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


                            FORM 10-QSB



(Mark One)


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

                For the quarterly period ended September 30, 2005
--------------------------------------------------------------------------------

|_|   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 small business issuer as specified in its charter)

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

                              No. 1169 Yumeng Road
                       Ruian 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 |_|


                      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 |_| No |X|
--------------------------------------------------------------------------------

<PAGE>

                                      INDEX

PART I.    FINANCIAL INFORMATION (unaudited)................................   3

Item 1.    Financial Statements:............................................   3

           Consolidated Balance Sheets......................................   3

           Consolidated Statements of Operations for the Three Months and
              Nine Months Ended September 30, 2005 and 2004.................   4

           Consolidated Statements of Changes in Shareholders' Equity
              for the Third Quarter Ended on September 30, 2005 and 2004....   5

           Consolidated Statements of Cash Flows for the Third Quarter Ended
              September 30, 2005 and 2004...................................   6

           Notes to the Consolidated Financial Statements...................   7

Item 2.    Management's Discussion and Analysis or Plan of Operations.......   9

Item 3.    Controls and Procedures..........................................  15

PART II.   OTHER INFORMATION................................................  15

Item 1.    Legal Proceeding.................................................  15

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds......  15

Item 3.    Defaults Upon Senior Securities..................................  16

Item 4.    Submission Of Maters To a vote of Security Holders...............  16

Item 5.    Other Information................................................  16

Item 6.    Exhibits.........................................................  16

SIGNATURES..................................................................  17


                                       2
<PAGE>

                                                      PART I
                                               FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                               SORL AUTO PARTS, INC.
                                            CONSOLIDATED BALANCE SHEETS
                                     SEPTEMBER 30, 2005 AND DECEMBER 31, 2004

                                     Assets
                                                                                                     December 31,
                                                                              September 30,              2004
                                                                              2005 Unaudited           Audited
                                                                             ----------------       --------------
<S>                                                                          <C>                    <C>
Current Assets
     Cash and cash equivalents                                         US$            721,452  US$         729,875
     Account receivables, net of provision                                         22,864,804           12,595,905
     Notes receivables                                                                432,676              129,675
     Inventory                                                                      2,720,323            1,875,300
     Prepayments                                                                    1,296,602            1,404,710
     Other currents (receivables, or discontinued operations)                         180,443              393,300
                                                                             ----------------       --------------
         Total Current Assets                                                      28,216,300           17,128,765
Fixed Assets
     Property, plant and equipment                                                  9,492,870            7,517,796
     Less: Accumulated depreciation                                                (2,788,265)          (2,165,142)
                                                                             ----------------       --------------
         Fixed Assets, Net                                                          6,704,605            5,352,654
Other Assets
     Intangible assets                                                                 44,078               43,174
     Less: Accumulated amortization                                                    (9,998)              (4,454)
         Intangible Assets, Net                                                        34,080               38,720
     Other LT assets (discontinued operations)                                             --                   --
         Total Other Assets                                                            34,080               38,720
     Total Assets                                                      US$         34,954,985  US$      22,520,139
                                                                             ================       ==============
                      Liabilities and Shareholders' Equity
Current Liabilities
     Accounts payable                                                  US$          3,166,039  US$       4,717,655
     Deposit received from customers                                                1,863,476              861,624
     ST bank loans                                                                 11,798,471            4,830,918
     Accrued expenses                                                                 553,713              625,769
     Other current liabilities                                                        844,929                   --
                                                                             ----------------       --------------
         Total Current Liabilities                                                 18,226,628           11,035,966

Minority Interest                                                                   1,650,720            1,148,418

Shareholders' Equity
     Common stock                                                                      26,594               26,574
     Paid in capital                                                                4,147,217            4,082,237
     Accumulated other comprehensive income (loss)                                    156,160                   --
     Retained earnings (deficit)                                                   10,747,665            6,226,944
                                                                             ----------------       --------------
                                                                                   15,077,636           10,335,755
     Total Liabilities and Shareholders' Equity                        US$         34,954,985  US$      22,520,139
                                                                             ================       ==============
</TABLE>

The accompanying notes are an integral part of the financial statements


                                                        3
<PAGE>

<TABLE>
<CAPTION>
                                                SORL AUTO PARTS, INC.
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                              FOR THE THIRD QUARTER ENDED ON SEPTEMBER 30, 2005 AND 2004


                                                             2005Q3         2005 YTD         2004 Q3        2004 YTD
                                                           ---------------------------     --------------------------
<S>                                                        <C>             <C>             <C>            <C>
Revenue                                               US$   16,376,928      45,794,109      12,595,272     33,054,188

Cost of Sales                                               12,909,886      35,747,428       9,706,939     25,270,118
                                                           ---------------------------     --------------------------
Expenses:
     Selling and Distribution Expenses                         849,854       2,732,863         606,780      1,622,100
     General and Administrative Expenses                       822,925       2,027,085         536,362      1,947,934
                                                           ---------------------------     --------------------------
          Total Expenses                                     1,672,779       4,759,948       1,143,142      3,570,034

Operating Income                                             1,794,263       5,286,733       1,745,191      4,214,036

Financial Expenses                                            (145,168)       (331,254)        (78,125)      (234,677)
Non-Operating Expenses                                         (12,642)        (88,615)        (13,157)       (49,431)
                                                           ---------------------------     --------------------------
Income Before Provision for Income Taxes                     1,636,453       4,866,864       1,653,909      3,929,928

Provision for Income Taxes                                          --              --              --             --
                                                           ---------------------------     --------------------------
Net Income Before Minority Interest                          1,636,453       4,866,864       1,653,909      3,929,928
                                                           ===========================     ==========================
Minority Interest                                              163,645         486,686         165,391        297,137
                                                           ---------------------------     --------------------------
Net Income                                                   1,472,808       4,380,178       1,488,518      3,632,791
                                                           ===========================     ==========================
Foreign Currency Translation Adjustment                        156,160         156,160              --             --

Minority Interest's share                                       15,616          15,616              --             --
                                                           ---------------------------     --------------------------
Comprehensive Income (Loss)                                  1,613,352       4,520,721       1,488,519      3,632,791
                                                           ===========================     ==========================
Weighted average common share - Basic                       13,297,055      13,290,388      13,287,055     13,287,055

Weighted average common share - Diluted                     13,297,055      13,290,388      13,287,055     13,287,055

EPS - Basic                                                       0.11            0.33            0.11           0.27

EPS - Diluted                                                     0.11            0.33            0.11           0.27
</TABLE>

The accompanying notes are an integral part of the financial statements


                                                          4
<PAGE>

<TABLE>
<CAPTION>
                                                SORL AUTO PARTS, INC.
                                         CONSOLIDATED STATEMENTS OF CHANGES
                                           IN SHAREHOLDERS' EQUITY FOR THE
                                 THIRD QUARTER ENDED ON SEPTEMBER 30, 2005 AND 2004

                                                                          Retained          Other
                           Number of                                      Earnings      Comprehensive  Shareholders'
                            Shares      Common Stock  Paid in Capital    (Deficit)         Income         Equity
--------------------------------------------------------------------------------------------------------------------
<S>                      <C>            <C>           <C>                <C>            <C>            <C>
Beginning Balance -
Dec.  31, 200                328,533           657        26,883,343       1,420,000            --        28,304,000

Common Stock              12,958,522        25,917                                                            25,917

Re-organization                                          (22,801,106)                                    (22,801,106)

Net Income (Loss)                                                          3,632,791                       3,632,791

Other Comprehensive
Income (Loss)                                                                                   --                --

Paid In Capital
Contributions                                                     --
--------------------------------------------------------------------------------------------------------------------
Ending Balance -
Sep. 30, 2004                               26,574         4,082,237       5,052,791            --         9,161,602
====================================================================================================================

Beginning Balance -
Dec 31, 200               13,287,055        26,574         4,082,237       6,226,944            --        10,335,755

Common Stock                  10,000            20                                                                20

Net Income (Loss)                                                          4,520,721                       4,520,721

Other Comprehensive
Income (Loss)                                                                              156,160           156,160

Paid In Capital
Contributions                                                 64,980                                          64,980
--------------------------------------------------------------------------------------------------------------------
Ending Balance -
Sep. 30, 2005             13,297,055        26,594         4,147,217      10,747,665       156,160        15,077,636
====================================================================================================================
</TABLE>

Note:    Common stock has a par value of $0.002

The accompanying notes are an integral part of the financial statements


                                                         5
<PAGE>

<TABLE>
<CAPTION>
                                               SORL AUTO PARTS, INC.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE THIRD QUARTER ENDED ON SEPTEMBER 30, 2005 AND 2004


                                                                                   2005                  2004
                                                                             ----------------        -------------
<S>                                                                          <C>                     <C>
Cash Flows from Operating Activities
Net Income (Loss)                                                      US$          4,520,721  US$       3,632,791
     Adjustments to reconcile net income (loss to net cash from
     operating activities:
     Amortization                                                                       5,544               (3,323)
     Depreciation                                                                     623,123              351,410
     Changes in Assets and Liabilities:
     Account Receivables                                                          (10,268,899)         (11,725,129)
     Notes Receivables                                                               (303,001)          (1,469,862)
     Other Receivables                                                                212,857             (100,159)
     Inventory                                                                       (845,023)            (380,950)
     Prepayments, Deposits, and Other Current Assets                                  108,108            1,719,360
     Account Payables                                                              (1,551,615)          (4,275,039)
     Deposits Received from Customers                                               1,001,852            3,085,319
     Other Payables and Accrued Expenses                                              772,873           25,501,713
     Minority Interest                                                                502,302              848,137
                                                                             ----------------        -------------
            Net Cash Flows from Operating Activities                               (5,221,158)          25,734,346

     Cash Flows from Investing Activities
        Acquisition of Property and Equipment                                      (1,975,074)            (278,779)
        Investment in Intangible Assets                                                  (905)             (28,343)
                                                                             ----------------        -------------
            Net Cash Flows from Investing activities                               (1,975,979)            (307,122)

Cash Flows from Financing Activities
     Proceeds from Borrowings                                                       6,967,553           (2,175,812)
     Proceeds from Share Issuance                                                          20               25,917
     Paid-in capital increase                                                          64,980          (22,801,106)
                                                                             ----------------        -------------
            Net Cash flows from Financing Activities                                7,032,553          (24,951,001)

     Accumulated other Comprehensive Income                                           156,160

Net Increase (Decrease) in Cash                                                        (8,424)             476,224

Cash - Beginning of the term                                                          729,875                   --
                                                                             ----------------        -------------
Cash - End of the term                                                                721,452              476,224
                                                                             ================        =============
Supplemental Cash Flow Disclosures
     Interest Paid                                                                    139,286               79,124
     Tax Paid                                                                              --                   --
                                                                             ----------------        -------------
</TABLE>


                                                        6
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    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.

2.    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 Ruian Group Ruian Auto Parts Company Limited ("Ruian") 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.

3.    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.

4.    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.


                                       7
<PAGE>

5.    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.    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.

7.    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.


                                       8
<PAGE>

8.    OTHER MATTERS

      In January 2004, the Ruili Group underwent a corporate reorganization to
restructure its business (the "Reorganization"). Pursuant to the Reorganization,
the Ruili Group and Fairford Holdings Limited ("Fairford"), a company
incorporated on November 3, 2003, in Hong Kong with limited liability, with
identical shareholders as the Ruili Group, established Ruili Group Ruian Auto
Parts Co., Ltd., in the PRC as a Sino-foreign equity joint venture company with
limited liability (the Company) on March 4, 2004.

      As part of the Reorganization, the Ruili Group transferred to the JV
Company the business of manufacture and sale of various kinds of automobile
valves and related operations together with the relevant assets and liabilities
(the "Transferred Business") effective from January 19, 2004. This was
accomplished by transferring the relevant assets and liabilities of the
Transferred Business including trade receivables, inventories, plant and
machineries, and short and long-term borrowings from the Ruili Group to Fairford
at a consideration of $6,406,780. Fairford then injected these relevant assets
and liabilities as capital contribution for 90% interest of the JV Company. The
remaining 10% capital contribution resulted from the Ruili Group's additional
inventories. The assets and liabilities injected into the JV Company by the
Ruili Group and Fairford represented all the relevant assets and liabilities of
the Transferred Business. The Ruili Group retained ownership of certain assets
and liabilities including land use rights, buildings, prepayment and deposits of
real estate investments, bank balances, borrowings, claims and contingent
liabilities (collectively the "Non-transferred Business"). The net assets of
discontinued operations were transferred to stockholders at $22,160,876.

                                    PART II

ITEM 2. MANAGEMENT'S DISCUSSION & 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. 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-QSB.

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.


                                       9
<PAGE>

      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, plant 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.

      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.


                                       10
<PAGE>

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.

      Under 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 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.


                                       11
<PAGE>

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 SEPTEMBER 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 from the quarter ended September 30, 2004, representing a 33%
increase. The cost increase was consistent with the increase in 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.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses for 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).

DEPRECIATION AND AMORTIZATION

      Depreciation and amortization expenses during the quarter ended September
30, 2005 were $182,000, approximately the same as that of the quarterly
depreciation & amortization expenses of $182,000 in 2004.


                                       12
<PAGE>

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 Joint
Venture. Minority Interest in income amounted to US$164,000 and US$165,000 for
the quarters ended September 30, 2005 and 2004, respectively.

NET INCOME

      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 NINE MONTHS ENDED SEPTEMBER 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.

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.


                                       13
<PAGE>

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 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.

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.

      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.


                                       14
<PAGE>

      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 United
States recently occurring will have a detrimental effect on the Company's
operation even though the Company's export business represents almost one third
its revenues.

9.    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.

      Our Chief Executive Officer and Chief Financial Officer, after evaluating
our disclosure controls and procedures (as defined in the rules and regulation
of the Securities and Exchange Commission under the Exchange Act as of the end
of the period covered by this Quarterly Report on Form 10-QSB, have concluded
that as of such date, our disclosure controls and procedures were effective to
ensure that information we are required to disclose in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

      (b)   Changes in Internal Controls.

      During the period covered by the Quarterly Report on Form 10-QSB, there
were no significant 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 1. LEGAL PROCEEDINGS.

None.

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS.

None.


                                       15
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

      (a)   Exhibits:

            31.1  Certification pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002

            31.2  Certification pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002

            32.1  Certification pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002

            32.2  Certification pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002


                                       16
<PAGE>

                                   SIGNATURES

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

Dated: November 11, 2005                      SORL AUTO PARTS, INC.


                                              By: /s/  Xiao Ping Zhang
                                                --------------------------------
                                                Name:  Xiao Ping Zhang
                                                Title: Chief Executive Officer


                                       17