UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 AMENDMENT NO. 2
                                       TO
                                   FORM 10-KSB
--------------------------------------------------------------------------------

(Mark one)

               [ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2004

             [X] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

      For the transition period from January 1, 2004 to September 30, 2004

                         Commission File Number: 0-31049

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.
        (Exact name of small business issuer as specified in its charter)

                 Nevada                                 86-0995730
        (State of incorporation)                 (IRS Employer ID Number)

             Central Plaza, 18 Harbour Road, Suite 3203A, 32nd Floor
                                Hong Kong, China
               (Address of principal executive offices) (Zip Code)

                                  852-2588-1228
                           (Issuer's telephone number)
--------------------------------------------------------------------------------

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value

Check  whether  the issuer  has (1) filed all  reports  required  to be files by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period the Company was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Company'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. [ ]

The  issuer's  revenues  for the  nine  months  ended  September  30,  2004  was
$30,997,070.

The aggregate market value of voting common equity held by  non-affiliates as of
January 10, 2005 was approximately  $108,930,443  using the closing price of the
Company's common stock of $16.50 per share on January 7, 2005.

As of January 10, 2005 there were  16,792,184  shares of Common Stock issued and
outstanding.

          Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

                                EXPLANATORY NOTE

This  Amendment  No. 2 to our Annual  Report on Form  10-KSB for the fiscal year
ended  September  30, 2004 is filed to: (i) add  disclosure  in Item 6 regarding
critical  accounting  policies for revenue recognition and basis of presentation
of financial  statements in connection with the Company's  acquisition of shares
of Starway  Management  Limited;  (ii) add  disclosure  under  Item 6  regarding
liquidity and capital  resources  relating to the Company's  notes  receivables;
(iii) correct  earnings per share  calculations  related to the  acquisition  of
shares of  Starway  Management  Limited;  (iv) add  disclosure  in Note 1 of our
financial statements regarding the consideration for the acquisition of Starway;
(v) add disclosure in Note 1 regarding revenue recognition  accounting policies;
(vi) add  disclosure  in Note 11 regarding  Chinese taxes the Company is subject
to;  (vii)  add  disclosure  in new Note 17  regarding  the  restatement  of the
financial  statements;  (viii) add an updated report on the consolidated balance
sheet of Starway Management Limited and subsidiaries as of December 31, 2003 and
the related  consolidated  statements  of  operations  and  comprehensive  loss,
changes in stockholders'  equity and cash flows for the years ended December 31,
2003 and 2002 from Webb & Company, P.A. and an updated report from the Company's
current auditors, Moore Stephens Wurth Frazer and Torbet, LLP; and (ix) file the
consents to the  incorporation  by  reference  on the Form S-8 of such  reports.
Except as required to reflect the changes  noted above,  this Form 10-KSB/A does
not attempt to modify or update any other  disclosures set forth in the original
filing.  Additionally,  this Form 10-KSB/A does not purport to provide a general
update or discussion of any other  developments of the Registrant  subsequent to
the original  filing.  The filing of this Form  10-KSB/A  shall not be deemed an
admission that the original filing,  when made, included any untrue statement of
material fact or omitted to state a material fact  necessary to make a statement
not misleading.

                                      -ii-
<PAGE>

                      CHINA ENERGY SAVINGS TECHNOLOGY, INC.

                                TABLE OF CONTENTS

                                                                           Page
                                                                          Number
                                                                          ------

CAUTION REGARDING FORWARD-LOOKING INFORMATION                               3

PART I                                                                      4

ITEM 1 - DESCRIPTION OF BUSINESS                                            4
ITEM 2 - DESCRIPTION OF PROPERTY                                           13
ITEM 3 - LEGAL PROCEEDINGS                                                 13
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               14

PART II

ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS                                               14
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION         16
ITEM 7 - FINANCIAL STATEMENTS                                              23
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURES                                         23
ITEM 8A - CONTROLS AND PROCEDURES                                          25
ITEM 8B - OTHER INFORMATION                                                25

PART III

ITEM 9 -  OFFICERS AND DIRECTORS                                           26
ITEM 10 - EXECUTIVE COMPENSATION                                           29
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT                                                       31
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   33

PART IV                                                                    33

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K                                 33
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES                           34

SIGNATURES                                                                 35


                                        2
<PAGE>

CAUTION REGARDING FORWARD-LOOKING INFORMATION

All  statements  contained  in  this  Form  10-KSB,  other  than  statements  of
historical  facts,  that address future  activities,  events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe,"  "anticipate,"  "expect" and words of similar import. These
statements are based on certain  assumptions and analyses made by us in light of
our experience and our assessment of historical  trends,  current conditions and
expected future developments as well as other factors we believe are appropriate
under the  circumstances.  However,  whether  actual results will conform to the
expectations  and  predictions of management is subject to a number of risks and
uncertainties that may cause actual results to differ materially.

Such risks include,  among others,  the following:  international,  national and
local general economic and market conditions:  our ability to sustain, manage or
forecast  our  growth;   raw  material  costs  and  availability;   new  product
development and introduction; existing government regulations and changes in, or
the  failure  to  comply  with,  government   regulations;   adverse  publicity;
competition;  the loss of significant  customers or suppliers;  fluctuations and
difficulty in forecasting  operating  results;  changes in business  strategy or
development  plans;  business  disruptions;  the  ability to attract  and retain
qualified  personnel;  the  ability to  protect  technology;  and other  factors
referenced in this and previous filings.

Consequently, all of the forward-looking statements made in this Form 10-KSB are
qualified by these cautionary  statements and there can be no assurance that the
actual  results   anticipated  by  management  will  be  realized  or,  even  if
substantially  realized,  that they will have the  expected  consequences  to or
effects on our business operations.

The safe harbors of  forward-looking  statements  provided by Section 21E of the
Securities  Exchange Act of 1934 are unavailable to issuers of penny stock.  Our
shares may be  considered  penny stock and such safe harbors set forth under the
Reform Act may not be available to us.

As used in this Form 10-KSB, unless the context requires otherwise, "we" or "us"
or  the  "Company"  means  China  Energy  Savings   Technology,   Inc.  and  its
subsidiaries.


                                        3
<PAGE>

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

INTRODUCTION

We are a Nevada  corporation  headquartered in Hong Kong, China that invests in,
develops,  markets,  distributes and manufactures energy saving products for use
in commercial and industrial settings.  As of September 30, 2004, we owned a 50%
interest in Starway  Management  Limited,  a British Virgin Islands  corporation
("Starway") which owns all of the equity interests in Shenzhen Dicken Industrial
Development Limited, a company incorporated in the Republic of China on November
20,  1996  ("SDID")  which in turns owns all of the equity  interest in Shenzhen
Dicken Technology Development Limited, a company incorporated in the Republic of
China on November 9, 1999 ("SDTD"). SDID and SDTD develops,  markets distributes
and  manufactures  energy saving  products for use in commercial  and industrial
settings in China.  Subsequently,  in November,  2004, we acquired an additional
15% interest in Starway bringing out total ownership of Starway to 65%.

Public  information  concerning the Company is also made  available  through our
website at: www.cesv-inc.com.

CORPORATE HISTORY

We were  originally  incorporated  under  the  laws of the  State of  Nevada  on
February 14, 2000 as "Rim.com, Inc." On April 6, 2000, we closed our acquisition
of Rimmer  Computer Inc., an Arizona  corporation  which had been in business in
Phoenix, Arizona for over 13 years ("Rimmer").

Rimmer is an approved  technical  service  provider  for  computer  hardware and
software system manufacturers such as Novell,  Microsoft,  IBM, Compaq,  Hewlett
Packard,  Cisco and  others.  Rimmer  employed  five  people and the  individual
technicians  have received  certifications  such as Microsoft  Certified  System
Engineer and Certified NetWare Engineer.  All of Rimmer's customers were located
in the Phoenix, Arizona area. Rimmer, however, did not generate a profit for the
Company was only a marginal operating entity without  expenditure of substantial
marketing capital.  On June 6, 2002, we amended our Articles of Incorporation to
change our corporate name to Rim Holdings Inc.

On June 18, 2004, three of our stockholders namely Christina M. Strauch, Michael
K.  Hair,   P.C.  and  Robert  H.   Korndorffer   (collectively,   the  "Selling
Shareholders")  sold  8,888,224  shares of the common  stock of the  Company for
$225,000  (the  "Sale") to Best  Development  Company,  Ltd.,  a British  Virgin
Islands corporation ("Best  Development") and Jie Zhu, an individual ("Zhu"). In
connection  with this  transaction,  we also  redeemed  1,000,000  shares of our
common stock held by Ms. Strauch and  transferred  all of our interest in Rimmer
to Ms. Strauch. The sale of the 8,888,224 shares represented approximately 50.1%
of the  total  outstanding  stock  of  the  Company.  In  connection  with  this
transaction,  Ms. Strauch  resigned as our Chairman,  Chief  Executive  Officer,
Treasurer  and Chief  Financial  Officer and Mr.  Korndorffer  resigned from our
Board of Directors  effective as of June 22, 2004. Mr. Lee Kam Man was appointed
as our CEO as of June  22,  2004 and Mr.  Lee Kam Man and Mr.  Li  Shilong  were
appointed as directors of the Company.

The  proceeds  from the Sale were  then  loaned to the  Company  by the  Selling
Shareholders.  We used such  proceeds to pay off our current  liabilities.  Both


                                        4
<PAGE>

Christina M. Strauch and Robert Korndorffer were issued  convertible  promissory
notes as  consideration  for the loans which were convertible into 3,993,700 and
1,126,300  shares,  respectively,  of the  Company's  restricted  common  stock.
Michael K. Hair, P.C. assigned his convertible  promissory note to Nimish Patel,
counsel for the Company,  as partial payment for legal services  provided to the
Company.  This  promissory  note  is  convertible  into  833,320  shares  of the
Company's  restricted  common stock. All such convertible  promissory notes were
converted into our common stock on August 25, 2004.

On June 30,  2004,  we acquired  50% of the  outstanding  shares of Starway from
Eurofaith Holdings, Inc., a British Virgin Islands Corporation  ("EuroFaith") by
issuing to EuroFaith a convertible promissory note which may be convertible into
223,073,380  shares of our common stock.  This  convertible  promissory note was
also converted into our common stock on August 26, 2004.

On August 24, 2004,  we changed our name from Rim Holdings  Inc. to China Energy
Savings Technology, Inc. On August 25, 2004, we effected a 20 to 1 reverse stock
split of our common stock.

As a result, our corporate structure is illustrated as follows:

         -----------------------------------------
         |                                       |
         | China Energy Savings Technology, Inc. |
         |                                       |
         -----------------------------------------
                             | 50% (as of 9/30/04); 65% (as of 11/17/04)
                             |
         -----------------------------------------
         |                                       |
         | Starway Management Limited            |
         |                                       |
         -----------------------------------------
                             | 100%
                             |
         -----------------------------------------
         |                                       |
         | Shenzhen Dicken Industrial            |
         | Development Limited                   |
         |                                       |
         -----------------------------------------
                             | 100%
                             |
         -----------------------------------------
         |                                       |
         | Shenzhen Dicken Technology            |
         | Development Limited                   |
         |                                       |
         -----------------------------------------

Subsequent  to the closing of our fiscal year ended on September  30,  2004,  on
November 17, 2004, we completed an  acquisition of an additional 15% interest in
Starway  from  Eurofaith  by issuing a total of  3,346,100  shares of our common
stock  to  Eurofaith.  After  this  acquisition  we  own a  total  of 65% of the
outstanding shares of capital stock of Starway.


                                        5
<PAGE>

DESCRIPTION OF STARWAY'S BUSINESS

Starway was  incorporated  in the British  Virgin Islands on September 15, 1998.
Starway  owns  all  of  the  equity  interests  in  Shenzhen  Dicken  Industrial
Development Limited, a company incorporated in the Republic of China on November
20,  1996  ("SDID")  which in turns owns all of the equity  interest in Shenzhen
Dicken Technology Development Limited, a company incorporated in the Republic of
China on November 9, 1999 ("SDTD"). In 2003,  Eurofaith,  the former shareholder
of SDID exchanged 100% of the common shares of SDID for 100 shares of Starway.

Starway,  through its two subsidiaries  SDTD and SDID is a People's  Republic of
China based marketer, distributor and manufacturer of energy saving products for
use in commercial and industrial  settings.  SDID is a foreign-owned  enterprise
100% owned by Starway  under the laws of the People's  Republic of China ("PRC")
and  responsible  for  the  operation  and  sales  of its  products.  SDTD  is a
wholly-owned subsidiary of SDID and is a limited company incorporated in the PRC
and holds the  patent on  technology  used by SDID to  manufacture  and sell its
products and is responsible  for the  development  of energy saving  projects of
Shenzhen Dicken Group.

PRINCIPAL PRODUCT

OVERVIEW OF ENERGY SAVER PRODUCTS

The basic  technology  behind the  Company's  energy  saver  products  is a soft
switching  system  (the  "Switching   System")  comprised  of   microprocessors,
transformers and timing circuits which are designed to work together to regulate
and monitor the flow of electricity from main electricity  delivery units to the
device using such electricity (e.g.,  lighting devices,  sewing devices,  etc.).
This  regulation  and  monitoring is designed to lower the use of electricity by
such devices,  but still maintain the  performance  of such devices.  The energy
saver products are designed to be easily installed,  with no wiring  alterations
or circuit modifications, and fully automated upon installation.

LIGHT SAVER PRODUCTS

The Company's Light Saver products  include the street light saver,  fluorescent
light saver and the  electricity  saving  lamp light saver and are the  flagship
products  using the Company's  Switching  System.  All of these products use the
Switching System to reduce the amount of electricity  used by lighting  systems.
In many street light and  fluorescent  lighting  systems,  the supply voltage is
only required to allow the lights to turn on;  thereafter the operating  voltage
can be reduced.  The Company's  Light Saver products  automatically  switch from
normal  to  economy  voltage  after  the  start  up  period  and  the  products'
transformer  automatically  switches to the reduced  voltage and monitors use of
such  voltage.  The drop in  current is  dependent  on the age and type of light
fittings.  When additional  lights are turned on, the Switching  System "senses"
the change and switches to allow additional electricity to flow to power on such
additional  lights. In addition,  the Switching System monitors the main voltage
and  automatically  switch out of economy  mode when the main voltage drop could
induce a brownout.

The Company's Light Saver products are designed for  retrofitting  into existing
installations.   No   modification  is  required  to  existing  light  fittings.
Installations  are  relatively  quick and  simple.  The  Company's  Light  Saver
products  are  wired  into the  lighting  circuit,  before  and  after the light
switches and can be mounted  vertically,  horizontally  or hung.  The  Company's
Light Saver's products are fully automated once they are installed.

                                        6
<PAGE>

Once the Company's Light Saver products are installed, they generally reduce the
amount  of  electricity  used by the  lighting  system,  extend  the life of the
lights,  and  reduces the  operating  temperature  of the  lights.  As a result,
consumers of the Company's Light Saver's may save on their electricity bills and
cost of purchasing replacement light tubes.

SDTD warrants the original purchaser of its Light Saver products for a period of
3 years from the date of  installation,  to be free from  defects in and arising
from the design, assembly, manufacturer, material or workmanship of the products
and will  replace the  defective  products  without  any charge to the  original
purchaser.

SEWING MACHINE ELECTRICITY SAVER

SDTD  has also  introduced  the  Sewing  Machine  Electricity  Saver  using  the
Switching  System.  In  general,  the sewing  machine is used to sew in interval
processes.  In between the sewing intervals the sewing machine's motor runs on a
constant pace, drawing electricity without actually sewing. The Company's Sewing
Machine  Electricity  Saver product uses to the  Switching  System to reduce the
amount of electricity used in between actual use of the sewing machine.  As with
the Light Saver products, once the Sewing Machine Electricity Saver products are
installed, they are fully automated.

Once the Company's Sewing Machine Electricity Saver products are installed, they
generally reduce the amount of electricity used by such machines, may extend the
life of such machines, reduces the operating temperature and noise of the sewing
machine.  As a result,  consumers of the Company's  Sewing  Machine  Electricity
Saver may save on their  electricity  bills and cost of  purchasing  replacement
sewing machines.

OTHER PRODUCTS IN DEVELOPMENT

SDTD is currently  developing  other  products that use the Switching  System to
create more energy  efficient  devices.  Such  products  include:  the Injection
Molding  Machine Saver,  the Central Air Condition  Electricity  Saver,  the Oil
Bleed Set Electricity Saver and the Multi User Electricity Saver.

SALES AND DISTRIBUTION

SDTD sells and distributes  its products all over China,  with offices and sales
agents in the cities of Beijing, Shanghai, Chendu, Xi'An and in the provinces of
Wu-Han, Guangzhou,  Hu-Nan and Ah-Hui. In addition, SDTD offers distributorships
at city  levels to  distributors  who want to sell  SDTD's  products.  Each such
distributor is required to pass qualification  inspections by SDTD and pay a one
time upfront fee to SDTD for the right to distribute SDTD's products. Currently,
SDTD only sells to customers in China.

SDTD  has  installed  the  Light  Saver  Products  in  the  building,   offices,
supermarkets,  shopping malls, restaurants, buildings, factories, oil fields and
residential  premises of  approximately  300  customers in over 10 provinces and
cities in China.  The Light Saver  Products  have also been  installed on street
lamps for cities in China.


                                        7
<PAGE>

SDTD sells its products by offering two types of contracts:  Savings  Sharing or
Equipment Sale.

Under the Equipment Sale  contract,  the customer pays upfront for the equipment
and installation cost.

Under the Savings Sharing contract, the customer is not required to pay any cost
up front for the equipment and installation of SDTD's  products.  Such customer,
however,  enters into a 5 to 7 year  contract  with SDTD  whereby  from the date
SDTD's  products are installed,  the customer shall pay to SDTD 70% of the total
savings from the reduced  electrical  bill.  SDTD has entered into these Savings
Sharing contracts since July of 2002. As of September 30, 2004, SDTD has entered
into 11 Savings Sharing contracts with:

Shenzhen Dicken Jilin Branch
Zhuzhou Municipal Street Light Bureau
Anqing Kuntai Decoration Co., Ltd
Shenzhen E-store Market Co., Ltd
Nanjing Langchi Group Co., Ltd
Shenzhen Dicken Shenyang Branch
Nanjing Giant Economic Co., Ltd
Chongqing Baifuda Technology Development Co., Ltd
Hunan Xuhua Economic trade Co., Ltd
Wuhu United Technology Co., Ltd
Kelamayi Jingying Co., Ltd

CONCENTRATION OF CUSTOMERS

While SDTD has  approximately  470 customers,  none of our customers account for
more than 10% of our  revenues.  However,  100% of our sales  revenue  were from
companies located in China.

MANUFACTURING

SDTD designs,  prototypes and manufactures the chipset component of its products
at its  manufacturing  facilities  located at Shenzhen Hi-Tech Zone Center Road,
Shenzhen City, Guangdong Province,  China. SDTD's  manufacturing  facilities are
ISO9001  certified.  SDTD contracts out the  manufacturing and assembling of all
other components to subcontractors. Our current annual manufacturing capacity is
approximately  10,000 units. The principal  components to the Company's products
are computer chips, circuit boards, transformers and semiconductors.  The prices
for these  components  are subject to market forces largely beyond the Company's
control,  including energy costs,  market demand,  and freight costs. The prices
for  these  components  have  varied  significantly  in the  past  and may  vary
significantly in the future.


                                        8
<PAGE>

INTELLECTUAL PROPERTY

Mr. Ian Cheng Yi Feng  first  explored  energy  savings  software  in 1999 for a
Canadian company called Imperial Canadian Overseas Capital Corporation ("ICOC").
ICOC  then  sold and  transferred  the  initial  software  technology  it had to
Shenzhen Baobo Industrial (now SDTD) pursuant to a Technology Transfer Agreement
dated December 2001 for  consideration  of RMB$2 million.  This is a transfer of
technology,  not a patent.  This  agreement  provided for a  termination  of the
agreement in December,  2011. This agreement was subsequently amended on January
3, 2003 to eliminate the termination date and changed the term to be permanently
effective.  This  agreement  also  provides  that SDTD has the right to  further
develop this technology to create its own  intellectual  properties and SDTD has
the right to  transfer,  trade,  use and make it  SDTD's  patent.  ICOC  further
declared and agreed to undertake in this agreement that it has never applied and
will never apply for any patent covering the initial software  technology in any
countries.

With this  technology,  SDTD put together the  technicians  and  programmers and
developed  the chip set that is the heart of the  intelligence  control  circuit
board Switching System used in Starway's products. Subsequently, Mr. Cheng Ming,
a former  shareholder  and  director  of  SDTD,  applied  for a patent  in China
covering this technology in April, 2003 and was granted preliminary  approval of
the patent by the Chinese  intellectual  property  agency on September 19, 2003.
All rights under such patent were then  transferred to SDTD by Mr. Cheng Ming on
December 19, 2003.

COMPETITION

There are  approximately 50 companies that do business in the PRC that engage in
the production and sales of energy saving products. SDTD is able to compete with
such  competitors  because  the  energy  saving  products  of  such  competitors
generally use  transformer  hardware to stabilize the voltage in order to reduce
electricity  use.  SDTD's  products,  on the other hand uses the Soft  Switching
System  consisting  of  intelligent  control  circuit  boards  made  of  chipset
(software) and work with the transformer (hardware) in stabilizing the voltage.

On  December  11,  2003,  the  China  National  Scientific  Technology  Products
Committee  issued a "Certificate of Approval" for SDTD's  products  stating that
SDTD's  products have an average  energy  savings range of between 28% to 34% as
compared to the average energy  savings range of other energy  savings  products
which  range from  8-25%.  The  Guangdong  Research  Center for  Scientific  and
Technical Information, in its recent report on intelligent control circuit board
concluded that, "there are so far no other similar device in the market that can
compete."

The  management  of  Starway is not  currently  aware of any  competitors  doing
business in China that are marketing or  manufacturing  energy  saving  products
using an intelligent control circuit board.  However,  competitors may be in the
process of developing similar technology.

SDTD's products have been approved by the Shenzhen Energy Saving Association and
its quality certified by the China National Authority.


                                        9
<PAGE>

GOVERNMENTAL REGULATION

The sale of SDID's products are generally not subject to governmental  approvals
or regulations. When SDID sells its products to governmental entities (e.g., for
street lamps,  etc.), such governmental  entities'  approval of the products are
required for such specific use.

RESEARCH AND DEVELOPMENT

We believe  that we will  continue  to refine  and  develop  new energy  savings
products.  In addition,  we also believe  that SDID will begin  developing  wind
electric  generation  technology within the next 12 months. SDID was granted the
right to establish a wind farm on  approximately 20 miles of land at Ala Shan by
the Xinjiang Boertala Mongolia  Autonomy  Government.  We plan to invest in this
project from the end of 2004 until the middle of 2005.

EMPLOYEES

As of the date of this filing,  China Energy  Savings,  Inc. (the parent entity)
has no full time employees, 13 part time employees and no long term consultants.
We have 3 corporate  officers,  the Chief  Executive  Officer,  Chief  Financial
Officer and the Corporate Secretary.

Starway  has no full  time  employees,  6 part time  employees  and no long term
consultants.

In  addition,   SDID  employs   approximately   190  full  time   employees  and
approximately  2,000  part-time sales  consultants and 5 long-term  consultants.
SDID does not bear the costs of such part-time  sales  consultants  because they
are  compensated  by  commission  on sales  and  distribution  of the  Company's
products.

The management of SDID is as follows:

LIU TIAN FU

Age 39 C.F.O. (CHIEF FINANCIAL  OFFICER) is an economist who received his Master
degree from  University of Xiang Tan,  Hunan  Province.  Prior to joining Dicken
Hi-Tech  Development,   he  worked  as  a  financial  analyst  and  advisor  for
International Financial Venture Capital Committee.

YANG AN YONG

Age 41 C.T.O. (CHIEF TECHNICAL OFFICER) is a  professional  engineer,  graduated
from Electronics Science University of Chang Du, Si-Chuang province. He has over
12 years R&D experience in high technology and in the energy saving  industries.
He joined Dicken  Hi-Tech  Development in September,  2002 as a Senior  Software
Engineering Manager.

HUANG ZHI

Age 46 (OFFICE  MANAGER) has over 20 years  experience  in Public  Relations and
Human  Resources.  Graduated from University of Lao-ning  Province,  worked as a
professional  TV  reporter.  She has  successfully  worked  over 6 years  for HR
department of Shenzhen City Government.


                                       10
<PAGE>

IGOR SIZYKH

Age 43 C.M.O. (CHIEF MARKETING OFFICER) is a  highly  motivated team player with
13 years experience in management and supervision for automotive,  international
sales and franchise  industries in Europe and Canada.  He has proven  ability to
increase   profitability   through   contract   negotiations,   developing   new
partnerships,  strategic planning,  innovative marketing strategies.  Mr. Sizykh
has a Bachelor of Arts Degree in Economics and Commerce.

None of our employees are under employment agreements.

RISK FACTORS

A DROP IN THE RETAIL PRICE OF  ELECTRICAL  ENERGY MAY HAVE A NEGATIVE  AFFECT ON
THE COMPANY'S BUSINESS.

A customer's  decision to purchase the Company's products is primarily driven by
the payback on the  investment  resulting  from the  increased  energy  savings.
Although  management  believes  that current  retail  energy  prices  support an
attractive  return on  investment  for the Company's  products,  there can be no
assurances  that future retail pricing of electrical  energy will remain at such
levels.

THERE  CAN BE NO  ASSURANCE  THAT  THE  COMPANY  CAN  KEEP  UP  WITH  THE  RAPID
TECHNOLOGICAL CHANGE IN THE ENERGY SAVING PRODUCTION INDUSTRY.

Although the Company is  developing  and  marketing  its  products  with what it
believes is  state-of-the  art  technology,  there can be no assurance  that new
technologies that supersede the Company's technologies will not be developed. As
new  technologies  are  developed,  the Company may need to adapt and change its
products and services,  its method of marketing or delivery or alter its current
business in ways that may  adversely  affect  revenue and its ability to achieve
its proposed business goals.

THE COMPANY MUST CONTINUALLY  RESEARCH AND DEVELOP NEW TECHNOLOGIES AND PRODUCTS
TO REMAIN COMPETITIVE.

To achieve its  strategy  and obtain  market  share,  the  Company  will need to
continually  research,  develop  and  refine  new  technologies  and  offer  new
products. Many factors may limit the Company's ability to develop and refine new
products,  including  access  to new  products  and  technologies,  as  well  as
marketplace resistance to new products and technology.

THE COMPANY MUST ATTRACT AND RETAIN HIGHLY  SKILLED AND  MOTIVATED  EMPLOYEES TO
SUCCESSFULLY MANAGE ITS GROWTH AND COMPETE IN THE MARKETPLACE.

The  Company's  ability to manage its growth and  operations  going forward will
depend on,  among other  things:  expanding,  training and managing its employee
base, including  attracting,  retaining and motivating highly skilled personnel;
developing or outsourcing its customer interface, operations, administration and
maintenance  systems;  and controlling  its expenses.  The Company cannot assure
that it will succeed in developing all or any of these capabilities.


                                       11
<PAGE>

THE COMPANY'S CURRENT  STOCKHOLDERS  EXERCISE  SUBSTANTIAL  CONTROL AND MAY MAKE
DECISIONS THAT YOU DO NOT CONSIDER TO BE IN YOUR BEST INTERESTS.

Currently, the Company's executive officers and one shareholder beneficially own
in the aggregate  approximately  60.7% of the  outstanding  Common Stock.  It is
expected that these individuals will maintain a majority control of the Company.
As a result,  these  stockholders,  acting  together,  will be able to  exercise
control over all matters requiring approval of the stockholders of the Company.

THE MARKET FOR THE COMPANY'S COMMON STOCK IS ILLIQUID.

The Company's common stock is traded on the Over-the-Counter  Bulletin Board. It
is thinly traded compared to larger more widely known companies in its industry.
Thinly  traded common stock can be more volatile than stock trading in an active
public  market.  The Company cannot predict the extent to which an active public
market for its common stock will develop or be sustained.

THE PENNY STOCK RULES MAY EFFECT THE LIQUIDITY OF OUR COMMON STOCK.

Since the  Company's  securities  are not listed on the Nasdaq  Stock  Market or
certain  other  national  securities  exchanges  and the price  thereof is below
$5.00,  subsequent  purchases of the Company's securities will be subject to the
requirements  of the penny  stock  rules,  absent  the  availability  of another
exemption.  The SEC has adopted rules that regulate  broker-dealer  practices in
connection  with  transactions  in "penny  stocks."  Penny stocks  generally are
equity  securities  with a price  of less  than  $5.00  (other  than  securities
registered  on certain  national  securities  exchanges  or quoted on The Nasdaq
Stock  Market).  The penny  stock  rules  require a  broker-dealer  to deliver a
standardized  risk  disclosure  document  required  by the SEC,  to provide  the
customer  with  current  bid and  offer  quotations  for the  penny  stock,  the
compensation  of the  broker-dealer  and  its  salesperson  in the  transaction,
monthly account  statements showing the market value of each penny stock held in
the customer's account,  to make a special written  determination that the penny
stock is a suitable  investment  for the purchaser  and receive the  purchaser's
written  agreement to the transaction.  The Company is currently  subject to the
penny stock rules and,  therefore,  these  disclosure  requirements may have the
effect of reducing the level of trading activity in the Company's common stock.

PAST  ACTIVITIES OF THE COMPANY AND ITS AFFILIATES MAY LEAD TO FUTURE  LIABILITY
FOR THE COMPANY.

Prior to the acquisition of Starway, the Company engaged in businesses unrelated
to its current operations.  Although the major shareholders of the Company prior
to the  acquisition  of  Starway  indemnified  Rim  Holdings  against  any loss,
liability,  claim, damage or expense arising out of or based on any breach of or
inaccuracy in any of their  representations  and warranties  made regarding such
acquisition,  any liabilities  relating to such prior business against which the
Company is not completely  indemnified may have a material adverse effect on the
Company.


                                       12
<PAGE>

RISKS RELATED TO DOING BUSINESS IN THE PRC

FUTURE  FLUCTUATION  IN THE VALUE OF THE  RENMINBI  MAY  NEGATIVELY  AFFECT  THE
COMPANY'S  ABILITY TO  CONVERT  ITS RETURN ON  OPERATIONS  TO U.S.  DOLLARS IN A
PROFITABLE MANNER AND ITS SALES GLOBALLY.

Until 1994,  the  Renminbi  experienced  a gradual but  significant  devaluation
against  most  major  currencies,  including  U.S.  dollars,  and  there  was  a
significant  devaluation  of the Renminbi on January 1, 1994 in connection  with
the replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system.  Since 1994, the value of the Renminbi relative to
the U.S.  Dollar has remained stable and has  appreciated  slightly  against the
U.S.  dollar.  Countries,  including the U.S.,  have argued that the Renminbi is
artificially  undervalued  due to China's  current  monetary  policies  and have
pressured China to allow the Renminbi to float freely in world markets.

If any  devaluation  of the Renminbi were to occur in the future,  the Company's
returns on its  operations  in China,  which are  expected  to be in the form of
Renminbi,  will be negatively  affected upon  conversion  to U.S.  dollars.  The
Company  attempts to have most future payments,  mainly  repayments of loans and
capital contributions, denominated in U.S. dollars. If any increase in the value
of the Renminbi were to occur in the future, the sales of the Company's products
in China and in other countries may be negatively affected.

ITEM 2 - DESCRIPTION OF PROPERTY

During the last quarter of fiscal year 2004, we,  through a subsidiary  owned by
Starway  (Miramar  Development  Limited),  rented office space in Hong Kong at a
rate of $7,800 per month. The term of the lease was for 2 years.

SDID owns an old factory which is currently  leased to an unrelated third party.
This was SDID's old manufacturing factory which it has outgrown. The old factory
is approximately 405.27 square meters and is located at Baoan District, Shenzhen
City,  Guangdong  Province,  China. SDID also owns two residential units, one is
approximately  179 square meters  located at Nanshan  District,  Shenzhen  City,
Guangdong  Province,  China and the other one is approximately 139 square meters
located at Futian District,  Shenzhen City,  Guangdong Province,  China).  These
residential  units are used by Mr. Cheng,  SDID's President and to house certain
expatriate technicians.

SDID's  operates out of leased office and factory  space which is  approximately
2,200 square  meters and is located at Block 3, 30 Shenzhen  Hi-Tech Zone Centre
Road, Shenzhen City, Guandong Province, China. SDID pays approximately US$58,000
per year in rent for such  space.  The lease  for such  space is for a term of 5
years.

We do not anticipate  investing in real estate or interests in real estate, real
estate mortgages,  or securities of or interests in persons primarily engaged in
real estate activities. We currently have no formal investment policy, and we do
not  intend to  undertake  investments  in real  estate as a part of our  normal
operations.

ITEM 3 - LEGAL PROCEEDINGS

We are not aware of any material pending legal proceedings involving us, Starway
or its subsidiaries.


                                       13
<PAGE>

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

No matters  were  submitted to a vote of our  security  holders  during the last
quarter of the fiscal year ended September 30, 2004.


                                     PART II

ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The  Common  Stock is not listed on any stock  exchange.  We have  submitted  an
application to have our Common Stock listed on the NASDAQ National market.  Such
application,  however,  has not been  approved  as of the time of filing of this
report.  The Common Stock is traded  over-the-counter  on the OTC Bulletin Board
under the symbol  "CESV."  The  following  table sets forth the high and low bid
information  for the Common  Stock for each  quarter  within the last two fiscal
years.

QUARTERLY COMMON STOCK PRICE RANGES

     ======================================================================
     QUARTER ENDED                                 2002/2003
     ----------------------------------------------------------------------
                                            HIGH              LOW
     ----------------------------------------------------------------------
     December 31, 2002                     $1.20             $0.60
     ----------------------------------------------------------------------
     March 31, 2003                        $1.00             $0.80
     ----------------------------------------------------------------------
     June 30, 2003                         $1.20             $0.80
     ----------------------------------------------------------------------
     September 30, 2003                    $2.40             $0.80
     ======================================================================


     ======================================================================
     QUARTER ENDED                                 2003/2004
     ----------------------------------------------------------------------
                                            HIGH              LOW
     ----------------------------------------------------------------------
     December 31, 2003                     $3.60             $1.00
     ----------------------------------------------------------------------
     March 31, 2004                        $5.40             $0.80
     ----------------------------------------------------------------------
     June 30, 2004                         $5.80             $1.40
     ----------------------------------------------------------------------
     September 30, 2004                   $20.00             $4.20
     ======================================================================

** Note: All prices  adjusted to take into account of the 1 for 20 reverse stock
split that took effect on August 25, 2004.

These quotations reflect inter-dealer prices, without retail mark-up,  mark-down
or commission and may not represent actual transactions. As of January 10, 2004,
there were  approximately  615 stockholders of record of our Common Stock and no
stockholders of record of our Preferred Stock.


                                       14
<PAGE>

We have never paid any  dividends on the Common Stock.  We currently  anticipate
that any future  earnings will be retained for the  development  of our business
and  do  not  anticipate  paying  any  dividends  on  the  Common  Stock  in the
foreseeable future.

On September  8, 2004,  we  established  the 2004 Equity  Incentive  Plan ("2004
Plan") with 1,200,000  shares approved and subject to the 2004 Plan. The purpose
of the Plan is to grant stock and stock  options to purchase our common stock to
our  employees  and  key  consultants.   On  September  17,  2004,  we  filed  a
registration statement on Form S-8 registering all 1,200,000 shares.

<TABLE>
<CAPTION>
----------------------------   ---------------------   ---------------------   ----------------------
                                Number of securities                            Number of securities
                                 issued or issuable       Weighted-average      remaining available
                                  upon exercise of       exercise price of      for future issuance
                                outstanding options,    outstanding options,        under equity
Plan Category                    warrants and rights     and warrants rights     compensation plans
----------------------------   ---------------------   ---------------------   ----------------------
<S>                            <C>                     <C>                     <C>
Equity Compensation Plans
approved by security holders.                      0                       0                        0
----------------------------   ---------------------   ---------------------   ----------------------
Equity Compensation Plans
not approved by security
holders.                                     670,000                       0                  530,000
----------------------------   ---------------------   ---------------------   ----------------------
TOTAL                                                                     $0
</TABLE>

SALES OF UNREGISTERED SECURITIES

In February 2004 we issued 2,500,000 restricted common stock shares to our legal
counsel in  conversion  of $50,000 of accrued  legal  services  and future legal
services in connection with our acquisition of Starway. In February 2004 we also
issued 4,000,000 restricted common stock shares to our Chairman in conversion of
$80,000 of accrued salary. We relied upon the exemption from registration as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
shares.  The investors took their shares for investment  purposes without a view
to  distribution  and had access to  information  concerning the Company and our
business prospects, as required by the Securities Act. In addition, there was no
general  solicitation  or  advertising  for  the  purchase  of our  shares.  All
certificates for our shares contain a restrictive legend.

On August 25, 2004, the Company issued 11,451,336 shares of common stock, in the
aggregate, to EuroFaith Holdings, Inc.'s assignees and 3 individuals pursuant to
a conversion of outstanding  convertible notes held by EuroFaith Holdings,  Inc.
and the 3  individuals.  We relied upon the exemption from  registration  as set
forth in Section  4(2) of the  Securities  Act of 1933 for the issuance of these
shares.  The investors took their shares for investment  purposes without a view
to  distribution  and had access to  information  concerning the Company and our
business prospects, as required by the Securities Act. In addition, there was no
general  solicitation  or  advertising  for  the  purchase  of our  shares.  All
certificates for our shares contain a restrictive legend.


                                       15
<PAGE>

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

The following discussion of our financial condition and results of operations of
should be read in  conjunction  with the financial  statements and related notes
thereto.  The following discussion contains certain  forward-looking  statements
that involve risks and uncertainties. Our actual results could differ materially
from those discussed herein. We undertake no obligation  publicly to release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.

OVERVIEW

We are a holding  company that invests in,  develops,  markets,  distributes and
manufactures  energy  saving  products  for  use in  commercial  and  industrial
settings. All of our revenues are derived from our ownership interest in Starway
which  owns all of the equity  interests  in SDID which in turns owns all of the
equity  interest in SDTD.  The  holding  company  itself does not  independently
generate any revenues.

Our  financial  statements  are  consolidated  with  those  of  Starway  and its
subsidiaries  with an adjustment to take into account the 50% of Starway that is
not  owned  by us.  Starway's  subsidiaries,  SDID and  SDTD  develops,  markets
distributes  and  manufactures  energy saving products for use in commercial and
industrial settings in China.

CRITICAL ACCOUNTING POLICIES

Our management's  discussion and analysis of its financial condition and results
of operations are based upon our consolidated  financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States. Our financial statements reflect the selection and application of
accounting  policies which require management to make significant  estimates and
judgments.  See  note  1 to the  Company's  consolidated  financial  statements,
"Summary  of  Significant  Accounting  Policies."  Our  management  bases  their
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable  under the  circumstances.  Actual  results may differ
substantially from these estimates under different assumptions or conditions. We
believe that the following  reflect the more critical  accounting  policies that
currently affect our financial condition and results of operations.

REVENUE AND DEFERRED REVENUE RECOGNITION

The Company has two types of contracts  for its product  sales:  energy  savings
sharing contracts and equipment sales contracts.  The Company recognizes revenue
when all four of the  following  criteria are met: (1)  persuasive  evidence has
been received that an arrangement  exists;  (2) delivery of the products  and/or
services has occurred;  (3) the selling price is fixed or determinable;  and (4)
collectibility is reasonably assured.  The Company follows the provisions of SAB
No. 104 which sets forth guidelines in the timing of revenue  recognition  based
upon  factors  such as passage of title,  installation,  payments  and  customer
acceptance.  Any amounts  received  prior to satisfying  the  Company's  revenue
recognition  criteria is recorded as deferred  revenue.  Over the specified time
period of the energy savings contact  changes in the amount of savings  realized
by the customers could effect the amount of unearned revenues.


                                       16
<PAGE>

NOTES RECEIVABLE

We carry  our  notes  receivable  at the net  present  value  of the  discounted
contract price, net of allowance for doubtful accounts.

BASIS OF PRESENTATION OF FINANCIAL STATEMENT

The Company has a issued consolidated  financial  statements even though it only
owns 50% of Starway.  The Company exercises  significant control over Starway by
the following:

New Solomon  Consultants  Limited  owns a majority  shares in the  Company.  The
shareholders  of New Solomon  Consultants  Limited are also the  shareholders of
Eurofaith Holdings,  Inc. which at September 30, 2004 owned 15% of Starway.  The
director of  Eurofaith at  September  30, 2004 is also a director and  corporate
secretary of the Company.  In November  2004 the Company  acquired the remaining
15% from Eurofaith Holdings, Inc. for 3,346,100 shares of the Company which were
issued to New Solomon  Consultants  Limited.  The Company  has  obtained  voting
control over Starway through New Solomon Consultants Limited.

Based upon the above  facts the  Company  determined  that the  presentation  of
consolidated  financial  statements  would  be more  meaningful  to the  readers
instead of presenting single line items under the equity method of accounting.

RECENT EVENTS

Subsequent  to the close of our year end on September  30, 2004, on November 17,
2004,  we  completed  an   acquisition   of  an  additional  15%  interest  (the
"Acquisition")  in  Starway.  Prior  to the  Acquisition,  we  owned  50% of the
outstanding shares of capital stock of Starway. After the Acquisition,  we owned
a total  of 65% of the  outstanding  shares  of  capital  stock of  Starway.  We
acquired the  additional 15% interest in Starway by issuing a total of 3,346,100
shares of our common stock. The amount of consideration  for the Acquisition was
determined  with reference to the acquisition of shares of Starway capital stock
on June 30, 2004. The closing of the Acquisition  occurred on November 17, 2004.
The sole consideration for the Acquisition is our common stock.

CHANGE OF YEAR END

Prior to our acquisition,  Starway and its subsidiaries'  reporting year end was
December 31.  However,  our reporting  year end was September 30. In order to be
consistent  with our reporting year end, our Board of Directors  approved all of
their subsidiaries' fiscal year end to change from December 31 to September 30.

The consolidated  financial statements consist of a nine month transition period
ended  September  30, 2004 and 2003  (unaudited),  and the calendar  years ended
December 31, 2003 and 2002, respectively.

Since we had no material operational activities for the years ended December 31,
2003 and 2002 (prior to our acquisition of Starway), certain comparative amounts
have been reclassified to conform to the current year's presentation.

RESULTS OF OPERATIONS

General  Results of Operations for the Nine Months Ended  September 30, 2004 and
Nine Months Ended September 30, 2003:


                                       17
<PAGE>

     NINE MONTHS
     ENDED SEPTEMBER 30          2004           2003        CHANGE
     --------------------     ----------     ----------     ------

     Revenues                 30,997,070     19,556,412        59%
     Cost of goods sold       11,640,973     12,300,517        (5%)
     Gross profit             19,356,097      7,255,895       167%
     Gross profit margin              62%            37%
     Operating expenses       10,386,667      1,272,081       717%
     Other income              2,227,222        834,115       167%
     Income before
       minority interest      16,049,984      5,617,004       186%
     Net Income (After
       Minority Interest)      4,024,492      2,808,502        43%


General  Results of Operations  of Starway for the Twelve Months Ended  December
31, 2003 and Twelve Months Ended December 31, 2002:

     TWELVE MONTHS
     ENDED DECEMBER 31           2003           2002        CHANGE
     --------------------     ----------     ----------     ------

     Revenues                 31,057,877      7,914,658       292%
     Cost of goods sold       19,748,263      4,989,797       296%
     Gross profit             11,309,614      2,924,861       287%
     Gross profit margin              36%            37%
     Operating expenses        2,139,028      1,124,096        90%
     Other income              1,617,175        388,202       317%
     Income before
       minority interest       8,907,865      1,787,881       398%
     Net Income (After
       Minority Interest)      4,453,932        893,941       398%


INCOME BEFORE MINORITY INTEREST & NET INCOME

Our net income before minority  interest for the nine months ended September 30,
2004 and September 30, 2003 was $16,049,984 and  $5,617,004,  respectively.  Our
net income before  minority  interest for the twelve  months ended  December 31,
2004 and December 31, 2003 was $8,907,865 and $1,787,881  respectively.  Our net
income  before  minority  interest for the nine months ended  September 30, 2004
increased by approximately  186% when compared to our net income before minority
interest for the nine months ended  September  30, 2003.  Our net income  before
minority  interest for the twelve  months ended  December 31, 2003  increased by
approximately  398% when compared to our net income before minority interest for
the twelve months ended  December 31, 2002.  Such  significant  increases in net
income before minority  interest were due to a significant  increase in revenues
and gross profit during such periods as further discussed below.

As of September  30, 2004,  we held a 50% interest in Starway  which  incurred a
minority interest charge to our profit and loss statement of $12,025,492 for the
period ended  September 30, 2004 and $2,808,502  for 2003. As a result,  our net
income after minority  interest for the nine months ended September 30, 2004 and
September 30, 2003 was $4,024,492 and $2,808,502,  respectively.  Our net income
after  minority  interest  for the twelve  months  ended  December  31, 2004 and
December 31, 2003 was $4,453,932 and $893,941 respectively.


                                       18
<PAGE>

Further,  during the nine months ended  September 30, 2004, we adopted an Equity
Incentive  Plan,  and we  issued  630,000  shares  of our  common  stock  to our
employees and  consultants  with a value of $8,001,000  ($12.70 per share) under
this plan. For the period ending September 30, 2004, this amount was included in
the selling,  general and administrative expense of our financial statements and
decreased our net income before minority interest of $16,049,984 by $8,001,000.

REVENUES

Our  revenues  are derived  primarily  from SDID's  sales of its energy  savings
products and entering into energy savings  sharing  contracts.  Revenues for the
nine  months  ended  September  30,  2004 were  $30,997,070,  a net  increase of
approximately  59% compared  with  revenues of  $19,556,412  for the nine months
ended  September  30, 2003.  During the year ended  December  31,  2003,  we had
revenues of  $31,057,877  as compared to revenues of $7,914,658  during the year
ended  December 31, 2002,  an increase of  approximately  292%.  The increase in
revenues reflect strong sales growth in SDID's energy savings products, and were
the result of increased unit sales and entering into more energy savings sharing
contracts.  We note that SDIDs energy savings  products were first introduced to
the market  only in July 2002.  Since  there were only 6 months of sales in 2002
and that many of the products  were sold in 2002 were on a trial basis,  revenue
for 2002 was substantially  lower than for 2003 and 2004. Our management expects
that  revenue  will  continue  to  grow  significantly  in 2005  because  of our
marketing  and  sales  efforts  and  strong  demand  for  our  products  due  to
electricity  shortages in many parts of China.  Further, our management believes
that we will be able to  maintain  our price  levels due to strong  demand and a
lack  of  strong   competitive   products.   While  our  products  may  be  used
internationally, we currently have focused our sales efforts in China, targeting
large businesses and local governments. Management hopes to continue to increase
our market share in China.

GROSS PROFIT

We had a gross profit of  $19,356,097  and  $7,255,895 for the nine months ended
September  30,  2004 and  September  30,  2003,  respectively,  achieving a 167%
increase.  Gross profit was  $11,309,614 for the year ended December 31, 2003 as
compared to $2,924,861  for the year ended  December 31, 2002,  achieving a 287%
increase.  For the nine months  ended  September  30,  2004,  our profit  margin
increased  from  approximately  37% to 62%. Our cost of goods sold has decreased
for the nine months  ended  September  30, 2004 from  September  30,  2003.  The
significant  increase in gross  profit and profit  margin are a result of better
control over production  costs.  Because of our increase in sales volume, we are
able to buy  our  production  materials  in mass  quantities  so we are  able to
leverage more buying power to get better prices for supplies and materials  used
for the  production of our products.  Additionally,  we have seen an increase in
suppliers for the supplies and materials used for the production of our products
which results in more competitive pricing for such supplies and materials.  As a
result,  the cost of materials  such as chipsets and other  hardware used in the
production of our products has decreased  substantially  (approximately by 300%)
which in turn produces better profit margins for us. Such a decrease is expected
to continue in the short term but we expect it to be minimized in the future.

OPERATING EXPENSES

Below is a breakdown  comparison of the  operating  expenses for the Nine Months
Ended September 30, 2004 and Nine Months Ended September 30, 2003:


                                       19
<PAGE>

     NINE MONTHS
     ENDED SEPTEMBER 30               2004           2003        CHANGE
     ------------------------      ----------     ----------     ------

     Operating expenses             1,538,220        100,926     1,424%
     Sales and marketing
       expenses                       602,850        116,835       416%
     General administrative
       expenses                     8,245,597      1,054,320       682%
     Total operating expenses      10,386,667      1,272,081       717%


There  was a 717%  increase  of total  operating  expenses  from  $1,272,081  to
$10,386,667 for the nine months ended September 30, 2003 and September 30, 2004,
respectively. Operating expenses also increased to $2,139,028 for the year ended
December  31, 2003 as compared to  $1,124,096  for the year ended  December  31,
2002, an increase of approximately 90%. In general,  such significant  increases
attributable  to a large  increase in selling  expense.  We believe such selling
expense  will  continue to increase  substantially  to handle our growing  sales
volume.  In addition,  we expect that  professional  fees and expenses to ensure
compliance with U.S.  securities  laws, the  Sarbanes-Oxley  Act and marketplace
rules for the NASDAQ  National  Market  will  increase  substantially.  The 717%
increase in operating  expense for the nine months ended  September 30, 2004 was
substantially due to our adoption of our Equity Incentive Plan, and our issuance
of  620,000  shares  of our  common  stock  in  accordance  with the plan to our
employees and  consultants  with a value of $8,001,000  ($12.70 per share) which
was  included in the  selling,  general and  administrative  expenses  and as an
increase in paid-in capital in our financial statements.  Such stock was used to
compensate many of our employees and consultants who have helped us in our early
development  stage but were not fairly  compensated due to our lack of resources
at the time.

OTHER INCOME

We had other income of $2,227,222  for the nine month ended  September 30, 2004,
as compared to  $834,115  for the nine months  ended  September  30,  2003.  The
increase of  approximately  167% was due to the extra income  received  from our
customers on the basis of energy savings for using our products.

LIQUIDITY AND CAPITAL RESOURCES

     NINE MONTHS
     ENDED SEPTEMBER 30                   2004           2003          CHANGE
     ---------------------------       ----------     ----------     ----------

     Net cash provided by (used
       in) operating activities        18,342,562       (334,108)    18,676,670
     Net cash used in
       investing activities               166,298       (101,099)       267,397
     Net cash (used in) provided
       by financing activities           (104,860)       567,529       (672,389)


The  increase  of  $18,676,670  in net cash  provided  by  operating  activities
primarily  reflects an increase in revenues for the nine months ended  September
30, 2004.  The increase was also due to better  management of the  collection of
long-term notes receivables during the period.


                                       20
<PAGE>

The increase of $267,397 in net cash used in investing activities was due to the
proceeds from the sale of an investment property during the period.

The decrease of $672,389 in net cash provided by financing activities was due to
the  payment on loans and no  proceeds  from the  issuance  of stock or new debt
during the period ending September 30, 2004.

We believe that we have adequate  capital  resources to continue our  operations
and will not need to raise  capital  in the near  future.  We  believe  that our
current  cash  balance  and the  revenues  that  will be  generated  will  cover
anticipated  operating  expenses  for a  period  of at least  one  year  without
supplementing our cash reserves.  We may, however,  raise additional  capital to
acquire the balance of the 35% of Starway not currently  owned by us to increase
our ownership of Starway to 100%.

The Company's notes receivable  represent  amounts due on energy savings sharing
contracts and are stated at the present value of the discounted sales price. The
breach  of any terms  stated in the  contract  by the  customer  can lead to the
return of the energy  savings  equipment to the Company.  The Company will write
off the deficiency of the total receipts over the notes  receivable  outstanding
as bad debts in income statement and increase its closing  inventories after the
return of the equipment or the  collateral.  Accounts and notes  receivable  are
analyzed for potential bad debts on an annual basis.  The Company  requires each
new  customer  to go  through  credit  review  in order  for it to  approve  the
extension  of credit.  Once the sale is made the Company  performs  reviews on a
monthly  basis to  ensure  that the  customer  is  adhering  to the terms of the
payment schedule. If the customer does not adhere to the payment schedule,  then
we follow up with the customer as to collection  of the payments.  At the end of
each year management  reviews the individual  accounts and notes  receivable for
status of  collections  and payment  terms,  payment  history and order  status,
customer's  financial  condition  if  available  to  determine  if such  account
receivable are considered uncollectible. Generally all amounts over one year old
are  reserved  for or  written  off as bad  debts.  The fair value of the energy
savings   equipment  secured  under  the  energy  savings  sharing  contract  is
determined  by  comparing  the  market  price  of the  equipment  at the date of
repossession.

MANAGEMENT ASSUMPTIONS

Management anticipates,  based on internal forecasts and assumptions relating to
our current  operations  that existing cash and funds  generated from operations
will be sufficient to meet working  capital for at least the next 12 months.  In
the event that plans change,  our assumptions  change or prove  inaccurate or if
other  capital   resources  and  projected  cash  flow  otherwise  prove  to  be
insufficient  to  fund  operations  (due  to  unanticipated  expense,  technical
difficulties,  or otherwise), we could be required to seek additional financing.
There can be no assurance that we will be able to obtain additional financing on
terms acceptable to it, or at all.

EFFECTS OF INFLATION

We are subject to commodity  price risks arising from price  fluctuations in the
market  prices of the various raw materials  that  comprise our products.  Price
risks are managed by each business unit through  productivity  improvements  and
cost-containment  measures.  For the time being, the management does not believe
that  inflation risk is material to our business or our  consolidated  financial
position, results of operations or cash flows.

                                       21
<PAGE>

EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

Our operating  subsidiaries  are located in China,  and our Company buys all raw
materials in China and sells all our products in China using Chinese Renminbi as
the  functional  currency.  Based on China  government  regulation,  all foreign
currencies  under the  category  of current  accounts  are  allowed to be freely
exchanged with hard  currencies.  During the past two years of operation,  there
were no significant changes in exchange rates; however,  unforeseen developments
may cause a significant change in exchange rates.

INVESTMENT IN SUBSIDIARIES

As of September 30, 2004, we owned a 50% interest in Starway  Management Limited
("Starway") and subsequently  increased our share in Starway to 65% by acquiring
an  additional  15% interest in Starway on November 16, 2004. We may acquire the
remaining  35%  interest  in  Starway  which  would then  become a wholly  owned
subsidiary of CESV.

Starway holds 100% interest in Shenzhen Dicken  Industrial  Development  Limited
("SDID"),  which subsequently holds 100% interest in the energy savings project,
Shenzhen  Dicken  Technology  Development  Limited  ("SDTD") as well as owns the
intellectual property of their energy savings products in China.

FORECAST FOR THE YEAR 2005

1.   The Market

     We are a developer and manufacturer of energy savings products in China. We
     believe  that the  shortage of power in China is  expected to continue  for
     years to come the most  immediate  and  effective  solution  is to conserve
     energy use. We believe that demand for our  products  will be strong in the
     next few years and we will strive to increase our capabilities to meet such
     demand.

2.   Government Support

     We have  established  a sales network of over 2,000 people in over 10 major
     provinces  and  cities in  China.  Our  energy  savings  products  are well
     received by the Chinese  government  which is advocating  the importance of
     energy savings to relieve the stress of power shortage.

3.   Customer Support

     SDID's  products  are well  accepted by our  customers  including  business
     enterprises such as shopping malls,  supermarkets and particularly  factory
     owners who have been suffering from rolling blackouts. SDID's products have
     helped them lower their cost and increase their revenues.

4.   Technology Advancement and Research and Development

     We will  continue  to  actively  conduct  research  in the  field of energy
     savings technology and to develop and commercialize new products.


                                       22
<PAGE>

5.   Revenue and Income Growth

     Since  the end of our 2004  fiscal  year,  we have  signed  over 100  sales
     contracts  and orders,  including  sales of  equipment  and profit  sharing
     through  installation of equipment.  The biggest  contract reaches over $10
     million.  With this upward  trend,  the  management  foresees a substantial
     increase in both revenues and net profit for the year 2005.

6.   Other Investments

     CESV is  seeking  investment  opportunities  such as  wind  energy  and the
     acquisition  of a power  plant in the  hopes of  increasing  the  company's
     profit base.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

ITEM 7 - FINANCIAL STATEMENTS

Our financial  statements  appear at the end of this report  beginning  with the
Index to Financial Statements on page F-1 of this report.

ITEM 8 -  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURES

On  August  19,  2004,  we  engaged  Webb &  Company,  P.A.  as our  independent
accountants to review our consolidated balance sheet as of June 30, 2004 and the
related consolidated  statements of income,  stockholders' equity and cash flows
for the quarter then ended.  The  decision to appoint  Webb & Company,  P.A. was
approved by our Board of Directors.

We dismissed  Gary E. Hirth CPA ("Hirth") as our auditors  effective from August
19, 2004.  Hirth served as our independent  auditors for our former fiscal years
ended  September  30,  2003  and  September  30,  2002.  Hirth's  report  on our
consolidated  financial statements for our fiscal years ended September 30, 2003
and September  30, 2002 (the  "Reports")  did not contain an adverse  opinion or
disclaimer  of opinion and were not  qualified  or  modified as to  uncertainty,
audit scope or accounting  principles except as follows: In Hirth's report dated
December 29, 2003 and December 23, 2002 for financial  statements for our fiscal
years ended  September  30, 2003 and  September  30, 2002,  respectively,  Hirth
indicated  that:  "The  Company  has  negative  working  capital  and a  deficit
stockholders' equity. These conditions raise substantial doubt about its ability
to continue as a going  concern.  The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty."

During our former  fiscal years ended  September 30, 2003 and September 30, 2002
and until Hirth's  dismissal,  there were no disagreements with Hirth within the
meaning of item 304 of regulation S-B or any matter of accounting  principles or
practices,   financial  disclosure,  or  auditing  scope  or  procedure,   which
disagreements if not resolved to Hirth's  satisfaction,  would have caused Hirth
to make reference to the subject matter of the  disagreements in connection with
its reports.

During our former fiscal years ended  September 30, 2003 and September 30, 2002,
until  Hirth's  dismissal,  there were no  "reportable  events" (as such term is
defined in item 304(a)(1)(v) of regulation S-K).


                                       23
<PAGE>

During our two most recent fiscal years and any subsequent  interim period prior
to the engagement of Webb & Company,  P.A.,  neither we nor anyone on our behalf
consulted  with Webb & Company,  P.A.  regarding  either (i) the  application of
accounting  principles  to  a  specified  transaction,  either  contemplated  or
proposed,  or the type of audit  opinion that might be rendered on our financial
statements or (ii) any matter that was either the subject of a "disagreement" or
a "reportable event."

This change in  accountant  was  reported by us in a Current  Report on Form 8-K
filed  with the SEC on  August  24,  2004.  We  requested  Hirth to  review  the
disclosure  contained herein in that report and asked Hirth to furnish us with a
letter addressed to the SEC containing any new information, clarification of our
expression of Hirth's views,  or the respects in which Hirth does not agree with
the statements  contained in that report.  A copy of Hirth's letter was filed as
an Exhibit to that Current Report on October 15, 2004.

On November 5, 2004, we engaged Moore Stephens Wurth Frazer & Torbet LLP ("Moore
Stephens") as our independent accountants to audit the Registrant's consolidated
balance sheet as of September 30, 2004 and the related  consolidated  statements
of income,  stockholders'  equity and cash flows for the fiscal year then ended.
The decision to appoint Moore Stephens was approved by our Board of Directors.

Webb & Company,  P.A.  ("Webb")  resigned  as the our  auditors  effective  from
November  5,  2004  because  of  auditor  conflict  under  Section  206  of  the
Sarbanes-Oxley Act of 2002 after an affiliate of Webb became our Chief Financial
Officer.  Webb served as our  independent  auditors  to: (i) audit our  recently
acquired subsidiary, Starway Management, Ltd. ("Starway") for fiscal years ended
December 31, 2003 and December 31, 2002; and (ii) to review the our consolidated
balance  sheet as of June 30, 2004 and the related  consolidated  statements  of
income,  stockholders'  equity and cash flows for the fiscal quarter then ended.
Webb's  report on Starway's  consolidated  financial  statements  for  Starway's
fiscal years ended  December 31, 2003 and December 31, 2002 (the  "Reports") did
not contain an adverse  opinion or  disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.

During our former fiscal years ended  September 30, 2003 and September 30, 2002,
and Starway's former fiscal years ended December 31, 2003 and December 31, 2002,
and until Webb's  resignation,  there were no disagreements with Webb within the
meaning of item 304 of regulation S-B or any matter of accounting  principles or
practices,   financial  disclosure,  or  auditing  scope  or  procedure,   which
disagreements if not resolved to Webb's satisfaction,  would have caused Webb to
make reference to the subject matter of the disagreements in connection with its
reports.

During our former fiscal years ended  September 30, 2003 and September 30, 2002,
and Starway's former fiscal years ended December 31, 2003 and December 31, 2002,
and until Webb's resignation, there were no "reportable events" (as such term is
defined in item 304(a)(1)(v) of regulation S-K).

During our two most recent fiscal years and any subsequent  interim period prior
to the  engagement  of Moore  Stephens,  neither  we nor  anyone  on our  behalf
consulted with Moore Stephens regarding either (i) the application of accounting
principles to a specified  transaction,  either contemplated or proposed, or the
type of audit opinion that might be rendered on the our financial  statements or
(ii) any matter that was either the subject of a "disagreement" or a "reportable
event."


                                       24
<PAGE>

This change in  accountant  was  reported by us in a Current  Report on Form 8-K
filed  with the SEC on  November  12,  2004.  We  requested  Webb to review  the
disclosure  contained  herein in that report and asked Webb to furnish us with a
letter addressed to the SEC containing any new information, clarification of our
expression  of Webb's  views,  or the respects in which Webb does not agree with
the statements contained in that report. A copy of Webb's letter was filed as an
Exhibit to that Current Report on November 23, 2004.

ITEM 8A - CONTROLS AND PROCEDURES

As required by Rule 13a-15  under the Exchange  Act, the Company  carried out an
evaluation  of the  effectiveness  of the design and  operation of the Company's
disclosure  controls and  procedures as of the end of the period covered by this
annual report.  This  evaluation was carried out under the  supervision and with
the  participation  of the Company's  management,  including the Chief Executive
Officer  (acting  as the  principal  accounting  officer)  and  Chief  Operating
Officer.  Based upon that evaluation,  the Company's Chief Executive Officer and
Chief Operating  Officer have concluded that the Company's  disclosure  controls
and  procedures  are  effective.  The  Company has  enhanced  and  upgraded  its
accounting  system with the  addition of new  software  and is in the process of
transferring  the system to a new secure  server.  These measures are part of an
overall upgrade of the management computer systems that will make management and
control of  operations  more  efficient  and prepare the way for  Sarbanes-Oxley
compliance.  The Company is required to be in compliance with the Sarbanes-Oxley
regulations  by the end of Fiscal Year 2005.  The Company is proceeding  through
the first 2 quarters of Fiscal 2005 to introduce changes to its operating rules.
Many of these changes involve the use of new electronic systems for tracking and
documenting  management  decisions  and their  implementation.  Much of the work
required is in documenting existing systems differently and adapting them to the
new rules and systems.  There have been no significant  changes in the Company's
internal controls or in other factors, which could significantly affect internal
controls subsequent to the date the Company carried out its evaluation.

The Company did not make any changes that would change its internal control over
financial reporting that has materially  affected,  or that is reasonably likely
to materially affect, internal control over financial reporting.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information  required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive  Officer and Chief Financial  Officer as appropriate,  to allow timely
decisions regarding required disclosure.

ITEM 8B - OTHER INFORMATION

None.


                                       25
<PAGE>

                                    PART III

ITEM 9 - OFFICERS AND DIRECTORS

The following  table sets forth the names,  ages, and positions of our directors
and officers.

<TABLE>
<CAPTION>
Name                  Age       Position(s) Held        Officer since   Director since
------------------    ---    -----------------------    -------------   --------------
<S>                   <C>    <C>                        <C>             <C>
Sun Li                 34    Chief Executive Officer         2004            2004
                                            Chairman
                                            Director

Kam Wah Poon           49    Chief Financial Officer         2004             N/A


Stella Lai Fun Sim     36    Corporate Secretary and         2004            2004
                                            Director

Dennis Won Kong Yu     54                   Director          N/A            2004

Paul Risberg           42                   Director          N/A            2004

ShiLong Li             42                   Director          N/A            2004

Kam Man Lee            49                   Director         2004            2004
                                        (Former CEO)

Wing Sze Yau           30                   Director          N/A            2004

Shao Guang Tan         43                   Director          N/A            2004
</TABLE>

The  directors  named  above will  serve  until the next  annual  meeting of our
stockholders  or until their  successors  are duly  elected and have  qualified.
Directors will be elected for one-year terms at the annual stockholders meeting.
Officers  will hold their  positions at the pleasure of the board of  directors,
absent  any  employment  agreement.  There is no  arrangement  or  understanding
between any of our directors or officers and any other person  pursuant to which
any  director or officer was or is to be selected as a director or officer,  and
there is no  arrangement,  plan or  understanding  as to whether  non-management
stockholders  will exercise their voting rights to continue to elect the current
board of directors. There are also no arrangements, agreements or understandings
between non-management  stockholders that may directly or indirectly participate
in or influence the management of our affairs.

There are no family  relationships  among the foregoing  directors and executive
offices.  None of the directors or executive  officers has, during the past five
years: (a) Had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy  or within two years  prior to that  time;  (b) Been  convicted  in a
criminal  proceeding  or  subject  to a pending  criminal  proceeding;  (c) Been
subject to any order, judgment, or decree, not subsequently reversed,  suspended
or vacated, of any court of competent  jurisdiction,  permanently or temporarily


                                       26
<PAGE>

enjoining, barring, suspending or otherwise limiting his involvement in any type
of business,  securities,  futures,  commodities or banking activities;  and (d)
Been  found  by a court  of  competent  jurisdiction  (in a civil  action),  the
Securities and Exchange  Commission or the Commodity Futures Trading  Commission
to have  violated a Federal or state  securities  or  commodities  law,  and the
judgment has not been reversed, suspended, or vacated.

BIOGRAPHICAL INFORMATION

SUN LI, Age 34, is the  Chairman of the Board and the Chief  Executive  Officer.
Mr. Sun has been engaged in retail  business,  motors,  real property,  internet
development,  sales and  marketing  in  Beijing,  Xing Tai (in Hebei  Province),
Shanghai and Shenzhen for years.  In addition,  he has 10 years of experience in
China  marketing and financial  investment in the stock markets of Hong Kong and
China.  Mr. Sun is the  investing  shareholder  of  Shenzhen  Dicken  Industrial
Development  Limited. He is recently elected Chairman of the Board and appointed
as the Chief Executive  Officer ("CEO") of the Company.  Since 1999, Mr. Sun has
served as the shareholder  and Chief Executive  Officer of Beijing Heng Fu Plaza
Development,  Inc.  ("Heng  Fu")  which  is  devoted  to the  construction  of a
100,000m2 multi-purpose commercial plaza in Chao Yang District, Beijing.

KAM WAH POON, Age 49, is our Chief  Financial  Officer.  Mr. Poon is a Certified
Public   Accountant  in  Hong  Kong.  He  earned   masters  degree  in  Business
Administration  from the University of Strathclyde.  He is a member of the FCCA,
FHKSA,  TIHK. Mr. Poon has over 15 years of audit experience since 1982. He also
has over 10 years of experience in the accounting practice and commercial sector
since 1993.

LAI-FUN SIM. Age 36, is the Executive Director and Corporate Secretary.  Ms. Sim
has completed the Higher Diploma in Translation and  Interpretation  at the City
University. She has over 13 years experience in administration. She has obtained
the qualification of Stock Broker and Stock Broker  Representative in Hong Kong.
She worked for China Convergent  Corporation  Limited listed on the Nasdaq Stock
Market,  the Australian  Stock Exchange and Frankfurt  Stock  Exchange,  and its
subsidiary  listed on the Stock  Exchange of Hong Kong as  Assistant to Chairman
for from 1999 through 2001.  From 2002 through 2003,  she joined China Cable and
Communications, Inc. listed on the Nasdaq OTCBB as Assistant to Chairman.

DENNIS WON-KONG YU, Age 54, is the Executive  Director.  Mr. Yu was the Director
of Strong  Choice  Investment  (Holdings)  Limited from 1999 to 2000. He holds a
bachelor  degree  in  motion  picture  from  UCLA in the USA.  He has  extensive
experience in the financing of film production and strategic development of film
entertainment  business.  Apart  from  the film  business,  he has over 10 years
experience in the financial  investment  field and was an Executive  Director of
China Convergent  Corporation  Limited, a company listed on the Australian Stock
Exchange, Nasdaq Stock Market and Frankfurt-listed company from 2000 to 2002. He
re-joined  Strong Choice  Investment  (Holdings)  Limited from 2002 to 2003 as a
Director.  He has been  Executive  Director  of Fortuna  International  Holdings
Limited,  a company listed on the Stock Exchange of Hong Kong,  since the end of
2003.

PAUL  RISBERG  Age 42,  is the  Non-executive  Director.  He has  over 10  years
experience in investment  banking and securities market expertise.  He currently
provides  consulting  service to  numerous  small to medium  size  companies  in
regards to growth  strategies  and capital  expansion  opportunities.  From 1998
until 2002, Mr. Risberg served as Divisional  Vice President of Fahnestock & Co.


                                       27
<PAGE>

(now known as Oppenheimer & Co.),  one of oldest New York Stock Exchange  firms.
Mr. Risberg supervised operations at Fahnestock's Atlanta, Minneapolis, Richmond
and Cincinnati offices including  compliance,  trading,  investment banking, new
equity issue distribution,  branch manager  supervision and reporting.  Prior to
that,  Mr.  Risberg  served as Senior  Vice  President  and  Branch  Manager  of
Josephthal & Co., and was instrumental in establishing the firm's Atlanta office
in 1995.  Since 1995,  Mr.  Risberg  has also  conducted  extensive  research on
alternative energy processes  including energy audit,  photovoltaic array design
and construction, wind and hydro energy services.

SHI LONG LI, age 42, born in Beijing and graduated from post secondary  college.
Mr. Li has over 10 years of experience in property development. He also has over
5 years of experience in the development,  operation and investment in broadband
cable  television  in some  provinces and major cities in China such as Beijing,
Shenzhen, Fujian Province,  Jiangsu Province and Hebei Province. Over the last 3
years,  Mr. Li has been engaged in finance and  securities  investment in China,
Hong Kong and overseas.

KAM MAN LEE, age 49, has over 23 years of  experience in  construction  services
management.  Before joining the Company, he was the substantial  shareholder and
chairman of a limited company whose principal  activities are civil  engineering
and  construction  services.  He  joined  the Hong  Kong-listed  company,  China
Prosperity  Holdings (Hong Kong) Limited in 1998 and from then until 2001 served
as its Executive Director.

WING SZE YAU. Age 30,  earned her bachelors  degree from the Lingnan  University
majoring in Asia  Pacific  Studies of Social  Science.  She has been  working as
corporate  secretary in various  companies  with over 7 years of  experience  in
business  administration.  For the past five years she has worked  with  various
Chinese non-profit educational organizations.

SHAO-GUANG TAN. Age 43, is a qualified accountant in China. He holds a bachelors
degree in foreign  trade and  economic  management.  Currently  he is the deputy
general  manager  and  chief  financial  officer  of  Jia  Sheng   International
Consultant (HK) Co., Limited. Prior to this position, and since 1999, he was the
general  manager and financial  controller of Xinhui Auction Limited in Jiangmen
City,  Guangdong  Province.  Mr. Tan has over 20 years experience in banking and
financial management and has worked with the Guangdong Development Bank.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange  Act of 1934  (the  "Exchange  Act")
requires our directors and executive officers,  and persons who beneficially own
more than ten percent of a registered  class of our equity  securities,  to file
with the Securities and Exchange  Commission (the "Commission")  initial reports
of beneficial  ownership  and reports of changes in beneficial  ownership of our
Common Stock. The rules promulgated by the Commission under Section 16(a) of the
Exchange  Act  require  those  persons to furnish us with  copies of all reports
filed with the  Commission  pursuant to Section 16(a).  The  information in this
section is based  solely upon a review of Forms 3, Forms 4, and Forms 5 received
by us.

The  following  persons  were not able to file their Form 3 within 10 days after
he/she was  elected an officer or  director of the Company or became a more than
10% shareholder of the Company:


                                       28
<PAGE>

================================================================================
Name                    Position/Shareholder          Form 3 Filed
--------------------    ---------------------------   --------------------------

Sun Li                  CEO/Director                  Not filed yet
--------------------    ---------------------------   --------------------------
Kam Wah Poon            CFO                           Not filed yet
--------------------    ---------------------------   --------------------------
Lai Fun Sim             Secretary/Director            Not filed yet
--------------------    ---------------------------   --------------------------
Dennis Wong Kong Yu     Director                      Not filed yet
--------------------    ---------------------------   --------------------------
Shilong Li              Director                      June 29, 2004
--------------------    ---------------------------   --------------------------
Kam Man Lee             Director                      June 29, 2004
--------------------    ---------------------------   --------------------------
Shao Guang Tan          Director                      Not filed yet
--------------------    ---------------------------   --------------------------
Wing Sze Yau            Director                      Not filed yet
--------------------    ---------------------------   --------------------------
Best Development        10% Shareholder (former)*     June 29, 2004
--------------------    ---------------------------   --------------------------
Jie Zhu                 10% Shareholder (former)*     June 30, 2004
--------------------    ---------------------------   --------------------------
New Solomon             10% Shareholder               October 20, 2004
================================================================================


CODE OF ETHICS

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller, or persons performing similar functions. Such code of ethics will be
provided to any person without charge,  upon request.  You may request a copy of
this code of ethics to be sent as a pdf file to an e-mail address; if you do not
have an e-mail  address you may request a copy by sending  such request to us at
our principal office.

AUDIT COMMITTEE FINANCIAL EXPERT

Mr. Shao Guang Tan is the Audit  Committee  Financial  Expert that serves on the
Company's audit committee. Mr. Tan is independent,  as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act.

PROCEDURES FOR NOMINATING DIRECTORS

The Board has created a Nominating  Committee and adopted a Nominating Committee
Charter. Such charter is filed as an exhibit to this Annual Report.

ITEM 10 - EXECUTIVE COMPENSATION

The  following  executive  compensation  disclosure  reflects  all  compensation
awarded to, earned by or paid to the executive  officers  below,  for the fiscal
years ended September 30, 2004,  2003, and 2002. None of our executive  officers
received  compensation in excess of $100,000 for the fiscal year ended September
30, 2004,  and no officer  received  compensation  in excess of $100,000 for the
fiscal years 2004, 2003 or 2002,  respectively.  The following table  summarizes
all  compensation  received  by our Chief  Executive  Officer,  Chief  Financial
Officer (former) and Corporate Secretary in fiscal years 2004, 2003 and 2002.


                                       29
<PAGE>

<TABLE>
<CAPTION>

                                       Annual Compensation               Long-Term Compensation
                                 -------------------------------   ---------------------------------
                                                                            Awards           Payouts
                                                                   -----------------------   -------
                                                    Other Annual    Stock      Underlying     LTIP      All Other
Name and               Fiscal     Salary    Bonus   Compensation   Award(s)   Options/SARs   Payouts  Compensation
Principal Position      Year       ($)       ($)        ($)          ($)          ($)          ($)         ($)
---------------------  ------    -------    -----   ------------   --------   ------------   -------  ------------
<S>                    <C>       <C>        <C>     <C>            <C>        <C>            <C>      <C>
Sun Li                   2004    $     *       --             --         --             --        --       --
Chief Executive          2003         --       --             --         --             --        --       --
Officer                  2002         --       --             --         --             --        --       --

Kam Wah Poon             2004    $     *       --             --         --             --        --       --
Chief Financial          2003         --       --             --         --             --        --       --
Officer                  2002         --       --             --         --             --        --       --

Stella Lai Fun Sim       2004    $     *       --             --         --             --        --       --
Secretary                2003         --       --             --         --             --        --       --
                         2002         --       --             --         --             --        --       --

Christy M. Strauch (1)   2004    $80,000       --             --         --             --        --       --
Chief Executive          2003    $90,000       --             --         --             --        --       --
Officer (former)         2002    $60,000       --             --         --             --        --       --

Kam Man Lee              2004    $     *       --             --         --             --        --       --
Chief Executive          2003         --       --             --         --             --        --       --
Officer (former)         2002         --       --             --         --             --        --       --
</TABLE>

----------------
* None paid as of September 30, 2004.

(1)  On May 11, 2004, Ms. Strauch converted $80,000 in accrued but unpaid salary
     into  4,000,000  shares of  restricted  common stock in  consideration  for
     services rendered during the fiscal year ended 2004.

                                       30
<PAGE>

The following  table shows all grants during the fiscal year ended September 30,
2004 of stock  options  under our  stock  option  plans to the  named  executive
officers.

           OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 2004
                               (Individual Grants)

We have not granted any options/stock appreciation rights during the fiscal year
ended September 30, 2004.

LONG-TERM INCENTIVE PLAN AWARDS ("LTIP") TABLE

We do not currently have any LTIP.

COMPENSATION OF DIRECTORS

We issued 3,000 shares to Mr. Riseberg as compensation for serving on our Board.
All other board members were not paid any compensation for serving on our Board.
We may, at our discretion, reimburse board members for expenses.

EMPLOYMENT   AGREEMENTS,   TERMINATION  OF  EMPLOYMENT   AND   CHANGE-IN-CONTROL
ARRANGEMENTS

We currently have no employment  agreements with any of our executive  officers,
nor any  compensatory  plans or  arrangements  resulting  from the  resignation,
retirement or any other  termination  of any of our executive  officers,  from a
change-in-control,  or from a change in any executive officer's responsibilities
following a change-in-control.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership of our common stock as of January 10, 2005,  determined  in accordance
with Rule 13d-3 and 13d-5 of the Exchange Act by (i) each person who is known by
us to own beneficially more than five percent (5%) of the outstanding  shares of
our voting securities, (ii) each of our directors and officers, and (iii) all of
our directors  and executive  officers as a group.  Unless  otherwise  indicated
below, to our knowledge, all persons listed below have sole voting and investing
power  with  respect  to their  shares of  common  stock,  except to the  extent
authority is shared by spouses under applicable community property laws.


                                       31
<PAGE>

<TABLE>
<CAPTION>
=================================================================================================
                        Name and address                Amount and nature
Title of Class       of beneficial owner (1)         of beneficial ownership     Percent of class
--------------     --------------------------        -----------------------     ----------------
<S>                <C>                               <C>                         <C>
Common                                 Sun Li                  9,955,134 (2)               59.28%
                             CEO and Director
--------------     --------------------------        -----------------------     ----------------
Common                           Kam Wah Poon                          0                       0%
                                          CFO
--------------     --------------------------        -----------------------     ----------------
Common                            Lai Fun Sim                     10,000                       *%
                      Corporate Secretary and
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                    Dennis Wong Kong Yu                          0                       0%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                          Paul Riesberg                      3,000                       *%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                             Shilong Li                    222,205 (3)                1.32%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                            Kam Man Lee                          0                       0%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                           Wing Sze Yau                          0                       0%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                         Shao Guang Tan                          0                       0%
                                     Director
--------------     --------------------------        -----------------------     ----------------
Common                 New Solomon Consulting                  9,955,134                   59.28%
--------------     --------------------------        -----------------------     ----------------
                   All officers and directors
                                   as a group                 10,190,339                   60.69%
=================================================================================================
</TABLE>
* less than 1%.

(1)  The address for all officers and  directors  is Central  Plaza,  18 Harbour
     Road,  Suite  3203A,  32nd  Floor,  Hong  Kong,  China,   unless  otherwise
     indicated.

(2)  Sun Li indirectly  owns  9,955,134  shares  through sole  ownership of Able
     Stars  Enterprises  Ltd.  which  controls  and  owns  55%  of  New  Solomon
     Consultants Limited which owns 9,955,134 shares.

                                       32
<PAGE>

(3)  Shilong Li indirectly  owns 222,205  shares  through sole ownership of Best
     Development Co., Ltd. which owns 222,205 shares.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the period ended September 30, 2004,  stockholders were repaid $95,578 of
loans payable.

As of September 30, 2004, the due from related party amounted to US$1,257,130. A
majority  of  this  amount  was  generated  from  making  cash  advances  to the
shareholders for ordinary business expenses.  In addition,  certain shareholders
had  collected  the payments on  receivables  on the  Company's  behalf from the
customers  and those  payments  had not been were not  repaid to the  Company by
September 30, 2004.timely.  Those amounts are unsecured,  interest free and have
no fixed terms of repayment.

                                     PART IV

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

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

 2.1*     Stock  Purchase  Agreement  dated  as of June  16,  2004 by and  among
          Christina M. Strauch,  Michael K. Hair, P.C.,  Robert  Korndorffer and
          Best Development Company, Ltd.
 2.2*     Stock  Purchase  Agreement  dated as of June 29,  2004 by and  between
          Eurofaith  Holdings,  Inc.  and Rim  Holdings,  Inc.  and  Convertible
          Promissory Note.
 3.1**    Articles of Incorporation of the Company
 3.2**    By-Laws of the Company
10.1***   China Energy Savings Technology, Inc. 2004 Equity Incentive Plan
14****    Code of Business Ethics
21        Subsidiaries of the Registrant
23.1      Consent of Moore Stephens Wurth Frazer & Torbet, LLP
23.2      Consent of Webb & Company, P.A.
31.1      Certification Pursuant to Rule 13a-14(a) and 15d-14(a)(4) of Principal
          Executive Officer
31.2      Certification Pursuant to Rule 13a-14(a) and 15d-14(a)(4) of Principal
          Financial Officer
32.1      Certification  Pursuant  to  Section  1350 of Title  18 of the  United
          States Code of Principal Executive Officer


                                       33
<PAGE>

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

32.1      Certification  Pursuant  to  Section  1350 of Title  18 of the  United
          States Code of Principal Financial Officer
99.1      Nominating Committee Charter

--------------
(*)    Incorporated  herein  by  reference  to Form  8-K  filed  with  the  U.S.
       Securities and Exchange Commission on June 30, 2004.
(**)   Incorporated  herein  by  reference  to  Form  10  filed  with  the  U.S.
       Securities and Exchange Commission on July 11, 2000.
(***)  Incorporated  herein  by  reference  to Form  S-8  filed  with  the  U.S.
       Securities and Exchange Commission on September 17, 2004.
(****) Incorporated  herein by  reference  to Form  10-KSB  filed  with the U.S.
       Securities and Exchange Commission on January 13, 2005.


ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
professional services rendered by our principal accountants for the audit of our
annual financial statements, review of financial statements included in our Form
10-QSBs  and other  services  provided  by the  accountant  in  connection  with
statutory and regulatory filings are as follows:

Fiscal Year 2003: $8,250;
Fiscal Year 2004: $150,000.

AUDIT RELATED FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
assurance and related  services by our principal  accountant that are reasonably
related to the  performance of the audit or review of our financials  statements
are as follows:

Fiscal Year 2003: $0;
Fiscal Year 2004: $0.

TAX FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
professional  services rendered by our principal accountants for tax compliance,
tax advice and tax planning are as follows:

Fiscal Year 2003: $1,100;
Fiscal Year 2004: $0.

ALL OTHER ACCOUNTANT FEES

The aggregate  fees billed for each of Fiscal Year 2003 and Fiscal Year 2004 for
other  professional  services  rendered  by  our  principal  accountants  are as
follows:

Fiscal Year 2003: $540;
Fiscal Year 2004: $0.


                                       34
<PAGE>

                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of 1934,
as amended,  the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    CHINA ENERGY SAVINGS TECHNOLOGY, INC.


                                    By:     /s/ Sun Li
                                        ----------------------------------------
                                            Sun Li
                                            Chief Executive Officer

                                    Dated:  June 15, 2005


In accordance with the Securities Exchange Act of 1934, as amended,  this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

            SIGNATURE                                     TITLE                                DATE
----------------------------------     -------------------------------------------        -------------
<S>                                    <C>                                                <C>
            /s/ Sun Li                      Chief Executive Officer & Director            June 15, 2005
----------------------------------            (Principal Executive Officer)
              Sun Li

        /s/ Kam Wah Poon                         Chief Financial Officer                  June 15, 2005
----------------------------------     (Principal Financial & Accounting Officer)
           Kam Wah Poon

         /s/ Lai Fun Sim                      Corporate Secretary & Director              June 15, 2005
----------------------------------
           Lai Fun Sim

      /s/ Dennis Won Kong Yu                             Director                         June 15, 2005
----------------------------------
        Dennis Won Kong Yu

          /s/ Kam Man Lee                                Director                         June 15, 2005
----------------------------------
            Kam Man Lee

         /s/ Shao-Guang Tan                              Director                         June 15, 2005
----------------------------------
           Shao-Guang Tan

          /s/ Wing See Yau                               Director                         June 15, 2005
----------------------------------
            Wing See Yau

</TABLE>

                                       35
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE

REPORT OF MOORE STEPHENS WURTH FRAZER & TORBET, LLP,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                               F-2

REPORT OF WEBB & COMPANY, P.A., INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM                                                      F-3

CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003                     F-4

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND
THE YEARS ENDED DECEMBER 31, 2003 AND 2002                                  F-5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2004 AND THE YEARS ENDED DECEMBER 31,
2003 AND 2002                                                               F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2004 AND 2003 AND THE YEARS ENDED DECEMBER 31,
2003 AND 2002                                                               F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                  F-8



                                       F-1
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

China Energy Savings Technology, Inc. and Subsidiaries
(Formerly Known As Rim Holdings, Inc.)

We  have  audited  the  accompanying  balance  sheet  of  China  Energy  Savings
Technology,  Inc. and  Subsidiaries  as of September  30, 2004,  and the related
statements of income and other comprehensive income (loss), shareholders' equity
and cash  flows  for the nine  months  then  ended  September  30,  2004.  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 audit. The financial statements of Starway Management Limited as of December
31, 2003 and 2002,  the acquirer of China Energy  Savings  Technology,  Inc., as
explained in note 1 in the  accompanying  financial  statements  were audited by
other  auditors  whose report dated  January 29, 2004  expressed an  unqualified
opinion on those statements.

We  conducted  our audit 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.  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
audit provides 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  Energy  Savings
Technology,  Inc. and  Subsidiaries as of September 30, 2004, and the results of
its operations  and its cash flows for the nine months ended  September 30, 2004
in conformity with accounting principles generally accepted in the United States
of America.

Our report on our audit of the basic consolidated  financial statements of China
Energy  Savings  Technology,  Inc.  and  Subsidiaries  for the nine months ended
September 30, 2004 appear on pages F-4 to F-23. That audit was conducted for the
purpose of forming an  opinion on the basic  consolidated  financial  statements
taken as a whole. The supplemental  financial  information of Starway Management
Limited  and  Subsidiaries,  a 50%  owned  subsidiary  of China  Energy  Savings
Technology,  Inc. as further  described in note 1 of the consolidated  financial
statements,  contained  on  pages  F-24 to F-27 is  presented  for  purposes  of
additional  analysis  and is not a  required  part  of  the  basic  consolidated
financial  statements of China Energy Savings Technology,  Inc. The supplemental
information  on pages F-24 to F-27 does not reflect the  adjustment  for the 50%
minority  ownership   interest  as  reflected  in  the  consolidated   financial
statements of China Energy Savings  Technology,  Inc. Such  information has been
subjected  to the  auditing  procedures  applied  in  the  audit  of  the  basic
consolidated financial statements and, in our opinion, except for the effects of
the  minority  interest,  such  information  is fairly  stated  in all  material
respects in relation to the basic consolidated  financial  statements taken as a
whole.

/s/ Moore Stephens Wurth Frazer and Torbet, LLP

December 27, 2004
Walnut, California

                                       F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
  China Energy Savings Technology, Inc.


We  have  audited  the  accompanying   consolidated  balance  sheet  of  Starway
Management  Limited and  subsidiaries  as of  December  31, 2003 and the related
consolidated  statements  of  operations  and  comprehensive  loss,  changes  in
stockholders'  equity and cash flows for the years ended  December  31, 2003 and
2002.  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 audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  As  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly in all material  respects,  the financial  position of Starway Management
Limited  and  subsidiaries  as of  December  31,  2003  and the  results  of its
operations  and its cash flows for the years ended December 31, 2003 and 2002 in
conformity with accounting principles generally accepted in the United States of
America.

WEBB & COMPANY, P.A.

Boynton Beach, Florida
January 29, 2004

                                       F-3
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                           CONSOLIDATED BALANCE SHEETS
             AS OF SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                     ASSETS
                                                                         September 30           December 31
                                                                 ---------------------------   -------------
                                                                      2004         2003             2003
                                                                    Audited     (Unaudited)       Audited
                                                                 ------------   ------------   -------------
<S>                                                              <C>            <C>            <C>
CURRENT ASSETS:
  Cash                                                           $ 18,442,862   $    181,283    $     21,165
  Accounts receivable, trade, net of allowance for doubtful
    accounts of $768,151 and $301,288 as of September 30, 2004
    and 2003, $766,710 as of December 31, 2003, respectively        6,580,525      2,548,643       4,304,134
  Current maturities of notes receivable, net                       3,727,540      2,131,334       2,201,523
  Inventories                                                       4,329,552        726,983         533,453
  Prepaid expenses                                                  1,529,955                         71,582
  Due from related party                                            1,257,130
                                                                 ------------   ------------    ------------
       Total current assets                                        35,867,564      5,588,243       7,131,857
                                                                 ------------   ------------    ------------
PLANT AND EQUIPMENT, net                                              528,344        761,951         750,266
                                                                 ------------   ------------    ------------
OTHER ASSETS:
  Long-term notes receivable, net                                   7,087,692     10,443,217      12,743,550
  Other receivables                                                   778,880        190,476         252,700
  Intangible asset, net                                                              233,677         227,627
  Other assets                                                                        64,617
                                                                 ------------   ------------    ------------
       Total other assets                                           7,866,572     10,931,987      13,223,877
                                                                 ------------   ------------    ------------
          Total assets                                           $ 44,262,480   $ 17,282,181    $ 21,106,000
                                                                 ============   ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                          $  2,719,554   $  3,106,338    $  2,789,735
  Current portion note payable                                         12,799                         12,536
  Other payables                                                      551,528
  Loans payable - related parties                                                    237,821          95,578
  Customer deposits                                                 1,752,216        315,076          83,967
  Taxes payable                                                     1,892,676      3,611,761       4,854,221
                                                                 ------------   ------------    ------------
       Total current liabilities                                    6,928,773      7,270,996       7,836,037
                                                                 ------------   ------------    ------------
LONG-TERM LIABILITIES:
  Note payable, net                                                     7,895         27,640          17,440
                                                                 ------------   ------------    ------------
       Total liabilities                                            6,936,668      7,298,636       7,853,477
                                                                 ------------   ------------    ------------
MINORITY INTEREST                                                  18,662,906      4,991,767       6,633,436
                                                                 ------------   ------------    ------------
SHAREHOLDERS' EQUITY:
  Preferred stock,  $0.001 par value, 10,000,000
    shares authorized, none issued and outstanding
  Common stock, $0.001 par value, 50,000,000 shares
    authorized, 12,968,401 shares issued and outstanding               12,968             11              11
  Additional paid-in capital                                        8,655,339        666,666         666,666
  Statutory reserves                                                  324,583        329,489         324,583
  Retained earnings                                                 9,666,676      3,996,754       5,642,184
  Accumulated other comprehensive income                                3,340         (1,142)        (14,357)
                                                                 ------------   ------------    ------------
       Total shareholders' equity                                  18,662,906      4,991,778       6,619,087
                                                                 ------------   ------------    ------------
          Total liabilities and shareholders' equity             $ 44,262,480   $ 17,282,181    $ 21,106,000
                                                                 ============   ============    ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-4
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND
                   THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                          Nine Months Ended                  Year Ended
                                                                            September 30                    December 31
                                                                    ----------------------------    ----------------------------
                                                                         2004           2003            2003             2002
                                                                       Audited       Unaudited        Audited          Audited
                                                                       Restated       Restated        Restated         Restated
                                                                    ------------    ------------    ------------    ------------
<S>                                                                 <C>             <C>             <C>             <C>
REVENUES                                                            $ 30,997,070    $ 19,556,412    $ 31,057,877    $  7,914,658

COST OF GOOD SOLD                                                     11,640,973      12,300,517      19,748,263       4,989,797
                                                                    ------------    ------------    ------------    ------------
GROSS PROFIT                                                          19,356,097       7,255,895      11,309,614       2,924,861

OPERATING EXPENSES
  Operating expense                                                    1,538,220         100,926         155,780         225,589
  Selling, general and administrative expenses                         8,848,447       1,171,155       1,983,248         898,507
                                                                    ------------    ------------    ------------    ------------
         Total Operating Expenses                                     10,386,667       1,272,081       2,139,028       1,124,096
                                                                    ------------    ------------    ------------    ------------
INCOME  FROM OPERATIONS                                                8,969,430       5,983,814       9,170,586       1,800,765
                                                                    ------------    ------------    ------------    ------------
OTHER INCOME (EXPENSE)
  Interest income                                                      2,202,122         829,681       1,607,373         389,253
  Interest expense                                                        (3,086)           (404)           (573)           (118)
  Other income (expense)                                                  25,506             169              --            (933)
  Other income                                                             2,680           4,669          10,375              --
                                                                    ------------    ------------    ------------    ------------
         Total Other Income                                            2,227,222         834,115       1,617,175         388,202
                                                                    ------------    ------------    ------------    ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                      11,196,652       6,817,929      10,787,761       2,188,967

CREDIT (PROVISION) FOR INCOME TAXES                                    4,853,332      (1,200,925)     (1,879,896)       (401,086)
                                                                    ------------    ------------    ------------    ------------
INCOME BEFORE MINORITY INTEREST                                       16,049,984       5,617,004       8,907,865       1,787,881

MINORITY INTEREST                                                     12,025,492       2,808,502       4,453,933         893,940
                                                                    ------------    ------------    ------------    ------------
NET INCOME                                                             4,024,492       2,808,502       4,453,932         893,941

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustment                                 17,697         (12,074)        (12,074)          1,544
                                                                    ------------    ------------    ------------    ------------
COMPREHENSIVE INCOME (LOSS)                                         $  4,042,189    $  2,796,428    $  4,441,858    $    895,485
                                                                    ============    ============    ============    ============
Net income per share - basic and diluted                            $       0.36    $       0.25    $       0.40    $       0.08
                                                                    ============    ============    ============    ============
Weighted average number of shares outstanding - basic and diluted     11,327,720      11,153,669      11,153,669      11,153,669
                                                                    ============    ============    ============    ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-5
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND
                   THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                                            Accumulated
                                                                                               other
                                                                      Unappro-                compre-
                                                         Additional   priated                 hensive      Subscrip-
                                     Number    Common      Paid-in    Retained   Statutory    income         tion
                                   of shares   stock       capital    Earnings    Reserves    (loss)       Receivable     Totals
                                  ----------  ---------  ----------  ----------  ---------  ------------   -----------  -----------
<S>                               <C>         <C>        <C>         <C>         <C>        <C>            <C>          <C>
BALANCE, December 31, 2001               100  $      11  $1,333,322  $1,037,829  $ 199,961  $     (3,827)  $  (727,272) $ 1,840,024
  Cash received from
    subscription receivable                                                                                    121,211      121,211
  Foreign currency translation
    adjustments                                                                                    1,544                      1,544
  Minority interest                                        (666,667)   (518,915)   (99,981)                    303,031     (982,532)
  Net income                                                            893,941                                             893,941
  Statutory reserves                                                   (229,508)   229,508
                                  ----------  ---------  ----------  ----------  ---------  ------------   -----------  ------------
BALANCE, December 31, 2002               100         11     666,655   1,183,347    329,488        (2,283)    (303,030)    1,874,188
  Cash received from
    subscription receivable                                                                                   303,030       303,030
  Contributed capital by
    stockholders                                                 11                                                              11
  Foreign currency translation
    adjustments                                                                                  (12,074)                   (12,074)
  Net income                                                          4,453,932                                           4,453,932
  Statutory reserves                                                      4,905     (4,905)
                                  ----------  ---------  ----------  ----------  ---------  ------------   -----------  -----------
BALANCE, December 31, 2003               100         11     666,666   5,642,184    324,583       (14,357)                 6,619,087
  Foreign currency translation
    adjustments                                                                                   17,697                     17,697
  Shares issued in connection
    with recapitalization         12,338,301     12,327     (12,327)
  Issued S-8 stock of 630,000
    shares                           630,000        630   8,001,000                                                       8,001,630
  Net income                                                          4,024,492                                           4,024,492
                                  ----------  ---------  ----------  ----------  ---------  ------------   -----------  -----------
BALANCE, September 30, 2004       12,968,401  $  12,968  $8,655,339  $9,666,676  $ 324,583  $      3,340   $        --  $18,662,906
                                  ==========  =========  ==========  ==========  =========  ============   ===========  ===========
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-6
<PAGE>

             CHINA ENERGY SAVINGS TECHNOLOGY, INC. AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 AND
                   THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                     Nine Months Ended                 Year Ended
                                                                       September 30                   December 31
                                                              ----------------------------    ----------------------------
                                                                   2004          2003              2003           2002
                                                                 Audited       Unaudited         Audited         Audited
                                                              ------------    ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                  $  4,024,492    $  2,808,502    $  4,453,932    $    893,941
  Adjustments to reconcile net income to cash
  provided by (used in) operating activities:
      Minority interest                                         12,025,492       2,808,502       4,453,933         893,940
      Depreciation and amortization                                 59,601          64,421         104,306          91,042
      Stock issued for services                                  8,001,630
      Allowance for doubtful accounts                                               23,424         465,422         301,288
  Change in operating assets and liabilities:
    (Increase) decrease in assets:
      Intangible assets                                            227,627          22,150
      Accounts receivable                                       (2,276,391)     (1,150,417)    (15,193,852)     (3,693,119)
      Long-term notes receivable, net                            4,129,841      (9,452,000)
      Amount due from related parties                           (1,257,130)
      Inventories                                               (3,796,099)        927,861       1,121,391      (1,235,177)
      Prepaid expenses                                          (1,458,373)        237,694         166,113        (237,694)
      Other receivables                                           (526,180)        163,075         100,851          57,809
      Other assets                                                                 (55,003)          9,614
    Increase (decrease) in liabilities:
      Accounts payable                                             (70,180)        855,491         538,886       1,534,109
      Other payable                                                551,528
      Customer deposits                                          1,668,249        (295,713)       (526,822)        152,073
      Tax payable                                               (2,961,545)      2,707,905       3,950,365         874,971
                                                              ------------    ------------    ------------    ------------
        Net cash provided by (used in) operating activities     18,342,562        (334,108)       (355,861)       (366,817)
                                                              ------------    ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of intangible asset                                                                                     (40,459)
  Proceeds from sale of fixed assets                               173,123
  Purchase of property and equipment                                (6,825)       (101,099)        (49,544)        (16,213)
                                                              ------------    ------------    ------------    ------------
        Net cash used in investing activities                      166,298        (101,099)        (49,544)        (56,672)
                                                              ------------    ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds (payments) on loans payable - related parties           (95,578)        (66,183)       (208,426)        347,179
  Proceeds from notes payable                                                       27,640
  Payments on notes payable                                         (9,282)                         (7,963)
  Increase in minority interest                                                    303,031         303,031
  Proceeds from issuance of common stock                                           303,041         303,041         121,211
                                                              ------------    ------------    ------------    ------------
        Net cash (used in) provided by financing activities       (104,860)        567,529         389,683         468,390
                                                              ------------    ------------    ------------    ------------
EFFECT OF EXCHANGE RATE ON CASH                                     17,697                         (12,074)          1,544
                                                              ------------    ------------    ------------    ------------
INCREASE (DECREASE) IN CASH                                     18,421,697         132,322         (27,796)         46,445
CASH, beginning of period                                           21,165          48,961          48,961           2,516
                                                              ------------    ------------    ------------    ------------
CASH, end of period                                           $ 18,442,862    $    181,283    $     21,165    $     48,961
                                                              ============    ============    ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest expense                                $      3,086    $        404    $        573    $        118
                                                              ============    ============    ============    ============
NON-CASH TRANSACTIONS:

Stock issued for services                                     $  8,001,630    $         --    $         --    $         --
                                                              ============    ============    ============    ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-7
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION

ORGANIZATION

On August 23, 2004, China Energy Savings Technology, Inc. (the Company) formally
changed its name from Rim Holdings Inc. to China Energy Savings Technology, Inc.

On June 30, 2004 ("the Closing  Date") Rim Holdings  Inc., a Nevada  corporation
(Rim) and  Eurofaith  Holdings,  Inc.,  a  British  Virgin  Islands  Corporation
("Eurofaith),  entered a Stock Purchase  Agreement (the Eruofaith Stock Purchase
Agreement).  Pursuant to the Stock purchase  agreement,  Rim acquired 50% of the
outstanding  shares of Starway Management Ltd., a British Virgin Islands company
("Starway")  from  Eurofaith  (the  "Acquisition").  The purchase price for such
stock was  $120,000,000  payable by Rim's  issuance of a convertible  promissory
note on the Closing Date. The note may be convertible into 223,073,380 shares of
the Rim's common stock upon  maturity at the  discretion  of Rim.  Eurofaith may
also convert at any time prior to the maturity. On June 30, 2004, the fair value
of the  convertible  note payable was discounted to the fair value of the equity
interest acquired of $6,633,440 which is 50% of the net book value of Starway as
December 31, 2003.  On August 26, 2004 this note was converted  into  11,153,669
shares  post-split of 20 to 1 (223,073,380 pre split).  New Solomon  Consultants
Limited acquired 6.9 million shares of common stock from Eurofaith Holdings upon
conversion.  The  shareholders of New Solomon  Consultants  Limited are also the
shareholders of Eurofaith (see Note 15).

Immediately after the closing of this transaction, Rim redeemed 1,000,000 shares
of its common stock from  Christina M. Strauch in exchange for all of the shares
of Rimmer Computer, Inc., an Arizona corporation ("Rimmer").

Prior to the transaction, Rim was a holding company holding all of the shares of
Rimmer.  Rimmer is an approved  technical service provider for computer hardware
and software  system  manufacturers.  All of Rimmer's  customers  are  currently
located  in  the  Phoenix,  Arizona  area.  Since  the  closing,  Rim's  primary
operations consist of the operations of Starway.

As  a  result,  the  transaction  was  treated  for  accounting  purposes  as  a
recapitalization  by the accounting  acquirer Starway Management  Limited.  This
stock  issuance  represents 50% of the issued and  outstanding  stock of Starway
Management  Limited  at  the  time  of  issuance.  The  acquisition  of  Starway
Management  Limited by the Company was  accounted for as a  recapitalization  of
Starway  Management  Limited,  pursuant to which the accounting basis of Starway
Management  Limited  continued  unchanged  subsequent to the  transaction  date.
Starway  Management Limited will be the historical  financial  statements of the
Company and its subsidiaries Shenzhen Dicken Industrial  Development Limited and
Shenzhen Dicken Technology  Development  Limited.  The financial statements have
been restated to reflect the  recapitalization as if the transaction happened as
of January 1, 2002.


See report of independent registered public accounting firm.

                                       F-8
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

ORGANIZATION, (CONTINUED)

Starway was  incorporated  in the British  Virgin Islands on September 15, 1998.
Starway  owns  all  of  the  equity  interests  in  Shenzhen  Dicken  Industrial
Development Limited, a company incorporated in the People's Republic of China on
November  20,  1996  (SDID)  which in turns owns all of the equity  interest  in
Shenzhen Dicken Technology  Development  Limited, a company  incorporated in the
People's Republic of China on November 9, 1999 (SDTD). In 2003,  Eurofaith,  the
shareholder  of SDID  exchanged 100% of the common shares of SDID for 100 shares
of Starway.

ACTIVITIES

Starway  through its two  subsidiaries  SDTD and SDID is a People's  Republic of
China based marketer, distributor and manufacturer of energy saving products for
use in commercial and industrial  settings.  SDID is a foreign-owned  enterprise
and  responsible  for  the  operation  and  sales  of its  products.  SDTD  is a
wholly-owned  subsidiary of SDID and is a limited liability company incorporated
in the PRC and is responsible  for the  development of energy saving projects of
Shenzhen Dicken Group.  The Company through its  subsidiaries  mainly sell their
products within the People's Republic of China.

BASIS OF PRESENTATION

The  accompanying  financial  statements  have been prepared in accordance  with
accounting  principles  generally accepted in the United States of America.  The
accompany  consolidated  financial  statements  include the  accounts of Starway
Management Limited,  Shenzhen Dicken Technology Development Limited and Shenzhen
Dicken  Industrial  Development  Limited,   (collectively  the  "Company").  All
material  intercompany  transactions  and balances  have been  eliminated in the
consolidation.  Even  though the  Company  only owns 50% of  Starway  Management
Limited, the Company has presented  consolidated financial statements due to the
common  ownership of the various entities and because the Company has management
control over the subsidiaries.

CHANGE OF YEAR END

Prior to the  acquisition,  the Company's  subsidiaries  reporting  year end was
December 31. However Rim Holdings, Inc.'s reporting year end is September 30. In
order to be consistent  with Rim's  reporting  year end, the Company's  Board of
Directors  approved  all of their  subsidiaries'  fiscal  year end  change  from
December 31 to September 30.


See report of independent registered public accounting firm.


                                       F-9
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

CHANGE OF YEAR END, (CONTINUED)

The consolidated  financial statements consist of a nine month transition period
ended  September  30, 2004 and 2003  (unaudited),  and the calendar  years ended
December 31, 2003 and 2002, respectively.

The audited financial statements of Starway Management Limited as of and for the
years ended  December  31, 2003 and 2002 were filed with Form 8-K/A dated August
30, 2004 with the  Securities  and Exchange  Commission.  The audited  financial
statements  as of September  30, 2004 include the  activities  of the  Company's
subsidiaries.

Since Rim Holdings,  Inc. had no material  operational  activities for the years
ended  December  31,  2003 and  2002,  certain  comparative  amounts  have  been
reclassified  to conform  to the  current  year's  presentation.  The  unaudited
financial statements as of and for the nine months ended September 30, 2003 have
been  included  for  comparative  purposes  only  and  reflect  all  adjustments
(consisting  of normal  recurring  adjustments)  that  are,  in the  opinion  of
management,  necessary  for a fair  presentation  of the  results  of the period
presented.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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

NOTES RECEIVABLE

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


See report of independent registered public accounting firm.


                                      F-10
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

INVENTORY

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

PLANT AND EQUIPMENT

The Company's  plant and equipment are stated at cost.  Depreciation is provided
over the  estimated  useful lives of the  respective  assets on a  straight-line
basis from five to fifteen years.

INTANGIBLES

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

IMPAIRMENT OF LONG-LIVED ASSETS

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

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


See report of independent registered public accounting firm.


                                      F-11
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

REVENUE AND DEFERRED REVENUE RECOGNITION

The Company  recognizes revenue when all four of the following criteria are met:
(1)  persuasive  evidence has been  received  that an  arrangement  exists;  (2)
delivery of the products and/or services has occurred;  (3) the selling price is
fixed or determinable; and (4) collectibility is reasonably assured. The Company
follows the provisions of SAB No. 104 which sets forth  guidelines in the timing
of  revenue   recognition   based  upon   factors  such  as  passage  of  title,
installation,  payments and customer  acceptance.  Any amounts received prior to
satisfying the Company's  revenue  recognition  criteria is recorded as deferred
revenue.

The Company has two types of contracts  for its product  sales:  energy  savings
sharing contracts and equipment sales contracts.

(a)  ENERGY SAVINGS SHARING

Under this  arrangement,  the  customers do not need to bear the initial cost of
the energy saving equipments. They have to make energy savings sharing contracts
with the Company which is entitled to receive a share of the  aggregated  amount
of estimated energy saving within a specified period of the arrangement.

The Company's revenue arising from sales of energy savings  equipments and notes
receivable under this arrangement are recognized when:

1.   the agreement of energy savings sharing is signed by both parties;
2.   the original estimated cost savings can be ascertained; and
3.   the  equipment  is  installed  and  tested  for an  average  rate of energy
     savings.

The receipt of each  installment  made by the customer  during the period of the
contract  will  be  recognized  as  the  repayments  of  the  outstanding  notes
receivable  when the amount of energy  savings can be  quantified  and agreed by
both parties.  The excess of original  estimated  savings stated in the contract
will be recognized as the interest income by the Company.

(b)  OUTRIGHT EQUIPMENT SALES

Under this arrangement, the Company's customer has to pay the cost of the energy
saving equipments and they can keep all benefits of energy saving to them.

Revenue  arising from the sales of the energy  saving  equipment to customers is
recognized  when goods are taken to be the point in time when the  customer  has
accepted  the goods and the  related  risks and  rewards of  ownership.  Revenue
represents  the sales value of goods to  customers  after  allowances  for goods
returned,  excludes value added tax ("VAT") and is after  deduction of any trade
discounts.


See report of independent registered public accounting firm.


                                      F-12
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

(b)  OUTRIGHT EQUIPMENT SALES, (CONTINUED)

Under all energy savings  contracts,  the customer  cannot  terminate a contract
once the  contract is signed by both  parties and the goods have been tested and
delivered and accepted by the customers. There are no product returns permitted.
Any default or breach of the terms  stated in the  contract by the  customer can
lead to the return of the energy savings equipments to the Company.

PRODUCT DEVELOPMENT COSTS

Product  development  costs  incurred  in  the  process  of  developing  product
improvements  and  enhancements  or new  products  are  charged  to  expense  as
incurred.   Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  86,
Accounting  for the Costs of Computer  Software to be Sold,  Leased or Otherwise
Marketed,   requires   capitalization  of  certain  software  development  costs
subsequent  to the  establishment  of  technological  feasibility.  Based on the
Company's product development process,  technological feasibility is established
upon the  completion of a working model.  Costs incurred by the Company  between
the  completion of the working model and the point at which the product is ready
for general release have been insignificant.

FOREIGN CURRENCY TRANSLATION

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


See report of independent registered public accounting firm.


                                      F-13
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

COMPREHENSIVE INCOME (LOSS)

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

INCOME TAXES

The  Company  accounts  for  income  taxes  under  the  Statement  of  Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109").

Under Statement 109,  deferred tax assets and liabilities are recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those  temporary  differences  are expected to be  recovered  or settled.  Under
Statement 109, the effect on deferred tax assets and  liabilities of a change in
tax rates is  recognized  in income in the period that  includes  the  enactment
date.  The Company is organized in the British  Virgin  Islands and the People's
Republic  of China and no tax  benefit is  expected  from the tax credits in the
future. The Company located its factories in a special economic region in China.
This economic region allows foreign  enterprises a two-year income tax exemption
and a 50% income tax reduction for the  following  three years.  The Company was
approved as a wholly owned foreign  enterprise  in 2004.  The Company has income
tax  exemption  for years  ending  September 30 2004 and 2005 and 50% income tax
reduction for the years ending September 30, 2006, 2007 and 2008.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The fair value of short-term and long-term notes receivable was determined using
a discounted  cash flow  analysis  based on the  Company's  borrowing  rate.  At
September 30, 2004 and 2003 and December 31, 2003,  the carrying  value of these
notes approximated their fair value.


See report of independent registered public accounting firm.


                                      F-14
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

EARNINGS PER SHARE

The Company reports earnings per share in accordance with the provisions of SFAS
No. 128,  "Earnings Per Share." SFAS No. 128 requires  presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing  such earnings per share.  Basic  earnings per share  excludes
dilution and is computed by dividing income available to common  stockholders by
the  weighted  average  common  shares  outstanding  during the period.  Diluted
earnings per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.

Effective  August 25, 2004, the Company  concluded a reverse split at a ratio of
20 to 1.

In  accordance  with  U.S.  SEC SAB  Topic  4C.,  the  shares  on the  financial
statements  and notes to financial  statements  including  per share amounts are
presented  after applying  retroactively  to reflect the reverse stock split and
the merger acquisition on June 30, 2004.

CONCENTRATIONS AND CREDIT RISKS

During 2004 and 2003, 100% of the Company's  sales were to companies  located in
the PRC. At September 30, 2004 and 2003 and December 31, 2003, all the Company's
assets are located in the PRC.

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

CASH IN BANK ACCOUNTS

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 September  30, 2004 and 2003 amounted to  $18,269,919  and
$175,024,  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.


See report of independent registered public accounting firm.


                                      F-15
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities,  an  Interpretation  of ARB 51".  FIN No. 46 provides  guidance in the
identification of entities of which control is achieved through means other than
voting  rights  ("variable  interest  entities" or "VIE's") and how to determine
when and which  business  enterprise  should  consolidate  the VIE (the "Primary
Beneficiary").   In  addition,  FIN  No.  46  required  that  both  the  Primary
Beneficiary and all other enterprises with a significant  variable interest in a
VIE make additional disclosures. The transitional disclosure requirements of FIN
No. 46 are required in all financial  statements  initially issued after January
31, 2003, if certain  conditions are met. The adoption of this pronouncement did
not have a material  effect on the  Company's  financial  position or results of
operations.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities".  SFAS  No.  149  amends  and
clarifies  financial  accounting  and  reporting  for  derivative   instruments,
including   certain   derivative   instruments   embedded  in  other   contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".  The
changes in SFAS No. 149 improve financial  reporting by requiring that contracts
with comparable  characteristics  be accounted for similarly.  This statement is
effective for contracts  entered into or modified after June 30, 2003 and all of
its  provisions   should  be  applied   prospectively.   The  adoption  of  this
pronouncement did not have a material effect on the Company's financial position
or results of operations.

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


See report of independent registered public accounting firm.


                                      F-16
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES AND ORGANIZATION, (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS, (CONTINUED)

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

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

NOTE 2 - ACCOUNTS RECEIVABLE

Accounts  receivable as of September  30, 2004,  December 31, 2003 and September
30, 2003 consisted of the following:

                          September 30,   September 30,   December 31,
                              2004            2003            2003
                          -------------   -------------   ------------

Accounts receivable       $   7,348,676   $   2,849,931   $  5,070,844
Less: allowance for
      doubtful accounts         768,151         301,288        766,710
                          -------------   -------------   ------------
Totals                    $   6,580,525   $   2,548,643   $  4,304,134
                          =============   =============   ============


See report of independent registered public accounting firm.


                                      F-17
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - NOTES RECEIVABLE

The notes receivable  represent amounts due on Energy Savings Sharing contracts.
The  Company  carries  its  notes  receivable  at the net  present  value of the
discounted  contract  price.  The notes  receivable  are  secured by the related
equipment. The notes receivable amounted to the following:

                          September 30,   September 30,   December 31,
                              2004            2003            2003
                          -------------   -------------   ------------

Notes receivable          $  10,815,232   $  12,574,551   $ 14,945,073
Less:
   Current portion of
   notes receivable           3,727,540       2,131,334      2,201,523
                          -------------   -------------   ------------
Totals                    $   7,087,692   $  10,443,217   $ 12,743,550
                          =============   =============   ============

The following table represents as of September 30, 2004 the estimated  principal
collections on notes receivable:

     Year Ending September 30,
               2005                                       $  3,727,540
               2006                                          3,407,370
               2007                                          3,199,932
               2008                                            480,390

NOTE 4 - INVENTORIES

Inventories  as of September 30, 2004,  September 30, 2003 and December 31, 2003
consisted of the following:

                          September 30,   September 30,   December 31,
                              2004            2003            2003
                          -------------   -------------   ------------

Raw materials             $   1,013,976   $     142,813   $     25,531
Work in progress                869,059         113,911         60,604
Finished goods                2,446,517         470,259        447,318
                          -------------   -------------   ------------
Totals                    $   4,329,552   $     726,983   $    533,453
                          =============   =============   ============

NOTE 5 - PREPAID EXPENSES

Prepaid  expenses at September  30, 2004  amounted to  $1,529,955  and represent
advances to suppliers on inventory purchases.


See report of independent registered public accounting firm.


                                      F-18
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - PLANT AND EQUIPMENT

Plant and  equipment as of September 30, 2004 and 2003 and December 31, 2003 are
summarized as follows:

                               September 30,   September 30,   December 31,
                                   2004            2003            2003
                               -------------   -------------   ------------

Building                       $     409,888   $     627,680   $    627,680
Office equipment                      80,100          68,405         68,405
Furniture and fixtures                41,574          41,649         41,649
Plant, machinery and
  equipment                           80,126          80,267         80,267
Vehicle                              148,586         148,846        148,846
                               -------------   -------------   ------------
                                     760,274         966,847        966,847
Less:  accumulated
  depreciation                       231,930         204,896        216,581
                               -------------   -------------   ------------
Plant and equipment, net       $     528,344   $     761,951   $    750,266
                               =============   =============   ============

Depreciation  expense for the  periods  ending  September  30, 2004 and 2003 and
December 31, 2003 amounted to $59,601, $76,106 and $64,421, respectively.

NOTE 7 - INTANGIBLES

The  Company  has  licensed  the use of several  patents  from its founder for a
period of ten years.  The licenses  expire in July 2012.  The licenses are being
amortized over the license period of ten years using the  straight-line  method.
During the period ending  September 30, 2004, the Company has  revaluated  these
intangible  assets  which the useful  life became  unforeseeable  and decided to
write off the remaining balance of US$ 206,335 as of September 30, 2004.

NOTE 8 - NOTES PAYABLE, NET

Long-term obligations consisted of the following:

Note payable to finance company, secured by automobile,
interest at 5.44% per annum. Monthly payments of $1,067
due through April 2006                                            $      20,694
Less current maturities                                                  12,799
                                                                  -------------
Total                                                             $       7,895
                                                                  =============


See report of independent registered public accounting firm.


                                      F-19
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 - NOTES PAYABLE, NET, (CONTINUED)

Principal payments for the next five years are as follows:

     Year Ending September 30,
               2005                              $      12,799
               2006                                      7,895

NOTE 9 - RELATED PARTY TRANSACTIONS

During the nine  months  ended  September  30,  2004,  stockholders  were repaid
$95,578 of loans payable.

As of September 30, 2004, the due from related party amounted to US$1,257,130. A
majority  of  this  amount  was  generated  from  making  cash  advances  to the
shareholders for ordinary business expenses.  In addition,  certain shareholders
had collected payments on receivables on the Company's behalf from the customers
and those  payments  had not been repaid to the Company by  September  30, 2004.
These amounts are unsecured, interest free and have no fixed terms of repayment.

NOTE 10 - CUSTOMER DEPOSITS

The Company  requires  their  customers to deposit  monies with the Company when
they place an order for their  products.  The Company  does not pay  interest on
these  amounts  Customer  deposits  amounted  to  US$1,752,216,  US$315,076  and
US$83,967 as of September 30, 2004 and 2003 and December 31, 2003, respectively.

NOTE 11 - TAXES PAYABLE

Taxes payable at September  31, 2004 and 2003,  and December 31, 2003 consist of
the following:

                               September 30,   September 30,   December 31,
                                   2004            2003            2003
                               -------------   -------------   ------------
Urban maintenance and
  construction tax             $      21,104   $      14,130   $     21,584
Education tax                          1,058          42,390         74,108
Enterprise income tax                     --       2,143,961      2,281,467
Value added tax                    1,870,514       1,411,280      2,477,062
                               -------------   -------------   ------------
Totals                         $   1,892,676   $   3,611,761   $  4,854,221
                               =============   =============   ============


See report of independent registered public accounting firm.


                                      F-20
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - TAXES PAYABLE, (CONTINUED)

On July 22, 2004, the local Chinese tax authority waived the previously  accrued
tax accumulated prior to January 1, 2004 in the amount of US$4,853,332 which was
recorded as a credit  during  2004 for  previously  accrued  income  taxes.  The
Company has  elected to record the entire  credit for  Chinese  income  taxes in
2004.

The credit (provision) for income taxes consisted of the following:

                             Nine Months Ended                Year Ended
                                September 30                  December 31
                          ------------------------    ------------------------
                             2004          2003           2003          2002
                          ----------   -----------    -----------    ---------

Credit (Provision) for
  China income taxes      $4,853,332   $(1,200,925)   $(1,879,896)   $(401,086)
                          ----------   -----------    -----------    ---------
Total provision for
  income taxes            $4,853,332   $(1,200,925)   $(1,879,896)   $(401,086)
                          ==========   ===========    ===========    =========

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

                                September 30                  December 31
                          ------------------------    ------------------------
                             2004          2003           2003          2002
                          ----------   -----------    -----------    ---------

U.S. Statutory rates          34.0%        34.0%          34.0%         34.0%
Foreign income not
  recognized in USA          (34.0)       (34.0)         (34.0)        (34.0)
China income taxes              --         17.0           17.0          17.0
                          ----------   -----------    -----------    ---------
      Totals                    --%        17.0%          17.0%         17.0%
                          ==========   ===========    ===========    =========

The Company located its factories in a special  economic  region in China.  This
economic region allows foreign enterprises a two-year income tax exemption and a
50% income tax reduction for the following three years. The Company was approved
as a wholly  owned  foreign  enterprise  in 2004.  The  Company  has  income tax
exemption  for years  ending  September  30,  2004 and 2005 and 50%  income  tax
reduction for the years ending September 30, 2006, 2007 and 2008.


See report of independent registered public accounting firm.


                                      F-21
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - TAXES PAYABLE, (CONTINUED)

The  estimated  tax  savings  for the year ending  September  30, 2004  amounted
$3,167,613.  The net  effect on  earnings  per share if the  income tax had been
applied would decrease earnings per share from $0.36 to $0.08.

The Value  Added Tax (VAT tax) in China is similar to state sales tax charged in
the United  States on retail goods sold in the US. The VAT tax varies  depending
upon the product or service being sold.

The VAT tax is not  subject to the tax  holiday  and the  Company is required to
charge the customer for this amount.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company  leases its  facilities  under long term,  non-cancelable  operating
lease agreements expiring through June 2009. The non-cancelable  operating lease
agreements provide that the Company pays certain operating  expenses  applicable
to the leased premises.

Total rent expense for the nine months ended September 30, 2004 and 2003 and for
the years ended  December  31,  2003 and 2002  amounted  to  $102,689,  $37,309,
$35,929 and $18,543, respectively.

As of September 30, 2004,  the future  minimum  annual lease  payments  required
under the operating leases for the next five years are as follows:

     Year Ending September 30,
              2005                                     $ 59,270
              2006                                       58,000
              2007                                       58,000
           Thereafter                                    87,000

NOTE 13 - MINORITY INTEREST

Minority  interest  represents  the outside  shareholder's  50% ownership of the
common  stock of Starway  Management  Limited.  Due to common  control  over the
entities the  financial  statements of the Company have been restated to reflect
the  minority's  shareholder's  interest  as if the  transaction  was  effective
January  1,  2002.  For the nine  months  ended  September  30,  2004 the amount
allocated to the minority interest was computed as follows:


See report of independent registered public accounting firm.


                                      F-22
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 - MINORITY INTEREST, (CONTINUED)

                                                        September 30,
                                                            2004
                                                        -------------

Net income before minority interest                     $  16,049,984
Add back stock based compensation
   not subject to minority interest                         8,001,000
                                                        -------------
   Adjusted income for Minority Interest                $  24,050,984
                                                        =============
50% allocated to Minority Interest                      $  12,025,492
                                                        =============

NOTE 14 - EQUITY INCENTIVE PLAN

On September 8, 2004, the Company adopted an Equity  Incentive Plan. The purpose
of this plan is to attract,  retain and motivate  eligible persons whose current
and  potential  contributions  are  important  to the  success of the Company by
offering them an opportunity to participate in the Company's future  performance
through awards of Options, the right to purchase common stock and stock bonuses.
A total of  1,200,000  shares of common  stock  have  been  registered  with the
Securities and Exchange Commission under this plan.

On  September  16,  2004,  the  Company  issued  10,000  shares to  non-employee
consultants  and  620,000  shares  of its  common  stock to  certain  qualifying
employees  at US$12.70  per share.  The total  shares were valued at  $8,001,000
($12.70 per share),  the closing  price of the stock at the date the shares were
issued. The 630,000 shares are fully vested at the time of issuance.

The Company accounts for its employee stock option grants in accordance with the
fair value  provisions of Statement of Financial  Accounting  Standards No. 123,
"Accounting  for  Stock-Based  Compensation"  (SFAS 123). SFAS 123 established a
fair-value-based  method  of  accounting  for  stock-based  compensation  plans.
Pursuant to the transition  provisions of SFAS 148,  "Accounting for Stock-Based
Compensation  - Transition and  Disclosure"  (SFAS 148), the Company has elected
the prospective method and will apply the fair value method of accounting to all
equity  instruments  issued to employees.  As of September 30, 2004, total stock
based  compensation  expense  recorded  in  the  accompanying  income  statement
amounted to $7,874,000.

Compensation  expense  related  to stock  options  granted to  non-employees  is
accounted for under Statement of Financial  Accounting Standards No. (SFAS) 123,
"Accounting for Stock-Based  Compensation" and Emerging Issues Task Force (EITF)
96-18,  "Accounting  for  Equity  Instruments  that are  Issued  to  Other  than
Employees for Acquiring,  or in conjunction  with Selling,  Goods, or Services,"


See report of independent registered public accounting firm.


                                      F-23
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - EQUITY INCENTIVE PLAN, (CONTINUED)

which require  entities to recognize an expense,  based on the fair value of the
related  awards.  As  of  September  30,  2004,  total  stock   compensation  to
non-employees amounted to $127,000.

NOTE 15 - SHAREHOLDERS' EQUITY

STOCK ISSUANCES

During 2004, one stockholder exchanged 1,000,000 shares of common stock with the
Company for 100% of the stock of Rimmer Computer, Inc.

During  July  2004,  the  Company  approved  a  reverse  stock  split of 20 to 1
effective August 25, 2004.

On August 26, 2004,  the Company issued  11,153,669  shares of common stock upon
conversion of a promissory  note held by  Eurofaith.  Such  promissory  note was
issued by the Company in exchange for shares of Starway (See note 1). No part of
the purchase price was  represented by borrowed  funds.  On August 26, 2004. New
Solomon  Consultants  Limited  acquired 6.9 million  shares of common stock from
Eurofaith  Holdings upon conversion.  This transaction was part of a transaction
pursuant to which New Solomon acquired control of the Company.  The shareholders
of New Solomon Consultants are the shareholders of Eurofaith.

On September 16, 2004,  the Company issued 630,000 shares of its Common Stock at
$12.70 per share in  accordance  with the  Company's  Equity  Incentive  Plan as
described in note 14.

STATUTORY RESERVES AND RESTRICTED RETAINED EARNINGS

The laws and  regulations  of the PRC require that before a wholly owned foreign
investment  enterprise  ("WOFIE")  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.

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


See report of independent registered public accounting firm.


                                      F-24
<PAGE>

                     CHINA ENERGY SAVINGS TECHNOLOGY, INC.
                                AND SUBSIDIARIES
                     (FORMERLY KNOWN AS RIM HOLDINGS, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 - SUBSEQUENT EVENTS

On November 17, 2004, the Company  completed an acquisition of an additional 15%
interest  in Starway.  Prior to the  acquisition,  the Company  owned 50% of the
outstanding  shares of capital  stock of  Starway.  After the  acquisition,  the
Company  will own a total of 65% of the  outstanding  shares of Starway  capital
stock.  The  Company  acquired  the  additional  15%  interest  in Starway  from
Eurofaith.  The sole  director of  Eurofaith  is also a director  and  Corporate
Secretary of the Company.

The Company acquired the 15% interest in Starway by issuing a total of 3,346,100
shares of common stock of the Company.  The amount of consideration given by the
Company for the  acquisition was determined with reference to the acquisition of
shares of Starway  capital stock as reported in the Company's  Current Report on
Form 8-K filed on June 30, 2004. The closing of the Acquisition  (the "Closing")
occurred on November 17, 2004 (the "Closing Date").  The sole  consideration for
the Acquisition is common stock of the Company.

NOTE 17 - RESTATEMENT

The Company has  restated  the  financial  statements  for the nine months ended
September  30, 2004 and 2003 and the years ended  December  31, 2003 and 2002 to
restate the  earnings  per share to reflect the merger  acquisition  on June 30,
2004.  The  effect  of the  restatement  on the  Company's  previously  released
consolidated  statements  of income is to reduce  earnings per share from $0.51,
$0.40, $0.64 and $0.13 for the nine-months ended September 30, 2004 and 2003 and
year  ended  December  31,  2003 and 2002 to $0.36,  $0.25,  $0.40,  and  $0.08,
respectively,


See report of independent registered public accounting firm.


                                      F-25
<PAGE>

Supplemental information:

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        AS OF SEPTEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                     ASSETS
                                                                            September 30
                                                                      -------------------------
                                                                         2004          2003
                                                                        Audited      Unaudited
                                                                      -----------   -----------
<S>                                                                   <C>           <C>
CURRENT ASSETS:
  Cash                                                                $18,442,862   $   181,283
  Accounts receivable, trade, net of allowance for doubtful
     accounts of $768,151 and $301,288 as of September 30, 2004 and
     2003, $766,710 as of December 31, 2003, respectively               6,580,525     2,548,643
  Current maturities of notes receivable, net                           3,727,540     2,131,334
  Inventories                                                           4,329,552       726,983
  Prepaid expenses                                                      1,529,955
  Due from related party                                                1,257,130
                                                                      -----------   -----------
     Total current assets                                              35,867,564     5,588,243
                                                                      -----------   -----------

PLANT AND EQUIPMENT, net                                                  528,344       761,951
                                                                      -----------   -----------
OTHER ASSETS:
  Long-term notes receivable, net                                       7,087,692    10,443,217
  Other receivables                                                       778,880       190,476
  Intangible asset, net                                                                 233,677
  Other assets                                                                           64,617
                                                                      -----------   -----------
     Total other assets                                                 7,866,572    10,931,987
                                                                      -----------   -----------
        Total assets                                                  $44,262,480   $17,282,181
                                                                      ===========   ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                               $ 2,719,554   $ 3,106,338
  Current portion note payable                                             12,799
  Other payables                                                          551,528
  Loans payable - related parties                                                       237,821
  Customer deposits                                                     1,752,216       315,076
  Taxes payable                                                         1,892,676     3,611,761
                                                                      -----------   -----------
     Total current liabilities                                          6,928,773     7,270,996
                                                                      -----------   -----------
LONG-TERM LIABILITIES:
  Note payable, net                                                         7,895        27,640
                                                                      -----------   -----------
     Total liabilities                                                  6,936,668     7,298,636
                                                                      -----------   -----------
SHAREHOLDERS' EQUITY:
  Common stock, $0.116 par value, 10,000,000 shares authorized,
     100 shares issued and outstanding                                        100            11
  Additional paid-in capital                                            1,333,244     1,333,333
  Statutory reserves                                                      649,168       658,977
  Retained earnings                                                    35,335,352     7,983,698
  Accumulated other comprehensive income (loss)                             7,948         7,526
                                                                      -----------   -----------
     Total shareholders' equity                                        37,325,812     9,983,545
                                                                      -----------   -----------
        Total liabilities and shareholders' equity                    $44,262,480   $17,282,181
                                                                      ===========   ===========
</TABLE>

See report of independent registered public accounting firm.

                                      F-26
<PAGE>

Supplemental information:

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES

     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003


                                                         Nine Months Ended
                                                           September 30
                                                   ----------------------------
                                                       2004            2003
                                                      Audited        Unaudited
                                                   ------------    ------------

REVENUES                                           $ 30,997,070    $ 19,556,412

COST OF GOOD SOLD                                    11,640,973      12,300,517
                                                   ------------    ------------
GROSS PROFIT                                         19,356,097       7,255,895

OPERATING EXPENSES
  Operating expense                                   1,538,220         100,926
  Selling, general and administrative expenses          847,447       1,171,155
                                                   ------------    ------------
     Total Operating Expenses                         2,385,667       1,272,081
                                                   ------------    ------------

INCOME FROM OPERATIONS                               16,970,430       5,983,814
                                                   ------------    ------------
OTHER INCOME (EXPENSE)
  Interest income                                     2,202,122         829,681
  Interest expense                                       (3,086)           (404)
  Other income (expense)                                 25,506             169
  Other income                                            2,680           4,669
                                                   ------------    ------------
     Total Other Income                               2,227,222         834,115
                                                   ------------    ------------

INCOME BEFORE PROVISION FOR INCOME TAXES             19,197,652       6,817,929

CREDIT (PROVISION) FOR INCOME TAXES                   4,853,332      (1,200,925)
                                                   ------------    ------------

NET INCOME                                           24,050,984       5,617,004

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustment                22,305           9,809
                                                   ------------    ------------
COMPREHENSIVE INCOME (LOSS)                        $ 24,073,289    $  5,626,813
                                                   ============    ============


See report of independent registered public accounting firm.

                                      F-27
<PAGE>

Supplemental information:

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                                                                other
                                                                      Unappro-                 compre-
                                                         Additional   priated                  hensive      Subscrip-
                                     Number    Common      Paid-in    Retained    Statutory    income        tion
                                   of shares   stock       capital    Earnings     Reserves    (loss)       Receivable     Totals
                                  ----------  ---------  ----------  -----------  ---------  ------------  -----------  -----------
<S>                               <C>         <C>        <C>         <C>          <C>        <C>           <C>          <C>
BALANCE, December 31, 2002,
  audited                                100  $      11  $1,333,322  $ 2,366,694  $ 658,977  $     (2,283) $  (606,061) $ 3,750,660
Cash received from subscription
  receivable                                                                                                   606,061      606,061
Contributed capital by
 stockholders                                                    11                                                              11
Foreign currency translation
  adjustments                                                                                       9,809                     9,809
Net income                                                             5,617,004                                          5,617,004
Statutory reserves
                                  ----------  ---------  ----------  -----------  ---------  ------------  -----------  -----------
BALANCE, September 30, 2003,
  unaudited                              100         11   1,333,333    7,983,698    658,977         7,526                 9,983,545
Foreign currency translation
  adjustments                                                                                     (21,883)                  (21,883)
Additional paid-in capital
Net income                                                             3,290,861                                          3,290,861
Statutory reserves                                                         9,809     (9,809)
                                  ----------  ---------  ----------  -----------  ---------  ------------  -----------  -----------
BALANCE, December 31, 2003,
  audited                                100         11   1,333,333   11,284,368    649,168       (14,357)               13,252,523
Foreign currency translation
  adjustments
Common stock                                                                                       22,305                    22,305
Additional paid-in capital                           89         (89)
Net income                                                            24,050,984                                         24,050,984
                                  ----------  ---------  ----------  -----------  ---------  ------------  -----------  -----------
BALANCE, September 30, 2004,
 audited                                 100  $     100  $1,333,244  $35,335,352  $ 649,168  $      7,948  $        --  $37,325,812
                                  ==========  =========  ==========  ===========  =========  ============  ===========  ===========
</TABLE>

See report of independent registered public accounting firm.


                                      F-28
<PAGE>

Supplemental information:

                   STARWAY MANAGEMENT LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                 Nine Months Ended
                                                                    September 30
                                                           ----------------------------
                                                               2004            2003
                                                              Audited        Unaudited
                                                           ------------    ------------
<S>                                                        <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                               $ 24,050,984    $  5,617,004
  Adjustments to reconcile net income to cash
    provided by (used in) operating activities:
      Depreciation and amortization                              59,601          64,421
      Allowance for doubtful accounts                                            23,424
  Change in operating assets and liabilities:
    (Increase) decrease in assets:
      Intangible assets                                         227,627          22,150
      Accounts receivable                                    (2,276,391)     (1,150,417)
      Long-term notes receivable, net                         4,129,841      (9,475,424)
      Amount due from related parties                        (1,257,130)
      Inventories                                            (3,796,099)        927,861
      Prepaid expenses                                       (1,458,373)        237,694
      Other receivables                                        (526,180)        163,075
      Other assets                                                              (55,003)
    Increase (decrease) in liabilities:
      Accounts payable                                          (70,180)        855,491
      Other payable                                             551,528
      Customer deposits                                       1,668,249        (295,713)
      Tax payable                                            (2,961,545)      2,707,905
                                                           ------------    ------------
           Net cash used in operating activities             18,341,932        (357,532)
                                                           ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of fixed assets                            173,123
  Purchase of property and equipment                            (10,803)        (87,484)
                                                           ------------    ------------
           Net cash used in investing activities                162,320         (87,484)
                                                           ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds (payments) on loans payable - related parties        (95,578)        (66,183)
  Proceeds from notes payable                                                    27,640
  Payments on notes payable                                      (9,282)
  Proceeds from issuance of common stock                                        606,072
                                                           ------------    ------------
           Net cash provided by financing activities           (104,860)        567,529
                                                           ------------    ------------

EFFECT OF EXCHANGE RATE ON CASH                                  22,305           9,809
                                                           ------------    ------------
INCREASE (DECREASE) IN CASH                                  18,421,697         132,322

CASH, beginning of period                                        21,165          48,961
                                                           ------------    ------------
CASH, end of period                                        $ 18,442,862    $    181,283
                                                           ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest expense                             $      3,086    $        404
                                                           ============    ============
</TABLE>

See report of independent registered public accounting firm.

                                      F-29