---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
Amendment No. 2

|(Mark One)                                                |                                                                                    
|--------------------------------------------------------- | -----------------------------------------------------------------------------------
|x                                                         | QUARTERLY   REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                          |                                                                                    
|For the quarterly period ended   March 31, 2006          
|                                                          |                                                                                    
|o                                                         | TRANSITION   REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|                                                          |                                                                                    
|For the transition period from   __________ to __________
|                                                          |                                                                                    
|Commission file number 000-11991                         

|SORL AUTO   PARTS, INC.                                 
|--------------------------------------------------------
|                                                        
|(Exact name of registrant as   specified in its charter)

|DELAWARE                                                         |  | 30-0091294                         
|---------------------------------------------------------------- |  | -----------------------------------
|                                                                 |  |                                    
|(State or other jurisdiction of   incorporation or organization) |  | (IRS Employer Identification   No.)

|No. 1169 Yumeng Road                      
|------------------------------------------
|Ruian Economic Development District       
|Ruian City, Zhejiang Province             
|Peoples Republic Of China                
|                                          
|(Address of principal executive   offices)
|                                          
|86-577-6581-7720                          
|                                          
|(Registrants telephone number)           

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

| | Yes | x |  | No | o | 
| | --- | - |  | -- | - | 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

| | Large   Accelerated Filer | o | Accelerated   Filer | o | Non-Accelerated   Filer | x | 
| | ------------------------- | - | ------------------- | - | ----------------------- | - | 

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

| | Yes | o |  | No | x | 
| | --- | - |  | -- | - | 

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the registrant classes of common equity, as of the latest practicable date:

As of April 30, 2006 there were 13,346,555 shares of Common Stock outstanding

---



Reasons for Amendment

This filing is being amended to include, revise or omit information to improve the disclosures as follows:

| |  | The column headings in the statements of
cash flows for the quarters ended March 31, 2006 and 2005 have been modified to
clearly label them As Restated.  This revision was necessitated
by a reclassification of cash flows from notes receivable for those quarters from
investing cash flows to operating cash flows.                                                                                                                                                                                                                      
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Disclosure   has been added to the financial statements under Note T, Restatement to   describe the effects of the restatement (of the cash flows from the changes   in notes receivable balances from investing cash flows to operating cash   flows) on income before extraordinary items, net income, related per share   amounts, and stockholders equity.                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | A current   report on Form 8K has been simultaneously filed to notify readers or   potential readers that the financial statements previously filed for the   quarters ended March 31, 2006 and 2005 on Form 10Q filed on May 15, 2006 and   Form 10Q/A (Amendment #1) filed on July 27, 2006 should not be relied upon   due to the restatement of cash flows from notes receivable from investing   cash flows to operating cash flows.                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Disclosure   has been added to Note Q Stock Compensation Plan to clearly describe the   contractual term of the options issued on March 1, 2006 as being 3   years.  Additionally, Note Q has been   revised to correct the intrinsic value of the options issued on March 1,   2006.  The intrinsic value of the   options issued were zero at the grant date since the market value of the   stock was equal to the strike price of the options.  The previous filing erroneously reported the fair value rather   than the intrinsic value.

2

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INDEX

|PART I.    | FINANCIAL INFORMATION (unaudited)                         | 1   
|---------- | --------------------------------------------------------- | ----
|           |                                                           |     
|Item 1.    | Financial Statements:                                     | 1   
|           |                                                           |     
|           | Consolidated Balance Sheets                               | 2   
|           |                                                           |     
|           | Consolidated Statements of Operations                     | 3   
|           |                                                           |     
|           | Condensed Consolidated Statements of Stockholders Equity | 4   
|           |                                                           |     
|           | Consolidated Statements of Cash Flows                     | 5   
|           |                                                           |     
|           | Notes to the Condensed Financial Statements               | 6-14
|           |                                                           |     
|PART II.   | OTHER INFORMATION                                         | 14  
|           |                                                           |     
|Item 6.    | Exhibits                                                  | 14  
|           |                                                           |     
|SIGNATURES | 15                                                       

i

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PART I FINANCIAL INFORMATION

|Item 1. | Financial Statements
|------- | --------------------

SORL AUTO PARTS, INC. AND SUBSIDIARIES Ruian City, ZheJiang Province, China

|TABLE OF CONTENTS                                                          |     
|-------------------------------------------------------------------------- | ----
|                                                                           |     
|                                                                           |     
|Condensed Consolidated Balance Sheets                                      | 2   
|                                                                           |     
|Condensed Consolidated Statements of Operations and Comprehensive   Income | 3   
|                                                                           |     
|Condensed Consolidated Statements of Stockholders Equity                  | 4   
|                                                                           |     
|Condensed Consolidated Statements of Cash Flows                            | 5   
|                                                                           |     
|Notes to Condensed Consolidated Financial Statements                       | 6-14

1

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CONSOLIDATED BALANCE SHEETS

|                                                                                                                          |  | March 31,   2006 |             | December   31,   2005 | 
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----------- | --------------------- | 
|                                                                                                                          |  |                  |             |                       | 
|                                                                                                                          |  |                  | (Unaudited) |                       | 
|ASSETS                                                                                                                    |  |                  |             |                       | 
|Current Assets                                                                                                            |  |                  |             |                       | 
|Cash   and cash equivalents                                                                                               |  |                  | 1,153,781   |                       | 
|Account   receivables, net of provision                                                                                   |  |                  | 28,673,136  |                       | 
|Notes   receivables                                                                                                       |  |                  | 2,156,920   |                       | 
|Inventory                                                                                                                 |  |                  | 1,134,773   |                       | 
|Prepayments                                                                                                               |  |                  | 1,321,678   |                       | 
|Other   current assets                                                                                                    |  |                  | 510,474     |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Total Current Assets                                                                                                      |  |                  | 34,950,762  |                       | 
|Fixed Assets                                                                                                              |  |                  |             |                       | 
|Property,   plant and equipment                                                                                           |  |                  | 10,423,487  |                       | 
|Less:   Accumulated depreciation                                                                                          |  |                  | (3,287,358  | )                     | 
|                                                                                                                          |  |                  |             |                       | 
|Fixed Assets, Net                                                                                                         |  |                  | 7,136,129   |                       | 
|Construction   in progress                                                                                                |  |                  | 88,276      |                       | 
|Other Assets                                                                                                              |  |                  |             |                       | 
|Deferred   compensation cost-stock options                                                                                |  |                  | 173,934     |                       | 
|Intangible   assets                                                                                                       |  |                  | 44,590      |                       | 
|Less:   Accumulated amortization                                                                                          |  |                  | (13,790     | )                     | 
|                                                                                                                          |  |                  |             |                       | 
|Intangible Assets, Net                                                                                                    |  |                  | 30,800      |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Total Other Assets                                                                                                        |  |                  | 204,734     |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Total Assets                                                                                                              |  |                  | 42,379,901  |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Liabilities and Shareholders Equity                                                                                      |  |                  |             |                       | 
|Current Liabilities                                                                                                       |  |                  |             |                       | 
|Accounts   payable                                                                                                        |  |                  | 5,349,133   |                       | 
|Deposit   received from customers                                                                                         |  |                  | 1,081,277   |                       | 
|Short   term bank loans                                                                                                   |  |                  | 14,511,114  |                       | 
|Accrued   expenses                                                                                                        |  |                  | 517,859     |                       | 
|Other   current liabilities                                                                                               |  |                  | 1,112,782   |                       | 
|Total Current Liabilities                                                                                                 |  |                  | 22,572,165  |                       | 
|Minority Interest                                                                                                         |  |                  | 1,926,684   |                       | 
|Shareholders Equity                                                                                                      |  |                  |             |                       | 
|Common   stock, $0.002 par value, 50,000,000 authorized, 13,346,555 issued and   outstanding at 03/31/2006 and 12/31/2005 |  |                  | 26,693      |                       | 
|Paid   in capital                                                                                                         |  |                  | 4,623,022   |                       | 
|Accumulated   other comprehensive income (loss)                                                                           |  |                  | 451,028     |                       | 
|Retained   earnings                                                                                                       |  |                  | 12,780,309  |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Total Current Liabilities                                                                                                 |  |                  | 17,881,052  |                       | 
|                                                                                                                          |  |                  |             |                       | 
|Total Liabilities and Shareholders Equity                                                                                |  |                  | 42,379,901  |                       | 
|                                                                                                                          |  |                  |             |                       | 

The accompanying notes are an integral part of these financial statements.

2

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|                                             |  |      | For the   three months ended   March 31, |     
|-------------------------------------------- |  | ---- | ---------------------------------------- | ----
|                                             |  |      |                                          |     
|                                             |  | 2006 |                                          | 2005
|                                             |  |      |                                          |     
|Sales                                        |  | $    | 19,419,584                               |     
|Cost   of Sales                              |  |      | 15,023,826                               |     
|                                             |  |      |                                          |     
|Gross Profit                                 |  |      | 4,395,758                                |     
|Operating Expenses                           |  |      |                                          |     
|Selling   and Distribution Expenses          |  |      | 868,016                                  |     
|General   and Administrative Expenses        |  |      | 1,096,962                                |     
|                                             |  |      |                                          |     
|Total Operating Expenses                     |  |      | 1,964,978                                |     
|                                             |  |      |                                          |     
|Operating Income                             |  |      | 2,430,780                                |     
|Financial   Expenses                         |  |      | 265,547                                  |     
|Non-Operating   Expenses                     |  |      | 89,675                                   |     
|                                             |  |      |                                          |     
|Net Income Before Provision for Income Taxes |  |      | 2,075,558                                |     
|Provision   for Income Taxes                 |  |      | 293,608                                  |     
|                                             |  |      |                                          |     
|Net Income Before Minority Interest          |  |      | 1,781,950                                |     
|Minority   Interest                          |  |      | 178,195                                  |     
|                                             |  |      |                                          |     
|Net Income Attributable to Shareholders      |  | $    | 1,603,755                                |     
|Other Comprehensive Income                   |  |      |                                          |     
|Foreign   Currency Translation Adjustment    |  |      | 126,705                                  |     
|Minority   Interests Share                  |  |      | 12,671                                   |     
|                                             |  |      |                                          |     
|Comprehensive Income                         |  | $    | 1,717,789                                |     
|Weighted   average common share - Basic      |  |      | 13,346,555                               |     
|Weighted   average common share - Diluted    |  |      | 13,347,123                               |     
|Earnings   Per Share  Basic                 |  | $    | 0.12                                     |     
|Earnings   Per Share  Diluted               |  | $    | 0.12                                     |     

The accompanying notes are an integral part of these financial statements.

3

---



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY FOR THE PERIOD FROM DECEMBER 31, 2004 THROUGH MARCH 31, 2006.

|                                                  |  | Number of   Common   Shares |            | Common   Stock |   | Additional   Paid-In   Capital |  | Retained   Earnings |           | Accumulated   Other   Comprehensive     Income |   | Total     Stockholders     Equity |  | Minority   Interest |        
|------------------------------------------------- |  | --------------------------- | ---------- | -------------- | - | ------------------------------ |  | ------------------- | --------- | ---------------------------------------------- | - | ---------------------------------- |  | ------------------- | -------
|                                                  |  |                             |            |                |   |                                |  |                     |           |                                                |   |                                    |  |                     |        
|Beginning Balance - Dec 31, 2004                  |  |                             | 13,282,253 |                | $ | 26,565                         |  | $                   | 4,082,246 |                                                | $ | 6,226,944                          |  |                     |       
|Common   Stock - Adjustment for fractional shares |  |                             | 3,614      |                |   | 7                              |  |                     | -7        |                                                |   |                                   |  |                     |       
|Net   Income                                      |  |                             |           |                |   |                               |  |                     |          |                                                |   | 1,501,870                          |  |                     |       
|                                                  |  |                             |            |                |   |                                |  |                     |           |                                                |   |                                    |  |                     |        
|Ending Balance - Mar 31, 2005                     |  |                             | 13,285,867 |                | $ | 26,572                         |  | $                   | 4,082,239 |                                                | $ | 7,728,814                          |  |                     |       
|                                                  |  |                             |            |                |   |                                |  |                     |           |                                                |   |                                    |  |                     |        
|Beginning Balance - Dec 31, 2005                  |  |                             | 13,346,555 |                | $ | 26,693                         |  | $                   | 4,444,118 |                                                | $ | 11,176,554                         |  | $                   | 336,993
|Net   Income                                      |  |                             |           |                |   |                               |  |                     |          |                                                |   | 1,603,755                          |  |                     |       
|Other   Comprehensive Income (Loss)               |  |                             |           |                |   |                               |  |                     |          |                                                |   |                                   |  |                     | 114,035
|Paid   In Capital Contributions                   |  |                             |           |                |   |                               |  |                     | 178,904   |                                                |   |                                   |  |                     |       
|                                                  |  |                             |            |                |   |                                |  |                     |           |                                                |   |                                    |  |                     |        
|Ending Balance - Mar 31, 2006                     |  |                             | 13,346,555 |                | $ | 26,693                         |  | $                   | 4,623,022 |                                                | $ | 12,780,309                         |  | $                   | 451,028
|                                                  |  |                             |            |                |   |                                |  |                     |           |                                                |   |                                    |  |                     |        

The accompanying notes are an integral part of these financial statements.

4

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CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                             |  | For the   three months ended
March 31, |           
|---------------------------------------------------------------------------- |  | -------------------------------------- | ----------
|                                                                             |  |                                        |           
|                                                                             |  | (As Restated)                          |           
|                                                                             |  | 2006                                   |           
|                                                                             |  |                                        |           
|Cash Flows from Operating Activities                                         |  |                                        |           
|Net   Income                                                                 |  | $                                      | 1,603,755 
|Adjustments to reconcile net income to net cash from   operating activities: |  |                                        |           
|Minority Interest                                                            |  |                                        | 178,195   
|Bad Debt Expense                                                             |  |                                        | 156,875   
|Depreciation and Amortization                                                |  |                                        | 264,994   
|Stock-Based Compensation Expense                                             |  |                                        | 4,970     
|Changes in Assets and   Liabilities:                                         |  |                                        |           
|Accounts Receivable                                                          |  |                                        | (3,490,237
|Other Receivables                                                            |  |                                        | (462,357  
|Notes Receivables                                                            |  |                                        | (668,816  
|Inventory                                                                    |  |                                        | 1,377,810 
|Prepayments                                                                  |  |                                        | 480,151   
|Account Payables                                                             |  |                                        | 1,863,146 
|Deposits Received from Customers                                             |  |                                        | (242,808  
|Other Payables and Accrued Expenses                                          |  |                                        | 886,686   
|                                                                             |  |                                        |           
|Net Cash Flows from Operating Activities                                     |  |                                        | 1,952,364 
|                                                                             |  |                                        |           
|Cash Flows from Investing Activities                                         |  |                                        |           
|Acquisition   of Property and Equipment                                      |  |                                        | (282,540  
|Investment   in Construction in Progress                                     |  |                                        | (88,276   
|                                                                             |  |                                        |           
|Net Cash Flows from Investing Activities                                     |  |                                        | (370,816  
|Cash Flows from Financing Activities                                         |  |                                        |           
|Proceeds   from (Repayment of) Bank Loans                                    |  |                                        | (1,515,603
|                                                                             |  |                                        |           
|Net Cash Flows from Financing Activities                                     |  |                                        | (1,515,603
|Effects on changes in foreign exchange rate                                  |  |                                        | 126,705   
|Net   Increase (Decrease) in Cash                                            |  |                                        | 192,650   
|Cash   and Cash Equivalents - Beginning of the period                        |  |                                        | 961,131   
|                                                                             |  |                                        |           
|Cash and Cash Equivalents - End of the period                                |  | $                                      | 1,153,781 
|                                                                             |  |                                        |           
|Supplemental Cash Flow Disclosures:                                          |  |                                        |           
|Interest   Paid                                                              |  | $                                      | 199,240   
|Tax   Paid                                                                   |  | $                                      |          

The accompanying notes are an integral part of these financial statements.

5

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A -          Description of Business

| | SORL   Auto Parts, Inc. (the Company) is principally engaged in the manufacture   and distribution of automotive air brake valves and related components for   commercial vehicles weighing more than three tons, such as trucks and buses,   through its 90% ownership of Ruili Group Ruian Auto Parts Company Limited   (the Joint Venture) in the Peoples Republic of China (PRC or   China).  The Company distributes products both in China and   internationally under the SORL trademarks.  The Companys product range   includes approximately 40 categories of brake valves with over 800 different   specifications.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note B -          Basis of Presentation

| | The   condensed consolidated financial statements include the accounts of SORL Auto   Parts, Inc. and its majority owned subsidiaries.  All significant   intercompany balances and transactions have been eliminated in the   consolidation. Certain information and footnote disclosures normally included   in financial statements prepared in conjunction with generally accepted   accounting principles have been condensed or omitted pursuant to such rules   and regulations, although the Company believes that the disclosures are   adequate to make the information presented not misleading. These condensed   consolidated financial statements should be read in conjunction with the   annual audited financial statements and the notes thereto included in the   Companys annual report on Form 10-K and other reports filed with the SEC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The   accompanying unaudited interim financial statements reflect all adjustments   of a normal and recurring nature which are, in the opinion of management,   necessary to present fairly the financial position, results of operations and   cash flows of the Company for the interim periods presented. The results of   operations for these periods are not necessarily comparable to, or indicative   of, results of any other interim period or for the fiscal year taken as a   whole.                                                                                                                                                                                                                                                                                                                                                               

Note C -          Recent Pronouncements

| | In   March 2006, the Financial Accounting Standards Board (FASB) issued   Statement of Financial Accounting Standard (SFAS) No. 156, Accounting for   Servicing of Financial Assets  an amendment of FASB Statement No. 140   (SFAS 156).  SFAS 156 amends FASB Statement No. 140 with respect to   the accounting for separately recognized servicing assets and servicing   liabilities.  SFAS 156 requires all separately recognized servicing   assets and servicing liabilities to be initially measured at fair value, if   practical.  SFAS 156 is effective as of the beginning of the first   fiscal year that begins after September 15, 2006.  As such, the Company   is required to adopt these provisions at the beginning of the fiscal year   ended December 31, 2007.  The Company is currently evaluating the impact   of SFAS 156 on its consolidated financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note D -          Related Party Transactions

| | The   Company continued to purchase non-valve automotive components, raw materials   and packaging materials from the Ruili Group Co., Ltd., which is the minority   shareholder of the Joint Venture, and also has the common controlling party,   i.e. the Zhang family.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                           
|

6

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The   following related party transactions occurred for the first quarter ended   March 31, 2006 and 2005:

Note D -          Related Party Transactions-Continued

|                                             |  | Three   Months Ended    March 31, |          
|-------------------------------------------- |  | --------------------------------- | ---------
|                                             |  |                                   |          
|                                             |  | 2006                              |          
|                                             |  |                                   |          
|PURCHASES FROM:                              |  |                                   |          
|Ruili   Group Co., Ltd.                      |  | $                                 | 5,843,210
|Ruian   Ruili Haizhiguan Auto Part Co., Ltd. |  |                                   |         
|                                             |  |                                   |          
|Total Purchases                              |  | $                                 | 5,843,210
|                                             |  |                                   |          
|SALES TO:                                    |  |                                   |          
|Ruili   Group Co., Ltd.                      |  | $                                 | 2,585,814
|                                             |  |                                   |          
|Total Sales                                  |  | $                                 | 2,585,814
|                                             |  |                                   |          

| | The   total purchases from Ruili Group during the first quarter ended March 31,   2006 consisted of $5.6 million finished products of non-valve auto parts and   $0.2 million of packaging materials.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a)  |  |                                                    |  | (b)  |  | March 31,   2006 |         | (c) |      | (d) |      | December   31,   2005 |  
|---- |  | -------------------------------------------------- |  | ---- |  | ---------------- | ------- | --- | ---- | --- | ---- | --------------------- | -
|     |  |                                                    |  |      |  |                  |         |     |      |     |      |                       |  
|(e)  |  | Accounts Payable and Other Payables                |  | (f)  |  |                  |         |     | (g)  |     | (h)  |                       |  
|(i)  |  | Shuping   Chi                                      |  | (j)  |  | $                |        |     | (k)  |     | (l)  |                       | $
|     |  |                                                    |  |      |  |                  |         |     |      |     |      |                       |  
|(m)  |  | Total Related Parties included in Accounts Payable |  | (n)  |  | $                |        |     | (o)  |     | (p)  |                       | $
|     |  |                                                    |  |      |  |                  |         |     |      |     |      |                       |  
|(q)  |  | (r)                                                |  | (s)  |  |                  |         |     | (t)  |     |      |                       |  
|(u)  |  | Prepayment                                         |  | (v)  |  |                  |         |     | (w)  |     | (x)  |                       |  
|(y)  |  | Ruili   Group Co., Ltd.                            |  | (z)  |  | $                | 473,000 |     | (aa) |     | (bb) |                       | $
|     |  |                                                    |  |      |  |                  |         |     |      |     |      |                       |  
|(cc) |  | Total prepayment                                   |  | (dd) |  | $                | 473,000 |     | (ee) |     | (ff) |                       | $
|     |  |                                                    |  |      |  |                  |         |     |      |     |      |                       |  

7

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Note E -          Accounts Receivable

| | The   changes in the allowance for doubtful accounts at March 31, 2006 and December   31, 2005 are summarized as follows:
| | -------------------------------------------------------------------------------------------------------------------------

|                             |  | March 31,   2006 |           | December   31,    2005 |  
|---------------------------- |  | ---------------- | --------- | ---------------------- | -
|                             |  |                  |           |                        |  
|Beginning   balance          |  | $                | 914,721   |                        | $
|Add:   Increase to allowance |  |                  | 156,875   |                        |  
|Less:   Accounts written off |  |                  |          |                        |  
|                             |  |                  |           |                        |  
|Ending balance               |  | $                | 1,071,596 |                        | $
|                             |  |                  |           |                        |  

| | The   companys receivables are summarized as follows:
| | ------------------------------------------------------

|                                        |  | March 31,   2006 |  | December   31,   2005 |           
|--------------------------------------- |  | ---------------- |  | --------------------- | ----------
|                                        |  |                  |  |                       |           
|Accounts   receivable                   |  | (rr)             |  | $                     | 29,744,732
|Less:   allowance for doubtful accounts |  | (ww)             |  |                       | 1,071,596 
|                                        |  |                  |  |                       |           
|                                        |  |                  |  |                       |           
|Account receivable balance, net         |  | (ggg)            |  | $                     | 28,673,136
|                                        |  |                  |  |                       |           

Note F -          Inventories

On March 31, 2006 and December 31, 2005, inventories consist of the following:

|                  |  | March 31,   2006 |           | December   31,    2005 |  
|----------------- |  | ---------------- | --------- | ---------------------- | -
|                  |  |                  |           |                        |  
|Raw   Material    |  | $                | 222,833   |                        | $
|Work   in process |  |                  | 398,869   |                        |  
|Finished   Goods  |  |                  | 513,071   |                        |  
|                  |  |                  |           |                        |  
|Total Inventory   |  | $                | 1,134,773 |                        | $
|                  |  |                  |           |                        |  

8

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Note G -          Property, Plant and Equipment

Property, plant and equipment consisted of the following, on March 31, 2006 and December 31, 2005:

|                                 |  | March 31,
2006 |            | December   31,
2005 |  
|-------------------------------- |  | -------------- | ---------- | ------------------- | -
|                                 |  |                |            |                     |  
|Machinery                        |  | $              | 8,967,719  |                     | $
|Moulds                           |  |                | 1,087,434  |                     |  
|Office   equipment               |  |                | 191,884    |                     |  
|Vehicle                          |  |                | 176,450    |                     |  
|                                 |  |                |            |                     |  
|Sub-Total                        |  |                | 10,423,487 |                     |  
|Less:   Accumulated depreciation |  |                | (3,287,358 | )                   |  
|                                 |  |                |            |                     |  
|PPE, Net                         |  | $              | 7,136,129  |                     | $
|                                 |  |                |            |                     |  

| | Depreciation   expense charged to operations was $263,077 and $190,225 for the first quarter   ended March 31, 2006 and 2005, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------

Note H -          Intangible Assets

| | Gross   intangible assets were $44,590, less accumulated amortization of $13,790 for   net intangible assets of $30,800 as of March 31, 2006.  Gross intangible   assets were $44,297, less accumulated amortization of $11,873 for net   intangible assets of $32,424 as of December 31, 2005. Amortization expenses   were $1,916 and $1,780 for the first quarter ended March 31, 2006 and 2005   respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Future   estimated amortization expense is as follows:                                                                                                                                                                                                                                                                                                                                                            

|2006        |  | 2007 |       | 2008 |   | 2009  |  | 2010 |       | Thereafter |  
|----------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---------- | -
|            |  |      |       |      |   |       |  |      |       |            |  
|$     5,076 |  | $    | 3,617 |      | $ | 3,617 |  | $    | 3,617 |            | $

Note I -          Prepayment

Prepayment consisted of the following as of March 31, 2006 and December 31, 2005:

|                         |  | March 31,
2006 |           | December   31,
2005 |  
|------------------------ |  | -------------- | --------- | ------------------- | -
|                         |  |                |           |                     |  
|Raw   material suppliers |  | $              | 1,168,456 |                     | $
|Equipment   purchase     |  |                | 153,222   |                     |  
|                         |  |                |           |                     |  
|Total prepayment         |  | $              | 1,321,678 |                     | $
|                         |  |                |           |                     |  

9

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Note J -          Accrued Expenses

Accrued expenses consisted of the following as of March 31, 2006 and December 3, 2005:

|                         |  | March 31,
2006 |         | December   31,
2005 |  
|------------------------ |  | -------------- | ------- | ------------------- | -
|                         |  |                |         |                     |  
|Accrued   payroll        |  | $              | 287,501 |                     | $
|Other   accrued expenses |  |                | 230,358 |                     |  
|                         |  |                |         |                     |  
|Total accrued expenses   |  | $              | 517,859 |                     | $
|                         |  |                |         |                     |  

Note K -          Bank Borrowings

Bank borrowings represent the following as of March 31, 2006 and December 31, 2005:

|                        |  | March 31,
2006 |            | December   31,
2005 |  
|----------------------- |  | -------------- | ---------- | ------------------- | -
|                        |  |                |            |                     |  
|Secured                 |  | $              | 14,511,114 |                     | $
|Less:   Current portion |  |                | 14,511,114 |                     |  
|                        |  |                |            |                     |  
|Non-current   portion   |  | $              |           |                     | $
|                        |  |                |            |                     |  

| | These   loans were from two banks, Bank of China and CITIC Bank, to finance general   working capital as well as new equipment acquisition. Corporate or personal   guarantees are provided for those bank loans as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | $8.69M |  | Guaranteed   by Ruili Group Co., Ltd., a related party;                                                                             
| | ------ |  | ------------------------------------------------------------------------------------------------------------------------------------
| | $2.45M |  | Guaranteed   by Ruili Group Co., Ltd., a related party, and Mr. Xiao Ping Zhang and Ms.   Shu Ping Chi, both principal shareholders;
| | $3.37M |  | Guaranteed   by Shenghuabo Group Co., Ltd., a non-related party.                                                                    

| | The   Company does not provide any sort of guarantee to any other parties. Interest   rates for the loans ranged between 4.964% and 6.003% per annum.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

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Note L -          Income Taxes

| | The   Joint Venture is registered in the PRC, and is therefore subject to state and   local income taxes within the PRC at the applicable tax rate on the taxable   income as reported in the PRC statutory financial statements in accordance   with relevant income tax laws.  According to applicable tax laws   regarding Sino-Foreign Joint Venture Manufacturers, the Joint Venture is   exempted from income taxes in the PRC for the fiscal years ended December 31,   2005 and 2004.  Thereafter, the Joint Venture is entitled to a tax   concession of 50% of the statutory income tax rate of 26.4%, for the   following three years ended December 31, 2006, 2007, and 2008.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | The   reconciliation of the effective income tax rate of the Joint Venture to the   statutory income tax rate in the PRC for the first quarter ended March 31,   2006 is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|Statutory   tax rate           |  |  | 26.4  | %
|------------------------------ |  |  | ----- | -
|Tax   holidays and concessions |  |  | -13.2 | %
|                               |  |  |       |  
|Effective   tax rate           |  |  | 13.2  | %
|                               |  |  |       |  

| | No   provision for deferred tax liabilities has been made, since the Joint Venture   had no material temporary differences between the tax bases of assets and   liabilities and their carrying amounts.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note M -          Leases

| | The   Company has a lease agreement with Ruili Group Co., Ltd., a related party,   for the rental of a manufacturing plant.  The lease is for a ten year   term ending in February 2014.  Rent expense for the first quarter ended   March 31, 2006 and 2005, was $109,752 and $109,752 respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                      
| | Future   minimum rental payments for the years ended December 31 are as follows:                                                                                                                                                                                                                     

|2006          |  |   | 2007    |  |   | 2008    |  |   | 2009    |  |   | 2010    |  |   | Thereafter | 
|------------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ---------- | 
|              |  |   |         |  |   |         |  |   |         |  |  
|$     439,540 |  | $ | 439,540 |  | $ | 439,540 |  | $ | 439,540 |  | $ | 439,540 |  | $ | 1,321,620  | 

Note N -          Advertising Costs

| | Advertising   costs are expensed as incurred and are classified as selling expenses.    Advertising costs were $3,819 and $4,275 for the first quarter ended March   31, 2006 and 2005, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note O -          Research and Development Expenses

| | Research   and development costs are expensed as incurred and were $63,196 and $24,788   for the first quarter ended March 31, 2006 and 2005, respectively.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

11

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Note P -          Warranty Claims

| | Warranty   claims were $228,335 and $101,533 for the first quarter ended March 31, 2006   and 2005, respectively. The movement of accrued warranty expenses or the   first quarter ended March 31, 2006 is as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Beginning   balance at January 01, 2006               |  | $ | 179,932 | 
|----------------------------------------------------- |  | - | ------- | 
|Accrued   during the first quarter of 2006:           |  | $ | 176,005 | 
|Less:   Actual Paid during the first quarter of 2006: |  | $ | 127,602 | 
|                                                      |  |   |         | 
|Ending balance at March 31, 2006:                     |  | $ | 228,335 | 
|                                                      |  |   |         | 

Note Q -          Stock Compensation Plan

| | The   Companys 2005 Stock Compensation Plan (the Plan) permits the grant of share   options and shares to its employees for up to 1,700,000,000 shares of common   stock. The Company believes that such awards better align the interests of   its employees with those of its shareholders. Option awards are generally   granted with an exercise price equal to the market price of the Companys stock   at the date of grant.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Pursuant   to the Plan, the Company issued 60,000 options with an exercise price of   $4.79 per share on March 1, 2006. In accordance with the vesting provisions   of the grants, the options will become vested and exercisable under the   following schedules.                                                                                                                                                                  

| | Number   of Shares |  | %   of Shares Issued |  | Initial   Vesting Date | 
| | ------------------ |  | -------------------- |  | ---------------------- | 
| | 60,000             |  | 100%                 |  | March   1, 2009        | 

| | The   Company accounts for stock-based compensation in accordance with SFAS No. 123   Revised, Share-Based Payment. The fair value of each option award is   estimated on the date of grant using the Black-Scholes-Merton option-pricing   model that uses the assumptions noted in the following table.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Dividend   Yield               |  |   | 0.00    | %
|------------------------------ |  | - | ------- | -
|Expected   Volatility          |  |   | 96.54   | %
|Risk-Free   Interest Rate      |  |   | 4.59    | %
|Contractual   Term             |  |   | 3 years |  
|Stock   Price at Date of Grant |  | $ | 4.79    |  
|Exercise   Price               |  | $ | 4.79    |  

| | Total   deferred stock-based compensation expenses related to 60,000 stock options   granted within the first quarter ended March 31, 2006 amounted to   $178,904.  This amount is amortized over three years in a manner   consistent with Financial Accounting Standards Board Interpretation No. 123   (R).  The amortization of deferred stock-based compensation for these   equity arrangements was $4,970 for the three months ended March 31, 2006. As   of March 31, 2006, there was $173,934 of total unrecognized compensation cost   related to non-vested share-based compensation arrangements granted under the   plan. The cost is expected to be recognized over a period of 2.9 years.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | A   summary of option activity under the Plan as of March 31, 2006 and changes   during the three months then ended is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                |  | Options |        | Weighted   Average   Exercise price |   | Weighted   Average   Remaining   Contractual   Term |  | Aggregate   Intrinsic   Value |          
|------------------------------- |  | ------- | ------ | ----------------------------------- | - | --------------------------------------------------- |  | ----------------------------- | ---------
|                                |  |         |        |                                     |   |                                                     |  |                               |          
|January   1, 2006               |  |         |       |                                     | $ |                                                    |  |                               |         
|Granted                         |  |         | 60,000 |                                     |   | 4.79                                                |  |                               | 3 Years  
|Exercised                       |  |         |       |                                     |   |                                                    |  |                               |         
|Forfeited                       |  |         |       |                                     |   |                                                    |  |                               |         
|Outstanding at March 31,   2006 |  |         | 60,000 |                                     | $ | 4.79                                                |  |                               | 2.9 Years
|Exercisable at March 31,   2006 |  |         |       |                                     |   |                                                    |  |                               |         

Note R -          Commitments and Contingencies

| | During   the first quarter ended March 31, 2006, the Company has contracted with   WenZhou Great Wall Structural Foundation Engineering Company, ZheJiang   BaoDing Structural Steelwork Engineering Co., Ltd .and ShangHai YueHai   Architectural Design Co., Ltd for the construction of a temporary plant,   amounting to $180,052.  During the first quarter ended March 31, 2006,   the Company had paid $88,276, and has an obligation with the remaining   $91,776 scheduled the date of completion.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note S -          Subsequent Event

| | On   April 18, 2006, the company was approved to list its common shares on the   NASDAQ Capital Market and commence trading its shares on NASDAQ under the   symbol NASDAQ: SORL.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

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Note T -          Restatement

The accompanying financial statements for the quarters ended March 31, 2006 and 2005 have been restated to present changes in cash flows from notes receivable arising from trade customers as a component of operating cash flows rather than investing cash flows as previously reported.  The restatement affected the statements of cash flows only for the three months ended March 31, 2006 and 2005, respectively.  The restatement had no impact on income from continuing operations, net income, earnings per share (basic or diluted) or stockholders equity.

Part II   OTHER INFORMATION

|Item 6. | Exhibits.
|------- | ---------

| | (a) | Exhibits:
| | --- | ---------

| | 3.1  | Articles of   Incorporation (1)                                                                                                                                         
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                         
| | 3.2  | Bylaws (1)                                                                                                                                                              
| |      |                                                                                                                                                                         
| | 10.1 | Share   Exchange Agreement and Plan of Reorganization (2)                                                                                                               
| |      |                                                                                                                                                                         
| | 31.1 | Certification   of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),   promulgated under the Securities and Exchange Act of 1934, as amended.  (3)
| |      |                                                                                                                                                                         
| | 31.2 | Certification   of Principal Accounting Officer pursuant to Rule 13a-14 and Rule 15d-14(a)   promulgated under the Securities and Exchange Act of 1934, as amended.  (3)
| |      |                                                                                                                                                                         
| | 32.1 | Certification   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  (3)                                                                                         
| |      |                                                                                                                                                                         
| | 32.2 | Certification   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  (3)                                                                                         

|   
|---
|(1)
|   
|(2)
|   
|(3)

14

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment to report to be signed on its behalf by the undersigned thereunto duly authorized.

|Dated: | August 15,   2006 | SORL AUTO   PARTS, INC.
|------ | ----------------- | -----------------------
|       |                   |                        
|       |                   |                        
|       |                   | By:                    
|       |                   |                        
|       |                   | Name:                  
|       |                   | Title:                 

15

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