UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549
                                  ------------
                                   FORM 10-KSB

      (Mark One)

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF
      1934

                  For The Fiscal Year Ended: December 31, 2005

|_|   TRANSITION REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934

                     For the Transition Period From __ to __
                          Commission File No. 000-33483


                            GENERAL COMPONENTS, INC.

                 (Name of Small Business Issuer in its Charter)


                     Nevada                                     88-0496645
(State or other Jurisdiction of Incorporation or             (I.R.S. Employer
                  Organization)                             Identification No.)


      Suite 2021, 20/F, Two Pacific Place                88 Queensway, Hong Kong
    (Address of principal executive offices)                    (Zip Code)

         Issuer's telephone number, Including Area Code: (852) 2167 8298

          Securities registered under to Section 12(b) of the Act: None

            Securities registered under to Section 12(g) of the Act:

                    Common Stock, par value $0.001 per share
                    ----------------------------------------

                                (Title of Class)

Check whether the Issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. |_|

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. |_|

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

Issuer's revenues for the fiscal year ended December 31, 2005 were $1,461,886.

As of March 31,  2006,  the  aggregate  market value of the common stock held by
non-affiliates of the Registrant was approximately $45,067,500.

As of March 31, 2006, there were 100,030,000 shares of Common Stock,  $0.001 par
value per share, outstanding.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

Documents incorporated by reference:  None.
<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                -----------------

                                                                                                              Page
                                                                                                              ----

<S>      <C>               <C>                                                                                <C>
PART I..........................................................................................................1

         Item 1.           Description of Business..............................................................1

         Item 2.           Description of Property..............................................................9

         Item 3.           Legal Proceedings...................................................................10

         Item 4.           Submission of Matters to a Vote of Security Holders.................................10

PART II........................................................................................................10

         Item 5.           Market for Common Equity and Related Stockholder Matters and Small Brokers
                           Issure Purchasers of Equity Securities..............................................10

         Item 6.           Management's Discussion and Analysis or Plan of Operation...........................11

         Item 7.           Financial Statements................................................................14

         Item 8.           Changes in and Disagreements with Accountants on Accounting and Financial
                           Disclosure..........................................................................14

         Item 8A.          Controls and Procedures.............................................................14

         Item 8B.          Other Information...................................................................14

PART III.......................................................................................................15

         Item 9.           Directors, Executive Officers, Promoters and Control Persons; Compliance
                           with Section 16(A) of the Exchange Act..............................................15

         Item 10.          Executive Compensation..............................................................17

         Item 11.          Security Ownership of Certain Beneficial Owners and Management and Related
                           Stockholders Matters................................................................18

         Item 12.          Certain Relationships and Related Transactions......................................19

         Item 13.          Exhibits............................................................................19

         Item 14.          Principal Accountant Fees and Services..............................................20


         INDEX TO FINANCIAL STATEMENTS........................................................................F-1
</TABLE>


                                        i
<PAGE>

                                    PART I.

Item 1.  Description of Business

      General Components,  Inc. ("we", "us", "our", the "Company", or "GCI") was
incorporated under the laws of the State of Nevada on January 14, 2000 under the
name of  Pro-Active  Solutions,  Inc.  On July 7, 2004,  we changed  our name to
General Components,  Inc. On September 24, 2004, the Company consummated a Share
Exchange Agreement (the "Exchange  Agreement") with General Components,  Inc., a
privately  owned  Cayman  Islands  company  ("GCI  Cayman"),  and  GCI  Cayman's
shareholders,  (the "Shareholders"),  pursuant to which the Company acquired all
of the issued and outstanding  shares of stock of GCI Cayman in exchange for the
issuance  in the  aggregate  of  20,000,000  of our shares of common  stock (the
"Shares") to the Shareholders. As a result of the transaction, GCI Cayman became
a  wholly-owned  subsidiary of the Company and, upon the issuance of the Shares,
the  Shareholders  owned  approximately  80% of all of the Company's  issued and
outstanding common stock

      We are engaged in the development,  manufacture and marketing of broadband
networking  products  and  systems for the "last  mile"  broadband  connectivity
market.  We  currently  offer  a  wide  range  of  basic  to  high-end  modular,
upgradeable  systems that enable  end-users to send and receive  high-speed data
communications  through the Internet  Backbone  Network.  Our  products  include
cables, patch cords, panels, adapters, converters, switches and wireless devices
that are produced by OEM manufacturers  and sold under the "General  Components"
and "Reachhome"  brands.  In late 2004, we entered the  fast-growing  enterprise
VOIP  market in  China.  In early  2005,  we signed a  reseller  agreement  with
VocalData,  Inc.,  a  subsidiary  of  Tekelec,  to become  their  only  software
distributor of enterprise VOIP products in China.  With respect to hardware,  we
established  OEM   relationships   with  a  number  of  Chinese  VOIP  equipment
manufacturers.  We anticipate  that our involvement in the  connectivity  market
with  distributors  will help the future  sales of VOIP  products to  enterprise
users and system integrators. With the launch of VOIP products in April 2005, we
have started  promoting VOIP to enterprises and operators in China.  Even though
sales of VOIP in 2005 represented  only 14% of total revenues,  we expect that a
substantial portion of our 2006 revenue will be derived from VOIP product sales.
GCI is  currently  providing  solutions  to three types of  enterprise  markets:
small-medium  enterprises  ("SME");  large  corporations;  and special  interest
groups  (including  retail  users).  We  distribute  our products in China,  the
Pacific  Rim,  the  Middle  East  and  Eastern  Europe  primarily   through  our
distributors, resellers and/or system integrators to both office and residential
markets. It is our intention to expand our distribution  channels into the North
American  market.  We are  headquartered  in Hong Kong and have numerous offices
throughout China.

      Your attention is  specifically  called to the risk factors in this Item 1
below and the  detailed  information  within the  financial  statements  and the
explanatory notes which appear elsewhere in this Form 10-KSB.

Recent Events

      On April 1, 2005, the  shareholders of the Company approved an increase in
the number of authorized shares of common stock to 280 million from 100 million,
each share having a par value of $0.001.

      On May 27, 2005, all the shares of the Company's  Series A Preferred stock
were converted  into Common Stock  resulting in the Company  issuing  80,000,000
shares of common  stock to the holders of the Series A  Preferred  Stock and the
Series A Preferred Stock being canceled.

Our Products and Solutions

We are focused on two areas of "last mile" broadband technologies:

      o     Traditional networking cables and systems; and

      o     Voice over Internet Protocol enterprise solution.


                                       1
<PAGE>

Traditional Networking Cables and Systems

      To date, our core business has been the manufacture and  distribution of a
full line of structured cabling systems and three-level  router-switch equipment
for multi-family  residential and commercial buildings.  Our products, which are
capable of  delivering  information  at 100 Mbps of bandwidth,  include  cables,
patch cords, panels,  adapters,  converters,  switches and wireless devices that
are produced by OEM  manufacturers  and sold under the "General  Components" and
"Reachhome" brands.

      Our Ethernet  system,  which includes  router/switch  systems,  structured
cable and adapters and software,  has been widely  distributed in China.  By the
end of 2005, we authorized approximately 148 distributors,  resellers and system
integrators  throughout  China. We also trained and certified  approximately 523
Chinese   engineers   who  are   qualified  to  customize   system  design  with
GCI/Reachhome  products for end users. We also developed new distributors in the
Middle East and India during 2005.

Voice Over Internet Protocol (VOIP) Products

      In late 2004, we entered the fast-growing enterprise VOIP market in China.
In early 2005, we signed a reseller agreement with VocalData, Inc., a subsidiary
of  Tekelec,  to become  their only  software  distributor  of  enterprise  VOIP
products in China.  With respect to hardware,  we established OEM  relationships
with a number of Chinese VOIP equipment  manufacturers.  We anticipate  that our
involvement in the connectivity  market with distributors will help drive future
sales of VOIP  products to  enterprise  users and system  integrators.  With the
launch  of VOIP  products  in April  2005,  we have  started  promoting  VOIP to
enterprises  and  operators  in China.  Even  thought  the sales of VOIP in 2005
represented only 14% of total revenues,  we expect that a substantial portion of
our 2006  revenue  will be derived  from VOIP  product  sales.  GCI is currently
providing  solutions  to  three  types  of  enterprise   markets:   small-medium
enterprises  ("SME");  large  corporations;  and special interest groups (retail
users).

      VOIP is a  technology  that  allows you to make  telephone  calls  using a
broadband Internet connection instead of a regular (or analog) phone line, known
as "plain old telephone  system"  ("POTS").  Some  services  using VOIP may only
allow you to call other people using the same service,  but others may allow you
to call anyone who has a  telephone  number - including  local,  long  distance,
mobile, and international numbers. Also, while some services only work over your
computer or a special VOIP phone,  other services allow you to use a traditional
phone  through an adaptor.  In contrast,  the primary phone system we use today,
POTS,  is a  collection  of  interconnected  systems  operated  by  the  various
telephone  companies  and  administrations  around  the world.  POTS  started as
human-operated  analogue  circuit  switching  systems  (plugboards),  progressed
through electromechanical  switches. By now this has almost completely been made
digital,  except for the final  connection to the  subscriber  (i.e.,  the "last
mile"):  The  signal  coming  out of the phone set is  analogue.  It is  usually
transmitted over a twisted pair cable still as an analogue signal.

      SMEs  normally  have limited IT  resources  and lower  corporate  budgets.
However,  they are under pressure from mounting  administrative costs. We intend
to provide  SME users with a publicly  centralized  server to host IP calls.  We
expect our VOIP  service  for SMEs to assist in  reducing  the  difficulties  of
establishing  and  configuring  proper networks and servers to host the internal
calls and reduce the cost to a premium unlimited call package as low as US$2 per
month per user for first three years of the contract in China.

      Enterprise  solutions for large corporations  consist of both hardware and
software components.  Hardware includes a server,  firewall,  IP phone, gateway,
and integrated access device ("IAD").  Software  includes the  VocalData/Tekelec
system  customized  for  local  enterprises.  With an  affordable  subscription,
corporations  can reduce  internal call costs while  departments  or branches at
different locations can increase their communication and increase  productivity.
Corporate  callers can also enjoy  conference call, voice mail, call forwarding,
3-way  calling  and many  other  advanced  features.  Many  carriers  prefer the
VocalData/Tekelec voice application server for several reasons:


                                       2
<PAGE>

      o     Tight  Application  Integration on an Open Platform.  In addition to
            the basic call control and hosted PBX features,  the enterprise VOIP
            system we offer  incorporates  several  key  applications  including
            conferencing,  messaging  and  firewall  traversal  as  part  of its
            solution.  Because this  enterprise VOIP system  incorporates  these
            capabilities as integral applications within its hosted IP telephony
            solution,  enterprises  pay less per application and reduce the time
            required for system integration, which we expect to translate into a
            more  cost-effective  solution  with  a  faster  time-to-market.  In
            particular,  the system  session border  controller  provides a cost
            benefit,  since the system's firewall traversal solution is 75% less
            expensive  per user  than  external  border  or  session  controller
            products, which may require extra customer hardware or software or a
            truck roll to do firewall reconfiguration.

      o     Standards-Based.  Since the enterprise  VOIP system we are reselling
            is open and  standards-based,  enterprise planning to interface with
            third-party  applications  can be done easily.  The system  supports
            SIP, TAPI, SOAP,  Corba, and AMIS-A,  the most widely used protocols
            for  integration  with  third-party  voicemail.  In  addition,  this
            enterprise VOIP system provides a powerful  Application  Programming
            Interface ("API") for customized development.

      o     Carrier-Grade  Quality.   Carrier-grade  represents  a  fundamental,
            ongoing  commitment to deliver  high-quality,  reliable systems that
            can  support  large  numbers  of  enterprise  users.  By  using  the
            industry's  most  reliable   architecture,   configuration   of  the
            enterprise   VOIP   system  we  offer  is   designed   for   99.999%
            availability.  Based  upon  NEBS-compliant  SUN  Netra  servers,  we
            provide a standby  server for every active call agent  server.  This
            means that calls in progress  should  remain  connected  even in the
            event of a server failure. Customer tests have demonstrated that the
            system is the most powerful voice applications  server, with 3 times
            the calls per second  throughput of our nearest  competitor.  At 200
            calls per  second,  our  enterprise  VOIP  system  supports  100,000
            subscribers  on a single  server pair.  This results in total server
            costs that are 80% lower than alternatives.

      o     Broadest Interoperability. To give businesses maximum selection, the
            Tekelec enterprise VOIP system is committed to operating with a wide
            variety  of  partners  in the  gateway,  softswitch,  endpoint,  and
            applications  and technology  areas.  This enterprise VOIP system is
            designed to be compatible with a broad range of IP phones because it
            is the only voice  application  server to support all four  endpoint
            protocols:  SIP,  MGCP,  Cisco SCCP or "skinny" and Mitel MiNet.  By
            supporting all protocols, the systems enable additional features and
            can provide a smoother  transition for IP PBX businesses  converting
            to hosted solutions.

      o     Differentiating  Features  and  Applications.  The  enterprise  VOIP
            system we offer comes with a full set of  ready-to-use  features and
            applications.  Service  providers  can attract new  customers,  grow
            revenues per user, and help to retain existing customers by offering
            services  based on the  software  core  feature  sets and  converged
            applications.   There  are  four  application   areas  available  to
            customers: Desktop Integration,  Productivity, Mobility and Business
            Applications.  Desktop Integration includes the Web Portal which not
            only makes it easy for users to take  advantage  of their  telephony
            features  but  takes  advantage  of  IP  telephony  to  display  the
            corporate  phone  directory,  voice  mail  and  user  call  log with
            click-to-dial  capability.  Mobility applications offer a variety of
            features  that enable  business  travelers to work more  effectively
            while away from the office and also provide  802.11 or Wi-Fi support
            for "in building" mobility. This enterprise VOIP system provides the
            most  comprehensive  set  of  PBX  features,  because  of  its  more
            extensive protocol support.

      o     Ease of Administration.  With its multiple levels of administration,
            the  Tekelec   enterprise  VOIP  system   provides   companies  with
            self-administration  and end-user communications  controls.  Wizards
            and  profiles  hasten  account  set  up  and  the  bulk-provisioning
            capability  can be  used  for a rapid  data  upload.  The  web-based
            administration  interface enables companies to handle administrative
            tasks either centrally or on a distributed basis. Additionally,  its
            convenient  organization  simplifies data entry and maintenance.  In
            addition,  office moves and layout changes are simplified due to the
            "plug and play" self-discovery capability of IP-based addresses. Our
            integrated applications can help enterprises increase revenues while
            minimizing  investment  costs because of the use of standard servers
            and open interfaces.


                                       3
<PAGE>

      To increase  communication  of family and friends,  especially the growing
population of  expatriates  from other  countries and because of the  employment
relocation of individuals  from other regions within China, we intend to provide
an i-Net membership  service where this group of people can communicate over our
VOIP  network.  This service aims to help family,  friends and special  interest
groups  minimize  phone service costs and maximize voice  communication.  To the
best of our knowledge,  this  enterprise type of VOIP service is not impacted by
telecommunications regulation.

Suspension of Plastic Optical Fiber (POF) Development.

      Due to the entry of  competing  technologies  in the markets for POF,  POF
technology has not been able to acquire substantial market share.  Several large
companies  have  delayed  their  commercial  launch of their POF. We have made a
strategic decision to defer our further  commercialization and launch of our POF
until  at  least  one or two of  these  large  companies  launch  a  significant
marketing  campaign  of POF.  We do not  have the  resources  to be first in the
market place in this sector. Consequently,  we have, at this time, suspended the
research  and  development  in POF.  We  believe  that we have the  intellectual
property to further develop,  commercialize  and mass produce POF at a time when
the market  justifies  a  significant  investment  in this  technology.  We will
continue to carefully monitor this sector in 2006,  paying particular  attention
to the market launch plans of our major competitors.

Market Opportunity

      There is one key market in which we intend to operate  as we  continue  to
develop our products: the VOIP products market.

      VOIP Products Market

      As in other parts of the world,  VOIP has entered the Asia telecom  market
at an unprecedented  pace. Market revenues for IP telephony in Asia are expected
to reach US$420.6 million this year and US$1.14 billion by 2007, as projected by
Frost & Sullivan. IP Telephony or the IP-PBX voice equipment segment remains one
of the leaders in the enterprise telephony market and is expected to surpass the
PBX segments, the largest enterprise telephony segment by 2007.

      VOIP has become the fastest growing service in China's  telecommunications
industry  with  some  analysts  forecasting  that it will  capture  up to 30% of
China's long-distance market in 2006 as the VOIP market is going to be opened to
link up with the POTS.  Bundling VOIP with other LAN products may be our premier
application because we may become capable of providing a "one stop shop" to many
Chinese enterprises.

      China Market

      China has one of the highest  growth rates of Internet users in the world.
According  to  statistics  released by the China  Internet  Network  Information
Center,  Internet  users in China  reached 111 million in at December  31, 2005,
growing at a rate of about 18.1% per anuum.  This increase in Internet users and
the fast pace of new housing  construction will increase the demand for speedier
Internet access. As over 41% of application is instant  communication and demand
for  telecom  is  growing,  the need for  speed in the "last  mile" and  instant
communication  through the  internet  are  increasing  as well.  Our  structured
cabling and VOIP business should benefit from this increase.

Our Strategy

      Our business strategy is to leverage low cost Asian  manufacturing to meet
the growing demand for broadband products in the "last mile" market. Our goal is
to become a world player in the "last mile" market.


                                       4
<PAGE>

      We believe  the  principal  components  of our  business  strategy  are as
follows:

      o     Sales and distribution.  Our business strategy is to utilize our low
            cost,  Asian  manufacturing  base and customer  pool and new product
            development  group to increase sales in China. We intend to continue
            to try to identify needs in the broadband  connectivity  sector, and
            to try to acquire and develop technology and assemble products under
            our own brand name through OEM and ODM manufacturers.

      o     Research  and  Development  and  Product  Development.  We  consider
            research  and  development  and  product  development  as being  the
            essential  driving  force of our  business  strategy.  We have  been
            engaged in product  development  since our  inception:  first in its
            structured cable, and more recently in our product development of an
            integrated  VOIP solution.  We will seek to leverage our partnership
            with  Tekelec to develop a product line to  accommodate  the growing
            demand from the Chinese  enterprise  market.  On the other hand,  as
            some large companies have delayed their  commercial  launch of their
            POF,  we have  slowed  down our POF  research  and  development  and
            continue to carefully monitor this sector in 2006, paying particular
            attention to the market launch plans of our major competitors.

      o     Patents.  To date,  we have filed three patent  applications  in the
            U.S.  and two in China for our GI POF  technology.  The three patent
            applications filed in U.S. consist of 1) a novel process in creating
            a graded index polymer  optical  fiber,  2) a method to maintain the
            uniform  quality  throughout  the  manufacturing  process and 3) the
            tools  for  the  manufacturing  process.  We do not  use  any of our
            patents in connection with the development of any VOIP business.  We
            intend to file for patent protection for our POF products we develop
            and  improvements  thereto,  although  currently  we have  suspended
            activities in this line of business.

Competition

      In the VOIP market,  we will face  competition  from many companies,  both
local and  international.  We believe that our local presence,  the fact that we
have been in the  communications  market in China through our structured  cable,
wireless and telephony  business,  our  experience in  integrating  products and
services,  and our access to less expensive hardware components  manufactured in
Asia provides us with a competitive  advantage with respect to these groups.  In
comparing  ourselves with larger  competitors in the VOIP market,  such as Cisco
and Lucent,  we believe that we may have a more flexible  production  and a more
competitive cost structure.

      We will  also  continue  to  face  competition  from  companies  that  are
developing  and  marketing  technologies  that compete  with ours.  For example,
evolving workgroup dynamics and the increasing  mobility of employees,  combined
with  falling  prices  makes  Wireless  Local Area  Network  ("WLAN")  solutions
attractive  to larger end users.  Largely as a result of  significant  marketing
efforts by vendors such as Apple, Compaq, Intel and Lucent, we expect the use of
WLANs in homes and small/medium-sized  businesses to increase with the growth of
broadband.

Risk Factors

      In addition to the other  information in this annual report,  our business
is subject to numerous risks which should be considered  carefully in evaluating
our business and prospects.

Risks Related to Our Industry and Operations and Going Concern

      Our  operations  could be  curtailed  if we are unable to obtain  required
additional financing.  As of December 31, 2005, we had approximately $185,185 in
cash and cash equivalents.  We require additional financing to continue our VOIP
development and marketing efforts, as well as financing new opportunities in the
related  telecommunications  business.  While we are seeking to raise additional
funds through the sale of equity  securities,  there can be no assurance that we
will be successful in our efforts.  Our need to raise  additional funds in order
to operate  through the current fiscal year raises  substantial  doubt as to our
ability to  continue as a going  concern.  In their  report on our  consolidated
annual  financial   statements  for  the  year  ended  December  31,  2005,  our
independent auditors included an explanatory  paragraph regarding concerns about
our  ability  to  continue  as a going  concern.  If we are  unable to raise the
capital we need, our business strategy will be adversely  affected,  which could
severely  limit our  ability to  generate  revenue  and we may cease  conducting
business as a going concern.

      Revenues  from  our  core  business  may   fluctuate.   Our  revenues  are
characterized by significant  fluctuation based on customer demand.  Many of our
products have short  lead-times and uneven seasonal demand.  Fluctuating  demand
results  from  a  variety  of  factors,  including,  but  not  limited  to,  the
cancellation  of  large  orders,   price  concessions  on  high  volume  orders,
competitive pressures and changing technological requirements.  In addition, our
sales volume and product mix impact our gross  margin.  Therefore,  if our sales
volume  does not  improve,  or we have an  unfavorable  product  mix, we may not
achieve  the gross  margin  rate we expect,  resulting  in lower  than  expected
results of operations. These factors may fluctuate from quarter to quarter.


                                        5
<PAGE>

      We operate in a highly  competitive  industry.  The  industry  in which we
operate is highly competitive, and we expect that this level of competition will
continue.  Factors that could affect our ability to compete  successfully in the
industry include the quality,  performance,  price, reliability,  mix and market
acceptance of our products;  market  acceptance  of our  competitors'  products;
efficiency and quality of the production and implementation of our products; and
our customer support and reputation.

      We have numerous competitors in our core business of networking cables and
systems,  some of which  are very  large,  with  substantial  technological  and
financial  resources and brand recognition and some of our competitors have very
low cost  structures and support from  governments in their home  countries.  In
addition, we will face numerous competitors in our new VOIP business assuming it
can be  successfully  launched.  We  cannot  assure  you that we will be able to
compete successfully against existing or future competitors.  Competitors may be
able to offer lower prices, additional products or services or a more attractive
mix of products or services,  or services or other  incentives that we cannot or
will not match or do not offer.  These competitors may be in a stronger position
to respond quickly to new or emerging  technologies and may be able to undertake
more extensive marketing  campaigns,  adopt more aggressive pricing policies and
make more  attractive  offers to potential  customers,  employees  and strategic
partners.

      If we fail to  maintain  a product  portfolio  that is  attractive  to our
customers,  enhance  our  existing  products  and keep pace  with  technological
advances  in our  industry,  or if we  pursue  technologies  that do not  become
commercially  accepted,  customers may not buy our products.  The demand for our
products  can  change  quickly  and in ways that we may not  anticipate  because
markets  for  our  principal   products  are   characterized  by  the  following
conditions:  rapid, sometimes disruptive  technological  developments;  evolving
industry and  certification  standards;  frequent new product  introductions and
enhancements;  changes in customer  requirements;  and short product life cycles
with declining prices over the lives of products.

      Our operating  results  depend to a  significant  extent on our ability to
maintain a product portfolio that is attractive to our customers, to enhance our
existing products, and to continue to introduce new products successfully and on
a timely basis. New  technological  innovations  generally require a substantial
investment  before any assurance can be given as to their commercial  viability.
If we fail to make sufficient investments or if we focus on technologies that do
not become  widely  adopted,  other  technologies  could  render our current and
planned products obsolete.

      We rely on  third  parties  to  manufacture  allt of our  products  and to
provide  substantially  all of our  components.  If these third  parties fail to
deliver quality products and components at reasonable  prices on a timely basis,
we may alienate some of our customers, and our revenues,  profitability and cash
flow may decline. We use contract manufacturers  significantly as an alternative
to  manufacturing  products  ourselves.  If these contract  manufacturers do not
fulfill  their  obligations  to  us,  or if  we do  not  properly  manage  these
arrangements,  our customer relationships may suffer. In addition, since we rely
more heavily now than  previously on contract  manufacturers,  we may have fewer
employees with the expertise needed to manage these third-party arrangements. In
relying  more on  third  parties,  we run  the  risk  that  the  reputation  and
competitiveness  of our products and  services may  deteriorate  because we have
less control over quality and delivery schedules.  We also may experience supply
interruptions,  cost  escalations and competitive  disadvantages if our contract
manufacturers  fail to  develop,  implement  or maintain  manufacturing  methods
appropriate for our products and customers.

      If we fail to protect our intellectual  property rights,  our business and
prospects may be harmed.  Intellectual  property  rights,  such as patents,  are
vital to our business,  and  developing new products and  technologies  that are
unique to us is  critical  to our  success.  We have filed a number of U.S.  and
foreign  patent  applications,  but we cannot  predict  whether any patents will
issue, will provide us with any competitive  advantage or will not be challenged
by third parties. Moreover, our competitors may already have applied for patents
that,  once issued,  could prevail over our patent rights or otherwise limit our
ability to sell our products.  Our competitors also may attempt to design around
our patents or copy or otherwise obtain and use our proprietary  technology.  If
we do not  receive  the  patents  we seek or if other  problems  arise  with our
intellectual  property,  our  competitiveness  could be significantly  impaired,
which would limit our future revenues and harm our prospects.


                                       6
<PAGE>

      Many of our planned products are highly complex and may contain defects or
errors that are detected only after deployment in networks.  If that occurs, our
reputation  may be  harmed.  Our VOIP  products  under  development  are  highly
complex,  and there is no  assurance  that our  extensive  product  development,
manufacturing  and  integration  testing will be adequate to detect all defects,
errors, failures and quality issues that could impact customer satisfaction.  As
a result, we could have to replace certain components and/or provide remediation
in response to the  discovery of defects in products  that are shipped.  Most of
these  occurrences  can be  rectified  without  incident,  as has  been the case
historically.  However,  the  occurrence  of any  defects,  errors,  failures or
quality  issues  could  result  in  cancellation  of  orders,  product  returns,
diversion of our resources, legal actions by our customers or our customers' end
users and other losses to us or to our customers or end users. These occurrences
could also result in the loss of or delay in market  acceptance  of our products
and loss of sales,  which  would  harm our  business  and  adversely  affect our
revenues and profitability.

      Rapid  changes to  existing  regulations  or  technical  standards  or the
implementation  of new regulations or technical  standards  relating to products
and services not previously  regulated could be disruptive,  time-consuming  and
costly to us. Many of our products  and  services  will be developed in reliance
upon existing  regulations  and  technical  standards or our  interpretation  of
unfinished  technical  standards.  Changes to existing regulations and technical
standards,  or the  implementation  of new regulations  and technical  standards
relating to products and  services not  previously  regulated,  could  adversely
affect the  development  of and demand for our  products and services or require
the expenditure of substantial additional funds.

      Our success  depends on our  ability to recruit and retain key  personnel.
Our success  depends in large part on our  ability to recruit and retain  highly
skilled technical,  managerial,  sales and marketing personnel.  Competition for
these personnel is intense.  The loss of services of any of our key personnel or
our failure to attract and retain  qualified  personnel in the future could make
it  difficult  for us to  meet  our  key  objectives,  such  as  timely  product
introductions.

      Our relationship  with Nottingham  Technology Co. Limited  ("Nottingham"),
formerly known as Nottingham Optical Technology Co., Limited,  and its potential
to default on an outstanding  loan obligation may adversely  affect our business
operations.  Nottingham, through a collaborative arrangement,  assists us in the
development of  proprietary  technologies  to create POF and related  networking
equipment. Nottingham has a loan obligation to the Agricultural Bank of China to
repay a loan in the  principal  amount  of  Renminbi  13,840,000  (approximately
US$1,714,951). Because we have such a close affiliation with Nottingham and rely
on it to assist us in the development of POF  technology,  if it defaults on its
loan  obligations,  we may be forced to cease all operations or severely curtail
or development and production of broadband networking products and systems.

Risks Associated With Doing Business In Greater China

      There are  substantial  risks  associated  with doing  business in greater
China, as set forth in the following risk factors.

      The  establishment  and  expansion of  international  operations  requires
significant  management attention. A substantial portion of our current, as well
as any anticipated future revenues, are or are expected to be derived from Asia.
Our  international  operations  are subject to risks,  including the  following,
which, if not planned and managed  properly,  could materially  adversely affect
our business,  financial  condition and operating results:

      o     legal  uncertainties or unanticipated  changes regarding  regulatory
            requirements, liability, export and import restrictions, tariffs and
            other trade barriers;

      o     longer   customer   payment  cycles  and  greater   difficulties  in
            collecting accounts receivable;

      o     uncertainties of laws and enforcement  relating to the protection of
            intellectual property; and

      o     potentially uncertain or adverse tax consequences.


                                       7
<PAGE>

      Fluctuations in the value of the RMB relative to foreign  currencies could
affect our operating results. We have historically  conducted  transactions with
customers,  paid payroll and other costs of operations in Chinese  Renminbi.  To
the extent future  revenue is  denominated  in foreign  currencies,  we would be
subject  to  increased  risks  relating  to  foreign   currency   exchange  rate
fluctuations  that  could  have a  material  adverse  affect  on  our  financial
condition  and  operating  results.  To date, we have not engaged in any hedging
transactions in connection with our international operations.

      Our  operations  and assets in greater  China are  subject to  significant
political and economic uncertainties.  Changes in laws and regulations, or their
interpretation,  or the imposition of  confiscatory  taxation,  restrictions  on
currency conversion,  imports and sources of supply, devaluations of currency or
the  nationalization or other  expropriation of private enterprises could have a
material  adverse  effect on our business,  results of operations  and financial
condition.  Under  its  current  leadership,  the  Chinese  government  has been
pursuing  economic reform policies that encourage  private economic activity and
greater  economic  decentralization.  There is no assurance,  however,  that the
Chinese  government will continue to pursue these policies,  or that it will not
significantly alter these policies from time to time without notice.

      We may have limited legal  recourse  under  Chinese law if disputes  arise
under contracts with third parties. The Chinese government has enacted some laws
and  regulations  dealing  with  matters  such  as  corporate  organization  and
governance,  foreign investment,  commerce,  taxation and trade. However,  their
experience  in   implementing,   interpreting   and  enforcing  these  laws  and
regulations  is  limited,  and our  ability to enforce  commercial  claims or to
resolve  commercial  disputes is unpredictable.  The resolution of these matters
may be subject to the  exercise of  considerable  discretion  by agencies of the
Chinese  government,  and forces  unrelated  to the legal merits of a particular
matter or dispute may influence their  determination.  Any rights we may have to
specific  performance,  or to seek an injunction under Chinese law, in either of
these cases, are severely limited,  and without a means of recourse by virtue of
the Chinese legal  system,  we may be unable to prevent  these  situations  from
occurring.  The  occurrence  of any such  events  could have a material  adverse
effect on our business, financial condition and results of operations.

      Compliance with the Foreign Corrupt  Practices Act could adversely  impact
our  competitive  position;  failure to comply could subject us to penalties and
other adverse consequences.  We are subject to the United States Foreign Corrupt
Practices Act, which generally  prohibits  United States companies from engaging
in bribery or other prohibited  payments to foreign officials for the purpose of
obtaining or retaining  business.  Foreign  companies,  including  some that may
compete with us, are not subject to these prohibitions.  Corruption,  extortion,
bribery,  pay-offs, theft and other fraudulent practices occur from time-to-time
in mainland  China.  We can make no assurance that our employees or other agents
will not engage in such conduct for which we might be held  responsible.  If our
employees or other agents are found to have engaged in such practices,  we could
suffer severe penalties and other  consequences that may have a material adverse
effect on our business,  financial condition and results of operations.


                                       8
<PAGE>

Item 2.  Description of Property

      We maintain our primary executive offices at Suite 2021, 20/F, Two Pacific
Place,  88 Queensway,  Hong Kong pursuant to an agreement  with Simplex  Capital
Asia Limited.  We pay Simplex Capital Asia Limited a monthly fee of $2,564 which
is for general and administrative services including office space, utilities and
secretarial  support.  The following sets forth the additional  properties which
are used by us in connection with the operation of our business:

<TABLE>
<CAPTION>

                                                                                       Area in Sq.      Monthly
                                            Address              Expiry Date             Meters        Rental US$

<S>                            <C>                               <C>                     <C>            <C>
Registered Office              Suite 2108, 21/F., Block C,        12/31/2006             151.53           $967
                               ZhongGuanCun Technology
                               Development Building, No. 34
                               ZhongGuanCun South Avenue,
                               HaiDian District, Beijing, P.R.
                               China

Beijing Representative Office  Suite 1802, Grand Pacific          10/13/2007             434.57         $6,426
                               Building, Phase C, No. 8A
                               Guanghua Road, Chao Yang
                               District, Beijing, P.R. China,
                               100026

Shanghai Representative        Suite 1308, Jing An Zhonghua       4/7/2007                84.65         $1,452
Office                         Building, No. 1701 West Beijing
                               Road, Shanghai, P. R. China
                               610041

Guangzhou Representative       Suite 1111, East Tower, Yang       1/9/2006                64.99           $604
Office                         Cheng Trading Center, No. 122
                               TiYu Dong Road, Tian He
                               District, Guangzhou, P. R.
                               China, 510620

Wuhan Representative Office    Suite 7-2-301, Shi Long Garden,    1/9/2006               142.00           $273
                               Hong Shan District, Wuhan, P. R.
                               China,

Beijing Warehouse              Lot. West, No. 3 Warehouse,No.     7/31/2006              500.00         $1,425
                               10 Bai Zi Wan Road, Chao Yang
                               District, Beijing, P.R.China,
                               100022

Beijing Warehouse              Lot. East, No. 9 Warehouse, No.    7/31/2006              120.00           $342
                               10 Bai Zi Wan Road, Chao Yang
                               District, Beijing, P.R.China,
                               100022
</TABLE>


                                       9
<PAGE>

Item 3.  Legal Proceedings

      We were named as a defendant in patent  infringement suit filed by Panduit
Corp.  in  connection  with its patent  entitled  "Angled Patch Panel With Cable
Support Bar For Network  Cable  Racks".  On March 15,  2005,  Panduit  filed the
complaint  in the United  States  District  Court for the  Northern  District of
Illinois,  Eastern  Division  on March 15,  2005.  Panduit  also  named  Leviton
Manufacturing Company,  Inc., The Siemon Company, Tyco Electronics  Corporation,
Molex,  Inc. and AESP,  Inc. as defendants  in the case.  The suit was dismissed
without  prejudice in June 2005 and, to our  knowledge,  a new suit has not been
initiated.

Item 4.  Submission of Matters to a Vote of Security Holders

      No matter was  submitted to a vote of security  holders  during the fourth
quarter ended December 31, 2005.

                                    PART II.

Item 5.  Market for Common Equity, Related Stockholder Matters and Small Brokers
         Issuer Purchasers of Equity Securities

Market Information

      There had been a very limited and sporadic  public  trading market for our
shares of common stock until  October 26, 2004,  so it is difficult to ascertain
when our common  stock  qualified  for listing on The Over the Counter  Bulletin
Board.  Our common  stock is currently  listed on the Over the Counter  Bulleten
Board under the symbol "GCPO".  Prior to that time the Company was quoted on the
Pink Sheets L.L.C.  under the symbol "PAVS". The table below sets forth, for the
calendar  quarters  indicated,  the high and low prices of our  common  stock as
reported on the OTC Bulletin  Board.  The OTC market  quotations  reported below
reflect inter-dealer prices, without markup, markdown or commissions and may not
represent actual transactions.


                                                     OTC Bulletin Board
                                                 --------------------------
                                                  High                Low
                                                 -------            -------
               2005 First Quarter                 $2.75              $1.60
               2005 Second Quarter                $3.00              $2.00
               2005 Third Quarter                 $2.90              $2.25
               2005 Fourth Quarter                $2.38              $1.24



                                                     OTC Bulletin Board
                                                 --------------------------
                                                  High                Low
                                                 -------            -------
               2004 Fourth Quarter*               $2.25              $1.85

*First,  second and third  quarters of 2004 price ranges are not listed  because
the earliest date our securities qualified for listing was October 26, 2004.

Holders

      As of March 31,  2006,  there  were 799  holders  of record of our  common
stock.

Dividends

      We have not  paid any  dividends  on our  common  stock to date and do not
currently intend to pay dividends in the future. The payment of dividends in the
future will be  contingent  upon our  revenues  and  earnings,  if any,  capital
requirements and general financial condition. It is the present intention of our
board of  directors  to retain all  earnings,  if any,  for use in our  business
operations  and,  accordingly,  our  board  does not  anticipate  declaring  any
dividends in the foreseeable future.


                                       10
<PAGE>

Recent  Sales  of  Unregistered  Securities;  Use of  Proceeds  from  Registered
Securities

      On January 26, 2005,  we granted  30,000  shares of the  Company's  common
stock to Dr. James K. Walker under the Securities Act of 1933, as amended.  Such
shares were issued in connection with Dr.  Walker's  appointment to the board of
directors of the  Company.  We issued the shares to Dr.  Walker  pursuant to the
exemption from  registration  contained in Section 4(2) of the Securities Act as
they were sold to a sophisticated,  wealthy individual.  We did not pay any fees
or  commissions  as a result of issuance  of these  shares.  Dr.  Walker was not
nominated for  re-election at the last annual general  meeting of  stockholders.

Item 6.  Management's Discussion and Analysis or Plan of Operation

      The following  discussion should be read in conjunction with our Financial
Statements and footnotes thereto contained elsewhere in this annual report.

Forward Looking Statements

      The  statements  discussed in this annual report include  forward  looking
statements that involve risks and  uncertainties,  including the timely delivery
and  acceptance  of our products and the other risks  detailed from time to time
under the heading "Risk Factors" in Item 1 above.

Critical Accounting Policies

Revenue recognition

      Sales of goods are recognized  when goods are delivered and title of goods
sold has passed to the purchaser and no  significant  post-delivery  obligations
remain.

Valuation of long-lived asset

      The Company 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.  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.

Use of estimates

      The  preparation  of financial  statements in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial  statements and the reported
amounts of expenses  during the reporting  period.  Actual  results could differ
from those estimates.

      Management  does  not  believe  that  any  recently  issued,  but  not yet
effective,  accounting  standards  if  currently  adopted  would have a material
effect on the accompanying financial statements.

Business Overview

We were  incorporated  under the laws of the State of Nevada on January 14, 2000
under the name of  Pro-Active  Solutions,  Inc. On July 7, 2004,  we changed our
name to General Components, Inc. On September 24, 2004, GCI and the Shareholders
group of General Components, Inc., ("GCI-Cayman"), a Cayman Islands corporation,
(collectively, "Shareholders") closed the transactions contemplated by the share
exchange  agreement  (the "Share  Exchange  Agreement")  of September  24, 2004.
Pursuant to the Share Exchange Agreement, Shareholders agreed to transfer to GCI
and GCI agreed to acquire from the Shareholders all of the shares,  which shares
constitute 100% of the outstanding capital stock of GCI-Cayman,  in exchange for
20 million shares of GCI's common stock to be issued on the closing date,  which
shares  constituted  80% of the issued and  outstanding  shares of GCI's  common
stock  immediately  after the closing of the  transactions.  This share exchange
transaction resulted in those Shareholders  obtaining a majority voting interest
in GCI. Generally accepted accounting  principles require that the company whose
shareholders  retain the majority  interest in a combined business be treated as
the  acquirer  for  accounting  purposes,  resulting  in a reverse  acquisition.
Accordingly,  the  share  exchange  transaction  has  been  accounted  for  as a
recapitalization  of GCI.  The  financial  year end date of GCI has been changed
from May 31 to December 31 effective  from the financial year ended December 31,
2004.

      In  September  2004,  a stock  purchase  agreement  (the  "Stock  Purchase
Agreement") was signed between GCI and a purchaser (the  "Purchaser").  Pursuant
to the Stock Purchase Agreement,  the Purchaser agreed to purchase 20% shares of
the  outstanding  common stock of GCI,  subsequent to any shares changes arising
from the Share Exchange Agreement as well as the Stock Purchase  Agreement,  for
consideration of US$2 million.


                                       11
<PAGE>

      We are engaged in the development,  manufacture and marketing of broadband
networking  products  and  systems for the "last  mile"  broadband  connectivity
market. We offer a wide range of basic to high-end modular,  upgradeable systems
that enable end-users to send and receive high-speed data communications through
the Internet Backbone Network. Our products include cables, patch cords, panels,
adapters,  converters,  switches and  wireless  devices that are produced by OEM
manufacturers and sold under the "General Components" and "Reachhome" brands. In
late 2004, we entered the fast-growing enterprise VOIP market in China. In early
2005,  we signed a reseller  agreement  with  VocalData,  Inc., a subsidiary  of
Tekelec,  to become their only software  distributor of enterprise VOIP products
in China.  With respect to hardware,  we established  OEM  relationships  with a
number  of  Chinese  VOIP  equipment  manufacturers.   We  anticipate  that  our
involvement in the connectivity  market with  distributors  will help the future
sales of VOIP  products to  enterprise  users and system  integrators.  With the
launch  of VOIP  products  in April  2005,  we have  started  promoting  VOIP to
enterprises  and  operators  in China.  Even  thought  the sales of VOIP in 2005
represented only 14% of total revenues,  we expect that a substantial portion of
our 2006  revenue  will be derived  from VOIP  product  sales.  GCI is currently
providing  solutions  to  three  types  of  enterprise   markets:   small-medium
enterprises ("SME"); large corporations;  and special interest groups (including
retail users).

Business Outlook

      Structured Cable and POF

      Historically,  we had two areas of product development:  structured cables
and POF cables.  We have an applied OEM business  model to service  customers in
China and in other  parts of the world.  According  to Qian Jia,  a  China-based
cabling system market research firm, our overall  structured cable  installation
were ranked top 10 in China in 2005. We continue to sell our  structured  cables
to  customers  in  the  Middle  East.  However,  the  rising  copper  price  has
substantially  reduced  our  gross  margin.  We  expect  2006  will  be  another
challenging  year for  structured  cable margin.  On the POF side, we anticipate
that POF products will be one of the next generation  networking mediums because
of its higher bandwidth, lower cost and lack of magnetic interference, which may
replace copper wire cables.  However, due to the entry of competing technologies
in the markets for POF, POF technology has not been able to acquire  substantial
market share.  Several large companies have delayed their  commercial  launch of
their POF,  and the global  market has not  developed  as rapidly as the Company
anticipated.  As a result of the  uncertain  market  and its  limited  financial
resources, the Company has, for the immediate future, ceased its POF development
and  commercialization  efforts,  and is  focusing  its  resources  on its  VOIP
business (see below) as well as looking at other new opportunities in businesses
and technologies in related  businesses.  We will continue to carefully  monitor
this sector in 2006, paying  particular  attention to the market launch plans of
our major competitors.

      VOIP

      In late 2004, we decided to enter the fast-growing  enterprise VOIP market
in China. In early 2005, we signed a reseller agreement with VocalData to become
their only software  distributor  of enterprise  VOIP in China.  With respect to
hardware,  we  established  OEM  relationships  with a number  of  Chinese  VOIP
equipment manufacturers.  We anticipate that our involvement in the connectivity
market and with  distributors  will help the future  sales of VOIP  products  to
enterprise  users and system  integrators.  During 2005,  we provided  both VOIP
services  and  equipments  and VOIP income  accounted  for 14% of  revenue.  The
successful  installations of the VOIP systems in Motorola China and the agent of
China  Railcom  were two  significant  milestones  in our effort in VOIP market.
While  we  are  further  developing  our  VOIP  to  meet  different   customers'
requirements,  we also incurred higher selling and marketing  expenses.  We also
launched  soft phone  services  which  allow  corporate  users to  download  the
software and install on their  computers.  Although  Soft phone was still at the
testing stage, we received  positive  feedbacks from users as the convenience of
making  call from their  laptop  computer  while on the road.  We expect  that a
reasonable portion of our 2006 revenue will be derived from VOIP product sales.

Results of Operations for the Years ended December 31, 2005 and 2004.

Revenues.  Revenues  were  $1,461,886  for the year ended  December 31, 2005, as
compared  to  $1,714,457  for  the  same  period  in  2004.   This  decrease  is
attributable  to price  competition  in the whole  market,  which  resulted in a
decrease in the price levels of our structured cabling products.

Gross margin.  Our gross margin  decreased  from 27% (2004) to 21% (2005).  This
decrease is  attributable  to the  increase in raw  material  prices,  including
copper and plastic, of cable in 2005.


                                       12
<PAGE>

Gross profit.  Gross profit was $308,293 in the year ended December 31, 2005, as
compared to $465,106 for the same period in 2004. This decrease was attributable
to the increase in raw material prices,  including copper and plastic,  of cable
in 2005.

Operating  loss.  For the year  ended  December  31,  2005,  operating  loss was
$2,040,261 as compared to an operating loss of $1,495,534 for the same period in
2004.  This increase in operating loss is due in part to an increase in selling,
general and administrative expenses primarily attributable to the provision of a
receivable outstanding over 1 year of $500,000 as a doubtful account.

Net loss.  Net loss was  $3,577,791  for the year ended  December 31,  2005,  as
compared to $1,907,601 for the same period in 2004.  This  significant  increase
was  attributable  to an  increase  in  sharing  of  losses  and  impairment  of
investment of $1,597,550 recognized in 2005 regarding Nottingham,  provision for
doubtful  accounts  of $500,000  and an  increase in general and  administrative
expenses.

For the year ended December 31, 2005, the net loss per share was $0.053.

Selling,   general   and   administrative   expenses.   Selling,   general   and
administrative expenses were $2,348,554 for the year ended December 31, 2005, as
compared to $1,590,640 for the same period in 2004.  This increase was primarily
attributable  to the  provision  of a  receivable  outstanding  over  1 year  of
$500,000 as a doubtful  account  and an  increase in general and  administrative
expenses.

Other  expenses.  Other expenses were $1,537,530 for the year ended December 31,
2005,  as compared to $412,067  for the same period in 2004.  This  increase was
attributable  to an increase in the sharing of losses from equity  investee  and
impairment of investment, totaling $1,597,550.

Research & development  costs. No research & development costs were incurred for
the year ended December 31, 2005, as compared to $370,000 for the same period in
2004. This decrease was attributable to the Company reducing its research.

Income Taxes

No provisions for taxes have been recorded for the year ended December 31, 2005,
as we had no assessable taxes for the year.

Liquidity and Capital Resources

As of  December  31,  2005,  we had  $185,185 of cash and cash  equivalents  and
$143,660 of negative  working capital as compared to $1,037,292 of cash and cash
equivalents  and $1,327,333 of working  capital,  respectively,  at December 31,
2004.  The account  receivables  decreased  from $266,279 in 2004 to $102,202 in
2005.

Cash flow decreased in 2005 by 82%, from  $1,037,292 in 2004 to $185,185.  There
was a net outflow of cash from operations of $712,082 in 2005 in comparison to a
net  outflow of  $1,362,949,  which  resulted  from the  settlement  of accounts
payable of $1,373,377,  in 2004.  With respect to cash flow from  investing,  we
have a net  cash  outflow  of  $140,217  in 2005  versus a net  cash  inflow  of
$1,594,316 in 2004.  This represents the net result of an advance to an investee
of  $100,032  and  acquisition  of fixed  assets of $40,289  in 2005.  We had no
cashflow from  financing  activities in 2005 versus a $32,494 net inflow of cash
flow  from  financing  in  2004,  as a  result  of  repayment  of bank  loan and
restricted  cash in 2004.

We have  insufficient  cash and cash  equivalents to operate for the next twelve
months. Management has commenced the implementation of a reorganization plan for
cutting  operating  cost  and  sales  stimulation  in  2006 to  maintain  normal
operations and improve the performance of the Company.

As a result of our  recurring  losses from  operations  and working  capital and
stockholders'   deficit,  the  opinion  of  our  independent  registered  public
accounting firm relating to the financial statements for the year ended December
31, 2005, contains an explanatory  paragraph expressing  substantial doubt about
our ability to continue as a going concern. Such report states that the ultimate
outcome of this matter could not be determined as of the date of the report. Our
plans to address  the  situation  are  presented  above.  However,  there are no
assurance that these endeavors will be successful or sufficient.


                                       13
<PAGE>

Off-Balance Sheet Arrangements

      We do not have any off-balance sheet arrangements.

Item 7.  Financial Statements

      Please see the financial  statements  beginning on page F-1 located at the
end of this annual report.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

      None.

Item 8A. Controls and Procedures

      (a)   Evaluation of disclosure controls and procedures.

      The Company's  Chief Executive  Officer and Chief  Financial  Officer have
evaluated the effectiveness of the Company's  disclosure controls and procedures
(as defined in Exchange Act Rules  13a-15(f) and 15d-15(f)) as of the end of the
period  covered by this report.  Based on this  evaluation,  such  officers have
concluded that, as of December 31, 2005, the Company's  disclosure  controls and
procedures  are  effective  in  alerting  them on a  timely  basis  to  material
information  relating  to the Company  required to be included in the  Company's
periodic filings under the Exchange Act.

      (b)   Changes in internal control over financial reporting.

      During  the year ended  December  31,  2005,  there were no changes in our
internal  control over financial  reporting  that  materially  affected,  or are
reasonably likely to affect, our internal control over financial reporting.

Item 8B. Other Information

      None.


                                       14
<PAGE>

                                   PART III.

Item 9.   Directors,   Executive   Officers,   Promoters  and  Control  Persons;
          Compliance with Section 16(a) of the Exchange Act.

Our current directors and executive officers are as follows:

<TABLE>
<CAPTION>

Name                        Age              Title

<S>                         <C>              <C>
Simon Mu                    48               Chairman  and  Chief   Executive   Officer  of  the
                                             Company

Bruce A. Cole               58               Vice  Chairman,  Secretary  and  President  of  the
                                             Company

Junichi Goto                52               Director of the Company

Regis Kwong                 43               Director of the Company

Peter Wang                  51               Director of the Company

Jonathan Chan               34               Treasurer  and  Chief  Financial   Officer  of  the
                                             Company
</TABLE>

Dr. Simon Mu, Chairman and CEO - Dr. Mu is a founder of the Company and has been
Chairman of the Board of  Directors  and CEO since its  inception  in  September
1998. Dr. Mu is also the CEO of China Mineral  Acquisition  Corporation,  a U.S.
publicly listed company.  He is a Managing Director of Capital Bridge Investment
Ltd., a Chinese  company  specializing in mergers,  acquisitions  and distressed
debt  financing in China,  since August 2003.  Since 1996,  Dr. Mu has served as
Chairman of the Board of Beijing  Marrison  World Business  Information  Systems
Company,  a  computer  systems  integrator  in China,  in which Dr. Mu is also a
majority shareholder. He was Vice-Chairman of Jinpan International Ltd., an AMEX
listed company,  from August 1997 to December 1999. From February 1995 to August
1998, Dr. Mu was President of Patron America Inc., a financial advisory company.
From  September  1993 to January 1995, he served as Vice President of Investment
Banking for Salomon Brothers in Hong Kong.  Prior to joining Salomon,  he was an
Assistant  Professor at the Lyndon  Johnson  School,  the University of Texas at
Austin, from 1991 to 1993. Dr. Mu holds a Masters in Econometrics and a Ph.D. in
Planning and Development Finance,  both from the University of North Carolina at
Chapel Hill. He has a B.S. degree in Urban Planning from Nanjing University.

Mr. Bruce A. Cole, Vice Chairman and President - Mr. Cole has been involved with
the  Company  since its  inception,  and has served as a director of the Company
since  January  1999 and became  Vice  Chairman  in  December  2001.  He is Vice
Chairman of Morgan Stern Merchant Bank,  with offices in Beijing,  Hong Kong and
the U.S. He is a managing  member of Morgan Stern Realty  Holdings,  LLC,  which
owns  commercial  property in Texas.  Mr. Cole is also Vice  Chairman of Ramwell
Industrial  Limited,  an engineering  and equipment  manufacturing  company with
offices in China and the U.S. From 1996 to 1999,  Mr. Cole was the President and
a member of the Board of  Directors of National  Information  Group and its five
subsidiaries,  a publicly traded company in the U.S. with over 1,000  employees.
In May 1999,  National merged with First American Financial Corp., a NYSE listed
company.  From 1994 to 1996,  Mr. Cole served as Executive  Vice  President  and
General  Counsel  at J.B.  Oxford  Holdings.  He served as  Special  Counsel  at
Rubenstein  & Perry  from  1991-1994  where  he  managed  assets  of  distressed
companies and completed numerous corporate restructurings transactions involving
the $2 billion conservation proceedings of Executive Life Insurance Company. Mr.
Cole was the founding  member and  President of a San  Francisco  based law firm
from 1981-1990.  Mr. Cole has been active in business in China since 1985, first
as a lawyer  and then as a  businessman.  Mr.  Cole has  served  on a number  of
corporate  boards,  both public and private.  Mr. Cole earned a Bachelor of Arts
degree from UCLA and a Juris Doctor degree from the University of San Francisco.


                                       15
<PAGE>

Mr.  Junichi  Goto,  Director  - Mr.  Goto  has been a  member  of the  Board of
Directors  since  October  2004.  He has been the chairman  and chief  executive
officer of Go-To-Asia  Investment Limited.  Mr. Goto served as the president and
chief executive officer of Softbank China Venture  Investments Limited from July
1999 to June 2001.  Prior to that, he worked in the finance industry for over 20
years,  including  serving as managing  director and chief executive  officer of
Nomura  China  Venture  Investments  Limited  from  April  1996 to July 1999 and
serving as managing  director of China Investment  Banking  Department of Nomura
International (Hong Kong) Limited from 1992 to 1996. Mr. Goto holds a Bachelor's
degree in economics from the University of Tokyo.

Mr.  Regis  Kwong,  Director  - Mr.  Kwong  has  been a member  of the  Board of
Directors since October 2004. He has worked for several major U.S.-based  global
telecom services providers for over 18 years. During 1995 to 1997, he worked for
GTE (now Verizon) China as head of  operations.  From 1997 to 1999, he served as
Vice President and General Manager for its China operations.  After leaving GTS,
Mr. Kwong  founded  Terremark  Asia to provide  internet  messaging and Internet
Exchange services in China.  Terremark was later listed on the AMEX. Since 2000,
he has been the Managing  Director for China  Consolidated  Investment Firm. Mr.
Kwong  holds a  Bachelor  and  Master's  degree  in  Computer  Engineering  from
California Polytechnic University as well as an MBA from Rutgers University.

Mr. Peter Wang,  Director - Mr. Wang has been a member of the Board of Directors
since October 2004. He has ben the Chairman and CEO of Techedge Inc.  since June
2004,  and China  Quantum  Communication  Limited  since  October  2000.  He was
Executive Vice President and Director of Unitech  Telecom (now named  UTStarcom,
NASDAQ: UTSI) and co-founded US World Communications Group, Inc., United Medical
Group,  and  World  PCS,  Inc.  Mr.  Wang  also  worked  at AT&T  Bell  Labs and
Racal-Milgo  Information  System on Network Evolution  Planning.  He was elected
Deputy Chairman of the  Association of Privately Owned High-tech  Enterprises in
China. Mr. Wang has a BS in Computer Science and a MS in Electrical  Engineering
from  University of Illinois as well as an MBA in Marketing from  Southeast-Nova
University.

Mr. Jonathan Chan,  Treasurer and Chief Financial  Officer - Mr. Chan has served
as Treasurer and Chief Financial  Officer of the Company since November 2004. He
is  currently  an  Associate  Director  of  Go-To-Asia  Investment  Limited.  At
Go-To-Asia, Mr. Chan is responsible for venture capital investment activities in
the  Greater  China  Region.  Previously,  he served  as a manager  in charge of
venture capital investment for Softbank China Venture Investments  Limited.  Mr.
Chan also has over 6 years of experience in accounting and corporate finance, he
worked for Ernst & Young in Hong Kong where he was responsible for auditing, due
diligence  review,  corporate  valuations,  corporate  restructuring and initial
public  offerings  of PRC  enterprises.  Mr.  Chan holds a Bachelor  of Commerce
degree in Accounting and Computer  Information System from the University of New
South Wales, Australia. He is an associated member of the Hong Kong Institute of
Certified  Public  Accountants  (formerly  known as the  Hong  Kong  Society  of
Accountants) and a member of CPA Australia.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section  16(a) of the  Securities  Exchange Act  requires  our  directors,
executive officers and persons who own more than 10% of our common stock to file
reports of  ownership  and  changes in  ownership  of our common  stock with the
Securities and Exchange  Commission.  Directors,  executive officers and persons
who own more  than 10% of our  common  stock  are  required  by  Securities  and
Exchange  Commission  regulations  to furnish to us copies of all Section  16(a)
forms they file.

      Based  upon  review  of the  Forms  3 and  Form 4 filed  by the  following
reporting  persons during 2005 fiscal year,  such persons have not complied with
Section 16(a) filing requirements:

      Simon Mu filed a late Form 4 reporting the  conversion of preferred  stock
into common stock.

      Bruce A Cole filed a late Form 4 reporting  the  conversion  of  preferred
stock into common stock.

      Junichi  Goto filed a late Form 4 reporting  the  conversion  of preferred
stock into common stock.

      Regis Kwong  filed a late Form 4 reporting  the  conversion  of  preferred
stock into common stock.


                                       16
<PAGE>

      Jonathan  Chan filed a late Form 4 reporting  the  conversion of preferred
stock into common stock.

      James  Walker  filed a late  Form 3 upon  his  becoming  a  member  of the
company's Board of Director.

Code of Ethics

      In March  2005,  we  adopted a Code of Ethics  and  Business  Conduct  and
Insider Trading Policy ("Code") that applies to our principal executive officer,
principal  financial  officer,  principal  accounting  officer or  controller or
persons  performing  similar  functions.  A copy of such Code is incorporated by
reference as Exhibit 14.1 to this annual report. A copy of the Code will be made
available to any  stockholder,  free of charge,  upon  written  request to us at
Suite 2021, 20/F, Two Pacific Place, 88 Queensway, Hong Kong.

Board Committees and Designated Directors

      We have an  Audit  Committee  comprised  of three  independent  directors:
Junichi Goto,  Peter Wang and Regis Kwong. The Board of Directors has determined
that Mr. Junchi Goto is an "audit committee  financial expert" and "independent"
as defined under the relevant  rules of the SEC. We are currently  listed on the
OTC Bulletin Board and are therefore not required to have a nominating committee
or a compensation  committee.  We will evaluate  establishing such committees in
the future.

Item 10. Executive Compensation

      Certain  executive  officers have received cash  compensation for services
rendered on behalf of the Company.  Compensation  for services  rendered for the
year ended December 31, 2005 are listed below:

<TABLE>
<CAPTION>

                                            Annual compensation
                       -----------------------------------------------------------
   Name/Principal                                                                       All other
      Position         Fiscal Year       Salary ($)       Bonus ($)      Other ($)      Comp. ($)
      --------         -----------       ----------       ---------      ---------      ---------
<S>                         <C>           <C>              <C>             <C>            <C>
Simon Mu,
Chairman and CEO             2005         $90,000            --              --             --
                             2004         120,000            --              --             --
                             2003         120,000            --              --             --

Bruce Cole, Vice
Chairman, President
and Secretary                2005         $90,000            --              --             --
                             2004         $70,000            --              --             --
                             2003             -0-            --              --             --
</TABLE>

      During each of the last three fiscal years, none of our other officers had
salary and bonus greater than  $100,000.  Additionally,  our executive  officers
and/or  their   respective   affiliates   will  be  reimbursed  by  us  for  any
out-of-pocket  expenses incurred in connection with activities  conducted on our
behalf.  There is no limit on the  amount of these  out-of-pocket  expenses  and
there will be no review of the  reasonableness  of such expenses by anyone other
than our Board of Directors,  which includes persons who may seek reimbursement,
or a court  of  competent  jurisdiction  if such  reimbursement  is  challenged.

      Since  our  formation,  we have not  granted  any stock  options  or stock
appreciation  rights or any awards under  long-term  incentive  plans.


                                       17
<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners and Management

      The  following  table  sets forth  information  regarding  the  beneficial
ownership of our common stock as of March 31, 2006 by:

      o     each person known by us to be the  beneficial  owner of more than 5%
            of our outstanding shares of common stock;

      o     each of our officers and directors; and

      o     all our officers and directors as a group.

Unless otherwise indicated,  we believe that all persons named in the table have
sole  voting and  investment  power with  respect to all shares of common  stock
beneficially owned by them.

<TABLE>
<CAPTION>

Names and Addresses                                            Amount and Nature
of Beneficial Owners                                       of Beneficial Ownership(1)            Percent of Class
--------------------                                       --------------------------            ----------------
<S>                                                                <C>                                <C>
Simon Mu(2)                                                        21,599,272                         21.60%

Lotus Liberator Fund                                               10,579,240                         10.58%
Room 2703, 27/F, The Centrium
60 Wyndham Street
Central, Hong Kong

Dan Zheng Lee                                                       9,256,832                          9.26%
2 Hudson Court
Franklin Park, New Jersey 08823

Bruce Cole(2)                                                       6,171,216                          6.17%

China Enterprise Investments No. 12 Limited                         5,701,696                          5.70%
P.O. Box 309GT, Ugland House
South Church Street
Georgetown, Grand Cayman
Cayman Islands

Junichi Goto(2)                                                       617,120                          *

Jonathan Chan(2)                                                      493,696                          *

Regis Kwong(2)                                                        308,560                          *

Peter Wang(2)                                                         308,560                          *

All directors and executive officers as a group                    29,498,424                          29.5%
(6 persons)
</TABLE>

-----------------------------------
* Less than one percent.

(1) Unless  otherwise  noted, the Company believes that all persons named in the
table have sole voting and  investment  power with  respect to all shares of the
Common Stock beneficially owned by them. A person is deemed to be the beneficial
owner of securities which may be acquired by such person within 60 days from the
date  indicated  above upon the  exercise  of options,  warrants or  convertible
securities.  Each  beneficial  owner's  percentage of ownership is determined by
assuming that options,  warrants or convertible securities that are held by such
person (not those held by any other person) and which are exercisable  within 60
days of the date indicated above, have been exercised.


                                       18
<PAGE>

(2) Indicates a director and/or executive officer of the Company. The address of
each such  individuals is c/o General  Components,  Inc.,  Suite 2021, 20/F, Two
Pacific  Place,  88 Queensway,  Hong Kong.

Item 12.  Certain Relationships and Related Transactions

      During the year ended December 31, 2004 and 2005, we sold goods to Beijing
Marrison World Business  Information Company Limited for US$217,136 and US$6,267
respectively.  Dr.  Simon Mu, our Chairman and Chief  Executive  Officer,  has a
controlling  interest in Beijing  Marrison  World Business  Information  Company
Limited.

      We  paid  consultancy  service  fees  to  Ramwell  Industrial  Limited  of
US$370,000  in the year ended  December  31, 2004 as  compensation  for services
rendered in accordance with a contract signed in 2001 for future maintenance and
engineering  consulting  services,   including  improving  the  POF  production,
reviewing the quality system and quality assurance system. Mr. Bruce Cole, a our
Vice  Chairman,  President and  Secretary,  is a director of Ramwell  Industrial
Limited.

      The amount of US$500,000 due from Nottingham International Limited ("NIL")
represents  sales of  machinery  by the  Company  in 2002 which  amount  remains
outstanding at December 31, 2005. NIL holds a 40% equity interest in Nottingham.
The amount is interest-free,  unsecured and repayable on demand. Prior to August
2003,  Mr. Simon Mu was a director of NIL. As of December 31, 2005,  the Company
has made full provision for the outstanding balance of US$500,000 due from NIL.

Item 13.  Exhibits

The following Exhibits are filed as part of this report.

<TABLE>
<CAPTION>

Exhibit No.           Description
-----------           -----------
<S>                   <C>
2.1                   Share Exchange Agreement by and between General Components, Inc., a Nevada
                      corporation and General Components, Inc., a Cayman Islands corporation dated
                      September 24, 2004.(1)
2.2                   Stock Purchase Agreement by and among General Components, Inc. and certain
                      Investors listed on Exhibit A thereto dated September 24, 2004.(1)
2.3                   Agreement and Plan of Merger dated as of July 7, 2004 between Pro-Active
                      Solutions, Inc., a Nevada corporation ("Parent"), and General Components,
                      Inc., a Nevada corporation and a direct wholly-owned subsidiary of Parent.(2)
3.1                   Certificate of Incorporation.(3)
3.2                   Certificate of Designation of General Components, Inc.(1)
3.3                   By-laws.(3)
4.1                   Form of Common Stock Certificate.(3)
10.1+                 Dr. Simon Mu Employment Letter
14.1                  Code of Ethics and Insider Trading Policy.
31.1*                 Certification of Chief Executive Officer pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.
31.2*                 Certification of Chief Financial Officer pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.
32.1*                 Certification of Chief Executive Officer pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.
32.2*                 Certification of Chief Executive Officer pursuant to Section 906 of the
                      Sarbanes-Oxley Act of 2002.
</TABLE>

------------------------------
*  Filed herewith.

+ Indicates management contract or compensatory plan or arrangement.

(1)  Incorporated by reference herein to the Periodic Report filed on Form 8-K/A
on January 20, 2005.


                                       19
<PAGE>

(2) Incorporated by reference herein to the Periodic Report filed on Form 8-K on
July 8, 2004.

(3)  Incorporated  by reference  herein to the General Form for  Registration of
Securities of Small Business Issuers filed on Form 10-SB January 9, 2002.

(4)  Incorporated by reference herein to the Periodic Report filed on Form 8-K/A
on November 22, 2004.

Item 14.  Principal Accountant Fees and Services

      The firm of BDO  McCabe  Lo  Limited,  formerly  known as BDO  McCabe Lo &
Company acts as our  principal  accountant.  The  following is a summary of fees
paid to our principal accountant for services rendered.

AUDIT FEES

      During the fiscal years ended December 31, 2004 and 2005, we have paid our
principal  accountant  $138,846 and  $117,732  for the  services  our  principal
accountant performed in connection with audit of financial statements.

AUDIT RELATED FEES

      During the fiscal years ended  December 31, 2004 and 2005,  our  principal
accountant did not render assurance and related services  reasonably  related to
the performance of the audit or review of financial statements.

TAX FEES

      During the fiscal years ended  December 31, 2004 and 2005,  our  principal
accountant did not render services to us for tax compliance,  tax advice and tax
planning.

ALL OTHER FEES

      During the fiscal years ended  December  31, 2004 and 2005,  there were no
fees billed for products and services provided by the principal accountant other
than those set forth above.

AUDIT COMMITTEE APPROVAL

      Our audit committee together with the entire board of directors  evaluates
and approves in advance the scope and the cost of the  engagement  of an auditor
before the auditor  renders  audit and  non-audit  services.  We do not have any
pre-approval policies and procedures.


                                       20
<PAGE>









                            GENERAL COMPONENTS, INC.

                        Consolidated Financial Statements
                 For the years ended December 31, 2005 and 2004









<PAGE>

                            GENERAL COMPONENTS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                        Page
                                                                        ----
Report of Independent Registered Public Accounting Firm                  F1
Consolidated Balance Sheets                                              F2
Consolidated Statements of Operations                                    F3
Consolidated Statements of Stockholders' Equity (Deficit)                F4
Consolidated Statements of Cash Flows                                    F5
Notes to Consolidated Financial Statements                             F6-F13



<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and stockholders of
GENERAL COMPONENTS, INC.

We  have  audited  the  accompanying  consolidated  balance  sheets  of  GENERAL
COMPONENTS,  INC. and  subsidiaries  (the "Company") as of December 31, 2005 and
2004,  and the related  consolidated  statements  of  operations,  stockholders'
equity  (deficit)  and cash flows for each of the two years in the period  ended
December 31, 2005.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audits include  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting  Accordingly,  we express  no such  opinion.  Our audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of GENERAL
COMPONENTS,  INC and  subsidiaries  as of December  31,  2005 and 2004,  and the
consolidated  results of their  operations  and their cash flows for each of the
two years in the period ended December 31, 2005, in conformity  with  accounting
principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial  statements,  the Company  has been  suffering  recurring  losses from
operations and has working capital and stockholders'  deficit as of December 31,
2005. These matters raise  substantial  doubt about its ability to continue as a
going concern.  Management's plans in rgeard to these matters are also described
in Note 1. The consolidated  financial statements do not include any adjustments
that may result from the outcome of this uncertainty.


                                                       /s/ BDO McCabe Lo Limited


Hong Kong, March 29, 2006


                                      F-1
<PAGE>

                            GENERAL COMPONENTS, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                             ------------------------
                                                                                 2005          2004
                                                                                  US$           US$
                                     ASSETS

<S>                                                                          <C>            <C>
Current assets:
  Cash and cash equivalents                                                     185,185     1,037,292
  Accounts receivable, net of provision                                         102,202       266,279
     for doubtful debts (nil, US$896)
  Inventories (note 3)                                                          568,938       581,874
  Prepaid expenses and other current assets                                      38,253       103,663
                                                                             ----------    ----------
               Total current assets                                             894,578     1,989,108
Property, plant and equipment, net (note 4)                                     111,542       123,136
Investment in and advances to equity investee, net of                                --     1,497,518
        impairment (US$1,422,708, nil)
        (note 5)
Amount due from affiliates, net of provision                                         --       500,000
     for doubtful debts  (US$500,000, nil) (note 9)
Intangible assets (note 6)                                                                     26,771
                                                                             ----------    ----------
               Total assets                                                   1,006,120     4,136,533
                                                                             ==========    ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable                                                              572,120       191,709
  Accrued payroll and employees' benefits                                        50,472           472
  Customer deposits                                                              29,070        13,590
  Other accrued liabilities (note 7)                                            386,576       445,555
  Income taxes payable                                                               --        10,449
                                                                             ----------    ----------
               Total current liabilities                                      1,038,238       661,775

Commitments and contingencies (note 10)

Stockholders' equity (deficit) (note 11):
  Common stock, par value $0.001 per share;
    authorized December 31, 2005 - 280,000,000 shares;
    December 31, 2004 - 25,000,000 shares;
    shares issued and outstanding December 31, 2005 - 100,030,000 shares;
    December 31, 2004 - 20,000,000 shares                                       100,030        20,000
  Series A preferred stock, par value $0.001 per share;
    authorized 10,000,000 shares, shares issued and
    outstanding December 31, 2005 - nil;
    December 31, 2004 - 10,000,000 shares                                            --        10,000
Additional paid in capital                                                    7,732,834     7,735,364
Accumulated losses                                                            7,868,397    (4,290,606)
Accumulated other comprehensive income
    - foreign currency translation adjustment                                     3,415            --
                                                                             ----------    ----------
               Total stockholders' equity (deficit)                             (32,118)    3,474,758
                                                                             ----------    ----------
               Total liabilities and stockholders' equity (deficit)           1,006,120     4,136,533
                                                                             ==========    ==========
</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>

                            GENERAL COMPONENTS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                    Year ended December 31,
                                                                 -----------------------------
                                                                    2005              2004
                                                                     US$               US$
<S>                                                                <C>               <C>
Net sales                                                          1,461,886         1,714,457

Cost of sales                                                     (1,153,593)       (1,249,351)
                                                                 -----------       -----------
Gross profit                                                         308,293           465,106

Selling, general and administrative expenses                      (2,348,554)       (1,590,640)
Research and development costs                                            --          (370,000)
                                                                 -----------       -----------
Operating losses                                                  (2,040,261)       (1,495,534)

Other income (expenses)
    Interest expenses                                                     --           (43,743)
    Interest income                                                    2,479             4,510
    Share of losses and impairment of equity investee             (1,597,550)         (355,060)
    Others, net                                                       57,541           (17,774)
                                                                 -----------       -----------
Total other expenses, net                                         (1,537,530)         (412,067)
                                                                 -----------       -----------
Loss before income taxes                                          (3,577,791)       (1,907,601)

Income taxes (note 8)                                                     --                --
                                                                 -----------       -----------
Net loss                                                          (3,577,791)       (1,907,601)

Foreign currency translation adjustment                                3,415                --
                                                                 -----------       -----------
Comprehensive loss                                                (3,574,376)       (1,907,601)
                                                                 ===========       ===========
Net loss per share
- basic and diluted                                                   (0.053)           (0.319)
                                                                 ===========       ===========
Weighted average common stock outstanding
- basic and diluted                                               68,028,603         5,988,607
                                                                 ===========       ===========
</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                            GENERAL COMPONENTS, INC.

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                       Common stock             Series A preferred stock
                               ------------------------------------------------------------

                                                                                                 Additional
                                   Shares                         Shares                          paid-in
                                 outstanding      Amount       outstanding         Amount         capital
                               ------------    ------------    ------------     ------------    ------------
                                                    US$                              US$             US$

<S>                              <C>                 <C>         <C>              <C>             <C>
Balance at December 31, 2003     18,954,463          18,954              --               --       4,564,593

Conversion of convertible
   loans and accrued
   interests in connection
   with reverse merger            1,045,537           1,046              --               --       1,184,905

Shares created in reverse
  merger                          5,000,000           5,000              --               --          (9,134)

Conversion of common stock
   to series A preferred
   stock                        (20,000,000)        (20,000)     10,000,000           10,000          10,000

Issuance of shares for a 2
   for 1 stock dividend           5,000,000           5,000              --               --          (5,000)

Issuance of shares               10,000,000          10,000              --               --       1,990,000

Net loss                                 --              --              --               --              --
                               ------------    ------------    ------------     ------------    ------------
Balance at December 31, 2004     20,000,000          20,000      10,000,000           10,000       7,735,364

Issuance of common stock to
  a director                         30,000              30              --               --          67,470

Conversion of Series A
  preferred stock to common
  stock                          80,000,000          80,000     (10,000,000)         (10,000)        (70,000)

Foreign currency
translation adjustment                   --              --              --               --              --

Net loss                                 --              --              --               --              --
                               ------------    ------------    ------------     ------------    ------------
Balance at December 31, 2005    100,030,000         100,030              --               --       7,732,834
                               ============    ============    ============     ============    ============

<CAPTION>

                                Accumulated
                                   other                          Stock-
                               comprehensive    Accumulated      holders'
                                   income         losses      equity (deficit)
                                ------------    ------------  ----------------
                                     US$            US$              US$

<S>                               <C>             <C>              <C>
Balance at December 31, 2003              --      (2,383,005)      2,200,542

Conversion of convertible
   loans and accrued
   interests in connection
   with reverse merger                    --              --       1,185,951

Shares created in reverse
  merger                                  --              --          (4,134)

Conversion of common stock
   to series A preferred
   stock                                  --              --              --

Issuance of shares for a 2
   for 1 stock dividend                   --              --              --

Issuance of shares                        --              --       2,000,000

Net loss                                  --      (1,907,601)     (1,907,601)
                                ------------    ------------    ------------
Balance at December 31, 2004              --      (4,290,606)      3,474,758

Issuance of common stock to
  a director                              --              --          67,500

Conversion of Series A
  preferred stock to common
  stock                                   --              --              --

Foreign currency
translation adjustment                 3,415             --            3,415

Net loss                                  --      (3,577,791)     (3,577,791)
                                ------------    ------------    ------------
Balance at December 31, 2005           3,415      (7,868,397)        (32,118)
                                ============    ============    ============
</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

                            GENERAL COMPONENTS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                           --------------------------------
                                                                              2005                 2004
                                                                               US$                  US$
<S>                                                                        <C>                   <C>
Cash flows from operating activities
  Net loss                                                                 (3,577,791)           (1,907,601)
  Adjustment to reconcile net loss to net cash used
     in operating activities:
  Depreciation and amortization                                                79,092                76,518
  Loss on disposal of property, plant and equipment                             2,681                22,530
  Director's compensation by issuance of common stock                          67,500                    --
  Allowance for inventories                                                   157,388                    --
  Provision for doubtful accounts                                             500,000                    --
  Adjustment  to  reverse  effect of  write-up  of  technology               (154,940)             (154,940)
     rights
  Share of loss of an equity investee                                         329,782               510,000
  Impairment of investment in equity investee                               1,422,708                    --
  Changes in operating assets and liabilities:
     Accounts receivable                                                      164,077             1,356,051
     Bills receivable                                                              --                37,087
     Inventories                                                             (144,452)              (80,372)
     Prepaid expenses and other current assets                                 65,410               (35,301)
     Accounts payable                                                         380,411            (1,373,377)
     Accrued payroll and employee benefits                                     50,000                (8,499)
     Customer deposits                                                         15,480                (4,266)
     Other accrued liabilities                                                (58,979)              223,631
     Income tax payable                                                       (10,449)                   --
     Amounts due to a director                                                     --               (24,410)
                                                                           ----------            ----------
Net cash used in operating activities                                        (712,082)           (1,362,949)
                                                                           ----------            ----------
Cash flows from investing activities
  Purchase of property, plant and equipment                                   (40,289)               (5,744)
  Proceeds from disposal of property, plant and equipment                         104                    60
  Additional contribution in capital                                               --             2,000,000
  Cash advance to an equity investee                                               --              (400,000)
  Payment to an equity investee                                              (100,032)             (614,458)
  Loan from an equity investee                                                     --               614,458
                                                                           ----------            ----------
Net cash from (used in) investing activities                                 (140,217)            1,594,316
                                                                           ----------            ----------
Cash flows from financing activities
  Repayment of bank loans                                                          --              (626,506)
  Increase in restricted cash                                                      --               659,000
                                                                           ----------            ----------
Net cash from financing activities                                                 --                32,494
                                                                           ----------            ----------
Effect of changes in exchange rate                                                192                    --
                                                                           ----------            ----------
Net (decrease) increase in cash and cash equivalents                         (852,107)              263,861
Cash and cash equivalents, beginning of year                                1,037,292               773,431
                                                                           ----------            ----------
Cash and cash equivalents, end of year                                        185,185             1,037,292
                                                                           ==========            ==========
Supplementary  disclosures of cash flow  information:
Cash paid during the year for:
    Interest                                                                       --                43,743
    Income taxes                                                                   --                    --
                                                                           ==========            ==========
Supplementary disclosures of significant non-cash transactions:
    Conversion of convertible loans and accrued loan interest
      in connection with reverse merger                                            --             1,185,951
    Shares created in reverse merger                                               --                (4,134)
    Conversion of common stock to series A preferred stock in
      connection with reverse merger                                               --                10,000
    Issuance of shares for a 2 for 1 stock dividend                                --                 5,000
    Issuance of common stock as compensation to a director                     67,500                    --
                                                                           ==========            ==========
</TABLE>



          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

1.  Organization and Basis of Financial Statements

      General Components,  Inc. (the "Company" or "GCI") was organized under the
laws of the State of Nevada  corporation on January 14, 2000,  under the name of
Pro-Active Solutions,  Inc. ("Pro-Active").  On July 7, 2004, Pro-Active changed
its name to General Components,  Inc., which had only limited operations and had
been a development stage company.

      On  September  24,  2004,  GCI  and  the  Shareholders  group  of  General
Components, Inc., ("GCI-Cayman"),  a Cayman Islands corporation,  (collectively,
"Shareholders")  closed  the  transactions  contemplated  by the share  exchange
agreement (the "Share  Exchange  Agreement") of September 24, 2004.  Pursuant to
the Share Exchange  Agreement,  Shareholders  have agreed to transfer to GCI and
GCI has agreed to acquire from the Shareholders all of the shares,  which shares
constitute 100% of the outstanding capital stock of GCI-Cayman,  in exchange for
20 million shares of GCI's common stock to be issued on the closing date,  which
shares shall constitute 80% of the issued and outstanding shares of GCI's common
stock  immediately  after the closing of the  transactions.  This share exchange
transaction resulted in those Shareholders  obtaining a majority voting interest
in GCI. Generally accepted accounting  principles require that the company whose
shareholders  retain the majority  interest in a combined business be treated as
the  acquirer  for  accounting  purposes,  resulting  in a reverse  acquisition.
Accordingly,  the  share  exchange  transaction  has  been  accounted  for  as a
recapitalization  of GCI.  The  financial  year end date of GCI has been changed
from May 31 to December 31 effective  from the financial year ended December 31,
2004.

      In  September  2004,  a stock  purchase  agreement  (the  "Stock  Purchase
Agreement") was signed between GCI and a purchaser (the  "Purchaser").  Pursuant
to the Stock Purchase Agreement,  the Purchaser agrees to purchase 20% shares of
the  outstanding  common stock of GCI,  subsequent to any shares changes arising
from the Share Exchange Agreement as well as the Stock Purchase Agreement, for a
consideration of US$2 million.

      Stockholders  of record as of October 14,  2004 of the Company  received a
share  dividend  on  October  25,  2004 of one  share of  common  stock for each
outstanding  share  of  common  stock  of  the  Company  (the  "Dividend").  The
transaction  increased  the total number of  outstanding  shares of common stock
from 5,000,000 to 10,000,000.  Prior to the payment of the Dividend, the Company
effected a  recapitalization  of the Company pursuant to which 20,000,000 shares
of the Company's  outstanding  common stock were exchanged for 10,000,000 shares
of the Company's Series A Preferred Stock.

      Each  share of Series A  Preferred  Stock was  convertible  into eight (8)
shares of common  stock and each share of Series A Preferred  Stock was entitled
to eight (8) votes, voting together with the holders of common stock as a single
class.  All the shares of Series A Preferred  Stock were  converted  into Common
Stock on May 27, 2005,  resulting in the Company's issuing  80,000,000 shares of
common  stock to the  holders of the Series A  Preferred  Stock and the Series A
Preferred Stock being canceled.

      The principal  activity of the Company and its  subsidiaries is to provide
broadband  technology  for the "last mile" market.  The  Company's  products are
produced  by OEM  manufacturers  and sold  under the  "General  Components"  and
"Reachhome" brands. The Company has also developed plastic optical fiber ("POF")
cable technology and related networking equipment. The Company has filed patents
in the USA and Asia on its  proprietary POF  technology,  related  manufacturing
process and production  machinery.  The Company currently offers a wide range of
entry-level to high-end modular,  upgradeable systems in the last mile broadband
connectivity  market.  It also  licenses its POF  technology  and  manufacturing
process to and procures the production machinery for selected partner customers.
In 2005,  the POF  global  market did not  develop  as  rapidly  as the  Company
anticipated.  The Company has deferred the  commercialization  and launch of POF
products. Consequently, the Company has ceased research and development on POF.

      The  Company  has  developed  a new  product  line of Voice Over  Internet
Protocol  ("VoIP") by  application  of specific  software and technology of soft
switch  for  provision  of voice  communication  services  within  the  internet
environment.  The Company has signed a reseller  agreement  with the supplier to
become its sole software distributor of enterprise VoIP products in China.

      The Company's consolidated financial statements have been presented on the
basis that it is a going concern,  which  contemplates the realization of assets
and the  satisfaction  of  liabilities  in the normal  course of  business.  The
Company has suffered  recurring losses from operations,  negative cash flow from
operations of US$712,082 for the year ended December 31, 2005, and has a working
capital  deficit of US$143,660  and a  stockholders'  deficit of US$32,118 as of
December 31, 2005.  The  management  has to implement a  reorganization  plan of
cutting operating cost and stimulate sales in 2006 to maintain normal operations
and improve the  performance of the Company.  There can be no assurance that the
Company will have the ability to  implement  its  business  plan and  ultimately
attain  profitability.  The financial  statements do not include any adjustments
relating to the  recoverability  and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.

2.  Summary of Significant Accounting Policies

      Principles  of  consolidation-The   consolidated   financial   statements,
prepared in accordance  with  generally  accepted  accounting  principles in the
United States of America, include the assets,  liabilities,  revenues,  expenses
and cash flows of all subsidiaries. Intercompany balances, transactions and cash
flows are eliminated on consolidation.

      Intangible assets- Patents are measured initially at cost and amortized in
a  straight-line  basis over their estimated  useful lives,  which is on average
five years.

      Cash and cash  equivalents-Cash and cash equivalents include cash on hand,
cash  accounts,  interest  bearing  savings  accounts and time  certificates  of
deposit with a maturity of three months or less when purchased.

      Inventories-Inventories  are stated at the lower of cost or market.  Cost,
which comprises  direct materials and other direct costs that have been incurred
in  bringing  the  inventories  to their  present  location  and  condition,  is
calculated using the weighted average method.


                                      F-6
<PAGE>

                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

2.  Summary of Significant Accounting Policies - Continued

      Property, plant and equipment-Property,  plant and equipment are stated at
cost including the cost of improvements.  Maintenance and repairs are charged to
expense as incurred.  Depreciation and amortization are provided on the straight
line method based on the estimated useful lives of the assets as follows:

Furniture, fixtures and equipment       5 - 7 years
Motor vehicles                          5 years
Leasehold improvements                  the shorter of 5 years or the lease term

      Valuation of  long-lived  assets-The  Company  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. 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.

      Revenue recognition-Sales of goods are recognized when goods are delivered
and  title  of  goods  sold  has  passed  to the  purchaser  and no  significant
post-delivery obligations remain.

      Comprehensive income-Accumulated other comprehensive income represents the
foreign  currency  translation  adjustments and is included in the  consolidated
statement of stockholders' equity.

      Shipping  and  handling  costs-Shipping  and  handling  costs  related  to
delivery of finished  goods are  included in selling  expenses.  During the year
ended  December  31, 2005 and 2004,  shipping  and  handling  costs  expensed to
selling expenses were US$39,062 and US$52,418, respectively.

      Income  taxes-Income taxes are provided on an asset and liability approach
for financial  accounting and reporting of income taxes. Current tax is based on
the  profit  or loss  from  ordinary  activities  adjusted  for  items  that are
non-assessable  or disallowable  for income tax purpose and is calculated  using
tax rates that have been enacted or  substantively  enabled at the balance sheet
date.  Deferred income tax liabilities or assets are recorded to reflect the tax
consequences in future years of differences  between the tax basis of assets and
liabilities  and the financial  reporting  amounts at each year end. A valuation
allowance is recognized if it is more likely than not that some portion, or all,
of a deferred tax asset will not be realized.

      Foreign currency translation-The  consolidated financial statements of the
Company are presented in United States Dollars ("US$").  Transactions in foreign
currencies  during  the  year are  translated  into  US$ at the  exchange  rates
prevailing at the transaction dates. Monetary assets and liabilities denominated
in foreign  currencies at the balance sheet date are translated  into US$ at the
exchange rates prevailing at that date.  Non-monetary assets and liabilities are
stated at  historical  rates.  All  exchange  differences  are dealt with in the
income statement.

      On consolidation,  the financial statements of subsidiaries are translated
from Hong Kong  dollars  ("HK$")  and  Renminbi  ("RMB"),  being the  functional
currencies of all of the  Company's  subsidiaries,  into US$ in accordance  with
SFAS  No.  52,  "Foreign  Currency  Translation".  Accordingly  all  assets  and
liabilities are translated at the exchange rates prevailing at the balance sheet
dates and all income and  expenditure  items are translated at the average rates
for each of the years.  The  exchange  rate between the RMB and the weighted US$
used for the years ended  December 31, 2005 and 2004 were RMB8.0702 to US$1.0000
and RMB8.3 to US$1.0,  respectively;  and the HK$ and the US$ used for the years
ended December 31, 2005 and 2004 were both HK$7.80 to US$1.00.

      Post-retirement   and   post-employment   benefits-The   Company  and  its
subsidiaries  contribute  to a  state  pension  scheme  in  respect  of its  PRC
employees  and a  mandatory  provident  fund  scheme in respect of its Hong Kong
employees.  Other than the  above,  neither  the  Company  nor its  subsidiaries
provide any other post-retirement or post-employment benefits.


                                      F-7
<PAGE>

                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

2.  Summary of Significant Accounting Policies - Continued

      Net loss per share- Basic net loss per share calculated in accordance with
SFAS No.  128,  "Earnings  Per  Share".  Basic net loss per share is computed by
dividing  net loss to common  stockholders  by the  weighted  average  number of
common shares outstanding during the period.  Diluted net income per share gives
effect to all dilutive  potential common shares  outstanding  during the period.
The weighted average number of common shares  outstanding is adjusted to include
the number of additional  common shares that would have been  outstanding if the
dilutive  potential common shares had been issued. In computing the dilutive net
income per share,  the average share price for the period is used in determining
the number of shares  assumed to be reacquired  under the treasury  stock method
from the exercise of stock.

      The Company has not included the Series A preferred  stock as common stock
equivalents  because the effect would be  anti-dilutive.  The number of dilutive
common  stocks  that  would  be  added  to the  weighted  average  common  stock
outstanding  if their effect was not  anti-dilutive  is 80,000,000  for the year
ended December 31, 2004. There was no outstanding Series A preferred stock as of
December 31, 2005.

      Use of estimates- The  preparation  of financial  statements in conformity
with  generally  accepted  accounting  principles  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.

      Recent  changes in accounting  standards - In December 2004, the Financial
Accounting  Standards  Board  ("FASB")  issued  SFAS  No.  123  (revised  2004),
"Share-Based  Payment",  which is a revision  of SFAS No. 123,  "Accounting  for
Stock-Based  Compensation",  SFAS  No.  123(R)  supersedes  APB  Opinion  No.25,
"Accounting  for Stock Issued to Employees and amends SFAS No.95,  "Statement of
Cash  Flows".  Generally,  the  approach  in SFAS  No.123(R)  is  similar to the
approach  described  in SFAS No.  123.  However,  SFAS  No.123(R)  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the income  statement based on their fair values.  Pro forma
disclosure is no longer an alternative. SFAS No. 123(R) was to be effective from
the  beginning of the first  interim or annual  reporting  period after June 15,
2005.  In April  2005,  the  Securities  and  Exchange  Commission  delayed  the
implementation  of SFAS 123(R).  As a result,  SFAS 123(R) will be effective for
small business  issuers from the beginning of the first annual  reporting period
after December 15, 2005,  which is the fiscal year ending  December 31, 2006 for
the Company.  The adoption of SFAS NO. 123(R) is not expected to have a material
effect  on  the  Company's   consolidated   financial  position  or  results  of
operations.

      In December 2004, the FASB issued SFAS No. 153,  Exchanges of Non-monetary
Assets,  an  amendment  of APB  Opinion  No.  29.  SFAS No.  153  addresses  the
measurement  of  exchanges of  non-monetary  assets and  redefines  the scope of
transactions  that  should be  measured  based on the fair  value of the  assets
exchanged.  SFAS No. 153 is effective for non-monetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005, which is the fiscal year ending
December 31, 2006 for the Company.  The adoption of SFAS No. 153 is not expected
to have a material effect on the Company's  consolidated  financial  position or
results of operations.

      In May 2005,  the FASB issued SFAS No. 154,  Accounting  Changes and Error
Corrections ("SFAS No. 154"), which replaces Accounting Principles Board Opinion
No. 20,  Accounting  Changes  and SFAS No. 3,  Reporting  Accounting  Changes in
Interim  Financial  Statements.  SFAS No. 154 changes the  requirements  for the
accounting for and reporting of a change in accounting  principles.  It requires
retrospective  application to prior periods' financial  statements of changes in
accounting  principles,  unless it is  impracticable  to  determine  either  the
period-specific  effects or the cumulative effect of the change.  This statement
is effective for  accounting  changes and  corrections  of errors made in fiscal
years beginning after December 15, 2005. The impact on the Company's  operations
will  depend  on future  accounting  pronouncements  or  changes  in  accounting
principles.

3.  Inventories

      Inventories by major categories are summarized as follows:

                                                          2005          2004
                                                           US$           US$

Merchandise                                              790,352      641,741
Less: allowances for inventories                        (221,414)     (59,867)
                                                     ------------  -------------
                                                         568,938      581,874
                                                     ============  =============


                                      F-8
<PAGE>

                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

4.  Property, Plant and Equipment

      Property, plant and equipment consist of the following:

                                                           2005          2004
                                                            US$           US$
At cost:
Furniture, fixtures and equipment                          304,862      265,367
Motor vehicles                                              56,523       54,959
Leasehold improvements                                      19,311       18,776
                                                        -----------  -----------
Total                                                      380,696      339,102

Less: accumulated depreciation                            (269,154)    (215,966)
                                                        -----------  -----------
Net book value                                             111,542      123,136
                                                        ===========  ===========

      Depreciation for the years ended December 31, 2005 and 2004 were US$52,322
and US $40,885, respectively.

5.  Investment In and Advances To Equity Investee

                                                           2005          2004
                                                           US$           US$
Investment cost                                                 --           --
Amount due from investee                                 1,860,032    1,760,000
Share of losses                                           (437,324)    (262,482)
Impairment of investment                                (1,422,708)          --
                                                        -----------  -----------
                                                                --    1,497,518
                                                        ===========  ===========

      The Company holds a 20% equity interest in Nottingham  Technology  Limited
("Nottingham"),  formerly  known as Nottingham  Optical  Technology  Limited,  a
Sino-foreign joint venture  established in the PRC for the purpose of production
of POF  products.  The  consideration  for the equity  interest was satisfied by
means of a transfer of license to  technology  right - at a  recognized  capital
contribution  value of  US$1,549,398.  Since  the  technology  right  represents
self-generated  development  costs,  it has been  expensed  as  incurred  in the
Company's financial statements.  Accordingly, the investment cost of the Company
for the  establishment  of Nottingham was assigned with a zero value.  The joint
venture agreement specifies that the Company is responsible for establishing the
POF production line. The Company has employed Ramwell  Industrial Limited to set
up the  production  line.  Refer  to note 9 -  Related  Party  Transactions  for
details.

      As mentioned on note 1, due to unsatisfactory market conditions in the POF
market,  the  investment  in and advance to  Nottingham  were fully  impaired at
December 31, 2005.

      The amount due from an equity  investee  represents an unpaid amount of US
$1,760,000  in relation to machinery  sold by the Company to  Nottingham in 2002
and cash  advanced to  Nottingham  amounting  to US $100,000  during  2005.  The
balance is unsecured, interest free and repayable on demand.

6.  Intangible Assets

                                                           2005          2004
Patents:                                                    US$           US$

At cost                                                     67,373       67,373
Less: accumulated amortization and impairment              (67,373)     (40,602)
                                                        -----------  -----------
Net book value                                                  --       26,771
                                                        ===========  ===========

      Due to  unsatisfactory  market  conditions in the POF market,  all patents
were fully impaired at December 31, 2005.

7.  Other Accrued Liabilities

      Other accrued liabilities consist of the following:

                                                           2005          2004
                                                            US$           US$

Value added tax payable                                    170,793      218,563
Accrued expenses                                           145,922      153,638
Overpayment from trade debtors                              54,820       54,820
Others                                                      15,041       18,534
                                                        -----------  -----------
                                                           386,576      445,555
                                                        ===========  ===========


                                      F-9
<PAGE>

                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

8.  Income Taxes

      United States

      General  Components,  Inc. and General  Components,  Inc. (New Jersey),  a
wholly owned subsidiary of the Company, are incorporated in the United States of
America and are subject to United  States of America tax law. No  provision  for
income  taxes has been made as they have no  taxable  income  for the year.  The
applicable federal income tax rate for both of the years ended December 31, 2005
and 2004 is 34%.

      Cayman Islands

      GCI-Cayman,  a wholly owned subsidiary of the Company,  is incorporated in
the Cayman  Islands and,  under the current laws of the Cayman  Islands,  is not
subject to income taxes.

      People's Republic of China

      General  Components,  Inc.  (Beijing),  a wholly owned  subsidiary  of the
Company, is incorporated in the People's Republic of China ("PRC"). According to
relevant PRC tax  regulations,  High and New  Technology  Enterprises  operating
within a New Technology  Development  Zone are entitled to a reduced  Enterprise
Income Tax ("EIT") rate of 15%. The  subsidiary  is recognised as a High and New
Technology  Enterprise and  accordingly is subject to EIT of 15%. Under the same
incentive  scheme,  the  subsidiary is entitled to a full exemption from EIT for
each of the years ended  December 31, 2000,  2001 and 2002.  The  subsidiary  is
further  entitled to 50%  reduction  for EIT for 3 years from January 1, 2003 to
December 31,  2005.  No provision  for EIT has been made as the  subsidiary  has
incurred a loss for the years ended December 31, 2005 and 2004.

      Hong Kong

      General Components  Limited, a wholly owned subsidiary of the Company,  is
incorporated  in Hong Kong and is  subject  to Hong Kong  profits  tax law.  The
Company is subject to Hong Kong  taxation on its  activities  conducted  in Hong
Kong and income  arising in or derived from Hong Kong.  No provision for profits
tax has been made as the  subsidiary  has no taxable  income for the years ended
December 31, 2005 and 2004.  The  applicable  statutory  tax rate both years are
17.5%.

      As a result,  for the years ended December 31, 2005 and 2004,  there is no
provision for income taxes for the Company on a consolidated basis.

      A  reconciliation  between  the  provision  for income  taxes  computed by
applying the  statutory tax rate in the PRC, the tax  jurisdiction  in which the
principal  subsidiary  of the Company is located,  to income before income taxes
and the actual provision for income taxes is as follows:

<TABLE>
<CAPTION>

                                                                          2005          2004
                                                                           US$           US$

<S>                                                                    <C>            <C>
Tax calculated at PRC subsidiary domestic statutory rate of 33%        (1,180,671)    (629,508)
Effect of different tax rates in various jurisdictions                    704,002      306,204
Tax holidays and concessions                                              149,153       60,971
Tax effect of expenses not deductible for tax purpose                      10,615          599
Tax effect of revenue not subject to tax                                  (51,211)     (52,238)
Increase in valuation allowances                                          170,898      138,523
Tax effect of share of unused tax losses of an equity investee            193,380      168,300
Others                                                                      3,834        7,149
                                                                      -------------  ----------
                                                                               --           --
                                                                      =============  ==========
</TABLE>


                                      F-10
<PAGE>


                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

8.  Income Taxes - Continued

      The amount of unrecognized deferred tax assets is as follows:

<TABLE>
<CAPTION>

                                                                          2005         2004
                                                                          US$           US$

<S>                                                                       <C>           <C>
Future benefit of tax losses                                              604,584       443,886
Depreciation on property, plant and equipment
   in excess of related tax allowances                                      4,168         4,192
Temporary differences in recognition of sales                             (82,124)      (90,370)
Temporary differences in recognition of cost of sales                      33,375        24,159
Temporary differences in treatment of development costs                     1,775        24,559
Others                                                                      7,560        (7,986)
                                                                      -------------   ----------
Net deferred tax assets                                                   569,338       398,440
Valuation allowance for net deferred tax assets                          (569,338)     (398,440)
                                                                      -------------   ----------
Net deferred tax assets                                                         -             -
                                                                      =============   ==========
</TABLE>

9.  Related Party Transactions

      During the year ended  December 31, 2005 and 2004,  the Company sold goods
to Beijing Marrison World Business  Information Company Limited for US$6,267 and
US$217,136,  respectively.  Mr.  Simon  Mu,  director  of  the  Company,  has  a
controlling  interest in Beijing  Marrison  World Business  Information  Company
Limited.

      The  Company  paid  consultancy  service  fees to  Ramwell  Industrial  of
US$370,000 in the year ended December 31, 2004 as  compensation  for services in
accordance  with  the  contract  signed  in  2001  for  future  maintenance  and
engineering  consulting  services,   including  improving  the  POF  production,
reviewing the quality system and quality  assurance  system and so on. Mr. Bruce
Cole, a director of the Company, is a director of Ramwell Industrial Limited.

      The amount of US$500,000 due from Nottingham International Limited ("NIL")
represents  sales of  machineries  by the Company in 2002 which  amount  remains
outstanding at December 31, 2005. NIL holds a 40% equity  interest in Nottingham
Technology  Limited.  The amount is  interest-free,  unsecured  and repayable on
demand. Prior to August 2003, Mr. Simon Mu was a director of NIL. As of December
31,  2005,  the Company has made full  provision of the  outstanding  balance of
US$500,000 due from NIL.

10.  Commitments and Contingencies

      The Company leases  premises under various  operating  leases,  certain of
which  contain  escalation  clauses.  Rental  expenses  under  operating  leases
included in the statement of income were US$132,059 and US$122,189 for the years
ended December 31, 2005 and 2004, respectively.

      The Company was obligated under operating leases requiring minimum rentals
as follows:

                                                          2005
Years ending December 31                                   US$
2006                                                     112,264
2007                                                      60,450
                                                         --------
Total minimum lease payments                             172,714
                                                         ========

      Legal  proceedings  - The  Company  was  named as a  defendant  in  patent
infringement  suit filed by Panduit Corp.  ("Panduit")  in  connection  with its
patent  entitled  "Angled  Patch Panel With Cable  Support Bar For Network Cable
Racks".  Panduit filed the complaint in the United States District Court for the
Northern District of Illinois, Eastern Division on March 15, 2005. Panduit seeks
an injunction  against use of the patent and damages to be determined by a jury.
As of June 14, 2005,  the Notice of Dismissal  without  Prejudice has been filed
and the case was dismissed also.

      There are no other material  commitments and  contingencies as of December
31, 2005.


                                      F-11
<PAGE>


                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

11.  Stockholders' Equity (Deficit)

      Common stock

      In September  2004, in  connection  with the reverse  merger,  the Company
converted  the  convertible  loans and  accrued  interests  of  GCI-Cayman  into
1,045,537 common stock of the Company.

      In September 2004,  there were 5,000,000 shares of common stock created in
reverse merger.

      In November 2004, the Company converted  20,000,000 shares of common stock
into 10,000,000 shares of series A preferred stock.

      In November 2004, the Company issued  5,000,000 shares of common stock for
completion of a 2 for 1 stock dividend.

      In November 2004, the Company issued  10,000,000 shares of common stock in
a consideration of US$2,000,000.

      In January  2005,  the Company  issued  30,000  shares of common  stock as
compensation for a newly appointed director.

      In April 2005,  the Company  increased  its  authorized  common stock from
25,000,000 shares to 280,000,000 shares.

      On May 27,  2005,  the  Company  converted  10,000,000  shares of Series A
Preferred Stock into 80,000,000  shares of common stock.  There were no Series A
Preferred Stock outstanding at December 31, 2005.

      Series A preferred stock

      As mentioned in common stock, the Company  converted  20,000,000 shares of
common  stock into  10,000,000  shares of Series A  Preferred  Stock in November
2004. All of the Series A Preferred shares were converted into 80,000,000 shares
of common stock in May 2005.

12.  Employee Benefits

      The  Company  contributes  to a state  pension  scheme run by the  Chinese
government  in respect of its  employees in China.  The expense  related to this
plan, which is calculated at a range of 12%-22.5% of the average monthly salary,
was  US$21,592  and  US$18,195  for the years ended  December 31, 2005 and 2004,
respectively.

      According to the Mandatory Provident Fund ("MPF") legislation regulated by
the Mandatory  Provident Fund Schemes  Authority in Hong Kong,  with effect from
December  1,  2000,  the  Company is  required  to  participate  in a MPF scheme
operated by approved  trustees  in Hong Kong and to make  contributions  for its
eligible employees.  The contributions borne by the Company are calculated at 5%
of the salaries and wages  (monthly  contribution  is limited to 5% of HK$20,000
for each eligible employee) as calculated under the MPF legislation. The expense
related to the MPF in the years ended  December  31,  2005 and 2004  amounted to
US$2,831 and US$2,758, respectively.

13.  Operating Risk

      Concentrations of major customers and suppliers-A  substantial  percentage
of the  Company's  sales are made to the  following  customers and are typically
sold on an open account basis.

      Sales to major customers are summarized as follows:

<TABLE>
<CAPTION>

                                                              2005       2004
                                                             ------     ------
                                                               %           %
      <S>                                                    <C>        <C>
      Nanjing Railway Computer Engineering Co., Ltd           14.69         --
      Beijing CVC Communications Co., Ltd                     11.02         --
      Beijing Marrison World Business Information Limited        --      12.66
      Beijing He Xin Kang Information Technology Co., Ltd        --      12.60
</TABLE>


                                      F-12
<PAGE>


                            GENERAL COMPONENTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

13.  Operating Risk - Continued

      A substantial  percentage of the Company's merchandises are purchased from
the following suppliers.

      Purchase from major suppliers are summarized as follows:

<TABLE>
<CAPTION>

                                                          2005      2004
                                                         ------    ------
                                                            %         %
      <S>                                                <C>       <C>
      Surf Pu Technology Co., Ltd.                        38.66     27.06
      Surtec Industrial Inc.                              15.80      8.81
      Beijing Digital Telecom                                --     16.90
      Fujitsu i-Network Systems (Shanghai) Co., Ltd.         --     13.88
</TABLE>

      Credit  risk- The  Company is exposed to credit risk from its cash at bank
and fixed deposits and bills and accounts receivable. The credit risk on cash at
bank and fixed  deposits is limited  because the  counterparties  are recognized
financial  institutions.  Bills and accounts  receivable are subjected to credit
evaluations.  An allowance  has been made for  estimated  irrecoverable  amounts
which has been  determined  by  reference  to past  default  experience  and the
current economic environment.

      The Company is not exposed to any significant concentration of credit risk
because its exposure is spread over several financial  institutions and a number
of customers. The maximum amount of credit risk which the Group is exposed to at
the balance sheet date is represented  by the carrying  amounts of the Company's
financial assets.

      Foreign  currency  risk-  Most of the  transactions  of the  Company  were
settled in  Renminbi  and U.S.  dollars.  In the opinion of the  directors,  the
Company would not have significant foreign currency risk exposure.

      Fair value risk -The carrying  amounts of the following  financial  assets
and  financial  liabilities  approximate  to  their  fair  value,  cash and bank
balances, fixed deposits, interest in associate,  accounts and bills receivable,
prepayment,  deposits  and  other  receivables,  accounts  payable,  borrowings,
accrued liabilities and customer advances.

      Country  risk- The  Company  has  significant  investments  in China.  The
operating  results of the  Company may be  adversely  affected by changes in the
political and social  conditions in China, and by changes in Chinese  government
policies  with  respect  to laws and  regulations,  anti-inflationary  measures,
currency  conversion and remittance  abroad,  and rates and methods of taxation,
among  other  things.  There can be no  assurance,  however,  those  changes  in
political and other conditions will not result in any adverse impact.

14.  Fair Value of Financial Instruments

      Fair  value of the  amounts  due to or from  affiliates  and  stockholders
cannot  be  readily   determined   because  of  the  nature  of  related   party
transactions.

15.  Segment Information

      The Company's sales by geographic destination are as follows:

                                                        2005          2004
                                                         US$           US$

PRC                                                    1,374,533     1,564,765
Others                                                    87,353       149,692
                                                     ------------- ------------
Total net sales                                        1,461,886     1,714,457
                                                     ============= ============

      The location of the Company's identifiable assets are as follows:

                                                         2005          2004
                                                          US$           US$

PRC                                                      940,180     2,704,384
Hong Kong                                                 24,152     1,350,600
USA                                                       41,788        54,778
                                                     ------------- ------------
Net identifiable assets                                1,006,120     4,109,762
Intangible assets                                              -        26,771
                                                     ------------- ------------
                                                       1,006,120     4,136,533
                                                     ============= ============


                                      F-13
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of the  Section  13 or 15 or  15(d) 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 on the
28th day of April, 2006.

                                     GENERAL COMPONENTS, INC.


                                     By:    /s/ Simon Mu
                                            -----------------------------------
                                            Simon Mu
                                            Chief Executive Officer (Principal
                                            Executive Officer)

      In accordance  with the Securities  Exchange Act of 1934,  this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>

              Signature                                 Title                                Date
<S>                                     <C>                                            <C>
/s/ Simon Mu
-------------------------------         Chairman of the Board of Directors and Chief   April 28, 2006
Simon Mu                                Executive Officer

/s/ Bruce Cole
-------------------------------         Vice Chairman of the Board of Directors,       April 28, 2006
Bruce Cole                              President and Secretary

/s/ Jonathan Chan
-------------------------------         Chief Financial Officer (Principal             April 28, 2006
Jonathan Chan                           Accounting and Financial Officer) and
                                        Treasurer

/s/ Junichi Goto                        Director                                       April 28, 2006
-------------------------------
Junichi Goto

/s/ Regis Kwong                         Director                                       April 28, 2006
-------------------------------
Regis Kwong

/s/ Peter Wang                          Director                                       April 28, 2006
-------------------------------
Peter Wang
</TABLE>