U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                   FORM 10-KSB

                              --------------------

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

                   For the Fiscal Year Ended December 31, 2004

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

      For the transition period from ________________ to __________________

                        Commission File Number 000-49630

                              China Autoparts, Inc.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

         Delaware                                            13-4168913
--------------------------------------------------------------------------------
(State or other jurisdiction of                            (IRS. Employer
 incorporation or organization)                           Identification No.)

276 Fifth Avenue, Suite 703, New York, New York                   10001
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

Issuer's telephone number, including area code (212)-684-3760

Securities registered pursuant to Section 12(b) of the Act:
            Common Stock $.0001 par value

Securities registered pursuant to Section 12(g) of the Act:
            None.

      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 |_|
<PAGE>

      Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|

      State issuer's revenues for its most recent fiscal year. $17,655,852.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates is $0.

      On March 28, 2005, the issuer had 9,090,910 shares of common stock
outstanding.

      Transitional Small Business Disclosure Format (check one):

                                 Yes |_| No: |X|


                                       ii
<PAGE>

                              CHINA AUTOPARTS, INC.
                                    Form 10-K
                       Fiscal Year Ended December 31, 2004

                                Table of Contents
                                   PART I Page




Item 1.      Description of Business..........................................1
Item 2.      Description of Property..........................................
Item 3.      Legal Proceedings................................................
Item 4.      Submission of Matters to a Vote of Security Holders..............

PART II

Item 5.      Market for Common Equity, Related Stockholder Matters
               and Small Business Issuer Purchases of Equity Securities.......
Item 6.      Management's Discussion and Analysis or Plan of Operation........
Item 7.      Financial Statements.............................................
Item 8.      Changes in and Disagreements with
               Accountants on Accounting and
               Financial Disclosure...........................................
Item 8A.     Controls and Procedures..........................................
Item 8B.     Other Information................................................

PART III

Item 9.      Directors and Executive Officers
               of the Registrant..............................................
Item 10.     Executive Compensation...........................................
Item 11.     Security Ownership of Certain Beneficial
               Owners and Management and Related
               Stockholder Matters............................................
Item 12.     Certain Relationships and Related
               Transactions...................................................
Item 13.     Exhibits.........................................................
Item 14.     Principal Accountant Fees and Services...........................

Signatures....................................................................

Financial Statements  F-1


                                      iii

<PAGE>

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

      Certain  statements  in this Report,  and the  documents  incorporated  by
reference herein, constitute "forward-looking  statements" within the meaning of
Section  27A of  the  Securities  Act of  1933,  Section  21E of the  Securities
Exchange Act of 1934 and the Private  Securities  Litigation Reform Act of 1995.
Such forward-looking  statements involve known and unknown risks,  uncertainties
and other factors which may cause  deviations in actual results,  performance or
achievements to be materially different from any future results,  performance or
achievements expressed or implied. Such factors include, but are not limited to:
the  difficulty  in  predicting  the timing and  outcome of legal  proceedings,;
market and  customer  acceptance  and demand for our  products;  our  ability to
market our products;  the use of estimates in the  preparation  of our financial
statements;  the impact of  competitive  products  and  pricing;  the ability to
develop and launch new products on a timely basis;  the regulatory  environment;
fluctuations  in  operating   results,   including  spending  for  research  and
development and sales and marketing  activities;  and, other risks detailed from
time-to-time  in our filings with the  Securities and Exchange  Commission  (the
"Commission").

      The words  "believe,  expect,  anticipate,  intend  and plan" and  similar
expressions identify forward-looking statements. These statements are subject to
risks  and   uncertainties   that  cannot  be  predicted  or   quantified   and,
consequently,  actual  results may differ  materially  from those  expressed  or
implied by such forward-looking  statements.  Readers are cautioned not to place
undue reliance on these forward-looking  statements,  which speak only as of the
date the statement was made.


                                       1
<PAGE>

                                     PART I

ITEM 1. BUSINESS

General

      China  Autoparts,  Inc. (the "Company" or "we") is a holding company for a
British Virgin Islands company called Rhohan Holdings Limited.("Rhohan"),  which
is a holding  company owning 100% of Chengdu  Tonglin  Casting  Industrial  Co.,
Ltd.("Tonglin"), a corporation formed under the laws of the People's Republic of
China,  which we refer to as the  "PRC."  Tonglin  is a  manufacturer  of engine
blocks. Tonglin currently manufactures and is developing a total of 20 different
engine blocks which  accommodate three or four cylinders for cars, mini vans and
light trucks.  Currently,  Tonglin's sales are made solely to companies  located
within the PRC.

      Our  executive  offices are located at 276 Fifth  Avenue,  Suite 703,  New
York,  New York  10001 and our  telephone  number is  212-684-3760.  Tonglin  is
located  outside of the city of Chengdu in the  Sichuan  Province  of the PRC at
Xinchang  Tonglin  Industrial  Zone, Dayi County,  Chengdu,  Sichuan PRC 611337.
Tonglin uses a factory  facility in Chengdu  with over 9.5 acres of  production,
warehouse and office space (see  "Description  of  Property")  and currently has
approximately 1,200 employees.

      The  Company  was  incorporated  in  Delaware  under  the  name,   "Talram
Corporation"  on May 1,  2001 to  engage in any  lawful  corporate  undertaking,
including, but not limited to, selected mergers and acquisitions. From that date
until  May 12,  2004,  we  remained  in the  business  of  seeking  a merger  or
acquisition  candidate.  Our only other activities  during that time were filing
our required reports under the Securities Exchange Act of 1934, as amended,  and
issuing shares to our initial shareholders.

      On April 22, 2004,  we entered  into a Capital  Stock  Exchange  Agreement
pursuant to which on May 13, 2004 we acquired 100% of the  outstanding  stock of
Rhohan from Double Unity  Investments,  Ltd., a company which is wholly owned by
Li Yungao ("Double  Unity"),  in exchange for 6,636,366  shares of the Company's
Common  Stock.   Rhohan  and  Double  Unity  are  each  British  Virgin  Islands
corporations.  Rhohan's  only  asset  is 100% of the  stock  of  Tonglin,  a PRC
corporation  that is classified as a wholly-owned  foreign  enterprise under PRC
law by virtue of its ownership by Rhohan. In contemplation of the closing of the
Capital Stock Exchange Agreement, on May 1, 2004 we changed our name from Talram
Corporation to China Autoparts, Inc..


                                       2
<PAGE>

      The  result  of the  above  transactions,  as set  forth in the  following
diagram, is that Rhohan is now our direct,  wholly-owned  subsidiary and Tonglin
remains a wholly-owned subsidiary of Rhohan.

                          ----------------------------

                              China Autoparts, Inc.

                          ----------------------------

                                    |        100%
                          ----------------------------

                            Rhohan Holdings Limited.

                          ----------------------------


                                    |        100%
                          ----------------------------

                                 Chengdu Tonglin
                          Casting Industrial Co., Ltd.

                          ----------------------------

      Neither we nor Rhohan have any  operations or plan to have any  operations
in the future other than acting as a holding company and management  company for
Tonglin and raising capital for its operations.

Recent Developments

      On January 25,  2005,  we entered  into a Stock  Purchase  Agreement  (the
"Stock Purchase Agreement") with Li Yungao, Rhohan, Tonglin, Double Unity and JE
Castings Investments Limited ("JE Castings"),  a British Virgin Islands company.
Pursuant to the Stock Purchase Agreement,  Double Unity sold 1,818,182 shares of
our Common Stock to JE Castings for an aggregate  purchase price of US$3 million
and the  Company  issued 100 shares of its Series A Preferred  Stock,  par value
$0.0001 ("Series A Preferred  Stock"),  to JE Castings for an aggregate purchase
price of US$165.  Each share of Series A Preferred Stock is convertible into one
share of the Company's  Common  Stock,  subject to adjustment as provided in our
Amended and Restated Certificate of Incorporation (the "Restated  Certificate").
The closing of the  foregoing  transactions  (the "First  Closing")  occurred on
February 2, 2005.

      In addition to the first closing,  the Stock Purchase Agreement  provides,
subject to certain  conditions set forth therein,  for JE Castings to acquire an
additional  3,030,203  shares of Series A Preferred Stock at a purchase price of
US$1.65 per share for an aggregate  purchase price of US$4,999,835  (the "Second
Closing").  In  addition,  if the net income of the  Company for the fiscal year
ending  December 31, 2005 ("Fiscal  2005") as set forth in the Company's  income
statement  for the  Fiscal  year  2005,  excluding  all  extraordinary  or other
non-recurring income or loss ("2005 Net Income"),  is less than $4,000,000,  the
Company  will  issue the  number of shares of Series A  Preferred  Stock  which,
together with the shares  purchased in the First Closing and the Second Closing,
will give JE Castings potentially a maximum 40% equity ownership interest in the
Company on a fully diluted basis. In such event, Double Unity would transfer for
no additional  consideration to JE Castings the number of shares of Common Stock
such that after this transfer JE Castings will own an aggregate number of shares
of Common  Stock that  represents  15% of the equity  ownership  interest in the
Company on a fully diluted  basis . (The  foregoing  transactions  following the
Second Closing are referred to collectively the "Third Closing.")  Following the
Third Closing,  JE Castings would potentially own a maximum 55% equity ownership
interest in the Company on a fully diluted basis.


                                       3
<PAGE>

            The Stock  Purchase  Agreement  also provides that JE Castings shall
have the  right  to  appoint  directors  as  described  in the  Investor  Rights
Agreement (as defined  below) and the right to appoint,  terminate,  reassign or
refuse the  approval of an  executive  officer so long as JE Castings and any of
its affiliates holds at least 5% of the Company's total outstanding Common Stock
and Series A Preferred Stock.

            Pursuant to the Stock Purchase  Agreement,  on February 2, 2005, the
Company  entered  into an Investor  Rights  Agreement  by and among the Company,
Rhohan,  Tonglin, Double Unity, Li  Yungao and JE Castings (the "Investor Rights
Agreement"),  which, among other things, grants JE Castings certain registration
rights with respect to its shares of Common Stock and certain  rights to appoint
directors to the Company's  board under certain  circumstances.  Pursuant to the
Investor Rights  Agreement,  we granted JE Castings certain demand  registration
rights, exercisable at any time after the earlier of (a) February 2, 2008 or (b)
six months after the effective  date of the Company's  initial  public  offering
with respect to the shares of the Common Stock owned or issuable upon conversion
of Series A Preferred  Stock held by it. In  addition,  JE Castings  was granted
"piggyback" registration rights with respect to such shares in the event that we
register our securities  under the Securities  Act. The  "piggyback"  rights are
subject to certain exceptions as set forth in the Investor Rights Agreement.  In
the event that we conduct an initial public offering,  JE castings has agreed to
a "lock-up" period of 180 days following the date of the final prospectus.

      The Investor Rights Agreement also grants JE Castings the right to appoint
directors  to our Board and to Rhohan and  Tonglin's  boards.  The number of the
directors which JE Castings is entitled to appoint is to be determined according
to its  percentage  ownership  of our Common  Stock,  determined  on a partially
diluted basis allowing for conversion of the outstanding  shares of the Series A
Preferred Stock, as follows:

       Percentage Ownership by JE Castings    Number of Directors Appointed by
                                              JE Castings
       More than 50%                                        3
       10% - 50%                                            2
       5% - 10%                                             1

      Also pursuant to the Stock  Purchase  Agreement,  on February 2, 2005, the
Company entered into a Right of First Refusal, Co-sale and Drag-Along Agreement,
by and among the Company, Double Unity, Li Yungao, JE Castings and certain other
common  stockholders of the Company set forth on Exhibit A thereto (the "Co-Sale
Agreement").  The Co-Sale Agreement  provides that JE Castings and its permitted
assigns  (collectively,  the  "Holders"),  subject to specified  conditions  and
limitations, are granted (i) preemptive rights to purchase a pro rata portion of
any new securities to be sold or issued by the Company, and (ii) rights of first
refusal with respect to proposed  transfers of Common Stock by Double Unity,  Li
Yungao,  the  stockholders  set forth in  Exhibit A thereto  (collectively,  the
"Founding  Stockholders")  or Li Yungao's spouse,  children or trust ("Permitted
Transferees").   In  addition,   if  the  Founding   Stockholders  or  Permitted
Transferees propose to transfer their shares to any third party, the Holders may
transfer a pro rata portion of their shares to the proposed  purchaser  upon the
same terms and conditions offered to the Founding  Stockholders or the Permitted
Transferees.  In the  event  that the  Founding  Stockholders  or the  Permitted
Transferees  attempt to transfer their shares in a manner  inconsistent with the
Co-Sale  Agreement,  the Holders  have the right to put their shares back to the
Founding  Stockholders or the Permitted  Transferees (as the case may be) at the
same price per share as applicable to the attempted transfer.


                                       4
<PAGE>

      Furthermore, if after February 2, 2009, Holders representing more than 50%
in interest of the shares of all Holders  approve of a proposed  acquisition  of
the Company, then each of the Founding Stockholders is obligated to, among other
things,  take all  actions  reasonably  necessary  to  consummate  the  proposed
acquisition   including,   without  limitation,   amending  the  Certificate  of
Incorporation  of the Company and refraining  from  exercising  any  dissenters'
rights or rights of appraisal in connection with the acquisition.

      The Co-Sale  Agreement will  terminate  upon the written  agreement of the
Company  and JE  Castings,  the  closing of an initial  public  offering  by the
Company  with  net  proceeds  of  more  than  $20,000,000  or  the  liquidation,
dissolution or winding up of the business and operations of the Company.

      Business

Tonglin began  operations in 1990 as a workshop of Chengdu  Rongxin  Enterprises
Co., Ltd.  ("Rongxin"),  a PRC casting  company owned by Li Yungao.  Tonglin was
incorporated  on January 21,  2000 in the PRC as a  sino-foreign  joint  venture
company.  At that time,  Rongxin was the PRC joint venture partner owning 40% of
the company and Rhohan was the foreign joint venture  partner  owning 60% of the
company. Beginning in July, 2001, Rhohan increased its ownership interest in the
joint venture by purchasing  additional  interests with monies obtained from the
distribution of dividends from the joint venture.

      On  November  20,  2003,  Rhohan's  purchase of the final 25% of the joint
venture owned by Rongxin was approved by the State  Administration  for Industry
and Commerce for the PRC and Tonglin became a wholly-owned  foreign  enterprise,
referred to as a "WOFE," by virtue of its status as a wholly-owned subsidiary of
a foreign  company,  Rhohan.  There are no restrictions on Tonglin's  operations
under PRC law, or otherwise, that result from its status as a WOFE.

      Tonglin is a manufacturer of engine blocks,  which are sometimes  referred
to as  cylinder  blocks.  An engine  block is a cast iron  block to which  other
engine parts are attached.  It is usually a casting and includes the housing for
the engine cylinders and the upper part of the crankcase.


                                       5
<PAGE>

      Tonglin's production of engine blocks over the past three fiscal years has
been  increasing  as  Tonglin  has  been  able  to add  additional  capacity  to
accommodate  orders.  Tonglin began with two casting  workshops in 2000, and now
has five workshops which allow for annual  production  capacity of approximately
700,000 engine blocks.  Tonglin plans further  production  capacity increases as
needed and if the necessary capital is available.  Tonglin's  production for the
past three fiscal years is set forth below:

Year                  Units             Increase from Prior Year
----                  -----             ------------------------

2004                  495,859           12.96%

2003                  438,984           27.9%

2002                  343,334           57.3%

2001                  218,313             --

      Tonglin  believes that there are currently  approximately  100  automobile
manufacturers  in the PRC.  Tonglin  sells  its  engine  blocks  directly  to 17
different automobile manufacturers and engine assembly companies within the PRC.
Of those 17, for the fiscal year ended December 31, 2004, approximately 90.0% of
the  Company's  sales were to its five largest  customers  and 79.2% were to its
three  largest  customers.   For  the  fiscal  year  ended  December  31,  2003,
approximately   94.0%  of  sales  were  to  its  five  largest   customers   and
approximately 68.0% of sales were to its three largest customers. For the fiscal
year ended  December  31,  2002,  approximately  93.5% of sales were to its five
largest  customers  and  approximately  72.8% of sales were to its three largest
customers.

      Tonglin's five largest customers during the fiscal year ended December 31,
2004, by sales, were: Chengdu Zhengheng Engine Parts Co., Ltd.,  Shanghai Wulong
Automobile  Parts Co.;  Chongqing  Chang'an  Automobile  Co., Ltd.,  ,SAIC Chery
Automobile  Co.,  Ltd. and Zhejiang  Geely  Automobile  Manufacture  Co.,  Ltd..
Chengdu  Zhengheng  is an engine  assembler  which  sells most of its engines to
Chongqing Chang'an Automobile Co., Ltd..

      The loss of any of Tonglin's five largest  customers could have a material
adverse effect on the Company's business.


                                       6
<PAGE>

Products

      Tonglin either produces or has under development 23 different gasoline and
diesel  engine block models which  accommodate  three or four  cylinders and are
used in cars, mini vans and light trucks. The following is a complete listing of
the models and their specifications:

--------------------------------------------------------------------------------
Product Model                           Product Descriptions
--------------------------------------------------------------------------------
CA20                                    Sedan Gasoline Engine Block, 2.0L
                                        V4, Integrated Casting Block, 50 Kg
--------------------------------------------------------------------------------
4JB1                                    Truck Diesel Engine Block, 2.0L
                                        V4, Studded Block, 63 Kg
--------------------------------------------------------------------------------
4JA1                                    Truck Diesel Engine Block, 2.0L
                                        V4, Studded Block, 60.5 Kg
--------------------------------------------------------------------------------
372Q                                    Sedan Gasoline Engine Block, 1.0L
                                        V3, Integrated Casting Block, 25 Kg
--------------------------------------------------------------------------------
480Q                                    Sedan Gasoline Engine Block, 1.6L
                                        V4, Integrated Casting Block, 40.5 Kg
--------------------------------------------------------------------------------
F8C                                     Mini Sedan Gasoline Engine Block, 0.8L
                                        V3, Integrated Casting Block, 23 Kg
--------------------------------------------------------------------------------
GL18                                    Sedan Gasoline Engine Block, 1.8L
                                        V4, Integrated Casting Block, 41.5 Kg
--------------------------------------------------------------------------------
472(474)Q                               Sedan Gasoline Engine Block, 1.3L
                                        V4, Integrated Casting Block, 42 Kg
--------------------------------------------------------------------------------
465-1ANE1                               Mini Sedan Gasoline Engine Block, 1.1L
                                        V4, Integrated Casting Block, 31 Kg
--------------------------------------------------------------------------------
GL16                                    Sedan Gasoline Engine Block, 1.6L
                                        V4, Integrated Casting Block, 38 Kg
--------------------------------------------------------------------------------
465QF                                   Mini Sedan Gasoline Engine Block, 1.0L
                                        V4, Integrated Casting Block, 30 Kg
--------------------------------------------------------------------------------
368Q                                    Mini Sedan Gasoline Engine Block, 0.8L
                                        V3, Integrated Casting Block, 22.5 Kg
--------------------------------------------------------------------------------
479Q                                    Sedan Gasoline Engine Block, 1.3/1.5L
                                        V4, Integrated Casting Block, 38 Kg
--------------------------------------------------------------------------------
465Q                                    Mini Sedan Gasoline Engine Block, 0.9L
                                        V4, Integrated Casting Block, 28 Kg
--------------------------------------------------------------------------------
462Q                                    Mini Sedan Gasoline Engine Block, 0.8L
                                        V4, Integrated Casting Block, 28 Kg
--------------------------------------------------------------------------------
491Q                                    Light Truck Gasoline Engine Block, 2.2L
                                        V4, Integrated Casting Block, 55 Kg
--------------------------------------------------------------------------------
495QF(3RZ)                              Light Truck Gasoline Engine Block, 2.8L
                                        V4, Integrated Casting Block, 61 Kg
--------------------------------------------------------------------------------
4G24(2RZ)                               Light Truck Gasoline Engine Block, 2.8L
                                        V4, Integrated Casting Block, 55 Kg
--------------------------------------------------------------------------------
376Q                                    Mini Vehicle Diesel Engine Block, 1.0L
                                        V4, Integrated Casting Block, 26 Kg
--------------------------------------------------------------------------------
4G54                                    Sedan Casoline Engine Block, 2.5L
                                        V4, Integrated Casting Block, 61Kg
--------------------------------------------------------------------------------
4G64                                    Sedan Casoline Engine Block, 2.4L
                                        V4, Integrated Casting Block, 55.13Kg
--------------------------------------------------------------------------------
472Q                                    Sedan Casoline Engine Block , 1.1L
                                        V4, Integrated Casting Block, 32Kg
--------------------------------------------------------------------------------
493QEngine Block Cover                  The accessory to 4JB1
--------------------------------------------------------------------------------

      The 491Q and 465Q have been and  continue  to be  Tonglin's  best  selling
products,  accounting  for  approximately  69.3%,  72.0% and 73.9% of  Tonglin's
revenues  for  the  fiscal  years  ended  December  31,  2004,   2003  and  2002
respectively.  Together with the 462Q and 479Q,  these models have accounted for
approximately  87.2%,  90.8% and 95.0% of Tonglin's revenues in the fiscal years
ended December 31, 2004, 2003 and 2002,  respectively.  While Tonglin's  product
sales are  currently  concentrated,  it is making  efforts  to market  its other
models as its production capacity has expanded, see "Marketing".


                                       7
<PAGE>

      One of the areas which  Tonglin  believes  sets it apart from other engine
block  manufacturers is its emphasis on quality,  beginning with its purchase of
raw materials and through the production process,  and low cost. Tonglin chooses
its suppliers of raw  materials  through  rigorous  quality  assurance  testing,
interviews,  site visits and,  secondarily,  based on price.  Tonglin  considers
hundreds of raw material  suppliers  in order to have at least three  acceptable
sources available at all times for each raw material.

      Tonglin  has  obtained  International   Organization  for  Standardization
("ISO")  TS16949  Certification  with respect to its production  processes.  ISO
TS16949 is a quality assurance  standard  specific to automotive  production and
service part  companies.  It aligns  existing U.S.,  German,  French and Italian
automotive  quality system standards within the global  automotive  industry and
specifies  the  quality  system   requirements  for  the  design,   development,
production,  installation  and  servicing of  automotive-related  products.  ISO
TS16949 was written by the International Automotive Task Force which consists of
the following group of vehicle manufacturers:  BMW Group, DaimlerChrysler,  Fiat
Auto,  Ford Motor Company,  General  Motors  Corporation,  PSA  Peugeot-Citroen,
Renault S.A. and Volkswagen, as well as several trade associations.

      Tonglin  believes  that its  emphasis on quality has not only  resulted in
increased orders for its products,  but has also resulted in a low percentage of
engine blocks which do not pass inspection  prior to shipping or are returned by
customers.  For the fiscal year ended December 31, 2004, only 1. 5% of Tonglin's
engine blocks were rejected upon inspection by Tonglin or by customers.  Tonglin
also believes that in the future, its quality, and compliance with international
standards may assist it in marketing  engine blocks in countries  other than the
PRC.

Raw Materials

      Tonglin's  low cost  structure  is dependent on its ability to procure raw
materials at prices which are  generally  below those paid by other engine block
manufacturers.  The raw  materials  purchased  by Tonglin,  which are  generally
available, consist primarily of iron and resin sand used in the casting process.
Tonglin's advanced processing technology and unique casting process enable it to
utilize the lower priced raw  materials  in its  manufacturing  process  without
sacrificing  quality in the end product.  See "Tonglin's  Production  Processes.
Tonglin does not have any long-term contracts or arrangements with any suppliers
and therefore,  there is no guarantee that necessary  materials will continue to
be procured at the prices or delivery terms currently available or acceptable to
Tonglin.  However, as set forth above, Tonglin evaluates numerous suppliers each
year and always has at least three that are approved for  purchases for each raw
material.

      During the fiscal year ended  December 31,  2004,  Tonglin  purchased  raw
materials from the following  suppliers totaling 30.6% of its total raw material
purchases:  Dayi County Metal Recycling Co., Ltd., Xin Jiang A'lashankou Jinshan
Trading Co., Ltd. and Chongqing Changjiang Modeling Materials Co., Ltd..

      During the fiscal year ended  December 31,  2003,  Tonglin  purchased  raw
materials from the following  suppliers totaling 35.3% of its total raw material
purchases: Xu Yundong, Jinan Shengquan and Xinjin Financial Commerce and Trading
Co., Inc.


                                       8
<PAGE>

      To  date,  Tonglin  has not  experienced  any  significant  difficulty  in
obtaining raw materials  other than  fluctuation in prices between 2002 and 2003
for iron.  Tonglin  believes that the raw materials it requires will continue to
be generally available in the future.

Production Processes

      Tonglin's  production of engine  blocks is  accomplished  almost  entirely
through the use of manual labor with  approximately  1,013 workers working three
shifts six days per week. At Tonglin's  current  production  levels,  Tonglin is
able to take  advantage  of low  cost  labor in the  Chengdu  area,  which  less
estimated to cost  approximately 50% less than in the Beijing or Shanghai areas.
Tonglin has  experienced  minimal worker  turnover  because its wages are better
than  average  in its region  and  Tonglin  retains  the  flexibility  to add or
subtract  workers as needed.  However,  once  production  levels increase beyond
Tonglin's  current  capacity  of 700,000  engine  blocks,  Tonglin's  management
believes  that it will become  feasible to  automate  certain of its  production
processes.

      Tonglin's engine blocks are produced using a sand casting process. Casting
is a process in which  liquid  molten  metal is poured  into a hollow  cavity or
mold.  After the molten metal cools,  it has the shape of the mold cavity.  In a
sand casting  process,  the mold is made from sand by packing the sand onto wood
or metal pattern halves,  removing it from the pattern halves and assembling the
two halves.

      Tonglin  believes  that the sand  casting  process is  currently  the best
available for iron engine blocks because die casting, which is used for aluminum
and lighter metals,  cannot be used with iron. In a die casting process,  molten
metal is injected  into a steel mold at high  pressure.  The mold  separates and
ejects the casting as the metal cools.

      While many of its  competitors  use a sand casting  process to manufacture
engine  blocks,  Tonglin  believes  that its method is unique and  distinguishes
Tonglin  from its  competitors.  Tonglin  uses a dry resin sand (sand mixed with
clay)  which  allows  for  production  with  little  capital  investment,  short
production  cycles and  reclamation and reuse of  approximately  90% of the sand
used in the process. Many cast-iron engine block companies, and most in the PRC,
use a green sand casting method  utilizing wet sand. While the sand used in this
method can be cheaper,  the molding  machinery can be more expensive;  moreover,
wet molds deform easily, resulting in lower quality products.

      Prior to  production,  raw  materials,  primarily  iron, are inspected and
tested for purity and then  melted.  Once the mold is made from the resin  sand,
molten iron is poured into the mold and allowed to cool.  When the metal  cools,
the engine  block is removed  from the mold by breaking  it. The engine block is
then  machined to remove any excess  metal,  and polished to a smooth finish and
painted with an anti-rust paint.

      Random  samples  are taken from each batch of finished  engine  blocks for
quality   control   inspection   and  testing  using   physical,   chemical  and
spectrographic analysis.


                                       9
<PAGE>

The PRC Automobile Market

      The  PRC  automobile  market  has  been  characterized  by  steady  growth
beginning in the mid-1990s and  continuing  today.  In the six years since 1998,
domestic  automobile  production  has increased from  approximately  1.6 million
vehicles to approximately 5.07 million vehicles,  or approximately 275%. Private
automobile  ownership  and the  number of  licensed  drivers  in the PRC  showed
similar increases during the same period.  Private vehicle  ownership  increased
13.65 million in 2004 as compared with 2003 according to the PRC National Bureau
of Statistics and the number of licensed  drivers  increased 5.1 million in 2004
as compared with 2003.

      The growth in the PRC automobile  market has been greatly  assisted by the
PRC  government  which has  imposed  tariffs and import  quotas on foreign  made
vehicles,   limited  foreign  ownership  of  automobile  manufacturers  to  50%,
encouraged  foreign  investment  and  assisted  in  infrastructure  development.
According to the PRC National Bureau of Statistics, the total length of roadways
in the PRC increased from 1,157,009  kilometers in 1995 to 1,856,239  kilometers
in 2004. In addition, there are numerous new and continuing road improvement and
expansion projects, mostly centering around the PRC's major urban areas.

      While we believe that the assistance of the PRC government  will continue,
the  PRC has  agreed,  in  connection  with  its  entry  into  the  World  Trade
Organization  ("WTO"),  to eliminate quotas and  substantially  lower tariffs on
imported   automobiles.   This  is  already   beginning  to  lead  to  increased
competition,  lower  prices  and lower  profits  to PRC  automakers.  It is also
likely,  in turn, to lead to lower prices and margins for  automobile  parts and
components, including engine blocks.

      In 2005,  the total  market  demand for  automobiles  is  estimated  to be
5,800,000,  an increase of 12%  compared to that of 2004,  according  to the PRC
Information  Center.  However,  due to  increases  in oil  prices,  the  traffic
pressure in major cities and restrictive  national policy on automobile purchase
mortgages  and  insurance,  the actual  increase in  revenues in the  automobile
market will remain moderate.

      Nevertheless,   the  PRC  is  currently  the  fifth  largest  producer  of
automobiles in the world and the Company believes that PRC automobile production
and sales will continue to grow in the future.  The Company's  beliefs are based
on continuing  and rapid growth being  experienced by the PRC economy as well as
the following PRC  government  and industry  forecasts  made during 2003.  While
there is some  disagreement  over  the  rate of  growth  that  the  market  will
experience, many forecasters agree that growth will be strong.


                                       10
<PAGE>

Prediction of PRC Automakers

Source                                          Production
--------------------------------------------------------------------------------
Shen Ningwu                                     10 million by 2010
Vice Chairman
China Association of Automobile Manufacturers

Feng Fei                                        5.89 million cars
Deputy Director-General                         3.48 million trucks/buses
State Council of PRC Industrial Economics       by 2010
Research Development

Huang Yong He                                   7.5-8.2 million by 2010
China Automotive Technical Research Center

Atsuyoshi Hyogo                                 7 million cars
CEO                                                      3 million trucks/buses
Honda Motor China Investment Co.                by 2010

Miao Wei                                        20% annual growth to 2009
Chairman of the Board of Directors
Donfeng Motors

Li Wenyong                                      5.11 million cars
Deputy Chief Economist                          4.01 million trucks/buses
FAW

Source of data: FORIN China Auto Weekly, March 1, 2004 Edition

      Like the market for automobiles,  the market in the PRC for auto parts has
shown similar growth.  Although consistent and reliable data with respect to the
PRC auto parts market is often  unavailable,  Profits reported by PRC Automobile
Industry  Bureau were RMB26.606  billion for the period from January to November
2004,  which  represents an increase of 16.34%  compared with the same period in
2003.  Therefore,  we believe  that the auto  parts  market in the PRC has shown
recent and substantial  growth, and engine related parts have shown particularly
strong  growth.  The Company  believes that this growth is likely to continue as
long as automobile production continues to grow.

Marketing, Sales and Sales Contracts

      Based on its own  sales of  engine  blocks  and the  total  number  of PRC
manufactured  automobiles in 2004, Tonglin estimates that its engine blocks were
in approximately  9.66% of all automobiles  produced in PRC in 2004 and 3.53% of
light trucks and 32.83% of mini class automobiles during the same period.

      Tonglin  markets its  products  directly to its  customers  through its 11
member sales department.  Each member of the sales department  receives three to
five months of training  in both  business  and  technical  matters  relating to
engine blocks and their design, function and manufacturing.


                                       11
<PAGE>

      The  sales  department  performs  several  functions.   First,  the  sales
department  is  responsible  for  business  development.  In  order  to  develop
business, Tonglin employees contact auto manufacturers directly and attend trade
shows and  exhibitions  for the  casting and auto parts  industries  in the PRC.
While  Tonglin has also started to place  advertisements  in trade  journals and
papers,  most of its  business  has been  developed  by direct  solicitation  of
customers and referrals from other customers.

      Second,  the sales  department is  responsible  for  after-sales  service.
Tonglin  has one  employee  on-site at each of its major  customers  who provide
technical  assistance  and  support  for  Tonglin's  products,  ensure  customer
satisfaction,  collect  data as to how  Tonglin's  products  can be improved and
better  integrated into its customers'  production lines and monitor the quality
of Tonglin's  products from the customer's  prospective.  Tonglin has received a
favorable  response to its on-site  support and plans to add additional  on-site
support personnel.

      Third,  the sales  department  is  responsible  for studying and analyzing
market  trends and data in order to  recommend  new  products  or an emphasis on
particular products.

      Because  Tonglin  may have  additional  capacity  of  approximately  up to
250,000 engine blocks in 2005, the sales department plans to increase  Tonglin's
market  share by  improving  customer  service by adding  more  on-site  service
personnel  at its  customers,  taking a more active role in  developing  product
specifications  with customers,  improving  market and  competition  research in
order to respond quickly to changes and new developments, increasing advertising
in trade journals and other  publications  and marketing  Tonglin's  products to
automobile  manufacturers  and engine assemblers in provinces where Tonglin does
not now have a significant presence.

      Most of Tonglin's sales are made through contracts with its customers. The
contracts  tend to be short term - less than one year - and  specify a number of
engine blocks to be delivered and dates or months of delivery. Prior to entering
into a contract,  Tonglin usually receives a letter of intent from the customer.
Upon receipt of the letter of intent, the managers of the Sales,  Accounting and
Production  departments convene to discuss the manpower,  raw material and other
requirements for the contract and then set forth definitive contract terms using
Tonglin's  standard  contract  form.  A contract is then  drafted  which must be
approved by Tonglin's Chairman.

      Because the sales  contracts  specify  numbers of engine blocks needed and
the  time  they  are  required,  Tonglin  usually  has  ample  time to plan  for
production and does not experience significant backlogs of orders.

Seasonality of Tonglin's Business

      Tonglin's  production tends to peak in the third and fourth  quarters.  In
January and  February,  production  generally  slows down due to the Chinese New
Year Holiday.


                                       12
<PAGE>

Competition

      The  automobile  parts  market in the PRC  generally is  competitive, with
approximately  100 PRC  automakers to supply.  With the PRC's entry into the WTO
and the PRC's  agreements  to lift many of the barriers to foreign  competition,
competition  is to  increase  in the PRC auto  parts  market as a whole with the
entry of  foreign  companies  to the  market.  However,  with  respect to engine
blocks,  the Company  believes  that Tonglin can continue to increase its market
share  within the PRC  because of its ability to  manufacture  at a low cost and
because engine blocks are heavy and expensive to ship from other countries.

      Tonglin's current competition is primarily from the following companies:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Competitor        Engine        Automobile Type                                       Market Share (%)       Market Share (%)
                  Block         in which the Model(s)                                 of  the Competitor     of Tonglin
                  Model(s)      are used
------------------------------------------------------------------------------------------------------------------------------
<S>               <C>           <C>                                                   <C>                    <C>
Chongqing Aoli    368Q and      Changan Mini Bus and Changan Auto                     25.51%                 55.85%
                  465Q
                  462Q          Changan Mini Van                                      0                      68.03%
------------------------------------------------------------------------------------------------------------------------------
Kunshan Toyota    491Q          Shenyang Jinbei/Changcheng Saifu                      8.36%                  41.03%

------------------------------------------------------------------------------------------------------------------------------
Shenyang Futian   491Q          Shenyang Jinbei/Changcheng Saifu                      17.50%                 41.03%

------------------------------------------------------------------------------------------------------------------------------
Nanjing Teksid    480Q and      Qirun QQ/Qirun Fengyun                                12.67%                 41.85%
                  372Q
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

      The above  information  is for the period from  January to  November  2004
based  on the  China  Automobile  Industry  Comprehensive  Analysis,  a  journal
published by China Automobile Industry Consulting Company and reports from sales
and marketing representatives of the Company who work closely with the Company's
customers.


                                       13
<PAGE>

      Tonglin's primary direct competitor is Chongqing Aoli which, like Tonglin,
sells a large percentage of its engine blocks to Chongqing  Chang'an  Automobile
Co., Ltd. We believe that  Chongqing  Chang'an  Automobile  Co., Ltd.  currently
purchases approximately 36.67% of its engine blocks from Chongqing Aoli and that
Chongqing Aoli has approximately the same production capacity as Tonglin for the
462Q  and  465Q  products;  however,  Chongqing  Aoli  does  not  have  the same
production  capacity as Tonglin for its other  products.  In  addition,  Tonglin
believes  that its quality  and  customer  satisfaction  ratings are better than
Chongqing  Aoli and that Tonglin has recently been gaining market share from it.
Since January 2004, Tonglin has been supplying to Chongqing Chang'an  Automobile
Co., Ltd. all of the model 462Q engine blocks purchased by that company.

      Shenyang  Futian is larger and better  capitalized  than  Tonglin  and the
quality of its products is  comparable  to that of Tonglin;  however,  Tonglin's
prices are lower, which the Company believes gives it a substantial advantage.

      In addition to the above, there are several large automobile manufacturers
in the PRC which,  to some extent,  are vertically  integrated  and  manufacture
their own engine blocks.  Tonglin plans to market to these  manufacturers in the
future because Tonglin believes it can offer lower costs and comparable quality.

      Tonglin is in the progress of  increasing  its market share by  increasing
the number of its customers. For instance,  Baoding Great Wall recently returned
as a the customer of Tonglin.  Also, the number of products (480Q and 372Q) sold
to SAIC Chery  Automobile  Co.,  Ltd. has recently  doubled.  Hebei  Xinfeng and
Shenyang Dongji have also become new customers of Tonglin.

Research and Development Activities

      Tonglin has 43 employees  engaged in research and development  activities.
Research and development  activities  encompass the development of new products,
as well as the  improvement of existing  products and  manufacturing  processes.
Tonglin selects research and development  projects based upon automobile  market
production trends and requests from its customers for additional  products.  The
Research  and  Development  expenses in 2004 and 2003 are  $107,268 and $41,474,
respectively.

      Tonglin  currently has six products under  development,  two of which have
been sent out to customers for testing and analysis. For full year 2005, Tonglin
plans to introduce four additional products.

Intellectual Property

      Tonglin does not own any intellectual property.


                                       14
<PAGE>

Government Regulation

      Tonglin  does  not  face  any  significant  government  regulation  of its
business or production and does not require any government  permits or approvals
to conduct its business,  other than those required of all  corporations  in the
PRC.

Employees

      The Company, through Tonglin,  currently has approximately 1,180 employees
of whom approximately 1,013 are manufacturing workers.  Tonglin's  manufacturing
workers work in three shifts, six days per week.

      Tonglin  requires  each  employee  to  enter  into a  standard  employment
agreement.  Employees  in the  Research and  Development,  Sales and  Accounting
Departments  are also required to sign a  confidentiality  agreement  protecting
Tonglin's  proprietary  technology and corporate and production  information and
processes.

Risk of Loss and Liability Issues

      Pursuant to the shipping terms in Tonglin's  standard  customer  contract,
Tonglin  bears the risk of loss in  shipment  which it does not  insure.  While,
Tonglin believes that the shipping companies it uses carry adequate insurance or
are  sufficiently  solvent  to  cover  any  loss in  shipping,  there  can be no
assurance that Tonglin can be adequately  reimbursed  upon the loss of an engine
block shipment.

      Tonglin does not carry any product  liability or other similar  insurance.
While  product  liability  lawsuits  in the PRC are rare and  Tonglin  has never
experienced significant failures of its products, there can be no assurance that
Tonglin  would  not face  liability  in the event of the  failure  of any of its
products.

Related Parties and Conflicts of Interest

      As  previously  discussed in this section  under the heading,  "Business,"
Tonglin began as a workshop of Chengdu  Rongxin  Enterprises  Co., Ltd. which is
owned by Li Yungao,  the Company's  principal  shareholder and Tonglin's  former
principal  shareholder.  There are a number of other companies which have common
shareholders  and management with the Company and Tonglin which also had started
as part of Chengdu Rongxin Enterprises Co., Ltd., as listed below.

      To the extent that the persons  listed  below have  positions  with either
Tonglin or the Company and positions with other  entities,  they may not be able
to devote their full business time to the Company, Tonglin and their operations.


                                       15
<PAGE>

Name of Related Entity                  Related  Persons/Positions with the
                                        Company or Tonglin

Chengdu Rongxin Industrial              Li Yungao - CEO and Chairman. Also,
Co., Ltd.                               General  Manager  and  Chairman  of
                                        Tonglin;  principal  shareholder of
                                        the Company.

Chengdu Rongxin Ruigao Machinery        Li  Yungao  -  70%  owner,  General
                                        Manager  and  Co,  Ltd.   Chairman.
                                        Also,  General Manager and Chairman
                                        of Tonglin,  principal  shareholder
                                        of the Company.

Chengdu Begin Pipeline Co., Ltd.        Li Yungao - Owner and  Chairman  of
                                        the Board.  Also,  General  Manager
                                        and Chairman of Tonglin,  principal
                                        shareholder of the Company.

Chengdu High Pressure Valve Plant       Owned principally by Mr. Li Yungao.

Chengdu Taichang Metals Co., Ltd.       Li  Jing  -  Principal   owner  and
                                        Chairman.  Also, a Director and COO
                                        of the  Company  and  the son of Li
                                        Yungao.

      Each of Li Yungao and Li Jing  devotes  approximately  80% of his business
time to the Company.

ITEM 2. DESCRIPTION OF PROPERTY

      The Company leases an executive office at 276 Fifth Avenue, Suite 703, New
York,  New York 10001 at a monthly  rental of $500.00.  Pursuant to the terms of
our  lease,  the rent is to be  adjusted  each  year  and is to be paid  every 3
months.  Either party may unilaterally  terminate the lease upon 30 days written
notice.

      Tonglin  operates  through five factory plants, a warehouse and a separate
office building, which occupy approximately 9.5 acres.

      All land in the PRC is owned by the  government  and cannot be sold to any
individual or entity.  Instead,  the government  grants  landholders a "land use
right." In 2003,  Tonglin  purchased the land use right for the land occupied by
Plant 5 and the  warehouse  from  the  government  for  $171,358.  This  land is
currently  held in the name of Chengdu  Rongxin  Industrial  Co., Ltd.  which is
currently in the process of applying for a name change for the land use right.

      Plants  1  through  4 were  contributed  to  Tonglin  by  Chengdu  Rongxin
Enterprises  Co., Ltd. upon its formation and Plant 5 and the warehouse  used by
Tonglin were  constructed  by it.  Chengdu  Rongxin  Enterprises  Co.,  Ltd. was
dissolved  in  October,  2002 and its assets  and  liabilities  were  assumed by
Chengdu Rongxin Ruigao Machinery Co., Ltd..


                                       16
<PAGE>

      Tonglin is in the  process of  obtaining  the  necessary  certificates  to
evidence  ownership  of the  buildings  for  Plants 1  through  4 under PRC law.
Tonglin's PRC counsel has advised that such property was  contributed by Chengdu
Rongxin Enterprises Co., Ltd when setting up Tonglin, therefore, Tonglin has the
right to use the property. However, without the certificates, Tonglin may not be
able to protect its rights to the property if challenged in a PRC court.  Plants
1 through 4 are also currently  subject to a mortgage payable by Chengdu Rongxin
Industrial  Co.,  Ltd.  and  therefore,  a default  in  payment  would  give the
mortgagee the right to take  possession  of Plants 1 through 4. Chengdu  Rongxin
Industrial  Co., Ltd is  currently  in the process of releasing  the mortgage by
applying for replacing the  collateral  (Plants 1 through 4) with certain of its
other assets.

      The right to use the land on which plants 1 through 4 are situated is also
owned by  Chengdu  Rongxin  Industrial  Co.,  Ltd.  which is in the  process  of
obtaining  a land use right  certificate  in the name of Tonglin  subject to the
releasing of the mortgage held by Chengdu Rongxin Industrial Co., Ltd..

      Pursuant to a December 30, 2004  agreement,  Tonglin  leases the following
from Chengdu Rongxin Industrial Co., Ltd. for the following amounts:

      office space and employee living quarters - RMB 800,000 per year

      vehicles - RMB 100,000 per year; and

      computer equipment and office furniture - RMB 100,000 per year.

ITEM 3. LEGAL PROCEEDINGS

      Neither the  Company,  nor Rhohan nor Tonglin is  currently a party to any
pending legal proceeding except the following:

      In 2003  the  Company  made a  prepayment  of  $278,300  to  purchase  raw
materials to be used in our  operations.  The raw materials were never delivered
by the vendor.  The Company is currently in the process of retaining  lawyers to
bring a lawsuit against the vendor.

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

      There were no  shareholders  meetings in the fourth  quarter of the fiscal
year ending December 31, 2004.

      Pursuant  to the  Stock  Purchase  Agreement,  on  January  21,  2005  the
shareholders  of the Company  approved,  by a  Unanimous  Written  Consent,  the
Restated  Certificate,  which amended our Certificate of Incorporation to, among
other  things,  authorize  and provide  for the  designations,  preferences  and
relative participating, optional or other rights and qualifications, limitations
or  restrictions  of the Series A  Preferred  Stock.  Each share of the Series A
Preferred  Stock is  convertible at any time after issuance at the option of the
holder  into one share of Common  Stock.  The  conversion  rate for the Series A
Preferred  Stock would be subject to adjustment  upon the  occurrence of certain
dilutive  events,  as more  fully  described  in the  Restated  Certificate.  In
addition,  the Series A Preferred Stock shall be automatically be converted into
Common  Stock  immediately  upon the closing of a firm  commitment  underwritten
public  offering  with net  proceeds of at least $20  million,  such date may be
specified by the written  consent or agreement,  or specified by the vote of the
holders of a majority of the outstanding  shares of the Series A Preferred Stock
voting together as a single class.


                                       17
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

      As of the  date  of  this  report,  there  is no  trading  market  for the
Company's  securities  and we have no reason to believe  that such a market will
develop.

      As of the date of this  report,  there  are 10  holders  of the  Company's
Common Stock.

Recent Issuances of Securities

      On January 25, 2005, the Company  entered into a Stock Purchase  Agreement
with Double Unity,  JE Castings and certain other related parties to the Company
pursuant to which the  Company  issued and sold 100 shares of Series A Preferred
Stock to JE Castings for an  aggregate  purchase  price of US$165,  as described
under Item I of this Report.

Dividends

      The declaration and payment of dividends with respect to our Common Stock,
if any, is to be within the discretion of the Company's Board of Directors.

      On April 10, 2004, Rhohan's Board declared a US$1,000,000 dividend payable
to Double Unity. To date,  Rhohan has made dividend  payments to Double Unity of
US$583,220 of the total amount declared;  the balance of the declared  dividends
is scheduled to be paid by the end of March, 2005.

      Holders of the Series A Preferred Stock are entitled to receive  dividends
at the rate of 8% of their purchase price.  Such dividends are payable  annually
and are  cumulative.  No  dividends  with  respect  to the  Common  Stock can be
declared or paid until the holders of the Series A Preferred  Stock are paid the
cumulative dividends just described.


                                       18
<PAGE>

      The Company presently  intends to retain all earnings,  if any, for use in
its  business  operations  and,  accordingly,  the Board of  Directors  does not
anticipate declaring any dividends on our Common Stock in the near future.

      Dividends,  if any,  will be contingent  upon the  Company's  revenues and
earnings, capital requirements,  financial conditions and the ability of Tonglin
to obtain  approval to get monies out of the PRC. The PRC's  national  currency,
the Yuan, is not a freely convertible  currency.  Effective January 1, 1994, the
PRC foreign  exchange  system  underwent  fundamental  changes.  This reform was
stated to be in line with the PRC's  commitment to establish a socialist  market
economy and to lay the foundation for making the Yuan convertible in the future.
The  currency  reform is designed to turn the dual  exchange  rate system into a
unified and managed floating exchange rate system.

      A China  Foreign  Exchange  Trading  Centre was  formed in April,  1994 to
provide an interbank  foreign  exchange trading market whose main function is to
facilitate the matching of long and short term foreign exchange positions of the
state-designated  banks,  and to provide clearing and settlement  services.  The
People's Bank of China publishes the state managed  exchange rate daily based on
the daily average rate from the previous day's inter-bank trading market,  after
considering fluctuations in the international foreign exchange markets. Based on
these  floating  exchange  rates,  the  state-designated  banks  list  their own
exchange rates within permitted  margins,  and purchase or sell foreign exchange
with their customers.

      The  State   Administration  of  Foreign  Exchange  of  the  PRC  ("SAFE")
administers  foreign  exchange  dealings  and requires  that they be  transacted
through designated financial  institutions.  All Foreign Investment  Enterprises
("FIEs")  may  buy  and  sell  foreign   currency  from   designated   financial
institutions in connection with current account transactions, including, but not
limited to, profit  repatriation.  With respect to foreign  exchange  needed for
capital account transactions, such as equity investments, all enterprises in the
PRC (including  FIEs) are required to seek approval of the SAFE to exchange Yuan
into foreign  currency.  When applying for approval,  such  enterprises  will be
subject to review by the SAFE as to the source and nature of the Yuan funds.

      There can be no assurance that the Yuan relative to other  currencies will
not be volatile or that there will be no  devaluation  of the Yuan against other
foreign currencies, including the U.S.dollar.

Equity Compensation Plan Information

      As of December 31, 2004, the Company did not have any equity  compensation
plans.

Transfer Agent

      The Company  currently acts as its own transfer agent, but plans to engage
a transfer agent when, and if, a trading market for its Common Stock develops.


                                       19
<PAGE>

Penny Stock Regulations

      The  Commission  has adopted  regulations  which  generally  define "penny
stock" to be an equity  security  that has a market price of less than $5.00 per
share.  The Company's Common Stock,  when and if a trading market develops,  may
fall  within the  definition  of penny  stock and  subject to rules that  impose
additional  sales  practice   requirements  on  broker-dealers   who  sell  such
securities to persons other than established  customers and accredited investors
(generally  those  with  assets  in  excess of  $1,000,000,  or  annual  incomes
exceeding $200,000 or $300,000, together with their spouse).

      For  transactions  covered by these rules, the  broker-dealer  must make a
special  suitability  determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction. Additionally,
for any transaction,  other than exempt  transactions,  involving a penny stock,
the rules require the delivery,  prior to the transaction,  of a risk disclosure
document  mandated by the  Commission  relating to the penny stock  market.  The
broker-dealer   also  must  disclose  the   commissions   payable  to  both  the
broker-dealer  and the  registered  representative,  current  quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must  disclose  this  fact and the  broker-dealer's  presumed  control  over the
market.  Finally,  monthly  statements  must be  sent  disclosing  recent  price
information  for the penny  stock held in the  account  and  information  on the
limited  market in penny  stocks.  Consequently,  the  "penny  stock"  rules may
restrict the ability of  broker-dealers  to sell the Company's  Common Stock and
may affect the ability of investors to sell their Common Stock in the  secondary
market.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

      China  Autoparts,  Inc. (the  "Company") was  incorporated in the State of
Delaware  on May 1,  2001  and is a  holding  company  which  owns  100%  of the
outstanding  equity of Rhohan Holdings Limited, a British Virgin Islands company
("Rhohan").  Rhohan  is  also a  holding  company  for,  and  owns  100%  of the
outstanding equity of, Chengdu Tonglin Casting Industrial Co., Ltd. ("Tonglin").
Tonglin is a  manufacturer  of engine  blocks in the People's  Republic of China
("PRC") which currently  manufactures  and is developing a total of 23 different
engine blocks, which accommodate three or four cylinders for cars, mini vans and
light trucks manufactured in the PRC.

      On May 13, 2004,  the Company  acquired  100% of the  outstanding  capital
stock of Rhohan  pursuant to an April 22, 2004 Capital Stock Exchange  Agreement
in exchange for 8,590,910 shares of the Company's Common Stock.

      On January 25, 2005, the Company  entered into a Stock Purchase  Agreement
with Double Unity,  JE Castings and certain other related parties to the Company
pursuant to which (i) Double Unity sold  1,818,182  shares of Common Stock to JE
Castings for an aggregate purchase price of US$ 3 million,  and (ii) the Company
issued and sold 100 shares of Series A  Preferred  Stock to JE  Castings  for an
aggregate purchase price of US$165.


                                       20
<PAGE>

      Over  the  past  two  years,  Tonglin  has  expanded  its  operations  and
production facilities in order to meet increased demands from existing customers
who have expressed  satisfaction with Tonglin's  products.  Accordingly,  in the
fiscal years ended  December 31, 2004 and  December 31, 2003,  Tonglin  invested
approximately   $0.3  million  and  $1.8  million,   respectively,   in  capital
improvements  to  existing   production   facilities  and  new  equipment.   The
expenditures in year 2003 resulted in an increase in Tonglin's annual production
capacity from approximately  400,000 to approximately  700,000 engine blocks. No
expansion in the production capacity occurred during the year 2004.

RESULTS OF OPERATIONS

Fiscal Years Ended December 31, 2004 and December 31, 2003

Sales and Gross Profit

      Net sales for the fiscal year ended  December 31, 2004 were  approximately
$17.7 million compared to approximately  $16.2 million for the fiscal year ended
December 31, 2003, an increase of approximately  8.7%. The increase in net sales
resulted  primarily from Tonglin's 2003 expansion of its production  facilities,
which  resulted in an increase in production  from 438,984 engine blocks in 2003
to 495,859  engine blocks in 2004.  The increase was partially  offset by a 7.2%
decrease in average sales price in year 2004 as compared to year 2003 .

      Gross profit for the year ended December 31, 2004 was approximately  $5.85
million, a decrease of approximately  $.07 million , or approximately  1.1%,from
$5.92  million for the prior year.  The decrease in gross  profits was primarily
due to an increase in the cost of iron from an average of approximately $213 per
ton for the fiscal year ended  December 31, 2003 to an average of  approximately
$286 per ton for the fiscal year ended December 31, 2004.

      During the fiscal  years ended  December  31, 2004 and  December 31, 2003,
there was a substantial  concentration of sales.  During the year ended December
31,  2004,  approximately  90.0% of sales  were to the  Company's  five  largest
customers and  approximately  79.2% of sales were to the Company's three largest
customers.  For the fiscal year ended December 31, 2003,  approximately 94.0% of
sales were to the Company's five largest  customers and  approximately  68.0% of
sales were to the Company's three largest customers.

Cost of Sales

      Cost of sales increased to approximately $11.8 million for the fiscal year
ended December 31, 2004, or approximately 14.2% from approximately $10.3 million
in the prior year.  The increase was primarily due to (i) an  approximate  13.0%
increase in production  from 438,984  engine blocks to 495,859 engine blocks and
(ii) the increase in the cost of iron in the fiscal year ended December 31, 2004
noted above.


                                       21
<PAGE>

      Tonglin's  increase in  production  resulted  from  increased  orders from
certain  existing  customers and increased  sales of Tonglin's 465Q product from
187,413  units during the fiscal year ended  December 31, 2003 to 245,551  units
for the fiscal year ended December 31, 2004.

Selling, General and Administrative Expenses

      Selling,  general and  administrative  expenses  were  approximately  $1.9
million for the fiscal year ended December 31, 2004, or  approximately  10.7% of
net sales, compared to approximately $1.7 million, or approximately 10.4% of net
sales, for the fiscal year ended December 31, 2003.

      Selling,  general and  administrative  expenses  for the fiscal year ended
December  31,  2004  consisted  primarily  of  salaries  and  wages  ($803,862),
professional  fees ($321,222) and advertising  costs ($60,143).  The increase in
selling,  general and administrative  expenses resulted primarily from increases
in salaries and wages associated with the increase in production, an increase in
professional  fees  incurred  in order to meet the filing  requirements  of a US
reporting  public company and an increase in  expenditures  on  advertising  for
marketing purposes.

Income From Operations

      Income From  Operations  decreased  to  approximately  $4.1 million in the
fiscal year ended December 31, 2004, or approximately  12.8% from  approximately
$4.6 million in the fiscal year ended  December 31, 2003,  primarily  due to (i)
the decrease in average sales price in the fiscal year ended  December 31, 2004,
as noted  above,  and (ii) the  increase  in the cost of iron in the fiscal year
ended December 31, 2004, as noted above.

Income Taxes

      The Company did not carry on any business or maintain any branch office in
the United  States  during the year ended  December  31,  2004 or the year ended
December 31, 2003. Therefore,  no provision for U.S. federal income taxes or tax
benefits on the  undistributed  earnings  and/or  losses of the Company has been
made.

      Pursuant to the relevant laws and  regulations in the PRC,  Tonglin,  as a
wholly foreign owned enterprise ("WFOE") in the PRC, is entitled to an exemption
from the PRC  enterprise  income  tax for two  years  commencing  from its first
profitable  year,  after loss  carry-forwards  from the previous five years have
been recovered. Tonglin first reported gross profits for the year ended December
31, 2000.  Effective  January 1, 2002,  the two-year 100%  exemption from income
taxes had expired and  Tonglin,  as a WFOE  located in a Special  Economic  Zone
designated  by the PRC  government,  became  entitled to 50% relief from the PRC
enterprise income tax for the following years of its operation until 2010.


                                       22
<PAGE>

      In addition,  in accordance with the Circular of Transmission of the State
Administration  of Taxation of Sichuan Province on Implementing the Relevant Tax
Policies of Development of the West Regions and  Implementation of the Suggested
Policies of State Administration of Taxation,  Tonglin is entitled to reduce its
income tax rate to 7.5%.  Therefore Tonglin's income tax rate for the year ended
December  31, 2004 and  December  31, 2003 was 7.5%.  Tonglin's  income tax rate
remained at 7.5% until  December 31, 2004.  Tonglin's  income tax for subsequent
years will be 15% until 2010.

      Tonglin has been exempt from local income tax;  suchexemption  will expire
in January  2005,  and Tonglin will  thereafter  be subject to a 3% local income
tax.

Net Income

      Net income  increased  to  approximately  $4.2  million in the fiscal year
ended December 31, 2004, or approximately  9.1% from  approximately $3.9 million
in the fiscal year ended December 31, 2003, primarily due to the increase of the
refund of the value-added tax ("VAT")  received from local government due to the
more lenient tax policy to the casting and moding industry. Such refund has been
put into the category of "Other Income".

Plan of Operation

      Tonglin's  previously  made  capital  investments  enabled  it to  produce
250,000  more engine  blocks in the fiscal year ended  December 31, 2004 than in
the fiscal year ended December 31, 2003.  Now,  Tonglin is focusing on marketing
additional  products to its existing  customers and adding new customers through
increased  advertising and calls on potential customers.  For instance,  Tonglin
has become the supplier of Sichuan Fangxiang  Automobile Accessory Co., Ltd. and
Hebei  Ruifeng  Internal  Combustion  Engine  Co.,  Ltd.  where  Tonglin did not
previously have a presence.

      In order to increase  its sales to existing  customers,  Tonglin  plans to
increase its sales and service personnel, particularly personnel who are on site
at  Tonglin's  customers.  In  addition,  there  were  six  new  products  under
development  as of December 31, 2004,  including two products which have already
been sent to  customers  for  testing,  and plans to put at least  four more new
products into  Tonglin's  development  pipeline  prior to the end of fiscal year
2005.

      Tonglin  believes  that it will be able to execute  its plan of  operation
using its existing  income,  earnings and credit  facilities  without  having to
raise capital from outside sources. Liquidity and Capital Resources

      Since Tonglin's inception,  it has financed its operations and met capital
expenditure  requirements  primarily  through cash flows from  operations,  bank
loans and lines of credit, capital from its shareholders and related parties and
outside sources. Because of the seasonal fluctuation of the automobile market in
the PRC (which tends to be slow in the summer  months and then peaks in February
and March when PRC  automobile  purchases  tend to be made) and a slower payment
cycle than in the U.S., Tonglin extends unsecured credit to its customers during
the fiscal year and finances its operations with short term bank loans and loans
from related parties.


                                       23
<PAGE>

      In April, 2004, Rhohan declared a $1,000,000 dividend  distribution to its
sole shareholder, Double Unity.

      As of  December  31,  2004,  Tonglin  had the  following  short term loans
outstanding with the following terms:

Lender and Terms                                            Amount Due
----------------                                            ----------
Chengdu City Commercial Bank, Dayi Branch                   $1,210,000
Due January 15, 2005
Monthly interest only payment at 0.57525%.
Guaranteed by Chengdu High Pressure Valve
Plant, a related party

Shanghai Pu Dong Development Bank, Chengdu Branch           $3,630,000
Due March 29, 2005
Monthly interest only payment at 0.48675%
Guaranteed by Chengdu Rongxin Ruigao
Machinery Co., Ltd, a related party

      In the past Tonglin has loaned monies to Chengdu Taichang Metals Co., Ltd.
("Taichang"), a company principally owned by Li Jing, an officer and Director of
the Company,  and the son of Li Yungao,  the Company's Chairman and CEO, as well
as  Tonglin's  and  Rhohan's  Chairman  and CEO.  All such loans were  repaid by
Chengdu Taichang Metals Co., Ltd. on April 1, 2004 with no further  liability to
Tonglin.

Accounts Receivable

      The  increase  in trade  accounts  receivable  from  December  31, 2003 to
December 31, 2004 is primarily  attributable  to the large  increase of sales in
November and December, 2004.

      The  decrease in Other  Receivables  to  approximately  $5.0 million as of
December 31, 2004 from  approximately  $5.5 million as of December 31, 2003, was
primarily due to the repayment from our related party - Chengdu  Taichang Metals
Co., Ltd.

Inventory

      Inventories  of finished  goods as of December  31, 2004 and  December 31,
2003 amounted to $1.21 million and $1.2 million respectively. Inventories of raw
materials  decreased  between  December  31,  2003 and  December  31,  2004 from
approximately  $0.94 million to  approximately  $0.86 million.  In general,  the
inventory  levels  have  remained  constant  for the past two years.  The slight
decrease in raw materials  was primarily due to our efforts to reduce  inventory
levels because of the increase in the cost of iron.


                                       24
<PAGE>

Accounts Payable

      Accounts  payable,  accrued  expenses and other  payables  decreased  from
December  31, 2003 to December  31,  2004  primarily  as a result of the Company
paying its  suppliers  and  repayment of notes payable to banks in the first six
months of 2004.

Cash

      The decrease in free cash from  December 31, 2003 to December 31, 2004 was
primarily attributable to the increase in payments for purchasing raw material.

      The  increase in  restricted  cash from  December 31, 2003 to December 31,
2004 was primarily  attributable to the increase in percentage of the restricted
cash requirement for the lines of credit required by banks.

Critical Accounting Policies

      Management's  discussion  and  analysis  of its  financial  condition  and
results  of  operations  are based  upon the  Company's  consolidated  financial
statements,  which have been prepared in accordance with United States generally
accepted accounting principles..  The Company's financial statements reflect the
selection and  application of accounting  policies  which require  management to
make  significant  estimates  and  judgments.   See  note  2  to  the  Company's
consolidated financial statements, "Summary of Significant Accounting Policies".
Management  bases its  estimates on historical  experience  and on various other
assumptions that are believed to be reasonable under the  circumstances.  Actual
results  may  differ  from  these  estimates  under  different   assumptions  or
conditions.  The Company  believes that the following  reflect the more critical
accounting  policies that currently affect the Company's financial condition and
results of operations:

Revenue recognition

      Product  sales are  recognized  when the  products  are  delivered  to and
inspected by customers and title has passed. The Company offers no warranties on
its products.  If there are any products that do not meet the quality  standards
set forth in their contract,  the customers will notify the company. The Company
at this time replaces the defective goods with new products. The defective goods
are returned to the Company and are reworked and returned to inventory.

      Sales revenue represents the invoiced value of goods, net of a VAT. All of
the  Company's  products  that  are  sold in the PRC are  subject  to a  Chinese
value-added  tax at a rate of 17% of the  gross  sales  price.  This  VAT may be
offset by VAT paid by the Company on raw materials and other materials  included
in the cost of producing its finished products.


                                       25
<PAGE>

Property, Plants and Equipment

      Plant  and  equipment  are  recorded  at cost.  Depreciation  is  recorded
utilizing the straight-line  method over the estimated  original useful lives of
the assets, which ranges from 5-30 years.

      Long-term assets of the Company are reviewed  annually as to whether their
carrying value has become impaired.  The Company considers assets to be impaired
if the  carrying  value  exceeds the future  projected  cash flows from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives. As of December 31, 2004, the Company expects these assets to be
fully recoverable.

Bad debts

      The Company's  business  operations are conducted in the People's Republic
of China.  During the normal course of business,  the Company extends  unsecured
credit to its customers. Management reviews its accounts receivable on a regular
basis to  determine  if the bad debt  allowance  is adequate  at each  year-end.
However, the Company records a provision for "Accounts Receivable, Trade," which
ranges  from 0.3% to 1.0% of the  outstanding  accounts  receivable  balance  in
accordance with generally accepted accounting principles in the PRC.

ITEM 7. FINANCIAL STATEMENTS

The  following  table  presents  selected  financial  data for us for the  three
previous  fiscal years ended  December 31, 2002,  2003 and 2004.  We derived the
selected  financial  data set forth  below  with  respect to our  statements  of
operations  for the three fiscal years ended  December 31, 2004,  2003 and 2002,
and our  balance  sheets  as at  December  31,  2004,  2003 and  2002,  from our
consolidated financial statements that are included elsewhere in this report. We
derived the selected financial data for us at December 31, 2001 and for the year
then ended from our consolidated  financial statements which are not included in
this report. You should read the following summary financial data in conjunction
with the  consolidated  financial  statements and  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations"  appearing elsewhere
in this report.

                                       26
<PAGE>

<TABLE>
<CAPTION>
                                     For the Fiscal Year ended December 31,
                         --------------------------------------------------------------
                            2004             2003             2002             2001
                                                                            (unaudited)
<S>                      <C>              <C>              <C>              <C>
Gross revenues           $17,655,852      $16,248,926      $14,159,153      $ 9,867,955

Income from operations     4,054,404        4,647,659        4,397,720        2,987,874

Net income                 4,226,189        3,873,418        3,169,845        1,959,016

Total assets              22,216,373(1)    22,365,455(2)    13,376,635(3)    11,746,964(4)

Total liabilities         11,959,662(1)    15,381,089(2)     6,660,006(3)     5,374,392(4)
                         --------------------------------------------------------------
</TABLE>

(1)   As of December 31, 2004
(2)   As of December 31, 2003
(3)   As of December 31, 2002
(4)   As of December 31, 2001

      The  Company's  consolidated  financial  statements,  including  the notes
thereto,  together with the report of independent  certified public  accountants
thereon, are presented beginning at page F-1.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

      During the fiscal years ended December 31, 2004 and December 31, 2003, and
the subsequent  interim  period,  Moore  Stephens  Wurth Frazer and Torbet,  LLP
("Moore Stephens"),  the principal  independent  accountant of our subsidiaries,
Rhohan and Tonglin,  has not resigned or declined to stand for re-election,  and
was not dismissed.

      On  May  18,  2004,  we  dismissed  Michael  T.  Studer  CPA  P.C.  as our
independent accountant.  Mr. Studer had been previously engaged as the principal
accountant to prepare our financial  statements.  The reason for the termination
was that we had  acquired  Rhohan,  which is a holding  company  for its primary
business  unit,  Tonglin,  both of which have been audited by Moore  Stephens as
discussed  above.  We believe  that it was in our best  interests  to have Moore
Stephens   continue  to  work  with  Rhohan  and  Tonglin  as  auditors  of  the
consolidated  financial  statements of China Autoparts and Rhohan. The dismissal
of Michael T Studer CPA P.C. and retention of Moore Stephens was reported in our
Current Report on Form 8-K that we filed on May 20, 2004.


                                       27
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES

      We maintain disclosure controls and procedures that are designed to ensure
that  information  required  to be  disclosed  in our  Exchange  Act  reports is
recorded,  processed,  summarized and reported within the time periods specified
in the  Commission's  rules and forms,  and that such information is accumulated
and communicated to our management to allow timely decisions  regarding required
disclosure.  Management  necessarily applied its judgment in assessing the costs
and benefits of such  controls  and  procedures,  which,  by their  nature,  can
provide only reasonable assurance regarding management's control objectives.

      At the conclusion of the period ended December 31, 2004, we carried out an
evaluation,  under the supervision and with the participation of our management,
including our Chairman and Chief Executive Officer and Chief Financial  Officer,
of the effectiveness of the design and operation of our disclosure  controls and
procedures. Based upon that evaluation, the Chairman and Chief Executive Officer
and  Chief  Financial  Officer  concluded  that  our  disclosure   controls  and
procedures  were  effective in alerting them in a timely  manner to  information
relating to the Company required to be disclosed in this report.

ITEM 8B. OTHER INFORMATION

None.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The  following  are the officers and  directors of the Company as of the date of
this report.  Each of the Company's current officers and directors is a resident
of the PRC. As a result,  it may be difficult for investors to effect service of
process  within the United  States upon them or to enforce in the United  States
court judgments obtained against them in the United States courts.

Name                           Positions                            Age
----                           ---------                            ---
Li, Yungao                     CEO and Chairman of the             62
                               Board of Directors
Li, Jing                       Director and COO                    34
Ding, Ke                       EVP, Business Development           40
                               and Director
Huang, Hui                     Director                            32
Christopher John Hasson        Director                            41

LI YUNGAO is Chairman and CEO of the Company,  the sole Director and shareholder
of Double Unity,  a Director of Rhohan and has served as the Chairman and CEO of
Tonglin  since its  formation in 2000.  During the past five years Mr. Li Yungao
has served as Chairman and CEO of Chengdu Begin  Pipeline  Co.,  Ltd., a company
which produces metal pipes and pipeline products, and Chengdu Rongxin Industrial
Co., Ltd. and Chengdu  Rongxin  Ruigao  Machinery  Co.,  Ltd.  which are holding
companies for Mr. Li Yungao's  interests in machinery  manufacturing  companies.
Mr. Li Yungao  started his career as a farmer and, after  receiving  training in
manufacturing  in a valve  factory,  started  his own  metal  and  pipe  casting
companies. Mr. Li Yungao is the father of Mr. Li Jing.


                                       28
<PAGE>

LI JING is a Director  and COO of the Company.  For the past five years,  Mr. Li
Jing has served as the CEO of Chengdu Taichang Metals Co., Ltd., a steel trading
company.  Mr. Li Jing has a degree from Chengdu Economic  Management College and
is the son of Mr. Li Yungao.

DING KE is a Director  of the  Company  and  Rhohan  and has been a Director  of
Tonglin  since  2000.  During the past five  years,  Mr.  Ding has served as the
Executive  Vice  President  for  Hua  Tai   Enterprise   Management   Co.,  Ltd.
(1999-2002),  an investment  management  company,  and the Chairman and owner of
Shenzhen Significant Value Industrial Co.,Ltd. (2002 through present), a company
that owns coffee shops. Mr. Ding has a Bachelor of Material  Engineering  degree
from Donghua  University and a Master of Management Science degree from Shanghai
Jiaotong University.

CHRISTOPHER  JOHN HASSON is a Director of the Company since February 2005. He is
also  Director and Chief  Executive  Officer of Johnson  Electric  Capital since
2001.  Prior to that, he had served as Vice President and Director of The Boston
Consulting Group (1997-2001), a management consultancy.

HUANG HUI is a Director of the Company since  February  2005.  She is also Chief
Representative of Johnson Electric Capital Shanghai  Representative Office since
2003. She had  previously  worked as an Associate at Goldman Sachs Asia LLP from
2000 to  2003  and as  Associate  Consultant  at The  Boston  Consulting  Group,
a management consultancy from 1994 to 1998.

FAMILY RELATIONSHIPS

      Li Yungao is the father of Mr. Li Jing.

AUDIT COMMITTEE FINANCIAL EXPERT

      The full Board of Directors of the Company  currently  serves as its audit
committee.  The Board of Directors  does not currently  have an audit  committee
"financial  expert" as defined under Rule 401(e) of  Regulation  S-B because the
Company only recently  consummated its transaction  with Rhohan and the Board of
Directors is in the process of searching for a suitable candidate for this Board
position.


                                       29
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Neither the Company nor Rhohan  currently pays any compensation to its executive
officers or directors.  The following is a summary of the  compensation  paid by
Tonglin to its CEO and four most highly compensated officers for the three years
ended December 31, 2004.

<TABLE>
<CAPTION>
                                       ANNUAL COMPENSATION                                        LONG TERM COMPENSATION

                                                                                             Awards                  Payouts

                                                                          Other      Restricted  Securities
                                                                          Annual       Stock     Underlying                  All
                                       Year                              Compen-       Awards     Options/     LTIP         Other
     Name            Position         Ended      Salary($)   Bonus($)   sation($)        $          SARS      Payouts   Compensation
------------------------------------------------------------------------------------------------------------------------------------
<S>             <C>                 <C>           <C>           <C>         <C>          <C>         <C>         <C>          <C>
   Li Yungao           CEO          12/31/2004    $60,500       00          0            0           0           0            0
                                    12/31/2003    $73,000                   0            0           0           0            0
                                    12/31/2002    $60,000       0           0            0           0           0            0
 Chen Weisheng         CFO          12/31/2004    $36,000       0           0            0           0           0            0
                                    12/31/2003    $36,000       0           0            0           0           0            0
                                    12/31/2002    $30,000                   0            0           0           0            0
   Ding Ke           Director       12/31/2004    $36,000       0           0            0           0           0            0
                                    12/31/2003    $18,000       0           0            0           0           0            0
                                    12/31/2002    $10,000       0           0            0           0           0            0
 Wang Wenquan    Tonglin Director   12/31/2004    $36,000       0           0            0           0           0            0
                                    12/31/2003    $36,000       0           0            0           0           0            0
                                    12/31/2002    $30,000       0           0            0           0           0            0
  Liu Zenglin     Tonglin Chief     12/31/2004    $36,000                   0            0           0           0            0
                     Engineer
                                    12/31/2003    $36,000       0           0            0           0           0            0
                                    12/31/2002    $30,000       0           0            0           0           0            0

 Song Ronghui      Tonglin Vice     12/31/2004    $36,000       0           0            0           0           0            0
               General Manager for
                      Sales
                                    12/31/2003    $36,000       0           0            0           0           0            0
                                    12/31/2002    $30,000       0           0            0           0           0            0
</TABLE>


                                       30
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth as of the date of this report, certain
information with respect to the beneficial ownership of the voting securities by
(i) any person or group with more than 5% of the Company's securities, (ii) each
director, (iii) each executive officer and (iv) all executive officers and
directors as a group.

<TABLE>
<CAPTION>
                            Name and                                                               Amount and
                           Address of                              Title of              Nature of Beneficial        Percent of
                        Beneficial Owner                           Class                            Ownership        Class (1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                           <C>                    <C>
Li Yungao/Double Unity Investments Limited.                        Common Stock                     6,454,546(3)        71.0%
Director and CEO (2)
4009 Gloucester Tower
11 Pedder Street
Central
Hong Kong

JE Castings Investment Limited                                     Common Stock                     1,818,182             20%
Johnson Building
6-22 Dai Shun Street
Tai Po Industrial Estate
Tai Po
Hong Kong

LR Investment Holdings, Ltd.                                       Common Stock                       470,000            5.2%
c/o Harney Westwood & Riegels
Craigmuir Chambers
P.O. Box 71
Road Town, Tortola
British Virgin Islands

Li Jing, Director and COO                                          Common Stock                             0            0.0%
Xinchang Tonglin Industrial Zone
Dayi County, Chengdu, Sichuan PRC 611337

All Directors and Officers of the Company                          Common Stock                     6,454,546(3)        71.0%
as a group
</TABLE>


                                       31
<PAGE>

(1)   Computed  based  upon  a  total  of  9,090,910   shares  of  common  stock
      outstanding as of March 28, 2005.

(2)   The sole shareholder of Double Unity  Investments  Limited.  is Li Yungao,
      the Chairman of the Board of Directors and CEO of the Company,  Rhohan and
      Tonglin.

(3)   Each of Ding Ke, Liu Zenglin,  Chen Weisheng,  Song Ronghui,  Wang Xin and
      Wang Wenquan were granted 272,727 shares of the Company's  Common Stock by
      Double Unity Investments  Limited and, as a condition of the grant, agreed
      to any  reasonable  restriction  on sale  of the  Common  Stock  as may be
      suggested by the Company or Double Unity Investments Limited. As a result,
      Double  Unity  Investments   Limited  and  Li  Yungao  may  be  deemed  to
      beneficially  own an  aggregate  of  1,636,362  shares of the common stock
      owned by such persons.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      During the fiscal  years ended  December  31, 2004 and  December 31, 2003,
Tonglin entered into the following transactions with related parties:

      On May 20, 2003,  Tonglin entered into an Agreement with Chengdu  Taichang
Metals Co.,  Ltd. to make a 12-month loan in the amount of $3,025,000 to Chengdu
Taichang Metals Co., Ltd. using the proceeds from Tonglin's bank line of credit.
In addition, Tonglin paid $1,089,000 to its bank as a restricted cash deposit as
required by the loan agreement.

      The $3,025,000  was required to be paid to Tonglin upon maturity  together
with  interest  calculated  based on the amount of the  restricted  cash deposit
using the bank's monthly interest rate of 0.4425%.  Chengdu Taichang Metals Co.,
Ltd. was required to pay a consultation fee of $121,000 to Tonglin upon maturity
of the loan. On April 1, 2004,  Chengdu  Taichang  Metals Co., Ltd. repaid these
amounts in full.


                                       32
<PAGE>

      On May 29, 2003,  Tonglin entered into an Agreement with Chengdu  Taichang
Metals Co., Ltd. to make a loan in the amount of $2,420,000 to Chengdu  Taichang
Metals Co., Ltd. using the proceeds from Tonglin's  credit lines for a period of
12 months. The loan agreement provided for the payment of interest to Tonglin at
maturity of the loan calculated  based on the amount of restricted cash deposits
posted by Tonglin  using the bank's  monthly  interest  rate of 0.4425%,  plus a
$77,101  consulting fee. Chengdu Taichang Metals Co., Ltd. posted a deposit with
Tonglin to partially guarantee  repayment.  All amounts due were paid by Chengdu
Taichang Metals Co., Ltd. on April 1, 2004.

      On November 4, 2003,  Tonglin  provided a guarantee to the  Industrial and
Commercial  Bank of China with respect to a  $1,089,000  credit line for Chengdu
Rongxin  Ruigao  Machinery  Co.,  Ltd.,  a  company  of which Li  Yungao  is the
principal owner,  Chairman and General Manager. The line of credit and guarantee
expired on April 29, 2004. As of June 30, 2004,  this guarantee of the bank line
of credit was released.

      During the fiscal  years ended  December  31, 2004 and  December 31, 2003,
various  cash  advances  and short term loans were made by and among the Company
and its  related  parties.  These items were each paid within the fiscal year in
which they were made, and no interest was charged.

      During the fiscal years ended  December  31,  2003,  Tonglin made sales of
$80,776 to Chengdu  Rongxin  Ruigao  Machinery  Co., Ltd. and made  purchases of
$78,423 from Chengdu Rongxin Ruigao Machinery Co., Ltd.

Pursuant to a December 30, 2004  agreement,  Tonglin  leases the following  from
Chengdu Rongxin Industrial Co., Ltd. for the following amounts:

      office space and employee living quarters - RMB 800,000 per year

      vehicles - RMB 100,000 per year; and

      computer equipment and office furniture - RMB 100,000 per year.

Prior to that,  Tonglin leased the above from Chengdu  Rongxin Ruigao  Machinery
Co., Ltd. on similar terms.

ITEM 13. EXHIBITS

Number      Description
------      -----------

3.1         Amended and Restated  Certificate  of  Incorporation  of the Company
            filed January 27, 2005;

3.2         Amended and Restated By-laws of the Company;


                                       33
<PAGE>

4.1         Form of Common Stock Certificate;

4.2         Form of Preferred Stock Certificate;

10.1        Stock Purchase  Agreement,  dated January 25, 2005,  entered into by
            and among the Company, Li Yungao, Rhohan,  Tonglin, Double Unity and
            JE Castings Investments Limited. (1)

10.2        Investor Rights Agreement,  dated February 2, 2005 , entered into by
            and among the Company, Li Yungao, Rhohan,  Tonglin, Double Unity and
            JE Castings Investments Limited. (2)

10.3        Right of First  Refusal,  Co-Sale  and Drag Along  Agreement,  dated
            February 2, 2005 , entered into by and among the Company, Li Yungao,
            Double  Unity,  JE Castings  Investments  Limited and certain  other
            common stockholders set forth on Exhibit A thereto. (3)

14.1        Code of ethics

21.1        List of Subsidiaries;

31.1        Certification  of Li Yungao pursuant to Exchange Act Rules 13a-14(a)
            and   15d-14(a),   as  adopted   pursuant  to  Section  302  of  the
            Sarbanes-Oxley Act of 2002;

31.2        Certification  of Chen  Weisheng  pursuant  to  Exchange  Act  Rules
            13a-14(a) and 15d-14(a),  as adopted  pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002;

32.1        Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002;

Footnotes:

(1)   Incorporated by reference from the Exhibit A to the Schedule 13D jointly
      filed by JE Castings, Johnson Electric Capital Limited and Johnson
      Electric Holdings Limited with the Commission on February 8, 2005.

(2).  Incorporated by reference from the Exhibit B to the Schedule 13D jointly
      filed by JE Castings, Johnson Electric Capital Limited and Johnson
      Electric Holdings Limited with the Commission on February 8, 2005.

(3).  Incorporated by reference from the Exhibit C to the Schedule 13D jointly
      filed by JE Castings, Johnson Electric Capital Limited and Johnson
      Electric Holdings Limited with the Commission on February 8, 2005.


                                       34
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and Non-Audit Fees

      The following table sets forth the fees billed to the Company for the
fiscal year ended December 31,2004 and 2003, respectively, by Moore Stephens:

                             Fiscal Year Ended     Fiscal Year Ended
                             December 31, 2004     December 31, 2003
Audit Fees                   $145,000              $215,000
Audit Related Fees           $0                    $0
Tax Fees                     $0                    $0
All Other Fees               $0                    $0

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           CHINA AUTOPARTS, INC.

Date: March 30, 2005                       /s/ Li Yungao
                                           -------------------------------
                                           By:  Li Yungao, CEO

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.


/s/ Chen Weisheng                                           March 30,2005
---------------------------------
Chen Weisheng, CFO


/s/ Li Jing                                                 March 30,2005
---------------------------------
Li Jing, Director


/s/ Ding Ke                                                 March 30,2005
---------------------------------
Ding Ke, Director


/s/ Huang Hui                                               March 30,2005
---------------------------------
Huang Hui, Director


/s/Christopher John Hasson                                  March 30,2005
---------------------------------
Christopher John Hasson, Director

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
China Autoparts, Inc. and Subsidiaries

We have audited the  accompanying  balance sheets of China  Autoparts,  Inc. and
Subsidiaries  as of December 31, 2004 and 2003,  and the related  statements  of
income and other  comprehensive  income  (loss),  shareholders'  equity and cash
flows for years then ended. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of China  Autoparts,  Inc. and
Subsidiaries  as of  December  31,  2004  and  2003,  and the  results  of their
operations  and their cash flows for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.



/s/ Moore Stephens Wurth Frazer and Torbet, LLP
-----------------------------------------------
Moore Stephens Wurth Frazer and Torbet, LLP

March 1, 2005
Walnut, California

                                      - 1 -


<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2004 AND 2003

                                   A S S E T S

<TABLE>
<CAPTION>
                                                                                      2004          2003
                                                                                  -----------   -----------
<S>                                                                               <C>           <C>
CURRENT ASSETS:
    Cash                                                                          $   295,056   $   488,001
    Cash - restricted                                                               2,968,959     2,057,000
    Accounts receivable, trade, net of allowance for doubtful
       accounts of $40,626 and $20,430 as of December 31, 2004
       and 2003, respectively                                                       7,285,199     6,789,525
    Accounts receivable, trade special                                                315,810       943,800
    Other receivables, net of allowance for doubtful accounts of $0
       and $278,300 as of December 31, 2004 and 2003, respectively                    315,707       407,470
    Other receivables - related party                                               4,994,266     5,462,785
    Prepaid expense                                                                   929,785     1,030,156
    Inventories                                                                     2,070,407     2,136,674
                                                                                  -----------   -----------
       Total current assets                                                        19,175,189    19,315,411
                                                                                  -----------   -----------

PLANT AND EQUIPMENT, net                                                            2,790,626     2,554,007
                                                                                  -----------   -----------

OTHER ASSETS:
    Intangible asset, net                                                             145,654       162,790
    Employee advances                                                                 104,904       333,247
                                                                                  -----------   -----------
       Total other assets                                                             250,558       496,037
                                                                                  -----------   -----------
          Total assets                                                            $22,216,373   $22,365,455
                                                                                  ===========   ===========

               L I A B I L I T I E S   A N D   S H A R E H O L D E R S'   E Q U I T Y

CURRENT LIABILITIES:
    Accounts payable                                                              $   595,647   $ 1,854,084
    Accounts payable - related party                                                     --          15,675
    Advances from customers                                                            49,401        54,934
    Wages and benefits payable                                                        571,437       689,225
    Income and other taxes payable                                                    496,158       527,011
    Accrued liabilities                                                               391,843       379,689
    Other payables                                                                  1,573,396     1,333,471
    Other payables - related party                                                       --         242,000
    Dividend payable                                                                  416,780          --
    Notes payable - bank                                                            3,025,000     5,445,000
    Short-term loans payable - bank                                                 4,840,000     4,840,000
                                                                                  -----------   -----------
       Total current liabilities                                                   11,959,662    15,381,089
                                                                                  -----------   -----------

SHAREHOLDERS' EQUITY:
    Preferred stock, $.0001 par value, 1,000,000 shares authorized,
       none issued and outstanding
    Common stock, $.0001 par value, 20,000,000 shares authorized,
       9,090,910 shares issued and outstanding                                            959           959
    Paid-in-capital                                                                   344,520       312,112
    Statutory reserve                                                               2,000,374     1,561,222
    Retained earnings                                                               7,888,835     5,101,798
    Accumulated other comprehensive income                                             22,023         8,275
                                                                                  -----------   -----------
       Total shareholders' equity                                                  10,256,711     6,984,366
                                                                                  -----------   -----------
          Total liabilities and shareholders' equity                              $22,216,373   $22,365,455
                                                                                  ===========   ===========
</TABLE>

The accompanying notes are an integral part of this statement.
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


                                                    2004            2003
                                                ------------    ------------
GROSS REVENUES                                  $ 17,655,852    $ 16,248,926

COST OF SALES                                     11,801,840      10,331,947
                                                ------------    ------------

GROSS PROFIT                                       5,854,012       5,916,979

OTHER OPERATING INCOME                                85,959         423,206
SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES      1,885,567       1,692,526
                                                ------------    ------------

INCOME  FROM OPERATIONS                            4,054,404       4,647,659
                                                ------------    ------------

OTHER INCOME (EXPENSE)
    Other income                                   1,091,789          79,440
    Other non-operating expense                     (563,905)       (514,381)
                                                ------------    ------------
         Total other income (expense)                527,884        (434,941)
                                                ------------    ------------

INCOME BEFORE INCOME TAXES                         4,582,288       4,212,718

PROVISION FOR INCOME TAXES                           356,099         339,300
                                                ------------    ------------

NET INCOME                                         4,226,189       3,873,418

OTHER COMPREHENSIVE INCOME (LOSS):
    Foreign currency translation adjustment           13,748              62
                                                ------------    ------------
COMPREHENSIVE INCOME (LOSS)                     $  4,239,937    $  3,873,480
                                                ============    ============

EARNINGS PER SHARE, BASIC AND DILUTED           $       0.47    $       0.43
                                                ============    ============

NUMBER OF SHARES                                   9,090,910       9,090,910
                                                ============    ============



The accompanying notes are an integral part of this statement.


<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                                                                            other
                                                Number    Common   Paid in   Statutory      Retained    comprehensive
                                              of shares   stock    capital   reserves       earnings    income (loss)      Totals
                                              ----------  ------  --------   ----------   -----------   -------------   -----------
<S>                                            <C>        <C>     <C>        <C>          <C>           <C>               <C>
BALANCE, January 1, 2003                       9,090,910  $  959  $279,765   $1,174,549   $ 5,253,143   $       8,213   $ 6,716,629
    Net income                                                                              3,873,418                     3,873,418
    Land use right                                                  32,347                                                   32,347
    Adjustment to statutory reserve                                             386,673      (386,673)                            0
    Dividend distributions                                                                 (3,638,090)                   (3,638,090)
    Foreign currency translation adjustments                                                                       62            62
                                              ----------  ------  --------   ----------   -----------   -------------   -----------
BALANCE, December 31, 2003                     9,090,910     959   312,112    1,561,222     5,101,798           8,275     6,984,366
    Net income                                                                              4,226,189                     4,226,189
    Land use right                                                  32,408                                                   32,408
    Adjustment to statutory reserve                                             439,152      (439,152)                            0
    Dividend distributions                                                                 (1,000,000)                   (1,000,000)
    Foreign currency translation adjustments                                                                   13,748        13,748
                                              ----------  ------  --------   ----------   -----------   -------------   -----------
BALANCE, December 31, 2004                     9,090,910  $  959  $344,520   $2,000,374   $ 7,888,835   $      22,023   $10,256,711
                                              ==========  ======  ========   ==========   ===========   =============   ===========
</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>
                                                                     2004           2003
                                                                 -----------    -----------
<S>                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                   $ 4,226,189    $ 3,873,418
    Adjustments to reconcile net income to cash
       provided by (used in) operating activities:
         Depreciation                                                224,017        160,490
         Amortization                                                 17,136          8,568
         Land use right                                               32,408         32,347
         Loss on disposal of equipment                                     0         84,408
         Bad debt expense                                             11,252
       (Increase) decrease in assets:
         Cash - restricted                                          (911,959)    (1,694,000)
         Accounts receivable - trade                                (543,710)       743,255
         Accounts receivable - trade special                         627,990       (568,700)
         Other receivables                                            91,763       (201,697)
         Other receivables - related party                           468,519     (8,358,255)
         Prepaid expenses                                            100,371       (318,501)
         Inventories                                                  66,267       (931,634)
         Employee advances                                           228,343       (262,449)
       Increase (decrease) in liabilities:
         Accounts payable                                         (1,258,437)       336,042
         Accounts payable - related party                            (15,675)        15,675
         Advances from customers                                      (5,533)        14,349
         Wages and benefits payable                                 (117,788)       (96,719)
         Other taxes payable                                         (30,853)       338,680
         Accrued liabilities                                          12,154        128,661
         Other payables                                              239,925        432,462
         Other payables - related party                             (242,000)      (303,450)
                                                                 -----------    -----------
           Net cash provided by (used in) operating activities     3,220,379     (6,567,050)
                                                                 -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of intangible asset - land use right                                  (171,358)
    Purchase of equipment                                           (342,499)    (1,829,036)
    (Increase) in construction in progress                           (81,353)
                                                                 -----------    -----------
           Net cash used in investing activities                    (423,852)    (2,000,394)
                                                                 -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings net of payments on short term notes payable        (2,420,000)     9,075,000
    Decrease in bank overdraft                                                      (19,617)
    Dividends paid                                                  (583,220)
                                                                 -----------    -----------
           Net cash provided by (used in) financing activities    (3,003,220)     9,055,383
                                                                 -----------    -----------

EFFECTS OF EXCHANGE RATE CHANGES ON CASH                              13,748             62
                                                                 -----------    -----------

(DECREASE) INCREASE IN CASH                                         (192,945)       488,001

CASH, beginning of year                                              488,001           --
                                                                 -----------    -----------

CASH, end of year                                                $   295,056    $   488,001
                                                                 ===========    ===========
</TABLE>

The accompanying notes are an integral part of this statement.

                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BACKGROUND

Background

On May 13, 2004, China Autoparts,  Inc.  (formerly known as Talram  Corporation)
(referred  to as  CHINA  AUTOPARTS  or the  Company),  a  Delaware  corporation,
completed  a "reverse  acquisition"  transaction  in which it  acquired  all the
outstanding stock of Rhohan Holdings Limited (referred to as RHOHAN),  a British
Virgin  Islands  (BVI)  corporation,  in  consideration  for the  issuance  of a
majority of CHINA AUTOPARTS' common shares.

The reverse  acquisition  was  completed  pursuant to a Capital  Stock  Exchange
Agreement  dated April 22,  2004.  Concurrently  with the closing of the reverse
acquisition,   Talram's   shareholders  changed  the  Company's  name  to  China
Autoparts,  Inc., its directors  appointed designees of Double Unity Investments
Limited  (100%  shareholder  of  RHOHAN)  as  directors  and  then  resigned  as
directors,   for  further  explanation  of  the  transaction;   these  financial
statements  should be read in  conjunction  with the Company's form 8K dated May
13, 2004.

China Autoparts,  Inc. was incorporated in the State of Delaware on May 1, 2001.
Up until  the  reorganization,  CHINA  AUTOPARTS  had only  nominal  assets  and
liabilities  and was a  development  stage  company  attempting  to  locate  and
consummate a merger with an ongoing business. As a result of the reorganization,
CHINA AUTOPARTS will continue the business operations of RHOHAN.

Rhohan Holdings  Limited was  incorporated on September 9, 1999 in the territory
of the British Virgin Islands. The Company,  through its wholly owned subsidiary
Chengdu Tonglin Casting Industrial Co., Ltd.  (TONGLIN),  principally engages in
the development,  production,  sales and related  technical service provision of
various types of petrol engine  cylinder body and other casting  products in the
People's Republic of China (PRC).

Chengdu Tonglin  Casting  Industrial Co., Ltd. was established in Dayi County of
Chengdu by Chengdu Rongxin  Enterprises Co., Ltd.  (Rongxin) and Rhohan Holdings
Limited  (RHOHAN) as a  Sino-foreign  equity joint  venture on January 21, 2000.
TONGLIN was classified as a Foreign Invested  Enterprise (FIE) in the PRC and is
subject  to the FIE laws of the PRC.  TONGLIN  is a Chinese  registered  limited
liability company with a legal structure similar to a regular  corporation and a
limited  liability  company  organized  under state laws in the United States of
America.  The Articles of Association  provides for a 50 year term with original
registered capital of approximately  $2,005,000.  RHOHAN was formerly owned 100%
by Double Unity  Investments  Limited  (referred to as Double Unity),  a British
Virgin Islands  corporation.  Double Unity Investments  Limited is 100% owned by
Mr. Li Yungao.  Rongxin  was 100%  owned by the  Company's  shareholder,  Mr. Li
Yungao.

Originally  Rongxin owned 40% and RHOHAN owned 60% of TONGLIN.  On July 5, 2001,
the registered capital of TONGLIN was increased to approximately  $3,214,000 and
RHOHAN's  ownership in TONGLIN  increased  to 75% and  Rongxin's  ownership  was
reduced to 25%.  RHOHAN paid for its increase in capital  through its portion of
undistributed  earnings.  In  October  2002,  Rongxin  agreed  to  transfer  its
remaining 25% ownership in TONGLIN to RHOHAN for approximately  $2,178,000 which
was paid from dividends distributed by TONGLIN.



                                     - 6 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BACKGROUND, (CONTINUED)

Background, (continued)

On November 20, 2003, this transfer was approved by the State Administration for
Industry and Commerce of the PRC. As a result of this transfer  TONGLIN became a
wholly foreign owned enterprise (WFOE).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The reporting entity

The  financial  statements  in the filings of CHINA  AUTOPARTS  become  those of
RHOHAN.  The  consolidated  financial  statements of China  Autoparts,  Inc. and
subsidiaries  represent the  activities of its 100% owned  subsidiaries,  Rhohan
Holdings  Limited and Chengdu  Tonglin  Casting  Industrial  Co., Ltd.  Talram's
continuing  operations  and balance  sheet are  insignificant  and therefore not
included in these financial statements.

Beginning April 22, 2004, China Autoparts, Inc. owns the following subsidiaries:

                                                 Percentage
      Subsidiary                                 Ownership
--------------------------------------------     ----------
Rhohan Holdings Limited (BVI company)               100%
   owned 100% by China Autoparts, Inc.
Chengdu Tonglin Casting Industrial Co., Ltd         100%
   (Chinese registered limited liability
   company), owned 100% by
   Rhohan Holdings Limited

Basis of presentation

Prior to April 22,  2004  Talram  was  considered  to be a  "development  stage"
enterprise  and its financial  statements  from December 31, 2003 and prior were
presented in accordance with Statement of Financial  Accounting Standards (SFAS)
No. 7, "Accounting and Reporting by Development Stage Enterprises".  As a result
of the reverse acquisition of Rhohan Holdings Limited,  the Company is no longer
considered to be a "development  stage  enterprise" and is no longer required to
report its financial statements in accordance with SFAS No. 7.

The consolidated  financial  statements  represent the activities of the Company
and its wholly  owned  subsidiaries.  The  Company's  financial  statements  are
prepared in conformity  with  accounting  principles  generally  accepted in the
United States of America.

Foreign currency translation

The reporting  currency of the Company is the US dollar.  TONGLIN uses its local
currency,  Renminbi, as its functional currency.  Results of operations and cash
flow are translated at average exchange rates during the period,  and assets and
liabilities  are  translated at the end of period  exchange  rates.  Translation
adjustments resulting from this process are included in



                                     - 7 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Foreign currency translation, (continued)
----------------------------

accumulated  other  comprehensive  income  in  the  consolidated   statement  of
shareholders' equity.

Transaction  gains and losses  that arise from  exchange  rate  fluctuations  on
transactions  denominated in a currency  other than the functional  currency are
included  in the  results of  operations  as  incurred.  These  amounts  are not
material to the consolidated financial statements.

Revenue recognition

Product  sales are  recognized  when the products are delivered to customers and
inspected  by the  customers  and  title  has  passed.  The  Company  offers  no
warranties  on its  products.  If there  are any  products  that do not meet the
quality  standards set forth in their  contracts,  the customers will notify the
company.  The  Company  at this  time  replaces  the  defective  goods  with new
products.  The defective  goods are returned to the Company and are reworked and
returned to inventory.

Sales revenue  represents the invoiced value of goods,  net of a value-added tax
(VAT).  All of the Company's  products that are sold in the PRC are subject to a
Chinese  value-added tax at a rate of 17% of the gross sales price. This VAT may
be offset  by VAT paid by the  Company  on raw  materials  and  other  materials
included in the cost of producing their finished product.

Plant and equipment, net

Plant and equipment  are recorded at cost.  Depreciation  is computed  using the
straight-line method over the estimated useful lives of the assets. Depreciation
expense for the years ended  December 31, 2004 and 2003 amounted to $224,017 and
$160,490 respectively. Estimated useful lives of the assets are as follows:

                                                           Estimated Useful Life
Buildings                                                       20-30 years
Machinery and equipment                                         10-15 years
Furniture and fixtures                                          5-10 years

Construction in progress includes  engineering  costs,  insurance costs,  wages,
interest  and other costs  relating to  construction  in  progress.  Balances in
construction  in progress are  transferred  to equipment when the related assets
are  ready  for  their  intended  use.  No   depreciation  is  provided  for  on
construction in progress.

Maintenance,  repairs and minor  renewals  are  charged  directly to expenses as
incurred.   Major  additions  and  betterment  to  property  and  equipment  are
capitalized.



                                     - 8 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Plant and equipment, net, (continued)
------------------------

Long-term  assets of the  Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if  the  carrying  value  exceeds  projected  future  cash  flows  from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful lives. As of December 31, 2004, the Company expects these assets to be
fully recoverable.

Plant and equipment consist of the following at December 31:

                                                      2004              2003
                                                  -----------       -----------
Buildings and improvements                        $ 1,193,844       $ 1,187,128
Machinery and equipment                             2,541,031         2,064,257
Construction in progress                               38,465            64,850
                                                  -----------       -----------
      Totals                                        3,773,340         3,316,235
Accumulated depreciation                             (982,714)         (762,228)
                                                  -----------       -----------
      Property and equipment, net                 $ 2,790,626       $ 2,554,007
                                                  ===========       ===========

In the year 2000,  Rongxin,  as part of its  original  capital  contribution  to
TONGLIN,  contributed certain buildings,  machinery, and equipment in the amount
of RMB 5,111,248,  or  approximately  $618,500.  The buildings,  machinery,  and
equipment were  originally  purchased by Rongxin through  financing  provided by
Rongxin's banking  institution and were pledged as collateral for this loan. The
term of this loan  commenced  on August 31, 1999 and expired on August 30, 2004.
But before the expiration,  Chengdu Rongxin Industrial Co.,Ltd renewed this loan
with term from  June 17,  2004 to June 16,  2007.  Except  for the fixed  assets
mentioned  above,  more fixed  assets that owned by Tonglin were also pledged as
collateral  for this renewed loan.  As of the date of this report,  the net book
value of these  pledged  assets is  $1,618,563.  The  titles  of the  buildings,
machinery,  and equipment  that  contributed by Rongxin are still in the name of
Chengdu  Rongxin  Industrial  Co.,Ltd.  Currently,  Chengdu  Rongxin  Industrial
Co.,Ltd is in the process of transferring to TONGLIN.

Use of estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  of the United States of America  requires  management to
make  estimates  and  assumptions  that  affect  the  amounts  reported  in  the
consolidated  financial  statements and accompanying notes.  Management believes
that the estimates utilized in preparing its financial statements are reasonable
and prudent. Actual results could differ from these estimates.

Recently issued accounting pronouncements

In March 2004, the FASB issued EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF
03-1 includes new guidance for


                                     - 9 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Recently issued accounting pronouncements, (continued)
-----------------------------------------

evaluating and recording  impairment losses on debt and equity  investments,  as
well as new  disclosure  requirements  for  investments  that are  deemed  to be
temporarily  impaired.  In September  2004,  the FASB issued Staff Position EITF
03-1-1,  which delays the effective date until additional guidance is issued for
the application of the  recognition  and measurement  provisions of EITF 03-1 to
investments   in  securities   that  are  impaired;   however,   the  disclosure
requirements  are  effective  for annual  periods  ending  after June 15,  2004.
Although the Company will  continue to evaluate  the  application  of EITF 03-1,
management  does not currently  believe  adoption will have a material impact on
the Company's financial position or results of operations.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. 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).
Paragraph 5 of ARB No. 43,  Chapter 4,  previously  stated that  "...under  some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight,  and  rehandling  costs may be so abnormal as to require  treatment  as
current period  charges..." SFAS No. 151 requires that those items be recognized
as current-period  charges  regardless of whether they meet the criterion of "so
abnormal."  In  addition,  this  statement  requires  that  allocation  of fixed
production  overhead to the costs of conversion be based on the normal  capacity
of the production facilities.

The provisions of SFAS 151 shall be applied  prospectively and are effective for
inventory costs incurred during fiscal years beginning after June 15, 2005, with
earlier  application  permitted for inventory costs incurred during fiscal years
beginning  after the date this Statement was issued.  The Company's  adoption of
SFAS  No.  151 is not  currently  expected  to  have a  material  impact  on the
Company's financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123(R) (revised  2004),  "Share-Based
Payment",  which amends FASB  Statement No. 123 and will be effective for public
companies  for interim or annual  periods  beginning  after June 15,  2005.  The
revised  standard  requires,  among  other  things  that  compensation  cost for
employee  stock  options be measured at fair value on the grant date and charged
to expense over the employee's  requisite service period for the option.  Due to
the absence of observable market prices for employee stock options, the standard
indicates that the fair value of most stock options will be determined  using an
option-pricing model. The Company's adoption of SFAS No. 123(R) is not currently
expected  to have a  material  impact on the  Company's  financial  position  or
results of operations.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets,
an  amendment  of APB  Opinion  No.  29. The  guidance  in APB  Opinion  No. 29,
Accounting  for  Nonmonetary  Transactions,  is  based  on  the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
assets  exchanged.  The  guidance in that  Opinion,  however,  included  certain
exceptions to that principle.  This Statement amends Opinion 29 to eliminate the
exception for  nonmonetary  exchanges of similar  productive  assets that do not
have commercial  substance.  A nonmonetary  exchange has commercial substance if
the future cash flows of the entity are  expected to change  significantly  as a
result of the  exchange.  SFAS No. 153 is effective  for  nonmonetary  exchanges
occurring  in fiscal  periods  beginning  after



                                     - 10 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF  SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Recently issued accounting pronouncements, (continued)
-----------------------------------------

June 15, 2005. The Company's  adoption of SFAS No. 153 is not expected to have a
material impact on the Company's financial position or results of operations.

Cash and concentration of risk

Cash  includes  cash on hand and demand  deposits  in accounts  maintained  with
state-owned  banks  within  the  People's  Republic  of  China.  Total  cash  in
state-owned  banks at December  31, 2004 and 2003  amounted  to  $3,161,747  and
$2,500,000,  respectively,  of which no deposits are covered by  insurance.  The
Company has not  experienced  any losses in such accounts and believes it is not
exposed to any risks on its cash in bank accounts.

The Company has a  concentration  of sales risk where five customers  represents
90% or  $15,891,364  of total sales for the year ended  December  31,  2004,  as
compared to 94% or $15,266,786 for five customers in the year ended December 31,
2003.  Total  outstanding  accounts  receivable for these customers  amounted to
$6,273,490 and $4,959,943 as of December 31, 2004 and 2003, respectively.

Cash-restricted

The Company through its bank agreements is required to keep certain cash amounts
on deposit which are subject to withdrawal restrictions.  The restricted amounts
are $2,968,959 and $2,057,000 as of December 31, 2004 and 2003, respectively.

Inventories

Inventories  are stated at the lower of cost or market on the first in first out
method of accounting and consist of the following at December 31:

                                                    2004                 2003
                                                 ----------           ----------
Raw materials                                    $  862,739           $  936,619
Finished goods                                    1,207,668            1,200,055
                                                 ----------           ----------
      Totals                                     $2,070,407           $2,136,674
                                                 ==========           ==========

Inventories  consist of raw materials and finished goods. Raw materials  consist
primarily  of iron and  resin  sand  used in the  casting  process.  The cost of
finished  goods  includes  direct costs of raw materials as well as direct labor
used in  production.  Indirect  production  costs such as utilities and indirect
labor related to  production  such as assembly and delivery are also included in
the cost of inventory and subsequently in the cost of goods sold. The production
cycle is very short. No work in process  inventory  existed at December 31, 2004
and 2003 as all the inventory in the process was completed  and  transferred  to
finished goods prior to the physical inventory count.

Costs and expenses not directly  related to the production  activities,  such as
compensation of sales,  marketing,  accounting and administrative  personnel are
included in selling,  general and administrative expenses of the period in which
they incurred.



                                     - 11 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Financial instruments

Statement of Financial  Accounting  Standards  No. 107 (SFAS 107),  "Disclosures
About Fair Value of Financial Instruments" requires disclosure of the fair value
of financial instruments held by the Company. SFAS 107 defines the fair value of
financial  instruments as the amount at which the instrument  could be exchanged
in a current  transaction  between willing  parties.  The Company  considers the
carrying  amount  of cash,  accounts  receivable,  other  receivables,  accounts
payable, accrued liabilities and other payables to approximate their fair values
because of the short period of time between the origination of such  instruments
and their expected realization and their current market rate of interest.

Accounts receivable, trade

The Company conducts its business  operations in the People's Republic of China.
During the normal course of business,  the Company extends  unsecured  credit to
its customers.  Management reviews its accounts receivable on a regular basis to
determine if the bad debt allowance is adequate at each year-end.  However,  the
Company records a provision for accounts  receivable trade that ranges from 0.3%
to 1.0%of  the  outstanding  accounts  receivable  balance  in  accordance  with
generally accepted accounting  principles in the PRC. The allowance for doubtful
accounts as of  December  31,  2004 and 2003  amounted  to $40,626 and  $20,430,
respectively.

Accounts receivable, trade special

This amount represents trade accounts  receivable due from various customers for
which the customers'  banks have  guaranteed  payments of the  receivable.  This
amount is non-interest  bearing and is normally paid within three to six months.
The Company  has the  ability to submit a request for payment to the  customer's
bank  earlier than the  scheduled  payment  date;  however,  the Company  incurs
interest and processing fee in such instances.

Intangible assets

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company.  However, the government grants the user a
"land use right" (the Right) to use the land.  In 2003,  TONGLIN  purchased  the
Right to use the land for 50 years from the  government  for a fee in the amount
of $171,358.

The Right is being  amortized over a minimum life of 10 years in accordance with
generally  accepted  accounting  principles in the PRC. The expense for the year
ended December 31, 2004 and 2003 amounted to $17,136 and $8,568, respectively. .

The  Certificates  of Land Use Rights of  approximately  57,347 Chinese acres of
land are occupied by buildings  operated by TONGLIN,  which are held in the name
of Chengdu Rongxin  Industrial  Co., Ltd., a related party.  The land use rights
have been  acquired  from  1998  through  2000 for a life of 50  years.  Chengdu
Rongxin Industrial Co., Ltd. has verbally agreed to let TONGLIN use the property
for agreed upon purposes through the life of the Land Use Rights.  However,  the
Land Use Rights  remains in the name of Chengdu  Rongxin  Industrial  Co.,  Ltd.
TONGLIN is not charged  for the use of the land nor has an asset been  reflected
on TONGLIN's



                                     - 12 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Intangible assets, (continued)

balance  sheet  for  these  rights.  The  original  cost of the land use  rights
amounted  to  $324,076.  In order to better  report the actual  expenses  of the
operations the Company has reported in the accompanying  consolidated statements
of  income an  expense  for the use of the land  with a  corresponding  entry to
paid-in-capital.  The Rights are being  amortized  over 10 years  based upon the
original cost of the rights and the expense for the year ended December 31, 2004
and 2003 amounted to $32,408 and $32,347, respectively.

Income taxes

The Company has adopted  Statement of Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" (SFAS 109).  SFAS 109 requires the recognition of
deferred  income  tax  liabilities  and  assets  for  the  expected  future  tax
consequences  of temporary  differences  between  income tax basis and financial
reporting basis of assets and  liabilities.  Provision for income taxes consists
of taxes  currently due plus deferred  taxes.  There are no deferred taxes as of
December 31, 2004 and 2003.


The charge for  taxation is based on the  results  for the year as adjusted  for
items, which are non-assessable or disallowed.  It is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred  tax is  accounted  for using the  balance  sheet  liability  method in
respect of temporary  differences  arising from differences between the carrying
amount  of  assets  and   liabilities  in  the  financial   statements  and  the
corresponding tax basis used in the computation of assessable tax profit.

In principle,  deferred tax liabilities are recognized for all taxable temporary
differences,  and  deferred tax assets are  recognized  to the extent that it is
probably  that  taxable  profit  will  be  available  against  which  deductible
temporary differences can be utilized.

Deferred  tax is  calculated  at the tax rates that are expected to apply to the
period when the asset is realized or the  liability is settled.  Deferred tax is
charged or  credited  in the income  statement,  except when it related to items
credited or charged  directly to equity,  in which case the deferred tax is also
dealt with in equity. Deferred tax assets and liabilities offset each other when
they  relate  to income  taxes  levied by the same  taxation  authority  and the
Company intends to settle its current tax assets and liabilities on a net basis.

The Company through its subsidiary,  TONGLIN,  is governed by the Income Tax Law
of  the  People's  Republic  of  China  (PRC)  concerning   Foreign   Investment
Enterprises  and  Foreign  Enterprises  and various  local  income tax laws (the
Income  Tax  Laws).  Income  Tax  Law of the  People's  Republic  of  China  for
Enterprises  with  Foreign  Investments  and Foreign  Enterprises  states,  "Any
enterprise with foreign  investments of a production nature scheduled to operate
for a period of not less than ten years shall, upon examination and verification
by the tax authorities in the year the company begins to make a profit,  will be
exempted  from  income  taxes in the first and second  years and allowed a fifty
percent reduction in the standard tax rates in the third to fifth years."



                                     - 13 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Income taxes, (continued)

Under the Income Tax Laws,  foreign  investment  enterprises (FIE) generally are
subject to an income tax at an  effective  rate of 33% (30% state  income  taxes
plus 3% local  income  taxes) on incomes  reported  in the  statutory  financial
statements after  appropriate tax adjustments,  unless the enterprise is located
in a specially  designated  region for which more favorable  effective tax rates
are applicable.

The Company was exempt from income tax from 2000 to 2001.  TONGLIN is located in
a Special  Economic  Zone and the PRC tax  authorities  have  approved a special
income tax rate of 15% for this area. In addition,  TONGLIN in  accordance  with
the Circular of  Transmission  the State  Administration  of Taxation of Sichuan
Province on  Implementing  the Relevant Tax Policies of  Development of the West
Regions and Implementation of the Suggested Policies of State  Administration of
Taxation,  "the enterprise income tax of the foreign  investment  enterprises in
the legal tax  reduction  period  shall be reduced by 7.5%."  TONGLIN  generated
profits in the year ended  December 31,  2000.  Effective  January 1, 2002,  the
two-year  100%  exemption for income taxes had expired for TONGLIN and it became
subject to income tax at a reduced  rate of 7.5%.  The Company is not subject to
any local income tax of 3% until the exemption and reduction  periods  expire in
2005.

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

                                                           2004           2003
                                                         --------       --------
Provision for China income tax                           $356,099       $339,300
                                                         --------       --------
      Total provision for income taxes                   $356,099       $339,300
                                                         ========       ========

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

                                                           2004           2003
                                                         --------       --------
U.S. Statutory rates                                        34.0 %        34.0 %
Foreign income not recognized in USA                       (34.0)        (34.0)
China income taxes                                           7.5           7.5
                                                         --------       --------
      Totals                                                 7.5 %         7.5 %
                                                         ========       ========

The Company has recorded an allowance for bad debts in the amount of $278,300 in
2003 as further described in note 5. This amount has been recorded as an expense
for financial  statement purposes.  However,  the ultimate deduction for Chinese
income tax purposes has not been  determined  and the amount to be deducted must
be approved by the appropriate  Chinese taxing authority.  A valuation allowance
for the entire amount has been  established  due to the uncertainty of realizing
the  deduction  of this  expense  for  income tax  purposes  as a result of this
uncertainty no deferred taxes has been provided in the accompanying consolidated
financial statements.

Value added tax

Enterprises  or  individuals  who  sell   commodities,   engage  in  repair  and
maintenance  or import and export  goods in the PRC are subject to a value added
tax in accordance with Chinese laws.



                                     - 14 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES, (CONTINUED)

Value added tax, (continued)
---------------

The value added tax standard  rate is 17% of the gross sales price.  A credit is
available  whereby VAT paid on the  purchases of  semi-finished  products or raw
materials used in the production of the Company's  finished products can be used
to offset the VAT due on sales of the finished product.

NOTE 3 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Income taxes paid amounted to $237,951 and $244,045 for the year ended  December
31, 2004 and 2003,  respectively.  Interest paid (including related party loans)
for the years ended December 31, 2004 and 2003 amounted to $299,276 and $355,923
respectively.

In April,  2004,  RHOHAN  declared a $1,000,000  dividend  distribution of which
$583,220 was paid by December 31, 2004 with the remaining $416,780 recorded as a
dividend payable on the accompanying balance sheet.

On April 22,  2004,  the Company  issued  8,590,910  shares of common stock in a
reverse acquisition transaction for no cash.

During the year ending December 31, 2004, the Company acquired equipment for the
total  amount of $36,784 as payment on an account  receivable  of $48,036.  This
transaction resulted in a bad debt expense of $11,252.

In 2003, the Company made a non-cash shareholders' distribution of $3,638,090 to
offset other receivables/payables due from/to related parties.


NOTE 4 - EARNINGS PER SHARE

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings Per Share" (SFAS 128). SFAS 128 requires the  presentation of earnings
per share (EPS) as Basic EPS and Diluted EPS. There are no  differences  between
Basic and Diluted EPS for the years ended December 31, 2004 and 2003. Income per
common  share  calculation  for the year ended  December  31, 2003  reflects the
retroactive  restatement  of the  shareholders'  equity  section to reflect  the
recapitalization  of the Company as of April 22, 2004. The number of shares used
in computing  earnings per share for the years ended  December 31, 2004 and 2003
each amounted to 9,090,910.  Earnings per share as of December 31, 2004 and 2003
amounted to $0.47 and $0.43, respectively.


NOTE 5 - OTHER RECEIVABLES

In 2003 the Company made a prepayment  of $278,300 to purchase raw  materials to
be used in its  operations.  As of  December  31,  2004,  the molds  were  never
delivered by the vendor. The Company is currently in litigation with the vendor.

Management intends to pursue collection of this receivable;  however, management
is  uncertain  that they will prevail in  collecting  the entire  amount.  As of
December  31,  2004,  management  has  decided to fully  reserve  this amount as
uncollectible.



                                     - 15 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - NOTES PAYABLE - BANK

The Company has the following lines of credit outstanding at December 31:


<TABLE>
<CAPTION>
                                                                    2004         2003
                                                                 ----------   ----------
<S>                                                              <C>          <C>
Shanghai Pu Dong Development Bank, Chengdu Branch due June
      2004, transaction fee at 0.05% restricted cash
      requirement of 30% or $363,000 Chengdu Rongxin Ruigao
      Machinery Co., Ltd. guaranteed the difference between
      the cash amount deposited and the credit line amount       $     --     $1,210,000

Chengdu City Commercial Bank, Dayi Branch the line dated
      2003 was due May 2004, and the line dated 2004 was due
      January 2005; transaction fees for both lines were at
      0.05%; the restricted cash requirement for the line
      dated 2003 was 40% or $726,000 and for the line dated
      2004 was 30% or $544.500; Chengdu Rongxin Industrial
      Co., Ltd. guaranteed the difference between the cash
      amount deposited and the credit line amount for both
      lines                                                       1,815,000    1,815,000

Chengdu City Commercial Bank, Dayi Branch the line dated
      2003 was due June 2004, and line dated 2004 was due
      February 2005; transaction fees for both lines were at
      0.05%; restricted cash requirement for the line dated
      2003 was 40% or $968,000 and for the line dated 2004
      was 100% or $1,210,000. Chengdu Rongxin Industrial
      Co., Ltd. guaranteed the difference between the cash
      amount deposited and the credit line amount for the
      line dated 2003 only                                        1,210,000    2,420,000

                                                                 ----------   ----------
                          Totals                                 $3,025,000   $5,445,000
                                                                 ==========   ==========
</TABLE>


The proceeds of the above debt as of December  31, 2003,  were loaned to Chengdu
Taichang  Metals Co.,  Ltd., a related party.  In return for this loan,  Chengdu
Taichang  Metals Co.  Ltd.  deposited  $242,000  cash with  TONGLIN as a partial
guarantee for the loan repayment.  The amount loaned to Chengdu  Taichang Metals
Co. Ltd. was  recorded in other  receivables-related  party on the  consolidated
balance sheet as of December 31, 2003 and was further  explained in Note 10. The
loan amount was  non-interest  bearing  and was due and payable in May 2004.  On
April 1, 2004, Chengdu Taichang Metals Co., Ltd. repaid this amount in full.


                                     - 16 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - SHORT-TERM LOANS PAYABLE - BANK

The Company has the following short-term loans payable at December 31:

<TABLE>
<CAPTION>
                                                                    2004        2003
                                                                 ----------   ----------
<S>                                                              <C>          <C>
Chengdu City Commercial Bank, Dayi Branch due January 15,
      2005 and January 29, 2004, respectively, monthly
      interest only payment at 0.57525%, guaranteed by
      Chengdu High Pressure Valve Plant, a related party         $1,210,000   $1,210,000


Shanghai Pu Dong Development Bank, Chengdu Branch due March
      29, 2005 and March 9, 2004, respectively, monthly
      interest only payment at 0.48675%, guaranteed by
      Chengdu Rongxin Ruigao Machinery Co., Ltd., a related
      party                                                       3,630,000    3,630,000
                                                                 ----------   ----------
          Totals                                                 $4,840,000   $4,840,000
                                                                 ==========   ==========
</TABLE>


NOTE 8 - RESERVES AND DIVIDENDS

The laws and regulations of the People's Republic of China require that before a
Sino-foreign  cooperative joint venture  enterprise  distributes  profits to its
partners,  it must first  satisfy  all tax  liabilities,  provide  for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors, after the statutory reserve.

Pursuant to the board of directors'  resolution,  the Company transferred 10% of
its net income,  as determined in accordance  with the PRC accounting  rules and
regulations,  to a statutory  surplus  reserve fund until such  reserve  balance
reaches 50% of the Company's registered capital.

The transfer to this reserve must be made before  distributions of any dividends
to  shareholders.  For the years ending  December 31, 2004 and 2003, the Company
transferred  $439,152 and $386,673,  respectively  which  represents  10% of the
years'  net  income  determined  in  accordance  with PRC  accounting  rules and
regulations to this surplus reserve.

The surplus reserve fund is non-distributable  other than during liquidation and
can be used to fund  previous  years'  losses,  if any,  and may be utilized for
business  expansion  or  converted  into share  capital by issuing new shares to
existing  shareholders in proportion to their  shareholding or by increasing the
par value of the shares  currently  held by them,  provided  that the  remaining
reserve balance after such issue is not less than 25% of the registered capital.

The Chinese  government  restricts  distributions of registered  capital and the
additional  investment amounts required by the Chinese joint ventures.  Approval
by the Chinese government must be obtained before distributions of these amounts
can be returned to the shareholders.

Pursuant to the board of directors'  resolution,  Rhohan declared $1,000,000 and
$3,638,090 to its shareholder Double Unity for the years ended December 31, 2004
and 2003 respectively.



                                     - 17 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - RETIREMENT BENEFIT PLANS

Regulations in the People's  Republic of China require the Company to contribute
to a defined  contribution  retirement  plan for all  permanent  employees.  All
permanent  employees  are  entitled  to an annual  pension  equal to their basic
salary  at  retirement.  The PRC  government  is  responsible  for  the  benefit
liability  to  these  retired  employees.   The  Company  is  required  to  make
contributions  to the state retirement plan at 17% of the monthly basic salaries
of the current  employees.  For the years ended  December 31, 2004 and 2003, the
Company  made  pension  contributions  in the amount of $294,934  and  $307,279,
respectively.

NOTE 10 - RELATED PARTY TRANSACTIONS AND CONTINGENCIES

The  following  is a list  of  related  parties  described  in the  accompanying
consolidated financial statements:

Chengdu Rongxin Enterprises Co., Ltd .is owned 100% by Mr. Li Yungao.

Chengdu  Rongxin  Industrial  Co.,  Ltd.  Is owned  by Mr.  Li  Yungao  and some
individuals.

Chengdu  Rongxin  Ruigao  Machinery Co., Ltd. is owned 70% by Mr. Li Yungao with
the Remaining 30% owned by Ren Xuzhi.

Chengdu Begin Pipeline Co., Ltd. is owned 75% by Chengdu Rongxin Industrial Co.,
Ltd. and 25% by Chengdu Begin Technology Development CO., Ltd.

Chengdu  High  Pressure  Valve Plant is owned by Mr. Li Yungao and 4  individual
technicians.

Chengdu Taichang Metals Co., Ltd. is 95% owned by Mr. Li Jing, who is the son of
Mr. Li Yungao.

During the year ended December 31, 2004 and 2003,  the Company  entered into the
following transactions with related parties:

Sales, purchases and other expenses for year ended December 31:



                                                            2004         2003
                                                          --------      --------
Sales
Chengdu Rongxin Ruigao Machinery Co., Ltd.                $  8,245      $ 80,776
                                                          ========      ========

Cost of sales
Chengdu Rongxin Ruigao Machinery Co., Ltd.                $  8,005      $ 78,423
                                                          ========      ========

Interest expense
Chengdu Rongxin Ruigao Machinery Co., Ltd.                $   --        $ 39,277
                                                          ========      ========

Lease expense
Chengdu Rongxin Ruigao Machinery Co., Ltd.                $121,000      $121,000
                                                          ========      ========


                                     - 18 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - RELATED PARTY TRANSACTIONS AND CONTINGENCIES, (CONTINUED)

Amounts due to/from related parties at December 31:


                                                            2004        2003
                                                         ----------   ----------
Other receivables - related party:
      Chengdu Rongxin Ruigao Machinery Co., Ltd.         $4,881,910   $   17,785
      Chengdu High Pressure Valve Plant                     112,356         --
      Chengdu Taichang Metals Co., Ltd.                        --      5,445,000
                                                         ----------   ----------
                                     Totals              $4,994,266   $5,462,785
                                                         ==========   ==========

Other payables - related party:
      Chengdu Taichang Metals Co., Ltd.                  $     --     $  242,000
                                                         ==========   ==========

On May 20, 2003,  TONGLIN entered into an agreement with Chengdu Taichang Metals
Co.,  Ltd.  to make a  12-month  loan in the  amount of  $3,025,000  to  Chengdu
Taichang  Metals Co., Ltd.  using the proceeds from  TONGLIN's bank note payable
described  in Note 6. In  addition,  TONGLIN  paid  $1,089,000  to their bank as
restricted cash deposit as required by the loan agreement.

The  $3,025,000  was required to be paid to TONGLIN upon maturity  together with
interest  calculated  based on the amount of  restricted  cash deposit using the
bank's monthly  interest rate of 0.4425%.  Chengdu Taichang Metals Co., Ltd. was
required to pay a  consultation  fee of $121,000 to TONGLIN upon maturity of the
loan. On April 1, 2004,  Chengdu  Taichang Metals Co., Ltd. repaid these amounts
in full.

On May 29, 2003,  TONGLIN entered into an agreement with Chengdu Taichang Metals
Co., Ltd. to make a loan in the amount of $2,420,000 to Chengdu  Taichang Metals
Co., Ltd. using the proceeds from TONGLIN's bank note payable  described in Note
6. In addition, TONGLIN paid $968,000 to its bank as the restricted cash deposit
as required by the loan agreement.

The  $2,420,000  was required to be paid to TONGLIN upon maturity  together with
interest  calculated  based on the amount of  restricted  cash deposit using the
bank's monthly  interest rate of 0.4425%.  Chengdu Taichang Metals Co., Ltd. was
required to pay a fee of $77,101 to TONGLIN upon  maturity of the loan. On April
1, 2004, Chengdu Taichang Metals Co., Ltd. repaid these amounts in full.

As part of the  above  loan  transactions  Chengdu  Taichang  Metals  Co.,  Ltd.
deposited  $242,000 of cash with  TONGLIN as a partial  guarantee to ensure that
the loans would be paid in full at maturity.

The other amounts due from related parties are generated from the Company making
various  cash  advances  and short  term  loans and the  allocation  of  various
expenses to related parties.  These  transactions are re-occurring in nature and
are generally  repaid during the current year on a revolving  basis. The Company
does not charge interest on these receivables.

On January 1, 2000,  TONGLIN and Chengdu Rongxin  Enterprises  Co., Ltd. entered
into a Working Ground and  Transportation  Equipment  Leasing  Agreement,  under
which TONGLIN leases office  building  space,  living areas and vehicles with an
annual rent of $121,000.



                                     - 19 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - RELATED PARTY TRANSACTIONS AND CONTINGENCIES, (CONTINUED)

Short-term  loans from Chengdu  Rongxin  Ruigao  Machinery  Co., Ltd.  (formerly
Chengdu  Rongxin  Enterprises  Co., Ltd.)  amounted to $544,500  during the year
ending  December 31, 2002.  This loan  included  interest at rates  ranging from
7.49% to 12.10% per annum and was paid off in 2003. Interest paid for year ended
December 31, 2004 and 2003 amounted to $0 and $39,277 respectively.

On November 4, 2003,  TONGLIN and Industrial  and Commercial  Bank of China Dayi
County Branch  entered into the  "Intangible  Right Security  Agreement",  under
which TONGLIN has guaranteed a $1,089,000  bank line of credit issued to Chengdu
Rognxin Ruigao  Machinery Co., Ltd. The term of this bank line of credit expired
on April 29, 2004. As of December 31, 2004,  this  guarantee of the bank line of
credit was released.

NOTE 11 - LEASES

The Company leases office building  space,  living  quarters,  and vehicles from
Chengdu Rongxin Ruigao Machinery Co., Ltd, formerly Chengdu Rongxin  Enterprises
Co.,  Ltd.,  a related  party,  in the amount of  $121,000  per year.  The lease
expenses paid for the year ended December 31, 2004 and 2003 amounted to $121,000
and $121,000, respectively.  Chengdu Rongxin Enterprises Co., Ltd. was dissolved
in October 2002. All of the assets,  including the lease  agreement,  were taken
over by Chengdu Rongxin Ruigao Machinery Co., Ltd., a related party. On December
31, 2004,  TONGLIN and Chengdu Rongxin  Industrial Co., Ltd.  entered into a new
lease agreement which replaced the lease agreement described above.

The Company also leases office space in the United  States.  The monthly rent is
$500 per month  commencing on July 1, 2004 through June 30, 2005.  The lease can
be  renewed  annually  subject  to a rental  rate  adjustment.  The lease can be
terminated by either party with a 30 day notice.

NOTE 12 - OTHER OPERATING INCOME

The Company has entered into various contractual  arrangements to act as a sales
agent for Chengdu  Zhengheng Engine Parts Co., Ltd. where the Company receives a
commission on sales of products  purchased from Chengdu  Zhengheng  Engine Parts
Co.,  Ltd.  Chengdu  Zhengheng  pays  commission to the Company by selling their
products to the Company at a sales  price which is  generally  2% lower than the
price the Company sells to their customers.  The Company records the net revenue
from the sales of these products as other operating income.  The sales and their
related cost of sales amounted to the following for the year ended December 31:

                                                      2004               2003
                                                  -----------        -----------
Total other sales                                 $ 9,796,771        $12,377,501
Cost of sales                                       9,710,812         11,954,295
                                                  -----------        -----------
      Other operating income                      $    85,959        $   423,206
                                                  ===========        ===========



                                     - 20 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - OTHER INCOME (EXPENSE), NET OF OTHER INCOME

The Company records the income and expenses  generated through  activities other
than the normal business activities as other income and expenses.

Other  income  and  expense  for the  year  ended  December  31  consist  of the
following:

                                                      2004              2003
                                                   ----------        ----------
Interest income                                    $  214,709        $   65,141
Weight scale fee                                        3,571             2,895
Iron scrape sale                                         --               1,399
Other income                                           67,564            10,005
Value added tax refund                                805,945              --
                                                   ----------        ----------
Total other income                                  1,091,789            79,440
                                                   ----------        ----------

Interest expense                                      524,776           355,923
Other non-operating expense                            39,129           158,458
                                                   ----------        ----------
Total other expense                                   563,905           514,381
                                                   ----------        ----------

Other income (expense), net                        $  527,884        $ (434,941)
                                                   ==========        ==========


NOTE 14 - DIVIDEND DISTRIBUTION

Before the  Company  entered  into the Stock  Exchange  Agreement,  the  Company
declared a $1,000,000 dividend  distribution to Double Unity Investments.  As of
December 31,  2004,  $583,220  was paid with the  remaining  balance of $416,780
recorded as a dividend payable on the accompanying balance sheet.

NOTE 15 - SUBSEQUENT EVENT

On January 25, 2005,  the Company,  together with Mr. Li Yungao,  founder of the
Company,  RHOHAN,  TONGLIN,  and Double  Unity,  entered  into a stock  purchase
agreement with JE Castings  Investments Limited ("JE Castings"),  a wholly owned
subsidiary of Johnson Electric Capital  Limited.  Pursuant to the agreement,  JE
Castings  acquired  1,818,182  shares of Common Stock of the Company from Double
Unity for an aggregate purchase price of US$3 million and they also acquired 100
shares of Series A Preferred  Stock from the Company for an  aggregate  purchase
price of US$165. The purchase was completed on February 2, 2005.

The $3 million  proceeds  will be used to repay a portion of the  related  party
debt owed by Chengdu Rongxin Ruigao Machinery Co., Ltd. , Chengdu Begin Pipeline
Co., Ltd. and Chengdu High Pressure Valve Plant to TONGLIN.

In connection  with this  agreement  the Company has  increased  its  authorized
Series A Preferred Stock to a total of 6,060,607 shares. In addition the Company
will sell an additional 3,030,203 of Series A Preferred stock to JE Castings for
an aggregate  amount of  $4,999,835 in 2005.  The use of these  proceeds will be
used to build a new manufacturing facility.



                                     - 21 -
<PAGE>


                     CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - SUBSEQUENT EVENT, (CONTINUED)

JE Casting  has the option to receive  additional  shares of Series A  Preferred
stock based upon a  predetermined  formula for no  consideration  in 2006 if the
Company's 2005 net income excluding  extraordinary  items or other non-recurring
income  of loss  items is less  than $4  million.  This  note  should be read in
conjunction  with the Company's form SC 13D filed with the  Securities  Exchange
Commission on February 8, 2005 for further details of the transactions.


                                     - 22 -