March 13, 1997


Ms. Dorine H. Miller
Mr. Dennis Muse
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 7-2
450 Fifth Street, N.W.
Washington, D.C.  20549

     Re:  Staff Comments to the  Registration  Statement on Form 10 of Goung Hei
          Investment Co. file no. 0-21457

Ladies and Gentlemen:

I have  filed  the  necessary  copies  of  Amendment  No. 1 to the  Registration
Statement on Form 10 (the "Registration Statement") of Goung Hei Investment Co.,
Ltd. (the "Company"). I am enclosing a marked copy of the Registration Statement
with this letter for your review.  All page  references  in this letter refer to
the marked  copy of the  Registration  Statement.  This  letter  responds to the
staff's comments of November 8, 1996.

   

Item 1. Description of Business

Background - Page 1

Comment           1.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See pages 2-3.

Comment           2.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 2.

Comment           3.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 2.

Comment           4.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 3.

Comment           5.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 3.





<PAGE>

General, page 3
---------------

Comment           6.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 4.

Products, Page 4

Comment           7.  The  Company  has  made  revisions  to  the   registration
                  statement in accordance with your comment. See page 4.

Comment           8. The  Company  has  filed  all  appropriate  agreements  and
                  documents between the Company and its principal customers. See
                  Exhibit 10-2 and 10-3.

Customers, page 4

Comment 9. 

     Goung Lee Construction Co., Ltd. is the 3rd largest construction company in
Taiwan.  It has formed  technical  cooperation  agreement  with Yokohawa  Bridge
corp.,  of  Japan  and  it  produces  bridges,  high-rise  buildings  and  other
general-purpose steel structures.  It has received the Chinese National Standard
(CNS) certificate issued by Central Standard Bureau of Taiwan.
     Goung  Lee  has  completed  the   following   constructions:   China  steel
corporation  2nd and 3rd phase  expansion  project,  Kaohsiung.  Taiwan Chemical
Corporation,  Long-Der Power Plant  Steelworks,  E-lan,  Tuntex Group  Stainless
Steel Plant, Tainan, Tuntex  Petro-Chemicals,  Inc., Tainan,  Da-Chin Automobile
Plant,  Pingtung,  Hong-Chung business plaza,  Kaohsiung,  Tuntex Group Oriental
Science Building,  Taipei, Golden Sand International  Building,  taichung,  Core
Pacific Construction CO., Chu-Wei building Taipei,  Long-Yang plaza,  Kaohsiung,
Kung-Kuan circle interchange steel briddge,  Taipei,  Taiwan highway bureau road
#5 steel bridge, Taipei.
     Goung Lee has  enjoyed  consistent  growth in  revenues  and  profits.  The
relative data and financial ratio analysis statement are listed below:

Table 1 The Comparison Data Among the First Three Largest  Construction  Company
of R.O.C.                                                       Unit:  Ton

<TABLE>
<CAPTION>
<S>                                                                            <C>        <C>       <C>      <C>
Year                             1994 year                 1993 year                          1992 year

Company              Production Growth Rate Sales Growth Rate Growth rate Sales Growth rate Production Sales Production
                                    (%)               (%)       (%)                (%)
Goung Lee                 39,771   86.71    36,245   73.80     20.45    20,854    44.83     17,684    14,399   21,301
Construction Co., Ltd
China Stee               l75,447    3.50    71,049   (8.66)   (42.72)   77,784   (38.15)   127,262   125,770   72,894
Constrution Co.
Chuen-Yuan                74,466   40.72     n/a       n/a    (13.61)   79,407    54.57     61,254    51,374   52,916
Construction Co.

</TABLE>

Table 2 Financial ratio Statement

FINANCIAL ANALYSIS ITEM                      1995          1994
LIABILITY/TOTAL ASSETS                       67.11        65.75
LONG-TERM CAPITAL/FIXED ASSETS              132.88       115.46
CURRENT RATIO                               114.28        98.94
ACID RATIO                                   44.71        56.42
ACCOUNT & NOTE RECEIVABLE TURNOVER            4.55         4.24
INVENTORY TURNOVER                            0.74         0.80
FIXED ASSET TURNOVER                          0.86         0.56
TOTAL ASSET TURNOVER                          0.38         0.31
GROSS PROFIT(%)                               19.6         21.6
ASSET PROFIT RATIO(%)                         5.75         4.42
EQUITY RATIO(%)                               6.26         4.09
NET PROFIT(%)                                 4.96         3.75
E.P.S.                                        1.22         0.90

     Goung Lee  onstruction  Co.,  Ltd owns  valuable  experience  in marketing 
(including dealing with the governmental agencies) while Qualyserve Construction
co., Ltd. has comparative  advantage in bridge-building  field. Both sides could
get profit through strategy alliance.  According to the related statements (From
the related  data  above we know that both sales and net profit of Goung Lee has
improved for the last two years.) and  investigation  to Goung Lee  Construction
Co., Ltd, we feel quite comfortable to undertake construction projects from this
company and make Goung Lee to be our principal customer.
     Since 1994, the cooperative  relationship between Goung Lee and us has been
well. The trading terms are acceptable and no unnormal events have happened.  We
enjoyed the harmonic relationship with Goung Lee so far.

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

Results of Operations, page 6

Comment 10.

The Company has made revisions to the registration  statement in accordance with
your comment. See pages 7 and 8.

Liquidity and Capital Resources

Comment           11.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 9.

Comment           12.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 9.

Comment           13.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 9.

Comment           14.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 8.

Item 4.  Security Ownership of Certain Beneficial Owners and Management, page 9

Comment           15.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 10.

Item 6.  Executive Compensation, page 13

Comment           16.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 14.

Item 7.  Certain Relationships and Related Transactions, page 13

Comment           17.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 14.

Item 9.  Market for Common Equity and Related Shareholder matters, page 13

Comment           18.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 14.

Item 10.  Recent Sales of Unregistered Securities, page 13

Comment        19. All of the former  shareholders  of Qualyserve  had access to
               all of the  information  concerning the terms of the  transaction
               between  the  Company and  Qualyserve,  and the Company  obtained
               representations  from each shareholders that he/she,  was able to
               fend for themselves, was a sophisticated investor, and understood
               the risk for transactions of this type.

Accounting Comments

Selected Financial Data

Comment           20.  The  Company  has made  revisions  to the  Registration
                  Statement in accordance with your comment. See Page

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

Comment           21.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment See Page

Comment           22.  The  Company  has  made  revisions  to  the  registration
                  statement  in  accordance  with  your  comment.  See  pages 8
                  through 9.

Comment           23.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 8.

Comment           24.  The  Company  has  made  revisions  to  the  registration
                  statement  in  accordance  with  your  comment.  See  pages 9
                  through 10.

Comment           25.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. See page 10.

Financial Statements

General

Comment 26.
(1)  As  of  December  31,  1995,  the  amount  borrowed  from  shareholders  is
     US$15,488,815.  Qualyserve  Construction Co., Ltd.,  Kaohsiung has not paid
     off this loan. On April 30, 1996, the shareholders and Mr. Lu Cui-Kang, the
     representative of Goung Hei Investment Co., Ltd., (GoungHei) in West Samoa,
     reached the contract that the advances from shareholders was going to be
     converted to hold the stocks of equivalent value.
(2)  The  shareholders of Qualyserve  Constructin Co., Ltd.,  Kaohsiung,  taiwan
     (QCC)  has  transferred  99.7% of  their  stockholders  equity  (19,846,000
     shares)  to West  Samoa  Goung Hei  Investment  Corporation.  The amount is
     US$13,449,007.(Net value)
(3)  Company  issued  new  10,131,609  shares  to Goung  Hei's  shareholders  in
     exchange  for all of  Goung  Hei's  common  stock  (the  capital  stock  is
     $30,000,000.  $1 par  value).
(4)  To sum up,  the  Company  shall  become  the  owner of 100% of Goung  Hei's
     outstanding  common stock and the Goung Hei shall become the owner of 99.7%
     of Qualyserve construction Co., Ltd.

     The Company  acquired the 99.7% common stock of  Qualyserve  by  exchanging
stock with Goung Hei.  The pro forma  combined  statement  is  parent-subsidiary
combined statement but merger combined statement. So it is not suitable to adopt
general merger accounting method.

Goung Hei Investment Co., Ltd.

Comment           27.  The  Company  has  made  revisions  to  the  registration
                  statement in accordance with your comment. Please see the
                  Goung Hei Investment Co., Ltd. and Subsidiary Consolidated Pro
                  forma Balance Sheet.

Comment           28.  The  Company  has made  revisions  to the  registration
                  statement in accordance  with your  comment.  Please see the
                  Goung Hei Investment  Co., Ltd. and Subsidiary  Consolidated
                  Pro forma Balance Sheet.


Comment          29.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung Hei Investment  Co., Ltd. and Subsidiary  Consolidated
                 Proforma  Statement  of  Income  and  Consolidated  Proforma
                 Statement of cash flow.

Comment          30.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung Hei Investment  Co., Ltd. and Subsidiary  Consolidated
                 Proforma Statement of changes in stockholders.


Comment          31.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung Hei Investment  Co., Ltd. and Subsidiary  Consolidated
                 Proforma Statement of changes in stockholders.


Comment          32.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung Hei  Investment  Co., Ltd. and Subsidiary  Consolidated
                 Proforma Statement of cash flows.


Comment          33.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please  see  the  Goung  Hei   Investment   Co.,   Ltd.  and
                 subsidiarty consolidated Proforma statement of cash flows.


Comment          34.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please see the Goung Hei Investment CO., Ltd. and Subsidiary
                 Consolidated Proforma Statement of changes in stockholders.


Comment          35.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung  Hei  Investment  Co.,  Ltd.  and  Subsidiary  Note to
                 Consolidated Proforma Statements note-2(K).


Comment          36.  The  Company  has made  revisions  to the  registration
                 statement  in  accordance  with  your  comment.  There is no
                 merger transaction  between the Company and Qualyserve.  The
                 Compay  acquired  the 99.7% common  stock of  Qualyserve  by
                 exchanging  stock  with  Goung  Hei on May 6. The pro  forma
                 combined  statement is  parent-subsidiary  ombined statement
                 but merger  combined  statement.  So it is not  suitable  to
                 adopt general merger accounting method.


Comment          37.  The  Company  has made  revisions  to the  registration
                 statement  in  accordance  with  your  comment.There  is  no
                 deferred  charge.  The  company  has made  revisions  to the
                 mistakes of registration statement. Please see the Goung Hei
                 Investment  Co., Ltd. and  Subsidiary  Note to  Consolidated
                 Proforma Statements.


Comment          38.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please se the Goung Hei Investment  Co., Ltd. and Subsidiary
                 Note to Consolidated Proforma Statemenst note-2(e).


Comment          39.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please see the Goung hei Investment Co., Ltd. and Subsidiary
                 Note to Consolidated Proforma Statements note-12.

Comment          40.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Goung  Hei  Investment  Co.,  Ltd.  and  Subsidiary  Note to
                 Consolidated Proforma Statements note-18.

Comment          41.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please see note-2(h) to Goung Hei  Investment  Co., Ltd. and
                 Subsidiarty Consolidated Proforma Statements.


Comment          42.  The  Company  has made  revisions  to the  registration
                 statement in accordance with your comment. See Note 5.

Comment          43.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  Please refer to
                 the answer of question 25.

          The Company has entered a contract of purhase of land and  building in
     order to meet the future needs for business.  The Contract is summarized as
     follows.

          1. Location:  Land-Chaocho section, Pingtung County(55,393oT) Buidling
          #1148, Chaocho section, Pingtung County 12,468.86oT)

          2.Contractor Kunli building Co., Ltd.

          3. Contract price:US$42,707,554.23(Tax included)

          4. Title of  properties:  Except titles of land#33 and #40-27 have not
          transferred, titles for all the residual have been transferred.

          5.  Evaluation:  The fair  market  value for the land and  building is
          evaluated. US$41,791,623.80

          6. As of December 31, 1995, US$41,267.763.65 has been paid.

     The value of the property was determined by property  appraising center.
     The fair value is determined by cost less accumulate  depreciation  and the
     depreciation is provided on the straight line method.

Comment          44.  The  Company  has made  revisions  to the  registration
                 statement in accordance with your comment. See Note 8.

Qualyserve Construction, Co.

Comment          45.  The  Company  has  made  revisions  to  the  registration
                 statement  in  accordance  with  your  comment.  

Comment          46.  The  Company  has  made  revisions  to  the  registration
                 statement in accordance with your comment.

Comment          47.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made revisions of registration statement according to SFAS
                 No. 121.  Please see the Qualyserve  construction  Co., Ltd.
                 financial statements note-2(g), note-16.


Comment          48.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please  see  the  Notes  to  Qualyserve   Construction   Co.
                 financial statements.


Comment          49.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your comment.  The company has
                 made  revisions to the mistakes of  registration  statement.
                 Please  see  the  Qualyserve  Construction,   Co.  financial
                 statements notes 2(k).


Comment          50.  The  Company  has made  revisions  to the  registration
                 statement in accordance  with your  comment.  Please see the
                 Qualyserve construction Co., Ltd. financial statements note-
                 11, note-15

Comment          51.  The  Company  has made  revisions  to the  registration
                 statement in accordance with your comment.

                 The  mechanics of the  calculation  of the weighted  avergae
                 number of shares  outstanding  are  below:  Original  shares
                 number  is   5,200,000   and  the  new  (November  )  issued
                 14,700,000  share. So the weighted  avergae number of shares
                 outstanding in December 31, 1995 is:

                 5,200,000 +14,700,000 *1/12=6,425,000 (shares)

                 Issuances of the company are all cash sales.


Comment          52.  The  Company  has made  revisions  to the  registration
                 statement in accordance with your comment. See Schedule II.

Item 14.

Comment          53.  The  Company  has made  revisions  to the  registration
                 statement in accordance with your comment. See page 18

Comment          54.  The  Company   has  made   revisions to the registration 
                 statement in accordance with your comment. See page 18.

Comment          55. See Exhibit ___

    


Please call Morgan F.  Johnston,  Esq. at (214)  401-0752  with any questions or
comments.

Sincerely,

/s/ Morgan F. Johnston

Morgan F. Johnston

<PAGE>

 

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


                                   Form 10/A-1



                   GENERAL FORM FOR REGISTRATION OF SECURITIES
              Under Section 12(b) or (g) of The Securities Exchange
                                   Act of 1934



                         GOUNG HEI INVESTMENT CO., LTD.
                         (Name of issuer in its charter)



           Delaware                                            75-2254391
     (State or other jurisdiction of                      (I.R.S. Employer
      incorporation or organization)                    Identification Number)


           236 Zen Lin Road, Zen Wu County, Kaohsiung, Taiwan, R.O.C.
               (Address of principal executive offices) (Zip code)


                    Issuer's telephone number: 8867-372-6088


           Securities to be registered under Section 12(b) of the Act:

               Title of each class              Name of each exchange on which
               to be so registered              each class is to be registered

                       none                                 none
         -------------------------               -----------------------------

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

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

                         Common Stock, $.00001 par value







<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

Background

         Goung  Hei  Investment   Co.,  Ltd.  was  originally   incorporated  as
Potentialistics,  Inc.  ("Potentialistics"),  a wholly owned subsidiary of Texas
American Group,  Inc.  ("TAG"),  a  publicly-owned  corporation,  in Delaware on
October 12, 1988 as a "blind pool.". In April of 1989, TAG distributed 1,585,733
shares of its issued and  outstanding  common  stock of  Potentialistics  to its
shareholders pursuant to an effective  registration  statement on Form S-18. The
amount  distributed  represented  only five percent (5%) of the amount of common
stock  outstanding.  The remaining  outstanding stock was owned by TAG. TAG sold
approximately 92% of the outstanding  shares to a third party and Halter Capital
Corporation, a Texas corporation, subsequently purchased this control block from
such third party.  Until the transaction  with Goung Hei Investment Co., Ltd., a
West Samoa  corporation  ("Goung  Hei")  described  below,  management of Halter
Capital  Corporation  controlled and participated in the business  operations of
Potentialistics.   Potentialistics   has  had  no   substantial   operations  or
substantial  assets since inception.  Its business purpose was primarily to seek
and  acquire or merge with all types of  business  ventures.  At the time of its
organization, the authorized capital stock was 50,000,000 shares of common stock
(the  "Common  Stock"),  par value  $.00001 per share and  10,000,000  shares of
preferred stock (the "Preferred Stock"), par value $.00001 per share.

         Prior to the transaction with Goung Hei, Potentialistics did not engage
in any business  activities  and the  business  purpose of  Potentialistics  was
primarily to seek out and obtain an  acquisition or merger  transaction  whereby
its  stockholders  would  benefit  by owning an  interest  in a viable  business
enterprise.  Since  Potentialistics had no operations or significant assets, its
principal  potential for profits came solely from operations it would receive in
an acquisition or merger transaction.  A merger or acquisition  transaction with
Potentialistics  would allow a privately  held company to become a publicly held
corporation with a broad  shareholder base without  experiencing the substantial
time and filing requirements and financial  expenditures  imposed by federal and
state securities laws.

   

          Potentialistics sought to effect a merger,  exchange of capital stock,
asset  acquisition  or other  similar  business  combination  with an  operating
business.  The business  objective of  Potentialistics  was to effect a business
combination  with a business  which  Potentialistics  believes  has  significant
growth  potential.  Potentialistics  intended to utilize  equity in  affecting a
business  combination.  As Potentialistics  had no income or business operations
from the date Tag  distributed  five  percent of its stock to its  shareholders,
Potentialistics  eventually  lacked the resources to continue to file its public
reports  with  the Securities  and Exchange Commission  ("SEC").As of April 30,
1991, Potentialistics ceased filing any reports with the Commission.
    

         In connection  with the  transaction  with Goung Hei  described  below,
Potentialistics  amended its Articles of  Incorporation  to (1) effect a reverse
split of Potentialistics'  issued and outstanding Common Stock on the basis that
each 15 shares then  outstanding  were converted into one share of Common Stock;
and (2) change the name of  Potentialistics  to Goung Hei Investment Co., Ltd.

Transaction with Goung Hei Investment Co., Ltd.

         In  June  of  1996,  Goung  Hei  obtained  a  controlling  interest  in
Potentialistics by acquiring 1,416,667 shares, or approximately 84%, of the then
issued and  outstanding  Common  Stock of  Potentialistics  from Halter  Capital
Corporation.  Halter Capital Corporation  retained a small ownership interest in
Potentialistics.  All prior  directors  and  officers  of  Potentialistics  then
resigned  and were  replaced  by  nominess  selected by Goung Hei. No members of
management who were involved with Potentialistics  prior to the transaction with
Goung Hei currently have any control or  participate in the business  operations
of Potentialistics.



<PAGE>


         As discussed  above,  the reason for entering into the transaction with
Goung Hei was that  Potentialistics  sought to obtain an  acquisition  or merger
transaction  whereby its  shareholders  would benefit by owning an interest in a
viable business enterprise. Specifically,  Potentialistics desired to enter into
a  transaction  with a company  that either  qualified,  or would  qualify,  for
listing on the Nasdaq National or SmallCap Market.  Upon analysis of Goung Hei's
business plans for Potentialistics (See "--Description of the Business"), it was
determined  that Goung Hei had specific  plans for  Potentialistics  to meet the
assets and net worth  criteria  to be listed on the Nasdaq  National or SmallCap
Market.  For these  reasons,  Potentialistics  believed  it could  best  enhance
shareholders' values by consummating the transaction with Goung Hei.

         On June 10,   1996,  Goung  Hei  caused  Potentialistics  to  acquire
Qualyserve Construction Co., Ltd. ("Qualyserve"),  a privately held company that
was  incorporated  in  Taiwan.  Potentialistics  entered  into a share  exchange
agreement by and among  Potentialistics,  Qualyserve and certain shareholders of
Qualyserve whereby Potentialistics  acquired 99.7% of the issued and outstanding
common stock of Qualyserve in exchange for an aggregate of 19,846,000  shares of
Common Stock.  After the consummation of the transaction,  the former Qualyserve
shareholders  owned 96.25% of  Potentialistics'  common stock and the balance is
owned  by the  remaining  shareholders.  All  references  to the  Company  shall
hereinafter  refer to the  business of the company  after the  transaction  with
Goung Hei, unless the context otherwise requires.

Restrictions on Shares held by Former Shareholders of Qualyserve

         All of the shares of the  Company's  common  stock  owned by the former
shareholders  of  Qualyserve  are  "restricted  securities"  and  under  certain
circumstances may in the future be sold only in compliance with Rule 144 adopted
under the  Securities  Act of 1933, as amended.  Rule 144 provides,  among other
things, that persons holding restricted securities for a period of two years may
each sell in brokerage  transactions every three months an amount equal to 1% of
the Company'  outstanding shares or the weekly reported volume of trading during
the four  calendar  weeks  preceding  the filing of a notice of  proposed  sale,
whichever is greater.  All of the shares held by former Qualyserve  shareholders
are not  eligible  for  resale  pursuant  to Rule 144  until  June of  1998.  No
prediction  can be made as to the effect,  if any,  that sales of such shares or
the  availability  of such  shares  for sale will have on the  Company's  market
prices  prevailing  from  time  to  time.  Nevertheless,  the  possibility  that
substantial  amounts  of  common  stock  may be sold in the  public  market  may
adversely  affect  prevailing  market prices for the Company's  shares and could
also  impair the  Company's  ability to raise  capital  through  the sale of its
equity securities.

Description of the Company's Current Business

General - Manufacturing and Industry of Taiwan.
----------------------------------------------

         More than any other sector, industry (including manufacturing,  mining,
construction  and utilities) has driven the growth of Taiwan's  economy.  During
the nineties,  manufacturing and industry has accounted for approximately 50% of
it gross  domestic  product,  produced  virtually all of its exports and employs
approximately   40%   of  its   workforce.   Manufacturing   alone   contributed
approximately 38% of the gross domestic product,  the largest single contributor
in the entire economy and employs approximately 32% of its workforce.

         Manufacturing  is expected to remain Taiwan's primary focus in the near
future.  While early on, Taiwan had problems with heavy  industry as a result of
environmental  difficulties,  stumbling privatization efforts and a lessening of
international  competitiveness due to increasing costs, such industries as steel
have the opportunity for tremendous growth due to the growth in the construction
industry (from a 1.3% share of gross domestic  product in 1983 to  approximately
5% in 1995). This growth is fueled by public sector infrastructure projects.

<PAGE>


The Company

         The following  description  will refer to the Company's  business after
its acquisition of Qualyserve.  Except where otherwise indicated, all references
to share amounts of Common Stock  reflect the one for 15 reverse split  effected
pursuant to the Stock Purchase Agreement.

         General

         In  recent  decades,  tremendous  economic  growth  has in large  means
ignited an immense flocking of people into urban areas.  Since the urban land is
limited,  it is a necessity to construct tall buildings to allow for the limited
area in which the people must occupy. However, Taiwan Island sits on the seismic
zone  and the  steel  structure,  for its high  strength  and  rigidity,  is now
commonly  applied to the  construction  of the  high-rise  buildings.  The steel
structure, usually in the form of being prefabricated, renders tremendous saving
in construction time and speeds up an early  realization of capital return.  Due
to the scarcity of labor,  the steel  structure,  designed and  manufactured  by
automatic  processing,  presents  a  powerful  competitive  edge in the  market.
Therefore,  because of the short supply of domestic land and the broad awareness
of environment protection, the steel structure becomes the unique resolution for
the building industry.

         Qualyserve  Construction  Co.,  Ltd.,  founded  seven  years  ago,  has
commanded a high  reputation  for solid  performance.  To closely  cope with the
dramatic changes in the marketing  environment,  Qualyserve has a well developed
prospective  operation  plan  aimed at a variety  of  expansion  projects.  Such
projects  include  the  TPC's  expansion  program  for TPC to add four new power
generation  units to the power  station,  the new  erection  of a nuclear  power
plant, and the enlargement of power production capacity in another nuclear power
plant. In addition,  there are many  construction  projects for public utilities
sponsored by the  government,  such as the  construction  of Scientific  Park in
Tainan City; the APROC Center, RTA, the Second Free Highway, the expansion plans
for CKS  International  Airport and  Kaohsiung  International  Airport,  and the
building of additional power plants and refuse resource plants.

     Qualyserve  is  currently   participating   in  TPC's   expansion  and  CKS
International  Airport. TPC's expansion on Tauchung  supplies the electric power
for 2 million people live in Tauchung  area. The expansion of CKS  International
Airport is the second phase expansion project in Taoyuan,  and CKS International
Airport is the biggest international airport in Taiwan, R.O.C.

Project Name               Total Price          Estimated       % of completion
(construction)                                complete year        on 12/31/95

TPC Power Plant            US$8,63,728            1996               94.40%
   Dust-collecting
Equipment, Tauchung

CKS Internation
   Airport                 US$2,702,446           1996               12.56%


         Similarly,  big strides in the  economic  development  of  southeastern
Asian  countries have witnessed the increasing  demand for  electricity in which
the steel structure is an essence for the construction of power plants. However,
in countries  like  Hongkong,  Indonesia,  Philippines,  Thailand,  Malaysia and
Vietnam,  the steel industry is small in scale,  unable to cope with the pace of
fast economic  development and its production technique is not sufficient enough
to  undertake  the  gigantic  construction  projects.  Furthermore,  the cost of
imported  steel is not  affordable.  The best solution is to cooperate  with the
constructors or equipment suppliers to create a joint venture in undertaking the
foreseeable  steel  structure  business.  For  Taiwan  alone,  the  productivity
available  is 700,000  mt of steel  structure  in 1996;  and the demand of steel
structure for the refuse resource plants EPA programs for the five years to come
is 500,000 mt, plus 400,000 mt for the power plant construction.

         Products.  The Company's  principal  business is to develop and acquire
leading steel  technologies,  including steel  construction  equipment and strip
roil & sheet. The future  objective of the Company will be to provide  materials
for aero-space and computer parts. Goung Hei, through its subsidiary, Qualyserve
Construction  Co.,  Ltd.,  a  corporation  organized  under the laws of  Taiwan,
Republic of China, is in the business of manufacturing, reprocessing, designing,
and marketing steel products and related equipment.


<PAGE>

         Depending on  the size of the construction project, the length of time
from  when the  Company receives a  contract until  the Company  completes its 
obligations under such contract can range from one to three years.
   

There are several steps on the Production process:
1.   Based on the design drawing of contract,  the production management section
     should prepare the steel material sheet to apply the material.
2.   Apply the material from factory administration section.
3.   Start the  construction  with  molding  lofting  and cutting to satisfy the
     size.
4.   After the welding step in manufacture process.
5.   Ater the  welding  process,  the  quantity  assurance  section completes a 
     "non-destruction" inspection.
6.   Sand blasting and painting if the contract required.
7.   Delivery of the fabricated products to building site.
8.   Erect the fabricated products.
9.   The supervisor of the construction project accepts after asserting that the
     quality or quantity meets requirement.
10.  After we sign the contract, the related department should be noticed.
    

         Customers.  The following three customers accounted for the  following
percentages of the Company's sales in fiscal year 1995:  Goung Lee Engineer Co.,
Ltd. (64.1%);  Jou-Da  Construction Co., Ltd. (13.75%);  and Shung Ding Engineer
Co., Ltd.  (5.27%).  The following three  customers  accounted for the following
percentages of the Company's sales in fiscal year 1994: Chung Yuan  Construction
Co.,  Ltd.  (36.83%);   Goung  Lee  Engineer  Co.,  Ltd.  (32.68%);  and  G-Yuan
Construction Co., Ltd. (7.01%).  The loss of any of these customers could have a
material adverse effect on the Company.

         Raw Materials and  Manufacturing.  The materials  used in the Company's
operations include steel plates,  steel materials,  rolled sections and built-up
sections.  The Company is dependent  upon outside  suppliers  for all of its raw
material  needs and,  therefore,  is subject  to  fluctuations  in prices of raw
materials.  In  particular,  the Company's  results of  operations  are affected
significantly  by  increases in the market  prices of steel  plate.  The Company
purchases its raw  materials at  market-based  prices from numerous  independent
suppliers.  Prices of steel  plate can be  adversely  affected  by,  among other
things,  the  price of iron  mine  and  certain  business  trends.  The  Company
purchases these  materials from various  suppliers at market prices and believes
that the loss of any one of its  suppliers  would  not have a  material  adverse
effect on the Company's business, financial condition and results of operations.

         Properties.  The Company  conducts its operations  from its main office
located at No. 366 Bor-Ay Rd., 8th Floor,  Kaohsiung,  Taiwan, Republic of China
under a three year lease with 14,400 square feet of office space. The production
facility is located in Kangshan,  Kaohsiung,  Taiwan and contains 360,000 square
feet.

         Competition.  The  industry  in which the  Company  operates  is highly
competitive   and  includes  a  large  number  of  both   domestic  and  foreign
manufacturers.  Certain of the Company's  competitors have greater sales volumes
and greater financial resources than the Company.

         The Company believes the following  factors have enabled the Company to
compete effectively:  (i) its low cost products that are attractively styled and
high  quality;  (ii) its ability to  anticipate  new  markets  and  distribution
channels for its products;  (iii) its continuing effort to improve its products;
(iv) its low cost production  capabilities  and stable,  experienced work force;
(v) its  strong  commitment  to  customer  service;  and  (vi)  its  experienced
management team.

<PAGE>

         Environmental Laws.  The  Company believes that there are currently no
material costs of compliance with environmental laws.
   

         Purchasing and Principal  Suppliers  Although the principal supplier of
the Company is China Steel  Corp.,  Kaohsiung,  Taiwan,  Republic of China,  the
Company maintains  relationships with several principal suppliers due to quality
considerations  and in order to benefit from the volume  purchasing  discount of
the material casts. Alternative suppliers with acceptable technology and quality
have been identified for all critical components.
    

         Research  and  Development.  The  Company's  research  and  development
objective  and its  implementation  have  ben  guided  by the  Company's  growth
strategies.   The  Company  is  committed   to  engaging   the  best   available
manufacturing technology of the steel industry and also research and development
in precious  metal.  This  research is  expected to produce  additional  product
offerings,  reduce the capital  cost of  maintenance  of  equipment  and improve
efficiency of the production.  Research and  development is conducted  primarily
through  routine  meetings held to solve the problems  concerning the quality of
the product and the scheduling of projects.

         Employees. The Company currently has 24 employees in its administrative
department and 12 employees in its  production  department on a full time basis.
These  employees are primarily  management  and  professional  staff and are not
subject to any collective  bargaining units. The relationship between management
and  employees  is  considered   excellent.   The  Company  firmly  believes  in
labor-management   interdependence   for  prosperity  and  in  harmonious  labor
relations.   The  Company  continues  to  adopt  the  following  measures:   (i)
establishment of multi-channel labor  communications,  (ii) constantly improving
management-labor communications and harmonization, (iii) improvement of the work
place  environment  and (iv)  ensure  the  effectiveness  of the  grievance  and
counseling systems.


<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                         OR PLAN OF OPERATION

Overview

     Goung Hei Investment Co., Ltd. was originally  incorporated as a West Samoa
Corporation  on April 2, 1996.  

         The  Company's  principal  business is to develop  and acquire  leading
steel  technologies,  including  steel  construction  equipment and strip roil &
sheet.  The  future  objective  will  be  capable  of  providing  materials  for
aero-space  and  computer  parts.  The  Company   currently  owns  and  operates
Qualyserve  Construction Co., Ltd., Kaohsiung,  Taiwan, Republic of China, which
forms the initial  base for the growth of the Company.  Qualyserve  Construction
Co.,  Ltd.  was  incorporated  on August  2,1989.  It engages in  manufacturing,
reprocessing,  designing and marketing of structure  steel  products and related
equipment.

         The  Company's net sales include  revenues from  construction  projects
(less  return  and  discount),   commission  revenue  and  sales  of  materials.
Construction  revenues  represent 77% and 75% of the Company's net sales for the
years ended December 31, 1995 and 1994, respectively. As the Company enters into
construction contracts or agreements, revenues from such contracts or agreements
are accounted for on a percentage  of completion  method,  based upon a ratio of
costs incurred to the total estimated  costs.  Losses are recorded when they are
incurred.

         The  Company's  cost of goods sales  include  all direct  manufacturing
costs,  consignment process costs, warehousing and freight. Direct manufacturing
costs has  accounted  for a  majority  of the cost of  sales.  The  Company  has
expensed a substantial portion of its construction activities, capitalizing only
those expenditures that are incurred.  Other operating expenses consist of sales
and marketing and general and administrative expenses.

    Due to the  adopton of  percentage  of  completion  method,  the  company's
operating results do not luctuate on a quarterly basis.

RESULT OF OPERATIONS

     The following table sets forth, as a percentage of net sales,  statement of
operations data for the periods indicated:

<PAGE>
   

<TABLE>
<CAPTION>
<S>                                                                            <C>   <C>         <C>

                                Nine Months Ended                            Fiscal  Year Ended
In US $                            September 30,                                     December 31,
                          1996        %       1995         %        1995       %        1994          %
Operation Revenue       13,575,625   100    9,752,886    100    19,986,136   100     11,246,701    100
Cost of Goods Sold      12,186,931   89.42  8,721,322    88.8   18,056,859   90.35   10,097,015   89.78
Gross profit             1,388,694   10.58  1,031,564    11.2    1,929,276    9.65    1,149,685   10.22
Operation Expenses         390,536    3.95    385,243     4.1      611,043    3.06      506,114    4.50
Incom from operations      998,158    6.63    646,321     7.1    1,318,233    6.60      643,572    5.72
Non-Operating Income       162,127    0.13     13,043     1.8      202,299    1.01       14,440    0.13
Non-Operating expenses     971,011   (3.48)   339,981     1.7     (633,296)  (3.17)     (98,249)  (0.87)
Income before income tax   189,274    7.18    319,383     4.44     559,764    4.98
Provision for Income Tax    47,319   (0.82)    79,846     1.80    (336,574)  (1.68)    (151,802)  (1.35)
income After income tax    141,955    2.46    239,537     5.37     550,662    2.75      407,962    3.63
Earning Per Share                $0.003              $0.046                $0.09               $0.08

</TABLE>
    

NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

Net Sales
---------

     As most construction companies, Qualyserve construction recognizes revenues
by adopting percentage of completion method at the end of the year, as the table
lists above.The marketing of the company performed quite well comparing with the
others in construction industry.

   

     Net sales  increase  39.2%.  The major reason is the  construction  project
increased 9 cases.

Cost of Sales
-------------

     Qualyserve gross profit as a percentage of net sales increased 0.35% in the
nine months ended  September 30, 1996. The change is a result of good control in
material and factory overhead costs.

Operating Expense
-----------------

     In comparison to the prior period, operating expense as a percentage of net
sales  decreased  0.47%.  The decreases  were  primarily due to reduction in the
workforce.
    

Fiscal Years Ended December 31, 1994 and 1995

Net Sales

         In comparison to the prior year, the Company's net sales increased 44%.
In general, revenues have increased with the increase in the number of contracts
and expanding market of potential customers. The increase in net sales in fiscal
1995 was primary due to recognition of revenues from constrution, which included
Thermo-power plant in Taichon, Steel  Construction-N.R.S,  Parking lots of Marco
and Kaohsiung Finance and Tax Building.

   Sales revenue: Sales revenue decreased $283,672.73. the difference results
from the cost of steel material raise  $4,670,981.83  but th price of sales only
raise $4,387,309.10.  The rate of sales price was less than the rate of cost and
the company increased the sales on steel material in the third and forth quarter
of 1995.
     Construction revenue: Construction revenue increased $1,051,418. Due to the
increase on taking more projects in 1995 than in 1994, the constrauction revenue
increased  compared with 1994.  Though the total cost increased,  the fixed cost
kept stable and the operation  went normal.  So the margin profit  increased and
the total revenue increased, too.
     Like all companies net profit margins of the company have been impacted and
will likely to continue  to be impacted by general  inflation  as well as sudden
price changes in key  materials and labor costs.  As discussed the section about
Taiwan,  inflation in Taiwan has been moderate for 1994-1995 and is not expected
to become a problem.

  The increase on operating  revenue is  $779,509.60  from 1994 to 1995. The
     changes were discussed as follows:

     (1)  Sales revenue:  Sales revenue  decreased  $283,672.73.  The difference
          results from the cost of steel  material raise  $4,670,981.83  but the
          price of sales only  raise  $4,387,309.10.  The  rising  rate of sales
          price was less than the rising rate of cost and the cocmpany increased
          the sales on steel material in the third and forth quarter of 1995.
     (2)  Construction revenue:  Construction revenue increased $1,051,418.  Due
          to the  increase  on taking more  projects  in 1995 than in 1994,  the
          construction  revenue  increased  compared with 1994. Though the total
          cost  increased,  the fixed cost kept  stable and the  operation  went
          normal.   So  the  margin  profit  increased  and  the  total  revenue
          increased, too.


<PAGE>

Cost of Sales

         The  Company's  gross profit,  as a percentage of net sales,  decreased
9.7% in fiscal 1995 from 10.2% in fiscal 1994. The decrease was primarily due to
the increase in  consignment  processing  cost and an increase in material  cost
such as alternate sources of packaging.  These costs increases resulted in lower
gross profit.

Operating Expenses

         In comparison to the prior year,  general and  administrative  expenses
increased by $105,000 in fiscal 1995 and increased as a percentage of net sales.
This increase was primarily due to the Company's growth.
   

Results of Operation:
  Year ended December 31, 1995
  Compared to December 31, 1994

Sales--Sales for 1995 were $19,986,136  compared to  $11,246,701  for 1994, an
     increase of 77.71%. the major reason is the construction  projects for 1995
     increase 9 cases  compared to 1994.  The extent and price of  projects  are
     also more huge and higher  than  usual.  The result of  adopting  "complete
     percentage" is the increase on sales.

Gross profit--Gross profit for 1995 were  $1,929,276 compared to $1,149,686 for
     1994,  an increase of 67.81%.  Owing to the  expansion on operation and the
     fixed cost level is equivalent as 1994, the gross margin increase.

Operation  Income--Operation  income  for  1995  were $  1,318,234  compared  to
     $643,572 for 1994, and increase of 104.83%. Due to the operation expense is
     under control and the gross profit increase, the operation income raise.

Non--Operation Income:  Non-Operation incom for 1995 were ($430,997) compared to
     ($82,852) for 1994, an decrease of 420.2%.  The interest expnse of loan for
     purchasing property made the non-operation expense increase.

Net  income  after tax--Net income after tax: Net income after tax for 1995 were
     $550,663 compared to $407,962 for 1994, an increase of 34.98%.

Results of Operation:
  Year ended December 31, 1994
  Compared to December 31, 1993

Sales--Sales for 1995 were  $11,246,701  compared to $53,306,994  for 19943,  an
     increase of 10.21%.  The major  reason is the extent and high price of "TCT
     power plant" project. So the sales increase.

Grossprofit--Gross  profit for 1994 were  $1,149,686  compared to  $550,726  for
     1993,  an increase of 108.76%.  Owing to the expansion on operation and the
     fixed cost level is equivalent as 1993, the gross margin increase.

Operation  Income--Operation  income for 1994 were $643,572  compared to $45,080
     for 1993,  an increase of 132.76%.  Due to the  operation  expense is under
     control and the gross profit increase, the operation income raise.

Non--Operation Income:  Non-Operation income for 1994 were ($83,808) compared to
     ($20,055)  for 1993, an decrease of 317.88%.  The interest  expense of loan
     for increasing capita resource made the non-operation expense increase.

Net  income after  tax--Net  income after tax: Net incom after tax for 1994 were
     $407,961 compared to $26,811 for 1993, an increase of 1421.60%.
    

Liquidity and Capital Resources

     Since  its  formation  in 1989,  Qualyserve  has  financed  its  operations
primarily  through its working capital,  proceeds  received from the issuance of
debt and the sale of stock.  While the  Company  did not incur any debt or issue
any  stock,  Qualyserve,  its  subsidiary,  had the  following  debt  and  stock
issuances:

     The details of debt issuances of Qualyserve ended on June 30, 1995 and June
30, 1996 are illustrated as follows.

<PAGE>


   
                        
BORROWINGS

                                                   September 30     September 30
Bank                                                   1996             1995

Credit Loans (due June 28, 1997)
     Interest Rate 9.275%                         $    72,727

Usance loans, (due March 23, 1997) 
     Interest rate 9.68%                            1,439,071

Usance loans, (due November 29, 1996)
     Interest rate 9.275%                             290,909

Usance loans (due February 17, 1997) 
     Interest rate 8.475%                           1,436,329

Note (due January 27, 1997)
     Interest rate 9.15%                              363,636

Note (due January 20, 1997)             
     Interest rate 8.475%                             545,454

Mortgage from Bank of Taiwan-Kang Shan
     Bra. --Interest rate 8.95%                    11,381,818

Credit Loan - Taiwan Cooperative Bank
     Kang Shan Branch                                 363,636

Credit Loan - Business Band Chou-Ju
     Branch --Interest rate 9.68%                   1,818,181
  
Loan for House-Chung shing Bank
     Yung Chi Branch --Interst rate 9.25%             789,762

Credit loan                                                          3,145,488
     Mortgage from Bank of Taiwan-Kang Shan Bra.                     1,087,273

                    Total                         $18,501,523        4,232,761




Sales of  stock:


Date     Sort       Issurance amount   Issue Price    Capital

1989/08  Set Up                          $0.36      $  206,896
1990/11  Cash Stock      722,900          0.36         929,797
1991/01  Cash Stock      295,061          0.36       1,224,858
1991/08  Cash Stock      715,900          0.36       1,940,758
1995/12  Cash Stock    5,388,563          0.73       7,329,321

The Company's  operating  activities  used cash for  operations of $2,925,000 in
fiscal 1995 and $3,431,000 in the six month period ended June 30, 1996.

Liquidity analysis for 1994 and 1995:

1.   Cash flow  ratio  for 1995  were  -20.51%  compared  to 1.16% for 1994,  an
     decrease of 1868%. The cash outflow of operation  activities was due to the
     rapid growing on number and scale of projects in construction.
2.   Cash flow properly  ratio for 1995 were 0.57%  compared to 19.79% for 1994,
     an decrease of 97.12% . The cash outflow of operation activities was due to
     the rapid growing on number and scale of projects in construction.
3.   Cash reinvestment ratio for 1995 were -7.63% compared to 1.76% for 1994, an
     decrease of 5335%. The cash outflow of operation  activities was due to the
     rapid growing on number and scale of projects in construction.
    

         Accounts  receivable  increased  $859,000 from December 31,1995 to June
30,1996 and  inventories  decreased  $1,470,000  from  December  31,1995 to June
30,1996.  Accounts  receivable  have increased due to longer payment terms which
have been granted to  distributors.  The Company  believes  that these new terms
reflect  normal  practices in the industry.  Inventories  have  increased due to
the increase of the construction project.

     The decrease in trade payables from December 31 ,1995 to September  30,1996
was due to the  repayment  of  certain  payables  with the  proceeds  from  debt
discussed  below.  Accrued  liabilities  have increased as a result of increased
interest payable.

     Sales revenue decreased  $283,672.73.  The difference results from the cost
of  steel  material  raise  $4,670,981.83  but the  price  of  sales  only  rise
$4,387,309.10.  The rate of sales  price  was less than the rate of cost and the
company increased the sales on steel material in the third and fourth quarter of
1995.

     Construction  revenue increased  $1,051,418.  Due to the increase on taking
more projects in 1995 than in 1994, the construction  revenue increased compared
with 1994.  Though the total cost increased,  the fixed cost kept stable and the
operation  went normal.  So the margin  profit  increased  and the total revenue
increased, too.

     Like all companies net profit margins of the company have been impacted and
will key  materials  and labor costs.  As discussed  the section  about  Taiwan,
inflation  in Taiwan has been  moderate  for  1994-1995  and is not  expected to
become a problem.

         In July 1995, the Company  completed a $10,980,536  financing with bank
of Taiwan, the proceeds of which were used to purchase a land for building a new
plant in Pington.  Interest and principal  are payable  quarterly for 32 periods
based upon an  established  formula.  This  subordinated  note bears interest at
8.5%. This term will end on June 21, 2005.
   

The total price of this property is US $42,707,554 (tax included)

The sources of the capital:

Cash  Stock  in  1995       US$10,808,824
Payable  to  stockholders    US15,659,347
*Long-term  loan            US$10,980,536 
Capital owned by company     US$3,819,056
Account payable              US$1,439,791 
TOTAL:                      US$42,707,554

*Note:    The  long-term  loan was  borrowed  from Bank of  Taiwan in 1995.  The
          interest  rate is 8.5%.  In th first  and  second  year,  there was no
          principal payments but the interest was paid monthly. From October 21,
          1997 to July 21, 2005, the principal is paid every three months.

<PAGE>


 The latest three year's financial analysis sheet are as follows.

                                             1995        1994       1993
#           FINANCIAL RATE                   RATE        RATE       RATE
1       FIXED ASSET/TOTAL ASSETS              76%         24%         6%
2       NET WORTH/TOTAL ASSETS                24%         37%        22%
3       BANK LOAN/NET WORTH                  129%         39%         6%
4       FIXED ASSET/NET WORTH                313%         64%        27%
5       FIXED ASSET (NET WORTH+
        LONG-TERM LIABILITIES)               104%         64%        27%
6       CURRENT RATIO                         89%        120%       120%
7       (CURRENT ASSET-INVENTORY)/
         CURRENT LIABILITY                    59%        116%        33%
8       ACID RATIO                            59%        116%        31%



     The preceding schedule shows an unfavorable shift in the composition of the
registrant's   liquidity  and  capital  resources  during  1995;  current  ratio
decreased from 120% to 89% and quick ratio decreased from 116% to 59%, while net
worth  decreased  from 37% to 24% of total  asset.  Therefore,  the  quality of
working capital is not as liquid as in 1994.
     Though th financial  ratios became worse by purchasing  this  property,  we
believe  that our  operation  will  become  better and  better in several  years
because of the expansion plan.  According to our  prediction,  the current ratio
and quick ratio could improve and achieve to normal level.

 The reasons we decide to buy this property are

(1)  Steel construction  business is a long-term investment  business.  It needs
     large capitals,  excellent  technology and intensive labors. A company owns
     it's  land or  property  could  have a  long-term  development  and  make a
     complete and detail planning.
(2)  Land is very  scarce and  expensive  in Taiwan.  We think the value of this
     property  will be higher  and higher in the  future  and  according  to the
     latest appraisal report, the price really rise.

     We will have a expansion  plan on this  property  in 1998.  In order to use
every assets as sufficient as possible in any periods,  the property is utilized
as parts of our operation now.
1.   Pre-assembly Yard:Some structure assembly line were made in this yard
2.   Storage Yard: Fabricated steel and materials were storaged here.
3.   Warehouse:We put the small pieces and component parts on the warehouse. The
     expansion content are listed as follows:

1.Production amount
     In order to satisfy the large needs of steel construction in the future, we
plan to increase 30,000 tons steel  structure for equipment and bridges,  12,000
tons steel  structute for buildings and 8,000 tons teel  structure for factories
from 1998 to 2000.

2.  Production equipment

     The  principal  production  equipment we need are  electronic  crane,  stud
welding gun,  electro-slag  welder,  overhead crane,  hydraulic press,  semiauto
cutting,  overhead  cranes,  making bottom  machine,  auto submerged arc welder,
forklift and crane. the total cost of these equipment is  US$14,545,455  and the
civil engineering fees ins US$7,272,727.  We also need to spend US$10,909,090 to
build anotherplant in 1998 and 1999.

3.  The total amount of the expansion plan
     According to the above evaluation expense, this expansion plan should spend
US$32,727,272.

4.The sources of cash
     The Company plan to issue cash stock of US$10,000,000 in 1998 for expansion
plan, replenishing our operation capital and reducing the operation cost.

    In order to achieve  automatic  production,  enhance the  productivity  and
product  quality as to satisfy the buyers'  requirements,  we plan to expand the
plant building and purchase new equipment in 1997. The required  period is three
months and the total required capital is US$82,000.

                                                                 UNIT :  US$

       ITEM                                                    Capital Required
   Gas Transferring Loop & Base                                       36,500
   Application Fee for Temporary Power                                29,000
   Hanging Overhead Crane Expense                                      5,500
   Other Equipment (Electronic Drill, Semiauto Cutting)               11,000

   TOTAL                                                              82,000



         The Company  believes that existing  sources of liquidity  will satisfy
its projected  working capital and capital  expenditure for at least the next 12
months.
    


<PAGE>


ITEM 3.  PROPERTIES


         Set forth below is certain  information  with respect to the  Company's
principal  properties.  The Company  believes that all of these  properties  are
adequately insured, in good condition and suitable for the uses described below.
<TABLE>
<CAPTION>
<S>                                                                            <C>            <C>
   
                                                      Approximate Size                          Lease Expiration
         Location                Primary Use           (Square Feet)         Owned/Leased             Date
         --------                -----------           -------------         ------------             ----
Office located at
Kaohsiung, Taiwan,          Corporate Office               14,400                Lease         December 2000
Republic of China
Plant located at
Kaohsiung, Taiwan,          Manufacturing Plant           360,000                Lease         December 2010
Republic of China
    

</TABLE>

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following   information  table  sets  forth  certain   information
regarding  the Common Stock owned on July 31, 1996 by (1) any person  (including
any "group") who is known by the Company to own beneficially more than 5% of its
outstanding Common Stock, (2) each director and executive  officer,  and (3) all
executive officers and directors as a group.


     The following  information table sets forth certain  information  regarding
the  Ccommon  Stock  owned on July 31,  1996 by (1) any  person  (including  any
"group")  who is known by the  Company to own  beneficially  more than 5% of its
outstanding Common Stock, (2) each director and executive  officer,  and (3) all
executive officers and directors as a group.
   

<TABLE>
<CAPTION>
<S>                                                                            <C>

Title of Class        Name and Address of     Amount and Nature of       Percent of class
                       Beneficial Owner          Beneficial Owner
-----------------    --------------------     --------------------       ----------------
Common Stock         Grand International*         6,720,000                     56%
                     Development Corporation

Common Stock         Great Kang Investment*         960,000                      8%

Common Stock         Chi-Kang Lu                    720,000                      6%

Common Stock         Yen-Jung Chang                 720,000                      6%

Common Stock         Executive Officers and       1,109,200                   9.24%
                      Directors as a group
                        (8 persons)

</TABLE>


Footnote:
1.   The chairman of Grand International  Development  Corporation is Chun Shin,
     Wu. The  representative  of legal person,  who execute both the  investment
     power and the sole voting power.
2.   The  chairman  of Great Kang  Investment  Corporation  is Jyu,  Wu, and she
     execute the investment power. The representative of legal person is Hsiung,
     Lu who execute the sole voting power.

<PAGE>



ITEM 5.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

         Certain  information about the directors and executive  officers of the
Company is contained in the following table:

Name                               Age                            Position

Chun Shin, Wu                       46                     Chairman and Director

Chi-Kang, Lu                        40                        President, Chief
                                                  Executive Officer and Director

Yen-Jung, Chang                     37                              Director

Bor-Yang, Hwang                     37                              Director

Chung-Ching, Yen                    38                              Director

Hsien-Pao, Lin                      61                              Director

Jung-Tung, Hsiao                    40                              Director

Tsung-chun, Chiu                    39                   Chief Financial Officer

Hsiung, Lu                          73                              Director

Juo-lan, Shen                       51                              Director

Yi-shih, Lin                        38                              Director

All directors hold office until the next annual meeting of the  shareholders  of
the Company or until their successors have been elected and qualified.  Officers
serve at the  discretion  of the  Board  of  Directors.  Additional  information
regarding the directors and officers is set forth below.

Chun-Shin  Wu,  Chairman of  Qualyserve  Construction,  has over  fifteen  years
experience in marketing and purchasing. Prior to joining Qualyserve Construction
Co.,  Ltd,  he was the  director  of  Ya-Hsin,  Heng-Yao,  Yao-Shen  and Li-Yuan
Industrial Corp. Mr. Wu brings extensive  experience to Qualyserve  Construction
in  marketing  and  purchasing.   Graduated  from  Taiwan  Provincial  Gang-Shan
Agricultural Engineering Vocational School.

<PAGE>


Chi-Kang  Lu, has  extensive  experience  in  planning,  operation,  control and
management of steel structure plant.  Prior to joining the Board of Directors of
Goung Hei Investment Corp., he continuously worked in Goung Lee Engineering Co.,
Ltd since 1982. He began work as an engineer, promoted to manager of Engineering
Department,  Vice President,  then to President.  When he was Vice President, he
assisted Mr. Lu Hsiung to build two steel structure  plants in Gang Shan and Zen
Wu. He also brings a variety of experience  to Goung Hei  Investment  Corp.,  in
purchasing and sales of products. Graduated from National Kaohsiung Institute of
Marine Technology-Department of Naval Architecture.  1982, Engineer of Goung Lee
Engineering  Co.,  Ltd--in  charge of  constructing  the drilling  plate.  1985,
manager of the  Engineering  Department--in  charge of steel  structure in land.
1988, Vice Chairman of Goung Lee Engineering  Co.,Ltd--assisted  in establishing
Gang-Shan plant. 1993,  President of Goung Lee Engineer  Co.,Ltd--establish  the
Zen-Wu plant.

Yen-Jeng Chang,  brings almost fifteen years experience in financial  management
and plan. Prior to joining Board of Directors of Goung Hei Investment Corp., she
was Vice Chairman and Controller of Goung Lee  Engineering  Co., Ltd since 1982.
Though her experience,  she brings expertise to the Company in area of financial
management.  Graduated from Senior Commercial  School.  From Graduation to 1982,
worked in Financial  Department  of Ganh-Shan  Metal Co.,  Ltd. From 1982 to the
present,  she works for Goung Lee Engineer  Co., Ltd as Vice  Chairman-Financial
Planning and Control.

Bor-Yan  Hwang,  has  extensive  years  experience in the field of cold rolling.
Prior to joining Board of Directors of Goung Hei Investment Corp., he worked for
China Steel  Corporation  for more than seven years. He also acted as consultant
for Cold Rolling  Mill  Indonesia  for three years.  Mr. Hwang was also the Vice
President of the Production and Engineering  Department in Ornasteel Corporation
between  1989 to 1994.  He had been  leading  a team of highly  experienced  and
competent  engineers  and was  directly  involved in the  formation of Ornasteel
Corporation,  Malaysia. At present, Mr. Hwang Bor Yang is leading the management
team in Techsu Steel Corporation Sdn. Bhd. June, 1982,  obtained Bachelor Degree
of Mechanical Engineering from National University of Jiao Tung, Taiwan. 1983 to
1985,  China Steel  --Engineer of operation and production  department.  1983 to
1988, China Steel --Engineer in Indonesia.  1988 to 1989, China Steel --Engineer
of new expansion project in China Steel  corporation.  1989 to 1994,  Ornatube &
Ornasteel--Vice  President in production and Ornasteel  engineering  department.
1994, Techsu Steel-managing director for the company.

<PAGE>


Chung-Ching  Yen, has fifteen years  experience in producing steel structure and
processing mechanics.  Prior to joining Qualyserve Construction Co., Ltd, he was
in charge of production  department of Chun-Yuan Steel  Industrial Co., Ltd from
1981 to 1990. He has worked as Vice  President of Qualyserve  Construction  Co.,
Ltd since 1990.  He brings broad  knowledge in variety of  industries as well as
expertise.  Graduated from Kuang-Wu Industrial College. From 1981 to 1990 he was
employed by Chun-Yuan Steel Industrial Co.-- in charge of production department.

Hsien-Pao Lin, worked as People  Representative  for over thirty years. Prior to
Board of Director  of Goung Hei  Investment  Corp.,  he was  Kaohsiung  District
Councilman and Taiwan Provincial Councilman. He was also Chief Recorder of Party
Office of Taiwan Provincial  Council and Chief Commissioner in Central Committee
of Chinese  National  Party.  He has also been  awarded  the  Second  Prize from
Ministry  of  Interior.  His  experience  provides  the  Company  with  valuable
experience  in  dealing  with  governmental  agencies.   Graduated  from  Taiwan
Provincial Tai-Nan High School and Shin-Chien Home Economics  College.  Chairman
of  Rural  Councilman  Association.   General  whip  of  Agriculture  &  Fishery
Association.  District  Councilman of Kaohsiung  hsien.  Provincial  councilman.
Chief recorder of party office of Taiwan Provincial Council.  Chief Commissioner
in Central Committee.

Jung-Tung  Hsiao,  has 21  years  experience  in  engineering  construction  and
production of steel structure.  Prior to joining the Board of Directors of Goung
Hei Investment  Corp , he was Vice President of Goung Lee  Engineering  Co., Ltd
from 1993 to the  present.  He had held a senior  position  for 12 years when he
worked for Evergreen and Chiang-Kang Industrial Corp. He bring his experience to
the Company in Engineering. Graduated from the Water & Soil Maintenance Engineer
Department of Tamkang College of Arts & Science . 1975 to 1982, Chinese Engineer
Consulting  Co.  1982 to  1986,  Chiang  An  Steel  Engineer  Co.  1986 to 1993,
Evergreen Heveen Metal Co. 1993 to 1996, Goung Lee Engineer Co.

Tsung-Chun Chiu, has extensive international  experience in project development,
venture,  and  finance.  He was special  assistant  to  chairman  of  Qualyserve
Construction  and vice  president  of  Administrative  Department  in Goung  Lee
Engineering  Co.,  Ltd.  between  1995-1996.  He worked as financial  manager of
Sam-Hsia Enterprise  Corporation in 1995. He currently is the Vice President and
Chief  Financial  Officer for the Company.  Mr. Chiu studied his Phd degree from
UCLA and he majored in business administration. Through his background he brings
to the Company expertise in areas of international  finance,  planning,  control
and  management.  Master  Degree of  Management  Science  Engineer from National
University  of Jiao Tung,  Taiwan.  From 1988 to 1994 he was the  President of a
computer company . During 1995 Sam-Hsia Enterprise Corp--financial manager. 1995
to 1996,  Goung Lee Engineer Co., Ltd.- Vice President.  August 1996,  Goung Hei
Investment Corp.--Vice President & Chief Financial Office.

<PAGE>


Hsiung Lu, has twenty years  experience  in  engineering,  material  purchasing,
project planning and plant  management.  Prior to joining the Board of Directors
of Goung Hei Investment  Corp., he was President of Goung Lee  Engineering  Co.,
Ltd from 1978 to 1988.  During that period, he established Goung Lee Engineering
Co., Ltd and set up steel  structure plant in Gang Shan. In 1993, he was elected
as  chairman  of Goung Lee.  As the  chairman of Goung Lee, he built a new steel
structure plant in Zen Wu. He has significant management experience in plant and
project  planning.  Administrator  of China  Engineering  Co.,Ltd--in  charge of
construction  engineering.   Established  Goung  Lee  Co.,  Ltd.  to  engage  in
shipbuilding.

Juo-Lan Shen, has twenty-five years experience in teaching. Prior to joining the
Board of Director  of Goung Hei  Investment  Corp.,  she was  elementary  school
teacher.  She also was  Director  of  Womens  League  and  assistant  to  Taiwan
Provincial  Councilman.  Graduated  from Kaohsiung  Girl's  School.  Director of
Fang-Shan Women's League Teacher of Ta-Tung Elementary School.

Yi-Shih Lin, graduated from Taipei Medical College, majoring in Dentistry. Prior
to  joining  the Board of  Director  of Goung  Hei  Investment  Corp.,  he was a
dentist.  He was  also  special  assistant  to  Mr.  Lin  Hsien-Pao,  Provincial
Councilman's office.


<PAGE>


ITEM 6.  EXECUTIVE COMPENSATION

         The Company did not pay any  compensation to its executive  officers or
directors during the fiscal year ended December 31, 1995.

Furthermore, other than as stated below there are no plans to pay any  officers 
for the fiscal year 1996.


Name    and        Principal Position        Salary(Annual pay)           Bonus
1. Chi-Kang Lu,      CEO and Director           US$115,000                  -
2. Tsung-chun Chiu,  CFO and Director           US$60,000                   -


ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


On July 21,  1995,  Mr.  Chun-Shin  Wu, a member  of the Board of  Directors  of
Qualyserve,  loaned Qualyserve the principal amount of $97,304.50 to be used as
working capital. The loan is without interest and is payable to Qualyserve.

On January 17, 1995, Mr.  Jung-sheng  Mah, a member of the Board of Directors of
Qualyserve,  loaned the Company the  principal  amount of $186,727 to be used as
working capital. The loan is without interest and is payable Qualyserve.

On March 20,  1995,  Mr.  Chan-Ching  Yen,  a member of the  Company's  Board of
Directors of Qualyserve,  loaned the Company the principal  amount of $12,447 to
be used as  working  capital.  The loan is  without  interest  and is payable to
Qualyserve.

On July 31,  1995,  Mr.  Chin-Houg  Tsai,  a member  of the  Company's  Board of
Directors of Qualyserve,  loaned the Company the principal  amount of $4,363,636
to be used as working  capital.  The loan is without  interest and is payable to
Qualyserve.

Payable  to  stockholders  current:  advance  from  stockholders,  with  no
interest,  no schedule for repayment.  The use of transactions with related
parties is for operation capital.

                             Maximum amount      Balance at
Year     Related Parties     during the Year      Year end
----     ---------------     ---------------     ----------
1994     Chan, Chien-Hue      $1,155,720.38         $ -

    

<PAGE>

ITEM 8.  LEGAL PROCEEDINGS

         The  Company  may from time to time  defend  various  claims  and legal
actions in the ordinary course of its operations. Management believes that there
are currently no such claims or actions that will have a material  effect on the
Company's financial position or results of operations.

ITEM 9.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The Common Stock was publicly traded in the over-the-counter market and
was  listed  in  the  "pink  sheets"  maintained  by  members  of  the  National
Association of Securities Dealers, Inc. from April 1989 through 1990.
There were no bids on the Common Stock from that time until June of 1996.

         The Common Stock began  trading  again on the  over-the-counter  market
maintained by members of the National Association of Securities Dealers, Inc. in
June of 1996. Since that date, J. Alexander  Securities,  the only market maker,
reports  that it is quoting  the stock at $.50  bid,$1.00  offered and no trades
have occurred since June of 1996. There are 4,856  shareholders of record of the
Company on December 23, 1996.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES

         In  June  of  1996,  the  Company  acquired  97%  of  the  issued  and
outstanding shares of common stock of Qualyserve in exchange for an aggregate of
19,846,000  shares  of  Common  Stock  issued  to  the  former  shareholders  of
Qualyserve  pursuant to a share  exchange  agreement  by and among the  Company,
Qualyserve and the shareholders of Qualyserve.

         The Company  relied on Section 4(2) of the  Securities  Act of 1933, as
amended  (the  "Securities  Act") in that such  transactions  did not  involve a
public offering and were thus exempt from the  registration  requirements of the
Securities  Act. Each investor was able to fend for himself in the  transaction,
and each  investor  was  furnished  with  information  concerning  the  proposed
operations  of the Company  and had the  opportunity  to verify the  information
supplied.

<PAGE>

ITEM 11. DESCRIPTION OF SECURITIES

Common Stock

         The Company is authorized to issue  50,000,000  shares of common stock,
par value $.00001 per share (the "Common Stock").  Each share of Common Stock is
entitled to one vote at all meetings of shareholders. The By-Laws of the Company
prohibit  cumulative  voting in the election of directors.  All shares of Common
Stock are equal to each other with  respect to  liquidation  rights and dividend
rights.  In the event of liquidation,  dissolution or winding up of the Company,
holders of the Common  Stock will be entitled  to receive,  on a pro rata basis,
all assets of the Company remaining after satisfaction of all liabilities. There
are no preemptive rights to purchase additional shares of Common Stock.

         Holders of Common Stock are  entitled to receive  dividends if and when
declared by the Board of Directors out of funds legally available therefore.

Preferred Stock

         The Company's Certificate of Incorporation  authorize 10,000,000 shares
of preferred  stock,  par value $.00001 per share (the "Preferred  Stock").  The
Certificate of Incorporation also provides that Preferred Stock may be issued in
one or more  series  as may be  determined  from  time to time by the  Board  of
Directors.  All shares of any one series of  Preferred  Stock will be  identical
except as to the date of issue and dates from which  dividends  on shares of the
series issued on different dates will cumulate,  if cumulative.  The Certificate
of  Incorporation  also grants the Board of Directors the power to authorize the
issuance of one or more series of Preferred  Stock,  and to fix by resolution or
resolutions  providing  for the issue of each such  series  the  voting  powers,
designations,  preferences, and relative,  participating,  optional, redemption,
conversion,  exchange or other special  rights,  qualifications,  limitations or
restrictions  of such series,  and the number of shares in each  series,  to the
full extent now or hereafter permitted by law.

Anti-Takeover Provisions

         The  Company's  Certificate  of  Incorporation  and  Section 203 of the
Delaware  General  Corporation Law (the "DGCL") contain certain  provisions that
may make the  acquisition  of control of the Company by means of a tender offer,
open market purchase, proxy fight or otherwise more difficult.

         Business  Combinations.  The Company is a Delaware  corporation  and is
subject to Section 203 of the DGCL. In general,  subject to certain  exceptions,
Section 203 of the DGCL  prohibits a publicly  held  Delaware  corporation  from
engaging in a "business  combination"  with an  "interested  stockholder"  for a
period of three  years  after the date of the  transaction  in which the  person
became an interested stockholder,  unless upon consummation of such transaction,
the  interested  stockholder  owned 85% of the voting  stock of the  corporation
outstanding  at the time the  transaction  commenced  (excluding for purposes of
determining the number of shares  outstanding  those shares owned by (x) persons
who are  directors  and also  officers  and (y)  employee  stock  plans in which
employee participants do not have the right to determine  confidentially whether
shares held subject to the plan will be tendered in a tender or exchange  offer)
or unless the business  combination  is, or the transaction in which such person
became an  interested  stockholder  was,  approved  in a  prescribed  manner.  A
"business  combination"  includes  mergers,  asset sales and other  transactions
resulting in a financial benefit to the interested  stockholder.  An "interested
stockholder" is a person who, together with affiliates and associates, owns (or,
in the case of affiliates and associates of the issuer,  did own within the last
three years) 15% or more of the  corporation's  voting stock other than a person
who owned such shares on December 23, 1987.

<PAGE>


         Indemnification.  The  Certificate of  Incorporation  provides that the
Company shall advance expenses to and indemnify each director and officer of the
Company to the fullest  extent  permitted by law and will limit the liability of
directors to corporations and their stockholders for monetary damages in certain
circumstances.

ITEM 12. INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS

         The  Certificate  of  Incorporation  of the  Company  provides  for the
indemnification of officers,  directors,  agents and employees of the Company to
the fullest  extent  permitted  by the General  Corporation  Law of the State of
Delaware  ("Delaware  Code").  Pursuant to Section 145 of the Delaware Code, the
Company  generally has the power to indemnify its present and former  directors,
officers,  employees and agents against expenses  incurred by them in connection
with any suit to which they are, or are threatened to be made, a party by reason
of their serving in such  positions so long as they acted in good faith and in a
manner they reasonably  believed to be in, or not opposed to, the best interests
of the Company,  and with respect to any criminal action, they had no reasonable
cause to believe  their  conduct  was  unlawful.  The  Company  has the power to
purchase and maintain  insurance  for such persons.  The statute also  expressly
provides that the power to indemnify  authorized thereby is not exclusive of any
rights granted under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.

         The above discussion of the Company's  Certificate of Incorporation and
of Section 145 of the  Delaware  Code is not  intended to be  exhaustive  and is
qualified in its entirety by such Bylaws and the Delaware Code.

         Insofar as indemnification for liabilities arising under the Securities
Act may be  permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities and Exchange  Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.


<PAGE>

   

ITEM 13. FINANCIAL STATEMENTS

Index to Financial Statements

      Interim Financial Statements of Goung Hei Investment Co., Inc. (Unaudited)

     F-1  Compilation Report
     F-2  Balance Sheets as of September 30, 1996      
     F-3  Consolidated  statements of Income for the Nine Months Ended September
          30, 1996 
     F-4  Consolidated  Statements  of Cash  Flows  for the  Nine  Months  Ended
          September 30, 1996 and 1995   
     F-6  Statements of Changes in  Shareholders'  Equity (Deficit) for the Nine
          Months  Ended  September  1996  (Deficit)
     F-7  Notes to Financial Statements

      Financial Statements of Qualyserve Construction Co., Ltd.(Audited)

     F-1  Independent Auditors' Report
     F-1  Balance Sheets as of December 31, 1995 and 1994
     F-2  Statements of Income for the Years Ended December 31, 1995
               and 1994
     F-2  Statements of Shareholders' Equity (Deficit) for the Years Ended
               December 31, 1995 and 1994
     F-2  Statements of Cash Flows for the Years Ended December 31, 1995
               and 1994
     F-24 Notes to Financial Statements

      Financial Statements of Potentialistics, Inc. (Audited)

     F-37 Independent Auditors' Report
     F-38 Balance Sheets as of December 31, 1995, 1994 and 1993
     F-39 Statements  of  Operations  for the Years Ended  December  31,
               1995,  1994 and 1993
     F-40 Statements of Shareholders' Equity(Deficit) for the Years Ended 
               December 31, 1995, 1994 and 1993
     F-41 Statements of Cash Flows for the Years Ended December 31, 1995,
               1994 and 1993
     F-42 Notes to Financial Statements


    

<PAGE>



    Compilation Report



         To the Stockholders

         GOUNG HEI INVESTMENT CO., LTD.

          The accompanying PRO FORMA consolidated  financial statements of Goung
          Hei Investment CO., Ltd. and it's subsidiary  Qualyserve  Construction
          CO.,  Ltd. at the end of  September  30,1996 are compiled by us. These
          PRO FORMA  consolidated  financial  statements include balance sheets,
          the related statements of income,  retained  earnings,  and cash flows
          for the years then ended.

          These PRO FORMA  consolidated  financial  statements  were compiled by
          referring the pro forma stock-holding data of  parent-subsidary  which
          were provided by the Company's management.

          We don't audit or re-investigate the financial statements, so we could
          not express any opinion or any guaranty on these financial statements.






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

         HORWATH & COMPANY 
         Certified  Public  Accountants 
         A member of  Horwath International
         Kaohsiung, Taiwan, R.O.C.

         December 10, 1996

<PAGE>

   


                  GOUNG HEI INVESTMENT CO., LTD.AND SUBSIDIARY
                       CONSOLIDATED PROFORMA BALANCE SHEET
                                September 30,1996
                        (AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
<S>                                                                            <C>           <C>              <C>

                                                              LIABILITIES i(R)                   
            A S S E T S               Amount          %       STOCKHOLDERS EQUITY                 Amount           %
  ------------------------         --------------   -------  ------------------------------    --------------   -------
  CURRENT ASSETS                                             CURRENT LIABILITIES
                                                             SHORT-TERM LOANS(NOTE8)              $4,148,126       6.99
  CASH & CASH EQUIVALENTS
    (NOTE4)                              $85,866      0.14   NOTES & ACCOUNTS PAYABLE              4,615,130       7.78
  NOTES & ACCOUNTS
    RECEIVABLE-ENT(NOTE5)              7,233,750     12.21   ACCRUED EXPENSES                        239,462       0.40
  OTHER RECEIVABLES                    1,035,284      1.75   INCOME TAX-PAYABLE                       47,319       0.08
  INVENTORIES(NOTE6)                   4,844,612      8.17   OTHER PAYABLES                           87,690       0.15
  PREPAYMENTS                            264,224      0.45   ADVANCE FROM CUSTOMERS                1,920,859       3.24
  PLEDGED TIME DEPOSIT                                          (NOTE10)
    (NOTE3)                              536,953      0.91   LONG-TERM LOANS-CURRENT PORTION       1,055,862       1.78
                                  --------------   -------      (NOTE9)
     TOTAL CURRENT ASSETS            $14,002,689     23.60                                     -------------    -------
                                  --------------   -------       TOTAL CURRENT LIABILITIES       $12,114,448      20.42
  PROPERTY,PLANT & EQUIPMENT
    (NOTE7)                                                                                    -------------    -------
  COST                               $45,818,910     77.25
  LESS: ACCUMULATED 
    DEPRECIATION(NOTE7)                 (662,345)    (1.12)   LONG-TERM LIABILITIES
                                  --------------   -------      LONG-TERM LOANS(NOTE9)           $15,825,410      26.68
  NET PROPERTIES(NOTE7)              $45,156,565     76.13                                     -------------    -------
                                  --------------   -------    TOTAL LONG-TERM LIABILITIES        $15,825,410      26.68
  OTHER ASSETS                                                                                 -------------    -------
  REFUNDABLE DEPOSITS                   $153,138      0.26   OTHER LIABILITIES
                                 ---------------   -------    GUARANTEE DEPOSIT RECEIVED           1,077,677       1.82
  TOTAL OTHER ASSETS                    $153,138      0.26   PAYABLE TO STOCKHOLDERS                     -         2.00
                                 ---------------   -------                                     -------------    -------
                                                             TOTAL OTHER LIABILITIES               2,265,889       3.82
                                                                                               -------------    -------
                                                             TOTAL LIABILITIES                    30,205,747      50.93
                                                                                               -------------    -------
                                                             MINORITY INTEREST                       $87,048       0.15
                                                                                               -------------    -------
                                                             STOCKHOLDERS EQUITY
                                                             CAPITAL STOCK(NOTE11)                       120       0.00
                                                             UNAPPROPRIATED EARNINGS
                                                                (NOTE12)                              37,430       0.06
                                                             CAPITAL SURPLUS                      28,891,235      48.71
                                                             EQUITY ADJUSTMENT ON 
                                                                TRANSLATION                           90,812       0.15
                                                             (NOTE2)                           -------------    -------
                                                             TOTAL STOCKHOLDERS EQUITY           $29,019,597      48.93
                                                                                               -------------    -------
                                                             TOTAL LIABILITIES &
       TOTAL ASSETS                 $59,312,392    100.00    STOCKHOLDERS' EQUITY                $59,312,072     100.00
                                 ==============   =======                                      =============    =======
</TABLE>


<PAGE>
                                                                 



                  GOUNG HEI INVESTMENT CO., LTD.AND SUBSIDIARY
                    CONSOLIDATED PROFORMA STATEMENT OF INCOME
                      FOR THE YEAR ENDED SEPTEMBER 30,1996
                            (EXPRESSED IN US DOLLARS)


            I T E M S                                Amount                 %
  -------------------------------------          --------------         -------
  OPERATING REVENUES                               $13,575,625          100.00

  COST OF GOODS SOLD                                12,186,931           89.77
                                                 -------------         -------
  GROSS PROFIT                                      $1,388,694           10.23

  OPERATION EXPENSES                                   390,536            2.88
                                                --------------         -------
  INCOME FROM OPERATIONS                              $998,158            7.35

  NON-OPERATING INCOME                                 162,127            1.19

  NON-OPERATING EXPENSES                              (971,011)          (7.15)
                                               ---------------         -------
  INCOME BEFORE INCOME TAX                            $189,274            1.39

  PROVISION FOR INCOME TAX(NOTE15)                      47,319            0.35
                                               ---------------         -------
  COMBINED INCOME                                     $141,955            1.05

  MINORITY INTEREST INCOME                                (113)          (0.00)

  PURCHASED PREACQUISITION EARNINGS                   (104,412)          (0.77)
                                               ---------------         -------
  CONSLIDATED NET INCOME AFTER INCOME TAX              $37,430            0.28
                                               ===============         =======
  Earnings Per share of common stock:                   $0.003
  Earnings per share(NOTE16)                   ===============


<PAGE>                          



                  GOUNG HEI INVESTMENT CO., LTD.AND SUBSIDIARY
                  CONSOLIDATED PROFORMA STATEMENT OF CASH FLOWS
                     For the years ended September 30, 1996
                            (Expressed In us Dollars)

 Items                                                                1996
----------------------------------------                        --------------
1. Cash flows from operating activities
Net income                                                         $37,430
adjusted to
    Bad debts                                                        4,658
    Depreciation                                                   249,412
    Increase in notes and accounts                               1,165,046
    receivable
    Increase in other receivable                                  (825,076)
    Increase in inventories                                       (343,310)
    Increase in prepayments                                       (133,706)
    Increase in notes and accounts                              (1,052,660)
    payable
    Decrease in accrued expenses                                    63,264
    Increase in income tax payable                                (205,233)
    Increase in other payables                                    (186,784)
    Increase in advance from customers                            (130,184)
    Purchased acquisition earning                                  104,412
    Minority interest income                                           113
                                                            --------------
    Cash used for operating                                    ($1,252,618)
    activities
                                                            --------------
2. Cash flows from investing activities
    Acquisitions of properties                                 ($2,703,129)
    Increase in refundable deposits                               (121,372)
    Increase in pledged time deposit                              (365,707)
                                                            --------------
    Cash used for investing                                    ($3,190,208)
    activities                                              --------------


<PAGE>


 Items                                                           1996
----------------------------------------                     --------------
3. Cash flows from financing activities

    Borrowing short-term loans                                  ($2,480,419)
    Borrowing long-term loans                                     5,900,736
    Increase in payable to stockholders                             794,754
    current
    Increase in guarantee deposit                                   (12,655)
    received                                                 --------------
    Cash provided by financing                                   $4,202,416
    activities
                                                             --------------
4. Effect of exchange rate changes                                   90,812
   on cash
                                                             --------------
5. Net increase in cash and cash                                  ($149,898)
   equivalents

6. Cash and Cash equivalents at                                     235,764
    beginning of year
                                                             --------------
7. Cash and Cash equivalents at end                                 $85,866
    of year
                                                             ==============

    Interest  paid in 9/30/1996  was  approimately  $914,440.Income  tax paid in
    9/30/1995 was $245,665.  Non-affecting cash flows of investing and financing
    activity in 9/30/1996 of  $1,055,862  The non-cash  activity  related to the
    company's investing and financing activity is described in note 9.



    The accompanying notes are an integral part of these statements

<PAGE>



                  GOUNG HEI INVESTMENT CO., LTD. AND SUBSIDIARY
           CONSOLIDATED PROFORMA STATEMENT OF CHANGES IN STOCKHOLDERS'
                  EQUITY For the years ended September 30, 1996
                       (Expressed In United State Dollars)
<TABLE>
<CAPTION>
<S>                                                                            <C>       <C>       <C>     <C>        <C>


                       CAPITAL ISSUED   CAPITAL SURPLUS                                RETAINED EARNINGS          
                    ------- ------    -------------------          ---------------------------------------
                       STOCK            Revaluation   Increment              Appropriated Unappropriated    Equity       Total 
                                        on                                                                  on         Stockholder's
                       Shares   Amount   Properties    Other    Total          Earnings   Earnings   Total  Translation  Adjustment
                                                                                                                         Equity 
                       ------   ------   ------------- --------  ------------  ---------   --------   ----- ----------- -----------
Balance at December 
31, 1995                -      $  -       $  -        $  -       $ -          $ -         $   -     $ -      $   -         $   -   
Cash stock(Note 11)  12,000,000  120         -       28,891,235  28,891,355     -             -       -          -       28,891,355
Net income for 1995     -         -          -           -        -             -          37,430   37,430       -           37,430
Effect of Foreign 
      Currency          -         -          -           -        -             -             -       -       90,812         90,812
Translation Changes  ----------  -----  ------------- ----------- ---------- ------------ -------  -------   -------     ----------
Balance at September 12,000,000  $120     $  -       $28,891,235  28,891,355  $  -        $37,430  $37,430   $90,812    $29,019,597
30, 1995             ==========  ====  ============= =========== ==========  ============ =======  =======   =======     ==========

</TABLE>


<PAGE>
                              

                  GOUNG HEI INVESTMENT CO., LTD.AND SUBSIDIARY
               NOTES TO CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
                               September 30, 1996
                (Amounts Expressed In Us Dollars)

 1. Introduction

        Our corporation's  principal  business is to develop and acquire leading
    steel technologics,  including steel construction equipment and strip roil &
    sheet,  The future  objective  will be capable of  providing  materials  for
    aero-space and computer  parts.  We currently  owns and operates  Qualyserve
    Construction Co.Ltd., Kanhsiung,  Taiwan, Republic of China, Which forms the
    initial  base for the growth of the  company.  The  Qualyserve  construction
    co.,Ltd.  was  incorporated on August 2,1989.  It engages in  manufacturing,
    reprocessing,  designing  and  marketing  of  structure  steel  products and
    related equipment.

 2. SIGNIFICANT ACCOUNTING POLICIES

        The  significant  accounting  policies of the Company,  which conform to
    accounting  principles  generally  accepted in the USA,  are  summarized  as
    follows:

    (a) CLASSIFICATIONS OF CURRENT AND UNCURRENT ITEMS

        The time  period  for  classifying  items as  current  or  long-term  is
    operating cycle (usually about 1-2 years).

        The threshold for  classifying  current or long-term  items is operation
    cycle, ranging from one year to two years.

    (b) CASH AND CASH EQUIVALENTS

        For the purposes of the statement of cash flows,  all highly liquid debt
    instruments purchased with a maturity of three months or less are treated as
    cash equivalents.

    (c) ALLOWANCE FOR DOUBTFUL ACCOUNTS

        The  allowance  for  doubtful  accounts  are  provided  according to the
    judgement of the  management,  which is sufficient to cover all possible bad
    debt losses.

    (d) INVENTORIES

        Inventories are costing by each of the construction  projects and stated
    at weighted average cost.
        At end of the years,  the  inventories are evaluated at lower of cost or
    market price (LCM).

       Construction in process represents net realized value.

<PAGE>


    (e) PROPERTIES

        Fixed  assets  are  stated  at  cost  less   accumulated   depreciation.
    Depreciation  is provided on the  straight-line  method using the  guideline
    service lives  prescribed by the government  which  approximately  estimated
    useful lives.

        Major renewals and betterments are  capitalized,  while  maintenance and
    repairs are expensed currently.

        Upon sale or disposal of  properties,  the related cost and  accumulated
    depreciation are removed from the accounts, and any gain or loss is credited
    or charged to income.

    (f) APPROPRIATED EARNINGS AND CAPTIAL SURPLUS

        The  Articles of  Incorporation  of the Company  provide that 10% of its
    annual  net income  should be set aside  asappropriated  earnings  until the
    accumulated  surplus  have  equalled the  company's  paid-in  capital.  This
    approprited eranings may be used to offset a deficit.  Capital surplus shall
    not be  appropriated  for uses  other  than for  offsetting  of  deficit  or
    transferring to contributed capital.

    (g) RECOGNIZED METHOD ON OPERATING REVENUES

        Construction Revenues:
        The  Company  recognizes  the  construction   revenue  by  applying  the
    Completed-Contract  Method while the contract  will be completed  within one
    year; The other applys the Percentage of Completion Method.

        Sales Revenues:
        Revenues and gains are  recognized  as most of  profit-making  processes
    have been achieved realized or can be realized.

    (h) INCOME TAX

      Income tax is provided  based on estimated  income tax currently  payable.
    Adjustments of tax  liabilities of prior years are added to or deducted from
    in the current year's tax provision.

      The Company adopted SFAS 109,  "Accounting for Income Tax," which requires
     the Company to recognize  deferred tax  liabilities  for influences  result
     from taxable temporary  differences,  to recognize  deferred tax assets for
     influences result from deductably temporary difference,  loss deduction and
     tax deduction,  and to estimate  allowance by evaluating the possibility of
     realization of deferred tax assets.

<PAGE>

    (i) PENSION PLAN

        The company adopted SFAS 87 "Accounting for Pensions" which requires the
    company to recognize  accured pension costs.  The date of September 30, 1996
    is used as the measured date for actuarial  purpose.  The company  disclosed
    the minimum pension liabilities on balance sheets in September 30, 1996. The
    company did not set up any pension plan until the year of 1995.

    (j) THE EQUITY ADJUSTMENT ON TRANSLATION OF FOREIGN CURRENCY

        Foreign  currency  financial  report  translation  based on FASB Article
    No.52.  All the assets and debts are all followed  the exchange  rate on the
    date of balance  sheets.  The equity of  stockhialer's  includes the initial
    retained  earnings  according  to the  balance of the last final  period and
    carry  forward.  The rest woll be  exchanged  by the  historical  rate.  The
    dividend  will be calculated  by the rate of declare day.  Fuuthermore,  the
    item of profit  and loss will  follow the rate of  weighted  average at that
    period.  About the exchange balance after calculation,  it will be listed in
    the equity  adjustment in translation of foreign currency in order to be the
    adjustment item for the stockholder equity.

    (K) ACCOUNTING ARRANGEMENT FOR INTERIM FINANCIAL STATEMENT

        It should be adjusted cost and expenditure  before  register  account in
    the end of fiscal  year.In the Interim  Report  should  also  estimate  this
    adjusted amount and divide it into every interim period  according to proper
    basis.

 3. ASSETS MORTGAGED OR PLEDGED

        The following  assets have been mortgaged or pledged as collateral's for
    long-term and short-term loans.

          Accounts                                    9/30/96
    ----------------------                      --------------
    Pledged time deposit                              $538,953
    Land                                            32,910,865
    Buildings                                        4,246,156
    Notes Receivable                                 3,426,737
                                                --------------
          Total                                    $41,122,711
                                                ==============



 4. CASH AND CASH EQUIVALENTS

          Accounts                                  9/30/96
    -------------------------                   --------------
        Cash on hand                                    $7,550
        Bank Deposit                                    78,316
                                                --------------
          Total                                        $85,866
                                                ==============

<PAGE>


 5. NOTES AND ACCOUNTS RECEIVABLE-NET

          Accounts                                 9/30/96
    -------------------------                  --------------
    Notes receivable                               $3,426,737
    Accounts receivable                             3,912,442
                                               --------------
    Subtotal                                       $7,339,179
    Less:Allowance for doubtful
         accounts                                    (105,429)
                                               --------------
         Net Amount                                $7,233,750
                                               ==============


      Our  company's  notes and  accounts  receivable  derive from  construction
   pursuant to our operation terms usually 1 to 2 years
  to form the basis for current and not current.

 6. INVENTORIES

          Accounts                                 9/30/96
    -------------------------                   --------------
    Materials                                       $2,689,473
    Construction in process                         11,308,623
    Less: Advance from
          customers                                 (9,153,484)
                                                --------------
    Net of inventories                              $4,844,612
                                                ==============



    Summary of Construction in process:
<TABLE>
<CAPTION>
<S>                                                                          <C>

                                                            9/30/96
                                      ----------------------------------------------------
                                        Construction in    Advance from
            Items                          Process         Customers             Net
 -------------------------------      ----------------    ----------------   -------------                                      
 Thermo-power plant in Taichon           $7,744,803        $6,401,777       $1,343,026
 Bureau of Commodity Inspection           1,471,104         1,167,156          303,948
 & Quarantine in Chizi
 Kaohsiung Finance and Tax                   35,815            10,976           24,839
 Building
 Steel Construction-N.R.S-m.s.s           1,128,460           895,418          233,042
 Project for CHUNGHWA PICTURE
 TUBES,LTD                                  691,054           651,939           39,115
 TAL-SH IN TAINUN                           114,439                            114,439
 SUN MOVIE CITY                             122,948            26,218           96,730
                                       ------------      ------------      -----------                                           
       Total                            $11,308,623        $9,153,484       $2,155,139
                                       ============      ============      ===========
                                                                    
</TABLE>

<PAGE>


 7. PROPERTY, PLANT AND EQUIPMENT

            Cost                                      9/30/96
  ------------------------                         --------------
  Land                                                $34,642,486
  Building                                              4,194,049
  Machinery and equipment                               3,264,661
  Transportation equipment                                255,358
  Furniture and fixtures                                  149,864
  Miscellaneous equipment                                 114,837
  Advance payments on land &                            3,197,655
  buildings purchases
                                                   --------------
       sub-total                                      $45,818,910
                                                   --------------
  Accumlated depreciation
  ------------------------
  Building                                                $84,442
  Machinery and equipment                                 369,072
  Transportation equipment                                 74,883
  Miscellaneous equipment                                 133,948
                                                   --------------
        Sub-total                                        $662,345
                                                   --------------
    Net                                               $45,156,565
                                                   ==============





 8. SHORT TERM LOANS

                                                                     9/30/96
                                                                 --------------
   Credit loans,due in June 28,1997 - variable interest rate
   (9.275% at September 30,1996),payable in monthly interest         $72,727

   Usance loans,due in March 23,1997 -variable interest rate
   (9.68% at September 30,1996),payable in monthly interest        1,439,071

   Usance loans,due in November 29,1996 -variable interest rate
   (9.275% at September 30,1996),payable in monthly interest         290,909

   Usance loans,due in February 17,1997 -variable interest rate
   (8.475% at September 30,1996),payable in monthly interest       1,436,329

   Note,due in  January 27,1997 -variable interest rate
   (9.15% at September 30,1996),payable in monthly interest          363,636

   Note,due in January 20,1997 -variable interest rate
   (8.475% at September 30,1996),payable in monthly interest         545,454
                                                                 -----------
                                                                  $4,148,126


<PAGE>




 9. Long Term Loan and Long Term Liability Due Within One Year

<TABLE>
<CAPTION>
<S>                                                                                   <C>  

                                                                                          9/30/96
                                                                                         --------------
   A. Bank:
   (1)Land and Building Mortage from Bank of Taiwan-Kang Shan Bra.                       $11,381,818
       Rating:(US$1.00:NT$27.5 appr.)
       Principal:US$12,618181(up   to  September,1996   US$11,381,818)  Interest
       Rate:Basic  Loan Rate + 1% Monthly  paid.  First 2 year do not return the
       principal  but only  interest.  Principal  paid every 3 months  from Oct.
       21,1997 to July 21st,  2005 by 32  payments.  The  interest  rate on June
       30,1996 is 8.95%

    (2)Crehit Loan-Taiwan Cooperative Bank Kang Shan Branch                                 363,636
       Principal:US$362,976
       Interest  Rate:Floating(September  30,1996 8.282%) Period: May 10,1996 to
       May 10,1997 The Bank agree to amend the contract when expire.

    (3)Credit Loan-Taiwan Business Band Chou-Ju Branch                                   $1,818,181
       Principal:US$1,814,882
       Interest  Rate:Floating(September  30,1996 9.68%) Period:March 14,1996 to
       Dec 21,1996 The Bank agree to amend the contract when expire.


    (4)Bank Note Loan-Taiwan Cooperative Bank Kang Shan Branch                             436,364
       Principal:US$435,571
       Interest  Rate:Floating(September  30,1996 8.271%)  Period:May 10,1996 to
       May 10,1997 The Bank agree to amend the contract when expire.

    (5)Loan for House-Chung shing bank Yung Chi Branch                                     789,762
       Principal:US$790,909
       Interest Rate:Floating(September 30,1996  9.25%)
       Period:August 9,1996 to August 9,2096

   B. Other:
    (6)Wha-Sia Renting Co., Ltd.                                                        1,137,218
       Loan for Machinery and Transpotation Equipment
       Principal:US$1,516,291
       Payment:Bank Note in accordance to the payment date.
       Principal paid every three months from Feb.6,1996 to Feb.
       2,1998 by 8 payments. The principal will be returned
       NT$5,212,250 for each payment. Interest Rate: 90 days bank
       note + 4.5% Monthly. The interest rate on September 30 1996 is
       10.95%

    (7)Wha-Sia Renting Co., Ltd.                                                         449,455
       Loan for Machinery Equipment
       Principal:US$599,273
       Payment:Bank Note in accordance to the payment date.
       Principal paid every three months from March 12,1996 to
       March 12,1998 by 8 payment. The pricipal will be returned
       NT$2,060,000 for each payment.
       Effective Interest Rate: 90 days bank note + 4.5% Monthly.
       The interest rate on September 30,1996 is 10.%

<PAGE>


    (8)Central Leasing Co., Ltd.                                                        504,838
       Principal:US$757,257(Sep.1996 US$504,838)
       Payment:        Principal paid by 6 payment

       The interest rate is 10.59%



    Total Long Term Liability                                                       $16,881,272  
    MINUS: Long Term Loans-current Portion                                           (1,055,862)
                                                                                  -------------
    Net Long Term Liability                                                         $15,825,410 
                                                                                  =============

</TABLE>

10. ADVANCES FROM CUSTOMERS

<TABLE>
<CAPTION>
<S>                                                                           <C>     <C> 

                                                                        9/30/96
                                                  ----------------------------------------------------
                                                Advances from         Construction in
            Items                                  Customers          Process                 Net
 -------------------------------                  ----------------                      ----------------
                                                                    ----------------
  Construction in Chunshi                                  $133,843           $53,181          $80,662
  Hospital

  Flight stop Construction in                             2,266,872           649,229        1,617,643
  CKS airport, Taoyuan Taiwan

  Projects of NRS MSS in                                    347,211           320,371           26,840
  Malaysia

  Remodeing of Taipei Bridge                              1,007,174           974,597           32,577

  Remodeing of Jungsa Building                               40,168            19,959           20,209
  Stair

  Parking lot Markro                                      2,969,756         2,826,828          142,928
  Supermarket in Nehu, Taipei
  Taiwan
                                                  ----------------   ----------------  ---------------                          
       Total                                            $6,765,024         $4,844,165       $1,920,859
                                                  ================   ================  ===============
                                                                   
</TABLE>


<PAGE>




11. CAPITAL STOCK

    (1) As of December 31,1995, the amount borrowed from

        shareholders is US$15,488,815.Qualyserve Construction Co.,

        Ltd.,Kaohsiung hae not paid off this loans.On April 30,1996,

        the shareholders and Mr.Lu Cui-Kang, the representative of

        Goung Hei Investment Co.,Ltd.reached the contract that the

        advances from shareholders was going to be converted to hold

        the stocks of equivalent value.

    (2) The shareholders of Qualyserve Construction Co., Ltd.,

       Kaohsiung, Taiwan (QCC) has transferred their stockholders

       equity to Goung Hei Investment Corporation. The amount is

       US$ 13,489,475.

    (3) Company issued new 10,131,609 shares to Goung Hei's .

        shreholders in exchange for all of Goung Hei's common stock

       ( the capital stock is $30,000,000. $1 par value) ,

    (4) To sum up, the Company shall become the owner of 100%

        of Goung Hei's outstanding common stock and the Goung Hei

        shall become the owner of 99.7% of Qualyserve construction Co.,Ltd.


12. RETAINED EARNINGS

    (1) The Articles of Incorporation of the Company provide that

        10% of its annual net income to be set aside as appropriated

        earnings until the accumulated reserve equals to the

        Company's capital stock. This appropriated earnings may be used to

        offset the deficit.

        The net income, after setting aside the appropriated earnings, shall

        be appropriated according to the results of stockholders

        meeting.


<PAGE>


13. MISCELLANEOUS GAIN

             Items                                           9/30/96
 ------------------------------                         ----------------
  Withhold from payable                                      $30,896
                                                              25,574
                                                        ----------------
  Total                                                      $56,470
                                                        ================



14. INTEREST EXPENSES

             Items                                           9/30/96
 ------------------------------                         ----------------
  Interest expenses                                        $1,278,076
  Less: Interest capitalized                                 (363,636)
                                                        ----------------
  Net                                                        $914,440

                                                        ================


15. INCOME TAX

             Items                                          9/30/96
 ------------------------------                         ----------------
  Provision for income tax                                  $47,319
                                                        ----------------
  INCOME TAX                                                $47,319
                                                        ================



16. EARNING PER SHARE(EPS)

             Items                                         9/30/96
 ------------------------------                         ----------------
  Net income                                                $37,430
  Weighted average
  number of shares
  outstanding                                            12,000,000
                                                       ----------------
  EARNINGS PER SHARE                                         $0.003
                                                       ================


<PAGE>


17. RELATED PARTY TRANSACTIONS

    (A) Titles and relationship of related parties

             Title                             Relationship with the Company
 ------------------------------               ----------------------------------
  Chun-Shin Wu                                 President of Board of Directors
                                               of Qualyserve Construction

  Chin-Hong Tsai                               Member of the Board of Directors
                                               of Qualyserve Construction

  Jung-Sheng Mah                               Member of the Board of Directors
                                               of Qualyserve Construction

  Chung-Ching Yen                              Member of the Board of Directors
                                               of Qualyserve Construction

    (B) Transaction with Related Parties

        Payable to stockholders current: advance from stockholders,

          with no interest.

                                     Maximum amount       Ending Balance as
        Related Parties              during the June      of September 30, 1996
 ------------------------------      ----------------    ----------------------
  Chun-Shin Wu                          $1,991,263          $565,354

  Jung-Sheng Ma                          1,722,996          -

  Chung-Ching Yen                          732,235          -

  Chin-Houg Tsai                         1,303,583           622,858

<PAGE>


18. CONTRACT

    The our company's major construction contracts and detailed total costs are
    listed below:

    (1) September 30,1996


<TABLE>
<CAPTION>
<S>                                                                            <C>       <C>               <C>                

--------------------------------------------------------------------------------------------------------------------------------
Construction Name       Agreement Price    Estimated       Completion      Estimated       Accumulated       Method of
                                           Total Cost      Percentage      C.year          Profit&loss       Subcription
---------------------------------------------------------------------------------------------------------------------------------
KuanLi-Taichuang          8,063,728       7,660,727       98.77%            1996           177,941           Percentage
Power Plant                                                                                                  of C. Method
---------------------------------------------------------------------------------------------------------------------------------
Hsitsu Commerce           1,815,595       1,455,164       83.33%            1996           258,532           Percentage
Inspection Bureau                                                                                            of C. Method
---------------------------------------------------------------------------------------------------------------------------------
C.K.S Airport             2,702,446       2,181,040       24.71%            1996           110,369           Percentage
Terminals                                                                                                    of C. Method
---------------------------------------------------------------------------------------------------------------------------------
Neihu Macro               3,095,051       2,870,024       91.60%            1996           197,878           Percentage
Parking Lot                                                                                                  of C. Method
--------------------------------------------------------------------------------------------------------------------------------
Taipei Bridge             1,021,648         947,369       95.67%            1996            68,222           Percentage
constrcection                                                                                                of C. Method
--------------------------------------------------------------------------------------------------------------------------------
 NRSi-DMSS                1,217,792       1,129,257       92.93%            1996            78,992           Percentage
construction                                                                                                 f C. Method
--------------------------------------------------------------------------------------------------------------------------------
C: Completion

</TABLE>


                               

<PAGE>

                          Independent Auditor's Report

To the Stockholders
QUALYSERVE CONSTRUCTION CO., LTD.

We have audited the accompanying balance sheets of QUALYSERVE  CONSTRUCTION CO.,
LTD. as of December  31, 1995 and 1994,  and the related  statements  of income,
retained  earnings,  and cash flows for the years then  ended.  These  financial
statements are the responsibility of the Company's management. Our resposibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance  with USA's  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the fianacial statements are free of material
misstatements  .  An  audit  includes  examining,  on  a  test  basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of QUALYSERVE  CONSTRUCTION CO.,
LTD. as of December 31, 1995 and 1995 and 1994 and the results of its operations
and its cash flows for the years then ended,  in conformity with USA's generally
accepted accounting principles.



----------------------------------
 HORWATH  &  COMPANY
 Certified   Public   Accountants 
 A  member  of  Horwath
 International Kaohsiung, Taiwan, R.O.C.

 April 15, 1996


<PAGE>


                        QUALYSERVE CONSTRUCTION Co., Ltd.
                                 BALANCE SHEETS
                           DECEMBER 31, 1995 AND 1994
                       (Expressed In United State Dollars)

<TABLE>
<CAPTION>
<S>                                                                            <C>    <C>         <C>     <C>            <C>      
                         1995                1994                                         1995                1994               
                    ------------  -----  ----------- -----                             ----------  -----   -----------    -----
A S S E T S            Amount       %      Amount     %    LIABILITIES AND               Amount      %        Amount        %
                                                           STOCKHOLDERS' EQUITY                                                  
------------------  ------------  -----  ----------- ----- --------------------------  ----------  -----   -----------    ----- 
CURRENT ASSETS                                             CURRENT LIABILITIES
                                                             Short-term loans(Note 8) $6,628,544.95 11.75 $  921,904.76   14.35
Cash and cash 
  equivalents      $  235,764.08 0.42 $  437,091.89  6.80  Notes and accounts payable  5,667,790.41 10.05  1,768,916.11   27.53
 (Notes 2 and 4)                                             Accrued expenses            176,198.49  0.31    189,177.30    2.94
Notes and accounts  8,403,453.65 14.91 4,221,168.83 65.70  Income tax payable            252,552.11  0.45    150,005.87    2.33
  receivable-Net
  (Notes 2 and 5)                                            Other payables              274,473.74  0.48           -        -
Other receivable      210,207.97  0.37    28,623.29  0.45  Advance from customers      2,051,043.45  3.64    999,142.59   15.55
  Inventories                                                (Nete 10)
 (Notes 2 and 6)    4,501,301.62  7.98   157,426.04  2.45  Long-term loans-current       343,141.76  0.61            -      -
                                                               portion (Note 9)        ------------ -----   -----------  ------
Prepayments           130,517.59  0.23    20,611.78  0.32                                                                          
Pledged bank                                               
  deposit                                                  Total Current Liabilities $15,393,744.91 27.28 $4,029,146.63   62.71
 (Notes 3)            171,245.80  0.30           -     -                             ------------- -----  ------------  ------
                    ------------  ----  ----------- -----                             
Total Current                                              LONG TERM LIABILITIES
      Assets      $13,652,490.71 24.22$4,864,921.83 75.72   Long term loans (Note 9) $10,637,394.42 18.86 $          -       -
                   ------------- ----- ------------ -----                             ------------- -----  ------------  ------  
                                                                                        
PROPERTY, PLANT AND EQUIPMENT                                                                                                   

Cost              $43,115,781.45 76.45$1,815,533.35 28.26 Total Longterm Liabilities $10,637,394.42 18.86 $          -       -
Less:Accumulated     (412,933.27)(0.73) (288,763.90)(4.49)                            ------------- -----  ------------  ------  
depreciation                                               OTHER LIABILITIES                                                        
                   ------------- ----- ------------ -----       Guarantee deposit    $ 1,090,341.54  1.93 $          -       -    
Net Properties    $42,702,848.18 75.72$1,526,769.45 23.76        received
 (Notes 2 and                                                Payable to stockholders  15,642,095.04 27.75            -       - 
       note7)      ------------- ----- ------------ -----    current (Note 21)                                                   
INTANGIBLE ASSETS                                              Pension liability 
 Deferred pension                                                (Note 2.11)              10,745.50  0.03            -       -
       cost       $    10,745.50  0.02 $         -      -                             ------------- -----   ------------ ------
                    ------------- -----  ----------- ----- Total Other Liabilities   $16,743,182.08 29.71  $         -       -     
                                                                                      ------------- -----   ------------ ------    
Total Intangible 
    Assets        $    10,745.50  0.02 $         -      -   Total Liabilities        $42,774,321.41 75.84 $4,029,146.63   62.71   
                   ------------- -----  -----------  -----                            ------------- -----  ------------  ------   
OTHER ASSETS                                                STOCKHOLDERS' EQUITY                                               
  Refundable                                                   Capital stock;$10 
     deposits     $    31,766.44  0.06 $  33,009.56  0.51      par value (Note 13)   $7,329,321.99  13.00  $1,940,758.94  30.21  
                                                            Capital surplus(Note 2)   5,388,563.05   9.55             -    0.00   
   (Note 5)                   -     -        120.65  0.01      Appropriated earnings
                   ------------- -----  ----------- -----         (Note 2)               38,819.74   0.07         242.76   0.00    
Total Other                                                  Unappropriated earnings                    
      Assets          $31,766.44  0.06  $ 33,130.21  0.52      (Note 16)                897,855.57   1.59     385,769.75   6.00  
                   ------------- -----   ---------- -----   Equity adjustment on            
                                                                translation (Note 2)    (31,030.93) (0.06)     68,903.41   1.07   
                                                                                       -----------   -----    ---------- ------   
                                                            Total Stockholders'
                                                                Equity              $13,623,529.42  24.16  $2,395,674.86  37.29
                                                                                      ------------- -----   ------------ ------
                                                            TOTAL LIABILITIES AND
TOTAL ASSETS    $56,397,850.83 100.00 $6,424,821.49 100.00     STOCKHOLDERS' EQUITY $56,397,850.83 100.00  $6,424,821.49 100.00
                 ============= ======  ============ ======                           ============= ======   ============ ======
</TABLE>
 
     The accompanying notes are an integral part of the financial statements
                  ( with auditor's report dated April 15,1996)

<PAGE>


                        QUALYSERVE CONSTRUCTION Co., Ltd.
                              STATEMENTS OF INCOME
                 For the years ended December 31, 1995 and 1994
                       (Expressed In United State Dollars)
 
<TABLE>
<CAPTION>
<S>                                                                            <C>       <C>
                                                       1995                        1994
                                             ------------------------     ------------------------
                                           Amount            %           Amount               %
                                       --------------     --------    --------------      --------
Operation Revenues(Note 2)            $19,986,136.09      100.00      $11,246,701.12       100.00

Cost of Goods Sold                     18,056,859.50       90.35       10,097,015.13        89.78
                                       -------------      ------      --------------       ------
Gross profit                            1,929,276.59        9.65        1,149,685.99        10.22

Operation expenses                        611,042.63        3.06          506,113.79         4.50
                                       -------------      ------      --------------       ------
 Income from operations                 1,318,233.96        6.60          643,572.20         5.72

Non-operating income                      202,299.48        1.01           14,440.70         0.13

Non-operating expenses                   (633,296.22)      (3.17)         (98,248.61)       (0.87)
                                       -------------      ------      --------------       ------
Income before income tax                  887,237.22        4.44          559,764.29         4.98

Provision for income tax                 (336,574.42)      (1.68)        (151,802.69)       (1.35)
   (Note 19)
                                       -------------      ------      --------------       ------
Net income after tax                     $550,662.80        2.75     $    407,961.60         3.63
                                       =============      ======      ==============       ======
Earnings per share of common stock:

Earnings per share (Notes 20)                        $0.09                            $0.08
                                                      ====                             ====

</TABLE>

  The accompanying notes are an integral part of the financial statements
               (with auditor's report dated April 15, 1996)



<PAGE>


                        QUALYSERVE CONSTRUCTION Co., Ltd.
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  For the years ended December 31,1995 and 1994
                       (Expressed In United State Dollars)

<TABLE>
<CAPTION>
<S>                                                                            <C>         <C>          <C>          <C>

                CAPITAL
                 STOCK                                  
                ISSUED         CAPITAL SURPLUS                             RETAINED EARNINGS                                      
              ---------- --------------------------------            ----------------------------
                                                                                                          Equity                  
                              Revaluation   Increment                Appropriated Unappropriated          Adjustment   Total 
                                                                                                             on        Stockholder's
                Shares    Amount on Properties  Other      Total       Earnings    Earnings     Total     Translation  Equity      
              ---------- ------------- ------ ---------   ----------- ----------  -----------  --------- ------------- ------------
Balance at
  December
    31,1993   5,200,000 $1,940,758.94 $   - $    -      $    -       $  242.76  $ (22,191.85)$(21,949.09)  $39,733.12  $1,958,542.97
Net income 
   for 1994                                                                       407,961.60  407,961.60          -       407,961.60
Effect of 
   Foreign
    Currency                                                                                                 29,170.29     29,170.29
Translation
   Changes
              ----------  ------------ ------ ----------- ------------ --------    ---------- ----------  ------------- -----------
Balance at 
   December
    31,1994    5,200,000 $1,940,758.94 $   - $    -      $    -       $  242.76  $385,769.75 $386,012.51$    68,903.41  2,395,674.86

Cash stock    14,700,000  5,388,563.05     - 5,388,563.05 5,388,563.05     -          -           -                    10,777,126.10
Legal
  surplus
   divided           -             -       -      -          -         38,576.98  (38,576.98)   -             -               -
Net income 
   for 1995          -             -       -      -          -             -      550,662.80  550,662.80      -          550,662.80
Effect of 
  Foreign
    Currency                                                                                                (99,934.34)  (99,934.34)
Translation
    Changes
              ----------  ------------ ------ ------------ ------------ ---------- ----------  ---------- ------------   ----------
Balance at
   December
    31,1995   19,900,000 $7,329,321.99 $  - $5,388,563.05 $5,388,563.05$38,819.74$897,855.57 $936,675.31 $ (31,030.93)$13,623,529.42
              ==========  ============ ====== ============ ============ ========= ==========  =========== ============ =============
</TABLE>



     The accompanying notes are an integral part of the financial statements

                   (with auditor's report dated April 15,1996)


<PAGE>


                  GOUNG HEI INVESTMENT CO., LTD.AND SUBSIDIARY
                  CONSOLIDATED PROFORMA STATEMENT OF CASH FLOWS
                 For the years ended December 31, 1995 and 1994
                            (Expressed In us Dollars)

 Items                                               1995            1994
----------------------------------------         ------------   --------------
1. Cash flows from operating activities
Net income                                      $  550,662.80    $  407,961.60
adjustments to Reconcil Net Income to
Net Cash used in Operating Activities:
    Bad debts                                       69,822.14        39,048.38
    Depreciation                                   138,496.30        81,349.73
    Amortization                                       117.99         3,184.98
    (Gain) or loss on disposal of fixed                609.99            -
        assets 
    Increase in notes and accounts              (4,249,284.90)   (3,273,852.03)
        receivable
    Increase in other receivable                  (181,584.68)      (22,704.81)
    Decrease (Increase) in inventories          (4,343.875.58)    5,780,944.62
    Decrease (Increase) in prepayments            (109,905.81)      113,008.77
    Increase in notes and accounts               3,898,874.30        64,875.43
    payable
    Decrease in accrued expenses                   (12,978.81)       44,777.82
    Increase in income tax payable                 102,546.24       145,936.67
    Increase in other payables                     274,473.74            -
    Increase in advance from customers           1,051,990.86    (3,355,929.87)
    Foreign exchange gain(loss)                   (114,313.70)       34,104.64
                                               --------------    -------------
    Cash outflows from operating               ($2,924,349.12)      $71,705.93
    activities
                                               --------------    -------------
2. Cash flows from investing activities
    Acquisitions of fixed assets              ($41,301,228.82)  ($1,083,985.94)
    Increase in refundable deposits                 (1,243.12)         (620.38)
    Increase in pledged bank deposit              (171,245.80)          -
                                               --------------    -------------
    Cash provided (used) by  investing        ($41,473,717.74)  ($1,084,606.32)
    activities                                             


<PAGE>


 Items                                            1995             1994
----------------------------------------   ---------------    --------------
3. Cash flows from financing activities
   ------------------------------------
    Borrowing short-term loans               $5,706,640.19       $360,527.52
    Borrowing long-term loans                10,980,536.18             -
    Increase in payable to stockholders      15,642,095.04             -      
    current
    Increase in guarantee deposit             1,090,341.54             -
    Issuance of cash stock                   10,777,126.10             -
    received                                --------------     ------------  
    Cash provided by financing              $44,196,739.05      $360,527.52
    activities
                                            --------------     ------------
4. Net increase(decreasein cash and cash    ($201,327.81)      ($652,372.87) 
   equivalents

5. Cash and Cash equivalents at               437,091.89       1,089,464.76   
    beginning of year
                                           --------------      ------------
6. Cash and Cash equivalents at end          $235,764.08        $437,091.89
    of year                                ==============      ============

Interest paid in 1995 and 1994 was approimately  $484,285.19 and 102,524. Income
tax  paid  in  1995  and  1994  were  approximately  $226,651.46  and  6,659.67.
Non-affecting  cash  flows  of  investing  and  financing  activity  in  1995 of
$341,886.21.


    The accompanying notes are an integral part of these statements


      
<PAGE>
                       QIALYSERVE CONSTRUCTION Co., Ltd.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1995 AND 1994
                   (Amounts Expressed In United State Dollars,
                         Except Where Otherwise Stated)
 
 1. GENERAL & ORGANIZATION

     Qualyserve  Construction Co., Ltd. (the Company) was incorporated on August
2, 1989. The Company is engaged in manufacture,  reporocess,  design and Sale of
all  Kinds  of  industrial   construction   and   equipments.   Main   Business:
Manufacturing  various sort of steel structure,  they follow the specialties and
process  of  manufacture,  maketing,  construction  in  order  to  belong  to an
independent manufacturing department.

 2. SIGNIFICANT ACCOUNTING POLICIES
  
     The  significant  accounting  policies  of the  Company,  which  conform to
accounting principles generally accepted in the USA, are summarized as follows:

    (a) CLASSIFICATIONS OF CURRENT AND UNCURRENT ITEMS

        The time period for classifying items as current or long-term
        is operating cycle (usually about 1-2 years).

    (b) CASH AND CASH EQUIVALENTS

        For purposes of the statement of cash flows, all highly
        liquid debt instruments purchased with a maturity of three months
        or less to be cash equivalents.

    (c) ALLOWANCE FOR DOUBTFUL ACCOUNTS

        The allowance for doubtful accounts are provided according
        to the judgement of the management, which is sufficient to cover
        all possible bad debt losses.

    (d) INVENTORIES

        Inventories are costing by each of the construction projects
        and stated at weighted average cost.
        At end of the years, the inventories are evaluated at lower
        of cost or market price (LCM).

       Construction in process represents net value.

 

    (e)DEFERRED CHARGES

       Deferred charges are amortized by the straight-line method
       over five years.

<PAGE>

   (f) PROPERTIES

     Fixed assets are stated at cost less accumulated depreciation. Depreciation
     is provided on the straight line method using the  guideline  service lives
     prescribed by the government which approximatcly estimated useful lives.

     Major renewals and  betterments  are  capitalized,  while  maintenance  and
     repairs are expensed currently.

     Upon sale or  disposal of  properties,  the  related  cost and  accumulated
     depreciation  are  removed  from  the  accounts,  and  any  gain or loss is
     credited or charged to income.

   (g) APPROPRIATED EARNINGS AND CAPITAL SURPLUS

     The Articles of Incorporation of the Company provide that 10% of its annual
     net  income  should  be  set  aside  as  appropriated  eranings  until  the
     accumulated  surplus  have  equaled the  company's  paid-in  capital.  This
     appropriated  earnings  may be used to offset a  deficit.  Capital  surplus
     shall not be  appropriated  uses  other than for  offsetting  of deficit or
     transferring to contributed capital.

   (h) RECOGNITION METHOD OF OPERATING REVENUES

     Construction Revenue:

     The  Company   recognizes   the   construction   revenue  by  applying  the
     Completed-Contract  Method while the contract will be completed  within one
     year;  The other by applying the  Percentage  of Completion  Method.  Sales
     revenue:  Revenues  and  gains  are  recognized  as most  of  profit-making
     processes have been achieved realized or can be realized.

   (i) INCOME TAX

     The Company  adopted SFAS 109,  "Accounting for Income Tax," which requires
     the Company to recognize  deferred tax  liabilities  for influences  result
     from taxably temporary  differences,  to recognize  deferred tax assets for
     influences result from deductably temporary difference,  loss deduction and
     tax deduction, and to estimate allowance by evaluating the realizability of
     deferred tax assets.

   (j) PENSION PLAN

     The company  adopted SFAS 87 "Accounting  for Pensions"  which requires the
     Company to recognize  accured pension costs.  The date of December 31, 1995
     is used as the measured date for actuarial  purpose.  The Company disclosed
     the minimum pension  liabilities on balance sheet of December 31, 1995. The
     company did not set up any pension plan until the year of 1995.

   (k) THE EQUITY ADJUSTMENT ON TRANSLATION OF FOREIGN CURRENCY

     Foreign currency  financial report translation based on FASB Article No.52.
     All the assets and debts are all followed the exchange  rate on the date of
     balance sheets.  The equity of stockholder's  includes the initial retained
     earnings  according  to the  balance  of the last  final  preiod  and carry
     forward.  The rest will be exchanged by the  historical  rate. The dividend
     will be  calculated  by the rate of declare  day.  Futhermore,  the item of
     profit and loss will  follow the rate of weighted  average at that  period.
     About the  exchange  balance  atter  calculation,  it will be losted in the
     equity  adjustment in  translation  of foreign  currency in order to be the
     adjustment item for the stockholder equity.

<PAGE>


   (l)ACCOUNTING ARRANGEMENT FOR INTERIN FINANCIAL STATEMENT

     It should be adjusted cost and expenditure  before register  account in the
     end of fiscal  year.  In the  Interim  Report  should  also  estimate  this
     adjusted amount and divide it into every interim period according to proper
     basis.

 3. ASSETS MORTGAGED OR PLEDGED

     The  following  assets have been  mortgaged or pledged as  collaterals  for
     long-term and short-term loans.

          Accounts                    1995               1994
    --------------------         --------------    --------------
    Pledged time deposit         $   171,245.80      $       -
    Land                          32,018,313.73              -
    Buildings                      3,586,651.49              -
    Notes Receivable               1,607,986.71      $439,878.28
                                 --------------       ----------
          Total                 $ 37,384,197.73      $439,878.28
                                 ==============       ==========



 4. CASH AND CASH EQUIVALENTS

                                           December ,31
                                  --------------------------------
          Accounts                    1995                1994
    -----------------            --------------    --------------
        Cash on hand             $    7,712.08          $5,998.32
        Bank Deposit                228,052.00         431,093.58
                                  ------------       ------------
          Total                  $  235,764.08      $  437,091.90
                                  ============       ============

 5. NOTES AND ACCOUNTS RECEIVABLE-NET
                                         December ,31
                                --------------------------------
          Accounts                  1995                1994
    --------------------       --------------       -------------
    Notes receivable            $3,102,668.45        $730,008.64
    Accounts receivable          5,407,259.24       3,530,634.15
                                 ------------       ------------
    Subtotal                    $8,509,927.69      $4,260,642.79
    Less:Allowance for
       doubtful accounts          (106,474.04)        (39,473.96)
                                 ------------       ------------
         Net Amount             $8,403,453.65      $4,221,168.83
                                 ============       ============

        Our company's notes and accounts receivable derive from
    construction pursuant to our operation terms usually 1 to 2
    years to form the basis for current and not current.

 6. INVENTORIES
                                                 December ,31
                                        ------------------------------
          Accounts                       1995                  1994
    -------------------------       --------------        --------------
    Materials                       $2,586,442.09          $       -
    Construction in progress        13,540,785.02             402,462.37
                                    -------------           ------------
    Subtotal                       $16,127,227.11          $  402,462.37
    Less: Advance from
          customers                (11,625,925.49)           (245,036.33)
                                   --------------           ------------
    Net of inventories            $  4,501,301.62          $  157,426.04
                                   ==============           ============

<PAGE>

    Summary of Constructions in progress:
<TABLE>
<CAPTION>
<S>                                                                            <C>         <C>

                                                              December 31,1995
                                                ------------------------------------
                                                  Construction in                             Advance from
            Items                                        Progress          Customers              Net
 -------------------------------                 ----------------      -------------         --------------
 Thermo-power plant in Taichon                      $7,475,508.45      $6,253,262.43         $1,222,246.02
 Bureau of Commodity Inspection                        717,786.15         608,867.46            108,918.69
 & Quarantine in Chizi
 Remodeling of Taipei Bridge                           929,223.58         925,932.72              3,290.86
 Kaohsiung Finance and Tax                              26,341.83          11,084.91             15,256.92
 Building
 Steel Construction-N.R.S-m.s.s                      1,037,730.11         752,919.57            284,810.54
 Parking lot-Wanklong                                2,705,489.72       2,666,674.29             38,815.43
 Supermarket in Nehu
 Project for CHUNGHWA PICTURE                          628,547.78         407,184.11            221,363.67
 TUBES, LTD.
 Remolding of stairs in kingsa                          20,157.40               -                20,157.40
 Building
                                                 ----------------     --------------         --------------
       Total                                       $13,540,785.02     $11,625,925.49         $1,914,859.53
                                                 ================     ==============         ==============

                                                               December 31,1995
                                                ------------------------------------
                                                  Construction in                             Advance from
            Items                                        Progress          Customers                   Net
 -------------------------------                 ----------------     --------------         --------------
 Door-shapped lift-Valmet                             $357,789.06        $245,036.33           $112,752.73
 pillar for Bureau of Commodity                         44,673.31               -                44,673.31
 inspection & Quarantine
                                                 ----------------     --------------        --------------
       Total                                          $402,462.37        $245,036.33           $157,426.04
                                                 ================     ==============        ==============
                                              
</TABLE>
<PAGE>

 7. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
<S>                                                                            <C>
                                                               December ,31
                                                     ------------------------------
            Cost                                          1995              1994
  ------------------------                         --------------      --------------
  Land                                             $32,018,313.73       $       -
  Buildings                                          3,586,651.49               -
  Machinery and equipment                              993,048.44         461,715.45
  Transportation equipment                             206,888.54         102,240.73
  Miscellaneous equipment                              265,006.76         186,695.07
  Advance payments on equipment                          6,208.85               -
  purchases
  Advance Payments on Land and                       6,039,663.64       1,064,882.10
  Buildings Purchases
                                                   --------------      -------------
        Sub-total                                  $43,115,781.45      $1,815,533.35
                                                   --------------      -------------

  Accumlated depreciation
  ------------------------
  Buildings                                            $32,023.69      $       -
  Machinery and equipment                              188,076.20         129,711.89
  Transportation equipment                              78,908.70          67,048.76
  Miscellaneous equipment                              113,924.68          92,003.25
                                                   --------------      -------------
        Sub-total                                     $412,933.27      $  288,763.90
                                                   --------------      -------------
    Net                                            $42,702,848.18      $1,526,769.45

                                                   ==============      =============
</TABLE>


 8.SHORT-TERM LOANS
                                                        Dec. 31,1995
                                               -------------------------------
          Items                                  Amount         Interest rate
  ------------------------                     --------------   --------------
  Credit loans                                 $2,378,338.82      8.65%-9.85%
  Mortgaged loans                               1,417,334.50      4.25%-9.25%
  Usance loans                                  2,832,871.63     8.50%-10.01%
                                              --------------
          Total                                $6,628,544.95
                                              ==============

                                                      Dec. 31,1994
                                           -------------------------------
          Items                               Amount         Interest rate
  ------------------------                 --------------    -------------
  Credit loans                              $571,428.57         8.75%
  Mortgaged loans                            350,476.19         9.00%
                                            -----------
          Total                             $921,904.76
                                            ===========
<PAGE>

 9.LONG-TERM LOANS AND CURRENT PORTIONS OF LONG-TERM LOANS

                                                   December,31
                                           --------------------------------
                                               1995               1994
                                           -------------      -------------
  Taiwan Bank Kangshan Branch,
  Land and Building Mortgaged
  Loan; Principal $ 299,000,000
  , Loan Period Jun 21, 1995-
  Jun 21,2005. Payments of
  interest are to be made each
  month. From Oct.21,1997 to Jun
  21,2005, divide 32 periods
   (3month per period), payments
  of principal are to be made
  each period.
  The floating interest rate for
  Dec 31,1995 is 8.5%                    $10,980,536.18        $      -
  Less: Long-term loans-current
        Portion                             (343,141.76)              -
                                         --------------        ------------
  Long-term Loans:                       $10,637,394.42        $      -
                                         ==============        ============

10. ADVANCES FROM CUSTOMERS
<TABLE>
<CAPTION>
<C>                                                                            <C>     <C> 
                                                                    December 31,1995
                                                             --------------------------------
                                                     Advance from    Construction in  
            Items                                      Coustomers           Progress        Net
 -------------------------------                 ----------------     --------------    ------------
 Construction in Chunshi                               135,170.62         $53,707.93      $81,462.69
 Hospital
 Flight stop Construction in                         2,274,686.42         332,212.27    1,942,474.15
 CKS airport
 Poject in malaysia                                    350,653.91         323,547.30       27,106.61
                                                 ----------------   ----------------  --------------
       Total                                        $2,760,510.95        $709,467.50   $2,051,043.45
                                                 ================   ================  ==============
</TABLE>

<TABLE>
<CAPTION>
<S>                                                                            <C>
                                                    December 31,1995
                                             --------------------------------
                                     Advance from   Construction in
            Items                      Customers      Progress              Net
 -------------------------        ----------------  ----------------  -------------
 Thermo-power plant in Taichon       $6,560,460.82     $5,508,559.96    $999,142.59

</TABLE>

<PAGE>


11. PENSION
       Based on SFAS 87, the following should be disclosed :
    A.Retirement Plan
      a.The retirement plan is applied to all eligible full-time
        employees.
      b.Calculation of pension paid is summaried as follows:
        * 2 points of pension are earned annually while
          1 point of pension is earned every year for employees with
          15 years or more of qualified service.
        * The last service year, if it reaches 6 months or longer,
          is computed as one year, otherwise as half year. The
          maximum pension points can be earned are 45.
        * Payment of pension is based on the years of qualified
          service and the averaged amount of  6 month salaries right
          before retirement.
    B.Based on SFAS 87, as of year 1995, the company recognized
      accrued pension costs by using the date of Dec. 31 1995 as
      the measured date for actuarial purpose. The recognized amount
      is $10,745.50 of deferred pension costs and pension obligation
      on balance sheet of Dec 31,1995.

12. Net Sales- Export:
      (1) In 1995 and 1996,the company's export sale income
         did not reach 10% of the total amount of Profit and Loss
         Statement
      (2)In 1993,no export sale income.

13. CAPITAL STOCK

    Date              Description    Increase Capital    Total Capital
  -----------        -------------   ----------------    -------------
                                
  Aug 1989               Set up             $ -            $206,896.55
  Nov 1990             Cash Stock        722,900.45         929,797.00
  Jan 1991             Cash Stock        295,061.41       1,224,858.41
  Aug 1991             Cash Stock        715,900.53       1,940,758.94
  Dec 1995             Cash Stock      5,388,563.05       7,329,321.99

      Par Value NT$10 authorized 19,900,000 shares capital stock is
    NT$19,900,000 about USD7,329,321.99 in Dec.31,1995 and 5,200,000
    shares capital stock is NT$52,000,000 about USD1,940,758.94 in
    Dec.31,1994.
<PAGE>

14.Other Benefit Plans:

      (1)All employees have labor insurance and national health
         insurance including giving birth,injury,medical,
         handicapped,aging and deathpayment pursuant to Laborers
         Insurance Regulations.
      (2)Proiding complete trainings to employees.
      (3)Regular health examination.
      (4)Regular employees' leisure activities and birthday party.

15.Post Retirement benefits other Pension
   The following table provides information on the Plan status
   at December 31,1995.
    Accumulated Post Retirement Benefit Obligation
      Retirees                                                        $10,470
      Fully eligible active participants                               10,750
                                                                      -------
    Plan assets                                                        21,220
                                                                      -------
    Accumulated post retirement benefit
      obligation in excess of Plan assets                              21,220

    Unrecognized gain(loss)                                                -
    Prior service cost                                                     -
    Unrecognized transition obligation                                (10,470)
                                                                      -------
    Accrued post retirement benefit cost
      in the balance sheet                                            $10,750
                                                                      =======
Post retirement benefits expense for 1996 included the follow
components:

    Service cost                                                       $8,079
    Interest cost                                                       1,591
    Amortization of unrecognized ner obligation at transition           1,415
                                                                      -------
    Post retirement benefits expense                                  $11,085
                                                                      =======
    1.Discount rate : 7.5%

    2.Rate of increase in compensation : 5.00%

16.RETAINED EARNINGS

    The Articles of Incorporation of the Company provide that 10%
    its annual net income should be set aside as appropriated earnings
    until the accumulated reserve has equaled the Company's paid-in
    capital stock. This appropriated earnings may be used to offset
    a deficit.

    The annual net income after setting aside the appropriated
    earnings shall be appropriated or dispoed by the stockholders
    meeting.

<PAGE>

17.MISCELLANEOUS GAIN

          Items                                1995               1994
    -----------------------              --------------       --------------
    Sale of scrap                          $16,556.43           $12,616.87
    Withhold from payable                  155,430.85                 -
    Other                                    2,100.67                 2.46
                                         ------------         ------------
       Total                              $174,087.95           $12,619.33
                                         ============         ============
18. INTEREST EXPENSES

          Items                               1995               1994
    -------------------------            --------------      --------------
    Interest expenses                      $692,701.23          $9,824.89
    Less: Interest capitalized             (111,886.12)              -
                                         --------------       -----------
       Net                                 $580,815.11          $9,824.89
                                         ==============       ===========

19. INCOME TAX

          Items                              1995               1994
    -------------------------           --------------      --------------
    Provision for income tax               $333,069.86        $151,802.69
    plus: Demand payments of                  3,504.56               -
          tax arrears
                                        --------------     --------------
       INCOME TAX                          $336,574.42        $151,802.69
                                        ==============     ==============

    (1) Differences between Provision for tax on financial
        statements and tax payable on income tax return:

          Items                              1995               1994
    ---------------------              --------------      --------------
    Tax based on lncome before            $221,435.34        $139,562.78
    tax
    Permanent differences:                   7,449.18           9,762.10
    Over-declared bad debts                 97,460.66               -
    Decrease in interest expense             6,724.68           2,477.81
    Other
                                       --------------     --------------
    Income tax for Current                $333,069.86        $151,802.69
    period
                                       ==============     ==============
20.EARNINGS PER SHARE (EPS)

          Items                             1995               1994
    -----------------------           --------------      --------------
    Net income                         NT$14,724,723       NT$10,784,465
                                         (US$550,663)     (US$407,961.60)
    Weighted average
    number of shares
    outstanding                            6,425,000           5,200,000
                                      --------------      --------------
    EARNINGS PER SHARE(NT$)                 NT$ 2.29            NT$ 2.07

    Rate of exchange                   USD1:NT$26.74       USD1:NT$26.44
                                      --------------      --------------
    EARNINGS PER SHARE(USD)                $0.09              $0.08
                                      ==============      ==============
      Weighted average number of shares Outstanding in 1995:
      $ 5,200,000+ 14,700,000 *1/12 = 6,425,000 (shares)

<PAGE>


21. RELATED PARTY TRANSACTIONS

    (a) Title and relationship of related parties

       Title                                  Relationship with the Company
 -------------------------                  -----------------------------------
  Wu, Chun-Shin                              President of the Board of Directors

  Tsai, Chih-Hong                               Member of the Board of Direcotrs
 
  Mah, Jung-Sheng                               Member of the Board of Direcotrs

  Yen, Chung-Ching                              Member of the Board of Direcotrs

  Chan, Chien-Hue                               Former President of the Board of
                                                Directors

    (b) Transaction with Related Parties

        (1) Payable to stockholders current: advance from
            stockholders, with no interest.

 Related Partles         Maximum amount during  Balance at the year
                                            1995 ended
 -----------------------     ------------------   -----------------
                                 
  Wu, Chun-Shin                6,856,223.75         $6,307,376.33

  Tsai, Chih-Houg              4,390,779.36          4,390,779.36

  Mah, Jung-Sheng              9,730,352.36          3,690,703.62

  Yen, Chung-Ching             3,600,943.76          1,253,235.73

  Chan, Chien-Hue              1,110,049.76                 -

                The abovenamed Payable to stockholders current, the
            liabilities use for capital to purchase land and factory
            in Chao-Chou. They do not have agreement in return
            deadline.

<PAGE>

 22.Quarterly Data(unaudited)

<TABLE>
<CAPTION>
<S>                                                                            <C>       <C>          <C>

                                                    FIRST        SECOND       THIRD        FOURTH
                                             1995   QUARTER      QUARTER      QUARTER      QUARTER      ANNUAL
NET SALES                                           3,869        3,710        4,096        8,311        19,986
GROSS MARGIN                                          373          358          396          802         1,929
OPERATINT EXPENSES                                    152           96          150          213           611
EARNINGS FROM OPERATIONS                              221          262          246          589         1,318
                                                   ==================================================================
NET EARNINGS                                          220          169           35          127           551
                                                   ==================================================================
MINORITY INTEREST IN EARNINGS                                                                                0
OF CONSOLIDATED SUBSIDIARICS                                                                                 0
                                                   ------------------------------------------------------------------
NET EARNINGS APPLICABLE TO                            220          169           35          127           551
                                                   ==================================================================
COMMON SHAREHOLDERS                                                                                          0
                                                   ==================================================================
PRIMARY EARNINGS PER COMMON SHARE                    0.03         0.03         0.01         0.02          0.09
                                                   ==================================================================
FULLY DILUTED EARNINGS PER COMMON SHARE              0.03         0.03         0.01         0.02          0.09
                                                   ==================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING                 6,425        6,425        6,425        6,425         6,425
                                                   ==================================================================

                                                    FIRST        SECOND       THIRD        FOURTH
                                            1994   QUARTER      QUARTER      QUARTER      QUARTER      ANNUAL
NET SALES                                           2,218        2,609        2,214        4,206        11,247
GROSS MAEGIN                                          227          266          227          429         1,148
OPERATION EXPENSES                                    100          117          100          189           505
                                                  -------------------------------------------------------------------
EARNINGS FROM OPERATIONS                              127          149          127          240           643
                                                  ===================================================================
NET EARNINGS                                           67           67          137          137           408
                                                  ===================================================================
PREFERRED STOCK DIVIDENDS
 NET EARNINGS APPLICABLE
                                                  -------------------------------------------------------------------
TO COMMON SHAREHOLDERS                                 67           67          137          137           408
                                                  ===================================================================
PRIMARY EARNINFGS PER COMMON SHARE                    0.01         0.01         0.03         0.03          0.08
                                                  ===================================================================
FULLY DILUTED EARNINGS PER COMMON SHARE               0.01         0.01         0.03         0.03          0.08
                                                  ===================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING                  5,200        5,200        5,200        5,200         5,200
                                                  ===================================================================
</TABLE>
<PAGE>

23.  Contingent and commitment events

   (A)Land contract

      The Company has entered a contract of purchase of land and

      building in order to meet the future needs for business. The

      Contract is summarized as follows:

      1.Location: Land-Chaocho section, Pingtung County(55,393T)

                  Building-#1148, Chaocho section, Pingtung County

                  (12,468.86T)

      2.Contractor: Kunli building Co.,Ltd.

      3.Contract price: US$ 42,707.554.23(Tax included)

      4.Title of properties: Except titles of land#33 and #40-27

                             have not transfered, titles for all the

                             residual have been transferred.

      5.Evaluation: The fair market value for the land and building

                    is evaluated US$ 41,791,623.80

      6.As of December 31,1995, US$ 41,267,763.65 has been paid.

   (B) Important construction contract
     From December 31st,1994 to December 31st,1996, the Company's
     Major construction contracts and detailed total costs are
     listed below:

<TABLE>
<CAPTION>
<S>                                                                            <C>              <C>               <C>

(1)December 31st,1995
-----------------------------------------------------------------------------------------------------------------------------------
Construction Name      Agreement Price        Estimated          Completion     Estimated        Accumulated        Method 
                                              Total Cost         Percentage     C. Year          Profit & Loss      of Subscription
-----------------------------------------------------------------------------------------------------------------------------------
Kuanli-Taichuang                                                                                                    Percentage of
Power Plant             8,063,728              7,878,459            94.40%       1996             174,902           C. Method
-----------------------------------------------------------------------------------------------------------------------------------
Hsitsu Commerce                                                                                                     Percentage of 
Inspection Bureau       1,815,595              1,496,522            40.26%       1996             128,455           C. Method
-----------------------------------------------------------------------------------------------------------------------------------
C.K.S. Airport                                                                                                      Percentage of 
Terminals               2,702,446              2,243,030            12.56%       1996              57,511           C. Method
-----------------------------------------------------------------------------------------------------------------------------------
Neihu Macro                                                                                                         Percentage of
Parking Lot             2,836,314              2,637,772            97.14%       1996             192,864           C. Method
-----------------------------------------------------------------------------------------------------------------------------------
     C: Completion

(2)December 31st,1994
-----------------------------------------------------------------------------------------------------------------------------------
Construction Name      Agreement Price        Estimated          Completion     Estimated        Accumulated        Method 
                                              Total Cost         Percentage     C. Year          Profit & Loss      of Subscription
-----------------------------------------------------------------------------------------------------------------------------------
Kuanli-Taichuang         8,063,728            7,878,459            66.32%       1996             174,902             Percentage of 
                                                                                                                     C. Method
-----------------------------------------------------------------------------------------------------------------------------------
Power Plant                313,830              313,830            94.91%       1996              56,077             Percentage of
Stylish Machinery                                                                                                    C. Method
-----------------------------------------------------------------------------------------------------------------------------------
C:Completion

</TABLE>

<PAGE>
 
   (C)Others

    (1) As of December 31, 1995 and 1994, Letters of Credit

        were issued but not used are summaried as follmws:

                                                        December    31
                                             -----------------------------------
        Items                                       1995               1994
 --------------------------                   ---------------    -------------
 Letters of Credit-Overseas                       $549,946.00            -
                                                                   
 Guarantee Deposit                                  54,995.00            -
                                                                   
 Letters of Credit-local                            15,288.99            -
                                                

24. Some accounts of financial statements, 1994 were reclassified in
    order to compile the financial statements for 1995.


                                 Goung Heu Investment Co.,Ltd
                                 Valuation and Qualifying Accoutss
                                 Schedule II

Description                               Beginning balance  Charged to expenses
For Year Ended
December,31,1995
Total reserves for                               $39,473.96         $67,000.08
doubtful
accounts and obsolete inventory

For Year Ended
December,31,1994
Total reserves for doubtful                       -                 $39,473.96
accounts and obsolete inventory

For Year Ended
December,31,1993
Total reserves for doubtful                       -                      -
accounts and obsolete inventory

NOTE: Valuation and qualifying accounts were not individualy
      significant; and, therefore,additions and deductions information
      has not been provided in this schedule.

    

<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors and Shareholders
Potentialistics, Inc.

We have audited the  accompanying  balance  sheets of  Potentialistics,  Inc. (a
Delaware  corporation and a development  stage enterprise) as of March 31, 1996,
December 31, 1995 and 1994 and the related statements of operations,  changes in
shareholders'  equity and cash flows for the three  months and each of the years
then  ended,  respectively,  and  for the  period  October  12,  1988  (date  of
inception)   through  March  31,  1996.  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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of  Potentialistics,  Inc. (a
development stage enterprise) as of March 31, 1996,  December 31, 1995 and 1994,
and the results of its  operations  and its cash flows for the three  months and
each of the years then ended, respectively,  and for the period October 12, 1988
(date of  inception)  through  March 31,  1996,  in  conformity  with  generally
accepted accounting principles.




                                                 /s/ S.W. HATFIELD + ASSOCIATES
                                                 ------------------------------
                                                 S. W. HATFIELD + ASSOCIATES
Dallas, Texas
May 8, 1996


<PAGE>



                              POTENTIALISTICS, INC.
                        (a development stage enterprise)
                                 BALANCE SHEETS
                   March 31, 1996, December 31, 1995 and 1994
<TABLE>
<CAPTION>



                                                                    March 31,       December 31,     December 31,
                                                                     1996              1995             1994
                                                                   ---------         ---------        ---------
<S>                                                               <C>               <C>              <C>
ASSETS                                                            $        -        $        -       $        -
                                                                   =========         =========        =========


LIABILITIES                                                       $        -        $        -       $        -
                                                                   ---------         ---------        ---------


SHAREHOLDERS' EQUITY
   Preferred stock - $0.00001 par value.
     10,000,000 shares authorized; none
     issued and outstanding                                                -                -                 -
   Common stock - $0.00001 par value.
     50,000,000 shares authorized.
     25,003,314 issued and outstanding,
     respectively                                                        250              250               250
   Contributed capital                                                 2,694             2,694            2,694
   Deficit accumulated during
     the development stage                                            (2,944)           (2,944)          (2,944)
                                                                   ---------         ---------        --------- 

       Total shareholders' equity                                         -                 -                -
                                                                   ---------         ---------        ---------

TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                                           $        -        $        -       $        -
                                                                   =========         =========        =========
</TABLE>


  The accompanying notes are an integral part of these financial statements. 
                                       4

<PAGE>



                              POTENTIALISTICS, INC.
                        (a development stage enterprise)
                            STATEMENTS OF OPERATIONS
                        Three months ended March 31, 1996
                   and years ended December 31, 1995 and 1994
               and the period October 12, 1988 (date of inception)
                             through March 31, 1996
<TABLE>
<CAPTION>

                                                                                                   Period from
                                                                                                 October 12, 1988
                                               Three months                                    (date of inception)
                                                  ended         Year ended         Year ended        through
                                                 March 31,      December 31,       December 31,      March 31,
                                                   1996             1995              1994             1996
<S>                                              <C>              <C>               <C>             <C>
REVENUES                                         $    -           $    -            $    -          $     -
                                                  -----            -----             -----            -----

EXPENSES
   Rent and management fees                           -                -                 -            1,100
   Other expenses                                     -                -                 -            1,711
   Amortization of
     organization costs                               -                -                 -              133
                                                  -----            -----             -----            -----

     Total expenses                                   -                -                 -            2,944
                                                  -----            -----             -----            -----

NET LOSS                                         $    -           $    -            $    -          $(2,944)
                                                  =====            =====             =====            ===== 


Net loss per weighted-average
   share of common stock
   outstanding                                   nil               nil              nil               nil

Weighted-average number
   of shares of common
   stock outstanding                         25,003,314       25,003,314        25,003,314       25,003,314
                                             ==========       ==========        ==========       ==========
</TABLE>


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

<PAGE>



                              POTENTIALISTICS, INC.
                        (a development stage enterprise)
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                        Three months ended March 31, 1996
                   and years ended December 31, 1995 and 1994
               and the period October 12, 1988 (date of inception)
                             through March 31, 1996
<TABLE>
<CAPTION>

                                                                               Deficit
                                                                             accumulated
                                                                             during the
                                              Common Stock     Contributed   development
                                            Shares      Amount   capital        stage        Total
<S>                                       <C>           <C>     <C>           <C>         <C>    
Issuance of stock at formation            25,000,000    $250    $    -        $    -      $   250

Capital contributed to
  support development                             -       -         600            -          600

Net loss for the period                           -       -          -           (606)       (606)
                                          ----------- --------   --------      --------     -------          

Balances at
  December 31, 1988                       25,000,000     250        600          (600)        244

Capital contributed to
  support development                          3,314      -       2,082            -        2,082

Net loss for the year                             -       -          -           (569)       (569)
                                          ----------- --------   ---------      -------     -------        

Balances at
  December 31, 1989                       25,003,314     250      2,682        (1,175)      1,757

Capital contributed to
  support development                             -       -          12            -           12

Net loss for the year                             -       -          -         (1,697)     (1,697)
                                          ----------- --------   ---------      -------     -------           

Balances at
  December 31, 1990                       25,003,314     250      2,682        (2,872)         72

Net loss for the year                             -       -          -            (27)        (27)
                                          ----------- --------   ---------      -------     --------    

Balances at
  December 31, 1991                       25,003,314     250      2,682        (2,899)         45

Net loss for the year                             -       -          -            (27)        (27)
                                          ----------- --------   ---------      -------     --------

Balances at
  December 31, 1992                       25,003,314    $250     $2,682       $(2,926)      $  18
                                          =========== ========   =========      =======     ========
</TABLE>


                                  - Continued -


  The accompanying notes are an integral part of these financial statements.
                                        6

<PAGE>



                              POTENTIALISTICS, INC.
                        (a development stage enterprise)
            STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - CONTINUED
                        Three months ended March 31, 1996
                   and years ended December 31, 1995 and 1994
               and the period October 12, 1988 (date of inception)
                             through March 31, 1996

<TABLE>
<CAPTION>
<S>                                                                            <C>    <C>
                                                                         Deficit
                                                                       accumulated
                                                                        during the
                                      Common Stock       Contributed   development
                                    Shares     Amount      capital        stage         Total
Balances at
  December 31, 1992              25,003,314     $250       $2,682         $(2,926)     $    18

Net loss for the year                    -        -            -              (18)         (18)
                                 -----------   -------    --------       ---------     ---------

Balances at
  December 31, 1993              25,003,314      250        2,682          (2,944)          -

Net loss for the year                    -        -            -               -            -
                                 -----------   -------    --------       ---------     ---------       

Balances at
  December 31, 1994              25,003,314      250        2,682          (2,944)          -

Net loss for the year                    -        -            -               -            -
                                 -----------   -------    --------       ---------     ---------  

Balances at
  December 31, 1995              25,003,314      250        2,682          (2,944)          -

Net loss for the period                  -        -            -               -            -
                                 -----------   -------    --------       ---------     ---------

Balances at
 March 31, 1996                  25,003,314     $250       $2,682         $(2,944)     $    -
                                 ===========   =======    ========       =========     =========

</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                        7

<PAGE>



                              POTENTIALISTICS, INC.
                        (a development stage enterprise)
                            STATEMENTS OF CASH FLOWS
                        Three months ended March 31, 1996
                   and years ended December 31, 1995 and 1994
               and the period October 12, 1988 (date of inception)
                             through March 31, 1996

<TABLE>
<CAPTION>
<S>                                                                            <C>   
                                                                     Period from
                                                                      October 12, 1988
                                   Three months                     (date of inception)
                                       ended   Year ended Year ended    through
                                      March 31,December 31,December 31,March 31,
                                           1996     1995     1994       1996
CASH FLOWS FROM
  OPERATING ACTIVITIES
     Net loss for the period            $   -     $   -    $   -      $(2,944)
     Adjustments to reconcile
       net loss to net cash
       provided by operating
       activities
         Payment of
           organization costs               -         -        -         (133)
         Amortization of
           organization costs               -         -        -          133
                                          -----     -----    -----      ------

Net cash used in operating activities       -         -        -        (2,944)
                                          -----     -----    -----      ------ 


CASH FLOWS FROM
   INVESTING ACTIVITIES                     -         -        -            -
                                          -----     -----    -----      ------


CASH FLOWS FROM
   FINANCING ACTIVITIES
     Issuance of common stock               -         -        -           250
     Capital contributed to
       support development                  -         -        -         2,694
                                          -----     -----    -----      ------

Net cash used in financing activities       -         -        -         2,944
                                          -----     -----    -----      ------

INCREASE IN CASH                            -         -        -            -

Cash at beginning of period                 -         -        -            -
                                          -----     -----    -----      ------

Cash at end of period                   $   -     $   -    $   -        $   -
                                          =====     =====    =====      ======

SUPPLEMENTAL DISCLOSURE
   OF INTEREST AND INCOME
   TAXES PAID
     Interest paid for the period       $   -     $   -    $   -        $   -
                                          =====     =====    =====      ======
     Income taxes paid for the period   $   -     $   -    $   -        $   -
                                          =====     =====    =====      ======
</TABLE>


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

<PAGE>


                              POTENTIALISTICS, INC.
                        (a development stage enterprise)

                          NOTES TO FINANCIAL STATEMENTS



NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Potentialistics,  Inc. (Company) was incorporated on October 12, 1988, under the
laws of the State of Delaware,  as a  wholly-owned  subsidiary of Texas American
Group,  Inc.,  a  publicly-owned  corporation  (TAG).  TAG caused the Company to
register  1,585,733  shares of its  initial  25,000,000  issued and  outstanding
shares of common stock with the Securities and Exchange Commission on Form S-18.
TAG then distributed the registered shares to TAG shareholders.  The Company has
had no  substantial  operations  or  substantial  assets  since  inception.  The
business purpose of the Company is to seek out and obtain a merger,  acquisition
or outright sale transaction  whereby the Company's  shareholders  will benefit.
The Company  has not  engaged in any  negotiations  from  inception  and has not
undertaken  any  steps  to  initiate  the  search  for a merger  or  acquisition
candidate.

The Company is considered in the  development  stage and, as such, has generated
no significant  operating revenues and has incurred cumulative  operating losses
of approximately $3,000.

The  Company's  majority  shareholder  has  continued to maintain the  corporate
status of the Company and provides all nominal  working  capital  support on the
Company's  behalf.  Because  of the  Company's  lack of  operating  assets,  its
continuance  is fully  dependent  upon  the  majority  shareholder's  continuing
support.  The  majority  shareholder  intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management 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.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   Cash and cash equivalents

     The Company considers all cash on hand and in banks,  including accounts in
     book overdraft  positions,  certificates of deposit and other highly-liquid
     investments with maturities of three months or less, when purchased,  to be
     cash and cash equivalents.

2.   Income taxes

     The Company files its own separate  federal income tax return.  The Company
     has no net  operating  loss  carryforwards  available  to offset  financial
     statement or tax return taxable income in future periods.

3.   Loss per share

     Loss per share is computed by dividing the net loss by the weighted-average
     number of shares of common  stock and  common  stock  equivalents,  if any,
     outstanding during the year/period.

NOTE C - RELATED PARTY TRANSACTIONS

For the period October 12, 1988 (date of inception)  through  December 31, 1989,
TAG provided  office space and management  services to the Company for a monthly
fee. Total expenses under this arrangement  aggregated $1,100 for the cumulative
period.

                                                                      

<PAGE>
   

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURE

         The Company's  independent  auditor for the fiscal years ended December
31, 1995, 1994 and 1993 was Scott Hatfield + Associates.

     The  accounting  firm of S.W. Hatfield + Associates was dismissed on March
31,  1996 by the  Company's  Board of  Directors.  During the fiscal  year ended
December 31, 1995, and the interim period subsequent to December 31, 1995, there
have been no  disagreements  with Scott  Hatfield + Associates  on any matter of
accounting  principles or practices,  financial statement disclosure or auditing
scope or procedure or any reportable events. Registrant has requested that Scott
Hatfield + Associates  furnish it with a letter  addressed to the Securities and
Exchange Commission stating whether it agrees with the above statements.

     Pursuant  to the  recommendation  by the Board of  Directors,  the  Company
engaged the accounting firm of Horwath & Co., CPAS. as independent  auditors for
the Company,  effective  as of February 10, 1996.  During the fiscal years ended
December 31, 1995 , 1994 and 1993 and the interim period  subsequent to December
31,  1995,  there have been no  consultations  with  Horwath & Co.,  CPAS on any
matter of accounting principles to a specific  transaction,  either completed or
proposed,  or the type of audit  opinion that might be rendered on the Company's
financial statements.

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

(a)      The financial  statements filed as part of this Registration  Statement
         as Item 13 are listed in the Index to  Financial  Statements  contained
         therein.

(b)      The following documents are filed as exhibits to this Registration 
            Statement:

   2.1      Stock Purchase Agreement dated May 6, 1996 by and among the Company,
              Goung Hei Investment Co., Ltd. and Halter Capital Corporation.*
   2.2      Stock Exchange Agreement dated April 15, 1996  by  and  among  the
             Company, Goung Hei Investment Corporation and Qualyserve
             Construction Co., Ltd. *
   3.1      Articles of Incorporation of the Company, as amended to date. *
   3.2      Bylaws of the Company.*
   4.1      Specimen Common Stock Certificate.*
   10.1     Leases for Properties.*
   10.2     Contract for project, CKJ International Airport
   10.3     Contract for project, Taichung Fossil Power Plant.
   16.1     Accountants letter
    * to be filed by amendment.

          
    
<PAGE>


                                   SIGNATURES


         In accordance  with Section 12 of the Securities  Exchange Act of 1934,
the Company caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date: March      , 1996                    GOUNG HEI INVESTMENT CO., LTD.
            ----
                                           /s/ Lu, Chi-Kang
                                       By:______________________________________
                                          Lu, Chi, Kang, Chief Executive Officer