EXHIBIT 10.1




                           STARWAY MANAGEMENT LIMITED
                                AND SUBSIDIARIES
                              FINANCIAL STATEMENTS
                     AS OF DECEMBER 31, 2003 (CONSOLIDATED)
                               AND 2002 (COMBINED)


<PAGE>

                           STARWAY MANAGEMENT LIMITED
                                AND SUBSIDIARIES


                                    CONTENTS


PAGE      1     INDEPENDENT AUDITORS' REPORT

PAGE      2     BALANCE SHEETS AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002
                (COMBINED)

PAGE      3     STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS
                ENDED DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)

PAGE      4     STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31,
                2003 (CONSOLIDATED) AND 2002 (COMBINED)

PAGE      5     STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003
                (CONSOLIDATED) AND 2002 (COMBINED)

PAGES  6 - 15   NOTES TO FINANCIAL STATEMENTS



<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors of:
Starway Management Limited

We have audited the accompanying  balance sheets of Starway  Management  Limited
and subsidiaries as of December 31, 2003 (consolidated) and 2002 (combined), and
the  related  statements  of  operations  and  comprehensive  loss,  changes  in
stockholders'  equity  and cash  flows for the years  ended  December  31,  2003
(consolidated)  and  2002  (combined).   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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  As audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes 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 financial statements referred to above present fairly in all
material  respects,  the financial  position of Starway  Management  Limited and
subsidiaries as of December 31, 2003  (consolidated) and 2002 (combined) and the
results of its  operations  and its cash flows for the years ended  December 31,
2003 (consolidated) and 2002 (combined) in conformity with accounting principles
generally accepted in the United States of America.

WEBB & COMPANY, P.A.

Boynton Beach, Florida
January 29, 2004


<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2003 AND 2002

                                     ASSETS

                                                       2003             2002
                                                  (Consolidated)     (Combined)
                                                   ------------    ------------
CURRENT ASSETS
 Cash                                              $     21,165    $     48,961
 Accounts receivable, net                             4,304,134       1,398,226
 Current maturities of notes receivable, net          2,201,523       1,073,978
 Inventories                                            533,453       1,654,844
 Prepaid expenses                                        71,582         237,694
                                                   ------------    ------------
     Total Current Assets                             7,131,857       4,413,703
                                                   ------------    ------------

PROPERTY AND EQUIPMENT - NET                            750,266         738,888
                                                   ------------    ------------
OTHER ASSETS
 Long-term notes receivable, net                     12,743,550       2,048,573
 Other receivables                                      252,700         353,551
 Intangible assets, net                                 227,627         255,827
 Other assets                                                --           9,614
                                                   ------------    ------------
     Total Other Assets                              13,223,877       2,667,565
                                                   ------------    ------------

TOTAL ASSETS                                       $ 21,106,000    $  7,820,156
                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable and accrued expenses             $  2,789,735    $  2,250,847
 Current portion note payable                            12,536              --
 Loans payable - related parties                         95,578         304,004
 Deposits                                                83,967         610,789
 Taxes payable                                        4,854,221         903,856
                                                   ------------    ------------
     Total Current Liabilities                        7,836,037       4,069,496
                                                   ------------    ------------
LONG-TERM LIABILITIES
 Note payable                                            17,440              --
                                                   ------------    ------------
     Total Long-Term Liabilities                         17,440              --
                                                   ------------    ------------

TOTAL LIABILITIES                                     7,853,477       4,069,496
                                                   ------------    ------------
STOCKHOLDERS' EQUITY
 Common stock, $0.116 par value, 10,000,000
  shares authorized, 100 shares issued and
  outstanding                                                11              11
 Additional paid-in capital                           1,333,333       1,333,322
 Retained earnings
  Unappropraited                                     11,284,368       2,366,694
  Appropriated                                          649,168         658,977
 Other comprehensive loss                               (14,357)         (2,283)
 Subscriptions receivable                                    --        (606,061)
                                                   ------------    ------------
     Total Stockholders' Equity                      13,252,523       3,750,660
                                                   ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 21,106,000    $  7,820,156
                                                   ============    ============

                 See accompanying notes to financial statements.

                                       2
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


                                                     For the          For the
                                                    Year Ended       Year Ended
                                                   December 31,     December 31,
                                                       2003             2002
                                                  (Consolidated)     (Combined)
                                                   ------------    -------------

REVENUE                                            $ 31,057,877    $  7,914,658

COST OF GOODS SOLD                                   19,748,263       4,989,797
                                                   ------------    ------------

GROSS PROFIT                                         11,309,614       2,924,861
                                                   ------------    ------------
OPERATING EXPENSES
 Selling expense                                      1,011,627         285,303
 Operating expense                                      155,780         225,589
 General and administrative expenses                    971,621         613,204
                                                   ------------    ------------
      Total Operating Expenses                        2,139,028       1,124,096
                                                   ------------    ------------

INCOME FROM OPERATIONS                                9,170,586       1,800,765
                                                   ------------    ------------
OTHER INCOME (EXPENSE)
 Interest income                                      1,607,373         389,253
 Interest expense                                          (573)           (118)
 Other expense                                               --            (933)
 Other income                                            10,375              --
                                                   ------------    ------------
      Total Other Income                              1,617,175         388,202
                                                   ------------    ------------

NET INCOME BEFORE PROVISION FOR INCOME TAXES         10,787,761       2,188,967

PROVISION FOR INCOME TAXES                            1,879,896         401,086
                                                   ------------    ------------

NET INCOME                                         $  8,907,865    $  1,787,881

OTHER COMPREHENSIVE INCOME
 Foreign currency translation gain (loss)          $    (12,074)   $      1,544
                                                   ------------    ------------

COMPREHENSIVE INCOME                               $  8,895,791    $  1,789,425
                                                   ============    ============

Net income per share - basic and diluted           $  89,078.65    $  17,878.81
                                                   ============    ============
Weighted average number of shares
outstanding - basic and diluted                             100             100
                                                   ============    ============


                 See accompanying notes to financial statements.

                                        3
<PAGE>

                    STARWAY MANAGEMENT LIMITED AND SUBSIDIARY
                       STATEMENTS OF STOCKHOLDERS' EQUITY
    FOR THE YEARS ENDED DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)

<TABLE>
<CAPTION>
                                                              Unappropri-    Appropri-      Other
                                                 Additional      ated           ated      Comprehen-
                                 Common Stock      Paid-In     Retained      Retained        sive      Subscription
                                Shares  Amount    Capital      Earnings      Earnings        Gain      Receivable         Total
                                ------  ------   ----------   -----------    ---------    ----------   ------------    -----------
<S>                              <C>    <C>      <C>          <C>            <C>          <C>          <C>             <C>
December 31, 2001                  100  $   11   $1,333,322   $ 1,037,829    $ 199,961    $   (3,827)  $   (727,272)   $ 1,840,024

Cash received from
 subscription receivable            --      --           --            --           --            --        121,211        121,211

Other comprehensive gain            --      --           --            --           --         1,544             --          1,544

Net income for 2002                 --      --           --     1,787,881           --            --             --      1,787,881
                                                                                                                       -----------
Comprehensive income                --      --           --            --           --            --             --      1,789,425
                                                                                                                       ===========
Appropriated retained
 earnings                           --      --           --      (459,016)     459,016            --             --             --
                                ------  ------   ----------   -----------    ---------    ----------   ------------    -----------

Balance, December 31, 2002
 (Combined)                        100      11    1,333,322     2,366,694      658,977        (2,283)      (606,061)     3,750,660

Cash received from
  subscription receivable           --      --           --            --           --            --        606,061        606,061

Contributed capital by
 stockholders                       --      --           11            --           --            --             --             11

Other comprehensive income          --      --           --            --           --       (12,074)            --        (12,074)

Net income for 2003                 --      --           --     8,907,865           --            --             --      8,907,865
                                                                                                                       -----------
Comprehensive loss                  --      --           --            --           --            --             --      8,895,791
                                                                                                                       ===========
Appropriated retained earnings      --      --           --         9,809       (9,809)           --             --             --
                                ------  ------   ----------   -----------    ---------    ----------   ------------    -----------

BALANCE, DECEMBER 31, 2003
 (CONSOLIDATED)                    100  $   11   $1,333,333   $11,284,368    $ 649,168    $  (14,357)  $         --    $13,252,523
                                ======  ======   ==========   ===========    =========    ==========   ============    ===========
</TABLE>


                 See accompanying notes to financial statements.

                                        4
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                             For the          For the
                                                            Year Ended       Year Ended
                                                           December 31,     December 31,
                                                               2003             2002
                                                          (Consolidated)     (Combined)
                                                           ------------    -------------
<S>                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Income                                                $  8,907,865    $  1,787,881
 Adjustments to reconcile net income to net
  cash used in operating activities:
 Depreciation and amortization                                  104,306          91,042
 Allowance for doubtful accounts                                465,422         301,288
 Changes in operating assets and liabilities:
  (Increase) decrease in:
    Accounts receivable                                     (15,193,852)     (3,693,119)
    Inventories                                               1,121,391      (1,235,177)
    Prepaid expenses                                            166,113        (237,694)
    Other receivables                                           100,851          57,809
    Other assets                                                  9,614              --
  Increase (decrease) in:
    Accounts payable                                            538,886       1,534,109
    Customer deposits                                          (526,822)        152,073
    Taxes payable                                             3,950,365         874,971
                                                           ------------    ------------
         Net Cash Used In Operating Activities                 (355,861)       (366,817)
                                                           ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of intangible assets                                       --         (40,459)
 Purchase of property and equipment                             (49,544)        (16,213)
                                                           ------------    ------------
         Net Cash Used In Investing Activities                  (49,544)        (56,672)
                                                           ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds (payments) on loans payable - related parties        (208,426)        347,179
 Payments on notes payable                                       (7,964)             --
 Proceeds from issuance of common stock                         606,073         121,211
                                                           ------------    ------------
         Net Cash Provided By Financing Activities              389,683         468,390
                                                           ------------    ------------

EFFECT OF EXCHANGE RATE ON CASH                                 (12,074)          1,544

NET INCREASE (DECREASE) IN CASH                                 (27,796)         46,445

CASH - BEGINNING OF PERIOD                                       48,961           2,516
                                                           ------------    ------------
CASH - END OF PERIOD                                       $     21,165    $     48,961
                                                           ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense                             $        573    $        118
                                                           ============    ============
</TABLE>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During  2003,  the Company  issued an  installment  note  payable of $37,940 for
property and equipment.


                 See accompanying notes to financial statements.

                                        5
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

     (A)  ORGANIZATION AND BASIS OF PRESENTATION

     Starway  Management  Limited was incorporated in the British Virgin Islands
     on September 15, 1998.

     Shenzhen  Dicken  Technology  Development  Limited was  incorporated in the
     Republic of China on November 9, 1999.

     Shenzhen  Dicken  Industrial  Development  Limited was  incorporated in the
     Republic of China on November 20, 1996.

     Starway Management Limited through its two wholly owned subsidiaries,  is a
     People's  Republic of China  ("PRC")  based  manufacturer  of energy saving
     products for use in commercial and industrial settings.

     During 2003,  Shenzhen Dicken Technology  Development  Limited and Shenzhen
     Dicken Industrial Development Limited exchanged 100% of their common shares
     for 100 shares of Starway Management  Limited under a reorganization  plan.
     The transfer has been accounted for as a  reorganization  of entities under
     common  control  as the  companies  were  beneficially  owned by  identical
     shareholders  and share common  management  and  technology.  The financial
     statements  have  been  prepared  as if  the  reorganization  had  occurred
     retroactively.

     The  accompanying  2003  consolidated   financial  statements  include  the
     accounts  of Starway  Management  Limited  and its 100% owned  subsidiaries
     Shenzhen  Dicken  Technology   Development   Limited  and  Shenzhen  Dicken
     Industrial Development Limited.

     The accompanying 2002 combined financial statements include the accounts of
     Starway Management Limited,  Shenzhen Dicken Technology Development Limited
     and Shenzhen Dicken Industrial Development Limited.

     All material intercompany balances and transactions have been eliminated in
     consolidation and combination.

     Starway Management Limited,  Shenzhen Dicken Technology Development Limited
     and Shenzhen Dicken Industrial  Development  Limited are hereafter referred
     to as the "Company".

     (B)  USE OF ESTIMATES

     In preparing  financial  statements in conformity  with generally  accepted
     accounting  principles,  management  is  required  to  make  estimates  and
     assumptions  that affect the reported amounts of assets and liabilities and
     the  disclosure of  contingent  assets and  liabilities  at the date of the
     financial  statements and revenues and expenses during the reported period.
     Actual results could differ from those estimates.

                                        6
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


     (C)  CASH AND CASH EQUIVALENTS

     For purposes of the cash flow statements,  the Company considers all highly
     liquid investments with original  maturities of three months or less at the
     time of purchase to be cash equivalents.

     (D)  NOTES RECEIVABLE

     The Company  carries its notes  receivable  at the net present value of the
     notes, net of allowance for doubtful accounts.

     (E)  INVENTORY

     Inventory  is  stated  at the lower of cost or  market  value,  cost  being
     determined on a first-in, first-out (FIFO) method.

     (F)  PROPERTY AND EQUIPMENT

     The  Company's  property and  equipment  are stated at the lower of cost or
     estimated  fair market value on the date of  acquisition.  Depreciation  is
     provided over the estimated  useful lives of the  respective  assets on the
     straight-line basis from five to fifteen years.

     (G)  INTANGIBLES

     Under the Statement of Accounting Standards ("SFAS") No. 142, "Goodwill and
     Other  Intangible  Assets",  all  goodwill  and certain  intangible  assets
     determined  to have  indefinite  lives  will not be  amortized  but will be
     tested for  impairment  at least  annually.  Intangible  assets  other than
     goodwill will be amortized over their useful lives of 10 years and reviewed
     for impairment in accordance with SFAS No. 144,  "Accounting for Impairment
     or Disposal of Long-Lived Assets".

     (H)  IMPAIRMENT OF LONG-LIVED ASSETS

     Per  SFAS  No.  144,  long-lived  assets  will  be  analyzed  annually  for
     indications of impairment.  Impairment of long-lived  assets is assessed by
     the Company whenever there is an indication that the carrying amount of the
     asset may not be recovered. Recoverability of these assets is determined by
     comparing the forecasted  undiscounted cash flows generated by those assets
     to the assets' net carrying value.  The amount of impairment  loss, if any,
     is measured as the difference  between the net book value of the assets and
     the estimated fair value of the related assets.



                                       7
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


     The Company evaluates the  recoverability of long-lived assets by measuring
     the carrying amount of the assets against the estimated undiscounted future
     cash  flows  associated  with  them.  At the time  such  flows  of  certain
     long-lived  assets are not sufficient to recover the carrying value of such
     assets, the assets are adjusted to their fair values.

     (I)  REVENUE AND DEFERRED REVENUE RECOGNITION

     The Company  recognizes product sales made for cash, on normal credit terms
     of 30 days or less and over extended payment terms. The Company  recognizes
     revenue when  persuasive  evidence of an arrangement  exists,  the seller's
     price to the buyer is fixed or determinable,  collectability  is reasonably
     assured and delivery has occurred.  The Company grants  customers  extended
     payment terms under contracts of sale.  These contracts are generally for a
     period  of  one  to  five  years  at  prevailing  interest  rates  and  are
     collateralized by the related equipment, which if repossessed,  may be less
     than the receivable  balance  outstanding.  The Company  recognizes revenue
     under profit sharing agreements when the amounts are fixed and determinable
     and collectability is reasonably assured.

     (J)  FOREIGN CURRENCY TRANSLATION

     The  functional  currency  of the  Company  is the  Chinese  Renminbi.  The
     financial statements of the Company are translated to United States dollars
     using  year-end  exchange  rates as to assets and  liabilities  and average
     exchange rates as to revenues and expenses. Capital accounts are translated
     at their historical exchange rates when the capital  transaction  occurred.
     Net gains and losses  resulting  from  foreign  exchange  translations  are
     included in the statements of operations and stockholders'  equity as other
     comprehensive income.

     (K)  COMPREHENSIVE INCOME (LOSS)

     The  foreign   currency   translation  gain  or  loss  resulting  from  the
     translation of the financial  statements  expressed in Chinese  Renminbi to
     United  States  dollars is  reported as other  comprehensive  (loss) in the
     statement of operations and stockholders' equity.

     (L)  INCOME TAXES

     The Company  accounts  for income  taxes under the  Statement  of Financial
     Accounting  Standards No. 109,  "Accounting  for Income Taxes"  ("Statement
     109").  Under  Statement  109,  deferred  tax  assets and  liabilities  are
     recognized  for the future tax  consequences  attributable  to  differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
     liabilities  are  measured  using  enacted  tax rates  expected to apply to
     taxable  income  in the  years in which  those  temporary  differences  are
     expected to be recovered  or settled.  Under  Statement  109, the effect on
     deferred tax assets and  liabilities of a change in tax rates is recognized
     in income in the period that  includes the enactment  date.  The Company is
     organized in the British Virgin Islands and the People's  Republic of China
     and no tax benefit is expected from the tax credits in the future (See Note
     12).

                                       8
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


     (M)  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  carrying  amounts of the  Company's  financial  instruments  including
     accounts  receivable,  stockholder loans and notes payable approximate fair
     value due to the relatively short period to maturity of these instruments.

     The fair value of short-term and long-term notes  receivable was determined
     using a discounted  cash flow  analysis  based on the  Company's  borrowing
     rate.  At December  31, 2003 and 2002,  the  carrying  value of these notes
     approximated the fair value.

     (N)  EARNINGS PER SHARE

     Basic and  diluted net income per common  share is computed  based upon the
     weighted  average  common  shares   outstanding  as  defined  by  Financial
     Accounting Standards No. 128, "Earnings Per Share." As of December 31, 2003
     and 2002, there were no common stock equivalents.

     (O)  BUSINESS SEGMENTS

     The Company  operates in one segment and therefore  segment  information is
     not presented.

     (P)  CONCENTRATION OF RISKS

     During  2003 and 2002,  100% of the  Company's  sales  were from  companies
     located in China.  During 2003 and 2002, 13% and 17% of the Company's sales
     were from one customer, respectively.

     The  Company's   operations  may  be  adversely   affected  by  significant
     political, economic and social uncertainties in China. Although the Chinese
     government has pursued  economic reform  policies in the past,  there is no
     assurance that the Chinese government will continue to pursue such policies
     or that such policies may not be significantly  altered,  especially in the
     event  of a  change  in  leadership,  social  or  political  disruption  or
     unforeseen  circumstances  affect  China's  political,  economic and social
     conditions.  There  is also no  guarantee  that  the  Chinese  government's
     pursuit of economic reforms will be consistent or effective.

     (Q)  NEW ACCOUNTING PRONOUNCEMENTS

     In January  2003,  the FASB issued FIN No. 46,  "Consolidation  of Variable
     Interest  Entities,  and  Interpretation  of ARB 51".  FIN No. 46  provides
     guidance on the  identification  of  entities of which  control is achieved
     through means other than voting  rights  ("variable  interest  entities" or
     "VIE's") and how to determine  when and which  business  enterprise  should
     consolidate the VIE (the "Primary  Beneficiary").  In addition,  FIN No. 46

                                       9
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)



     required that both the Primary Beneficiary and all other enterprises with a
     significant  variable  interest in a VIE make additional  disclosures.  The
     transitional  disclosure  requirements  of FIN No. 46 are  required  in all
     financial  statements  initially  issued after January 31, 2003, if certain
     conditions  are met.  The  adoption  of this  pronouncement  did not have a
     material  effect  on  the  Company's   financial  position  or  results  of
     operations.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments  and Hedging  Activities".  SFAS No. 149 amends and
     clarifies  financial  accounting and reporting for derivative  instruments,
     including  certain  derivative  instruments  embedded  in  other  contracts
     (collectively  referred to as derivatives) and for hedging activities under
     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities".  The changes in SFAS No. 149 improve  financial  reporting  by
     requiring that contracts with comparable  characteristics  be accounted for
     similarly.  This  statement  is  effective  for  contracts  entered into or
     modified  after June 30, 2003 and all of its  provisions  should be applied
     prospectively.

     In May 2003,  the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement of Financial  Accounting  Standards ("SFAS") No. 150, "Accounting
     For Certain Financial  Instruments with Characteristics of both Liabilities
     and  Equity".  SFAS No. 150 changes the  accounting  for certain  financial
     instruments with characteristics of both liabilities and equity that, under
     previous  pronouncements,  issuers  could  account  for as equity.  The new
     accounting   guidance  contained  in  SFAS  No.  150  requires  that  those
     instruments be classified as liabilities in the balance sheet.

     SFAS  No.  150  affects  the  issuer's   accounting   for  three  types  of
     freestanding  financial  instruments.  One type is  mandatorily  redeemable
     shares,  which the issuing company is obligated to buy back in exchange for
     cash or other  assets.  A second  type  includes  put  options  and forward
     purchase contracts,  which involves  instruments that do or may require the
     issuer to buy back some of its shares in exchange for cash or other assets.
     The third type of instruments that are liabilities  under this Statement is
     obligations that can be settled with shares, the monetary value of which is
     fixed,  tied solely or  predominantly to a variable such as a market index,
     or varies  inversely  with the value of the issuer's  shares.  SFAS No. 150
     does not apply to features embedded in a financial instrument that is not a
     derivative in its entirety.

     Most of the  provisions  of SFAS No. 150 are  consistent  with the existing
     definition of  liabilities  of FASB Concepts  Statement No. 6, "Elements of
     Financial  Statements".  The  remaining  provisions  of this  statement are
     consistent  with the FASB's proposal to revise that definition to encompass
     certain  obligations  that a reporting entity can or must settle by issuing
     its own shares.  This  statement is  effective  for  financial  instruments
     entered  into or  modified  after  May 31,  2003  and  otherwise  shall  be
     effective at the beginning of the first interim period beginning after June
     15,  2003.  The  adoption of these  pronouncements  did not have a material
     effect on the Company's financial position or results of operations.

                                       10
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


NOTE 2  ACCOUNTS RECEIVABLE

     Accounts  receivable  as of  December  31, 2003 and 2002  consisted  of the
     following:

                                                   2003         2002
                                                ----------   ----------

        Accounts receivable                     $5,070,844   $1,699,514
        Less: allowance for doubtful accounts      766,710      301,288
                                                ----------   ----------
                                                $4,304,134   $1,398,226
                                                ==========   ==========

     For the years  ended  December  31, 2002 and 2001,  the Company  recorded a
     provision for doubtful accounts of $465,422 and $301,288, respectively.

NOTE 3  NOTES RECEIVABLE

     The  following  table  represents  as  of  December  31,  2003,   scheduled
     collections of notes receivable, net of allowances, by fiscal year:

            Year Ending December 31,
                     2004                             $ 2,201,523
                     2005                               4,228,446
                     2006                               3,506,152
                     2007                               3,184,090
                     2008                               1,824,862
                                                      -----------
                                                       14,945,073
           Less current portion of notes receivable     2,201,523
                                                      -----------
                                                      $12,743,550
                                                      ===========

NOTE 4  INVENTORIES

     Inventories as of December 31, 2003 and 2002 consisted of the following:

                                          2003              2002
                                       ----------        ----------

     Raw materials                     $   25,531        $  762,896
     Work in progress                      60,604            25,410
     Finished goods                       447,318           866,538
                                       ----------        ----------
                                       $  533,453        $1,654,844
                                       ==========        ==========

NOTE 5  PROPERTY AND EQUIPMENT

     Property and equipment as of December 31, are summarized as follows:

                                       11
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


                                          2003              2002
                                       ----------        ----------

     Buildings                         $  627,680        $  627,680
     Office equipment                      68,405            65,579
     Furniture and fixtures                41,649            41,649
     Plant, machinery and equipment        80,267           112,707
     Vehicle                              148,846            40,764
                                       ----------        ----------
                                          966,847           888,379
     Less accumulated depreciation        216,581           149,491
                                       ----------        ----------
     Property and equipment, net       $  750,266        $  738,888
                                       ==========        ==========

     Depreciation  expense  for the years ended  December  31, 2003 and 2002 are
     $76,106 and $64,864, respectively.

NOTE 6  INTANGIBLES

     The Company has licensed the use of several  patents from its founder for a
     period of ten years.  The  licenses  expire in July 2012.  The licenses are
     being   amortized   over  the  license   period  of  ten  years  using  the
     straight-line method (See Note 8).

                                          2003              2002
                                       ----------        ----------

     Intangible                        $  282,005        $  282,005
     Accumulated amortization              54,378            26,178
                                       ----------        ----------
     Intangible, net                   $  227,627        $  255,827
                                       ==========        ==========

     Amortization  expense  for the years ended  December  31, 2003 and 2002 are
     $28,200 and $26,178, respectively (See Note 8).

NOTE 7  NOTES PAYABLE

     Long-term obligations consisted of the following:

     Note payable to finance company, secured by automobile,
     interest at 4.12% per annum. Monthly payments of $1,122
     due through April 2006                                      $  29,976

     Less current maturities                                        12,536
                                                                 ---------
                                                                 $  17,440
                                                                 =========

                                       12
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


     Maturities are as follows:

             Year Ending December 31,
                      2004                                       $  12,536
                      2005                                          12,990
                      2006                                           4,450
                                                                 ---------
                                                                 $  29,976
                                                                 =========

NOTE 8  RELATED PARTY TRANSACTIONS

     During the year ended December 31, 2003,  stockholders were repaid $208,426
     of loans  payable.  The total  loans of  $95,578  are  payable  on  demand,
     non-interest bearing and unsecured.

     During the year ended  December 31, 2002,  stockholders  loaned the Company
     $304,004.

     During 2002, the Company licensed two patents from its founder for a period
     of ten years at their historical cost of $282,005 (See Note 6).

NOTE 9  TAXES PAYABLE

     Taxes payable at December 31, 2003 and 2002 consist of the following:

                                                  2002             2003
                                              U.S. Dollars     U.S. Dollars
                                              ------------     ------------

     Urban maintenance and construction tax   $      5,071     $     21,584
     Education tax                                  14,437           74,108
     Enterprise income tax                         401,570        2,281,467
     Value added tax                               482,778        2,477,062
                                              ------------     ------------
                                              $    903,856     $  4,854,221
                                              ============     ============

NOTE 10  COMMITMENTS AND CONTINGENCIES

     (A) OPERATING LEASES

     The Company  leases its facilities  under long term,  non cancelable  lease
     agreements expiring through June 2009. The non-cancelable  lease agreements
     provide that the Company pays certain operating expenses  applicable to the
     leased  premises.  Rent  expense for the years ended  December 31, 2003 and
     2002 was $35,929 and $18,543, respectively.

     The future  minimum  annual lease  payments  required  under the  operating
     leases are approximately:

                                       13
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


             Year Ending December 31,
                      2004                                       $  76,380
                      2005                                          59,270
                      2006                                          58,000
                      2007                                          58,000
                   Thereafter                                       87,000
                                                                 ---------
                                                                 $ 338,650
                                                                 =========

NOTE 11  STOCKHOLDERS' EQUITY

     (A) STOCK ISSUANCES

     During 1996, the Company issued 100 (post-reorganization)  shares of common
     stock to its founders for cash of $606,061 and subscriptions  receivable of
     $727,272.  The Company  received cash of $606,061 and $121,211  during 2003
     and 2002, respectively on the subscriptions receivable.

     During  2003,  stockholders  contributed  capital  of  $11 as  part  of the
     reorganization with Starway Management Limited.

     (B) APPROPRIATED RETAINED EARNINGS

     The  Company  is  required  to  make   appropriations  to  reserves  funds,
     comprising the statutory surplus reserve, statutory public welfare fund and
     discretionary surplus reserve,  based on after-tax net income determined in
     accordance with generally  accepted  accounting  principles of the People's
     Republic of China (the "PRC GAAP").  Appropriation to the statutory surplus
     reserve  should be at least 10% of the after tax net income  determined  in
     accordance  with  the PRC GAAP  until  the  reserve  is equal to 50% of the
     entities'  registered  capital.  Appropriations  to  the  statutory  public
     welfare  fund are at 5% to 10% of the after tax net  income  determined  in
     accordance  with  the  PRC  GAAP.  The  statutory  public  welfare  fund is
     established  for the purpose of  providing  employee  facilities  and other
     collective benefits to the employees and is non-distributable other than in
     liquidation.  Appropriations to the discretionary  surplus reserve are made
     at the discretion of the Board of Directors.

     The  Company's  subsidiaries  appropriated  $(9,809)  and  $459,016  to the
     reserve funds during 2003 and 2002, respectively, based on their net income
     under PRC GAAP.

NOTE 12  INCOME TAXES

     The Company  located its factories in a special  economic  region in China.
     This economic  region  allows  foreign  enterprises  a two-year  income tax
     exemption  beginning in the first year after they become  profitable  and a
     50%  reduction  in income tax for the next three years.  During  2003,  the


                                       14
<PAGE>

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
           AS OF DECEMBER 31, 2003 (CONSOLIDATED) AND 2002 (COMBINED)


     Company applied for the exemption,  but as of the date of this report,  has
     not received approval from the Chinese government. The Company has included
     a  provision  for income tax based on the current tax status of the Company
     at December 31, 2003 and 2002.

     The  Company is subject to central  government  income tax at a rate of 15%
     and provincial government income tax at a rate of 3%.

     The provision for income taxes at December 31 consisted of the following:

                                               2003              2002
                                            ----------        ----------

     Provision for China income tax         $1,566,580        $  334,238
     Provision for China local tax             313,316            66,848
                                            ----------        ----------
                                            $1,879,896        $  401,086
                                            ==========        ==========

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

                                               2003              2002
                                            ----------        ----------

     U.S. statutory rates                       34%               34%
     Foreign income not recognized in U.S.     (34)              (34)
     China income taxes                         18                18
                                            ----------        ----------
                                                18%               18%
                                            ==========        ==========


                                       15