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**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549










**FORM
      10-KSB**







(Mark One)





x ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGEACT
      OF
      1934.


For
      the
      fiscal year ended December 31, 2005


OR


****


oTRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF1934.


For
      the
      transition period from _________ to _________





***Commission
      file number 000-26119***







**CHINA
      WORLD TRADE CORPORATION**


(Exact
      name of small business issuer as specified in its charter)







**Nevada**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            ******87-0629754**
              (IRS
                Employer Identification No.)





**3rd
      Floor, Goldlion Digital Network Center**


**138
      Tiyu Road East, Tianhe**


**Guangzhou,
      PRC**


(Address
      of principal executive offices)





**(001-8620)
      -2886-0608**


(Issuer's
      telephone number)





(Former
      name, address and fiscal year, if changed since last report)





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





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





Common
      Stock, par value $.001 per share


(Title
      of
      Class)











Check
      whether the issuer: (1) filed all reports required to be filed by Sections
      13 or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.  Yes x No o





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 registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x





Issuer's
      revenues for its most recent fiscal year were $18,223





The
      aggregate market value of the issuer's common stock held by non-affiliates
      was
      approximately $24.8 million, based on the average closing bid and ask price
      for
      the common stock on March 31, 2006.





As
      of
      March 31, 2006, there were outstanding 33,668,923shares of the issuer's common
      stock, par value $.001.





Transitional
      Small Business Disclosure Format (check one):  Yes o No x











*Table
          of Contents*





**CAUTIONARY
      STATEMENT REGARDING FORWARD LOOKING INFORMATION**




The
      discussion contained in this 10-KSB under the Securities Exchange Act of 1934,
      as amended, (the "Exchange Act") contains forward-looking statements that
      involve risks and uncertainties. The issuer's actual results could differ
      significantly from those discussed herein. These include statements about our
      expectations, beliefs, intentions or strategies for the future, which we
      indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
      "will," "we believe," "the Company believes," "management believes" and similar
      language, including those set forth in the discussion under "Description of
      Business," including the "Risk Factors" described in that section, and
      "Management's Discussion and Analysis or Plan of Operation" as well as those
      discussed elsewhere in this Form 10-KSB. We base our forward-looking statements
      on information currently available to us, and we assume no obligation to update
      them. Statements contained in this Form 10-KSB that are not historical facts
      are
      forward-looking statements that are subject to the "safe harbor" created by
      the
      Private Securities Litigation Reform Act of 1995.




2




**TABLE
                OF CONTENTS****Part
                I**Item
            
            Page1.
            Description
                of Business
            42.
            Description
                of Property
            313.
            Legal
                Proceedings
            324.
            Submission
                of Matters to a Vote of Security Holders
            32**Part
                II**5.
            Market
                for Common Equity and Related Stockholder Matters
            336.
            Management's
                Discussion and Analysis or Plan of Operation
            357.
            Financial
                Statements
            438.
            Changes
                in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            758A.
            Disclosure
                Controls and Procedures
            76**Part
                III**9.
            Directors
                and Executive Officers of the Registrant
            7710.
            Executive
                Compensation
            7911.
            Security
                Ownership of Certain Beneficial Owners and Management
                and Related Stockholder Matters
            8112.
            Certain
                Relationships and Related Transactions
            8213.
            Exhibits,
                Lists and Reports on Form 8-K
            8314.
            Principal
                Accountant Fees and Services
            83**Other**Index
                to Exhibits
            84Signature
                Page
            85





3
 *Table
          of Contents*





**PART
      I**





**Item
      1** **.****Description
      of Business**




**History
      Of Our Company**




We
      were
      incorporated in the State of Nevada on January 29, 1998 under the name Txon
      International Development Corporation to conduct any lawful business, to
      exercise any lawful purpose and power, and to engage in any lawful act or
      activity for which corporations may be organized under the General Corporation
      Laws of Nevada.




On
      August
      14, 2000, pursuant to a share exchange agreement dated August 10, 2000, by
      and
      among Main Edge International Limited, a British Virgin Islands corporation,
      Virtual Edge Limited, a British Virgin Islands corporation and a wholly-owned
      subsidiary of Main Edge, Richard Ford, Jeanie Hildebrand and Gary Lewis, we
      acquired from Main Edge all of the shares of Virtual Edge (the “Acquisition”) in
      exchange for an aggregate of 1,961,175 shares of our common stock, which shares
      equaled 75.16% of Txon International’s issued and outstanding shares after
      giving effect to the Acquisition. Both Main Edge and Virtual Edge a
      non-operating holding companies organized to own the stock of businesses which
      they acquired. On September 15, 2000, Txon International Development Corporation
      changed its name to China World Trade Corporation and effectuated an 8 for
      1
      forward stock split. As a result of the forward stock split, Main Edge held
      15,689,400 shares of our common stock, which shares equaled 75.16% of our issued
      and outstanding shares.




In
      September 2002, we underwent a debt for equity capital restructuring whereby
      certain creditors of China World Trade converted an aggregate of $2,731,677
      into
      an aggregate of 4,000,000 shares of common stock.




On
      September 3, 2002, Powertronic Holdings Limited (“Powertronic”), a British
      Virgin Islands company, entered into a share purchase agreement with us (the
      “First Share Purchase Agreement”), to purchase 1,000,000 shares of our common
      stock and warrants to purchase up to 2,000,000 shares of our common stock (such
      warrants, the “First Warrants”), for the total purchase price of $500,000.
      Additionally, on December 17, 2002, Powertronic entered into a second share
      purchase agreement (the “Second Share Purchase Agreement”) with us , to purchase
      an additional 1,000,000 shares of our common stock and warrants to purchase
      up
      to an additional 2,000,000 shares of our common stock (such warrants, the
“Second Warrants”), for the total purchase price of $500,000. The First Warrants
      and the Second Warrants had an exercise price of $0.575 per share and were
      exercised in 2004.




On
      December 17, 2002, we entered into a share exchange agreement with Mr. William
      Chi Hung Tsang, the sole beneficial owner of the share capital in General
      Business Network (Holdings) Ltd., a Hong Kong company. Pursuant to the Share
      Exchange Agreement, we acquired from Mr. Tsang all of the issued and outstanding
      shares of General Business Network in exchange for 4,000,000 shares of our
      common stock and warrants to purchase an additional 4,000,000 shares of our
      common stock (the “Tsang Warrants”) at an exercise price of $0.92 per share. As
      of the date of acquisition, General Business Network owned two rental properties
      located at 20/F, Goldlion Digital Network Center, Unit 01-10, 138 Tiyu Road
      East, Tianhe, Guangzhou, the PRC and Flat B, 12/F., Champion Center, 301-309
      Nathan Road, Hong Kong, collectively valued in excess of $4,000,000. On January
      24, 2003, 4,000,000 shares of our common stock and the Tsang Warrants were
      issued to Mr. Tsang; to date, the Tsang Warrants have been fully exercised.




On
      May 7,
      2004, through one of our wholly-owned subsidiaries, we acquired 51% of the
      capital stock of CEO Clubs China Limited, a Hong Kong corporation (“CEO Clubs
      China”) for a total consideration in cash and shares of our common stock in the
      amount of $360,000, payable $120,000 in cash and $240,000 in market value of
      our
      common stock (80,000 shares) and a commitment to provide an operating cash
      in
      the amount of $120,000. CEO Clubs China has authorized chapters to operate
      under
      the “CEO Clubs” trademarks in the Greater China Region, including the PRC, Hong
      Kong and Taiwan. Comprised of thirteen chapters in the U.S. and China, the
      CEO
      Clubs are a by-invitation-only membership association. Members must be chief
      executive officers of businesses that have above $2,000,000 in annual sales.
      Our
      average club member has $20,000,000 in annual sales. In fiscal year 2002, CEO
      Clubs opened its first international chapter in China.




4
 *Table
          of Contents*




On
      August
      2, 2004, we consummated an acquisition of 51% of the capital stock of Guangdong
      New Generation Commercial Management Limited, a limited liability company
      organized and existing under the laws of the PRC, for an aggregate consideration
      of $10,232,000, payable approximately $2,741,000 in cash and approximately
      $7,487,000 in market value of our common stock (4,081,238 shares). One of our
      purposes for the acquisition was because New Generation was a formidable
      competitor in the travel agency business through operations of its five
      subsidiaries and twenty-one selling points in Southern China and a significant
      competitor in ticketing sales for international and domestic flights as well
      as
      inbound business travel. In addition, New Generation’s goal was to become one of
      the major consolidators of hotel rooms and airline tickets in China. By
      acquiring New Generation, we have added value to our business and eliminated
      this competition. New Generation has already acquired the necessary licenses
      to
      operate as a ticketing and travel agent in the PRC, a highly regulated business.
      New Generation’s business also includes insurance operations through its
      subsidiary, Huahao Insurance, and it is a licensed insurance agent in China
      to
      provide accidental and life insurance policies. The two main revenues managed
      by
      New Generation are those from the travel agency business and the insurance
      business. The financial results from Huahao Insurance are consolidated with
      the
      financial results of New Generation after Huahao Insurance was acquired by
      New
      Generation on June 30, 2004. While there can be no assurances of success, we
      expect that New Generation will contribute a significant revenue base to our
      company.




**History
      of Virtual Edge**




Virtual
      Edge was incorporated in the British Virgin Islands on February 18, 1999 as
      a
      non-operating holding company. We currently own 100% of the capital stock of
      Virtual Edge.




On
      October 5, 1999, pursuant to a share exchange, Virtual Edge acquired a majority
      interest in Infotech Enterprises Limited (“Infotech”). On October 18, 2000,
      pursuant to a Share Exchange Agreement with Vast Opportunity Limited, we
      acquired the remaining interest in Infotech. Infotech was incorporated on July
      2, 1999 and is engaged in building a bilingual (Chinese and English)
      Business-to-Business internet portal. We currently operate the business
      operations of Infotech through Virtual Edge.




On
      May 9,
      1997, the co-operative joint venture of our Beijing World Trade Center Club
      was
      formed initially by Canada Belford Enterprises Ltd., a wholly owned company
      by
      our CEO Mr. John Hui. On October 10, 1999, Virtual Edge signed an agreement
      with
      Belford Enterprises Limited pursuant to which Belford agreed to transfer its
      75%
      interest in Beijing World Trade Center Club (“Beijing WTC Club”) to Virtual
      Edge. Beijing WTC Club was engaged in the establishment of the Beijing World
      Trade Center Club and currently provides and will continue to provide
      recreation, business center services, communication and information services,
      products exhibitions services, commercial and trading brokerage services to
      its
      members. The Beijing World Trade Center Club is located at 2nd Floor, Office
      Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing, the
      PRC.




On
      November 10, 2001, Virtual Edge signed an agreement with Guangzhou City
      International Exhibition Co., Ltd. pursuant to which a co-operative joint
      venture company, Guangzhou World Trade Center Club (“Guangzhou WTC Club”) was
      formed to operate a business club in Guangzhou, the PRC, which club shall
      provide services including food and beverages, recreation, business center,
      communication and information, products exhibitions, as well as commercial
      and
      trading brokerage services to its members. Virtual Edge shares 75% of the
      profits from the operation of Guangzhou WTC Club. Guangzhou WTC Club had its
      grand opening on January 28, 2002. The Guangzhou World Trade Center Club is
      located at 3 rd Floor,
      Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou
      PRC.




We
      currently operate the Beijing World Trade Center Club and Guangzhou World Trade
      Center Club through Virtual Edge.




5
 *Table
          of Contents*




**Overview
      Of Our Company’s Three Business Lines**




Our
      business plan involves the pursuit of three distinct lines of business
      including:




·
            **Business
                Clubs**.
                We have business clubs located in Guangzhou and Beijing. Each business
                club is indirectly associated with the World Trade Center Association,
                by
                which we have positioned ourselves as a platform to facilitate trade
                between China and the world
                markets.




·
            **Business
                Travel and Related Service**.
                We provide business travel and related services. New Generation Group
                of
                companies, our latest acquisition and through which we provide business
                travel services, acts as a consolidator of airline tickets and hotel
                accommodations in China and as an agent for the sale of life and
                accident
                insurance in the Guangzhou Province of
                China.




·
            **Business
                Value-Added Services**.
                We provide value-added services, including, business consulting services,
                interactive marketing and incentive programs for merchants, financial
                institutions, telecom operators, and large corporations. In addition
                to
                these services, we also plan to the provide business consultancy
                services
                by focusing on (1) the financial advisory sectors, including market
                and
                industrial research and corporate restructuring and planning; (2)
                developing the international trade dimension of China enterprises
                and
                assisting foreign companies to establish their businesses in China;
                and
                (3) formulating marketing strategies. A small part of the business
                value-added services commenced operations in the year 2002 through
                Virtual
                Edge Limited, while the majority of these value added services commenced
                in the last fiscal quarter of 2004.






Our
      executive office is located at 3rd Floor, Goldlion Digital Network Center,
      138
      Tiyu Road East, Tianhe, Guangzhou, the PRC 510620.




Our
      segment revenues are stated in United States dollars and are prepared in
      accordance with United States generally accepted accounting principles. In
      this
      prospectus, unless otherwise specified, all dollar amounts are expressed in
      United States Dollars.




**China
      World Trade Corporation**


**Segment
      Revenues**


**Year
      ended December 31**


**2005**
            
            **2004**
            
            **2003**
              **(unaudited)**US$
            
            %
            
            US$
            
            %
            
            US$
            
            %Business
                Club
            
            
            894,550
            
            
            11.4
            %
            
            551,497
            
            
            17.8
            %
            
            1,485,440
            
            
            45.5
            %Business
                TravelTraveling
                Services
            
            
            4,619,608
            
            
            59.0
            %
            
            1,571,412
            
            
            50.8
            %
            
            -
            
            
            0.0
            %Insurance
            
            
            363,860
            
            
            4.6
            %
            
            100,193
            
            
            3.3
            %
            
            -
            
            
            0.0
            %Business
                Value-added
            
            
            1,618,414
            
            
            20.6
            %
            
            40,695
            
            
            1.3
            %
            
            212,605
            
            
            6.5
            %Others(1)
            
            
            342,792
            
            
            4.4
            %
            
            828,947
            
            
            26.8
            %
            
            1,566,566
            
            
            48.0
            %TOTAL
            
            
            7,839,224
            
            
            100.0
            %
            
            3,092,744
            
            
            100.0
            %
            
            3,264,611
            
            
            100.0
            %




**(1)**  **Other
      revenues in year 2003, year 2004 and year 2005 were mostly generated from cattle
      hide trading business and rental income of our wholly owned properties in
      Guangzhou and Hong Kong.**




6
 *Table
          of Contents*




**Our
      Corporate Structure**




We
      are a
      holding company for 23 direct and indirect, majority and wholly-owned
      subsidiaries that operate businesses in China. Eight of these companies are
      incorporated under the laws of the British Virgin Islands, four under the laws
      of Hong Kong, and the remaining 11 in the People’s Republic of China. All of our
      business operations are located in China. Set forth below is an organizational
      chart depicting the relationships among our various companies.




·
            *Business
                Clubs:*We
                carry out our Business Clubs operations through our subsidiaries
                Guangzhou
                World Trade Center Club Limited, Beijing World Trade Center Club,
                and CEO
                Clubs China Limited. The Business Clubs commenced operations in August
                2002.




·
            *Business
                Travel:*Our
                Business Travel operations are managed by New Generation which consists
                of
                a group of seven individual companies. The two main revenue streams
                generated by our Business Travel operations are from the travel agency
                business and the insurance agency business.




·
            *Business
                Value-Added Services:*Our
                Business Value-Added Services are offered through three of our
                subsidiaries including (1) Guangzhou World Trade Link Information
                Service
                Limited, (2) Creative Idea Enterprise Limited and (3) Virtual Edge.
                Guangzhou WTC Link Information Service Limited has provided short
                message
                service and customer relationship management services since July
                2004 but
                was disposed of on December 29, 2005 pursuant to the Purchase & Sale
                Agreement mentioned on Note 3 of the audit report. Creative Idea
                Enterprise Limited and Virtual Edge have each provided consultancy
                services since October 2002. Our consultancy services include the
                provision of market and industrial research, corporate restructuring
                and
                planning; and introduction of potential business affiliations.




The
      remainder of our revenues are generated from rental income on investment
      property held by our subsidiary General Business Network (Holdings) Limited
      and
      from trading income earned by our indirect subsidiary Polysend Trading Limited
      which has ceased its business since July 1, 2005.




Our
      remaining eight direct and indirect subsidiaries are either dormant companies
      or
      non-operating holding companies without any current operations or share
      ownership.









[The
      Remainder of Page Intentionally Left Blank]




7
 *Table
          of Contents*








8
 *Table
          of Contents*




**Revenue
      Derived From Our Businesses**




*Fiscal
      2005* :
      In
      fiscal 2005, we derived approximately $894,000 in revenues, representing 11.4%
      of total revenues from our Business Clubs operations; approximately $4,983,000
      in revenues, representing 63.5% of total revenues from our Business Travel
      and
      Related Services; approximately $1,618,000 in revenues, representing 20.6%
      of
      total revenues from our Value Added businesses; and approximately $343,000,
      representing 4.3% of total revenues from Other Operations. Other operations,
      as
      used in the previous sentence, includes (1) operations in rental property and
      (2) cattle hide trading (purchase and sale) businesses.




The
      rental properties include :




·
            Wholly
                owned rental property in Hong Kong located at 1209, 12/F., Champion
                Building, 301-309 Nathan Road, Kowloon, Hong Kong. This property
                generated
                $13,147 in revenue for fiscal 2005.




·
            Wholly
                owned rental property in Guangzhou, which was sold as of May 15,
                2005, and
                was located at 20thFloor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe,
                Guangzhou, the PRC. This property generated $56,000 in revenue for
                fiscal
                2005.




·
            The
                Rental Income Right of 21/F and 23/F, Goldlion Digital Network Center,
                138
                Tiyu Road East, Tianhe, Guangzhou, the PRC. The rental right was
                terminated on March 31, 2005. This property generated $151,000 in
                revenue
                for fiscal 2005.




The
      cattle hide trading is the business of buying and selling raw materials of
      leather from cattle. The various types of cattle hide include wetblue calf,
      weblue ox, wetblue heifer, wetblue bull, wetblue cow and wet salted heifer.
      Cattle hide trading generated $120,441 in revenue for fiscal 2005.




**Business
      Plan For Our Business Clubs**




**The
      Opportunity in China.** China
      has
      been considered one of the fastest growing economies in the world. The accession
      into the World Trade Organization will offer new opportunities for foreign
      companies to invest and do business in China. WTO membership for China will
      change the methods of market entry for overseas companies. Foreign companies
      will need to have well-tailored plans to cope with China’s target audience,
      services, marketing, finance, and human resources for the effective entry into
      the China market. The unique business culture and legal system in China will
      cause the local business information and services in China to become a key
      component to commerce.




As
      a
      result of lower barriers to entry into the China market, and a more attractive
      investment environment in recent years, we believe that many small and medium
      sized foreign enterprises will have investment opportunities in China for the
      first time. These foreign companies will need up-to-date business intelligence
      and know-how to successfully invest in the Chinese market.




China’s
      accession into the WTO also provides significant business opportunities to
      the
      small to medium size private Chinese companies. The increase in involvement
      from
      foreign companies and investors in the China market means more opportunities
      to
      do business with foreign companies. Under the trend of globalization, the
      Chinese market will evolve from many segmented and monopolized markets to an
      integrated national market that is open to the world economy. The small and
      medium sized companies in China will enjoy much lower cost to enter into the
      worldwide market but will also confront more competition, lowered profit
      margins, and new rules of the game. These Chinese companies will need up-to-date
      business intelligence, professional strategic planning and the access to the
      worldwide business networks to ensure success in the new environment. And with
      its imminent accession into WTO, there will be unique opportunities for foreign
      investment and international trade.




9
 *Table
          of Contents*




The
      World
      Trade Centers Association (“WTC Association”) is a not-for-profit corporation
      that focuses on promoting and assisting world trade activities. Its mission
      is
      to encourage world trade by fostering and supporting the development and
      operation of World Trade Centers in every region of the world. WTC Association
      was established in 1970 and has members from more than 330 cities in about
      100
      countries with global members of over 750,000 enterprises.




The
      World
      Trade Centers (“World Trade Centers”) are separate entities which are licensed
      by the WTC Association, each of which generate revenue and profit from operating
      businesses with access to a diverse array of state-of-the-art international
      trade services and facilities, which enables them to facilitate international
      trade. Under the jurisdiction of the WTC Association, there are two types of
      licenses that are available including (1) a license which enables the licensee
      to operate a World Trade Center Club in cooperation with China’s Commission for
      the Promotion of International Trade, and (2) a license which enables the
      licensee to designate a building as a “World Trade Center” but not operate such
      a club. We only have licenses that enable us to operate World Trade Center
      Clubs
      and, as previously mentioned, we currently have two World Trade Center Clubs
      in
      operation.




In
      the
      WTC Association, every local member of a World Trade Center in a city is
      automatically a member of all World Trade Centers worldwide. This helps the
      World Trade Centers to market their local membership, and also vastly increases
      the amount of services that a World Trade Center can offer to its local members.
      Therefore, the World Trade Centers worldwide form a reciprocal business network
      for businesses to access the international trade resources that may be expensive
      and even inaccessible in a domestic environment.




We
      plan
      to open and operate additional World Trade Center Clubs (also referred to as
      our
“Business Clubs”), which will be licensed by the WTC Association, in major
      cities in China, where Business Club members can relax, entertain, network
      and
      meet potential business affiliates in person, or via the Video Conferencing
      facilities of the WTC Association worldwide network.




The
      WTC
      Association has granted various licenses to the regional branches of the Trade
      Promotion Commission. The WTC Association can grant either regular full
      membership licenses or affiliate membership licenses to various branches of
      the
      Trade Promotion Commission, depending on the initial membership fee paid.




Through
      our wholly-owned subsidiary, Virtual Edge, we have formed 20-year co-operative
      joint ventures with the business subsidiaries of the Trade Promotion Commission
      including (1) the Beijing Wanlong Economic Consulting Limited for the
      joint-venture company Beijing World Trade Center Club and (2) the Guangzhou
      City
      International Exhibition Co. Ltd. for the joint venture company Guangzhou World
      Trade Center Club. Our Guangzhou World Trade Center Club and Beijing World
      Trade
      Center Club were both granted regular full membership licenses. We indirectly
      own 75% of the joint venture companies and the remaining 25% are owned by the
      business subsidiaries of the Trade Promotion Commission. Each arrangement may
      be
      terminated in the event the venture suffers material business setbacks or if
      a
      party materially breaches its obligations under the operating contract. We
      acquired the operation rights of regular full membership from WTC Association
      for running the world trade center clubs resulting from these two joint venture
      companies.




Under
      the
      co-operative joint venture of both Beijing World Trade Center Club and Guangzhou
      World Trade Center Club, we are obligated to pay a minimum of RMB150,000 (or
      approximately $18,500) annually until reaching their respective proportional
      profit sharing of 25% each to Beijing Wanlong Economic Consulting Limited and
      Guangzhou City International Exhibition Co. Ltd. They in turn pay WTC
      Association an annual fee of $10,000 for each individual world trade center
      club. Other than the annual fee which we pay to the business subsidiaries of
      the
      Trade Promotion Commission, we do not have any revenue sharing obligation with
      World Trade Center Association.




**Facilities.** The
      Guangzhou World Trade Center Club and Beijing World Trade Center Club provide
      a
      full range of top quality commercial and recreational services to our members.
      The clubhouses are luxuriously decorated and provide an elegant environment
      under which members can enjoy our facilities. ****




10
 *Table
          of Contents*




The
      facilities in our Beijing World Trade Center Club include snack bars, seminar
      and conference rooms, executive suites, office and meeting room packages,
      videoconferencing facilities, and exhibition rooms. The facilities in our
      Guangzhou World Trade Center Club include western fine dining, seminar and
      conference rooms, executive suites, office and meeting room packages,
      videoconferencing facilities, exhibition rooms, and cigar and wine corner.
      The
      business services offered by both the business clubs to its members include
      (i)
      liaison work with potential trading partners, (ii) international economic and
      trade exhibitions and seminars, (iii) interpreters and secretarial services,
      (iv) organized trips to participate in World Trade Center Association sponsored
      activities, (v) reception of visiting delegations of foreign World Trade Center
      Association member units, (vi) arrangement of meetings with Chinese government
      bodies, business corporations, and (vii) legal consultancy and travel management
      services.




**Events
      Management Services.** We
      assist
      foreign companies to organize and participate in conferences, exhibitions and
      special events such as the “beer festival” in China and assist Chinese companies
      to organize and participate in conferences and exhibitions overseas. We have
      already generated revenue from this fee based service business.




**Virtual
      Office.** Virtual
      office services help foreign companies to establish a presence in China at
      minimum cost. Each client will be assigned a dedicated phone number, fax number
      and mail address. The phone number can be forwarded to a number assigned by
      the
      client, or be answered by a well trained secretary who takes care of the
      communication for the client. Foreign companies can also manage their
      communication with their China affiliates over the Internet. These services
      started generating revenue in 2004 and a monthly fixed fee is charged for each
      account.




**Marketing
      Strategy.** We
      plan
      to market memberships in our Business Club mainly to (1) international
      companies, (2) businessmen who conduct business in China and with local Chinese
      companies and (3) businessmen seeking business opportunities within and outside
      China. We will utilize the good reputation and recognition of WTC Association
      name and the recreational and business facilities which will be offered at
      each
      Business Club to establish the Guangzhou Club, Beijing Club and other potential
      Business Clubs in various cities in the PRC as the premier business clubs of
      their kind. We also hope to make the ChinaWTC.com website into a distinctive
      Chinese/English language Internet portal.




We
      plan
      to achieve our marketing goals through (i) placing advertisements with
      traditional media, such as newspapers, television, radio, magazines etc., (ii)
      placing banners on high traffic web sites, (iii) sending e-mails to potential
      users, (iv) participating in trade shows, (v) employing the services of external
      public relations and marketing firms, (vi) airing television “infomercials” and
      talk shows, (vii) placing outdoor advertising signs and (viii) attending /
      holding press conferences. We intend to form strategic alliances with companies
      that can contribute services and local expertise in various market sectors.
      These alliances will increase our content and navigation services, support
      our
      advertising services and expand our distribution networks. We intend to form
      vertical alliances, such as exhibition management companies and travel agents,
      which will either allow us to integrate their products to our services offerings
      or to access their distribution networks. We will also form horizontal
      alliances, such as golf clubs and other business clubs, to increase our client
      base.




An
      integral part of our success is dependent on the development and enhancement
      of
      our products and services. We will incorporate new technologies from third
      parties, expand products and services internally and conduct market research
      to
      remain aware and informed of the evolving user tastes and latest technologies.
      The New Generation acquisition has demonstrated the success of our strategies
      to
      grow our revenues through vertical consolidation. By acquiring New Generation,
      we have integrated the services offered by New Generation into the services
      offered by the Business Clubs. The Business Clubs services have also created
      value to New Generation by allowing New Generation to offer premium services
      to
      a selected group of important clients.




On
      the
      other hand, the acquisition of the CEO Clubs China is an example of our
      strategies to horizontally consolidate other business clubs so as to increase
      our client base.




11
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          of Contents*




**Sources
      of Income.** We
      will
      generate income from our Business Clubs in several ways.




We
      intend
      to expand our Business Clubs and operate Business Clubs in major Chinese cities.
      While the worldwide business network from WTC Association together with the
      reciprocal services will be the core attraction to businesspersons in China,
      the
      business community that we maintain in the major Chinese cities will become
      a
      more valuable asset in the long term. Through our presence in major cities
      in
      China, we will develop a community of active businesspersons from small and
      medium sized enterprises with a common interest in world trade.




Additionally,
      our Business Clubs intend to generate revenue from the owners and senior
      management of small and medium sized enterprises in China, by providing a full
      range of top quality commercial and recreational services, and education and
      business networking programs. Our Business Club will also help members to liaise
      with potential trading partners from overseas, to join international economic
      and trade exhibitions and seminars, and to organize international business
      trips.




As
      part
      of the reciprocal arrangement under the WTC Association, the Business Clubs
      will
      also provide services to visiting delegations from foreign World Trade Center
      members. The China World Trade Business Club will help foreign companies or
      businesspersons to minimize the barrier of doing business in China. Services
      provided to foreign companies and businessperson may include organizing meetings
      with Chinese government bodies, business corporations and potential
      affiliates.




The
      revenue that we have derived already from the Business Club business comes
      directly from (1) membership fees, (2) fees collected from training and (3)
      events, such as seminars.




At
      each
      Business Club will be a Business Center, which is operated for the benefit
      of
      the members and others. While the Business Center’s services are not confined to
      members of the Business Club, members of the Business Club will enjoy special
      discounts for the Business Center services and more dedicated support from
      the
      staffs under the Business Club.




The
      revenue we have derived from a Business Center comes directly from (1) rental
      fees of facilities and (2) service fees. We will derive income from the Business
      Center providing (i) temporary offices, seminar and conference rooms, video
      conferencing facility, exhibition rooms, interpreters and secretarial services
      and business consultation services.




**Primary
      Clientele.** The
      main
      clients of our Guangzhou World Trade Center Club in year 2005
      included *:*




·
            Greentree
                Financial Group (China) Ltd. which accounted for 19% of the total
                revenue
                of Guangzhou World Trade Center
                Club;




·
            Mercury
                Interactive Corporation, which accounted for 9% of the total revenue
                of
                Guangzhou World Trade Center Club;




·
            Hyperion
                Solutions Corporation, which accounted for 7% of the total revenue
                of
                Guangzhou World Trade Center Club;
                and




·
            Maguire
                Products Asia Pte.Ltd. Singapore, which accounted for 6% of the total
                revenue of Guangzhou World Trade Center
                Club.




Collectively,
      the above four clients aggregately representing over 30% of the total revenue
      of
      Guangzhou World Trade Center Club. These above four clients account for a
      considerable portion of the total revenue of Guangzhou World Trade Center Club
      because all of these clients use our “Smart Office” under a fixed term from a
      one-month period to a 12 month period. We charge each of these clients
      additional fees for their uses of other facilities, such as teleconferencing,
      seminar rooms and other electronic equipment. In addition to these four main
      client, other clients include some international and domestic well-known
      enterprises, such as Koenig & Bauer AG, Esko-Graphics (Guangzhou), Maguire
      Products Asia Pte., Ltd. etc.




12
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          of Contents*




The
      main
      clients of our Beijing World Trade Center Club in year 2005
      included:




·
            Daimler
                Chrysler (China) Limited, which accounted for 21% of the total revenue
                in
                2005;




·
            Electro
                - Motive Diesel (EMD) International Holdings Limited, which accounted
                for
                14%of total revenue in 2005;




·
            Greentree
                Financial Group Inc. , which accounted for 10% of the total revenue
                in
                2005; and




·
            Pegasus
                Solutions, Inc. which accounted for 7% of the total revenue in 2005.




Other
      clients included Norson (Beijing) Information Technology Limited, Standard
      Life
      Assurance Company, Yongwei Investment Taiwan and other international companies.




**Potential
      Income From Potential License Agreements.** We
      intend
      to negotiate and acquire the necessary approval from WTC Association to license
      the China World Trade Center intellectual property rights including the logo
      and
      trademark to third parties. The licensees may use our logo and trademark to
      quickly establish a brand for their products such as office accessories, or
      to
      attract a group of clients for certain services such as credit cards offered
      by
      the Business Value-Added division. Revenue will be generated from royalty fees,
      which may be paid in cash, stock or other property.




**Competition.** There
      are
      a number of organizations utilizing the word of “Club” in China, such as the
      Beijing American Club, which offers more in terms of recreational facilities
      and
      services. There are other organizations, such as the American Chamber of
      Commerce, which provide limited trades and business information and networking
      capabilities. All other clubs and organizations in Guangzhou and Beijing only
      operate as clubhouses with local presence. On the contrary, we operate under
      the
      international brand name of “World Trade Center Club” exclusively in a certain
      region of PRC area. As a result, we out-compete the other players with our
      reciprocal membership advantage by leveraging on the global network of World
      Trade Center Clubs and among our World Trade Center Clubs in China. The
      management believes there will not be other business clubs in the regions that
      could operate under a similar model and this would provide the competitive
      advantage of our Business Clubs operations.




Our
      management believes that there is no single source of information and research
      report which is sophisticated enough for us to provide a meaningful estimate
      of
      the number of competitors and our competitive position in the business clubs
      industry.




**Employees.** We
      have
      38 employees in our Business Clubs as of December 31, 2005. None of them are
      parties to any union or collective bargaining agreement.




**Governmental
      Regulation of Business Club Operations in China.** The
      operation of our Business Clubs must conform to the governmental regulations
      and
      rules of the Peoples’ Republic of China. The practical effect of the People’s
      Republic of China legal system on our business operations in China can be viewed
      from two separate but intertwined considerations:




First,
      as
      a matter of substantive law, the Foreign Invested Enterprise laws provide
      significant protection from government interference. In addition, these laws
      guarantee the full enjoyment of the benefits of corporate Articles and contracts
      to Foreign Invested Enterprise participants. These laws, however, do impose
      standards concerning corporate formation and governance, which are not
      qualitatively different from the General Corporation Laws of the several states.
      Similarly, the People’s Republic of China accounting laws mandate accounting
      practices, which are not consistent with US Generally Accepted Accounting
      Principles. The China accounting laws require that an annual “statutory audit”
be performed in accordance with People’s Republic of China accounting standards
      and that the books of account of Foreign Invested Enterprises are maintained
      in
      accordance with Chinese accounting laws. Article 14 of the People’s Republic of
      China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned
      Enterprise to submit certain periodic fiscal reports and statements to designate
      financial and tax authorities, at the risk of business license
      revocation.




13
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          of Contents*




Second,
      while the enforcement of substantive rights may appear less clear than United
      States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned
      Enterprises are Chinese registered companies which enjoy the same status as
      other Chinese registered companies in business-to-business dispute resolution.
      Because the terms of the respective Articles of Association provide that all
      business disputes pertaining to Foreign Invested Enterprises are to be resolved
      by the Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm,
      Sweden applying Chinese substantive law, the Chinese minority partner in our
      joint venture companies will not assume a privileged position regarding such
      disputes. Any award rendered by this arbitration tribunal is, by the express
      terms of the respective Articles of Association, enforceable in accordance
      with
      the “United Nations Convention on the Recognition and Enforcement of Foreign
      Arbitral Awards (1958)”. Therefore, as a practical matter, although no
      assurances can be given, the Chinese legal infrastructure, while different
      in
      operation from its United States counterpart, should not present any significant
      impediment to the operation of Foreign Invested Enterprises.




**China’s
      Accession into the WTO.** On
      November 11, 2001, China signed an agreement to become a member of the World
      Trade Organization, sometimes referred to as the WTO, which is the international
      body that sets most trade rules, further integrating China into the global
      economy and significantly reducing the barriers to international commerce.
      China’s membership in the WTO was effective on December 11, 2001. China has
      agreed upon its accession to the WTO to reduce tariffs and non-tariff barriers,
      remove investment restrictions, provide trading and distribution rights for
      foreign firms, and open various service sectors to foreign competition. China’s
      accession to the WTO may favorably affect our business in that reduced market
      barriers and a more transparent investment environment will facilitate increased
      investment opportunities in China, while tariff rate reductions and other
      enhancements will enable us to develop better investment strategies and attract
      investment capital. In addition, the WTO’s dispute settlement mechanism provides
      a credible and effective tool to enforce members’ commercial rights. Also, with
      China’s entry to the WTO, it is believed that the relevant laws on foreign
      investment in China will be amplified and will follow common
      practices.




**Business
      Plan For Our Air-Ticketing and Hotel Booking Businesses**




We
      engage
      in the air-ticketing, hotel room booking and travel agency businesses through
      our indirect 51% ownership of the New Generation Group of companies. New
      Generation has ten operating subsidiaries in Southern China through which it
      operates these businesses. We believe that there are significant opportunities
      in the travel and tourism industry in China, which are set forth below, although
      there can be no assurances that we will be able to capitalize on
      them.




**New
      Generation’s Business Travel Services.** We
      seek
      to serve China’s emerging class of frequent independent travelers, or FITs, who
      engage in business and leisure travel on their own instead of traveling in
      groups. Through our professional team of staff, our nationwide 24-hour toll-free
      call center, our user-friendly Chinese and English language website and our
      extensive reseller network, we provide our customers with consolidated travel
      information and the ability to book airline tickets at discounted rates
      nationwide within China. We also provide our customers with the ability to
      book
      hotel rooms at discounted rates in over 220 cities in China. The majority of
      our
      hotel suppliers are three-, four- or five-star hotels, as rated by the China
      National Tourism Bureau, catering to higher-end travelers. We also offer other
      travel related services, such as vacation packages and corporate travel
      services, at competitive prices.




According
      to the Yearbook of China Tourism Statistics 2005, China’s domestic tourism
      spending totaled approximately RMB464 billion in 2004 and RMB528 billion in
      2005
      with an increase of 12.2%. In the same period, CTRIP, one of the best known
      operators serving FITs in China, derived RMB173 million in 2003 and 334 million
      in 2004 from this market, increased 64.5% and 93.1% from the previous year,
      respectively. This fact to a certain extent reflects that FITs will be a
      fast-growing, yet relatively underserved segment in the travel
      business.




New
      Generation believes that it is a major provider of air ticketing services in
      China. Historically, the air ticketing business in China has been limited to
      a
      fragmented presence due to the licensing requirements and significant capital
      requirements. CTRIP and E-Long are among the best known participants in this
      business and their brand name recognition and volume of transactions is notable.
      CTRIP derived $7,600,000 from air ticketing in 2004. In comparison, New
      Generation reported $4,290,000 in 2004, and $4,770,000 as of the twelve months
      ended December 31, 2005.




Since
      its
      inception in 1998, New Generation has built a substantial air-ticketing
      distribution network in China. It offers customers a wide selection of flights
      in all major cities in China, usually at significant discounts to published
      rates. Our airline ticketing volume has increased 28.9% from over 995,000
      tickets for the year ended December 31, 2004 to approximately 1,283,000 tickets
      for the year ended the December 31, 2005. This approximates $115,000,000 in
      value of transactions for the year ended Decemebr 31, 2004 and $151,000,000
      for
      the twelve months ended December 31, 2005.




14
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          of Contents*




We
      issue
      and deliver air tickets using a network of local agents throughout major cities
      in China. New Generation started its hotel booking business in April 2004 and
      revenue generated from this division is insignificant to date. At this stage
      in
      its development, management is concentrating on establishing a nationwide
      network through forging business affiliations and improving its information
      technology infrastructure. Up to December 2005, it had contractual arrangements
      with 360 hotels, and there are also more than 3,000 hotels in over 220 cities
      that can be accessed through subcontracts with other hotel booking agents.




To
      facilitate rapid growth in hotel booking business, New Generation has created
      a
      comprehensive IT platform to facilitate its operation. A call center and website
      approach are believed to be essential to overcome the requirement of having
      many
      geographic locations in order to conduct business. Through its telephone network
      and its website, New Generation’s hotel booking business is not limited to the
      established air ticketing network but rather is able to form a more extensive
      hotel booking network quickly, that will also benefit our air ticketing
      business. At
      present, the hotel booking volume was recorded at 2701 room-nights booked for
      the year ended December 31, 2005, comparing to 473 room-nights booked as of
      December 31, 2004, we believe that this business has significant growth
      potential.




**The
      Travel And Tourism Industry In China.** *The
      facts and statistics used in this registration statement relating to the travel
      industry and economy in China are derived from various government and institute
      research publications. While we have taken reasonable care to ensure that these
      facts and statistics presented are accurately reproduced from such sources,
      we
      have not independently verified them. These facts and statistics may not be
      comparable to similar facts and statistics collected for the industry or economy
      in the United States and other countries.*




In
      terms
      of domestic tourism spending in 2005, the approximately RMB528 billion ($66.1
      billion) travel industry in China is large and growing rapidly. We expect the
      industry to continue to experience rapid growth as China’s economy continues to
      develop. Travel and tourism in China is characterized by a highly fragmented
      and
      inefficient travel service sector due to many factors, including the lack of
      consolidated hotel ownership, the lack of a centralized hotel reservation
      system, the localized nature of travel agencies and a dual regulatory regime.
      We
      believe that the fragmented nature of the travel market in China will create
      increasing demand for central reservation platforms such as our own capable
      of
      consolidating a wide range of travel information and negotiating favorable
      terms
      with travel suppliers on the basis of scale from our aggregated
      demand.




According
      to the China National Tourism Administration, as of the end of 2004, China
      had
      more than 14,900 travel agencies, with the top 100 domestic travel agencies
      having an aggregate market share of less than 2%. As the requirements of
      travelers become more complex, we believe that these local agencies, which
      had
      been accustomed to providing services using state-owned travel suppliers, have
      been increasingly unable to respond to the changing needs of business and
      leisure travelers in China. In addition, the development of China’s tourism
      infrastructure has resulted in an increasing number of travelers who choose
      to
      engage in leisure travel without the constraints inherent in packaged group
      tours. These frequent independent travelers, or FITs, represent a key segment
      of
      the growing travel industry in China that we seek to serve.




The
      increasing accessibility of the Internet in China creates a foundation for
      new
      markets and opportunities, providing the ability to bring together a large
      number of segmented suppliers and customers in a highly fragmented travel
      industry. We believe that we are well positioned to benefit from these trends
      in
      China’s travel industry.




According
      to market data from CEIC Data Company Ltd., the frequent independent traveler,
      or FIT, segment of travelers grew at an approximately 8% compound annual growth
      rate from 2004 to 2005 and is the largest growing group of travelers in China.
      FITs are defined as travelers who do not travel with tour groups and who require
      flexibility in the selection of accommodations and transportation. FITs are
      typically more sophisticated urban dwellers who value customized experiences.
      We
      expect that as Chinese travelers become wealthier and more experienced with
      leisure travel, the appeal of traditional tours will become less important
      than
      the ability to arrange one’s own schedule.




Traditionally,
      most companies in China have relied on either local travel agencies or their
      internal resources for business travel planning. Companies in China have begun
      to recognize the importance of focusing on their core competency by outsourcing
      non-critical functions. A growing number of medium and large-sized companies
      are
      beginning to centralize their corporate travel management by outsourcing to
      professional travel service providers.




15
 *Table
          of Contents*




**Market
      Inefficiencies and Fragmentation.** The
      travel market in China is highly fragmented with an underdeveloped booking,
      reservation and fulfillment infrastructure, and with no dominant nationwide
      travel agencies. As a result of market reforms, a gradual shift from state-owned
      to privately-owned travel agencies and changing travel patterns, the travel
      market in China is undergoing a period of change. While competition among the
      older state-owned travel agencies and the privately owned travel agencies has
      significantly promoted the development of China’s travel service, the industry
      remains inefficient and is likely to remain so in the foreseeable
      future.




*Air-ticketing
      system.* Currently, TravelSky Technology Limited, or TravelSky, operates the only
      nationwide system for air-ticket reservations in China. Consumers in China
      do
      not have access to direct bookings on TravelSky unless it is done through
      individual travel agencies. Moreover, the delivery of air tickets remains
      inefficient. The majority of consumers in China receive their air tickets
      through physical delivery and payment to the travel agency is made upon
      delivery. The process of physical delivery means that consumers in China do
      not
      have a reliable or timely delivery process that can respond to last minute
      travel needs. For example, business travelers who change their flight
      destinations at the last minute often have to wait for the delivery of a
      physical ticket before they can initiate their travel. While some airlines
      in
      China have recently begun to offer electronic ticketing, there is currently
      no
      universal electronic ticketing system available. The International Air Transport
      Association recently announced that all members should adopt electronic tickets
      in 2007. As the employment of e-ticketing requires more capital investment
      on IT
      and relevant facilities, as well as more investment on staff training, smaller
      players will most likely be shaken out of the market during the process. On
      the
      other hand, this trend implies that business opportunities for larger agencies
      with relatively mature business models and operating at a large scale, such
      as
      New Generation, would survive.




*Hotel
      reservation system.* According to the Year Book of China Tourism Statistics 2005, as of December
      31,
      2004, China
      had
      10,888 star hotels, which includes 3,914 three-star hotels, 971 four-star hotels
      and 242 five-star hotels. .
      Hotels
      in China are generally run independently and are not part of large chains.
      The
      largest hotel chains in China are small relative to the larger hotel chains
      in
      the United States. There is no industry wide electronic reservation
      infrastructure similar to that available in the United States and parts of
      Europe.




There
      is
      no national distribution system for hotel rooms in China. Travel agents
      generally have to negotiate room availability and rates with the hotel each
      time
      they make a booking. Hotel suppliers in China are not able to benefit from
      an
      efficient distribution system that is managed by a centralized process. Until
      recently, travelers in China did not have access to comprehensive hotel
      information or a central location for bookings. Instead, travelers in China
      are
      still mainly interacting through walk-in room reservations, direct call-in
      reservations, business conventions and traditional travel agency bookings.
      There
      are some business operators, such as CTRIP and E-Long, developing centralized
      hotel booking platforms in China by utilizing scalable information technology
      platforms. At present, 70% transactions of CTRIP have been done through
      telephone and the rest 30% mainly fulfilled online.




In
      the
      on-line travel business, packaging air tickets with hotel room is increasingly
      popular for it reduces customers’ sensitivity on prices and the profit margin
      appears higher than traditional method providing ticketing and hotel booking
      separately. For Chinese companies conducting this business model, like CTRIP
      and
      eLong, hotel booking is the dominant source for revenues. In 2005, CTRIP derived
      $44,800,000 from hotel booking business, 65% of its total revenues. Air
      ticketing contributed 11% ($6,330,000) in the same year. *(Source:
      CTRIP Annual Report 2005* ).
      While
      in other countries where the “ticket + hotel room” model is more mature, air
      ticketing usually contributes to a larger portion of total revenues. Unlike
      either case, New Generation has been largely relying on air ticketing since
      its
      inception. As of nine months ended December 31, 2005, the revenue from air
      ticketing was about $7.769,000, representing 93% of its total
      revenues.




*Traditional
      travel agencies.* Travel
      agencies in China tend to be unaffiliated, small office operations. Due to
      local
      licensing requirements, even the four travel agencies that operate on a
      nationwide basis are mostly structured such that each office operates
      independently from the others. Consumers in China have generally not been able
      to enjoy the benefits that can be offered by a nationwide, integrated travel
      agency.




*Inefficiencies
      created by separate regulatory regimes.* Under
      current regulations, two distinct regulatory bodies regulate the travel industry
      in China. In order to sell air tickets, travel agencies must obtain a permit
      from the Civil Aviation Administration of China. If a travel agency intends
      to
      conduct the air-ticketing business in more than one city, an air-ticketing
      permit is required for every city, as there is currently no national
      air-ticketing license. In addition, in order to conduct other travel-related
      business such as hotel reservations, the travel agency must obtain a separate
      license from the China National Tourism Administration. Consumers who wish
      to
      purchase both air tickets and make hotel reservations through a single agency
      must use a travel agency that performs both functions. Many traditional travel
      agencies are unable to perform both functions given the limited number of
      licenses that can be issued and the costs associated with obtaining each
      license. As a result, consumers are often forced to arrange travel plans with
      multiple travel agencies.




16
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          of Contents*




**Regulation.** The
      travel industry in China is subject to substantial regulation by the Chinese
      government. This section sets forth a summary of certain significant Chinese
      regulations that affect our business and our industry. Current PRC laws and
      regulations impose substantial restrictions on foreign ownership in
      air-ticketing, advertising and Internet businesses in China.




*Foreign
      Ownership*




*Air-ticketing.* The
      principal regulation governing foreign ownership in air-ticketing business
      in
      China is The Foreign Investment Industrial Guidance Catalogue (2004 revision).
      Under this regulation, a foreign investor is allowed to own 100% of any
      wholesale and commission-based agency in China after December 11, 2004. As
      inferred from the law, air-ticketing does not fall into the statutory prohibited
      industries like the wholesale of newspaper and magazine, drugs, agricultural
      chemicals and membrane, chemical fertilizer, refined oil and crude oil, so
      it is
      our understanding that beginning on December 11, 2004 foreign investors were
      permitted to own 100% of an air-ticket agency.




*Travel
      agencies.* The
      principal regulation governing foreign ownership in travel agencies in China
      is
      the Establishment of Foreign Controlled and Wholly Foreign Owned Travel Agencies
      Tentative Provisions (2003). Recently, foreign investors that (i) primarily
      engage in travel agency business; (ii) have annual revenue from travel services
      exceeding $40,000,000 (in the case of foreign-controlled travel agencies) or
      $500,000,000 (in the case of wholly foreign owned travel agencies; and (iii)
      are
      members of travel industrial associations in their home countries or regions
      have been permitted to establish or own travel agencies in Beijing, Shanghai,
      Guangzhou, Shenzhen, Xian or other approved national tourism areas, upon the
      approval of the PRC government, subject to substantial restrictions on the
      scope
      of their business. For example, foreign invested travel agencies are prohibited
      from engaging in the business of overseas travel by PRC citizens or travel
      by
      persons from the other regions of the PRC to Hong Kong, Macau or Taiwan. In
      addition, other than its head office, foreign-invested travel agencies are
      not
      allowed to open branch offices.




Our
      51%
      ownership of the New Generation Group of companies involves the foreign control
      of a travel agency doing business in the Peoples’ Republic of China. The control
      of a Chinese travel agency is permissible under the Establishment of Foreign
      Controlled and Wholly Foreign Owned Travel Agencies Tentative Provisions (2003), subject
      to compliance with the restrictions on the scope of business for passenger
      air
      ticket sales agents, commercial agency, tourist information services and
      marketing research planning. All such businesses are not categorized as
“restricted” or “prohibited” by The Foreign Investment Industrial Guidance
      Catalogue (2004 revision). We believe the competitive advantage of the travel
      agency business of New Generation is not limited by the scope of business
      restrictions referred to in the preceding sentence, and, therefore, our
      operations are not impacted by laws regulating travel agencies.




*Advertising
      Agencies.* The
      principal regulations governing foreign ownership in advertising agencies in
      China include the Foreign Investment Industrial Guidance Catalogue (2002);
      and
      the Administrative Regulations Concerning Foreign Invested Advertising
      Enterprises (2004). Under these regulations, foreign investors can currently
      own
      up to 70% of the equity interest in an advertising agency in China. Beginning
      on
      December 10, 2005, foreign investors will be permitted to own 100% of an
      advertising agency.




*Internet
      content provision.* The
      principal regulations governing foreign ownership in the Internet content
      provision business in China include the Administrative Rules for Foreign
      Investments in Telecommunications Enterprises (2001); and the Foreign Investment
      Industrial Guidance Catalogue (2002). Under these regulations, a foreign entity
      is prohibited from owning more than 50% of a Chinese entity that provides
      value-added telecommunications services, including Internet content
      provision.




*General
      Regulation of Businesses*




*Air-ticketing.* The
      air-ticketing business is subject to the supervision of the Civil Aviation
      Administration of China, or CAAC, and its regional branches. The principal
      regulation governing air-ticketing business in China is the Administration
      on
      Civil Aviation Transporting Marketing Agency Business Regulations (1993). Under
      this regulation, an air-ticketing agency must obtain a permit from CAAC or
      its
      regional branch in every city in which the agency proposes to conduct business.
      The two types of air-ticketing permits in China are permits for selling tickets
      for international flights and flights to Hong Kong, Macau and Taiwan and permits
      for selling tickets for domestic flights in China except flights to Hong Kong,
      Macau and Taiwan.




*Travel
      agencies.* The
      travel agency industry is subject to the supervision of the China National
      Tourism Administration and local tourism administrations. The principal
      regulations governing travel agencies in China include the Administration of
      Travel Agencies Regulations (1996), as amended, and the Rules of Implementation
      of the Administration of Travel Agencies Regulations (2001). Under these
      regulations, a travel agency must obtain a license from the China National
      Tourism Administration in order to conduct cross-border travel business, and
      a
      license from the provincial-level tourism administration in order to conduct
      a
      domestic travel agency business.




17
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          of Contents*




*Advertising.* **** The
      State
      Administration of Industry and Commerce is responsible for regulating
      advertising activities in China. The principal regulations governing
      advertising, including online advertising in China include the Advertising
      Law
      (1994); and the Administration of Advertising Regulations (1987). Under these
      regulations, any entity conducting advertising activities must obtain an
      advertising permit from the local Administration of Industry and
      Commerce.




*Internet
      content provision service and online commerce.* The
      provision of travel-related content on the websites is subject to Chinese laws
      and regulations relating to the ** telecommunications
      industry and the Internet, and regulated by various government authorities,
      including the Ministry of Information Industry and the State Administration
      of
      Industry and Commerce. The principal regulations governing the
      telecommunications industry and the Internet include the Telecommunications
      Regulations (2000); the Administrative Measures for Telecommunications Business
      Operating Licenses (2001); and the Internet Information Services Administrative
      Measures (2000). Under these regulations, Internet content provision services
      are classified as value-added telecommunications businesses, and a commercial
      operator of such services must obtain an Internet content provision license
      from
      the appropriate telecommunications authority in order to carry out any
      commercial Internet content provision operations in China.




With
      respect to online commerce, there are no specific Chinese laws at the national
      level governing or defining online commerce activities, and no government
      authority has been designated to regulate these activities. There are existing
      regulations governing retail business that require companies to obtain licenses
      in order to engage in the business. However, it is unclear whether these
      existing regulations will be applied to online commerce.




*Regulation
      of Foreign Currency Exchange and Dividend Distribution*




*Foreign
      currency exchange.* The
      principal regulation governing foreign currency exchange in China is the Foreign
      Currency Administration Rules (1996), as amended. Under these rules, the
      Renminbi is freely convertible for trade and service-related foreign exchange
      transactions, but not for direct investment, loans or investments in securities
      outside China without the prior approval of the State Administration of Foreign
      Exchange of the People’s Republic of China, or SAFE.




Pursuant
      to the Foreign Currency Administration Rules, foreign-invested enterprises
      in
      China may purchase foreign exchange without the approval of SAFE for trade
      and
      service-related foreign exchange transactions by providing commercial documents
      evidencing these transactions. They may also retain foreign exchange, subject
      to
      a cap approved by SAFE, to satisfy foreign exchange liabilities or to pay
      dividends. However, the relevant Chinese government authorities may limit or
      eliminate the ability of foreign-invested enterprises to purchase and retain
      foreign currencies in the future. In addition, foreign exchange transactions
      for
      direct investment, loan and investment in securities outside China are still
      subject to limitations and require approvals from SAFE.




*Dividend
      distribution.* The
      principal regulations governing distribution of dividends by foreign-invested
      companies include (i) the Sino-foreign Equity Joint Venture Law (1979), as
      amended; (ii) the Regulations of Implementation of the Sino-foreign Equity
      Joint
      Venture Law (1983), as amended; (iii) The Foreign Investment Enterprise Law
      (1986), as amended; and (iv) The Regulations of Implementation of the Foreign
      Investment Enterprise Law (1990), as amended. Under these regulations,
      foreign-invested enterprises in China may pay dividends only out of their
      accumulated profits, if any, determined in accordance with Chinese accounting
      standards and regulations. In addition, wholly foreign owned enterprises in
      China are required to set aside at least 10% of their respective accumulated
      profits each year, if any, to fund certain reserve funds unless such reserve
      funds have reached 50% of their respective registered capital. These reserves
      are not distributable as cash dividends.




In
      addition, our wholly-owned subsidiaries are required to allocate portions of
      their respective after-tax profits to their enterprise expansion funds and
      staff
      welfare and bonus funds at the discretion of their boards of directors. Our
      affiliated Chinese entities are required to allocate at least 5% of their
      respective after-tax profits to their respective statutory welfare funds.
      Allocations to these statutory reserves and funds can only be used for specific
      purposes and are not transferable to us in the forms of loans, advances, or
      cash
      dividends.




18
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          of Contents*




**Competitive
      Strengths.** We
      have
      capitalized on the following competitive strengths in building our travel
      service business:




*Established
      large scale ticketing business.* New
      Generation has achieved a large scale of transactions in the flight ticketing
      services. The number of companies providing air ticketing services is much
      less
      than those providing services for room reservations in China. And few players
      engage in both businesses. On the supply side, there are thousands of suppliers
      for room reservation services, while there is a very limited number of airlines
      in China. As a result, hotel operators are confronting more fierce competition
      than airlines are. A small company can easily establish contacts with hotels
      and
      be their agents since the capital required is small and the relationship with
      suppliers is easy to manage. In contrast, to be an air ticketing agent,
      companies have to overcome high capital barriers first and then work hard to
      maintain good relationships with the airlines. Both are normally very scarce
      and
      critical resources in this business. Since New Generation has achieved large
      scale in its operations, it has formed mutually dependant relationships with
      its
      upstream suppliers and has thereby achieved a strong bargaining position with
      its suppliers. And the capital requirement is not a barrier to entry or growth
      for New Generation since its systems are already in place. New Generation has
      achieved the scale necessary to deal with its upstream suppliers, which include
      the airlines, as well as its downstream customers. Potential entrants into
      the
      industry face these capital and scale barriers to entry.




*Extensive
      resources in the airport.* New
      Generation is the first travel agent in China who provides customers with
      seamless pre-boarding services in the terminal. In 1998, it established “Red
      Carpet Service Zone” in the old Guangzhou Baiyun International Airport, the
      third largest airport in China, to provide customers with extensive services
      ranging from air-ticketing, check-in services to airport pick-up. After that,
      Huahao Group, New Generation’s former parent company, and one of our
      shareholders, entered into a 10-year joint venture agreement with a subsidiary
      of Baiyun Airport Company Ltd. to provide easy boarding services. The joint
      venture was reported as the first example in China of cooperation between a
      private company and the highly regulated airport industry. It is indicative
      of
      our extensive resources and those of our affiliates employed at the
      airport.




*Brand
      leadership.* As one
      of the early movers in the industry to adopt modern communications and Internet
      technologies, we believe that we have established one of the best-known brands
      for travel services in Southern China. We believe our customers associate the
      New Generation brand with value, convenience and confidence.




*Nationwide
      reach for nationwide travel destinations.* Our
      customers can book domestic and international air tickets and make reservations
      for accommodations at over 3,000 hotels in more than 220 cities across China,
      vacation packages and rental cars by calling our centralized 24-hour call center
      from anywhere in China or by logging onto our website. New Generation is ranked
      one of the top air-ticketing companies in China, in terms of volume of tickets
      sold and value of transactions. We issue and deliver air tickets using a network
      of local agents in major cities in China, covering all of the 975 domestic
      routes.




*Total
      customer focus.* We
      provide our customers with comprehensive travel information, allowing them
      to
      conveniently compare prices, browse availability and amenity options, and select
      the price and supplier that best meet their individual travel needs. Our
      user-friendly websites, well trained call center representatives and continuous
      service development efforts reflect our focus on providing superior customer
      service.




*Strong
      supplier value.* We offer
      our travel suppliers access to aggregated consumer demand and the ability to
      promote their services to a large and growing base of frequent independent
      travelers seeking higher-end travel services. In addition, our call center
      and
      web-based transaction and service platform, with its easy-to-use supplier
      interface, allows our suppliers to promote their services at low incremental
      cost and with minimal changes to their existing systems.




19
 *Table
          of Contents*




In
      addition, New Generation has also established a strong business affiliation
      with
      the leading Chinese airline groups, including China Southern Airlines and Air
      China. By the end of November 2005, New Generation had set up four direct air
      ticket sales centers under the name of the Guangzhou Branch of Air China, in
      selected strategic locations in Guangzhou. It also entered into a co-operation
      agreement with the Guangzhou branch of China Southern Airlines Company Limited
      to provide commuters with downtown check-in and connections services for flights
      of the China Southern Airline in the new Guangzhou Baiyun International Airport.
      The close business affiliation not only allows New Generation to benefit from
      more favorable sales related promotional and marketing policies, but also,
      enables it to get involved in the air carriers’ operational activities as a
      value-added services provider.




*Streamlined
      business operations through tailored information management
      systems.* We have
      drawn on our in-depth knowledge of the business practices unique to China’s
      travel service industry to develop proprietary processes and technology-based
      systems for use in our business. These processes and systems incorporate
      customer relationship management, order processing, financial reporting and
      performance management and enable us to coordinate effectively the activities
      of
      our staff, agents, suppliers and resellers. This results in streamlined
      operations, a higher degree of operating flexibility and stronger customer
      relationships through enhanced customer service.




*Scalable
      and cost-efficient services.* Our
      services and transaction processing, enabled by our centralized call-center
      and
      web-based distribution technologies, provides superior scalability and
      significant cost advantages over traditional methods of travel service
      distribution. We can expand our range of services and extend our geographical
      reach without making major changes to our existing infrastructure or incurring
      significant capital costs.




*Experienced
      management.* We
      believe that our management team, which includes Mr. William Chi Hung Tsang,
      and
      a seasoned team of senior managers at the operations level with significant
      experience in the areas of travel service operations, marketing, technology
      and
      finance, is well qualified and experienced to handle the challenges of the
      travel service industry in China.




**Competition.** The
      travel service industry in China is extremely large, highly fragmented and
      intensely competitive. We compete with eLong, Inc., Ctrip.com International,
      Ltd, traditional travel agencies such as CTS, CITS and CYTS, and hotel suppliers
      that sell their room inventory directly to consumers. The major markets in
      which
      we currently compete include the relatively affluent coastal areas of China.
      As
      China’s market continues to grow, we may face further competition from other new
      domestic hotel room consolidators or international players such as expedia.com
      or priceline.com that may seek to expand into China. We may also face increasing
      competition from hotels and airlines should they further expand into the direct
      selling market or engage in alliances with other travel service providers
      besides us. We compete on the basis of brand recognition, selection, price,
      ease
      of use, accessibility of information, breadth of services offered, convenience,
      and customer service and satisfaction.




The
      management believes that there is no single source of information and research
      report which is sophisticated enough for us to provide a meaningful estimate
      of
      the number of competitors and our competitive position in the travel service
      industry.




We
      cannot
      assure you that we will compete successfully with any of our current or future
      competitors.




20
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          of Contents*




**Opportunity
      For Growth.** We
      expect
      the travel and tourism industry in China to continue to grow rapidly as China’s
      economy continues to expand. China’s travel service industry is fragmented and
      inefficient. This fragmentation creates a market opportunity for our centralized
      reservation system for air-ticketing and hotel reservations, which offers
      comprehensive information and favorable terms negotiated with travel service
      suppliers across China who are offered economies of scale from our aggregated
      demand.




**Business
      Strategy for Travel Services.** Our
      goal
      is to become the leading provider of travel services in China. We seek to
      achieve revenue and earnings growth by pursuing the following key business
      strategies:




*Strengthen
      brand awareness and marketing.* We seek
      to strengthen consumer awareness of our brand by pursuing an aggressive
      marketing strategy based on online and traditional media advertising. We seek
      to
      encourage consumer conversion and the use of our services through segment-based
      marketing, targeted promotions and focused telemarketing efforts.




We
      also
      seek to promote the awareness of our brand and increase our penetration among
      our target customers by leveraging the customer bases of other leading
      businesses and customer service companies, by (i) increasing advertising using
      publications such as company brochures and magazines; (ii) cooperating with
      commercial banks for them to offer co-branded credit cards; and (iii) entering
      into arrangements with major airlines in China, such as China Southern Airlines,
      under which travel booking inquiries are directed from their service hotlines
      to
      us.




*Expand
      our range of travel services.* We
      intend to capitalize on our leadership in air-ticketing utilizing a centralized
      modern call center and web-based distribution technologies and leverage the
      reach and efficiency of our distribution of services by growing our hotel
      reservations and other travel related services, such as vacation packages,
      car
      rentals and corporate travel services. We seek to expand the selection of our
      destination services, such as restaurant and entertainment bookings, and offer
      our customers greater flexibility in choosing the desired combination of travel
      services.




We
      believe that the extensive network resources based on air-ticketing, IT platform
      and strategic alliances with other product and service providers will be
      converted to our advantage, and that competitors will find difficult to
      imitate.




*Enhance
      customer experience.* We seek
      to enhance our customer’s experience by providing more personalized care, and by
      strengthening and expanding travel supplier relationships to offer our customers
      a wider range of travel services. We seek to deliver consistently high-quality
      customer service through continuous improvements in the information technology
      systems utilized in our call center, and in the content, features and functions
      of our websites.




We
      seek
      to retain our most loyal customers and generate repeat ticketing by offering
      loyalty rewards and additional specialized services, including dedicated VIP
      lounges at airports and a VIP call service with reduced waiting time. Our VIP
      call service, staffed by a dedicated team of specially trained representatives,
      provides VIP customers personalized travel advice and services. A Customer
      Relationship Management (CRM) system was deployed in the first quarter of 2005.
      This CRM system will integrate the call center, and websites together with
      other
      resources to offer comprehensive incentive programs and personalized services
      in
      a proactive approach. Interactive information delivered through the mobile
      telephone network will also be employed.




*Enhance
      efficiency and profitability.* We have
      built our operating infrastructure to take advantage of the inherent cost
      advantages of our centralized call center and web-based distribution
      technologies. We also seek to increase the efficiency of our marketing programs
      by tracking the effectiveness of our expenditures on various marketing
      activities.




21
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          of Contents*




We
      continue to capitalize on improvements in electronic commerce infrastructure,
      such as the introduction of electronic ticketing. By using exclusive online
      promotional offers, we believe we will be able to benefit from the increasing
      adoption of online commerce among consumers by attracting additional customers
      and moving existing customers to our websites, thereby lowering our operating
      costs.




*Enhance
      our technology infrastructure.* We
      design and maintain our systems with a view to enhancing consumer-friendliness
      and providing adaptive products and services for our airline and other travel
      service suppliers. We seek to streamline our transaction processes through
      ongoing technology upgrades to our transaction and services level.




*Selectively
      pursue complementary acquisitions.* We seek
      to supplement the organic growth of our business by pursuing acquisitions which
      would enable us to expand our service offerings, our customer base and our
      distribution network. We seek to capitalize on the opportunities for
      consolidation in China’s fragmented and inefficient travel service industry by
      selectively exploring opportunities to acquire other travel service businesses
      such as air-ticketing agencies, hotel-room consolidators, tour-package agencies
      and corporate travel providers.




*Develop
      travel products and services for corporate clients.* We will
      enhance our travel services by providing corporate travel services that cover
      more international corporations and large national corporations in the region.
      The corporate market is a fast growing market a with high profit margin. With
      our comprehensive resources in ticketing, hotel reservations, business club
      facilities and airport services, we are confident that we can be one of the
      leading services providers in the region. At the moment, we have over 30
      corporate clients including large scale joint ventures such as Guangzhou Honda
      and Panasonic Wan Bao. We successfully entered into a service consignment
      agreement with the Purchasing Office of the Guangzhou City Government. This
      agreement will extend for two years from January 1, 2005 to December 31, 2006.
      Under this agreement, we will provide international business travel packages
      and
      related services to key personnel of the Guangzhou City Government at premium
      package prices.




**Pro-Forma
      Operating Revenues For Our Business Travel Services.** The
      following table sets forth the pro-forma amount of our revenues and profit
      (loss) from operations represented by each travel-related service for the
      periods indicated on a dollar and percentage basis:




**Operating
      Revenue on a Pro-Forma Basis**


**Jan
                to**
              **Dec
                200****5**
            
            **Jan
                to**
              **Dec
                2005**USD
            
            %**Business
                Travel services**Air-ticketing
            
            
            4,753,424
            
            
            92.95
            %Insurance
            
            
            359,915
            
            
            7.04
            %Other
            
            
            653
            
            
            0.01
            %Pro-Forma
                Operating Revenue
            
            
            5,113,992
            
            
            100.00
            %Operating
                Revenue of China World Trade and its non-business travel services
                subsidiaries
            
            
            2,725,232Consolidated
                Pro-forma Operating Revenue of China World Trade
            
            
            7,839,224




22
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          of Contents*




**Profit
      (loss) from Operations on a Pro-Forma Basis**


**Jan
                to**
              **Dec
                200****5**
            
            **Jan
                to**
              **Dec
                2005**USD
            
            %Business
                Travel servicesAir-ticketing
            
            
            297,735
            
            
            65.48
            %Insurance
            
            
            189,013
            
            
            35.52
            %Other
            
            
            (5,481
            )
            
            (1.00
            %)Pro-Forma
                Profit (loss) from Operations
            
            
            481,266
            
            
            100.00
            %Loss
                from Operations of China World Trade and its other non-business travel
                services subsidiaries
            
            
            (5,771,048
            )Consolidated
                Pro-forma Loss from Operations of China World Trade
            
            
            (5,289,782
            )Pro-Forma
                Net Income (loss)Air-ticketing
            
            
            (100,188
            )
            
            (215.98
            %)Insurance
            
            
            151,985
            
            
            327.64
            %Other
            
            
            (5,410
            )
            
            (11.66
            %)Total
            
            
            46,387
            
            
            100.00
            %Net
                Loss of China World Trade and its other non-business travel services
                subsidiaries
            
            
            (28,163
            )Consolidated
                Pro-forma Net Profit of China World Trade
            
            
            18,224Accumulated
                Profit (loss)Air-ticketing
            
            
            470,945Insurance
            
            
            886,052Other
            
            
            (24,851
            )Total
            
            
            1,332,146




***
      All the pro-forma numbers shown above** **are
      in conformity with GAAP financial measures.**


**(1)**  **The
      pro-forma numbers shown above are prepared on a consolidated
      basis.**


**(2)**  **The
      pro-forma net income figure of the air-ticketing segment includes consolidation
      adjustment of minority interest.**




*Air-ticketing.* We
      provide a 24-hour air-ticketing service through our toll-free call center and
      websites. We act as agents for all major airlines in China and international
      airlines that operate flights that originate from selected cities in China.
      We
      make flight reservations through TravelSky, which is the operator of the only
      nationwide system for air-ticket reservations in China, and currently issue
      and
      deliver air tickets using a network of local agents throughout major cities
      in
      China. Under current regulations, travel agents, including us, have no
      discretion to offer discounts on airline tickets. However, we have successfully
      negotiated escalating commissions with many airlines based on the number of
      air
      tickets we sell.




Our
      air-ticketing process begins when a customer initiates an inquiry through our
      toll-free call center or our websites. The customer is informed of the available
      flights based on their schedule and desired air carrier and we then confirm
      a
      booking for a seat on the selected flight through our call center. Booking
      information is sent to one of our local agents in the city where the customer
      wants the ticket to be issued and delivered. We have relationships with a
      network of local ticketing agents throughout major cities in China. We use
      these
      local agents and other third party delivery companies to deliver the tickets
      to
      our customers and collect payments for the tickets. We then collect the airfare
      from the delivery company, pay the agent’s commission and the cost of the
      tickets, and retain the balance ourselves. We currently do not pre-purchase
      air
      tickets for resale.




23
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          of Contents*




We
      believe that air-ticketing sales will continue their rapid pace of growth.
      In
      the year ended December 31, 2005, we sold approximately 1,283,000 air tickets,
      compared to approximately 995,000 air tickets sold in the the year ended
      December 31, 2004. We anticipate that the expected adoption of e-tickets in
      China will allow consumers to better use our call center and websites to book
      air tickets and will benefit our air-ticketing business by allowing us to reach
      a broader customer base without materially increasing our operating
      costs.




*Hotel
      reservations.* We
      currently have room supplier relationships with more than 3,000 hotels in over
      220 cities throughout China. We seek to offer a range of hotel options at a
      variety of prices, with the majority of our hotel suppliers being three-, four-
      or five-star hotels, catering to higher-end customers. For the year ended
      December 31, 2005, we derived only a very minimal of our total revenues from
      our
      hotel bookings.




We
      act
      primarily as an agent in our hotel-related transactions. When a customer makes
      an initial inquiry through either our call center or our websites, we match
      the
      customer’s request with our allotment of rooms and make a reservation for the
      customer with the appropriate hotel supplier. The hotel supplier returns a
      confirmation that is passed along to the customer by phone, fax or email. When
      the customer checks into the hotel on the designated date, the hotel informs
      us
      of the customer’s check in. The customer usually settles his hotel bill directly
      with the hotel, and we are entitled to a fraction of the room rate as a
      commission. Upon the completion of a customer’s stay, we verify with the hotel
      the length of the stay and calculate our commissions, ranging from 10% to 20%
      of
      the hotel room rate, which the hotels pay us on a monthly basis. We pay no
      penalty to the hotel for “no shows” on confirmed bookings, although we are not
      paid any commission in respect of “no show” bookings. We do not currently
      pre-purchase hotel rooms until the customer has paid us, and consequently do
      not
      carry significant inventory risk.




Depending
      on our agreement with the individual hotel supplier, we either receive a
      guaranteed allotment of hotel room-nights per month or operate on an
“as-requested” basis. Our agreements with hotels typically contain some or all
      of the following provisions:




*Room
      pricing* .
      The
      hotel guarantees negotiated room rates that are lower than published rates.
      In
      addition, the customer is also able to enjoy promotional rates if such rates
      are
      in effect.




*Room
      supply* .
      The
      hotel must notify us of any shortages of hotel rooms so that we can make
      alternative accommodations for our customers.




*Customer
      accommodation* .
      The
      hotel must upgrade the customer to a higher level of accommodation if, due
      to
      the fault of the hotel, a customer’s reserved room is not available upon check
      in.




*Confirmation
      of the customer’s stay* .
      The
      hotel must inform us of the length of the customer’s stay. We confirm a
      customer’s length of stay by contacting the hotel to verify the customer’s
      check-in and check-out dates and contact customers to crosscheck the information
      reported by the hotel. We continuously rate our hotel on the basis of the
      accuracy and timeliness of the reported information.




*Extended
      stay* .
      The
      hotel must immediately inform us if the customer extends their stay beyond
      the
      original booking. We then book the extended stay and calculate the additional
      commission.




*Commission
      payments* .
      The
      hotel pays us either a flat, pre-negotiated or an escalating commission based
      on
      the number of hotel room nights we book.




Our
      agreements with our hotel room suppliers are in writing for the most part.
      We
      enter into agreements with companies that own hotels. Due to the fragmented
      nature of the hotel industry in China where hotels are generally owned
      separately, we generally enter into agreements with hotel companies on an
      individual hotel basis.




24
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          of Contents*




*Vacation
      packages.* We offer
      third-party vacation packages that include air transportation, hotel
      accommodation and other travel related services to many popular destinations
      in
      China. A vacation package transaction begins in the same way as the majority
      of
      our other transactions, with the customer initiating an inquiry either through
      our toll-free call center or our websites. The customer selects the desired
      vacation package and places an order with us. After confirming both the hotel
      reservation and transportation arrangements with the appropriate travel
      supplier, we send our customer a confirmation and arrange for ticket delivery,
      if needed, through a local travel agency. The customer pays for the vacation
      upon delivery of the appropriate confirmation or air ticket, and we deduct
      our
      commission. In general, our customers only pay a penalty if they cancel their
      reservations at a late stage.




We
      select
      vacation packages to serve the unique needs of FITs. Many of our vacation
      packages are designed as self-guided tours that permit FITs to travel to desired
      locations without adhering to the rigid schedules that are typical of tour
      group
      packages.




*Corporate
      travel service.* We have
      recently begun to provide companies in China a corporate travel service
      providing travel planning, hotel reservations, air-ticketing and rental car
      bookings. By centralizing their travel management functions, our corporate
      clients can reduce their travel costs and the associated administrative burden.
      We also assist companies in planning, executing and streamlining their travel
      budgets.




**Marketing
      Strategy.** We
      market
      our travel services through a combination of direct marketing, online marketing,
      traditional media advertising and co-marketing with established brands. We
      seek
      to build our New Generation brand identity which consumers will associate with
      choice, convenience and value.




*Direct
      marketing.* We
      conduct direct marketing activities principally at major airports and
      transportation hubs in China. Our promotional efforts at these locations include
      the distribution of complimentary membership cards.




*Online
      marketing.* These
      portals feature hyperlinks to our websites for air-ticket and hotel service
      recommendations to their web visitors. In some cases we operate on a co-branded
      basis, where we provide our services and our brand is featured on these portals.
      In other cases, we operate on a private label basis, where we deliver our
      services using the brand name of the originating website. In both cases, we
      pay
      commissions based on the bookings generated through our co-marketers. We feel
      that our online marketing effort is an important part of our marketing strategy
      and serves as a cost-effective marketing tool. In addition, our online presence
      serves as an additional channel to capture targeted customers through
      association with established Internet brands in China. We believe that the
      Internet will continue to experience growth in China, and our relationships
      with
      top Internet portals in China will position us well to exploit its
      potential.




*Traditional
      marketing.* Our
      traditional media advertising efforts include newspaper and broadcast
      advertising. The focus of our media advertising efforts is to promote awareness
      of the New Generation brand among our potential customers.




*Co-marketing
      relationships.* We seek
      to expand our market reach by entering into co-marketing agreements with
      companies that have a large customer base and strong brand recognition. We
      believe that we are able to reach more customers and capitalize on their brand
      recognition in promoting our services and in enhancing our credibility. We
      have
      developed co-marketing agreements with some of the largest companies in China
      with a view to establishing our brand.




**Distribution
      Of Our Business Travel Services.** We
      are
      currently a major air ticketing provider in China. Our growth was achieved
      through locating our subsidies in the major cities in China. We also package
      hotel room booking services and tour packaging services with air tickets to
      better meet our customers’ needs. Our business goal is to become a leading
      integrator of air ticketing, hotel booking and tour packages. This requires
      utilization of our comprehensive distribution system that is comprised of a
      24
      hour toll-free call center, internet website, and a network of
      resellers.




25
 *Table
          of Contents*




*Call
      center* .
      We
      operate a 24-hour call center staffed by more than 42 customer service
      representatives (CSRs). The call center is accessible nationwide on a toll
      free
      basis for fixed line telephone calls in China and by calling 4008-168-168 in
      China. Our call center typically handles more than 1,000 calls per day.
      Although, it currently contributes little to the total air-ticketing
      reservations and hotel bookings, we are fully confident that with our market
      expansion, 1% of our total transactions will be generated from on-line
      transactions. We believe that our call center constitutes a cost-efficient
      distribution channel because of the available pool of low-cost labor in China.
      We expect our call center will become one of our principal distribution channel
      going forward, due to China’s large and growing mobile and fixed-line phone
      subscribers and consumer preference for the personalized service we are able
      to
      provide through our call center.




*Website* .
      We
      offer our travel services through our user-friendly website *www.4008168168.com* .
      The
      website allows us to expand our customer base and improve customer service
      with
      minimum transaction costs. Customers can browse travel service options, compare
      prices, book and confirm orders through our website. Our website is designed
      to
      provide customers with a quick, efficient and flexible service that facilitates
      comparison among our large number of travel suppliers. To support the
      internationalization of our business, we are undertaking a program to construct
      an English website and synchronize it with the Chinese one. Customers will
      be
      able to easily access both websites by logging onto *www.4008168168.com* .




*Reseller
      network* .
      We have
      developed an extensive nationwide network of over 110 non-exclusive resellers,
      consisting of smaller travel and air-ticketing agencies that utilize our call
      center and websites to distribute travel services. We pay our resellers a
      portion of our commission, subject to an escalating scale, based on the number
      of hotel reservations and air-ticket bookings they generate for us. Our
      air-ticketing network generates revenues from resellers’ monthly administration
      fees, ticketing system rentals and Physical Identity Devices maintenance fees.
      The volume of tickets sold and value of transactions completed are incorporated
      into our total volume and total transaction values for New
      Generation.




**Technology.** We
      believe that we have a strong technology team in the travel service industry
      in
      China. Our goal is to develop a high-performance, reliable, scalable and secure
      system in-house to support our business demands for new features and
      functionalities. We have built a sophisticated, proprietary back office system
      encompassing order processing, customer relationship management, inventory
      control, business intelligence and staff performance management functions that
      coordinates the activities of our internal departments, clients, agents and
      affiliates within a single cohesive platform. We have also invested in an
      advanced, in-bound call center for phone based bookings and a scalable network
      infrastructure system utilizing hardware and software from top-tier vendors.
      Our
      system connects us with our suppliers, clients and agents.




Our
      infrastructure security system is designed to ensure that our users can only
      access and use our system according to their assigned authorization levels.
      Our
      system also includes VPN and encryption technologies to allow for secure
      Intranet access, as well as an intrusion detection system, which is designed
      to
      detect security breaches. Our infrastructure security system, however, may
      not
      be adequate at all times and we may experience occasional security
      breaches.




**Employees.** We
      have
      493 employees in the New Generation Group of companies that are in the following
      job categories: Management and Administration (170), Customer Service (196),
      Sales and Marketing (66), Supplier Management (39), and Technical Services
      (22).




We
      participate in government-mandated multi-employer defined contribution plans
      under which certain pensions, medical and other welfare benefits are provided
      to
      employees. We make monthly payments to these plans based on the employee’s
      compensation.




We
      have
      not entered into any collective bargaining agreements. We consider our relations
      with our employees to be good.




26
 *Table
          of Contents*




**Facilities.** Our
      headquarters in Guangzhou Rihang Hotel are located in an adjoining property
      of
      approximately 1,740 square meters. Our call center is located in a leased space
      of approximately 600 square meters. We lease the premises for our call center
      under a two-year term lease, expiring in 2006. We also maintain branch and
      sales
      offices in major cities in Guangdong Province including Foshan, Shunde, Dongguan
      Zhongshan and Gaoming. We believe that adequate facilities are available to
      accommodate our future expansion plans.




**Legal
      Proceedings.** We
      are
      currently not involved in any material litigation, arbitration or administrative
      proceedings in the New Generation Group of companies that could have a material
      adverse effect on our financial condition or results of operations. From time
      to
      time, we may be involved in disputes with individual employees. So far as we
      are
      aware, no material litigation, arbitration or administrative proceedings are
      pending.




**Business
      Plan For Our Life And Accident Insurance Agency Business**




We
      are
      engaged in the accident and life insurance agency business through our indirect
      ownership interest in Huahao Insurance Agency Ltd., a limited liability company
      organized and existing under the laws of the PRC (“Huahao Insurance”). Huahao
      Insurance was formed in 2002 and is engaged in the life and accident insurance
      agency business in the Guangzhou Province of China.




Huahao
      Insurance places insurance for and services personal accounts throughout the
      Guangdong Province of China. Huahao Insurance acts as an agent in soliciting
      and
      negotiating contracts of insurance through insurance companies which are located
      across China, and also acts as a broker in procuring contracts of insurance
      on
      behalf of insured’s. Huahao Insurance specializes in a popular market niche
      known as life and accident insurance.




**The
      Insurance Industry.** Insurance
      brokerage companies principally serve businesses, public institutions and
      individual clients, which we refer to as “insured’s,” by placing general and
      specialty insurance coverage on their behalf with insurance carriers, which
      we
      refer to as “insurers,” and providing risk management consulting services.
      Through their knowledge of the insurance market and preferred relationships
      with
      insurers, insurance brokers are able to assist their clients by negotiating
      competitive rates and policy terms. Insurance brokers also serve as a
      distribution channel for insurers and perform much of the administrative and
      customer service functions insurers would have to otherwise perform were they
      to
      sell insurance coverage directly. Insurance brokers are typically compensated
      by
      commissions paid by insurers on the premium volume placed. These services,
      whether to individuals or institutions, are generally referred to as retail
      brokering.




**Our
      Insurance Business.** A
      substantial portion of the commission and fee business of Huahao Insurance
      is
      derived from placing insurance for individuals. It services its clients through
      its network of four offices in the Guangdong Province. No material part of
      Huahao Insurance’s business is dependent upon a single customer or on a few
      customers, the loss of any one or more of which would have a materially adverse
      effect on Huahao Insurance. We placed insurance for a total of 21,942 policies
      in 2004 and 12,650 policies in 2005 due to the newly reformed lower entrance
      requirements to the industry, which lead to strong competition from a lot of
      new
      insurance agencies.




**Competitive
      Strengths.**




*Distribution
      network.* Our
      comprehensive distribution network enables us to have easy access to individual
      consumers. Moreover, the size and scale of our air ticketing operations in
      the
      Guangdong Province enable us to distribute life and accidental insurance in
      an
      efficient manner to all of our clients.




*Agency
      Agreements.* Our
      agency agreements with leading insurance companies enable us to deliver
      efficient service after policy sales are made. We entered into agency agreements
      with leading insurance companies, including the People’s Insurance Company of
      China, PingAn Insurance Company of China and the China Pacific Insurance
      Company, in January 2002. Since 2003, we have been granted “green channel”
privileges by the above mentioned companies as a result of success in turnover,
      credibility, service level and industrial reputation. The lead time required
      for
      underwriting and settling claims has been shortened to a maximum of 7 working
      days by virtue of our “green channel” status, instead of the regular 15 working
      days for these matters. We believe that this arrangement will differentiate
      us
      from our competitors and will provide us with better opportunities to generate
      incremental revenues.




27
 *Table
          of Contents*




*Experienced
      and motivated management team.* Our
      top
      executive officers have over 35 years of combined experience in the insurance
      brokerage and financial services industries and are supported by a group of
      highly motivated professionals throughout our operations. The Chief Executive
      Officer of the New Generation Group, Zeliang Chen, has been with us since 2002.
      During his 10 years in the industry, he has gained substantial experience in
      insurance and financial services, the development of cross selling strategies,
      and operational integration. Due to his track record in the industry, he was
      appointed as the Representative Committee Member of China Insurance Brokerage
      Association in 2003, for a three-year term.




*Cross-selling
      potential with the air ticketing services.* Our
      strength in the air-ticketing business, which results from a large number of
      individual consumers, should benefit our insurance brokerage business. Given
      the
      similarities in selling procedures, we believe there is a great potential for
      joint marketing opportunities. In fact, life and accidental insurance polices
      can be incorporated with air-ticketing and hotel booking services into a package
      and sold as a value-added product to our customers.




**Competition.** The
      insurance brokerage and service business is highly competitive and there are
      many insurance brokerage and service organizations as well as individuals
      throughout the world who actively compete with Huahao Insurance in every area
      of
      its business. We are aware that there are firms in a particular locality which
      are as large as or larger than particular local office of our company which
      is
      located there. We believe that the primary factors determining our competitive
      position with other organizations in our industry are the overall cost and
      the
      quality of services rendered.




Our
      management believes that there is no single source of information and research
      report which is sophisticated enough for us to provide a meaningful estimate
      of
      the number of competitors and our competitive position in the insurance
      brokerage and service industry.




Huahao
      Insurance is also in competition with certain insurance companies which write
      insurance directly for their customers. Certain government benefits relating
      to
      life, health, disability, and accident are also alternatives to private
      insurance and hence indirectly compete with our business. To date, such direct
      writing and government benefits have had, in the opinion of the management
      of
      Huahao Insurance, relatively little effect on its business and operations,
      but
      we can make no prediction as to their effect in the future.




**Business
      Strategy.** Our
      objective is to continue our revenue growth while sustaining our profitability,
      and, to achieve this, we will focus on capitalizing on our competitive strengths
      and implementing the business strategy outlined below:




*Increase
      Operating Efficiencies.* We
      expect
      to realize continued improvement in our profit margin by consolidating the
      back-office operations of our brokerage business, completing strategic
      acquisitions and increasing the productivity of our sales professionals. Our
      management is incentivized to improve our profit margins by a variety of equity
      incentives and performance bonuses.




*Pursue
      fold-in and strategic acquisitions.* We
      believe in growth through acquisitions. We intend to make selective acquisitions
      of businesses currently operating in our geographic footprint and consolidating
      the operations into our existing infrastructure. Our acquisition criteria
      include strong financial performance, talented management, specialized area
      of
      expertise, critical geographical presence and excellent client and insurance
      carrier relationships.




*Enhance
      competitive advantage.* Since
      air-ticketing and hotel booking operations are both time consuming and require
      a
      long-term investment horizon, the majority of the market players are
      concentrating in either the air-ticketing business or hotel booking services.
      Few players compete in both markets. For this reason, we believe that with
      the
      combination of our strengths in the air ticketing and hotel booking business,
      we
      are able to enhance our competitive advantage by providing packaged services
      to
      meet various customer needs. Better integration in business travel related
      products and services can build up business resource barriers to entry, which
      are hard to overcome.




28
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          of Contents*




**Commissions
      And Fees.** The
      two
      major sources of operating revenues are commissions from brokerage and risk
      management operations and service fees from risk management operations.
      Information with respect to these two major sources as well as investment income
      and other revenue, including non-recurring gains, are as follows:


**Pro-Forma
                Data**
            
            **12/31/2005**
              **USD**
            
            **12/31/2004**
              **USD**
            
            **12/31/2003**
              **USD**Commission
                income
            
            
            359,459
            
            
            423,243
            
            
            929,916Fee
                income
            
            
            -
            
            
            -Investment
                income & others
            
            
            640
            
            
            166
            
            
            99Non-recurring
                income
            
            
            -
            
            
            -
            
            
            -




The
      primary source of Huahao’s compensation for its brokerage services is
      commissions paid by insurance companies which are usually based on a percentage
      of the premium paid by the insured. Commission rates are dependent on a number
      of factors including the type of insurance, the particular insurance company
      and
      the capacity in which our company acts. In some cases we are compensated for
      brokerage or advisory services directly by a fee from a client, particularly
      when insurers do not pay commissions. We also receive contingent commissions
      which are generally based on the profit the insurance company makes on the
      overall volume of business placed by the company in a given period of time.
      Occasionally, we share commissions with other brokers who have participated
      with
      us in placing insurance or servicing insureds. We also receive service fees
      from
      providing risk management operations.




**Sales
      Strategy.** Our
      sales
      strategy is to be a single distribution point to the individual consumer market,
      serving their life and accident insurance and other risk management needs.
      Consequently, our sales strategy emphasizes:




·
            Using
                consultative needs assessment to identify our clients’ insurance
                priorities;




·
            Promoting
                teamwork between sales professional and product specialists on a
                local and
                regional basis; and




·
            Maintaining
                an on-going consultative and trusted advisor relationship with out
                clients
                to increase client retention.




We
      have
      30 sales professionals, who we evaluate by measuring the revenues they generate
      from new business and cross selling and the revenues they are able to retain
      from existing clients.




We
      originate sales opportunities through a number of channels. We focus primarily
      on selling products and services to new and existing clients on a direct basis.
      In addition, we sell through approximately 50 professional associations and
      affinity groups. Professional associations such as those in the entertainment
      and construction industries, generates sales opportunities by virtue of the
      recognition we develop in those industries. Finally, a fast-growing component
      of
      our sales strategy is to distribute supplementary voluntary insurance products
      to employees of our business clients through worksite marketing arrangements.
      We
      believe that this sales channel can ultimately be used to distribute
      non-insurance-related financial products and services as well.




We
      utilize sales force automation software to manage and track the progression
      and
      status of sales prospects. Through regular updates to the system by our sales
      professionals, we are able to monitor sales opportunities as they evolve from
      the initial prospect phase through ultimate acceptance or refusal by the client.
      Detailed information on each sales prospect, including client information,
      size
      of revenue opportunity and type of product being sold, is recorded. As a result,
      sales force automation is able to serve as both a contact management application
      for our sales professionals and a business management tool for our regional
      and
      corporate sales management executives.




29
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          of Contents*




**Business
      Plan For Our Business Value-Added Services**




We
      provide business value-added services to a variety of customers. These services
      concentrate on business consultancy services, interactive marketing and
      incentive programs management for merchant chains and large corporations with
      significant user bases.




**Business
      Consultancy Services.** Our
      consultancy services are focused two areas. First, we provide consultancy
      services in the financial advisory sector including mergers and acquisitions
      advisory services, corporate restructuring advisory services and corporate
      finance advisory services. A specialty niche has been to consult with and advise
      local PRC companies in seeking foreign capital for their expansion programs.




Second,
      we assist Chinese companies in developing the international trade dimension
      of
      their own businesses and assist foreign companies to establish their businesses
      in China. We help Chinese companies in business development, marketing, sourcing
      and public relationship management in the international business environment.




These
      services are fee based, and our payment is structured either on a flat fee
      basis
      or on a success fee basis. Our consultancy services operation started in the
      last quarter of 2004 and our related revenues have been generated since early
      2005.




**Incentive
      Programs - WTC Link Information Service.** In
      April
      2003, Guangzhou World Trade Center Club Limited (“Guangzhou WTC Limited”), a 75%
      indirectly owned subsidiary of us, entered into an agreement with the
      Agricultural Bank of China providing for the introduction of a co-branded credit
      card. Pursuant to the agreement, Guangzhou WTC Limited is entitled to 15% of
      processing fees obtained in connection with the issuance of the credit card,
      with such amount increasing to 20% once the number of cards issued exceeds
      10,000. The agreement is for a term of four years, subject to automatic
      extension for an additional four year term, unless terminated on two months’
prior notice.




In
      order
      to enhance the value and attraction of the co-brand credit card, Guangzhou World
      Trade Center Club Limited, formed in 2004 and a subsidiary of us (“WTC
      Limited”), implemented efforts to recruit merchants that will provide discounts
      of goods and services to the members of the co-brand credit card, and, as such,
      has become an aggregator for discount merchants. This program is still in
      development and has been tested out with a limited number of consumers and
      business associates. It has not been fully rolled out to consumers. There is
      a a
      substantial risk that the Company will terminate this program due to an
      unforeseen adverse business environment.




Being
      an
      aggregator for discount merchants, in connection with the co-branded credit
      card, WTC Limited derives and plans to derive its revenue from (1) managing
      our
      co-branded credit card program; (2) advising and executing marketing strategies
      through the leverage of the advertising space available on the air-ticket
      jackets of New Generation; (3) providing interactive marketing through a short
      message service enabling merchant discount programs to be made available to
      the
      public by cell phone in an arrangement in which revenues are shared with China
      Telecom; and (4) managing the customer relationship programs for merchant chains
      and large corporations.




Except
      for the co-brand credit card program mentioned above in item number 1, we have
      already generated revenues from the other three services areas.




In
      addition to our compensation under the agreement with the Agricultural Bank
      of
      China, we plan to derive revenues in the form of merchant fees, as well as
      from
      advertisement income of the promotional leaflets and brochures. The development
      of the credit card services has been slow due to an extended trial run period
      on
      the card system imposed by the card issuing bank, Agricultural Bank of China.
      Although we continue to work on the fully issuance of the co-branded credit
      card, expecting to be officially launched in year 2006, our management believes
      that we may not be able to derive any revenue from this card services in year
      2006.




30
 *Table
          of Contents*




In
      addition to the four sources of revenue mentioned above, our role as an
      aggregator for discount merchants benefits customers by providing special
      discounts. It also further benefits us by building a valuable database of
      merchants and clients which will provide us the opportunity to promote and
      convert each of those merchants and clients to a member of one of our trade
      center clubs. This valuable database of merchants and clients will also help
      us
      to better promote and market to future target companies.




**Competition.** The
      definition of value-added services varies from company to company and it is
      not
      meaningful to compare our market position with other potential competitors.
      We
      provide value-added services on a customized basis, and we are not aware of
      any
      other company that offers the services that we do.




Our
      management believe that there is no single source of information and research
      report which is sophisticated enough for us to provide a meaningful estimate
      of
      the number of competitors and our competitive position in the value-added
      service industry.




**Strategic
      Investments.** We
      expand
      our business activities through strategic investments in companies which will
      directly or indirectly contribute positively to our overall revenues or profits.
      Strategic ventures which have no positive operation effect with our business
      or
      have a negative impact on our cash flow will not be initially considered. A
      group of business entities or an entity that will enable us to experience
      intrinsic growth will be considered, especially if they will enable us to evolve
      into a conglomerate in the Chinese business environment. The New Generation
      acquisition is an example of a major strategic investment by us. By acquiring
      New Generation, we can incorporate New Generation’s services to enhance our
      business club services, and at the same time can access New Generation’s huge
      client base of business travelers to recruit members for our Business Clubs.




**Employees.** We
      currently have 20 employees in our Value-Added Services division. We believe
      our
      future success will depend in large part upon the continued service of our
      technical and senior management personnel and our ability to attract and retain
      technical and managerial personnel. There can be no assurance that we will
      retain our key technical and managerial employees or that we can attract,
      assimilate or retain other highly qualified technical and managerial personnel
      in the future. None of our employees are subject to any collective bargaining
      agreements.





**Item
      2** **.****Description
      of Property**




Our
      main
      office and the Guangzhou World Trade Center Club facilities are located at
      3rd
      Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou,
      and the PRC 510620. Such office and club facilities are held pursuant to a
      lease
      from Guangzhou Silver Disk Property Management Co. Ltd., which provides for
      an
      aggregate monthly rental of approximately $42,285 (RMB$350,000) and expires
      on
      July 31, 2007.




Our
      Beijing World Trade Center Club facilities are located at 2nd Floor, Office
      Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing, the PRC.
      The five-year lease for the location of the Beijing WTC Club facilities, which
      runs from February 1, 2004 to January 31, 2009, was executed by Beijing Landmark
      Towers Co Ltd. and Beijing WTC Club. The terms of the lease provide for an
      aggregate monthly rental amount and management fees of approximately $14,640
      (RMB$121,180) and contains a rent free period from February 1, 2004 to January
      31, 2006.




Pursuant
      to the Share Exchange Agreement dated December 17, 2002, entered into by us
      and
      Mr. William Chi Hung Tsang, we acquired the entire issued share capital of
      General Business Network, which owned two commercial properties, one located
      at
      20/F, Goldlion Digital Network Center, Unit 01-10, 138 Tiyu Road East, Tianhe,
      Guangzhou, the PRC (the “PRC Property”) and the other at Flat B, 12/F, Champion
      Center, 301-309 Nathan Road, Hong Kong (the “Hong Kong Property”). The PRC
      Property was sold in May 2005 for approximately $2,460,000. We rent out the
      Hong
      Kong Property at an annual rental income of $13,077 (HK$102,000).





Our
      Hong
      Kong office is located at Room 1217, 12/F, Metropolis Tower, 10 Metropolis
      Drive, Hunghom, Kowloon, Hong Kong SAR. The office is held pursuant to a lease
      from Wisdom Champion (12) Limited, which provides for an aggregate monthly
      rental of HKD18,765 (or US$2,406). The lease runs from August 16, 2004 to August
      15, 2006.




31
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          of Contents*





Our
      Hong
      Kong executive quarter is located at Metropolis Residence, 8 Metropolis Drive,
      Hunghom, Kowloon, Hong Kong SAR. The residence is held pursuant to a lease
      from
      Mr. Wang Yun Hwa, which provides for an aggregate monthly rental of HKD12,000
      (or US$1,538). The lease runs from August 16, 2004 to August 15,
      2006.





Our
      subsidiary, New Generation, holds a property at Flat 601, 6/F, Shun Jing Crt,
      Huadu, Guangzhou, PRC with area approximately to 302 square meters.





New
      Generation holds a property at Flat 109, Blk 4, Haidian District, Beijing,
      PRC
      with area approximately to 92 square meters.




**Item
      3** **.****Legal
      Proceedings**





We
      are
      not aware of any pending or threatened legal proceedings, other than as set
      forth below, in which we are involved. In addition, we are not aware of any
      pending or threatened legal proceedings in which entities affiliated with our
      officers, directors or beneficial owners are involved.





On
      December 10, 2004, Kenneth P. Silverman, Esq., as Trustee for the Estate of
      Chief Executive Officers Clubs, Inc. (the “Trustee”), filed a Complaint against
      CEO Clubs China Limited, China World Trade Corporation, Simon Guo and J.P.
      Li
      (the “Complaint”), which commenced an Adversary Proceeding relating to a Chapter
      7 bankruptcy case pending in the U.S. Bankruptcy Court for the Southern District
      of New York, captioned as In Re: Chief Executive Officers Clubs, Inc., Debtor.
      The Complaint alleges, among other things, that certain assets of the Chief
      Executive Officers Clubs, Inc. bankruptcy estate were transferred to our Company
      in violation of Section 549 of the Bankruptcy Code. It requests that the
      Bankruptcy Court order, among other things, a return of such assets by our
      Company and/or seeks a judgment against us in the amount of not less than
      $480,000.





As
      previously disclosed, on May 7, 2004, the Company acquired 51% of the
      outstanding capital stock of CEO Clubs China Limited, a Hong Kong corporation
      (“CEO Clubs China”), through one of its wholly-owned subsidiaries, for a total
      consideration of cash and shares of common stock amounting to US$480,000. CEO
      Clubs China is an authorized chapter to operate under the “CEO Clubs” trademarks
      in the Greater China region, including the Peoples’ Republic of China, Hong Kong
      and Taiwan.





We
      have
      engaged counsel and are vigorously defending the Adversary Proceeding. We filed
      a Motion To Dismiss which was heard on March 22, 2005, and the judge ruled
      in
      favor of the Trustee by refusing to dismiss the case at this preliminary stage
      of the proceedings. Notwithstanding that decision, our primary defense is that
      we purchased the stock of CEO Clubs China, and did not acquire any assets of
      the
      Chief Executive Officers Clubs, Inc. bankruptcy estate. We believe that this
      defense will be meritorious should the matter ever come to trial.





**Item
      4** **.****Submission
      of Matters To a Vote of Security Holders****.**





No
      matter
      was submitted to a vote of security holders during the fourth quarter of the
      fiscal year covered by this Report.




32
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          of Contents*





**PART
      II**





**Item
                5.**
            **Market
                for Common Equity and Related Stockholder Matters**





Market
      Information





Our
      common stock is currently quoted on a limited basis on the Over-the-Counter
      Bulletin Board (“OTCBB”) under the symbol “CWTD”. The quotation of our common
      stock on the OTCBB does not assure that a meaningful, consistent and liquid
      trading market currently exists. We cannot predict whether a more active market
      for our common stock will develop in the future. In the absence of an active
      trading market:





(1)
      Investors may have difficulty buying and selling or obtaining market
      quotation;


(2)
      Market visibility for our common stock may be limited; and


(3)
      A
      lack of visibility of our common stock may have a depressive effect on the
      market price for our common stock.





The
      following table sets forth the range of bid prices of our common stock as quoted
      on the OTCBB during the periods indicated. The prices reported represent prices
      between dealers, do not include markups, markdowns or commissions and do not
      necessarily represent actual transactions.





High
                (1)
            Low2005
            First
                Quarter
            $2.66
            $1.90Second
                Quarter
            $3.25
            $1.80Third
                Quarter
            $2.56
            $1.89Fourth
                Quarter
            $2.10
            $1.312004
            First
                Quarter
            $9.20
            $1.00Second
                Quarter
            $5.00
            $1.07Third
                Quarter
            $9.95
            $1.80Fourth
                Quarter
            $4.50
            $1.85








Our
      common shares are issued in registered form. Interwest Transfer Company in
      Salt
      Lake City, Utah, is the registrar and transfer agent for our common stock.





Effective
      September 1, 2002, we executed a 1 for 30 reverse stock split of the outstanding
      shares of common stock.





As
      a
      result of a debt-to-equity capital restructuring in September 2002, we issued
      a
      total of 4,000,000 shares of common stock for a total debt of
      $2,731,677




As
      a
      result of two share purchase agreements dated September 3, 2002 and December
      17,
      2002, respectively, and entered into between us and Powertronic Holdings
      Limited, on January 24, 2003 we issued a total of 2,000,000 shares of common
      stock and warrants to purchase up to 4,000,000 shares of common stock for a
      total purchase price of $1,000,000 to Powertronic Holdings Limited.





As
      a
      result of a share exchange agreement dated December 17, 2002 entered into
      between the Company and Mr. William Chi Hung Tsang, on January 24, 2003, we
      issued 4,000,000 shares of common stock and warrants to purchase up to 4,000,000
      shares of common stock in exchange of 100% of the share capital of General
      Business Network (Holdings) Ltd.





As
      of
      December 31, 2005, there were 97 holders of record of 33,668,923 outstanding
      shares of common stock of the Company, not including approximately 3,500 holders
      of our shares in street name.




33
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          of Contents*





Dividends





We
      have
      not previously paid any cash dividends on its common stock and do not anticipate
      paying dividends on its common stock in the foreseeable future. It is the
      present intention of management to retain any earnings to provide funds for
      the
      operation and expansion of our business. Any future determination to pay
      dividends will be at the discretion of our board of directors and will depend
      on
      our results of operation, financial condition, contractual and legal
      restrictions and other factors the board of directors deem relevant.





Penny
      Stock Characterization





Our
      Shares are "penny stocks" within the definition of that term as contained in
      the
      Securities Exchange Act of 1934, which are generally equity securities with
      a
      price of less than $5.00. Our shares will then be subject to rules that impose
      sales practice and disclosure requirements on certain broker-dealers who engage
      in certain transactions involving a penny stock. These will impose restrictions
      on the marketability of the common stock.





Under
      the
      penny stock regulations, a broker-dealer selling penny stock to anyone other
      than an established customer or "accredited investor" must make a special
      suitability determination for the purchaser and must receive the purchaser's
      written consent to the transaction prior to the sale, unless the broker-dealer
      is otherwise exempt. Generally, an individual with a net worth in excess of
      $5,000,000 or annual income exceeding $200,000 individually or $300,000 together
      with his or her spouse is considered an accredited investor. In addition, unless
      the broker-dealer or the transaction is otherwise exempt, the penny stock
      regulations require the broker-dealer to deliver, prior to any transaction
      involving a penny stock, a disclosure schedule prepared by the Securities and
      Exchange Commission relating to the penny stock market. A broker-dealer is
      also
      required to disclose commissions payable to the broker-dealer and the Registered
      Representative and current bid and offer quotations for the securities. In
      addition a broker-dealer is required to send monthly statements disclosing
      recent price information with respect to the penny stock held in a customer's
      account, the account’s value and information regarding the limited market in
      penny stocks. As a result of these regulations, the ability of broker-dealers
      to
      sell our stock may affect the Selling Stockholders or other or other holders
      seeking to sell their shares in the secondary market. In addition, the penny
      stock rules generally require that prior to a transaction in a penny stock,
      the
      broker-dealer 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.





These
      disclosure requirements may have the effect of reducing the level of trading
      activity in the secondary market for a stock that becomes subject to the penny
      stock rules. These additional sales practice and disclosure requirements could
      impede the sale of our securities. In addition, the liquidity for our securities
      may be adversely affected, with concomitant adverse affects on the price of
      our
      securities.








Agreements
      to Register





On
      December 5, 2003, a Registration Rights Agreement was executed by the Company
      conferring upon Chi Hung Tsang demand registration rights for (i) 3,000,000
      shares of the Company's common stock ("Company Shares"), each with par value
      US$0.001 per share (the "Common Stock"); and (ii) shares underlying a two year
      warrant to purchase up to 6,000,000 shares of the Common Stock at an exercise
      price of US$0.75 per share. Upon written demand, the Company shall, register
      the
      shares and the shares underlying the warrants as soon as practicable and in
      no
      event later than 90 days from the notice. In addition, the Company must maintain
      the registration statement until all of the securities are sold or otherwise
      become freely tradable. [you do not register the warrants, instead you register
      the shares underlying the warrants. Typically, warrants do not get registered
      and trade on their own]




We
      have a
      Registration Rights Agreement, dated August 26, 2004, with the Purchasers under
      a Securities Purchase Agreement that was also executed on August 26, 2004,
      covering an aggregate of 2,321,003 shares of common stock issued to the
      Purchasers, and shares of common stock issuable to the Purchasers upon the
      exercise of warrants. In addition, we have a Registration Rights Agreement
      with
      Cornell Capital Partners, LP, dated November 15, 2004, covering the 14,285,714
      shares of our common stock that may be registered for sale pursuant to the
      SEDA,
      in addition to 375,000 shares of common stock issued as compensation under
      the
      SEDA.





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Shares
      Eligible for Future Sale





Upon
      effectiveness of this registration statement, the 16,981,717 shares of common
      stock sold in this offering will be freely tradable without restrictions under
      the Securities Act of 1933, except for any shares held by our "affiliates",
      which will be restricted by the resale limitations of Rule 144 under the
      Securities Act of 1933.





In
      general, under Rule 144 as currently in effect, any of our affiliates and any
      person or persons whose sales are aggregated who has beneficially owned his
      or
      her restricted shares for at least one year, may be entitled to sell in the
      open
      market within any three-month period a number of shares of common stock that
      does not exceed the greater of (i) 1% of the then outstanding shares of our
      common stock, or (ii) the average weekly trading volume in the common stock
      during the four calendar weeks preceding such sale. Sales under Rule 144 are
      also affected by limitations on manner of sale, notice requirements, and
      availability of current public information about us. Non-affiliates who have
      held their restricted shares for two years may be entitled to sell their shares
      under Rule 144 without regard to any of the above limitations, provided they
      have not been affiliates for the three months preceding such sale.





Further,
      Rule 144A as currently in effect, in general, permits unlimited resales of
      restricted securities of any issuer provided that the purchaser is an
      institution that owns and invests on a discretionary basis at least $100 million
      in securities or is a registered broker-dealer that owns and invests $10 million
      in securities. Rule 144A allows our existing stockholders to sell their shares
      of common stock to such institutions and registered broker-dealers without
      regard to any volume or other restrictions. Unlike under Rule 144, restricted
      securities sold under Rule 144A to non-affiliates do not lose their status
      as
      restricted securities.





Currently,
      approximately 10,900,000 shares of our common stock are available for sale
      in
      accordance with the provisions of Rule 144. Additionally, future sales of stock
      owned by our affiliates may be permitted according to Rule 144. The availability
      for sale of substantial amounts of common stock under Rule 144 could adversely
      affect prevailing market prices for our securities.





Changes
      of Equity Securities During Period Covered By Report





On
      April
      18, 2005, we issued 100,000 shares of common stock to Greentree Financial Group,
      Inc. for consulting services which included (a) assistance in the preparation
      of
      private offering documents, (b) compliance with Blue Sky regulations, (c)
      compliance with the SEC's periodic reporting requirements, (d) tax and
      accounting services, (e) EDGAR services, (f) preparation of interim financial
      information, (g) locating product vendors and (h) other consulting
      services. In this issuance, we relied on an exemption provided by Section 4(2)
      of the Securities Act of 1933, as amended.





On
      December 2, 2005, we issued 2,429,448 shares of common stock to Mr. Chi Hung
      Tsang pursuant to warrants issued on December 5, 2003.




On
      December 29, 2005, we issued a total of 249,478 shares of common stock according
      to our 2003 Non-Qualified Stock Compensation Plan




**Item
      6** **.****Management's
      Discussion and Analysis or Plan of Operation**





**PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





This
      discussion contains forward-looking statements. The reader should understand
      that several factors govern whether any forward-looking statement contained
      herein will be or can be achieved. Any one of those factors could cause actual
      results to differ materially from those projected herein. These forward-looking
      statements include plans and objectives of management for future operations,
      including plans and objectives relating to the products and the future economic
      performance of the company. Assumptions relating to the foregoing involve
      judgments with respect to, among other things, future economic, competitive
      and
      market conditions, future business decisions, and the time and money required
      to
      successfully complete development projects, all of which are difficult or
      impossible to predict accurately and many of which are beyond the control of
      the
      company. Although the company believes that the assumptions underlying the
      forward-looking statements contained herein are reasonable, any of those
      assumptions could prove inaccurate and, therefore, there can be no assurance
      that the results contemplated in any of the forward-looking statements contained
      herein will be realized. Based on actual experience and business development,
      the company may alter its marketing, capital expenditure plans or other budgets,
      which may in turn affect the company's results of operations. In light of the
      significant uncertainties inherent in the forward-looking statements included
      therein, the inclusion of any such statement should not be regarded as a
      representation by the company or any other person that the objectives or plans
      of the company will be achieved.




35
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          of Contents*





OVERVIEW





We
      were
      incorporated in the State of Nevada in 1998 to engage in any lawful corporate
      undertaking. Initially, our business objective was to open and operate business
      clubs in the major cities of China in association with the World Trade Center
      Association in order to position ourselves as the platform to facilitate trade
      between China and the world market. We currently operate two clubs, one in
      Guangzhou and the other in Beijing, PRC. Additionally, we expect to open clubs
      in Shanghai and Shenzhen, PRC in 2006. We have grown through acquisitions and
      internal growth and our business objectives have expanded as set forth in the
      following paragraphs.





Our
      growth and development as a business enterprise has been marked by a number
      of
      significant corporate events. Pursuant to a Share Exchange Agreement, dated
      as
      of August 10, 2000, between Virtual Edge Limited ("Virtual Edge") and Main
      Edge
      International Limited ("Main Edge"), Main Edge transferred all of the issued
      and
      outstanding shares of the capital stock of Virtual Edge to the Company in
      exchange for 1,961,175 shares of our pre-split common stock, representing
      approximately 75% of our outstanding shares of the common stock. Accordingly,
      we
      controlled the operations of Virtual Edge, and Main Edge became our majority
      stockholder. We then undertook an 8-for-1 forward split that was effective
      on
      15th day of September 2000, which resulted in Main Edge owning 15,689,400 shares
      of our common stock. Then, five major developments occurred. These were: (i)
      the
      consummation of two private placement financings by Powertronic Holdings Limited
      ("Powertronic") in September 2002 and December 2002 in which it acquired shares
      of our common stock, (ii) an acquisition of all the issued and outstanding
      shares of General Business Network (Holdings) Ltd. in December 2002, (iii)
      a
      1-for-30 reverse stock split that was effective on September 1, 2002, (iv)
      the
      assignment of the rights of the after tax rental income of certain premises
      from
      Mr. Tsang for a five year period in December 2003, and (v) the exercise of
      warrants for the shares of our common stock by Mr. Tsang and Powertronic in
      March 2004 and in July 2004, and the further exercise additional warrants in
      December 2004. As a result of these transactions, Mr. Chi Hung Tsang became
      the
      new major shareholder and owns over 12,600,000 shares of our common stock and
      Powertronic owns over 5,500,000 shares. Mr. Chi Hung Tsang is currently
      President and Chairman of our Board of Directors.





China
      World Trade Corporation ("China World Trade") has recently established its
      businesses into three distinct divisions, namely the club and business center;
      the business travel services; and the business value-added services. The Club
      and Business Center division is devoted to the building of the World Trade
      brand
      in China. Its objective is to open and operate business clubs in the major
      cities of China in association with the World Trade Center Association, in
      order
      to position the company as the platform to facilitate trade between China and
      the world market. China World Trade currently operates the Guangzhou World
      Trade
      Center Club, consisting of over 4,000 square meters, and The Beijing World
      Trade
      Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers
      Beijing, 8 North Dongsanhuan Road, Beijing PRC, and consisting of 730 square
      meters. In addition, since the acquisition of CEO Clubs China Limited ("CEO
      Clubs") in May 2004, CEO Clubs will complement China World Trade's offerings
      by
      targeting higher profile leadership from larger companies than those normally
      associated with China World Trade. The CEO Clubs family, of which each family
      member operates independently of each other, has thirteen chapters in the US
      and
      China. It focuses on recruiting CEO's of companies with annual sales exceeding
      $2 million as members. The average member of our affiliated CEO Clubs family
      has
      $20 million in annual sales.





Since
      the
      completion of the acquisition of majority stake of Guangdong New Generation
      Commercial Management Limited (the “New Generation Group” or “New Generation”)
      in August 2004, the Business Travel Services division has provided the necessary
      platform for China World Trade Corporation to focus on the high growth, travel
      related businesses. New Generation aims to be the pioneer and to become one
      of
      the market leaders in the travel agency businesses through the operations of
      its
      seven subsidiaries in Southern China in ticketing sales for international and
      domestic flights as well as inbound business travel. Being a major consolidator
      of hotel accommodations and airline tickets in China, New Generation has already
      acquired the necessary licenses to operate as a ticketing and travel agent
      in
      the PRC. These licenses include 26 licenses as a ticketing agent for
      international and domestic flights for both cargo and passengers issued by
      the
      Civil Aviation Administration of China and the International Air Transport
      Association and three licenses as a domestic and international travel agent
      issued by the Administrative Bureau of Tourism of China. In addition, New
      Generation is also an authorized/licensed insurance agent in China to provide,
      in particular, accidental and life insurances.. New Generation is believed
      to
      contribute a solid revenue base to the Company.





The
      Business Value-Added Services division concentrates on value-added services
      of
      merchant related businesses as well as on consultancy services. WTC Link
      International Limited and other subsidiaries of China World Trade, leveraged
      the
      network and database of the Business Clubs and New Generation to provide
      business related services to its clients. In addition, this division also
      provides consultancy services to China World Trade's members and clients in
      the
      financial services areas (may we state here “corporate strategy and business
      development areas) including mergers and acquisitions, corporate restructuring
      and financing.





36
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          of Contents*





RESULTS
      OF OPERATIONS





The
      following table shows the financial data of the consolidated statements of
      operations of the Company and its subsidiaries for the years ended December
      2005
      and 2004. The data should be read in conjunction with the audited consolidated
      financial statements of the Company and related notes thereto.





**Year
                ended**
            
            
            
            **Year
                ended****Dec
                31,**
            
            **%
                of**
            
            **Dec
                31,**
            
            **%
                of****2005**
            
            **Revenues**
            
            **2004**
            
            **Revenues****(In
                US$ thousands except per share data)****Operating
                revenues**Club
                and business center
            
            
            894
            
            
            11.4
            
            
            551
            
            
            17.8Business
                travel services
            
            
            4,983
            
            
            63.6
            
            
            1,672
            
            
            54.1Business
                value-added services
            
            
            1,618
            
            
            20.6
            
            
            41
            
            
            1.3Others
            
            
            344
            
            
            4.4
            
            
            829
            
            
            26.8Total
                Operating Revenues
            
            
            7,839
            
            
            100.0
            
            
            3,093
            
            
            100.0**Gross
                Profit**Club
                and business center
            
            
            735
            
            
            82.1
            
            
            460
            
            
            83.4Business
                travel services
            
            
            4,256
            
            
            85.4
            
            
            1,559
            
            
            93.3Business
                value-added services
            
            
            (895
            )
            
            (55.3
            )
            
            39
            
            
            95.1Others
            
            
            124
            
            
            36.3
            
            
            305
            
            
            36.8**Total
                Gross Profit**
            
            
            4,220
            
            
            53.8
            
            
            2,363
            
            
            76.4Selling,
                general and administrative expenses
            
            
            (9,168
            )
            
            (116.9
            )
            
            (8,133
            )
            
            (263.0
            )Impairment
                loss and depreciation
            
            
            (342
            )
            
            (4.4
            )
            
            (1,438
            )
            
            (46.5
            )**Loss
                from operations**
            
            
            (5,290
            )
            
            (67.5
            )
            
            (7,208
            )
            
            (233.0
            )**Non-operating
                income (expenses)**Other
                income net of expenses
            
            
            42
            
            
            0.5
            
            
            140
            
            
            4.5Interest
                expense net of income
            
            
            (108
            )
            
            (1.4
            )
            
            (66
            )
            
            (2.1
            )Realized
                gain on available-for-sale securities
            
            
            6,080
            
            
            77.6
            
            
            -
            
            
            -Gain
                on disposal of interest in a subsidiary
            
            
            86
            
            
            1.1
            
            
            -
            
            
            -Loss
                on disposal of leasehold land and building
            
            
            (255
            )
            
            (3.2
            )
            
            -
            
            
            -Profit
                on increase in shareholding in subsidiary
            
            
            -
            
            
            -
            
            
            -
            
            
            -**Income
                before income taxes and minority interest**
            
            
            555
            
            
            7.1
            
            
            (7,134
            )
            
            (230.7
            )Income
                taxes
            
            
            (254
            )
            
            (3.2
            )
            
            (47
            )
            
            (1.5
            )**Net
                income before minority interest**
            
            
            301
            
            
            3.8
            
            
            (7,181
            )
            
            (232.2
            )Minority
                interest
            
            
            (283
            )
            
            (3.6
            )
            
            (413
            )
            
            (13.4
            )**Net
                Profit/(loss)**
            
            
            18
            
            
            0.2
            
            
            (7,594
            )
            
            (245.6
            )**Profit/(Loss)
                per share of common stock**-
                Basic
            
            $
            0.00
            
            
            
            
            $
            (0.32
            )




37
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          of Contents*




FISCAL
      YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004.





OPERATING
      REVENUE


The
        Company has started to recruit members, and to provide club and business
        center
        services through its subsidiary Guangzhou World Trade Center Club located
        in
        Guangdong Province, the PRC since June 2002, business value-added services
        and
        others business through other subsidiaries of the Company since March 2003.
        We
        have commenced our operation in the business travel business since our
        acquisition of New Generation in August 2004. Investment in listed shares
        and
        rental incomes are grouped under others operating revenues and others gross
        profit. Consolidated operating revenue for the twelve-month period ended
        December 31, 2005 was $7,839,000, compared to $3,093,000 for the same
        corresponding period in year 2004, an increase of $4,746,000 or 153.4%. The
        increase was mainly the result of the increase in revenue generated from
        business travel services, club and business center and business value-added
        services. This increase was partially offset by the decrease in rental income
        and the discontinuation of the cattle hide trading business.


Of
        the
        $7,839,000 revenue in the twelve-month period ended December 31, 2005,
        approximately $894,000 (11.4%) was generated from providing club related
        services by Guangzhou World Trade Center Club and Beijing World Trade Center
        Club, $4,984,000 (63.6%) from business travel services resulting from the
        acquisition of the New Generation Group, $1,618,000 (20.6%) from business
        value-added services, and the remaining $344,000 (or 4.4%) from other (rental
        and listed shares investment) businesses. The acquisition of New Generation
        has
        contributed positively to our operating revenue. In addition, our cost of
        sales
        is generally positively related to our operating revenue, i.e., the higher
        the
        operating revenue, the higher the cost of sales and vice versa.





For
      the
      year ended December 31, 2005, New Generation sold a total of over 1,187,000
      tickets, which translates to a total value of air-ticket fare of approximately
      $145 million. As compared to the same corresponding period in year 2004, ticket
      sold of New Generation increased by 192,000 tickets (or 19.3%) from
      approximately 995,000 tickets with value of air-ticket fare increased by $26.3
      million (or 22.1%) from $118.9 million.


Consolidated
        gross profit increased $1,857,000 or 78.6% for the twelve-month period ended
        December 31, 2005 over the same corresponding period in year 2004. The increase
        was predominantly driven by our business travel services resulting from the
        acquisition of the New Generation in August 2004 and our club and business
        center services. Such an increase was partially offset by the decrease in
        the
        business value-added services and rental income. As a percentage of total
        operating revenues, consolidated gross profit margins of 53.8% in 2005 decreased
        from 76.4% in 2004. However, the lower profit margin as a percent of operating
        revenues for the year ended December 31, 2005 as compared to the same
        corresponding period in 2004 was primarily contributed by the negative margin
        from our business value-added services. We received common stock as compensation
        from the client for our services rendered. According to EITF Issue No. 00-8,
        we
        recognize our revenue in relation to a project using the share price of the
        common stock we received on the contract date. Subsequently, we subcontracted
        part of the services of the same project to an independent consultant at
        a later
        date and according to FAS 123, paragraph 8, we needed to record the compensation
        paid to non-employees in exchange of goods and services at fair value. The
        negative gross profit margin for the year ended December 31, 2005 of our
        consulting business was the result of the timing difference between the dates
        of
        the contract with our client and the subcontracting during an upward trend
        of
        the share prices of the common stock we received for services
        rendered.
 Of
          the
          $4,220,000 total gross profit for the year ended December 31, 2005,
          approximately $735,000 (or 17.4%) was generated from providing club and
          business
          center services, approximately $4,256,000 (or 100.9%) from business travel
          services, approximately a loss of $895,000 (or -21.2%) from providing business
          value-added services, and approximately $124,000 (or 2.9%) from other (rental
          and investment) businesses. As compared to the same corresponding period
          in year
          2004, the club and business center services represented a 19.5% (or $460,000)
          of
          the total gross profit; 66.0% (or $1,559,000) was generated from the business
          travel business; 1.6% (or $39,000) from providing business value-added
          services;
          and the remaining 12.9% (or $305,000) from other (rental and trading)
          businesses. The shift in segmental distribution was primarily due to the
          increase in gross profit in the business travel services, resulting from
          the
          acquisition of the New Generation Group. We foresee that this segment mix
          will
          continue to change and balance out in year 2006 upon further development
          in the
          business value-added services and the expected opening of World Trade Center
          Club Shanghai in the year 2006.


38
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          of Contents*





SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES


Selling,
        general and administrative expenses increased by approximately $1,035,000
        or
        12.7% to $9,168,000 for the year ended December 31, 2005 from $8,133,000
        for the
        same corresponding period in 2004. The increase was mainly a combination
        of the
        increase in professional fee resulting from our consulting business in the
        amount of approximately $493,000, the increase in other professional fees
        and
        marketing and information and technology in the total amount of approximately
        $510,000,.
 
 Of
        the
        $9,168,000 selling, general and administrative expenses incurred for the
        year
        ended December 31, 2005, the majority of it was approximately $2,456,000
        in
        staff related costs; approximately $1,477,000 in professional expenses in
        financial consultancy, investor relation and marketing consultancy;
        approximately $870,000 in building management and rental expenses which were
        necessary for the operations of our world trade centre clubs in Guangzhou
        and
        Beijing; approximately $430,000 in director related salaries; approximately
        $1,263,000 in the expenses of subcontracting our consultancy business. The
        management does not foresee this increasing trend will continue and they
        will
        continue to impose respective measures for trimming costs.
 
 IMPAIRMENT
        LOSS AND DEPRECIATION
 
 Total
        impairment loss and depreciation were approximately $342,000 for the year
        ended
        December 31, 2005, as compared to the same corresponding period in year 2004,
        a
        decrease of $1,096,000 or 76.2% from $1,438,000. The decrease was mainly
        due to
        the decrease in the impairment loss in the amount of approximately $1,167,000
        which was off-set by the increase in depreciation and amortization charge
        of
        approximately $70,000 over the corresponding period in year 2004.





FINANCIAL
      INCOME/(EXPENSES), NET





Interest
      expenses were approximately $136,000 for the year ended December 31, 2005,
      as
      compared to the same corresponding period in year 2004 in the amount of $66,000,
      an increase of $70,000 or 106.1%. The majority of the increase was the result
      of
      consolidating the interest expenses incurred by the New Generation in relation
      to an increased bank loan in the amount of RMB10,000,000 (approximately equals
      US$2.3 million) to RMB19,000,000 (approximately equals to US$2.4
      million)




OTHER
      INCOME AND REALIZED GAIN





The
      other
      income and realized gain increased by approximately $6,080,000 for the year
      ended December 31, 2005. The increase was the result of the gain on disposal
      of
      securities during the reporting period which we received as compensation for
      our
      consultancy services rendered. These securities may be sold only when earned
      under the respective consulting agreements, and it is our intention to sell
      shares earned as promptly as practicable in order to generate income for the
      company, subject to compliance with federal securities laws.





GAIN
      ON
      DISPOSAL OF INTEREST IN A SUBSIDIARY





Gain
      on
      disposal of interest in a subsidiary recorded at approximately $86,000 for
      the
      year ended December 31, 2005 compared to none for the same corresponding period
      in year 2004. The gain resulted from the disposal of our subsidiary WTC Link
      International Limited, which the management found the issue of co-brand credit
      card and the discount merchant program has limited progress.





LOSS
      ON
      DISPOSAL OF LEASEHOLD LAND AND BUILDING





The
      loss
      on disposal of leasehold land and building increased by approximately $255,000
      for the year ended December 31, 2005, as compared to none for the same
      corresponding period in year 2004. The loss was primarily the result from the
      payment of PRC tax and levy in the amount of approximately $229,000 resulting
      from the disposal of our Guangzhou property in May 2005.




39
 *Table
          of Contents*




INCOME
      TAXES





The
      Group
      is subject to income taxes on an equity basis on income arising in or derived
      from the tax jurisdiction in which it is domiciled and operates.





The
      Hong
      Kong subsidiaries incurred losses for taxation purposes for the period and
      thus
      Hong Kong Profits Tax has not been provided.





Several
      of our PRC subsidiaries are subject to PRC Enterprise Income Taxes (“EIT”) on an
      entity basis on income arising in and derived from the PRC. The applicable
      EIT
      rate is 33%.





Income
      taxes were $254,000 for the year end December 31, 2005, as compared to US$47,000
      for the same corresponding period in year 2004. The increase of income taxes
      was
      mainly from the operation of New Generation.





NET
      PROFIT





Net
      profit was approximately $18,000 for the year ended December 31, 2005, as
      compared to the same corresponding period in year 2004, an increase of
      $7,612,000 or 100.2% from a loss of $7,594,000. The increase in net income
      was
      the result of the recognition of the net gain from the disposal of securities
      which were received for compensation of our consultancy services. The increase
      was partially offset by the increase in loss from operations resulting from
      the
      increase in selling, general and administrative expenses of our business
      traveling services and consulting business within the business value-added
      services. Management believes that our operations will continue to improve
      and
      we do not foresee a trend of losses


LIQUIDITY
        AND CAPITAL RESOURCES





We
      have
      banking facilities granted in the total amount of approximately $2.4 million,
      of
      which approximately $2.3 million has been utilized as of December 31, 2005.
      These facilities include $1,250,000 in revolving loan; $1,120,000 in short
      term
      loan with pledged deposit of $412,000. The weighted average interest rate for
      these facilities is charged at 7.254% per annum.


As
        of
        December 31, 2005, cash and cash equivalents totaled $3.2 million. This cash
        position was the result of a combination of net cash provided by investing
        activities in the amount of $9,724,456, offsetting by net cash used in operating
        activities in the amount of $8,189,443 and net cash used in financing activities
        in the amount of $124,417. The increase in investing activities was mainly
        due
        to the disposal of available-for-sale securities of $6,838,178, net result
        of
        disposal and acquisition of property, plant and equipment of $1,910,594 and
        the
        disposal of intangible asset of $1,320,000. The net cash used in operating
        activities was mainly the result from the realized gain and received as income
        on available-for-sale securities of $7,122,003 and changes in working capital,
        which consists of the pledge of deposit of $412,484, decrease in account
        receivables of $1,913,350 and the increase in rental and other deposit of
        $721,732. Net cash used in financing activities was result from the repayment
        of
        advance from a shareholder amount to $183,405.





During
      the reporting period of year ended December 31, 2005, a total of 100,000 shares
      of the common stock of China World Trade Corporation were issued to Greentree
      Financail Corporation, Inc. in relation to a consulting service.





We
      believe that the level of financial resources is a significant factor for our
      future development and accordingly may choose at any time to raise capital
      through private debt or equity financing to strengthen its financial position,
      facilitate growth and provide us with additional flexibility to take advantage
      of business opportunities. However, other than the committed Standby Equity
      financing provided by Cornell Capital Partners, LC, we do not have immediate
      plan to have a public offering of our common stock.




40
 *Table
          of Contents*


OTHER
        SIGNIFICANT EVENTS


On
      March
      29, 2005, our board of directors approved the sale of the after-tax rental
      income rights of 21 st
      and 23 rd Floor,
      Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou to our
      Chairman, Mr. Chi Hung Tsang at the book value of $1,320,000. As a result,
      a
      cash balance due from Mr. Tsang in the amount of $377,504 as of March 31, 2005
      was subsequently paid off on April 28, 2005. The total consideration of
      $1,320,000 would be used to provide additional working capital for our group
      of
      companies.





On
      December 30, 2004, General Business Network (Holdings) Limited entered into
      a
      sale and purchase agreement with Guangzhou Goldlion Environmental Technology
      Company Limited for the sale of our property holding located in Guangzhou,
      the
      PRC for a consideration of approximately $2,500,000. This transaction was
      completed on May 31, 2005.





On
      May
      31, 2005, we closed on the sale of our property at 20 th Floor,
      Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou at
      approximately one percent discount to our book value in the amount of
      $2,457,000, as previously reported. The net proceeds of the sale will be used
      to
      provide additional working capital for our group of companies.





Guangdong
      New Generation Management Limited entered into a Cooperation Framework
      Agreement, dated July 29, 2005, as subsequently amended, providing for the
      acquisition of interests in each of Guangdong Hao Shi Guang Travel Agency and
      Guangdong Kaixuan Transportation Co., Ltd, both owned by Guangdong Rising Hotel
      Group Limited. The primary business of Kaixuan Transportation Co., Ltd. is
      to
      provide coach-hire services in Guangzhou and the primary business of Hai Shi
      Guang Agency is to provide packaged tour services mainly for corporate clients.





Pursuant
      to such agreement, we have agreed to purchase 22.68% of the share capital of
      the
      Travel Agency. We have further agreed to increase our purchase of the share
      capital of the Travel Agency until we own 70% of the outstanding share capital.
      The purchase price will be calculated based on the net assets of the Travel
      Agency as of June 30, 2005, as determined by an independent certified public
      accountant in the Peoples’ Republic of China, and is expected to be
      approximately $120,000.





We
      have
      additionally agreed to purchase 70% of the Transportation Company during the
      period August 1, 2005 through July 31, 2006. The purchase price is to be
      calculated based on its net assets as of June 30, 2005, as determined by an
      independent certified public accountant in the Peoples’ Republic of China, and
      is expected to be approximately $600,000. We paid an initial deposit of
      approximately $60,000 upon execution of the agreement and are required to pay
      an
      additional $69,000 by January 27, 2006, with both amounts being deducted from
      the final purchase price.





Upon
      payment of the $60,000, we took over routine operations of the Transportation
      Company for one year. During the subcontracting year, however, the
      Transportation Company’s equity holders retain the ability to make decisions
      with respect to major transactions, such as the acquisition or disposition
      of
      significant assets, incurrence of significant indebtedness or entering into
      new
      lines of business. If the closing of the full 70% is not consummated by July
      31,
      2006, due to reasons outside of our control, we are not entitled to the return
      of any amounts previously paid. Upon consummation of the full 70% acquisition
      by
      July 31, 2006, we become a shareholder owning a 70% interest in the
      Transportation Company.




41
 *Table
          of Contents*




CRITICAL
      ACCOUNTING POLICIES





In
      presenting our financial statements in conformity with generally accepted
      accounting principles, we are required to make estimates and assumptions that
      affect the amounts reported therein. Several of the estimates and assumptions
      we
      are required to make relate to matters that are inherently uncertain as they
      pertain to future events. However, events that are outside of our control cannot
      be predicted and, as such, they cannot be contemplated in evaluating such
      estimates and assumptions. If there is a significant unfavourable change to
      current conditions, it could result in a material adverse impact to our
      consolidated results of operations, financial position and liquidity. We believe
      that the estimates and assumptions we used when preparing our financial
      statements were the most appropriate at that time. Presented below are those
      accounting policies that we believe require subjective and complex judgments
      that could potentially affect reported results. However, the majority of our
      businesses operate in environments where we pay a fee for a service performed,
      and therefore the results of the majority of our recurring operations are
      recorded in our financial statements using accounting policies that are not
      particularly subjective, nor complex.








**Valuation
      of long-lived assets**





We
      review
      our long-lived assets for impairment, including property, plant and equipment,
      and identifiable intangibles with definite lives, whenever events or changes
      in
      circumstances indicate that the carrying amount of the assets may not be fully
      recoverable. To determine recoverability of our long-lived assets, we evaluate
      the probability that future undiscounted net cash flows will be greater than
      the
      carrying amount of our assets. Impairment is measured based on the difference
      between the carrying amount of our assets and their estimated fair value.





**Allowance
      for Doubtful Accounts**





We
      perform ongoing credit evaluations of our customers and adjust credit limits
      based upon customer payment history and current creditworthiness. We
      continuously monitor collections and payments from our customers and maintain
      a
      provision for estimated credit losses based upon our historical experience
      and
      any specific customer collection issues that have been identified. While such
      credit losses have historically been within our expectations and the provisions
      established, we cannot guarantee that we will continue to experience credit
      loss
      rates similar to those we have experienced in the past. Measurement of such
      losses requires consideration of historical loss experience, including the
      need
      to adjust for current conditions, and judgments about the probable effects
      of
      relevant observable data, including present economic conditions such as
      delinquency rates and financial health of specific customers.





**Goodwill
      on consolidation**





Our
      long-lived assets include goodwill. SFAS No. 142 "Goodwill and Other
      Intangible Assets" requires that goodwill be tested for impairment at the
      reporting unit level (operating segment or one level below an operating segment)
      on an annual basis and between annual tests in certain circumstances.
      Application of the goodwill impairment test requires judgment, including the
      identification of reporting units, assigning assets and liabilities to reporting
      units, assigning goodwill to reporting units, and determining the fair value
      of
      each reporting unit. Significant judgments required to estimate the fair value
      of reporting units include estimating future cash flows, determining appropriate
      discount rates and other assumptions. Changes in these estimates and assumptions
      could materially affect the determination of fair value for each reporting
      unit.




42
 *Table
          of Contents*





**Item
      7** **.****Financial
      Statements**


**CHINA
        WORLD TRADE CORPORATION AND SUBSIDIARIES**
 
 **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Page**Report
                    of Child, Van Wagoner & Bradshaw, PLLC, Independent Registered Public
                    Accounting Firm
              
              44Report
                  of Moores Rowland Mazars, Independent Registered Public Accounting
                  Firm
              
              45ConsolidatedBalance
                  Sheet
              
              46ConsolidatedStatements
                    of Operations and Comprehensive Income (Loss)
              
              47ConsolidatedStatements
                  of Changes in Shareholders’ Equity
              
              48ConsolidatedStatements
                  of Cash Flows
              
              49Notes
                  to Consolidated Financial Statements
              
              50-75
  43
 *Table
            of Contents*
 **REPORT
            OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 The
            Board
            of Directors and Shareholders
 **China
            World Trade Corporation**
 
 We
            have
            audited the accompanying consolidated balance sheet of China World Trade
            Corporation and subsidiaries as of December 31, 2005, and the related
            consolidated statements of operations, changes in shareholders’ equity and
            comprehensive income, and cash flows for the year then ended. These consolidated
            financial statements are the responsibility of the Group’s management. Our
            responsibility is to express an opinion on these consolidated financial
            statements based on our audits.
 
 We
            conducted our audits in accordance with the standards of the Public Accounting
            Oversight Board (United States). Those standards require that we plan
            and
            perform the audit to obtain reasonable assurance about whether the consolidated
            financial statements are free of material misstatement. The Group is
            not
            required to have, nor were we engaged to perform, an audit of its internal
            control over financial reporting. Our audit includes consideration of
            internal
            control over financial reporting as a basis for designing audit procedures
            that
            are appropriate in the circumstances, but not for the purpose of expressing
            an
            opinion on the effectiveness of the Group’s internal control over financial
            reporting. Accordingly, we express no such opinion. An audit also includes
            examining, on a test basis, evidence supporting the amounts and disclosures
            in
            the consolidated financial statements, 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 China Trade World
            Corporation and subsidiaries as of December 31, 2005, and the results
            of their
            operations and their cash flows for the year then ended, in conformity
            with
            accounting principles generally accepted in the United States of
            America.
 
 The
            accompanying financial statements have been prepared assuming that the
            Company
            will continue as a going concern. The Company has suffered losses from
            operations during the year and has a negative working capital that 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.
  
 /s/
            Child, Van Wagoner & Bradshaw, PLLC
   Certified
            Public Accountants
 
 Salt
            Lake
            City, Utah, USA
 April
            15,
            2006
  44
 
 **Report
            of Independent Registered Public Accounting Firm**
 
 
 To
            the
            Board of Directors and Shareholders of
 **China
            World Trade Corporation**
 
 
 We
            have
            audited the accompanying consolidated balance sheet of China World Trade
            Corporation (a Nevada corporation) and its subsidiaries as of December
            31, 2004
            and the related consolidated statements of operations, shareholders'
            equity and
            cash flows for the years ended December 31, 2004 and September 30, 2003.
            These
            financial statements are the responsibility of the Company's management.
            Our
            responsibility is to express an opinion on these financial statements
            based on
            our audits.
 
 We
            conducted our audits in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). 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 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 consolidated financial position of China
            World
            Trade Corporation and its subsidiaries as of December 31, 2004 and the
            consolidated results of their operations and their cash flows for the
            years
            ended December 31, 2004 and September 30, 2003 in conformity with generally
            accepted accounting principles in the United States.
 
 The
            accompanying financial statements have been prepared assuming that the
            Company
            will continue as a going concern. As discussed in Note 3(b) to the financial
            statements, the Company has suffered losses from operations during the
            year and
            has a negative working capital that raise substantial doubt about its
            ability to
            continue as a going concern. Management’s plans in regard to these matters are
            also described in Note 3(b). The financial statements do not include
            any
            adjustments that might result from the outcome of this uncertainty.
 
 
 
 /s/
            MOORES ROWLAND MAZARS
 
 *Chartered
            Accountants*
 *Certified
            Public Accountants*
 Hong
            Kong
 
 Date:
            April 14, 2004
  45
  
 **CHINA
                  WORLD TRADE CORPORATION AND SUBSIDIARIES**
                **CONSOLIDATED
                  BALANCE SHEET**
                **(Expressed
                  in United States Dollar (“US$”), except for per share
                  data)****December
                  31, 2005****ASSETS**
              
              ***Note*****Current
                  assets**Cash
                  and cash equivalents
              
              
              
              
              
              3,234,863Pledged
                  bank deposit
              
              
              
              
              
              412,484Accounts
                  receivables, net
              
              
              *5*
              
              
              3,377,343Available-for-sale
                  securities
              
              
              *8*
              
              
              1,413,750Prepayments
              
              
              
              
              
              231,428Other
                  current assets
              
              
              
              
              
              446,750Loans
                  receivables
              
              
              *12*
              
              
              410,946Rental
                  and other deposits
              
              
              *6*
              
              
              2,461,487Due
                  from related parties
              
              
              *7*
              
              
              614,183Due
                  from related companies
              
              
              *7*
              
              
              113,199***Total
                  current assets***
              
              
              
              
              
              12,716,433Property
                  use rights, net
              
              
              *9*
              
              
              1,572,657Goodwill
              
              
              *10*
              
              
              11,279,314Property,
                  plant and equipment, net
              
              
              *11*
              
              
              1,024,678***Total
                  assets***
              
              
              
              
              
              26,593,082**LIABILITIES
                  AND SHAREHOLDERS' EQUITY****Current
                  liabilities**Accounts
                  payables
              
              
              *14*
              
              
              3,070,892Accrued
                  expenses
              
              
              
              
              
              644,044Due
                  to a shareholder
              
              
              *15*
              
              
              137,131Due
                  to related parties
              
              
              *7*
              
              
              27,646Due
                  to related companies
              
              
              *7*
              
              
              77,578Income
                  tax payable
              
              
              
              
              
              1,422,308Tax
                  penalty payable
              
              
              
              
              
              1,026,680Deferred
                  income
              
              
              
              
              
              381,081Short-term
                  bank loan
              
              
              *13*
              
              
              2,346,461Hire
                  purchase creditor - current portion
              
              
              
              
              
              13,333Other
                  current liabilities
              
              
              
              
              
              1,300,989**Total
                  current liabilities**
              
              
              
              
              
              10,448,143Hire
                  purchase creditor - non-current portion
              
              
              
              
              
              36,667**Total
                  liabilities**
              
              
              
              
              
              10,484,810**Minority
                  interest**
              
              
              
              
              
              2,186,542**Commitments
                  and contingencies**
              
              
              
              
              
              -**Shareholders'
                  equity**Preferred
                  stock, par value of US$0.001 each;
                10,000,000
                  shares authorized, none issued or outstandingCommon
                  stock, par value of US$0.001 each;
                50,000,000
                  shares authorized, 33,668,923 shares issued and outstanding as
                  of December
                  31, 2005
              
              
              *18*
              
              
              33,669Additional
                  paid-in capital
              
              
              
              
              
              31,014,949Statutory
                  reserves
              
              
              *21*
              
              
              169,624Accumulated
                  other comprehensive income-
                  unrealized gain on available-for-sale securities
              
              
              
              
              
              751,250-
                  foreign currency translation adjustment
              
              
              
              
              
              23,990Accumulated
                  deficit
              
              
              
              
              
              (18,071,752
              )**Total
                  shareholders’ equity**
              
              
              
              
              
              13,921,730**Total
                  liabilities and shareholders’ equity**
              
              
              
              
              
              26,593,082
  See
        accompanying notes to consolidated financial statements.
  46
 *Table
            of Contents*
  **CHINA
                  WORLD TRADE CORPORATION AND SUBSIDIARIES**
                **CONSOLIDATED
                  STATEMENTS OF OPERATIONS **AND
                  COMPREHENSIVE INCOME (LOSS)****
                **(Expressed
                  in United States Dollar (“US$”), except for per share
                  data)****Year
                  ended December 31,****Note**
              
              **2005**
              
              2004**Operating
                  revenues**Club
                  and business centre
              
              
              
              
              
              
              
              **$**
              894,550
              
              $
              551,497Business
                  traveling services
              
              
              
              
              
              
              
              
              4,983,468
              
              
              1,671,605Business
                  value-added services
              
              
              
              
              
              
              
              
              1,618,413
              
              
              40,695Rental
              
              
              
              
              
              
              
              
              221,699
              
              
              701,284Trading
                  and others
              
              
              
              
              
              
              
              
              121,094
              
              
              127,6637,839,224
              
              
              3,092,744**Operating
                  costs and expenses**Club
                  and business centre
              
              
              
              
              
              
              
              
              (159,742
              )
              
              (91,415
              )Business
                  traveling services
              
              
              
              
              
              
              
              
              (727,089
              )
              
              (112,588
              )Business
                  value-added services
              
              
              
              
              
              
              
              
              (2,513,523
              )
              
              (1,841
              )Rental
              
              
              
              
              
              
              
              
              (98,762
              )
              
              (403,735
              )Trading
                  and others
              
              
              
              
              
              
              
              
              (119,767
              )
              
              (120,224
              )(3,618,883
              )
              
              (729,803
              )**Other
                  expenses**Depreciation
                  and amortization
              
              
              
              
              
              
              
              
              (303,797
              )
              
              (233,298
              )Impairment
                  losses on intangible assets
              
              
              
              
              
              
              
              
              -
              
              
              (222,676
              )Impairment
                  loss on goodwill
              
              
              
              
              
              
              
              
              -
              
              
              (388,118
              )Impairment
                  of property, plant and equipment
              
              
              
              
              
              
              
              
              (38,598
              )
              
              (594,343
              )Selling,
                  general and administrative expenses
              
              
              
              
              
              
              
              
              (9,167,728
              )
              
              (8,133,140
              )(9,510,123
              )
              
              (9,571,575
              )**Loss
                  from operations**
              
              
              
              
              
              
              
              
              (5,289,782
              )
              
              (7,208,634
              )**Non-operating
                  income (expense)**Other
                  income
              
              
              
              
              
              
              
              
              42,581
              
              
              138,994Interest
                  income
              
              
              
              
              
              
              
              
              28,171
              
              
              1,020Interest
                  expense
              
              
              
              
              
              
              
              
              (136,426
              )
              
              (65,909
              )Gain
                  on disposal of a subsidiary
              
              
              
              
              
              
              
              
              85,854
              
              
              -Realized
                  gain on disposal of available-for-sale securities
              
              
              
              
              
              
              
              
              6,079,960
              
              
              -Loss
                  on disposal of property, plant and equipment
              
              
              
              
              
              
              
              
              (254,740
              )
              
              -**Profit/(loss)
                  before income tax and minority interests**
              
              
              
              
              
              
              
              
              555,618
              
              
              (7,134,529
              )Income
                  tax expense
              
              
              
              
              
              4
              
              
              (254,419
              )
              
              (46,553
              )**Profit/(loss)
                  before minority interests**
              
              
              
              
              
              
              
              
              301,199
              
              
              (7,181,082
              )Minority
                  interests
              
              
              
              
              
              
              
              
              (282,975
              )
              
              (413,311
              )**Net
                  income/(loss)**
              
              
              
              
              
              
              
              $
              18,224
              
              $
              (7,594,393
              )**Per
                  share data:****Earnings
                  (loss) per share**Basic
              
              
              
              
              
              
              
              
              0.00
              
              
              (0.36
              )Diluted
              
              
              
              
              
              
              
              
              0.00
              
              
              (0.36
              )**Weighted
                  average number of shares outstanding**Basic
              
              
              
              
              
              
              
              
              31,154,526
              
              
              21,102,405Diluted
              
              
              
              
              
              
              
              
              31,154,526
              
              
              21,102,405Net
                  income/(loss)
              
              
              
              
              
              
              
              
              18,224
              
              
              (7,594,393
              )Other
                  comprehensive income (loss):
              
              
              
              
              
              
              
              
              
              
              
              -Unrealized
                  holding gain arising during the year
              
              
              
              
              
              
              
              
              751,250
              
              
              -Foreign
                  currency translation adjustments
              
              
              
              
              
              
              
              
              23,990
              
              
              -Comprehensive
                  income (loss)
              
              
              
              
              
              
              
              
              793,464
              
              
              (7,594,393
              )
  See
        accompanying notes to consolidated financial statements.
  47
 *Table
            of Contents*
  **CHINA
                  WORLD TRADE CORPORATION AND SUBSIDIARIES**
                **CONSOLIDATED
                  STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY**
                **(Expressed
                  in United States Dollar (“US$”), except per share
                  data)****Common
                  stock****Note**
              
              **No.
                  of shares**
              
              **Amount
                  issued**
              
              **Additional
                  paid in capital**
              
              **Accumulated
                  other comprehensive income (loss)**
              
              **Statutory
                  reserves**
              
              **Accumulated
                  deficit**
              
              **Total**Balance
                  as of January 1, 2004
              
              
              
              
              
              15,981,601
              
              
              15,982
              
              
              14,347,859
              
              
              -
              
              
              
              
              
              (10,325,959
              )
              
              4,037,882Common
                  stock issued in exchange for services in February 2004
              
              
              
              
              
              244,000
              
              
              244
              
              
              374,956
              
              
              -
              
              
              -
              
              
              -
              
              
              375,200Exercise
                  of warrants on March 22, 2004
              
              
              
              
              
              1,500,000
              
              
              1,500
              
              
              1,123,500
              
              
              -
              
              
              -
              
              
              -
              
              
              1,125,000Option
                  issued in exchange for services on February 27, 2004
              
              
              
              
              
              -
              
              
              -
              
              
              311,200
              
              
              -
              
              
              -
              
              
              -
              
              
              311,200Common
                  stock issued in exchange for services on May 7, 2004
              
              
              
              
              
              24,027
              
              
              24
              
              
              99,976
              
              
              -
              
              
              -
              
              
              -
              
              
              100,000Common
                  stock issued as consideration for acquisition of a subsidiary on
                  May 7,
                  2004
              
              
              
              
              
              80,000
              
              
              80
              
              
              239,920
              
              
              -
              
              
              -
              
              
              -
              
              
              240,000Common
                  stock issue in exchange for service on July 12, 2004
              
              
              
              
              
              50,500
              
              
              51
              
              
              160,149
              
              
              -
              
              
              -
              
              
              -
              
              
              160,200Exercise
                  of warrants on July 20, 2004
              
              
              
              
              
              2,000,000
              
              
              2,000
              
              
              1,148,000
              
              
              -
              
              
              -
              
              
              -
              
              
              1,150,000Exercise
                  of warrants on July 20, 2004
              
              
              
              
              
              1,500,000
              
              
              1,500
              
              
              1,378,500
              
              
              -
              
              
              -
              
              
              -
              
              
              1,380,000Common
                  stock issued as consideration for acquisition of a subsidiary on
                  July 30,
                  2004
              
              
              
              
              
              4,081,238
              
              
              4,081
              
              
              7,459,687
              
              
              -
              
              
              -
              
              
              -
              
              
              7,463,768Common
                  stock issued as a compensation for termination of a contract
              
              
              
              
              
              2,000
              
              
              2
              
              
              4,998
              
              
              -
              
              
              -
              
              
              -
              
              
              5,000Common
                  stock issued upon 1stprivate
                  placement
              
              
              
              
              
              433,333
              
              
              433
              
              
              649,567
              
              
              -
              
              
              -
              
              
              -
              
              
              650,000Modification
                  of The 2003 Plan
              
              
              
              
              
              -
              
              
              -
              
              
              645,718
              
              
              -
              
              
              -
              
              
              -
              
              
              645,718Exercise
                  of options of The 2003 Plan
              
              
              
              
              
              370,857
              
              
              371
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              371Exercise
                  of options for services
              
              
              
              
              
              58,552
              
              
              58
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              58Common
                  stock issued in exchange for placement agent services
              
              
              
              
              
              375,000
              
              
              375
              
              
              862,125
              
              
              -
              
              
              -
              
              
              -
              
              
              862,500Warrant
                  issued in exchange for placement agent services
              
              
              
              
              
              -
              
              
              -
              
              
              288,427
              
              
              -
              
              
              -
              
              
              -
              
              
              288,427Common
                  stock issued upon 2ndprivate
                  placement
              
              
              
              
              
              966,667
              
              
              967
              
              
              1,449,034
              
              
              -
              
              
              -
              
              
              -
              
              
              1,450,001Warrant
                  issued for waiver of sole registrants
              
              
              
              
              
              -
              
              
              -
              
              
              277,335
              
              
              -
              
              
              -
              
              
              -
              
              
              277,335Exercise
                  of warrants on December 15, 2004
              
              
              
              
              
              1,574,074
              
              
              1,574
              
              
              (1,574
              )
              
              -
              
              
              -
              
              
              -
              
              
              -Exercise
                  of warrants on December 15, 2004
              
              
              
              
              
              1,648,148
              
              
              1,648
              
              
              (1,648
              )
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  loss
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,594,393
              )
              
              (7,594,393
              )Transfer
                  to statutory reserves
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              44,403
              
              
              (44,403
              )
              
              -Balance
                  as of December 31, 2004
              
              
              
              
              
              30,889,997
              
              
              30,890
              
              
              30,817,729
              
              
              -
              
              
              44,403
              
              
              (17,964,755
              )
              
              12,928,267Common
                  stock issued in exchange for consultancy services on April 19,
                  2005
              
              
              *19(c*
              *)*
              
              100,000
              
              
              100
              
              
              199,900
              
              
              -
              
              
              -
              
              
              -
              
              
              200,000Exercise
                  of warrants on December 2, 2005
              
              
              *19(b*
              *)*
              
              2,429,448
              
              
              2,429
              
              
              (2,429
              )
              
              -
              
              
              -
              
              
              -
              
              
              -Exercise
                  of options of The 2003 Plan on December 29, 2005
              
              
              *19(a*
              *)*
              
              249,478
              
              
              250
              
              
              (251
              )
              
              -
              
              
              -
              
              
              -
              
              
              (1
              )Net
                  profit
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              18,224
              
              
              18,224Transfer
                  to statutory reserve
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              125,221
              
              
              (125,221
              )
              
              -Foreign
                  currency translation adjustment
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              23,990
              
              
              -
              
              
              -
              
              
              23,990Unrealized
                  gain on available-for-sale securities
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              751,250
              
              
              -
              
              
              -
              
              
              751,250Balance
                  as of December 31, 2005
              
              
              
              
              
              33,668,923
              
              
              33,669
              
              
              31,014,949
              
              
              775,240
              
              
              169,624
              
              
              (18,071,752
              )
              
              13,921,730
  See
        accompanying notes to consolidated financial statements.
  48
 *Table
            of Contents*
  **CHINA
                  WORLD TRADE CORPORATION AND SUBSIDIARIES**
                **CONSOLIDATED
                  STATEMENTS CASHFLOWS**
                **(Expressed
                  in United States Dollar (“US$”))****Year
                  ended**
                **December
                  31,**
              
              Year
                  ended December 31,***Note***
              
              **2005**
              
              2004**Cash
                  flows from operating activities:**Net
                  income (loss)
              
              
              
              
              
              18,224
              
              
              (7,594,393
              )Adjustments
                  to reconcile net loss to net cash used in operating activities:Loss
                  on sale of land and building
              
              
              
              
              
              25,676Minority
                  interest
              
              
              
              
              
              282,975
              
              
              413,311Amortization
                  on intangible asset
              
              
              
              
              
              90,000
              
              
              360,000Depreciation
                  and amortization
              
              
              
              
              
              303,797
              
              
              233,298Impairment
                  loss on property, plant and equipment
              
              
              
              
              
              38,598
              
              
              594,343Impairment
                  loss on goodwill
              
              
              
              
              
              -
              
              
              388,118Impairment
                  loss on intangible assets
              
              
              
              
              
              -
              
              
              222,676Impairment
                  loss on current assets
              
              
              
              
              
              105,799
              
              
              -(Decrease)
                  increase in deferred income
              
              
              
              
              
              (20,642
              )
              
              3,546Provision
                  for bad debts due from related companies
              
              
              
              
              
              -
              
              
              236,247Stock,
                  options and warrants issued for services
              
              
              
              
              
              232,500
              
              
              2,379,862Cashless
                  exercise of option
              
              
              
              
              
              -
              
              
              429Staff
                  compensation cost
              
              
              
              
              
              -
              
              
              645,718Realized
                  gain on available-for-sale securities
              
              
              
              
              
              (6,079,960
              )
              
              -Gain
                  on disposal of a subsidiary
              
              
              
              
              
              (85,854
              )
              
              -Available
                  for sale securities received as income
              
              
              
              
              
              (1,042,043
              )
              
              -Changes
                  in working capital:Pledged
                  deposit
              
              
              
              
              
              (412,484
              )Trade
                  and other receivables
              
              
              
              
              
              -
              
              
              1,865,106Accounts
                  receivables
              
              
              
              
              
              (1,913,350
              )
              
              -Other
                  current assets
              
              
              
              
              
              (165,593
              )
              
              -Loans
                  receivable
              
              
              
              
              
              (410,946
              )
              
              -Due
                  from related parties
              
              
              
              
              
              109,037
              
              
              -Due
                  from related companies
              
              
              
              
              
              237,791
              
              
              -Rental
                  and other deposits
              
              
              
              
              
              (721,732
              )
              
              (329,535
              )Prepayments
              
              
              
              
              
              (201,525
              )
              
              515,499Inventories
              
              
              
              
              
              136,112
              
              
              (97,637
              )Hire
                  purchase creditor
              
              
              
              
              
              50,000
              
              
              -Account
                  payables
              
              
              
              
              
              703,764
              
              
              -Accrued
                  expenses
              
              
              
              
              
              258,939
              
              
              -Other
                  current liabilities
              
              
              
              
              
              33,710
              
              
              891Due
                  to related parties
              
              
              
              
              
              (58,317
              )
              
              -Due
                  to related companies
              
              
              
              
              
              51,494Income
                  tax payable
              
              
              
              
              
              205,952
              
              
              37,400**Net
                  cash provided from (used in) operating activities**
              
              
              
              
              
              (8,228,078
              )
              
              (125,121
              )**Cash
                  flows from investing activities:**Acquisition
                  of a subsidiary
              
              
              
              
              
              (92,327
              )
              
              (2,382,036
              )Acquisition
                  of property, plant and equipment
              
              
              
              
              
              (508,153
              )
              
              (688,622
              )Acquisition
                  of intangible assets
              
              
              
              
              
              -
              
              
              -Disposal
                  of a subsidiary
              
              
              
              
              
              (272,477
              )
              
              -Proceeds
                  from disposal of intangible asset
              
              
              
              
              
              -
              
              
              -Proceeds
                  from disposal of property, plant and equipment
              
              
              
              
              
              2,457,382
              
              
              -Proceeds
                  from disposal of short-term investment
              
              
              
              
              
              24,163
              
              
              -Proceeds
                  from disposal of available-for-sale securities
              
              
              
              
              
              6,838,178
              
              
              -Proceeds
                  from disposal of intangible asset
              
              
              
              
              
              1,320,000
              
              
              -Acquisition
                  of available-for-sale securities
              
              
              
              
              
              (3,675
              )
              
              -Purchase
                  of investment securities
              
              
              
              
              
              -
              
              
              -Loan
                  advance to a related company
              
              
              
              
              
              -
              
              
              -**Net
                  cash used in investing activities**
              
              
              
              
              
              9,763,091
              
              
              (3,070,658
              )**Cash
                  flows from financing activities:**Repayment
                  of advance from a shareholder
              
              
              
              
              
              (183,405
              )
              
              -Proceeds
                  from issuance of shares upon exercise of warrants
              
              
              
              
              
              -
              
              
              3,655,000Proceeds
                  from issuance of shares upon private placements
              
              
              
              
              
              -
              
              
              2,100,001Advance
                  from a shareholder
              
              
              
              
              
              -
              
              
              320,536Proceeds
                  from new bank loan
              
              
              
              
              
              1,111,482
              
              
              604,076Repayment
                  of amount borrowed
              
              
              
              
              
              (1,052,495
              )
              
              (1,974,337
              )Capital
                  contribution from minority shareholder of a subsidiary
              
              
              
              
              
              -**Net
                  cash provided by financing activities**
              
              
              
              
              
              (124,418
              )
              
              4,705,276**Foreign
                  currency translation adjustments**
              
              
              
              
              
              -
              
              
              -**Net
                  increase in cash and cash equivalents**
              
              
              
              
              
              1,410,595
              
              
              1,509,497**Cash
                  and cash equivalents at beginning of year**
              
              
              
              
              
              1,824,268
              
              
              314,771**Cash
                  and cash equivalents at end of year**
              
              
              
              
              
              3,234,863
              
              
              1,824,268**Supplemental
                  disclosure information:**Interest
                  paid
              
              
              
              
              
              138,757
              
              
              61,157Income
                  tax paid
              
              
              
              
              
              52,108
              
              
              9,153**Non-cash
                  transactions:**Purchase
                  of subsidiaries by:-
                  issuance of common stock
              
              
              
              
              
              -
              
              
              7,706,383-
                  purchase consideration in arrear
              
              
              
              
              
              -
              
              
              120,000Disposal
                  of a subsidiary by:-
                  disposal consideration in arrear
              
              
              
              
              
              225,644
  See
        accompanying notes to consolidated financial statements.
  49
 *Table
            of Contents*
 **1.**  **ORGANIZATION
        AND DESCRIPTION OF BUSINESS**
 
 China
        World Trade Corporation (“CWTC”) was incorporated under the laws of the State of
        Nevada on January 29, 1998 as Weston International Development Corporation.
        On
        July 28, 1998, the name was changed to Txon International Development
        Corporation. On September 15, 2000 CWTC changed to its existing name. CWTC
        acts
        as an investment holding company.
 
 The
        Company and subsidiaries are hereinafter collectively referred to as the
        “Group”.
 
 Details
        of the major direct and indirectly owned subsidiaries and their principal
        activities as of the date of this report are summarized below:
 
 **Name
                  of company**
              **Date
                  of acquisition/**
                **formation**
              **Place
                  of**
                **incorporation**
              **Equity
                  interest owned by the Company**
              **Principal
                  activities**Beijing
                  World Trade Centre Club
              April
                  1, 1999
              PRC
              75%
              Club
                  servicesCEO
                  Clubs China Limited
              May
                  7, 2004
              Hong
                  Kong
              51%
              LicensingChina
                  Chance Enterprises Limited
              January
                  26, 2004
              BVI
              100%
              Equity
                  holding companyCreative
                  Idea Group Limited
              January
                  2, 2004
              BVI
              100%
              Business
                  consulting serviceGeneral
                  Business Network (Holdings) Limited
              January
                  24, 2003
              Hong
                  Kong
              100%
              Equity
                  holding company and properties investmentGeneral
                  Business Network (Guangzhou) Company Limited
              December
                  25, 2002
              PRC
              100%
              Equity
                  holding companyGuangdong
                  Airport Tour Service Limited
              August
                  2, 2004
              PRC
              75.4%
              Travel
                  ticketing agencyGuangdong
                  Hauhao Insurance Agency Limited
              January
                  15, 2002
              PRC
              31.6%
              Insurance
                  agencyGuangdong
                  New Generation Air Tour Service Ltd.
              September
                  30, 2004
              PRC
              25.6%
              Travel
                  ticketing agencyGuangdong
                  New Generation Commercial Management Limited
              August
                  2, 2004
              PRC
              51%
              Travel
                  ticketing agency and holding companyGuangdong
                  Boundless Travel Electronics  Services  Co. Ltd.
              July
                  29, 2004
              PRC
              25.6%
              Room
                  booking services and travel ticketing agencyGuangzhou
                  Hongyan Travel Services Limited
              July
                  17, 2004
              PRC
              30.6%
              Travel
                  ticketing agencyGuangzhou
                  World Trade Centre Club
              December
                  29, 2001
              PRC
              75%
              Club
                  servicesGuangzhou
                  Xinyou Foreign Enterprise Services Limited
              May
                  18, 2004
              PRC
              30.6%
              Garment
                  tradingPolysend
                  Trading Limited
              March
                  6, 2003
              Hong
                  Kong
              100%
              Leather
                  tradingSino
                  Platform Limited
              January
                  4, 2004
              BVI
              100%
              Equity
                  holding companyVirtual
                  Edge Limited
              August
                  14, 2000
              BVI
              100%
              Equity
                  holding company
  50
 *Table
            of Contents*
  **2.**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 (a)  Basis
        of
        consolidation
 These
          accompanying consolidated financial statements include the financial statements
          of CWTC and subsidiaries and have been prepared in accordance with accounting
          principles generally accepted in the United States of America (“US GAAP”). The
          results of subsidiaries acquired or disposed of during the year are consolidated
          from or up to the date of their effective dates of acquisition or disposal,
          respectively.
 All
        significant inter-company balances and transactions have been eliminated
        in
        consolidation.
  (b)  Use
        of
        estimates
 
 The
        preparation of consolidated financial statements requires management of the
        Group to make estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the date of the financial statements and the reported amounts of revenues
        and
        expenses during the reporting period. Actual results could differ from those
        estimates.
 
 (c)  Cash
        and
        cash equivalents
 
 Cash
        and
        cash equivalents of US$3,234,863 as of December 31, 2005 consist principally
        of
        cash at bank. For purposes of the consolidated statements of cash flows,
        the
        Group considers all highly liquid debt instruments with original maturities
        of
        three months or less to be cash equivalents. None of the Group’s cash is
        restricted as to withdrawal except pledged deposit amounting to US$ 412,484,
        which has been separately disclosed in current assets. .
 
 (d)  Accounts
        receivable
 
 Trade
        accounts receivable are recorded at the invoiced amount and do not bear
        interest. The allowance for doubtful accounts is the Group’s best estimate of
        the amount of probable credit losses in the Group’s existing accounts
        receivable. The Group determines the allowance based on historical write-off
        experience of the Group. The Group reviews its allowance for doubtful accounts
        on a regular basis. Past due balances over 90 days and over a specified amount
        are reviewed individually for collectibility. All other balances are reviewed
        on
        a pooled basis by industry. Account balances are charged off against the
        allowance after all means of collection have been exhausted and the potential
        for recovery is considered remote. The Group does not have any off-balance-sheet
        credit exposure related to its customers.
  (e)  Property-use
        rights
 
 Property-use
        rights are stated at cost less accumulated amortization and impairment losses.
        Costs of the property-use rights are amortized over the term of the relevant
        rights on a straight line basis.
  51
 *Table
            of Contents*
 
 (f)  Property,
        plant and equipment
 
 Property,
        plant and equipment and leasehold improvements are stated at cost less
        accumulated depreciation and impairment losses, if any. Depreciation is
        calculated on the straight-line method over the estimated useful lives of
        the
        assets. The estimated useful lives of the assets are as follows:
 
 Depreciable
                  lifeLeasehold
                  land and buildings
              50
                  yearsLeasehold
                  improvements
              2
                  -
                  3 yearsOffice
                  and computer equipment
              3
                  -
                  5 yearsMotor
                  vehicles
              3
                  -
                  6 yearsFurniture
                  and fixtures
              5
                  -
                  10 years
 
 (g)  Goodwill
        on consolidation
 
 Goodwill
        represents the excess of the purchase consideration payable in acquisitions
        of
        subsidiaries over the fair value of the net assets acquired at the time of
        acquisition. Goodwill on consolidation is stated at cost when it arises.
        As part
        of an ongoing review of the valuation of goodwill, management assesses the
        carrying value of the goodwill to determine if changes in facts and
        circumstances suggest that it may be impaired. If this review indicates that
        the
        goodwill is not recoverable, the carrying value of the goodwill would be
        reduced
        to its estimated fair market value.
 
 On
        disposal of a subsidiary, any attributable amount of purchased goodwill is
        included in the calculation of the gain or loss on disposal.
 
 (h)  Impairment
        of long-lived assets
 In
          accordance with FASB Statement 144, long-lived assets, such as property,
          plant
          and equipment, and purchased intangibles subject to amortization, are reviewed
          for impairment whenever events or changes in circumstances indicate that
          the
          carrying amount of an asset may not be recoverable. Recoverability of assets
          to
          be held and used is measured by a comparison of the carrying amount of
          an asset
          to estimated undiscounted future cash flows expected to be generated by
          the
          asset. If the carrying amount of an asset exceeds its estimated future
          cash
          flows, an impairment charge is recognized by the amount by which the carrying
          amount of the asset exceeds the fair value of the asset. Assets to be disposed
          of would be separately presented in the balance sheet and reported at the
          lower
          of the carrying amount or fair value less costs to sell, and are no longer
          depreciated. The assets and liabilities of a disposed group classified
          as held
          for sale would be presented separately in the appropriate asset and liability
          sections of the balance sheet.
 Goodwill
        is tested annually for impairment, and is tested for impairment more frequently
        if events and circumstances indicate that the asset might be impaired. An
        impairment loss is recognized to the extent that the carrying amount exceeds
        the
        asset’s fair value. This determination is made at the reporting unit level and
        consists of two steps. First, the Group determines the fair value of a reporting
        unit and compares it to its carrying amount. Second, if the carrying amount
        of a
        reporting unit exceeds its fair value, an impairment loss is recognized for
        any
        excess of the carrying amount of the reporting unit’s goodwill over the implied
        fair value of that goodwill. The implied fair value of
        goodwill is determined by allocating the fair value of the reporting unit
        in a
        manner similar to a purchase price allocation, in accordance with FASB Statement
        141, *Business
        Combinations.* The
        residual fair value after this allocation is the implied fair value of the
        reporting unit goodwill.
 
 (i)  Deferred
        income
 Deferred
          income represents unamortized non-refundable admission fees, membership
          fees and
          licensing fees received but the related services, or portion of the services,
          have not yet been rendered.
 52
 *Table
            of Contents*
 
 (j)  Revenue
        recognition
 
 The
        Group
        recognizes revenue when persuasive evidence of an arrangement exists, the
        element has been delivered, the fee is fixed or determinable, collection
        of the
        resulting receivable is probable, and VSOE of the fair value of any undelivered
        element exists. A discussion about these revenue recognition criteria and
        their
        applicability to the Group’s transactions as follows:
 
 *Persuasive
        evidence of an arrangement* :
        The
        Group uses either contract signed by both the customer and the Group or written
        sales receipt issued by the Group that legally bind the Group and the customer
        as evidence of an arrangement.
 
 *Product
        delivery* :
        The
        Group deems delivery to have occurred when the air tickets are accepted by
        and
        title and risk of ownership has passed to the customer. Delivery of other
        services are recognized as services are rendered under the terms of the
        contract.
 
 *Fixed
        or determinable fee* :
        The
        Group considers the fee to be fixed or determinable if the fee is not subject
        to
        refund or adjustment and the payment terms are within its normal established
        practices. If the fee is not fixed or determinable, the Group recognizes
        the
        revenue as amounts become due and payable.
 
 *Collection
        is deemed probable* :
        The
        Group conducts a credit review for all significant transactions at the time
        of
        the arrangement to determine the credit-worthiness of the customer. Collection
        is deemed probable if the Group expects that the customer will pay amounts
        under
        the arrangement as payments become due.
 
 (i)
              Club
                  and business center
  The
        Group, through its Business Club, provides members a commercial and recreational
        service, education programs and business networking programs. The Group
        generally records membership revenue as deferred income on its consolidated
        balance sheets and recognizes it over the membership period. Revenues generated
        from memberships that are subject to a pro rata refund are recognized ratably
        over the membership period.
  (ii)
              Business
                  traveling services
 
 *Travel
        distribution services*
  The
        Group
        engages in the air-ticketing, hotel room booking and travel agency businesses
        and receives commissions from travel suppliers for air travel, hotel rooms,
        vacation packages and cruises booked through its toll-free call center, websites
        and reseller network. Commissions from travel providers are recognized upon
        delivery of the appropriate confirmation or air ticket to the customers.
        Commissions from hotel room booking are recognized upon the confirmation
        of a
        customer’s stay with the hotel. The Company is not the primary obligor of the
        arrangement of these services and revenue is reported net in accordance with
        EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an
        Agent”.
  For
        informational purposes, the commission income of the Group was derived from
        air-ticketing services with total values as follows:
 
 Year
                  ended
              
              Year
                  endedDecember
                  31, 2005
              
              December
                  31, 2004US$
              
              US$Value
                  of air-ticket fare
              
              
              147,995,206
              
              
              54,890,272
 
 53
 *Table
            of Contents*
  *Life
        and accident insurance agency business*
 
 The Group
        engages in the life and accident insurance agency business in PRC. Commission
        revenues from the carriers for life and accident insurance are received and
        recognized during the underlying policy period.
  For
        informational purposes, the commission income of the Group was derived from
        insurance policies with total premium income as follows:
  Year
                  ended
              
              Year
                  endedDecember
                  31, 2005
              
              December
                  31, 2004US$
              
              US$Premium
                  income of insurance policies
              
              
              11,892,144
              
              
              2,489,675
 
 (iii)
              Business
                  value-added services
 
 Revenues
        from various business consultancy services contracts are recognized as services
        are provided. There are two basic types of services contracts: (1) fixed
        price
        (or flat fee basis) services contracts and (2) services contracts which may
        or
        may not be signed in advance for similar service on a success basis (success
        fee
        basis). Fixed price services contracts are generally performed evenly over
        the
        contract period, and, accordingly, revenue is recognized on a pro-rata basis
        over the life of the contract. Revenues derived from other services contracts
        are recognized when the services are performed in accordance with Staff
        Accounting Bulletin No. 104, “Revenue Recognition, revised and updated.”
Expenses related to all services contracts are recognized as incurred.
  For
        fixed
        price services contracts for which fees are received in the form of marketable
        securities, revenue is recognized with reference to the fair value of marketable
        securities as of the vested date. Vested date is taken as the contract date
        and
        fair value of the marketable securities is determined by multiplying quantity
        of
        shares received by the closing market price as of contract date. Revenue
        is
        recognized on a pro-rata basis over the life of the contract.
 (iv)
              Rental
                  and others
 
 *Rental*
  The
        Company also leases business facilities to members of the Club. These leases
        are
        classified as operating leases and the lease revenues are recognized based
        on
        the lease term of the facilities.
  *Others*
 
 The
        Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
        No.
        101 “Revenue Recognition of Financial Statements”, when the title and risk of
        loss have passed to the customer, there is persuasive evidence of an
        arrangement, delivery has occurred or services have been rendered, the sales
        price is determinable, and collectibility is reasonably assured.
 
 (v)
              Interest
                  income
 
 Interest
        income is recognized on a time apportionment basis, taking into account the
        principal amounts outstanding and the interest rates applicable.
 
 (k)  Advertising
        costs
 
 The
        Group
        expenses advertising costs as incurred in accordance with the SOP 93-7,
“Reporting for Advertising Costs”. Advertising
        costs are expensed as incurred and were US$312,207 for the year ended December
        31, 2005 and US$ 98,848 for the year ended December 31, 2004.
  54
 *Table
            of Contents*
 
 (l)
              Income
                  taxes
 
 The
        Group
        accounts for income tax using SFAS No. 109 “Accounting for Income Taxes”, which
        requires the asset and liability approach for financial accounting and reporting
        for income taxes. Under this approach, deferred income taxes are provided
        for
        the estimated future tax effects attributable to temporary differences between
        financial statement carrying amounts of assets and liabilities and their
        respective tax bases, and for the expected future tax benefits from loss
        carry-forwards and provisions, if any. Deferred tax assets and liabilities
        are
        measured using the enacted tax rates expected in the years of recovery or
        reversal and the effect from a change in tax rates is recognized in the
        statement of operations in the period of enactment. A valuation allowance
        is
        provided to reduce the amount of deferred tax assets if it is considered
        more
        likely than not that some portion of, or all of the deferred tax assets will
        not
        be realized. For details please refer to Note 4 to these financial
        statements.
 (m)
              Foreign
                  currency translation
 
 Assets
        and liabilities of the Group whose functional currency is the local currency
        are
        translated into U.S. dollars at exchange rates prevailing at the balance
        sheet
        date. Revenues and expenses are translated at average exchange rates for
        the
        year. The net exchange differences resulting from these translations are
        reported in accumulated other comprehensive income. Gains and losses resulting
        from foreign currency transactions are included in the consolidated statements
        of operations.
 
 (n)
              Business
                  segment reporting
 
 SFAS
        No.
        131 “Disclosures about Segments of an Enterprise and Related Information”
establishes standards for reporting information about operating segments
        on a
        basis consistent with the Group’s internal organization structure as well as
        information about geographical areas, business segments and major customers
        in
        financial statements.
 The
        Group
        operates in five principal business segments: club and business centre, business
        traveling services, business value-added services, rental, trading and others.
        There reportable segments are strategic business units that offer different
        services. They are managed separately because they provide distinct service
        that
        requires different knowledge and marketing strategies. The network maintenance
        service and Internet café segment were acquired as a unit, and the management at
        the time of acquisition was retained.
 
 (o)
              Stock-based
                  compensation
 In
          December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,”
which is a revision of SFAS No. 123, “Accounting for Stock-Based
          Compensation.” Generally, the approach in SFAS No. 123(R) is similar
          to the approach described in SFAS No. 123. However, SFAS
          No. 123(R) requires all share-based payments to employees, including
          grants of employee stock options, to be recognized in the income statement
          based
          on their fair values. Pro forma disclosure is no longer an alternative.
          The new
          standard will be effective for public entities (excluding small business
          issuers) for the fiscal year beginning after June 15, 2005. The Group
          adopted SFAS No. 123(R) on January 1, 2006 using the
          modified-prospective transition method. Had the Group adopted SFAS
          No. 123(R) for the year ended December 31, 2005, its diluted
          earnings per share would have been unchanged, and going forward, the Group
          expects that the adoption of SFAS No. 123(R) will have a similar
          effect on diluted earnings per share.
 The
        Company records compensation expense for stock-based employee compensation
        plans
        using the intrinsic value method in which compensation expense, if any, is
        measured as the excess of the market price of the stock over the exercise
        price
        of the award on the measurement date.
 
 On
        December 31, 2003, the Board of Directors adopted a stock option plan (The
        2003
        Plan). The 2003 Plan allows the Board of Directors to grant stock options
        to
        various employees of the Company. 1,000,000 stock options were granted in
        accordance with the terms of the 2003 Plan on December 31, 2003 to certain
        officers and directors at an exercise price of US$0.673 per share. The stock
        options will vest and become exercisable according to the following schedule:
 
 On
        April
        30,
        2004:                                                           
    25%
 
 On
        December 30,
        2004:                                                        
25%
 
 Each
        quarter
        thereafter:                                                        
6.25% (until fully vested)
  55
 *Table
            of Contents*
 
 By
        an
        ordinary resolution passed at a directors’ meeting held on October 31, 2004, the
        option holders of The 2003 Plan were allowed to begin exercising 50% of the
        total entitlements as of November 1, 2004 (ahead of the original entitlement
        on
        December 30, 2004) and on a cashless basis. The terms and conditions of the
        remaining 50% of their entitlements under The 2003 Plan shall stay the same.
 
 As
        the
        exercise price of the Company’s incentive stock options is higher than the
        market price of the underlying stock on the date of grant, pursuant to APB
        Opinion No. 25, no compensation expense has been recognized for stock options
        granted to employees at the date of grant.
 
 Following
        modification the options granted under The 2003 Plan, the modified award
        (i.e.
        50% of the total entitlements) was fully vested at October 31, 2004. The
        new
        measurement of stock-based compensation was required and based on the intrinsic
        value of the Company’s common stock at the date immediately prior to the
        modification (i.e. October 31, 2004). The compensation cost was recognized
        in
        the consolidated statement of operations and the same amount was credited
        to the
        Company’s additional paid-in capital.
 
 Had
        compensation expense for the same stock options been determined based on
        their
        fair values at the dates of grant and been amortized over the period from
        the
        date of grant to the date that the award is vested, as consistent with the
        provisions of SFAS No. 123, the Company's net loss and loss per share would
        have
        been reported as follows:
 
 Year
                  ended
              Year
                  endedDecember
                  31, 2005
              December
                  31, 2004Net
                  profit (loss), as reported
              
              18,224
              
              (7,594,393)Total
                  stock-based employee compensation expense determined under intrinsic
                  value
                  based on method for all awards, net of tax
              
              Nil
              
              645,718Total
                  stock-based employee compensation expense determined under fair
                  value
                  based on method for all awards, net of tax
              
              Nil
              
              (891,425)Pro
                  forma
              
              18,224
              
              (7,840,100)Earning
                  (loss) per share-
                  Basic and dilutedAs
                  reported
              
              0.00
              
              (0.36)Pro
                  forma
              
              0.00
              
              (0.37)
 
 The
        fair
        value of the options granted is estimated on the date of grant and date of
        modification using a Black-Scholes option pricing model with the following
        weighted average assumptions used:
 
 **Years
                  ended December 31,****2005**
              
              **2004**Dividend
                  yield
              
              
              -
              
              
              -Expected
                  price volatility
              
              
              224
              %
              
              224
              %Risk-free
                  interest rate
              
              
              2.1
              %
              
              2.1
              %Expected
                  life of options (in years)
              
              
              3
              
              
              3Weighted-average
                  fair value of options granted or modified
              
              $
              0.62
              
              $
              1.97
 
 56
 *Table
            of Contents*
  The
        weighted average fair value per option granted at the date of grant and date
        of
        modification was US$0.62 and US$1.97 respectively. For purposes of pro forma
        disclosure, the estimated fair value of the options is amortized on a straight
        line basis to expense over the options’ vesting periods, i.e., 3 years as
        prescribed under The 2003 Plan.
 
 (p)
              Comprehensive
                  income (loss)
 Accumulated
          comprehensive income, as presented in the accompanying consolidated statement
          of
          stockholder equity consists of changes in unrealized gains and losses on
          foreign
          currency translation as well as unrealized gains or losses from
          available-for-sale securities. This comprehensive income is not included
          in the
          computation of income tax expense or benefit.
 (q)
              Related
                  party
  Parties
        are considered to be related if one party has the ability, directly or
        indirectly, to control the other party or exercise significant influence
        over
        the party in making financial and operating decisions or vice versa, or where
        the Group and the party are subject to common control or common significant
        influence. Related parties may be individuals or other entities. All material
        related party transactions have been disclosed in the disclosure note 15
        to the
        financial statements.
 
 (r)
              Concentrations
                  of credit risk
 
 Financial
        instruments that potentially subject the Group to significant concentrations
        of
        credit risk consist principally of cash and trade accounts receivable. The
        Group
        performs ongoing credit evaluations of its customers' financial condition,
        but
        does not require collateral to support such receivables.
 
 The
        Group
        utilizes a limited number of suppliers for certain components used in its
        products but has no long-term supply contracts with them.
 
 (s)
              Fair
                  value of financial instruments
 Management
          considers that the carrying amounts of the Group’s cash, receivables, and
          payables approximate their fair value because of the short maturity of
          these
          instruments. Amounts due to related companies do not bear interest and
          do not
          have fixed payment terms. Management is therefore unable to estimate the
          fair
          value of such financial instruments.
 
 (t)  Operating
        leases
 Leases
          where substantially all the rewards and risks of ownership of assets remain
          with
          the leasing company are accounted for as operating leases. Rent payable
          and
          receivable under operating leases are recognized as expense and revenue
          on the
          straight line basis over the lease terms.
 
 The
          Company leases certain premises under non-cancellable operating leases.
          Rental
          expenses under operating leases were US$690,283 and US$564,198 for the
          years
          ended December 31, 2005 and 2004, respectively.
 57
 *Table
            of Contents*
 
 The
        Company leases certain premises under non-cancellable operating leases. Rental
        expenses under operating leases were US$690,283 and US$564,198 for the years
        ended 31 December 2005 and 2004 respectively.
 
 (u)  Earnings
        per share
 The
          Company computes earnings per common share (“EPS”) in accordance with SFAS
          No. 128, “Earnings per Share.” Basic earnings per common share (“Basic
          EPS”) are calculated using the weighted average number of shares of common
          stock
          outstanding during each period. Diluted earnings per common share (“Diluted
          EPS”) reflect the potential dilutive effect of additional common shares that
          are
          issuable upon exercise of outstanding stock options, deferred compensation,
          restricted stock units, and the outstanding commitment to issue shares
          under the
          Employee Stock Purchase Plan, determined by the treasury stock
          method.
 
 As
                  of
              
              As
                  ofDecember
                  31, 2005
              
              December
                  31, 2004Warrants
              
              
              921,002
              
              
              5,421,002Options
              
              
              -
              
              
              1,852,500921,002
              
              
              **7,273,502**
  (v)  Available-for-sale
          securities
 
 Available-for-sale
          securities received in respect of the services rendered in our business
          value-added segment are accounted for as a current asset for non-legend
          free
          trading shares, at fair value as of the vested date. Vested date refers
          to the
          contract date which the Company is entitled to the receipt of the shares
          in
          respect of its services rendered pursuant to the consultancy service engagement
          contract. Fair value is taken as the number of shares multiplied by the
          closing
          market price of the marketable securities received. For those restricted
          shares,
          it is accounted for as a non-current asset upon receipt of securities.
          For those
          available-for-sale securities still on hand as of year-end or quarter-end
          date,
          amounts are stated at fair value as of the reporting date. They will be
          “marked to market” by multiplying the number of shares on hand by the
          closing market price as of the reporting date. The change in unrealized
          gain or
          loss will be directly adjusted to accumulated other comprehensive income
          -
          unrealized gain on available-for-sale securities.
 
 Please
          refer to footnote 2(l)(iii) for method of revenue recognition in respect
          of the
          consultancy income relating to the receipt of available-for-sale securities.
          Realized gain on sale of available-for-sale securities is calculated by
          deducting fair value of shares disposed (number of shares disposed multiplied
          by
          market price as of vested date) from net proceeds on disposal (which selling
          expenses including brokerage commission and levies have been
          deducted).
 (w)  Recently
        Issued Accounting Standards
 
 In
        December 2004, the FASB issued SFAS Statement No.151, “Inventory Costs - an
        amendment of ARB No. 43, Chapter 4” ("SFAS 151"), which clarifies the accounting
        for abnormal amounts of idle facility expense, freight, handling costs, and
        wasted material (spoilage). Under this Statement, such items will be recognized
        as current-period charges. In addition, the Statement requires that allocation
        of fixed production overheads to the costs of conversion be based on the
        normal
        capacity of the production facilities. This Statement will be effective for
        the
        Group for inventory costs incurred on or after January 1, 2006. The Group
        is
        currently evaluating the impact of SFAS 151 on its financial
        statements.
 
 In
        December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of
        Non-monetary Assets - an amendment of APB Opinion No. 29” ("SFAS 153"), which
        eliminates an exception in APB 29 for non-monetary exchanges of similar
        productive assets and replaces it with a general exception for exchanges
        of
        non-monetary assets that do not have commercial substance. This Statement
        will
        be effective for the Group for non-monetary asset exchanges occurring on
        or
        after January 1, 2006. The Group is currently evaluating the impact of SFAS
        153
        on its financial statements.
 
 In
        May
        2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections
        -
        a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("SFAS 154").
        SFAS
        154 changes the requirements for the accounting for and reporting of a change
        in
        accounting principle. These requirements apply to all voluntary changes and
        changes required by an accounting pronouncement in the unusual instance that
        the
        pronouncement does not include specific transition provisions. SFAS 154 is
        effective for fiscal years beginning after December 15, 2005. As such, the
        Group
        is required to adopt these provisions at the beginning of the fiscal year
        ended
        December 31, 2006. The Group is currently evaluating the impact of SFAS 154
        on
        its financial statements.
 
 In
        February 2006, the FASB issued SFAS Statement No. 155, “Accounting for Certain
        Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140”
("SFAS 155"). This Statement amends FASB Statements No. 133, Accounting for
        Derivative Instruments and Hedging Activities, and No. 140, Accounting for
        Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
        This Statement resolves issues addressed in Statement 133 Implementation
        Issue
        No. D1, “Application of Statement 133 to Beneficial Interests in Securitized
        Financial Assets.” This Statement permits fair value re-measurement for any
        hybrid financial instrument that contains an embedded derivative that otherwise
        would require bifurcation, clarifies which interest-only strips and
        principal-only strips are not subject to the requirements of Statement 133,
        establishes a requirement to evaluate interests in securitized financial
        assets
        to identify interests that are freestanding derivatives or that are hybrid
        financial instruments that contain an embedded derivative requiring bifurcation,
        clarifies that concentrations of credit risk in the form of subordination
        are
        not embedded derivatives and amends Statement 140 to eliminate the prohibition
        on a qualifying special-purpose entity from holding a derivative financial
        instrument that pertains to a beneficial interest other than another derivative
        financial instrument. SFAS 155 is effective for all financial instruments
        acquired or issued for the Group for fiscal year begins after September 15,
        2006. The Group is currently evaluating the impact of SFAS 155 on its financial
        statements.
  58
 *Table
            of Contents*
 **3.     
          ACQUISITION AND DISPOSITION**
  **(a)**
 Pursuant
        to the Sale & Purchase Agreement dated on December 22, 2005, the Company,
        through a wholly-owned subsidiary, GD WTC acquired 60% of equity interest
        of
        Blue Express Limited for a cash consideration of $101,886, equivalent to
        RMB825,000. The results of operations have been included in the consolidated
        financial statements since the effective date of the acquisition. The aggregate
        purchase price was $101,886 and was fully paid in cash.
 
 The
        following table summarizes the estimated fair value of the assets acquired
        and
        liabilities assumed at the date of acquisition. [The Company is in the process
        of obtaining third-party valuations of certain intangible assets; thus the
        allocation of the purchase price is subject to refinement.]
 
 US$Assets
                  acquiredProperty,
                  plant and equipment
              
              
              194,095Cash
                  and cash equivalents
              
              
              9,559Rental
                  and other deposits
              
              
              9,386Other
                  receivables and prepayments
              
              
              17,581Inventory
              
              
              576Intangible
                  assets
              
              
              68,237Goodwill
              
              
              49,278Total
                  assets acquired
              
              
              348,712**Liabilities
                  assumed**Other
                  payables and accrued liabilities
              
              
              246,826Total
                  liabilities assumed
              
              
              246,826Net
                  assets acquired
              
              
              101,886
 
 The
        acquired intangible asset was the cost of Internet license fee to China Railcom
        Corporation Limited for the access to Internet connection in operating the
        Internet cafés in the PRC and was being amortized over the licensing period of 5
        years.
 
 The
        excess of cost over fair value of assets acquired of $49,278 was recorded
        as
        Goodwill in the consolidated financial statements. The goodwill is expected
        to
        be fully deductible for tax purposes.
  **(b)**
 Pursuant
          to the Sale & Purchase Agreement dated on December 22, 2005, the Company,
          through a wholly-owned subsidiary, Sino Platform Limited (“SPL”) disposed 80% of
          equity interest of WTC Link International Limited for a cash consideration
          or a
          Pink sheet stock with fair value not less than $225,641, equivalent to
          HK$1,760,000. The results of operations before the effective date of the
          disposal and gain on disposal on SPL have been included in the consolidated
          financial statements. The aggregate purchase price $225,641 was outstanding
          as
          of December 31, 2005 and the date of this financial statements.
 59
 *Table
            of Contents*
 
 The
        following table summarizes the estimated fair value of the assets disposed
        and
        liabilities discharged at the date of acquisition.
 
 US$Assets
                  soldProperty,
                  plant and equipment
              
              
              201,545Cash
                  and cash equivalents
              
              
              272,477Rental
                  and other deposits
              
              
              9,386Other
                  receivables and prepayments
              
              
              21,387Inventory
              
              
              953Intangible
                  assets
              
              
              68,121Goodwill
              
              
              49,278Total
                  assets sold
              
              
              623,147**Liabilities
                  discharged**Other
                  payables and accrued liabilities
              
              
              386,351Net
                  assets sold
              
              
              236,796
 
 The
        excess of disposal consideration over fair value of net assets sold after
        adjustments for losses of preceding year, which were not fully charged to
        minority interest, amounting to $85,854 was recorded as gain on disposal
        of a
        subsidiary in the consolidated financial statements.
 
 (c)
        Framework Guangdong New Generation Management Limited entered into a Cooperation
        Agreement, dated July 29, 2005, as subsequently amended, providing for the
        acquisition of interests in each of Guangdong Hao Shi Guang Travel Agency
        and
        Guangdong Kaixuan Transportation Co., Ltd, both owned by Guangdong Rising
        Hotel
        Group Limited. The primary business of Kaixuan Transportation Co., Ltd. is
        to
        provides coach-hire services in Guangzhou and the primary business of Hai
        Shi
        Guang Agency is to provide packaged tour services mainly for corporate
        clients.
  Pursuant
        to such agreement, we have agreed to purchase 22.68% of the share capital
        of the
        Travel Agency. We have further agreed to increase our purchase of the share
        capital of the Travel Agency until we own 70% of the outstanding share capital.
        The purchase price will be calculated based on the net assets of the Travel
        Agency as of June 30, 2005, as determined by an independent certified public
        accountant in the Peoples’ Republic of China.
  ** We
        have
        additionally agreed to purchase 70% of the Transportation Company during
        the
        period August 1, 2005 through July 31, 2006. The purchase price is to be
        calculated based on its net assets as of June 30, 2005, as determined by
        an
        independent certified public accountant in the Peoples’ Republic of China. We
        paid an initial deposit of approximately US$60,000 upon execution of the
        agreement and are required to pay an additional US$69,000 by January 27,
        2006,
        with both amounts being deducted from the final purchase price
  Upon
        payment of the US$60,000 in June, we were transferred full operating authority
        for the Transportation Company . If the closing of the full 70% is not
        consummated by July 31, 2006, due to reasons outside of our control, we are
        not
        entitled to the return of any amounts previously paid., However, the net
        profit
        of the Transportation Company earned during such one year period.will be
        received and accounted for as our revenue, irrespective of the purchase of
        70%
        of its share capital by us. Our arrangement operates as a subcontracting
        agreement in which we are entitled to the net profit during the subcontracting
        period (i.e. period during which we have the full operating authority) as
        a fee
        payment for the non-refundable deposit totaling $129,000. Upon consummation
        of
        the full 70% acquisition by July 31, 2006, then, we become a shareholder
        owning
        70% interest.
 
 **4.**  **INCOME
        TAXES**
 
 The
        Group
        are subject to income taxes on an entity basis on income arising in or derived
        from the tax jurisdiction in which it is domiciled and operated.
 
 The
        Hong
        Kong subsidiaries incurred losses for taxation purposes for the year and
        thus
        Hong Kong Profits Tax has not been provided.
 
 60
 *Table
            of Contents*
  Several
        PRC subsidiaries are subject to PRC Enterprise Income Taxes (“EIT”) on an entity
        basis on income arising in or derived from the PRC. Income tax expense comprises
        of the following:
 
 Year
                  ended December 31,2005
              
              2004Current
                  tax
              
              
              254,419
              
              
              46,553Deferred
                  tax
              
              
              -
              
              
              -254,419
              
              
              46,553
 
 
 A
        reconciliation of the income tax expense to the amount computed by applying
        the
        current tax rate to the income before income taxes in the consolidated
        statements of income is as follows:
 Year
                    ended December 31,2005
                
                
                2004%
                
                
                %Statutory
                    rate
                
                
                
                
                33.0
                
                
                
                
                33.0Non-deductible
                    expenses
                
                
                
                
                211.5
                
                
                
                
                (9.9
                )Tax
                    exempt income
                
                
                
                
                (18.6
                )
                
                
                
                -Tax
                    effect of net operating losses
                
                
                
                
                4,123.8
                
                
                
                
                (23.6
                )Unrecognised
                    temporary differences
                
                
                
                
                831.4
                
                
                
                
                0.2Subsidiary
                    not subject to tax
                
                
                
                
                (5,022.6
                )
                
                
                
                (1.3
                )Tax
                    rate differential between subsidiaries
                
                
                
                
                569.6
                
                
                
                
                (1.3
                )Over
                    provision in prior years related to a newly-acquired
                    subsidiary
                
                
                
                
                -
                
                
                
                
                2.0Others
                
                
                
                
                668.0
                
                
                
                
                0.21,396.1
                
                
                
                
                (0.7
                )
  
 Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. Significant components of the Group’s
        deferred tax assets and liabilities are as follows:
 
 As
                  of
                December
                  31, 2005
              
              As
                  of
                December
                  31, 2004**Deferred
                  tax assets**Net
                  operating loss
              
              
              8,500,133
              
              
              9,055,752Depreciation
              
              
              101,462
              
              
              101,462Deferred
                  expenditure
              
              
              2,952,336
              
              
              3,745,02511,553,931
              
              
              12,902,239Valuation
                  allowance
              
              
              (11,553,931
              )
              
              (12,902,239
              )**Total
                  deferred tax assets**
              
              
              -
              
              
              **-**
 
 61
 *Table
            of Contents*
  In
        assessing the realizability of deferred tax assets, management considers
        whether
        it is more likely than not that some portion or all of the deferred tax assets
        will not be realized. The ultimate realization of deferred tax assets is
        dependent upon the generation of future taxable income during the periods
        in
        which those temporary differences become deductible.
 
 **5.**  **TRADE
        RECEIVABLES, NET**
 
 As
                  of
                December
                  31,
                2005*US$*Trade
                  receivables, net
              
              
              3,377,343
 
 Provision
        of bad and doubtful debts amounting to US$3,625 has been made in these
        consolidated financial statements. The management considers that the accounts
        receivable are from reputable customers and expects to collect their outstanding
        balances in full.
 
 **6.**  **RENTAL
        AND OTHER DEPOSITS**
 
 Included
        in rental and other deposits are deposits paid to Guangzhou Goldlion City
        Properties Co., Ltd. of US$214,392 as of December 31, 2005. For relationship
        with the Group, please refer to note 15 (a) to these financial statements.
 
 **7.**  **AMOUNT
        DUE FROM/TO RELATED PARTIES**
 
 (a) Due
                  from related parties**As
                  of**
                **December
                  31,**
                **2005*****US$***Huang
                  Zehua
              
              
              245,761Chen
                  Dexiong
              
              
              368,422Classified
                  as current assets
              
              
              614,183
 
 (b)
                  Due from related companies
              
              **As
                  of**
                **December
                  31,**
                **2005*****US$***WTC
                  Link International Limited
              
              
              112,715Chinamax
                  International Limited
              
              
              52Guangzhou
                  Sanranxin Travel Ltd
              
              
              432Classified
                  as current assets
              
              
              113,199The
                  amounts due from related parties and related companies as of December
                  31,
                  2005 represented unsecured advances which were interest-free and
                  repayable
                  on demand. During the fourth quarter of 2005, the Company determined
                  that
                  receivables in the amount of US$18,206 were uncollectible and provision
                  for doubtful debts has been made accordingly.
  62
 *Table
            of Contents*
  (c)
              Due
                  to related parties
 
 **As
                  of**
                **December
                  31,**
                **2005*****US$***Ms.
                  Suo Hong Xia
              
              
              26,552Mr.
                  Ringo Leung
              
              
              1,094Classified
                  as current liabilities
              
              
              27,646
  (d)
              Due
                  to related companies
 
 As
                  of
                December
                  31,
                2005*US$*Guangzhou
                  Goldlion City Properties Co., Ltd.
              
              
              2,388Beijing
                  Wanlong Economic Consultancy Corporation Ltd.
              
              
              9,262Guangzhou
                  City International Exhibition Co.
              
              
              18,525Guangdong
                  Huahao Industries Group Limited
              
              
              1,179Guangdong
                  WTC Link Information Service Co. Ltd.
              
              
              46,224Classified
                  as current liabilities
              
              
              77,578
 
 The
        amounts due to related parties as of December 31, 2005 represented unsecured
        advances which were interest-free and repayable on demand.
 The
          amount due from related parties relates to general advances to the directors
          net
          of non-cash offsetting balances amounting to US$288,307. The amount due
          from
          related companies relates to the over paid reimbursement of traveling expenses.
          The amount due to directors relates to general advances to the Group. The
          amount
          due to related companies relates to rental and management fees and advisory
          fees.
  **8.**  **SHORT-TERM
        INVESTMENTS**
 The
          balance represents equity securities classified as “available-for-sale”. As at
          the balance sheet date, the “available-for-sale” securities are stated at the
          fair value and correspondingly an unrealized gain of US$751,250 is carried
          on
          the balance sheet as accumulated other comprehensive income.
 
 **9.**  **PROPERTY
        USE RIGHTS**
 
 Pursuant
        to agreements entered into between a subsidiary of the Company, Guangdong
        New
        Generation Commercial Management Limited (“GNGMC”), and Guangdong Hauhao
        Industries Group Co. Limited and Chen Zeliang dated December 28, 2004, GNGMC
        acquired the property use rights of their office premises located in Guangzhou
        for a 41-year period and 42-year period commencing from the date of agreements
        to October 30, 2045 and March 30, 2046 respectively. The total consideration
        of
        these transactions were US$1,611,648 The property use rights acquired have
        been
        capitalized and are being amortized on a straight-line basis over their lease
        terms.
  63
 *Table
            of Contents*
 
 **10.**  **GOODWILL**
 
 As
                  of
                December
                  31,
                2005*US$*Carrying
                  value, beginning and end of of year
              
              
              11,279,314
 
 During
        the year management employed a PRC certified public accountant to prepare
        a five
        years profit forecast on GNGCM and resulted with a positive balance. Hence
        no
        provision for impairment loss on the carrying value of the goodwill is
        necessary.
 
 **11.**  **PROPERTY,
        PLANT AND EQUIPMENT**
 
 Property,
        plant and equipment consist of the following:
 
 As
                  of
                December
                  31,2005US$Leasehold
                  land and buildings
              
              
              520,061Furniture
                  and fixtures
              
              
              25,821Office
                  and computer equipment
              
              
              651,796Leasehold
                  improvements
              
              
              184,228Motor
                  vehicles
              
              
              314,1401,696,046Less:
                  Accumulated depreciation and impairment loss
              
              
              671,368Net
                  book value
              
              
              1,024,678
  Total
        depreciation for the years ended December 31, 2005 and 2004 was US$265,062
        and
        US$233,298, respectively.
 
 In
        view
        of the operating loss experienced by the club operations of the Group,
        management considers that impairment losses of US$38,598 (2004: US$ 594,343)
        should be recognized on the property, plant and equipment carried on the
        balance
        sheet. These losses have been recognized as expenses and included in the
        consolidated statement of operations.
 
 
 **12.
        LOAN RECEIVABLE**
 
 The
        loans
        receivable are those loans to non-related companies which are interest bearing
        and having a fixed repayment schedule. Of total amount US$410,946 outstanding
        as
        of December 31, 2005, US$308,745 have been received in accordance with the
        loan
        agreement in February 2006.
 
 
 **13.**  **SHORT-TERM
        BANK LOAN**
 
 Guangdong
        Hauhao Industries Holdings Limited, Guangdong Hauhao Insurance Agency Limited,
        Chen Zeliang and a third party, Guangzhou Qidu Guarantee Service Company
        Limited
        provided corporate and personal guarantee to the bank against the bank loans
        of
        US$1,234,979 granted to GNGCM.
 
 A
        pledged
        deposit of US$412,484 was used to secure the bank loans of US$1,111,482 granted
        to Guangdong Airport Tour Service Limited. In additions, GNGCM, Chen Zeliang
        and
        Suo Hong Xia provided corporate and personal guarantee to the bank against
        the
        bank loans.
 
 Please
        refer to note 15(a) to these financial statements for details of relationship
        of
        these guarantors with the Group.
  64
 *Table
            of Contents*
  **14.**  **RELATED
        PARTY TRANSACTIONS**
 
 (a)  Names
        and
        relationship of related parties
 
 Existing
                  relationships with the CompanyBeijing
                  Wanlong Economic Consultancy Corporation Ltd.
              PRC
                  partner of a subsidiaryBernard
                  Chan
              An
                  officer and a shareholder of the CompanyChan
                  Chi Ming
              A
                  director and a shareholder of the CompanyChen
                  De Xiong
              A
                  shareholder and director of a subsidiaryChen
                  Zeliang
              A
                  shareholder and director of the CompanyChinamax
                  International Ltd.
              An
                  ex-shareholder of a former subsidiaryCui
                  Wencheng
              A
                  shareholder of the CompanyGoldlion
                  Holding Ltd.
              A
                  company controlled by close family members of a
                  directorGuangdong
                  Huahao Industries Group Co. Ltd.
              A
                  shareholder of a subsidiaryGuangzhou
                  City International Exhibition Co.
              PRC
                  partner of a subsidiaryGuangzhou
                  Cyber Strategy Limited
              A
                  company in which a director of the Company has beneficial interestGuangzhou
                  Goldlion City Properties Co., Ltd.
              A
                  company controlled by close family members of a directorGuangzhou
                  Goldlion Commercial Co., Ltd.
              A
                  company controlled by close family members of a directorGuangzhou
                  Goldlion Environmental Technology Co., Ltd.
              A
                  company controlled by close family members of a
                  directorGuangzhou
                  Sanranxin Travel Ltd
              A
                  company in which a director of the Company has beneficial interestHo
                  Chi Kin
              An
                  independent director of the CompanyHuang
                  Ze Hua
              A
                  shareholder and director of a subsidiaryJohn
                  Hui
              A
                  director, shareholder and officer of the CompanyLi
                  Jingping
              A
                  ex-director of a subsidiaryLuo
                  Chao Ming
              A
                  director of the CompanySimon
                  Guo
              A
                  director of a subsidiarySuo
                  Hong Xia
              A
                  shareholder and director of a subsidiaryTop
                  Link Ventures Ltd.
              A
                  company in which a director of the Company has beneficial
                  interestUnion
                  East Consultants Ltd.
              A
                  company in which a former director of the Company has beneficial
                  interestWilliam
                  Tsang
              A
                  director, shareholder and officer of the CompanyXelex
                  Inc.
              A
                  company in which an officer and a shareholder of the Company is
                  a directorYang
                  Xin
              A
                  shareholder of the CompanyZhao
                  Lin
              A
                  shareholder of the Company
 
 65
 *Table
            of Contents*
  (b)  Summary
        of related party transactions
 
 Notes
              
              Year
                  ended
                December
                  31, 2005
              
              Year
                  ended
                December
                  31, 2004US$
              
              US$Disposed
                  property, plant and equipment toGuangzhou
                  Goldlion Environmental Technology Co., Ltd.
              
              
              (i
              )
              
              2,457,382
              
              
              -Disposed
                  rental income rights toWilliam
                  Tsang
              
              
              (ii
              )
              
              1,320,000
              
              
              -Assets
                  purchased fromHuahao
                  Industries Group Co., Ltd.
              
              
              
              
              
              -
              
              
              1,576,639Suo
                  Hong Xia
              
              
              
              
              
              -
              
              
              235,590Chen
                  Zeliang
              
              
              
              
              
              -
              
              
              125,285Allowance
                  for doubtful accounts toGuangzhou
                  Cyber Strategy Limited
              
              
              (iii
              )
              
              12,031
              
              
              236,247Consultancy
                  fee expenses toBeijing
                  Wanlong Economic Consultancy Corporation Ltd.
              
              
              (iv
              )
              
              18,323
              
              
              18,122Bernard
                  Chan
              
              
              
              
              
              -
              
              
              2,564Guangzhou
                  City International Exhibition Co.
              
              
              (v
              )
              
              18,323
              
              
              18,122Guangzhou
                  Cyber Strategy Limited
              
              
              (iii
              )
              
              -
              
              
              1,938Ho
                  Chi Kin
              
              
              
              
              
              -
              
              
              3,000John
                  Hui
              
              
              
              
              
              -
              
              
              57,692Luo
                  Chao Ming
              
              
              
              
              
              -
              
              
              17,397
  66
 *Table
            of Contents*
  Notes
              
              
              Year
                  ended
                December
                  31, 2005
              
              
              Year
                  ended
                December
                  31, 2004$
              US
              
              $
              USRingo
                  Leung
              
              
              
              
              
              -
              
              
              5,128Top
                  Link Ventures Limited
              
              
              
              
              
              -
              
              
              61,538William
                  Tsang
              
              
              
              
              
              -
              
              
              57,692Xelex
                  Inc.
              
              
              
              
              
              -
              
              
              56,410Director
                  fee toHo
                  Chi Kin
              
              
              (vi
              )
              
              6,000
              
              
              -William
                  Tsang
              
              
              (ii
              )
              
              162,500
              
              
              -Chan
                  Chi Ming
              
              
              (vii
              )
              
              92.197
              
              
              -John
                  Hui
              
              
              (viii
              )
              
              150,000
              
              
              -Luo
                  Chao Ming
              
              
              (ix
              )
              
              19,142
              
              
              -Bernard
                  Chan
              
              
              (x
              )
              
              88,650
              
              
              -Chen
                  Zeliang
              
              
              (xi
              )
              
              29,445
              
              
              -Huang
                  Zehua
              
              
              (xii
              )
              
              3,638
              
              
              -Suo
                  Hongxia
              
              
              (xiii
              )
              
              1,835
              
              
              -Chen
                  Dexiong
              
              
              (xiv
              )
              
              5,202
              
              
              -Rent
                  and related expenses toGuangzhou
                  Goldlion City Properties Co., Ltd.
              
              
              (xv
              )
              
              256,893
              
              
              455,744Hauhao
                  Industries Group Co. Ltd.
              
              
              
              
              
              -
              
              
              46,103Guangzhou
                  Goldlion Environmental Technology Co., Ltd.
              
              
              (i
              )
              
              139,446
              
              
              -Membership
                  fee income fromUnion
                  East Consultants Limited
              
              
              
              
              
              -
              
              
              16,008Personal
                  guarantee granted fromMr.
                  William Tsang
              
              
              
              
              
              19,231
              
              
              19,231Traveling
                  expenses toGuangzhou
                  Sanranxin Travel Ltd.
              
              
              (xvi
              )
              
              6,125
              
              
              4,139Other
                  expenses toGoldlion
                  Holdings Ltd.
              
              
              (xvii
              )
              
              4,643
              
              
              -Other
                  income fromGuangzhou
                  Goldlion City Properties Co., Ltd.
              
              
              (xv
              )
              
              3,854
              
              
              -
 
 Notes:
 (i)
              As
                  of December 31, 2005, the amount due from/to Guangzhou Goldlion
                  Environmental Technology Co., Ltd. is
                  US$Nil.
 (ii)
              As
                  of December 31, 2005, the amount due to Mr. William Tsang is
                  US$137,131.
 (iii)
              As
                  of December 31, 2005, the amount due from/to Guangzhou Cyber Strategy
                  Limited is US$Nil.
 (iv)
              As
                  of December 31, 2005, the amount due to Beijing Wanlong Economic
                  Consultancy Corporation Ltd. is
                  US$9,262.
 (v)
              As
                  of December 31, 2005, the amount due to Guangzhou City International
                  Exhibition Co. is US$18,525.
 (vi)
              As
                  of December 31, 2005, the amount due from/to Mr. Ho Chi Kin is
                  US$Nil.
 (vii)
              As
                  of December 31, 2005, the amount due from/to Mr. Chan Chi Ming
                  is
                  US$Nil.
 (viii)
              As
                  of December 31, 2005, the amount due from/to Mr. John Hui is
                  US$Nil.
 (ix)
              As
                  of December 31, 2005, the amount due from/to Mr. Luo Chao Ming
                  is
                  US$Nil.
 (x)
              As
                  of December 31, 2005, the amount due from/to Mr. Bernard Chan is
                  US$Nil.
 (xi)
              As
                  of December 31, 2005, the amount due from/to Mr. Chen Zeliang is
                  US$Nil.
 (xii)
              As
                  of December 31, 2005, the amount due from Ms. Huang Zehua is
                  US$245,761.
 (xiii)
              As
                  of December 31, 2005, the amount due to Ms. Suo Hongxia is
                  US$26,552.
 (xiv)
              As
                  of December 31, 2005, the amount due from Mr. Chen Dexiong is
                  US$368,422.
 (xv)
              As
                  of December 31, 2005, the amount due to Guangzhou Goldlion City
                  Properties
                  Co., Ltd. is US$2,388.
 (xvi)
              As
                  of December 31, 2005, the amount due from Guangzhou Sanranxin Travel
                  Ltd.
                  is US$432.
 (xvii)
              As
                  of December 31, 2005, the amount due from/to Goldlion Holdings
                  Ltd. is
                  US$Nil.
 
 67
 *Table
            of Contents*
 
 **15.**  **AMOUNT
        DUE TO A SHAREHOLDER**
 
 The
        amount due to Mr. William Tsang represented unsecured advances which were
        interest-free and repayable on demand.
  **16.**  **OPERATING
        LEASE COMMITMENT**
 
 (a)  Operating
        lease payables
 
 As
        of
        December 31, 2005, the Group has total outstanding commitments not provided
        for
        under non-cancelable operating leases, which are payable as follows:
  Year
              
              As
                  of
                December
                  31, 2005
              
              As
                  of
                December
                  31, 2004US$
              
              US$2006
              
              
              706,723
              
              
              690,0872007
              
              
              472,593
              
              
              451,5252008
              
              
              194,416
              
              
              157,5722009
              
              
              32,391
              
              
              31,6881,406,123
              
              
              1,330,872
 
 In
        addition, the Group has committed to pay contingent rent at 2% to 10% on
        the
        monthly turnover of a subsidiary when the subsidiary's monthly turnover exceeds
        RMB500,000 (US$60,408) during the lease period ending in July 2007.
 
 The
        Group
        has also committed to pay contingent rental at the higher of the agreed rent
        and
        the following portion of the membership fee income of a subsidiary:
 
 ·
              15%
                  on the membership fee income of the subsidiary for the period from
                  February 1, 2004 to January 31, 2006·
              7.5%
                  on the membership fee income of the subsidiary for the period of
                  February
                  1, 2006 to January 31, 2009
 
 (b)  Operating
        lease receivables
 
 The
        total
        outstanding commitments under non-cancelable operating leases, which are
        receivable as follows:
 
 As
                  of
                December
                  31, 2005
              
              As
                  of
                December
                  31, 2004US$
              
              US$2006
              
              
              109,425
              
              
              145,4642007
              
              
              12,226
              
              
              25,731121,651
              
              
              171,195
 
 As
        of
        December 31, 2005, property, plant and equipment held for use under operating
        leases include gross amounts of US$410,056 and accumulated depreciation.
        Depreciation of property, plant and equipment in respect of assets held for
        use
        under operating leases are US$7,899 and US$37,804 for the year ended December
        31, 2005 and 2004 respectively.
  68
 *Table
            of Contents*
  **17.**  **RETIREMENT
        PLAN**
 
 The
        Group
        operates a Mandatory Provident Fund (“MPF”) plan for its Hong Kong employees.
        The pension expenses charged to the consolidated statement of operations
        amounted to US$10,627 and US$6,150 for the year ended December 31, 2005 and
        2004
        respectively.
 
 As
        stipulated by the PRC regulations, all retired employees of the Group who
        are
        residents of the PRC are entitled to an annual pension equal to their basic
        annual salary upon retirement. The Group contributed to a state-sponsored
        retirement plan at a certain percentage of the gross salary of its employees
        and
        has no further obligations for the actual pension payments or post-retirement
        benefits beyond the annual contributions. The state-sponsored retirement
        plan is
        responsible for the entire pension obligations payable to all employees.
        The
        pension expense for the year ended December 31, 2005 and 2004 was US$171,837
        and
        US$58,591 respectively.
 
 **18.**  **COMMON
        STOCK**
 
 (a) On
        December 29, 2005, 452,500 options under The 2003 Plan were exercised. The
        option holders were taken the cashless exercise of 249,478 shares, a total
        of
        249,478 common stock of the Company were issued accordingly. Details of the
        2003
        Plan are disclosed in Note 20 to these financial statements.
 
 (b) On
        December 2, 2005, Mr. William Tsang exercised warrant on a cashless basis
        for
        4,500,000 shares at a price of US$0.75 per share to acquire 2,429,448 shares
        of
        the common stock of the Company. As a result the exercise of these warrants,
        a
        total of 2,429,448 shares of common stock of the Company were issued
        accordingly.
 
 (c) On
        April
        19, 2005, the Company issued 100,000 shares to Greentree Financial Group
        Inc.
        for consulting services provided.
 
 
 **19.**  **OPTIONS
        PLAN**
 
 (a)  (i)  
        On December 31, 2003, the Company adopted The 2003 Plan which was approved
        by
        the shareholders on the same date. The 2003 Plan allows the Board of Directors,
        or a committee thereof at the Board’s discretion, to provide for a total
        1,000,000 stock options to officers, directors and key employees of the Company.
        All the stock options provided, were issued in accordance with the terms
        of The
        2003 Plan on the same day to certain officers, directors and key employees
        of
        the Company at an exercise price of US$0.673 per share and are exercisable
        during the period from April 30, 2004 to December 30, 2006.
 
 (ii)  On
        February 20, 2004, the Company cancelled 65,000 options and 30,000 options
        for
        the reason of resignation and job reposting respectively.
 
 (b)  On
        February 27, 2004, the Company entered into an agreement with Xelex Inc.
        for
        consulting services provided. Apart from the consultancy fee expenses, an
        option
        to acquire 80,000 shares at an exercise price of US$1 per share was issued
        to
        Xelex Inc.. The stock option was fully vested and became exercisable on
        September 1, 2004. On November 9, 2004, the option was fully exercised on
        a
        cashless basis. A total of 58,552 common stocks of the Company were
        issued
 
 The
        fair
        value of this option, which is estimated by the Black-Scholes option pricing
        model, was US$3.89. The additional expense was recognized in the preceding
        year
        consolidated statement of operations and the same amount was credited to
        the
        Company’s additional paid-in capital. The following weighted-average assumptions
        have been adopted in applying the Black-Scholes option pricing model:
 
 Expected
                  dividend yield
              
              
              NoneRisk-free
                  interest rate
              
              
              [2.1%
              ]Expected
                  volatility
              
              
              [367%
              ]Contractual
                  life
              
              
              [2
                  years
              ]
 
 69
 *Table
            of Contents*
  (c)  The
        stock
        options activities and related information are summarized as
        follows:
 Year
                        ended December 31, 2005
                    
                    Year
                        ended December 31, 2004Number
                        of Options
                    
                    Weighted
                        average exercise price
                    
                    Number
                        of Options
                    
                    Weighted
                        average exercise price*US$*
                    
                    
                    
                    *US$*Outstanding,
                        beginning of year
                    
                    
                    1,852,500
                    
                    
                    2.432
                    
                    
                    
                    
                    1,000,000
                    
                    
                    0.673Granted
                    
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    80,000
                    
                    
                    1.000Granted
                    
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    1,400,000
                    
                    
                    2.500Exercised-
                        The 2003 Plan (note 19(a))
                    
                    
                    (452,500
                    )
                    
                    0.673
                    
                    
                    
                    
                    (452,500
                    )
                    
                    0.673-
                        Xelex Inc.
                    
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    (80,000
                    )
                    
                    1.000Cancelled
                    
                    
                    -
                    
                    
                    -
                    
                    
                    
                    
                    (95,000
                    )
                    
                    0.673Outstanding,
                        end of year
                    
                    
                    1,400,000
                    
                    
                    3.0
                    
                    
                    
                    
                    1,852,500
                    
                    
                    2.432Exercise
                        price is less than market price on date of grant
                    
                    
                    Nil
                    
                    
                    Nil
                    
                    
                    
                    
                    1,480,000
                    
                    
                    2.892Exercisable,
                        end of year
                    
                    
                    1,400,000
                    
                    
                    3.0
                    
                    
                    
                    
                    1,400,000
                    
                    
                    3.000
 
 **As
                  of December 31, 2005**Weighted
                  average remaining contractual life
              
              
              3.267
                  yearsRange
                  of exercise priceUS$3.0
              
              
              1,400,000
 
 
 **20.**  **PRIVATE
        PLACEMENTS OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON
        STOCK**
 
 (a) On
        August
        26, 2004, the Company entered into a Securities Purchase Agreement with Bridges
        & PIPES, LLC, TCMP3 Partners, Connell Capital Partners, LP and Stealth
        Capital, LLC (the “Purchasers”), providing for the issuance by the Company to
        the Purchasers, of the (i) number of shares of Common Stock, and (ii) Series
        A
        Warrants, subject to an option in favor of the Purchasers to purchase additional
        shares of common stock and receive additional warrants.
 
 On
        August
        26, 2004 and December 3, 2004 under the Securities Purchase Agreement, the
        Purchasers acquired in the aggregate 433,333 and 966,667 shares of common
        stock
        respectively, at a price of US$1.5 per share, for an aggregate purchase price
        of
        US$2,100,000. Upon purchase, the Purchasers were also issued 700,001 five-year
        Series A Warrants to purchase that number of warrant shares at an exercise
        price
        equal to US$2.5 per share, without any additional consideration. In addition,
        the Company granted each Purchaser an option (the "Option") to purchase that
        number of shares of common stock equal to 1,400,001 shares (the "Firm Shares").
        Upon exercise of the Option at a purchase price of US$3 per share of common
        stock, the Purchaser would also receive, without additional consideration,
        five-year Series B Warrants to purchase 50% of the Firm Shares at an exercise
        price equal to US$4 per share.
  The fair values of attached Series A Warrants, Options and Series B Warrants
        were recorded in the Company’s additional paid-in capital.
 
 In
        addition, the Company has issued 112,667 Placement Agent's Warrants to Duncan
        Capital, LLC, who acted as Placement Agent to the Company in connection with
        the
        offering. Such warrants are five-year non-cashless exercise, provisioned
        warrants to purchase shares of common stock at US$2.5 per share. The costs
        associated with these transactions are also accounted for based on the fair
        value of these warrants at the date of issue.
 
 On
        August
        26, 2004, the Company also entered into a Registration Rights Agreement with
        the
        investors signatories thereto, which provides that on or prior to 45 days
        after
        the Escrow Date, the Company shall prepare and file with the Commission a
        Registration Statement covering the resale of all of the Registrable Securities
        (defined as the Firm Shares, Option Shares, shares issuable upon exercise
        of the
        Agent's Warrants and shares issuable upon exercise of the Series A Warrants
        and
        the Series B Warrants) for an offering to be made on a continuous basis pursuant
        to Rule 415 under the Securities Act. In addition, the Registration Rights
        Agreement also contains certain piggy-back registration rights in favor of
        the
        holders of Registrable Securities. All fees and expenses incident to the
        performance of or compliance with the Registration Rights Agreement are to
        be
        borne by the Company.
  70
 *Table
            of Contents*
 
 (b) On
        November 22, 2004, the Company entered into a Standby Equity Distribution
        Agreement (a "SEDA") and a Registration Rights Agreement, with US-based
        investment fund, Cornell Capital Partners, LP ("Cornell Capital") for
        US$30,000,000. Under the SEDA, Cornell has committed to provide up to
        US$30,000,000 of funding to the Company over a 24-month period, to be drawn
        down
        at the Company's discretion by the purchase of the Company's common stock.
        The
        purchase price of the shares purchased under the SEDA with respect to any
        advance will equal 99% of, or a 1% discount to, the lowest closing bid price
        of
        the common stock during the five consecutive trading day period immediately
        following the notice date. The amount of each advance is subject to a maximum
        advance amount of $1,500,000, except for the first advance, which may be
        in the
        amount of $3,000,000. Cornell Capital intends to sell any shares purchased
        under
        the SEDA at the then prevailing market price. Duncan Capital, LLC has been
        engaged by the Company to act as Placement Agent with respect to the
        SEDA.
 
 (c)
              In
                  connection with the SEDA, the Company has entered into a Letter
                  Agreement,
                  dated as of November 19, 2004 (the "Letter Agreement"), pursuant
                  to which
                  it agreed to (a) not make any draw-downs under the SEDA for a period
                  of
                  thirty days from the date of effectiveness of the soon-to-be-filed
                  registration statement, and (b) issue to Bridges & PIPES, LLC and
                  TCMP3 Partners, the two Purchasers at the first closing referred
                  to above,
                  83,334 Series A Warrants and 25,000 Series A Warrants, respectively,
                  in
                  order to induce such Purchasers to waive their rights to be the
                  sole
                  registrants on the registration statement. The costs associated
                  with these
                  compensations are also accounted for based on the fair value of
                  these
                  warrants at the date of issue.
 
 Using
        the
        Black-Scholes option pricing model with the following weighted-average
        assumptions:
 
 
 Expected
        dividend
        yield                                 
  None
 Risk-free
        interest
        rate                                      
3.61%
 Expected
        volatility                                           
211%
 Contractual
        life                                               5
        years
 
 The
        fair
        value of these warrants was estimated as US$2.56 for the year ended December
        31,
        2004. The additional expenses for placement services provided and compensation
        of were recognized in the preceding year consolidated statement of operations
        and the same amounts were credited to the Company’s additional paid-in capital.
        No additional expenses was recognized during the year because of no further
        issue of warrants for services.
 
 The
        warrant activities and related information are summarized as follows:
 
 Year
                  ended December 31, 2005
              
              Year
                  ended December 31, 2004Number
                  of Warrants
              
              Weighted
                  average exercise price
              
              Number
                  of Warrants
              
              Weighted
                  average exercise price*US$*
              
              
              
              *US$*Outstanding,
                  beginning of year
              
              
              5,421,002
              
              
              1.047
              
              
              14,000,000
              
              
              0.749Granted
              
              
              -
              
              
              -
              
              
              921,002
              
              
              2.500Exercised
                  (note 19 (b))
              
              
              (4,500,000
              )
              
              0.749
              
              
              (9,500,000
              )
              
              (0.748
              )Outstanding,
                  end of year
              
              
              921,002
              
              
              2.500
              
              
              5,421,002
              
              
              1.047Exercise
                  price is less than market price on date of grant
              
              
              Nil
              
              
              Nil
              
              
              4,500,000
              
              
              0.750Exercise
                  price exceeds market price on date of grant
              
              
              921,002
              
              
              2.500
              
              
              921,002
              
              
              2.500Exercisable,
                  end of year
              
              
              921,002
              
              
              2.500
              
              
              5,421,002
              
              
              1.047
 
 71
 *Table
            of Contents*
 
 **As
                  of December 31, 2005**Weighted
                  average remaining contractual life
              
              
              0.59
                  yearRange
                  of exercise priceUS$2.500
              
              
              921,002
 
 (d)
              The
                  Group had accounted for liquidated damage expense of US$208,500
                  in
                  connection with the failure to have its registration statement
                  become
                  effective as required under the terms of the Securities Purchase
                  Agreement
                  in which US$650,000 was raised in August 2004 and US$1,400,000
                  was raised
                  in December 2004. Under section 2© of the Registration Rights Agreement,
                  in part, that each investor is entitled to be paid an amount in
                  cash until
                  a registration statement is declared effective and/ or the Registrable
                  Securities may be sold pursuant to Rule 144(k) (which requires
                  a two years
                  holding period. If a registration statement is not declared effective
                  on
                  or prior to one hundred twenty days (120) days of closing, and
                  such amount
                  is equal to one percent (1%) of the aggregate purchase price paid
                  by the
                  Investors. We quantified the amount with reference to the date
                  when the
                  120 days period expires and accrue the liquidated damage expense
                  on a time
                  apportionment basis in respect of both amounts raised in August
                  and
                  December 2004 amounting to US$650,000 and US$1,400,000 respectively.
                  Of
                  total amount of US$208,500 provided, US$145,000 had been paid in
                  March
                  2006.
  **21.**  **STATUTORY
        RESERVES**
 
 Statutory
        reserves of the Company’s PRC subsidiaries include the statutory common reserve
        fund and the statutory common welfare fund. Pursuant to regulations in the
        PRC,
        the subsidiaries set aside 10% of their profits after tax for the statutory
        common reserve fund (except when the fund has reached 50% of the Company’s
        registered capital) and 5% of their profits after tax for the statutory common
        welfare fund. The statutory common reserve fund can be used for the following
        purposes:
 
 -
              to
                  make good losses in previous years; or
 
 -
              to
                  convert into capital, provided such conversion is approved by a
                  resolution
                  at a owners’ general meeting and the balance of the statutory common
                  reserve fund does not fall below 25% of the registered
                  capital.
 
 The
        statutory common welfare fund, which is to be used for the welfare of the
        staff
        and workers of the subsidiaries, is of a capital nature.
  **22.**  **SEGMENTAL
        REPORTING**
  The
        Group
        has four reportable segments; club and business centre, business traveling
        services, business value-added services and rental and others with four separate
        businesses lines in access services and product sales.
  The
        following table presents information about the Company's business segments
        for
        the years ended December 31, 2005 and 2004:
  **23.**  **BUSINESS
        SEGMENT INFORMATION**
 **Year
                  ended**
                **December
                  31,**
              
              **Year
                  ended**
                **December
                  31,****2005**
              
              **2004*****US$***
              
              ***US$*****Operating
                  revenues**Club
                  and business centre
              
              
              894,550
              
              
              551,497Business
                  traveling services
              
              
              4,983,468
              
              
              1,671,605Business
                  value-added services
              
              
              1,618,414
              
              
              40,695Rental
              
              
              221,699
              
              
              701,284Trading
                  and others
              
              
              121,093
              
              
              127,6637,839,224
              
              
              3,092,744
  72
 *Table
            of Contents*
 
 ***US$***
              
              *US$***Profit
                  (Loss) from operations**Club
                  and business centre
              
              
              (403,250
              )
              
              (1,705,288
              )Business
                  traveling services
              
              
              976,896
              
              
              904,951Business
                  value-added services
              
              
              (3,125,705
              )
              
              (113,569-Rental
              
              
              (336,406
              )
              
              (347,069
              )Trading
                  and others
              
              
              (67,247
              )
              
              (54,096
              )(2,955,712
              **)**
              
              (1,315,071
              )Corporate
                  expenses
              
              
              (2,334,070
              **)**
              
              (5,893,563
              )Consolidated
                  operating loss
              
              
              (5,289,782
              **)**
              
              (7,208,634
              )Realized
                  gain on available-for-sale securitiesOther
                  income
              
              
              42,581
              
              
              138,994Interest
                  income
              
              
              28,171
              
              
              1,020Interest
                  expense
              
              
              (136,426
              **)**
              
              (65,909
              )Realized
                  gain on available-for-sale securities
              
              
              6,079,960
              
              
              -Loss
                  on disposal of land and building
              
              
              (254,740
              **)**
              
              -Gain
                  on disposal of a subsidiary
              
              
              85,854Net
                  loss before income taxes
              
              
              555,618
              
              
              (7,134,529
              )
 
 **As
                  of**
                **December
                  31,**
                **2005*****US$*****Total
                  assets**Club
                  and business centre
              
              
              307,622Business
                  traveling services
              
              
              21,633,409Business
                  value-added services
              
              
              1,646,765Rental
              
              
              1,445,311Trading
                  and others
              
              
              1,559,97526,593,082
 
 73
 *Table
            of Contents*
  **24.**  **CONCENTRATIONS
        AND RISKS**
 
 (i)  Major
        Customers
 
 The
        following is a table summarizing the revenues from customers that individually
        represent greater than 10% of the total revenues for the year ended December
        31,
        2005 and their outstanding balances as at year end date:
 
 Year
                  ended December 31, 2005
              
              Year
                  ended December 31, 2004US$
              
              US$Customer
                  A
              
              
              3,087,215
              
              
              -
 
 As
        of
        December 31, 2005, the balances due to the Group amounted to
        US$Nil.
 
 (ii)  Major
        Vendors
 
 The
        following is a table summarizing the purchases from vendors that individually
        represent greater than 10% of the total purchases for the year ended December
        31, 2005 and their outstanding balances as at year end date:
 
 Year
                  ended December 31, 2005
              
              Year
                  ended December 31, 2004US$
              
              US$Vendor
                  A
              
              
              2,500,990
              
              
              -
 
 As
        of
        December 31, 2005, the balances due from the Group amounted to
        US$Nil.
 
 (iii)  Credit
        Risk
 
 Financial
        instruments that are potentially subject to credit risk consist principally
        of
        trade receivables. The Group believes the concentration of credit risk in
        its
        trade receivables is substantially mitigated by its ongoing credit evaluation
        process and relatively short collection terms. The Group does not generally
        require collateral from customers. The Group evaluates the need for an allowance
        for doubtful accounts based upon factors surrounding the credit risk of specific
        customers, historical trends and other information.
 
 (iv)  Exchange
        risk
 
 The
        Group
        cannot guarantee that the current exchange rate will remain steady; therefore
        there is a possibility that the Group could post the same amount of profit
        for
        two comparable periods and because of the fluctuating exchange rate actually
        post higher or lower profit depending on exchange rate of HK$ converted to
        US$
        on that date. The exchange rate could fluctuate depending on changes in
        political and economic environments without notice.
 
 **25.**  **CONTINGENCIES**
 
 Prior
        to
        the completion of acquisition by the Company, GNGCM had been paying Mainland
        China income tax at a basis of calculation which was not in accordance with
        the
        standard basis of calculation as stipulated by the Mainland China tax law.
        The
        shortfall of the underpaid tax liabilities, related surcharges and penalty
        up to
        the date of acquisition by the Company has already been fully provided in
        the
        consolidated financial statements. However, GNGCM would potentially be liable
        to
        further surcharge for late payment and penalty, additional to the amount
        being
        provided, for the period since the date of acquisition by the Company and
        up to
        the balance sheet date. A shareholder of GNGCM has undertaken to indemnify
        the
        Company against such shortfall and additional tax-related liabilities. As
        of
        December 31, 2005, the estimated further surcharges and penalties which GNGCM
        was potentially liable amounted to US$9,470,714 and US$185,771 respectively.
        The
        estimated further penalties were based on the highest charge rate of the
        range
        from 50% to 500%.
  26.
        DORMANT SUBSIDIARIES
            
 74
 *Table
            of Contents*




**Item
      8** **.****Changes
      in and Disagreements With Accountants on Accounting and Financial Disclosure**





On
      February
      16, 2006, Moore Rowland Mazars, Chartered Accountants (“MRM”) resigned as the
      independent registered public accounting firm for the Company. MRM had been
      the
      independent registered public accounting firm for and audited the consolidated
      financial statements of the Company for the year ended September 30, 2003,
      for
      the three months ended December 31, 2003, and for the year ended December 31,
      2004. All of the foregoing audited consolidated financial statements are
      hereinafter collectively referred to as the “consolidated financial statements.”
The reports of MRM on the consolidated financial statements for the past fiscal
      years indicated contained no adverse opinion or disclaimer of opinion, and
      were
      not qualified or modified as to uncertainty, audit scope or accounting
      principles, except for an explanatory paragraph relating to the Company’s
      ability to continue as a "going concern." The tender of resignation by MRM
      was
      approved unanimously by the Board of Directors.





In
      connection
      with the audits for the two most recent fiscal years and in connection with
      MRM’s review of the subsequent interim periods through February 16, 2006, there
      have been no disagreements between the Company and MRM on any matter of
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedure, which, if not resolved to the satisfaction of MRM, would
      have caused MRM to make reference thereto in their report on the Company’s
      financial statements for these fiscal years. MRM agreed with the foregoing
      statements in the letter that it was required to send to the Commission pursuant
      to Item 304 of Regulation S-B.




On
      February
      16, 2006, the Company engaged Zhong Yi (Hong Kong) C.P.A. Company Limited as
      its
      independent registered public accounting firm. The Company had not consulted
      with Zhong Yi (Hong Kong) C.P.A. Company Limited regarding the application
      of
      accounting principles to any contemplated or completed transactions nor the
      type
      of audit opinion that might be rendered on the Company’s financial statements,
      and neither written nor oral advice was provided that would be an important
      factor considered by the Company in reaching a decision as to an accounting,
      auditing or financial reporting issues. At the time of its engagement, Zhong
      Yi
      (Hong Kong) C.P.A. Company Limited had not yet been credentialed for practice
      before the Commission, although it began the credentialing process in November
      of 2005.




On
      March 23,
      2006, Zhong Yi (Hong Kong) C.P.A. Company Limited (“Zhong Yi”) resigned as the
      independent registered
      public accounting firm for the Company. Zhong Yi had been engaged on February
      16, 2006 as the independent registered public accounting firm to audit the
      consolidated financial statements of the Company for the year ended December
      31,
      2005. Zhong Yi was not credentialed to practice accounting before the
      Commission, but it had an application to be admitted pending with the Commission
      since November of 2005. Zhong Yi determined that it may not be credentialed
      in
      time and may not be able to finish and submit its audit report to the Commission
      in connection with the filing of this Annual Report on Form 10-KSB for the
      year
      ended December 31, 2005. As a result, Zhong Yi chose to resign in order to
      give
      the Company an opportunity to engage a credentialed auditing firm. The draft
      report of Zhong Yi on the
      audited consolidated financial statements for the past fiscal year contained
      no
      adverse opinion or disclaimer of opinion, and was not qualified or modified
      as
      to uncertainty, audit scope or accounting principles, except for an explanatory
      paragraph relating to the Company’s ability to continue as a "going concern."
      Zhong Yi’s tender of resignation was approved unanimously by the Board of
      Directors.





In
      connection
      with the audit for the most recent fiscal year and in connection with Zhong
      Yi’s
      review of the subsequent interim periods through March 23, 2006, there have
      been
      no disagreements between the Company and Zhong Yi on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure, which, if not resolved to the satisfaction of Zhong Yi, would have
      caused Zhong Yi to make reference thereto in its report on the Company’s
      financial statements for the last fiscal year. Zhong Yi agreed with the
      foregoing statements in the letter that it was required to send to the
      Commission pursuant to Item 304 of Regulation S-B.




On
      March 23,
      2006, the Company engaged Child, Van Wagoner & Bradshaw, PLLC  as
      its
      independent registered public accounting firm. The Company had not consulted
      with Child, Van Wagoner & Bradshaw, PLLC regarding the application of
      accounting principles to any contemplated or completed transactions nor the
      type
      of audit opinion that might be rendered on the Company’s financial statements,
      and neither written nor oral advice was provided that would be an important
      factor considered by the Company in reaching a decision as to an accounting,
      auditing or financial reporting issue.




75
 *Table
          of Contents*




**Item
      8A** **.
      Controls and Procedures**





*AnnualEvaluation
      of Controls* .
      As of
      the end of the period covered by this annual report on Form 10-KSB, we evaluated
      the effectiveness of the design and operation of our disclosure controls and
      procedures ("Disclosure Controls"). This evaluation (“Evaluation”) was performed
      by our Chief Executive Officer, Chi Ming Chan (our “CEO”), and our Chief
      Financial Officer, Man Ha (our “CFO”). In addition, we have discussed these
      matters with our securities counsel. In this section, we present the conclusions
      of our CEO and CFO based on and as of the date of the Evaluation with respect
      to
      the effectiveness of our Disclosure Controls..





*CEO
      and CFO Certifications* .
      Attached to this annual report are certain certifications of the CEO and CFO,
      which are required in accordance with the Exchange Act and the Commission's
      rules implementing such section (the "Rule 13a-14(a)/15d-14(a) Certifications").
      This section of the annual report contains the information concerning the
      Evaluation referred to in the Rule 13a-14(a)/15d-14(a) Certifications. This
      information should be read in conjunction with the Rule 13a-14(a)/15d-14(a)
      Certifications for a more complete understanding of the topic
      presented.





*Disclosure
      Controls* .
      Disclosure Controls are procedures designed with the objective of ensuring
      that
      information required to be disclosed in our reports filed with the Commission
      under the Exchange Act, such as this annual report, is recorded, processed,
      summarized and reported within the time period specified in the Commission's
      rules and forms. Disclosure Controls are also designed with the objective of
      ensuring that material information relating to us is made known to the CEO
      and
      the CFO by others, particularly during the period in which the applicable report
      is being prepared.





*Limitations
      on the Effectiveness of Controls* .
      Our
      management does not expect that our Disclosure Controls will prevent all error
      and all fraud. A control system, no matter how well developed and operated,
      can
      provide only reasonable, but not absolute assurance that the objectives of
      the
      control system are met. Further, the design of the control system must reflect
      the fact that there are resource constraints, and the benefits of controls
      must
      be considered relative to their design and monitoring costs. Because of the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of a system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.





*Scope
      of the Evaluation* .
      The CEO
      and CFO's evaluation of our Disclosure Controls included a review of the
      controls' (i) objectives, (ii) design, (iii) implementation, and (iv) the effect
      of the controls on the information generated for use in this quarterly report.
      In the course of the Evaluation, the CEO and CFO sought to identify data errors,
      control problems, acts of fraud, and they sought to confirm that appropriate
      corrective action, including process improvements, was being undertaken. This
      type of evaluation is done on a quarterly basis so that the conclusions
      concerning the effectiveness of our controls can be reported in our quarterly
      reports on Form 10-QSB and annual reports on Form 10-KSB. The overall goals
      of
      these various evaluation activities are to monitor our Disclosure Controls,
      and
      to make modifications if and as necessary. Our intent in this regard is that
      the
      Disclosure Controls will be maintained as dynamic systems that change (including
      improvements and corrections) as conditions warrant.





*Conclusions.* Based
      upon the Evaluation, our disclosure controls and procedures are designed to
      provide reasonable assurance of achieving our objectives. Our CEO and CFO have
      concluded that our disclosure controls and procedures are effective at that
      reasonable assurance level to ensure that material information relating to
      the
      Company is made known to management, including the CEO and CFO, particularly
      during the period when our periodic reports are being prepared, and that our
      Internal Controls are effective at that assurance level to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter or fiscal year that has materially affected, or is
      reasonably likely to affect, our Internal Controls.




76
 *Table
          of Contents*




**PART
      III**





**Item
      9****.****Directors
      and Executive Officers of the Registrant**





**Directors
      and Executive Officers**





Our
      Bylaws provide that we shall have that number of directors determined by the
      majority vote of the board of directors. Currently we have seven directors.
      Each
      director will serve until our next annual shareholder meeting. Directors are
      elected for one-year terms. Our Board of Directors elects our officers at the
      regular annual meeting of the Board of Directors following the annual meeting
      of
      shareholders. Vacancies may be filled by a majority vote of the remaining
      directors then in office. Our directors and executive officers are as follows:





***Name***
            ***Age***
            ***Position***William
                Chi Hung Tsang
            44
            Chairman,
                Director and PresidentZeliang
                Chen
            40
            Vice
                Chairman and DirectorJohn
                H.W. Hui
            47
            Vice
                Chairman, Chief Executive Office and Director (Resigned as Chief
                Executive
                Office on January 5, 2006)Chi
                Ming Chan
            44
            Chief
                Executive Officer (Appointed on January 5, 2006) and DirectorChao
                Ming Luo
            55
            DirectorBernard
                K. Chan
            41
            Chief
                Financial Officer (Resigned on February 28,2006)Man
                Ha
            43
            Chief
                Financial Officer (Appointed on February 28,2006)Ye
                Xin Long
            60
            Independent
                DirectorHamid
                R. Seyedin
            54
            Independent
                DirectorSamuel
                Yung
            47
            Independent
                Director (Resigned on January 5, 2006)Chi
                Kin Ho
            36
            Independent
                Director (Resigned on February 28,
                2006)








**Backgrounds
      of Directors**





*Executive
      Directors*





Mr.
      William Chi Hung Tsang, aged 44, is the President and Chairman of the Board
      of
      Directors of China World Trade Corporation. Mr. Tsang has more than 15 years
      of
      experience in leatherwear manufacturing and property investment. Prior to
      joining the Company, he was an executive director with a listed company for
      over
      10 years. He is a member of the Beijing Municipal Committee of the Chinese
      People’s Political Consultative Conference; committee member of Chinese General
      Chamber of Commerce, Hong Kong; vice chairman of Hong Kong United Youth
      Association Limited; chief president of New Territories Commercial &
Industrial General Association Ltd.; and vice chairman of both Hong Kong Chamber
      of Commerce in China - Guangdong and Guangzhou Federation of Industry &
Commerce. He is also an honorary president of North-East Overseas Chinese
      Friendship Association U.S.A., and an honorable citizen of Guangzhou.





Mr.
      Zeliang Chen, aged 40, is the Vice Chairman and Director of the Company. Mr.
      Chen graduated with honors from Renmin University of China with a Bachelor
      of
      Law. He is the founder of Guangdong Hua Hao Group of Companies and is a
      committee member of the Private Enterprise Council of Guangdong Province. Mr.
      Chen now is a Chief Executive Officer and Chairman of Guangdong New Generation
      Travel Service Co., Ltd., Director of Guangdong Huahao Industries Group of
      Companies, Director and Vice Chairman of China World Trade Corporation.





Mr.
      John
      H.W. Hui, aged 47, is the Vice Chairman of the Board of Directors. Mr Hui served
      as Chief Executive Officer of the Company until January 5, 2006. . Mr. Hui
      has
      over 10 years experience in China trade and investment. He is responsible for
      the overall corporate development of the Company. Mr. Hui is also the President
      of Beijing World Trade Center Club and Guangzhou World Trade Center Club. He
      has
      excellent relationships with the China partners and the principals of the World
      Trade Center Association in New York and other WTCs around the world. Mr. Hui
      is
      a current member of the Canada Business Council Beijing, and American Chamber
      of
      Commerce, Guangdong.





Mr.
      Chi
      Ming Chan, aged 44, is a Director and was appointed as Chief Executive Officer
      of the Company on January 5, 2006. Mr. Chan is responsible for the strategic
      planning, corporate development and project implementation of the Company.
      Before joining us, Mr. Chan was a Corporate Development Strategist for Renren
      Holding Ltd., a publicly listed company on the Hong Kong Stock Exchange. Mr.
      Chan founded Asian Information Resources (Holding) Ltd. in 1995, which
      eventually listed on the Hong Kong Stock Exchange in 1999. A specialist in
      Chinese law and China affairs, Mr. Chan is an expert in networking, Internet
      technology, database technology and management of technical resources. He
      developed an electronic database system for the Law-on-Line project of the
      University of Hong Kong and has provided technical consultancy to this project
      since 1991. He has also developed the Dongguan Network, which has become a
      successful model for other cities in China. He was appointed by the Asian
      Development Bank (ADB) as a consultant for the TA Project No. 2702 - Study
      on
      PRC Legal Information System and the Electronic Data Expert for the TA project
      No. 3000. Mr. Chan holds a Master of Law degree from Lancaster University,
      the
      United Kingdom, a Master of Philosophy degree in Physics and Bachelor Degree
      in
      Physics both from the Chinese University of Hong Kong.




77
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          of Contents*





Mr.
      Chao
      Ming Luo, aged 55 is a Director of the Company. Mr. Luo has long-term
      collaborative relations with Hong Kong business circles and associations. He
      was
      employed at the Xinhua News Agency Hong Kong from 1983 to 1996; he then joined
      the Xinhua News Agency Hong Kong Branch Guangzhou Representative Office in
      1996
      before joining the Company. He is the Chief Council Member of Guangdong Overseas
      Friendship Association, and Council Member of Guangzhou Overseas Friendship
      Association. Mr. Luo worked as the Electric Design Technician in Guangzhou
      Design Institute and the Assistant of Electric Technology Specialty, Electric
      Engineering Department in Guangdong University of Technology.





*Independent
      Directors and Members of Audit Committee*





Mr.
      Ye
      Xin Long, aged 60, is an Independent Director of the Company. Mr. Ye has over
      35
      years of experience doing business in China and investing in Chinese
      enterprises. He has an excellent relationship with the Beijing Municipal
      Government and the Guangzhou Municipal Government.





Mr.
      Hamid
      R. Seyedin, aged 54, is an Independent Director and a member of the audit
      committee of the Company. Mr. Seyedin is the CEO of First Washington Group
      and
      President of the American Chamber of Commerce in Guangdong. Under his leadership
      since 2003, the American Chamber of Commerce in Guangdong has grown by more
      than
      83% in membership and 300% in revenues. In 1991, former U.S. President George
      Bush recognized him in writing for his involvement with the passage of the
      Fast
      Track Procedures for the North American Free Trade Agreement (NAFTA). Appointed
      by three governors of the State of Maryland to four terms of office, he served
      as the Chairman of Montgomery College and State Chairman of the Maryland
      Association of Community Colleges representing all seventeen colleges in the
      State. He served on the Board of Directors of the Kennedy Institute, by
      appointment of Cardinal James A. Hickey (then Archbishop of Washington). He
      was
      a recipient of an award in business from the U.S. Department of Commerce. He
      received recognition from the U.S. Senate Sergeant At Arms for his service
      to
      the U.S. Senate Deliberations. Finally, he served two terms on the Maryland
      Advisory Committee of the U.S. Civil Rights Commission.





Mr.
      Samuel Yung, aged 47, is an Independent Director and a member of the audit
      committee of China World Trade Corporation until January 5, 2006. Mr. Yung
      is a
      Senior District Director of American International Assurance Co. (Bermuda)
      Ltd.,
      a member company of American International Group, Inc. He was the President
      of
      The Life Underwriters Association of Hong Kong in 1991, President of the General
      Agents and Managers Association of Hong Kong in 1996, and Advisory Board
      Chairman of the General Agents & Managers Association International between
      1997 and 1999. Mr. Yung has also participated in numerous community services
      and
      served as council member for a number of government committees. In addition,
      he
      also serves as advisor to many educational associations. Mr. Yung is a Certified
      Financial Planner CM ,
      a
      Chartered Insurance Agency Manager, a Registered Financial Consultant, a
      Certified Manager of Financial Advisor, and a Chartered Financial Practitioner.





Mr.
      Chi
      Kin Ho, aged 35, is an Independent Director and a member of the audit committee
      of the Company until February 28, 2006. Mr. Ho is a principal of CCP C.P.A.
      Limited of Hong Kong, an accounting firm focusing on providing statutory audit
      service. Mr. Ho is a U.S. Certified Public Accountant, a member of AICPA, and
      associate member of Hong Kong Accounting Association. He has over ten years
      of
      experience in both U.S. and China in the area of financial accounting, U.S.
      taxation and reporting, as well as management advisory. Mr. Ho earned his
      Bachelor of Business Administration Degree from Hawaii Pacific University.





*Officers*





Mr.
      Bernard K. Chan, aged 41, is the Chief Financial Officer of the Company until
      February 28, 2006. He oversees M&A and financial projects of China World
      Trade Corporation. Mr. Chan has over 15 years of experience in the areas of
      financial advisory, direct private investments and corporate finance. He was
      a
      Managing Partner of a local corporate finance firm concentrating on providing
      advisory of U.S. listing and capital raising. Prior to that, Mr. Chan was a
      member of senior management for several listed companies in Hong Kong and the
      largest private landowner in Hawaii, focusing on direct investments and assets
      management. He is also a Registered Investment Advisor. Mr. Chan earned his
      Master of Business Administration Degree in International Management and
      Investment Finance, Master of Science Degree in Applied Econometrics, and
      Bachelor of Business Administration Degree in Investment Finance, all from
      the
      University of Hawaii.




78
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          of Contents*





Mr.
      Man
      Ha, aged 43, was appointed as Chief Financial Officer on February 28, 2006.
      He
      has over 20 years of experience in the areas of auditing, transaction advisory
      services and commercial fields. In the past, he was executive director, group
      financial controller and company secretary of several publicly traded companies
      that were listed on the Hong Kong Stock Exchange. Mr. Ha holds a Masters Degree
      in Professional Accounting from the Open University of Hong Kong. He is also
      a
      fellow member of The Association of Chartered Certified Accountants and The
      Hong
      Kong Institute of Certified Public Accountants.





There
      are
      no familial relationships between our officers and directors.





**Code
      of Ethics**





The
      Company has adopted a Code of Ethics that applies to the Company’s principal
      chief executive officer, principal financial officer, principal accounting
      officer or controller, or persons performing similar functions, as well as
      other
      employees (the "Code of Ethics"). A copy of the Code of Ethics is attached
      hereto as Exhibit
      14.1 .
      The
      Code of Ethics is being designed with the intent to deter wrongdoing, and to
      promote the following:





·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional relationships





·
            Full,
                fair, accurate, timely and understandable disclosure in reports and
                documents that a small business issuer files with, or submits to,
                the
                Commission and in other public communications made by the small business
                issuer





·
            Compliance
                with applicable governmental laws, rules and regulations





·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the code





·
            Accountability
                for adherence to the code








**Section
      16(a) Beneficial Ownership Reporting Compliance**





Under
      Section 16(a) of the Exchange Act, all executive officers, directors, and each
      person who is the beneficial owner of more than 10% of the common stock of
      a
      company that files reports pursuant to Section 12 of the Exchange Act, are
      required to report the ownership of such common stock, options, and stock
      appreciation rights (other than certain cash-only rights) and any changes in
      that ownership with the Commission. Specific due dates for these reports have
      been established, and the Company is required to report, in this Form 10-KSB,
      any failure to comply therewith during the fiscal year ended December 2005.
      The
      Company believes that all of these filing requirements were satisfied by its
      executive officers, directors and by the beneficial owners of more than 10%
      of
      the Company’s common stock. In making this statement, the Company has relied
      solely on copies of any reporting forms received by it, and upon any written
      representations received from reporting persons that no Form 5 (Annual Statement
      of Changes in Beneficial Ownership) was required to be filed under applicable
      rules of the Commission.





**Item
      10****.
      Executive Compensation**





No
      compensation in excess of $100,000 was awarded to, earned by, or paid to any
      executive officer of China World Trade during the years 2005, 2004 and 2003,
      except as described below. The following table and the accompanying notes
      provide summary information for each of the last three fiscal years concerning
      cash and non-cash compensation paid or accrued by our chief executive officer
      and other executive officers earning in excess of $100,000 for the past three
      years.




79
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          of Contents*




SUMMARY
      COMPENSATION TABLE





Name
                of officer
            Year
            Salary
            Bonus
            Other
                AnnualCompen-
                sation
            Restricted
                StockAward(s)
            Securities
                UnderlyingOptions
                SARs(#)
            LTIP
              payouts
            All
                Other Compen-
              SationJohn
                Hui, CEO
            2005
            150,000
            -
            -
            55,823
            -
            -
            -John
                Hui, CEO
            2004
            57,692
            -
            -
            206,347
            -
            -
            -John
                Hui, CEO
            2003
            147,436
            -
            -
            -
            -
            -
            -William
                Chi Hung Tsang, Chairman & Director
            2005
            150,000
            12,500
            
            198,480William
                Chi Hung Tsang, Chairman & Director
            2004
            57,692
            
            
            733,680William
                Chi Hung Tsang, Chairman & Director
            2003
            141,026
            -
            -
            -
            -
            -
            -C.
                M. Chan, Director
            2005
            76,982
            15,215
            -
            53,755
            -
            -
            -C.
                M. Chan, Director
            2004
            -
            -
            -
            198,705
            -
            -
            -C.M.
                Chan, Director
            2003
            30,769
            -
            -
            -
            -
            -
            -Luo
                Chaoming, Director
            2005
            19,142
            -
            -
            26,878
            -
            -
            -Luo
                Chaoming, Director
            2004
            17,396
            -
            -
            99,362
            -
            -
            -Bernard
                Chan, CFO
            2004
            76,923
            11,727
            -
            -
            -
            -
            -Bernard
                Chan, CFO
            2004
            -
            -
            -
            218,399
            -
            -
            -





Compensation
      of Directors





In
      2001,
      China World Trade committed itself to compensate each of its Board of Directors
      with 2,000 shares of its common stock per annum. Board members typically meet
      on
      a bi-monthly basis.





2003
      Non-Qualified Stock Compensation Plan





The
      following table sets forth information about our 2003 Non-Qualified Stock
      Compensation Plan adopted by our Board of Directors and filed with the
      Commission as Exhibit 10.1 to our Registration Statement on Form S-8 on October
      28, 2003.





Shares
                remaining available for future issuance
            Shares
                issuable upon exercise of options to be granted in the future
            Weighted
                average exercise price of outstanding options397,000
            -
            -





Pursuant
      to the 2003 plan, we registered 2,000,000 shares of common stock and 1,000,000
      options to purchase shares of common stock at $0.673 per share, for a total
      registration for issuance of 3,000,000 shares of common stock. The Compensation
      Committee of the Board of Directors will issue common stock and award options
      to
      employees, directors, officers, consultants, advisors and other persons
      associated with our company. The 2003 plan is intended to provide a method
      whereby our company may be stimulated by the personal involvement of our
      employees, directors, officers, consultants, advisors and other persons in
      our
      business and reward such involvement, thereby advancing the interests of our
      company and all of its shareholders.





As
      of the
      date of this report, a total of 1,603,000 shares of common stock were issued
      to
      consultants and 985,000 options were issued to our management pursuant to our
      2003 Non-Qualified Stock Compensation Plan.




80
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          of Contents*








**Item
                11****.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**





The
      following table sets forth the number of shares of common stock beneficially
      owned as of December 31, 2005 by (i) those persons or groups known to us who
      will beneficially own more than 5% of our common stock; (ii) each Director
      and
      director nominee; (iii) each executive officer whose compensation exceeded
      $100,000 in the fiscal year ended December 31, 2005; and, (iv) all directors
      and
      executive officers as a group. The information is determined in accordance
      with
      Rule 13d-3 promulgated under the Exchange Act based upon information furnished
      by persons listed or contained in filings made by them with the Securities
      and
      Exchange Commission and upon information provided by such persons directly
      to
      us. Except as indicated below, the stockholders listed possess sole voting
      and
      investment power with respect to their shares.





Name/Address
            Number
                of Shares
            Percentage
              Ownership(1)William
                Chi Hung Tsang
              Room
                1217, The Metropolis Tower, 10 Metropolis Drive, Hunghom, Hong Kong
            13,867,716
            41.2%Powertronic
                Holdings Limited
              9
                Des Voeus Road West, 12thFloor,
                Hong Kong
            5,574,074
            16.6%Grand
                Perfection Limited
              15thFloor,
                Rihang Hotel, 198 Linhe Road West, Guangzhou, PRC
            2,040,619
            6.1%Bernard
                Chan
              65
                Cadogan Street, 2ndFloor,
                Kennedy Town, Hong Kong
            91,552
            **Chi
                Ming Chan
              138
                Tiyu Road East, 3rdFloor,
                Goldlion Digital Network Center, Guangzhou, PRC
            89,109
            **Chao
                Ming Luo
              138
                Tiyu Road East, 3rdFloor,
                Goldlion Digital Network Center, Guangzhou, PRC
            44,554
            **John
                Hui
              7040
                Granville Avenue, Suite 403, Richmond B.C. Canada
            92,536
            **All
                Officers and Directors as a Group (6 persons)
            16,226,086
            48.2%





**
      Less
      than 1%





(1)Based
      on 33,668,923 shares outstanding as of December 31, 2005.




81
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          of Contents*





**Item
      12****.** Certain
      Relationships and Related Transactions




We
      entered into a acquisition agreement (the “Acquisition Agreement”) dated
      November 19, 2003, with Mr. William Chi Hung Tsang (“Mr. Tsang”), the owner of
      the 21st to 23rd Floor of Goldlion Digital Network Center, 138 Tiyu Road,
      Tianhe, Guangzhou 510620, the PRC (the “Premises”). Mr. Tsang assigned to us the
      rents and other consideration (the “Rental Income Right”) valued at $1,800,000.
      Mr. Tsang was issued 3,000,000 shares of our common stock and warrants to
      purchase an additional 6,000,000 shares of our common stock (the “Warrants”) for
      $1,800,000 ($0.60 per share). The Warrants may be exercised between December
      5,
      2003 and December 1, 2005 at an exercise price of $0.75 per share. To date,
      Mr.
      Tsang has exercised the warrants to purchase up to 1,500,000 shares of our
      common stock and Mr. Tsang continues to hold a warrant to purchase up to
      4,500,000 shares of our common stock until December 1, 2005.




The
      value
      of the Rental Income Right was determined by using the present value of the
      5-year rental income rights of the Premises, or $1,831,795. This present value
      was based on the then actual rental income of the Premises, or $556,569. We
      then
      assumed the following percentages: (a) annual growth rate on the rental income
      of 3.0%, (b) rent free period and vacancy loss of 10%, and (c) business tax
      rate
      of 5.5%. We discounted back to November 2003 using a ten percent discount
      rate.




By
      a
      Settlement Agreement dated December 5, 2003, we converted $456,661.73 that
      was
      previously advanced by Mr. Tsang into 761,103 shares of common stock. In the
      quarter ended December 31, 2003, a personal guarantee was granted from Mr.
      Tsang
      in the amount of $19,231. As a result of these transactions, Mr. Tsang will
      beneficially own 71.82% of our shares of common stock, assuming exercise of
      all
      of his warrants.




We
      entered into several consulting agreements. On December 9, 2003, we issued
      100,000 and 50,000 shares to Greentree Financial Group, Inc. and RR Inv Holding
      Inc., respectively. On December 11, 2003, we issued 500,000 shares each to
      TMT
      Consultant and Mr. Andy Lau for consultancy services provided. On December
      16,
      2003, we issued 100,000 shares to Wall Street Strategies, Inc. for consultancy
      services provided and in February 2004, we issued another 69,000 shares to
      Greentree Financial Group, Inc.




We
      entered into a relationship with respect to rent and related expenses with
      Guangzhou Goldlion City Properties Co., Ltd. and Guangzhou Cyber Strategy
      Limited in the approximate amount of $96,154, and Dimension Marketing Limited
      in
      the amount of $80,645. These amounts have been classified as current
      liabilities. The amounts due to related parties represent unsecured advances
      which are interest-free and repayable on demand.




On
      December 30, 2004, General Business Network (Holdings) Limited, a wholly-owned
      subsidiary of our company, and Guangzhou Goldlion Environmental Technology
      Company Ltd., an affiliate of William Chi Hung Tsang, our Chairman, entered
      into
      an Agreement for Purchase and Sale of the premises known as the 20 th Floor of
      the Goldlion Digital Network Centre, Nos. 136 and 138 Ti Yu Dong Road, Tianhe
      District, Guangzhou PRC, pursuant to which Goldlion agreed to purchase the
      premises from General Business Network for $2,456,521.70 in cash. The closing
      occurred on May 31, 2005, and Goldlion paid the purchase price for the premises
      to General Business Network.





On
      March
      29, 2005, our board of directors approved the sale of the after-tax rental
      income rights of 21 st and
      23 rd   Floor,
      Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou to our
      Chairman, Mr. Chi Hung Tsang at the book value of $1,320,000. As a result,
      a
      cash balance due from Mr. Tsang in the amount of $377,504 as of March 31, 2005
      was subsequently paid off on April 28, 2005. The total consideration of
      $1,320,000 would be used to provide additional working capital for our group
      of
      companies.





The
      amounts due to related parties represent unsecured advances which are
      interest-free and repayable on demand.




82
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          of Contents*





**Item
      13****.****Exhibits
      and Reports on Form 8-K**





(a)  Exhibits .
      The
      exhibit list required by Item 13 of Form 10-KSB is provided in the " Index
      to Exhibits "
      located
      herein, immediately following Item 15.





(b)  Reports
      on Form 8-K Filed in Last Quarter of Fiscal Year 2004





(1)
            On
                January 5, 2005, the Company filed a Form 8-K in order to report
                an
                Agreement for Sale and Purchase of real estate, dated December 30,
                2004,
                between General Business Network (Holdings) Limited, a wholly-owned
                subsidiary of the Company, and Guangzhou Goldlion Environmental Technology
                Company Ltd.





(2)
            On
                January 24, 2005, the Company filed a Form 8-K in order to report
                a
                Complaint, dated December 10, 2004.(3)
            On
                January 11, 2006, the Company filed a Form 8-K in order to report
                the new
                appointment of a president and vice-chairman and the election of
                new
                directors.




(4)
            On
                February 21, 2006, the Company filed a Form 8-K regarding the changes
                of
                certifying accountants.(5)
            On
                March 1, 2006, the Company filed a Form 8-K in order to report the
                new
                appointment of their Chief Financial Officer.(6)
            On
                March 20, 2006, the Company filed an amendment to the current report
                on
                Form 8-K/A regarding the changes of certifying accountants.


(7)
            On March 30, 2006, the Company filed a Form 8-K to report changes
                in its
                certifying accountants.







**Item
      14****.****Principal
      Accountant Fees and Services**





Fees
        Billed For Audit and Non-Audit Services





The
      following table represents the aggregate fees billed for professional audit
      services rendered to accounting firm of Moores Rowland Mazars, our current
      independent auditor, ("Moores") for the audit of the Company's annual financial
      statements for the years ended December 31, 2004 and unaudited twelve-month
      period ended December 31, 2003, and all fees billed for other services rendered
      by Moores during those periods.





Year
                Ended December 31
            
            2005
            
            2004Audit
                Fees(1)
            
            
            100,635
            
            
            84,948Audit-Related
                Fees (acquisition audit fee of New Generation)(2)
            
            
            -
            
            
            64,103Tax
                Fees(3)
            
            
            3,095
            
            
            513All
                Other Fees(4)
            
            
            -
            
            
            -Total
                Accounting Fees and Services
            
            
            87,191
            
            
            149,564





(1)
            *Audit
                Fees*.
                These are fees for professional services for the audit of the Company's
                annual financial statements, and for the review of the financial
                statements included in the Company's filings on Form 10-QSB, and
                for
                services that are normally provided in connection with statutory
                and
                regulatory filings or engagements.





(2)
            *Audit-Related
                Fees*.
                These are fees for the assurance and related services reasonably
                related
                to the performance of the audit or the review of the Company's financial
                statements.





(3)
            *Tax
                Fees*.
                These are fees for professional services with respect to tax compliance,
                tax advice, and tax planning.





(4)
            *All
                Other Fees*.
                These are fees for permissible work that does not fall within any
                of the
                other fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
                Fees.





83
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          of Contents*




**Pre-Approval
      Policy For Audit and Non-Audit Services**





The
      Company does not have a standing audit committee, and the full Board performs
      all functions of an audit committee, including the pre-approval of all audit
      and
      non-audit services before the Company engages an accountant. All of the services
      rendered to the Company by accounting firm of Moores Rowland Mazars after May
      2003 were pre-approved by the Board of Directors of the Company.





The
      Company is presently working with its legal counsel to establish formal
      pre-approval policies and procedures for future engagements of the Company's
      accountants. The new policies and procedures will be detailed as to the
      particular service, will require that the Board or an audit committee thereof
      be
      informed of each service, and will prohibit the delegation of pre-approval
      responsibilities to management. It is currently anticipated that the Company's
      new policy will provide (i) for an annual pre-approval, by the Board or audit
      committee, of all audit, audit-related and non-audit services proposed to be
      rendered by the independent auditor for the fiscal year, as specifically
      described in the auditor's engagement letter, and (ii) that additional
      engagements of the auditor, which were not approved in the annual pre-approval
      process, and engagements that are anticipated to exceed previously approved
      thresholds, will be presented on a case-by-case basis, by the President or
      Controller, for pre-approval by the Board or audit committee, before management
      engages the auditors for any such purposes. The new policy and procedures may
      authorize the Board or audit committee to delegate, to one or more of its
      members, the authority to pre-approve certain permitted services, *provided
      that* the
      estimated fee for any such service does not exceed a specified dollar amount
      (to
      be determined). All pre-approvals shall be contingent on a finding, by the
      Board, audit committee, or delegate, as the case may be, that the provision
      of
      the proposed services is compatible with the maintenance of the auditor's
      independence in the conduct of its auditing functions. In no event shall any
      non-audit related service be approved that would result in the independent
      auditor no longer being considered independent under the applicable rules and
      regulations of the Securities and Exchange Commission.








**INDEX
      TO EXHIBITS**





The
      following exhibits are filed as part of this report:








Exhibit
                Number
            Description14.1
            Code
                of Ethics *31.1
            Rule
                13a-14(a)/15d-14(a) Certifications of Chi Ming
                Chan, CEO *31.2
            Rule
                13a-14(a)/15d-14(a) Certifications of Man Ha,
                Principal Financial Officer *****
              32
            ****
              Statement
                Required By 18 U.S.C. Section 1350, As Adopted Pursuant To Section
                906 of
                The Sarbanes-Oxley Act of 2002.*


* Filed
      herewith.




84
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          of Contents*




**SIGNATURES**





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





Date:
      April 14, 2006




CHINA
                WORLD TRADE CORPORATIONBy:
            /s/ Chi
              Ming ChanChi Ming Chan
              Chief
                Executive Officer







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





Signature
            Title
            Date/s/
                Chi Ming Chan
            Chief
                Executive Officer
            April
                14, 2006Chi
                Ming Chan
            Director/s/
                Man Ha
            Chief
                Financial Officer
            April
                14, 2006Man
                Ha





Pursuant
      to the requirements of the Exchange Act, this report has been signed by the
      following persons in the capacities and on the date indicated.





Signature
            Title
            Date/s/
                William C.H. Tsang
            Chairman
                and Director
            April
                14, 2006William
                C.H. Tsang/s/
                John H.W. Hui
            Vice
                Chairman and Director
            April
                14, 2006John
                H.W. Hui/s/
                Zeliang Chen
            Vice
                Chairman and Director
            April
                14, 2006Zeliang
                Chen/s/
                Chi Ming Chan
            Chief
                Executive Officer
            April
                14, 2006Chi
                Ming Chan
            and
                Director/s/
                Chao Ming Luo
            Director
            April
                14, 2006Chao
                Ming Luo








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