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

FORM 10-QSB/A

|(Mark One)                                                                                                            
|----------------------------------------------------------------------------------------------------------------------
|                                                                                                                      
|x                                                                                                                     
|                                                                                                                      
|For the quarterly period endedSeptember 30, 2005                                                                      
|                                                                                                                      
|o                                                                                                                     
|                                                                                                                      
|For the transition period   from _____________ to _____________                                                       
|                                                                                                                      
|Commission file   number   000-11991                                                                                  
|                                                                                                                      
|SORL AUTO   PARTS, INC.                                                                                               
|                                                                                                                      
|(Exact name of small business issuer as   specified in its charter)                                                   
|                                                                                                                      
|DELAWARE                                                                                                              
|                                                                                                                      
|(State or other jurisdiction of incorporation or organization)                                                        
|                                                                                                                      
|No. 1169   Yumeng RoadRuian Economic Development District   Ruian City, Zhejiang Province   Peoples Republic Of China
|                                                                                                                      
|(Address of principal executive offices)                                                                              
|                                                                                                                      
|86-577-65817720                                                                                                       
|                                                                                                                      
|(Issuer s telephone number)                                                                                          
|                                                                                                                      

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

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

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

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:

As of November 10, 2005 there were 13,346,555 shares of Common Stock outstanding

Transitional Small Business Disclosure Format (Check one):

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

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INDEX

|           |                                                            | **Page**
|---------- | ---------------------------------------------------------- | --------
|           |                                                            |         
|PART I.    | FINANCIAL INFORMATION (unaudited)                          |         
|           |                                                            |         
|Item 1.    | Financial Statements:                                      | 1       
|           |                                                            |         
|           | Consolidated Balance Sheets                                | 1       
|           |                                                            |         
|           | Consolidated Statements of Income                          | 2       
|           |                                                            |         
|           | Consolidated Statements of Changes in Stockholders Equity | 3       
|           |                                                            |         
|           | Consolidated Statements of Cash Flows                      | 4       
|           |                                                            |         
|           | Notes to  Consolidated Financial Statements                | 5       
|           |                                                            |         
|Item 2.    | Managements Discussion and Analysis or Plan of Operations | 7       
|           |                                                            |         
|Item 3.    | Controls and Procedures                                    | 14      
|           |                                                            |         
|PART II.   | OTHER INFORMATION                                          |         
|           |                                                            |         
|Item 6.    | Exhibits                                                   | 14      
|           |                                                            |         
|SIGNATURES | 15                                                        

- i -

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PART I FINANCIAL INFORMATION

Item 1.          Financial Statements

SORL Auto Parts, Inc. and SubsidiariesConsolidated Balance Sheets September 30, 2005 and December 31, 2004

|                                                           |  | September 30,2005 |            | December   31,2004 |    
|---------------------------------------------------------- |  | ----------------- | ---------- | ------------------ | ---
|                                                           |  |                   |            |                    |    
|                                                           |  | (Unaudited)       |            | (Audited)          |    
|Assets                                                     |  |                   |            |                    |    
|Current Assets                                             |  |                   |            |                    |    
|Cash and Cash Equivalents                                  |  | US$               | 721,452    |                    | US$
|Trade Receivables, Net of Provision                        |  |                   | 22,864,804 |                    |    
|Notes Receivable                                           |  |                   | 432,676    |                    |    
|Inventory                                                  |  |                   | 2,720,323  |                    |    
|Prepayments                                                |  |                   | 1,296,602  |                    |    
|Other Currents (Receivables, or discontinued   operations) |  |                   | 180,443    |                    |    
|                                                           |  |                   |            |                    |    
|Total Current Assets                                       |  |                   | 28,216,300 |                    |    
|Fixed Assets                                               |  |                   |            |                    |    
|Property, Plant and Equipment                              |  |                   | 9,492,870  |                    |    
|Less:    Accumulated Depreciation                          |  |                   | (2,788,265 | )                  |    
|                                                           |  |                   |            |                    |    
|Fixed Assets, Net                                          |  |                   | 6,704,605  |                    |    
|Other Assets                                               |  |                   |            |                    |    
|Intangible Assets                                          |  |                   | 44,078     |                    |    
|Less:    Accumulated Amortization                          |  |                   | (9,998     | )                  |    
|Intangible Assets, Net                                     |  |                   | 34,080     |                    |    
|Other LT Assets (Discontinued Operations)                  |  |                   | 0          |                    |    
|                                                           |  |                   |            |                    |    
|Total Other                                                |  |                   | 34,080     |                    |    
|                                                           |  |                   |            |                    |    
|Total Assets                                               |  | US$               | 34,954,985 |                    | US$
|                                                           |  |                   |            |                    |    
|Liabilities and Shareholders   Equity                     |  |                   |            |                    |    
|Current Liabilities                                        |  |                   |            |                    |    
|Accounts Payable                                           |  | US$               | 3,166,039  |                    | US$
|Deposit Received from Customers                            |  |                   | 1,863,476  |                    |    
|ST Bank Loans                                              |  |                   | 11,798,471 |                    |    
|Accrued Expenses                                           |  |                   | 553,713    |                    |    
|Other Current Liabilities                                  |  |                   | 844,929    |                    |    
|Total Current Liabilities                                  |  |                   | 18,226,628 |                    |    
|Long-Term Liabilities                                      |  |                   |            |                    |    
|LT Bank Loans                                              |  |                   | 0          |                    |    
|Other LT Liabilities                                       |  |                   | 0          |                    |    
|                                                           |  |                   |            |                    |    
|Total Liabilities                                          |  |                   | 18,226,628 |                    |    
|                                                           |  |                   |            |                    |    
|Minority Interest                                          |  |                   | 1,666,336  |                    |    
|Shareholders Equity                                       |  |                   |            |                    |    
|Common Stock                                               |  |                   | 26,594     |                    |    
|Paid In Capital                                            |  |                   | 4,147,217  |                    |    
|Accumulative Other Comprehensive Income (Loss)             |  |                   | 281,088    |                    |    
|Retained Earnings (Deficit)                                |  |                   | 10,607,122 |                    |    
|                                                           |  |                   |            |                    |    
|                                                           |  |                   | 15,062,021 |                    |    
|                                                           |  |                   |            |                    |    
|Total Liabilities and   Shareholders Equity               |  | US$               | 34,954,985 |                    | US$
|                                                           |  |                   |            |                    |    

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

- 1 -

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SORL Auto Parts, Inc. and SubsidiariesConsolidated Statements of Income 
For The Third Quarter Ended on September 30, 2005 and 2004

|                                                  |  | 2005 Q3 |            | 2005 YTD |  | 2004 Q3    |   | 2004 YTD |           
|------------------------------------------------- |  | ------- | ---------- | -------- |  | ---------- | - | -------- | ----------
|                                                  |  |         |            |          |  |            |   |          |           
|Sales                                             |  | US$     | 16,376,928 |          |  | 45,794,109 |   | US$      | 12,595,272
|Cost   of Sales                                   |  |         | 12,909,886 |          |  | 35,747,428 |   |          | 9,706,939 
|                                                  |  |         |            |          |  |            |   |          |           
|Gross   Profit                                    |  |         | 3,467,042  |          |  | 10,046,681 |   |          | 2,888,333 
|Expenses:                                         |  |         |            |          |  |            |   |          |           
|Selling and Distribution Expenses                 |  |         | 849,854    |          |  | 2,732,863  |   |          | 606,780   
|General and Administrative Expenses               |  |         | 822,925    |          |  | 2,027,085  |   |          | 536,362   
|                                                  |  |         |            |          |  |            |   |          |           
|Total   Expenses                                  |  |         | 1,672,779  |          |  | 4,759,948  |   |          | 1,143,142 
|Operating   Income                                |  |         | 1,794,263  |          |  | 5,286,733  |   |          | 1,745,191 
|Financial   Expenses                              |  |         | (145,168   | )        |  | (331,254   | ) |          | (78,125   
|Other   Income                                    |  |         | 0          |          |  | 0          |   |          | 0         
|Non-Operating   Expenses                          |  |         | (12,642    | )        |  | (88,615    | ) |          | (13,157   
|                                                  |  |         |            |          |  |            |   |          |           
|Income   (Loss) Before Provision for Income Taxes |  |         | 1,636,453  |          |  | 4,866,864  |   |          | 1,653,909 
|Provision   for Income Taxes                      |  |         | 0          |          |  | 0          |   |          | 0         
|                                                  |  |         |            |          |  |            |   |          |           
|Net   Income Before Minority Interest             |  | US$     | 1,636,453  |          |  | 4,866,864  |   | US$      | 1,653,909 
|                                                  |  |         |            |          |  |            |   |          |           
|Minority   Interest                               |  |         | 163,645    |          |  | 486,686    |   |          | 165,391   
|                                                  |  |         |            |          |  |            |   |          |           
|Net   Income Attributable to Shareholders         |  |         | 1,472,808  |          |  | 4,380,178  |   |          | 1,488,518 
|                                                  |  |         |            |          |  |            |   |          |           
|Foreign   Currency Translation Adjustment         |  |         | 312,320    |          |  | 312,320    |   |          | 0         
|Minority   Interests share                       |  |         | 31,232     |          |  | 31,232     |   |          | 0         
|                                                  |  |         |            |          |  |            |   |          |           
|Comprehensive   Income (Loss)                     |  |         | 1,753,896  |          |  | 4,661,266  |   |          | 1,488,518 
|                                                  |  |         |            |          |  |            |   |          |           
|Weighted   average common share - Basic           |  |         | 13,297,055 |          |  | 13,290,388 |   |          | 13,282,253
|Weighted   average common share - Diluted         |  |         | 13,297,055 |          |  | 13,290,388 |   |          | 13,282,253
|EPS   -Basic                                      |  |         | 0.11       |          |  | 0.33       |   |          | 0.11      
|EPS   -Diluted                                    |  |         | 0.11       |          |  | 0.33       |   |          | 0.11      

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

- 2 -

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SORL Auto Parts, Inc. and SubsidiariesConsolidated Statements of Changes in Stockholders Equity
 For The Third Quarter Ended on September 30, 2005 and 2004

|                                                                  |  | Number of    Common    Shares |            | Common    Stock |  | Additional      Paid in    Capital |  | Retained    Earnings    (Deficit) |             | Accumu.   OtherComprehensiveIncome |  | Shareholders      Equity |  | Minority    Interest |        
|----------------------------------------------------------------- |  | ----------------------------- | ---------- | --------------- |  | ---------------------------------- |  | --------------------------------- | ----------- | ---------------------------------- |  | ------------------------- |  | -------------------- | -------
|                                                                  |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        
|Beginning Balance - Dec 31, 2003                                  |  |                               | 12,953,720 |                 |  | 25,908                             |  |                                   | 26,858,092  |                                    |  | 1,420,000                 |  |                      |       
|Corporate Reorganization:                                         |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        
|Distribution of Discontinued Operations to   Shareholders         |  |                               |           |                 |  |                                   |  |                                   | (22,775,189 | )                                  |  |                          |  |                      |       
|Acquisition of Enchanted Village                                  |  |                               | 328,533    |                 |  | 657                                |  |                                   | (657        | )                                  |  |                          |  |                      |       
|Capital Contributed by Minority Shareholders                      |  |                               |           |                 |  |                                   |  |                                   |            |                                    |  |                          |  |                      |       
|Net   Income (Loss)                                               |  |                               |           |                 |  |                                   |  |                                   |            |                                    |  | 3,632,791                 |  |                      |       
|Other   Comprehensive Income (Loss)                               |  |                               |           |                 |  |                                   |  |                                   |            |                                    |  |                          |  |                      |       
|                                                                  |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        
|Ending Balance  September 30,   2004                             |  |                               | 13,282,253 |                 |  | 26,565                             |  |                                   | 4,082,246   |                                    |  | 5,052,791                 |  |                      |       
|                                                                  |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        
|Beginning Balance - Dec 31, 2004                                  |  |                               | 13,282,253 |                 |  | 26,565                             |  |                                   | 4,082,246   |                                    |  | 6,226,944                 |  |                      |       
|Common   Stock  Adjustment for fractional shares                 |  |                               | 4,802      |                 |  | 9                                  |  |                                   | (9          | )                                  |  |                          |  |                      |       
|Common   Stock  Issuance for payment financial advisory services |  |                               | 10,000     |                 |  | 20                                 |  |                                   | 64,980      |                                    |  |                          |  |                      |       
|Net   Income (Loss)                                               |  |                               |           |                 |  |                                   |  |                                   |            |                                    |  | 4,380,178                 |  |                      |       
|Other   Comprehensive Income (Loss)                               |  |                               |           |                 |  |                                   |  |                                   |            |                                    |  |                          |  |                      | 281,088
|                                                                  |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        
|Ending Balance  September 30,   2005                             |  |                               | 13,297,055 |                 |  | 26,594                             |  |                                   | 4,147,217   |                                    |  | 10,607,122                |  |                      | 281,088
|                                                                  |  |                               |            |                 |  |                                    |  |                                   |             |                                    |  |                           |  |                      |        

Note:     Common stock has a par value of $0.002

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

- 3 -

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SORL Auto Parts, Inc. and SubsidiariesConsolidated Statements of Cash Flows For The Nine Months Ended on September 30, 2005 and 2004

|                                                                                    |  | 2005 |             | 2004 |    
|----------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | ---
|                                                                                    |  |      |             |      |    
|Cash Flows from Operating   Activities                                              |  |      |             |      |    
|Net   Income (Loss)                                                                 |  | US$  | 4,380,178   |      | US$
|Adjustments to reconcile net   income (loss) to net cash from operating activities: |  |      |             |      |    
|Loss from Sale/Disposal of Assets                                                   |  |      | 0           |      |    
|Amortization                                                                        |  |      | 5,544       |      |    
|Depreciation                                                                        |  |      | 623,123     |      |    
|Financial Advisory Service expenses paid by   issuance Common Stock                 |  |      | 65,000      |      |    
|Changes   in Assets and Liabilities:                                                |  |      |             |      |    
|Trade Receivables                                                                   |  |      | (10,268,899 | )    |    
|Notes Receivables                                                                   |  |      | (303,001    | )    |    
|Other Receivables                                                                   |  |      | 212,857     |      |    
|Inventory                                                                           |  |      | (845,023    | )    |    
|Prepayments, Deposits, and Other Current Assets                                     |  |      | 108,108     |      |    
|Trade Payables                                                                      |  |      | (1,551,615  | )    |    
|Deposits Received from Customers                                                    |  |      | 1,001,852   |      |    
|Other Payables and Accrued Expenses                                                 |  |      | 772,873     |      |    
|Minority Interest                                                                   |  |      | 486,686     |      |    
|                                                                                    |  |      |             |      |    
|Net   Cash Flows from Operating Activities                                          |  |      | (5,312,317  | )    |    
|Cash Flows from Investing   Activities                                              |  |      |             |      |    
|Acquisition of Property and Equipment                                               |  |      | (1,975,074  | )    |    
|Investment in Intangible Assets                                                     |  |      | 0           |      |    
|Investing in Activities - Discontinued Ops                                          |  |      | 0           |      |    
|                                                                                    |  |      |             |      |    
|Net   Cash Flows from Investing Activities                                          |  |      | (1,975,074  | )    |    
|Cash Flows from Financing   Activities                                              |  |      |             |      |    
|Proceeds from Borrowings                                                            |  |      | 6,967,553   |      |    
|Proceeds from Share Issuance                                                        |  |      | 0           |      |    
|Paid-in Capital Increase                                                            |  |      | 0           |      |    
|                                                                                    |  |      |             |      |    
|Net   Cash Flows from Financing Activities                                          |  |      | 6,967,553   |      |    
|Effect   on changes in Foreign Currency Exchange Rate                               |  |      | 311,415     |      |    
|Net   Increase (Decrease) in Cash                                                   |  |      | (8,423      | )    |    
|Cash   - Beginning of Term                                                          |  |      | 729,875     |      |    
|                                                                                    |  |      |             |      |    
|Cash - End of Term                                                                  |  | US$  | 721,452     |      | US$
|                                                                                    |  |      |             |      |    
|Supplemental Cash Flow   Disclosures:                                               |  |      |             |      |    
|Interest Paid                                                                       |  |      | 139,286     |      |    
|Tax Paid                                                                            |  |      | 0           |      |    
|                                                                                    |  |      |             |      |    

- 4 -

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Companys financial position as of September 30, 2005 and the results of its operations and cash flows, for the nine months ended September 30, 2005 and 2004 have been made. Operating results for the nine months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the year ended
December 31, 2005.

These condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Companys Form 10-KSB for the year ended December 31, 2004.

DESCRIPTION OF BUSINESS

SORL Auto Parts (the Company) is principally engaged in the manufacture and distribution of automotive air brake valves and hydraulic brake valves for vehicles weighing more than three tons, such as trucks, vans and buses, through its 90% ownership of Ruili Group Ruian Auto Parts Company Limited (Ruili) in the PRC. The Company distributes products both in China and internationally under SORL Auto Parts trademarks. The Companys product range includes 36 categories of brake valves with over 800 different specifications.

REORGANIZATION

In March
2004, pursuant to a Joint Venture Agreement between the Ruili Group Co., Ltd., a
PRC corporation (Ruili Group), and Fairford Holdings, Inc., a Hong
Kong Company (Fairford), the parties formed a sino-foreign joint
venture (the Joint Venture) under the name Ruili Group Ruian Auto
Parts Co. Ltd., of which Fairford owned 90% and the Ruili Group owned 10%. 
The shareholders and their respective equity interests in Fairford and the Ruili
Group were identical.  In connection with its formation, the Joint Venture
acquired the business segment of the Ruili Group relating to the manufacture and
sale of various kinds of valves for automotive brake systems and related
operations (the Transferred Business).  This was accomplished
by the transfer from the Ruili Group to Fairford of the relevant assets and
liabilities of the Transferred Business including trade receivables,
inventories, and machinery, and the assumption of short and long term
borrowings for a purchase price of $6,390,000.  The consideration was based
on a valuation provided by Ruian Ruiyang Assets Valuation Co., Ltd., an
independent PRC valuation firm.  Fairford then transferred these assets and
liabilities to the Joint Venture as consideration for its 90% ownership interest
of the Joint Venture.  The Ruili Group transferred inventory as its capital
contribution for its 10% interest in the Joint Venture.  The assets and
liabilities transferred to the Joint Venture by Fairford and the Ruili Group
represented all the assets and liabilities of the Transferred Business. 
Certain historical information of the Transferred Business is based on the
operation of the Transferred Business when it was owned by the Ruili
Group.

In May 2004, pursuant to the terms of a Share Exchange Agreement (the Exchange Agreement) dated as of April 4, 2004, among the Company, Keating Reverse Merger Fund, LLC, Xiao Ping Zhang, Xiao Feng Zhang and Shuping Chi (collectively, the Sellers); and Fairford, the Company acquired from the Sellers (the Acquisition) all of the issued and outstanding equity interests of Fairford (the Fairford Shares).  As consideration for the Fairford Shares, the Company issued 1,000,000 shares of its Series A Convertible Preferred Stock, which were convertible into an aggregate of the 194,305,800 shares of common stock.  The consideration for the Acquisition was determined through arms length negotiations between the management and the Fairford Sellers.  As a result of the Acquisition, the Fairford Sellers acquired approximately 97.5% of the Companys
common stock on an as converted basis.

- 5 -

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A current report on Form 8-K was filed on May 24, 2004 to present the financials of the predecessor company (Ruili Group) for the years ended December 31, 2003 and 2002.  The historical financial statements filed with the 8-K reflected the assets and liabilities of both the Transferred Business and the non-transferred business.

Subsequent to the transfer and reorganization that occurred in March, 2004, the Company began presenting its financial statements as that of the successor company, being only those assets, liabilities, results of operations, and cash flows relating to the Transferred Business.  Prior periods were restated to reflect comparable prior period results of the Transferred Business.

BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

The financial statements for the periods ended September 30, 2005 and 2004 have been prepared to present the financial position, results of operations and cash flows of the continuing business of SORL Auto Parts, Inc (the successors financial statements).  The financial statements reflect the accounts of the transferred business (as described in the preceding paragraphs titled REORGANIZATION), from the Ruili Group to the Joint Venture.

SEASONAL BUSINESS

The Companys operations in China are seasonal due to Chinese holidays. Consequently, the three months ended March 31, 2005 and 2004 have been the Companys slowest period.

FOREIGN CURRENCY TRANSLATION

The Company maintains its books and accounting records in Renminbi (RMB), the currency of the Peoples Republic of China. The Companys functional currency is also RMB. Translation of financial statement amounts from RMB to the Companys reporting currency, United States dollars (US$), has been made at the exchange rate of US$1 to RMB8.11, based on the most recent announcement made by the Peoples Bank of China on July 21, 2005.

Assets and liabilities items denominated in foreign currency are translated to the functional currency at the prevailing exchange rate at the balance sheet date. Revenue and expenses are translated at the weighted average rate in effect on the transaction dates. Foreign currency gains and losses, if any, are included in the determination of net income for the period, i.e., in the account of other comprehensive income.

The RMB is not readily convertible into US dollar or other foreign currencies. The foreign exchange rate between the US$ and the RMB has been stable at approximately US$1 to RMB8.28 for the last few years. No representation is made that the RMB amounts could have been or could be, converted into United States dollars or any other currency at that rate or any other rate.

STOCK-BASED COMPENSATION

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (SFAS 123R). SFAS 123R revises FASB Statement No. 123 Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 Accounting for Stock Issued to Employees. SFAS 123R requires all public and non-public companies to measure and recognize compensation expense for all stock-based payments for services received at the grant-date fair value, with the cost recognized over the vesting period (or the requisite service period). The Company has adopted SFAS 123R on its consolidated financial statements.

- 6 -

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RECENTLY ISSUED ACCOUNTING STANDARDS

Interpretation No.  46 Consolidation of Variable Interest Entities, an Interpretation of ARB No.  51 (FIN 46).  FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003.  For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003.  FIN 46 does not have any impact on the financial position or results of operations of the
Company.

In April 2003, the FASB issued SFAS No.  149, Accounting for Amendment of statement 133 on Derivative Instruments and Hedging Activities, which amends and clarifies financial accounting and reporting for derivative instruments, including  certain derivative instruments embedded in other contracts and for hedging  activities under FASB Statement No.  133, accounting for Derivative Instruments and Hedging Activities.  This Statement is generally effective for contracts entered into or modified after June 30, 2003, and all provisions should be applied prospectively.  This statement does not affect the Company.

In May 2003, the FASB issued SFAS No.  150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which establishes  standards for how an issuer classifies and measures certain financial instruments with  characteristics of both liabilities and equity.  It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances).  This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of
adoption.  Restatement is not permitted.  This statement does not affect the Company.

In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No.  151 Inventory Costs - an amendment of ARB No.  43, Chapter 4 (SFAS 151).  This statement amends the guidance in ARB No.  43, Chapter 4, Inventory Pricing, to clarify the accounting  for abnormal amounts of idle facility expense, freight, handling costs, and wasted  material (spoilage).  SFAS 151 requires that those items be recognized as current-period charges.  In addition, this Statement requires that allocation of fixed production overheads to costs of conversion be based upon the normal capacity of the production facilities.  The provisions of SFAS 151 are effective for fiscal years beginning after June 15, 2005.  As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended December 31, 2006.  The Company is currently evaluating the impact of SFAS 151 on its consolidated financial statements.

RELATED PARTY TRANSACTIONS

The following related party transactions occurred for the three quarters ended September 30, 2005: the Company purchased $11.5M finished products and $0.3M packaging materials from Ruili Group; sold $3.3M products to Ruili Group for the three quarters ended September 30, 2005. The Company purchased $5.7M finished products and $0.5M packaging materials from Ruili Group for the three quarters ended September 30, 2004.

Item 2.          Managements Discussion And Analysis or Plan of Operation.

The following is
managements discussion and analysis of certain significant factors that
have affected our financial position and operating results during the periods
included in the accompanying consolidated financial statements, as well as
information relating to the plans of our current management.  This report includes  forward-looking statements.

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Generally, the words believes, anticipates, may, will, should, expect, intend, estimate, continue, and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected.  Undue reliance should not be place on these forward-looking statements  that speak only as of the date hereof.  We undertake no obligation to update these forward-looking statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-Q.

OVERVIEW

On May 10, 2004, we acquired all of the issued and outstanding equity interests of Fairford Holdings Limited, a Hong Kong limited liability company.  Until we acquired Fairford, we had only nominal assets and liabilities and limited business operations.  Although Fairford became our wholly-owned subsidiary following the acquisition, because the acquisition resulted in a change of control, the acquisition  was recorded as a reverse merger whereby Fairford is considered to be the accounting acquirer.  As such, the following results of operations are those of Fairford.

Fairford was organized in Hong Kong as a limited liability company on November 3, 2003.  Fairford owns 90% of the equity interest of Ruili Group Ruian Auto Parts Co., Ltd., a Sino-foreign joint venture (the Joint Venture) established pursuant to the laws of the Peoples Republic of China (PRC or China).  The Joint Venture is a joint venture between Fairford and Ruili Group Co., Ltd. (the Ruili Group).

The Ruili Group was incorporated in the PRC in 1987 to specialize in the development, production and sale of various kinds of automotive parts.  Its headquarters are located in the Ruian District of Wenzhou City, one of the leading automotive parts manufacturing centers of China with more than 1400 auto parts manufacturing companies.  Its major product lines include valves for air brake systems, auto metering products, auto electric products, anti-lock brake systems and retarders.  Some of those products were developed and are manufactured through affiliated companies of Ruili Group.  Due to its leading position in the industry, the Chairman of the Ruili Group, Mr. Xiao Ping Zhang, has been elected as the Chairman of Wenzhou Auto Parts Association, one of the leading auto parts trade associations in China.  Mr. Zhang is also Chairman and Chief Executive Officer of the
Company.  The Joint Venture was established in the PRC on March 4, 2004 as a Sino-foreign joint venture company with limited liability by the Ruili Group and Fairford.  Fairford and Ruili Group contributed 90% and 10%, respectively, of the paid-in capital in the aggregate amount of US$7,100,000.

In connection with its
formation, effective January 19, 2004, the Joint Venture acquired the
business of the Ruili Group relating to the manufacture and Sale of various
kinds of valves for automotive brake systems and related operations (the
Transferred Business).  This was accomplished by the transfer
from the Ruili Group to Fairford of the relevant assets and liabilities of the
Transferred Business  including trade receivables, inventories, and
machinery, and the assumption of  short and long term borrowings, at a
consideration of US$6,390,000.  The consideration was based on a valuation
by an independent PRC valuation firm.  Fairford then injected these assets
and liabilities as a capital contribution for its 90% interest in the Joint
Venture.  The Ruili Group also transferred inventory as its capital
contribution for its 10% interest in the Joint Venture.  The assets and
liabilities transferred to the Joint Venture by Fairford and the Ruili Group
represented all the relevant assets and liabilities of the Transferred
Business.  Certain historical information of the Transferred Business is
based on the operation of such Business when it was owned by the Ruili
Group.

Pursuant to the formation of the Joint Venture, on January 17, 2004, the Ruili Group and Fairford signed a binding Joint Venture agreement (the JV Agreement).  Pursuant to the JV Agreement, the Board of Directors consists of three directors; Fairford has the right to designate two members of the board and the Ruili Group has the right to designate one member.  The majority of the Board has decision making authority with respect to operating matters.  As a result, Fairford maintains operating control over the Joint Venture.

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As a result of the foregoing, through Fairfords 90% interest in the Joint Venture, the Company manufactures and distributes automotive air brake valves and hydraulic brake valves in China and internationally for use primarily in vehicles weighing over three tons, such as trucks, vans and buses.  There are thirty-six categories of valves with over eight hundred different specifications.  Management believes that it is the largest manufacturer of automotive brake valves in China.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Below is a description of accounting policies, which we consider critical to the preparation and understanding of our financial statements.  In addition, certain amounts included in or affecting our financial statements and related disclosure must be estimated, which requires us to make assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared.  Actual results may differ from these estimates under different assumptions or conditions.  The selection of critical accounting policies, the judgments and other uncertainties affecting the application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our consolidated financial statements.  We believe that the following critical accounting policies set forth below involve the
most significant judgments and estimates used in the preparation of our consolidated  financial statements.  We evaluate these policies on an ongoing basis, based upon historical results and experience, consultation with experts, trends and other methods we consider reasonable in the particular circumstances, as well as our forecasts as to how these might change in the future.

ACCOUNTING METHOD

The Company uses the accrual method of accounting which recognizes revenues when earned and expenses when incurred.

TRADE RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company presents trade receivables, net of allowances for doubtful accounts.  The allowances are calculated based on review of individual customer accounts.

INVENTORIES

Inventories are stated at the lower of cost or net realizable value.  Cost is calculated on the weighted-average basis and includes all costs to acquire and other costs incurred in bringing the inventories to their present location and condition.  The Company evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed moving-average cost if it exceeds the net realizable value.

INCOME TAXES

Taxes are calculated in accordance with taxation principles currently effective in the PRC.  The Company accounts for income taxes using the liability method.  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.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

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Under a Tax Holiday, the Company is granted exemption form income tax for two years commencing from the first cumulative profit-making year and 50% reduction in the local income tax rate in the following three years.  2004 is the first accumulative profit-making year.  SORL is entitled to a 50% income tax reduction in 2006, 2007 and 2008.  Thereafter, the applicable income tax rate is 26.40% in Wenzhou city which is located in the coastal economic development zones.

REVENUE RECOGNITION

In accordance with the provisions of Staff Accounting Bulletin No.  103, revenue is recognized when merchandise is shipped and title passes to the customer and collectibility is reasonably assured.  Revenues consist of the invoice value of the sale of goods and services net of value added tax, rebates and discounts.  The Company is subject to the following surtaxes, which are recorded as deductions from gross sales: Education Tax.

The Company does not receive revenue for shipping and handling to customers.  Shipping and handling expenses incurred by the Company are included in selling and administrative expenses in the accompanying consolidated statements of income.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade accounts receivable.  The Company performs ongoing credit evaluations with respect to the financial condition of its creditors, but does not require collateral.  In order to determine the value of the Companys accounts receivable, the Company records a provision for doubtful accounts to cover probable credit losses.  Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectibility of outstanding accounts receivable.

RESULTS OF OPERATIONS

(1)          FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004

SALES

Sales for the quarter ended September 30, 2005 increased by $3.8 million or 30% to $16.4 million from September 30, 2004, primarily as a result of the increase in the sales volume or the units sold particularly from export (outside of China) sales. The export sales accounted for 88% of the total quarter sales increase, while the domestic sales increase accounted for 12% of total quarter increase.

COST OF SALES

Cost of sales for the quarter ended September 30, 2005 increased to $12.9M from $9.7M for the quarter ended September 30, 2004, or 33% increase.  The cost increase was in line with the increase of sales revenue.

GROSS PROFIT

Gross profit for the quarter ended September 30, 2005 increased by $0.58M to $3.47M from $2.89M for the quarter ended September 30, 2004. This increase in gross profit was primarily due to the increase in the sales both in the domestic (China) and international market. However, the gross profit margin decreased to 21% in the quarter ended September 30, 2005 from 23% in the comparable quarter in 2004, primarily as a result of the RMB appreciation against the US dollar in the context of a much larger amount of export sales denominated in US dollars, as well as an increasing portion of distribution of products not manufactured by the Company itself (which carries a lower margin). Although the gross margin of distribution was at 4% on average, it represents an important value-added service to existing customers by offering to them a wider range of products and saving
customers transaction costs. As part of its short term strategy and in an effort to gain market share and brand recognition, the Company has not increased the prices of its products to offset the currency appreciation.

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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the quarter ended June 30, 2005 was $1.6M or 11% of total net sales compared to $1.2M or 11% of total net sales for the quarter ended June 30, 2004.  The increase of the expenses was in line with the growth of the business.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense increased to $201k during the quarter ended September 30, 2005 was $1.7M or 10% of total net sales compared to $1.1M or 9% of total net sales for the quarter ended September 30, 2004. The increase in expenses was consistent with the growth of the business. In the current quarter, the Company charged $65,000 to general & administrative expense (from the issuance of 10,000 shares at a market price of $6.50 per share on June 30, 2005 for financial advisory services).

INTEREST EXPENSE

Interest expense for the quarter ended September 30, 2005 increased by $60,000 to $139,000 from $79,000 from the quarter ended September 30, 2004. The increase in interest expense is due to the higher debt balance over the year.

INCOME TAX

There was no income tax for both the quarters ended September 30, 2005 and 2004.  As a result of the Joint Venture (i.e.  Ruili Group Auto Parts Co., Ltd.) obtaining its foreign joint-venture status in 2004, it is exempted from PRC income tax in both fiscal 2004 and 2005.

MINORITY INTEREST

Minority Interest represents a 10% non-controlling interest in the company.  Minority Interest in income amounted to US$164,000 and US$165,000 for quarters ended September 30, 2005 and 2004, respectively.

NET INCOME

The net income for the quarter ended September 30, 2005 decreased by $16,000, representing a 1% decrease in a net income in $1.47M from net income of $1.49M for the quarter ended September 30, 2004 due to the factors discussed above

(2)     FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

SALES

Sales for the three quarters ended September 30, 2005 increased by $12.7 million or 39% to $45.8 million, primarily as a result of the increase in the volume of products shipped. Export sales increased approximately 86%, constituting 60% of the total sales increase.

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COST OF SALES

Cost of sales for the three quarters ended September 30, 2005 increased to\$35.7M from $25.3M for the three quarters ended September 30, 2004, or a 41% increase. The cost increase was consistent with the changes in the operation.

GROSS PROFIT

Gross profit for the three quarters ended September 30, 2005 increased by $2.2M or 28% to $10.0M from $7.8M for the three quarters ended September 30, 2004. This increase in gross profit was primarily due to the increase in the sales both in the domestic and international market. However, the gross margin dropped 2% from 24% to 22% because of the RMB appreciation against the US dollar by 2%, as well as the increase in the distribution of products not manufactured by the Company by $5.8M which carried an average 4% gross margin.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the three quarters ended September 30, 2005 was $4.8M or 10% of net sales compared to $3.6M or 11% of net sales for the three quarters ended September 30, 2004. The decrease in selling, general and administrative expenses as a percentage of net sales was due primarily to the economies of scale resulting from the increase in sales.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense increased to $575,000 for the three quarters ended September 30, 2005, compared to the depreciation and amortization expense of $512,000 for the three quarters ended September 30, 2004.

INTEREST EXPENSE

Interest expense for the three quarters ended September 30, 2005 increased by $96,000 to $331,000 from $235,000 for the three quarters ended September 30, 2004. The increase in interest expense was due to the higher debt balance over the year.

INCOME TAX

There was no income tax for the two quarters ended June 30, 2005 and 2004.  As a result of the Joint Venture (i.e.  Ruili Group Auto Parts Co., Ltd.) obtaining its foreign joint-venture status in 2004, it is exempted from PRC income tax. There was no income tax for the three quarters ended September 30, 2005 and 2004. As a result of the Joint Venture obtaining its foreign joint-venture status in 2004, it is exempted from PRC income tax in both fiscal 2004 and 2005.

MINORITY INTEREST

Minority Interest represents a 10% non-controlling interest in the Joint Venture. Minority Interest in income amounted to $487,000 and $297,000 for the three quarters ended September 30, 2005 and 2004, respectively.

NET INCOME

The net income for the three quarters ended September 30, 2005 increased by $747,000, or 20% to a net income of $4.4M from a net income of US$3.6M for the three quarters ended September 30, 2004 due to the factors discussed above.

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FINANCIAL CONDITION

(1)          LIQUIDITY AND CAPITAL RESOURCES

OPERATING - The Companys operations utilized cash resources of $5,221,159 for the three quarters ended September 30, 2005, as compared to generating cash resources of $25,734,345 for the three quarters ended September 30, 2004, primarily as a result of that cash generated in 2005 was consumed to support the increase of receivables and inventory and reduce the accounts payables.

Accounts receivable for the 9 months ended September 30, 2005 increased by approximately $10,269,000 from $12,595,905 to $22,864,804. The increase is primarily attributable to credit terms of 120 days being extended to OEM customers which exceed the normal credit terms of 45-60 days extended to other customers, in addition to the increase in sales revenue.

Days Sales Outstanding (DSO) which is a common measure of liquidity, is computed by dividing accounts receivable at the balance sheet date by the daily net credit sales during the period. Days sales outstanding for the 9 months ended September 30, 2005 was 135 as compared to 97 days for the year ended December 31, 2004. The increase in the DSO primarily results from the extended terms offered to the OEM customers.

At September 30, 2005, the Company had cash and cash equivalents of $721,452, as compared to cash and cash equivalents of $476,233 at September 30, 2004. The Company had working capital of $9,989,672 at September 30, 2005, as compared to a working capital deficiency of $10,057,296 at September 30, 2004, reflecting current ratios of 1.55:1 and 0.86:1, respectively. The improvement in working capital for the three quarters ended September 30, 2005 was primarily a result of the growth of profit.

The Company anticipates that its working capital resources are adequate to fund the anticipated costs and expenses for the remainder of the fiscal year ending December 31, 2005.

INVESTING- for the three quarters ended September 30, 2005, the Company utilized $1,975,074 in the acquisition of property and equipment to support the growth of its business. During the nine months ended September 30, 2004, the Company utilized $307,122 in investing activities.

FINANCING - for the three quarters ended September 30, 2005, the Company generated $6,967,553 from bank loans; for the three quarters ended September 30, 2004, the Company paid off $2,175,812 in debt.

At September 30, 2005, the Company does not have any material commitments for capital expenditures or have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

(2)          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not have any market risk with respect to such factors as commodity prices, equity prices, and other market changes that affect market risk sensitive investments.

With respect to foreign currency exchange rates, the Company does not believe that the 2% appreciation or fluctuation of the RMB against the USD would have a detrimental effect on the Companys operation; even though the Company has almost one third of its revenues attributable to sales outside the PRC since on the one hand in the past the exchange rates to other currencies were fluctuating except for that to the US dollar, and on the other hand, exports to the US are still not material in relation to overall export sales.

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As the Companys debt obligations are primarily short-term in nature, with fixed interest rates, the Company does not have any risk from an increase in market interest rates.  However, to the extent that the Company arranges new borrowings in the future, an increase in market interest rate would cause a commensurate increase in the interest expense related to such borrowings.

Item 3.          Controls And Procedures

(a)          Evaluation of Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that the Company files or submits pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commissions (SEC) rules and forms, and that such information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In conjunction with the close of each fiscal quarter and under the supervision of the Chief Executive Officer and Chief Financial Officer, the Company conducts an update, a review and an evaluation of the effectiveness of the Companys disclosure controls and procedures. It is the conclusion of the Companys Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of the end of the most recent fiscal quarter reported on herein, that the Companys disclosure controls and procedures were effective.

(b)          Changes in Internal Controls.

During the period covered by the Quarterly Report on Form 10-QSB, there were no changes in our internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II OTHER INFORMATION

Item 6.          Exhibits.

(a)          Exhibits:

|EXHIBIT NO. |  | DOCUMENT DESCRIPTION                                                                                                                                                    
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                         
|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 Financial 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 18 U.S.C.  Section 1350,   as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief   Executive Officer).  (3)           
|            |  |                                                                                                                                                                         
|32.2        |  | Certification   pursuant to 18 U.S.C.  Section 1350,   as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief   Financial Officer).  (3)           

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

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SIGNATURES

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

|Dated:   January 31, 2006 | SORL AUTO   PARTS, INC.
|------------------------- | -----------------------
|                          |                        
|                          |                        
|                          | By:                    
|                          |                        
|                          | Name:                  
|                          | Title:                 

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