SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

         For the fiscal year ended December 31, 2001

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

                         COMMISSION FILE NUMBER 0-29482

                         OVM INTERNATIONAL HOLDING CORP.
                         -------------------------------
                 (Name of Small Business Issuer in Its Charter)

                   NEVADA                               88-0344135
                   ------                               ----------
         (State or other jurisdiction                 (I.R.S. Employer
         of incorporation or Organization)            Identification No.)

                     ROOM 2105, WEST TOWER, SHUN TAK CENTRE
                  200 CONNAUGHT ROAD C., SHEUNG WAN, HONG KONG
                  --------------------------------------------
               (Address and Principal Executive Offices)(Zip Code)

                                 (852)2810-6226
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Securities Exchange Act of
1934:

Title of Each Class                    Name of Each Exchange on Which Registered
-------------------                    -----------------------------------------

      NONE                                            NONE

                Securities registered under Section 12(g) of the Securities
                        Exchange Act of 1934:

                    COMMON STOCK, PAR VALUE $.0001 PER SHARE
                    ----------------------------------------
                                (Title of class)

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X]  No [ ]

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

State registrant's revenues for the year ended December 31, 2000.  $11,930,000

State the aggregate market value of the voting stock held by non-affiliates of
the registrant on March 7, 2002 computed by reference to the closing bid price
of the registrant's Common Stock as reported by THE WALL STREET JOURNAL on that
date. $302,850

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the registrant's Common Stock, par value
$.0001 per share (the "Common Stock"), as of March 29, 2002, was 12,070,000.

Transitional Small Business Disclosure Format (check one):

         Yes            No   X
             ------       ------

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

<PAGE>

                                   CONVENTIONS

         Unless otherwise specified, all references in this report to "US
Dollars" or "US$" are to United States dollars; all references to "Hong Kong
Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or
"Rmb" are to Renminbi yuan, which is the lawful currency of the People's
Republic of China ("China" or "PRC"). OVM International Holding Corporation (the
"Company") and HVM Development Limited ("HDL") maintain their accounts in US
Dollars and Hong Kong Dollars, respectively. Liuzhou HVM Construction Machinery
Company Limited ("Liuzhou HVM") and Liuzhou OVM Prestress Construction Company
Limited (the "Construction Company") maintain their accounts in Renminbi. The
financial statements of the Company and its subsidiaries are prepared in
Renminbi. Translations of amounts from Renminbi to US Dollars and from Hong Kong
Dollars to US Dollars are for the convenience of the reader. Unless otherwise
indicated, any translations from Renminbi to US Dollars or from US dollars to
Renminbi have been made at the single rate of exchange as quoted by the People's
Bank of China (the "PBOC Rate") on December 31, 2001, which was US$1.00 =
Rmb8.28. The Renminbi is not freely convertible into foreign currencies and the
quotation of exchange rates does not imply convertibility of Renminbi into US
Dollars or other currencies. Translations from Hong Kong Dollars have been made
at the single rate of exchange as quoted by the Hongkong and Shanghai Banking
Corporation Limited on December 31, 2001, which was US$1.00 = HK$7.80. All
foreign exchange transactions take place in the PRC either through the Bank of
China or other banks authorized to buy and sell foreign currencies at the
exchange rates quoted by the People's Bank of China. No representation is made
that the Renminbi or US Dollars amounts referred to herein could be converted
into US Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.


                           FORWARD-LOOKING STATEMENTS

         This report contains statements that constitute forward-looking
statements. Those statements appear in a number of places in this report and
include, without limitation, statements regarding the intent, belief and current
expectations of the Company, its directors or its officers with respect to the
Company's policies regarding investments, dispositions, financings, conflicts of
interest and other matters; and trends affecting the Company's financial
condition or results of operations. Any such forward-looking statement is not a
guarantee of future performance and involves risks and uncertainties, and actual
results may differ materially from those in the forward-looking statement as a
result of various factors. The accompanying information contained in this
report, including without limitation the information set forth above and the
information set forth under the heading, "Management's Discussion and Analysis
of Results of Operations and Financial Condition," identifies important factors
that could cause such differences. Such statements consist of any statement
other than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may", "expect", "anticipate", "believe",
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. With respect to any such forward-looking statement that
includes a statement of its underlying assumptions or bases, the Company
cautions that, while it believes such assumptions or bases to be reasonable and
has formed them in good faith, assumed facts or bases almost always vary from
actual results, and the differences between assumed facts or bases and actual
results can be material depending on the circumstances. When, in any
forward-looking statement, the Company, or its management, expresses an
expectation or belief as to future results, that expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the stated expectation or belief will result or be
achieved or accomplished.



                                       2
<PAGE>

                                     PART I

                         ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION
------------

         OVM International Holding Corporation (the "Company") was organized
under the laws of the State of Nevada on October 18, 1971 under the name of Mr.
Nevada, Inc., and, following the completion of a limited public offering in
April 1972, commenced limited operations which were discontinued in 1990.
Thereafter, the Company engaged in a reorganization and on several occasions
sought to merge with or acquire certain active private companies or operations,
all of which were terminated or resulted in discontinued negotiations. On
October 20, 1995, the Company changed its name to Intermark Development
Corporation. On November 4, 1996, the Company acquired all of the capital stock
of HVM Development Limited ("HDL"), formerly known as OVM Development Limited, a
British Virgin Islands corporation, and changed its name to OVM International
Holding Corporation.

         HDL owns a 70 percent equity interest in Liuzhou HVM Construction
Machinery Company Limited ("Liuzhou HVM"), formerly known as Liuzhou OVM
Construction Machinery Company Limited, a Sino-foreign equity joint venture
incorporated in the People's Republic of China (the "PRC") on May 10, 1995. The
PRC venture partner is Liuzhou Construction Machinery General Factory (the
"Factory"), which was a PRC State-owned enterprise. The Factory was subsequently
reorganized into a limited liability share capital company on January 10, 1995
known as Liuzhou OVM Joint Stock Company Limited (the "PRC Partner"). HDL and
the PRC Partner are parties to the Articles of Association and Joint Venture
Contract dated April 18, 1995 which establishes the basis of their relationship.
The joint venture contract is for a 30-year term which may be terminated under
certain limited circumstances as agreed upon by the parties. These Articles
establish a board of directors consisting of seven persons, a majority of which
are designated by HDL. The board of directors has responsibility for all major
financial and operations decisions relating to the activities of the venture
which require approval of a simple majority of directors (i.e. over 50%),
although all major decisions affecting the structure of the joint venture
require unanimous approval of the directors. Day-to-day operations of the joint
venture are overseen by the general manager and other deputy general managers.
The general manager is nominated and appointed by the board of directors of the
joint venture. HDL, in addition to providing initial cash contributions to the
joint venture, is responsible to assist in the purchase of machinery and
equipment outside the PRC, to promote products and assist in obtaining contracts
outside the PRC and to assist in certain training, personnel and procurement
functions.

         Liuzhou HVM has undertaken substantially all the businesses originally
carried out by the Factory since January 1, 1995 which principally include the
manufacture, production, sale and distribution of prestressing equipment,
components and hardware used in the construction of motorways, bridges,
railroads, buildings, hydroelectric dams and power stations in the PRC. Products
include anchorage systems, jacks, electric high-pressure oil pumps, steel
cables, direct display sensors, unbonded prestressing tendons and ancillary
equipment widely used in the construction industry. After the commencement of
operation of Liuzhou HVM in 1995, the PRC Partner became an investment holding
company and engaged in the trading of building and construction materials,
import and export of construction equipment, construction design and
consultation services.

         Liuzhou OVM Prestress Construction Co. Ltd. (the "Construction
Company") was incorporated in the PRC on February 28, 1987. The Construction
Company was previously a subsidiary company of the PRC Partner. During 1998,
Liuzhou HVM acquired a 69.3% interest in the Construction Company for



                                       3
<PAGE>

consideration of Rmb6,930,000 (US$837,000), with the remaining interests being
held by an affiliate of the PRC Partner (20%) and a third party (10.7%) in the
PRC. The Construction Company is principally engaged in the provision of
engineering services for prestress construction projects. As used herein, the
"Company" refers to OVM International Holding Corporation and includes, unless
the context otherwise requires, the current operations of HDL, Liuzhou HVM and
the Construction Company.

         The Company's products are distributed throughout the PRC to a
diversified customer base as well as overseas customers. The Company's customers
include construction and engineering companies and provincial, municipal and
regional construction bureaus across the PRC and in overseas countries.

         The Company's head office and production facilities are located in
Liuzhou Municipality, the industrial city of Guangxi Zhuang Autonomous Region
("Guangxi") with a total site area of approximately 46,000 square meters. Long
term land use rights for the land and buildings on which these facilities are
situated are held by Liuzhou Shuangma Electrical Company Limited ("Shuangma"),
an unaffiliated third party, and are leased to Liuzhou HVM for a term of 25
years effective January 1, 2000. Liuzhou HVM also leases certain production and
transportation equipment from Liuzhou Weilesi Elevator Factory ("Weilesi"), an
unaffiliated third party, for a term of 20 years effective January 1, 2000.

         In January 2000, Liuzhou HVM and the PRC Partner entered into various
agreements to modify the original joint venture arrangements as follows:

         o the leases covering the land, buildings, property and equipment
between the PRC Partner, as lessor, and Liuzhou HVM, as lessee, were terminated
effective January 1, 2000;

         o Liuzhou HVM agreed to cease using the intangible assets originally
acquired from the PRC Partner in 1995, including the "OVM" trademark;

         o Liuzhou HVM sold one-third of its inventories to the PRC Partner at
cost;

         o Liuzhou HVM sold certain fixed assets to the PRC Partner at their
carrying values;

         o all technology and know-how upon which the existing products
manufactured by Liuzhou HVM are based may be used by Liuzhou HVM and PRC
Partner;

         o certain employees of Liuzhou HVM ceased to be employed by Liuzhou HVM
and become employees of the PRC Partner; and

         At the same time, HDL and the PRC Partner discussed their intent for
HDL to acquire the PRC Partner's 30% interest in the joint venture.

         On April 29, 2001, HDL and the PRC Partner entered into a Memorandum of
Understanding which provides for the transfer of the PRC Partner's interest in
Liuzhou HVM to HDL, and the transfer of Liuzhou HVM's interest in the
Construction Company to the PRC Partner. The terms of the transfers are subject
to separate transfer agreements which have not yet been negotiated. HDL's
acquisition of the PRC Partner's interest in Liuzhou HVM is also subject to
resolution of a dispute over amounts owed by the PRC Partner to Liuzhou HVM.
This dispute has been submitted for arbitration being administered by the local
PRC government. Pursuant to another Memorandum of Understanding entered into by
and between HDL and the PRC Partner dated March 7, 2002, Liuzhou HVM agreed to
dispose of its 69.3% interest in the Construction Company to the PRC Partner at
a consideration based on the fair value of the Construction Company, to be
determined by an independent professional valuer, as of December 31, 2001.
Notwithstanding the disposition of the Construction Company, the Company started
to perform engineering services for prestress construction projects through
Liuzhou HVM in 2001. For the year ended December 31, 2001, sales attributable to
engineering services provided by Liuzhou HVM amounted to approximately
Rmb861,000 (US$104,000). See "History and Development of Liuzhou HVM".



                                       4
<PAGE>

         As a result of these modifications, the PRC Partner now competes with
the Company in product sales and services. Due to this direct competition from
the PRC Partner, the Company's sales for the year ended December 31, 2000
decreased by approximately 47.5% compared to that of the corresponding period in
1999. Management has been increasing its marketing effort since January 2000 to
promote its new trademark "HVM" and explore new markets and believes that the
new trademark will obtain wide acceptance from both existing and new customers.
For the year ended December 31, 2001, the Company's sales increased by
approximately 22.9% compared to 2000.

         Since January 1, 2000, Liuzhou HVM's products have been marketed under
a new trademark "HVM" which is registered in the name Shenzhen Hong Da Technical
Company Limited ("Hong Da"), a PRC entity wholly owned by Ching Lung Po,
President and Chief Executive Officer of the Company.

         Prior to a formal buy back of the PRC Partner's 30% interest in the
joint venture, a minority of the board of directors of the joint venture will
continue to be appointed by the PRC Partner, but they will not be involved in
day-to-day operations and management of the joint venture. HDL continues to
control a majority of seats on the board of directors and the appointment of the
General Manager and Deputy General Managers of Liuzhou HVM. Management also
believes that since its inception, Liuzhou HVM has developed considerable
goodwill within the PRC prestressing equipment manufacturing industry, and
enjoys a highly favorable reputation for its technical and management staff,
research and development team, quality control system, sales network and after
sales services. Management anticipates that the goodwill and reputation of
Liuzhou HVM will enable it to enjoy continued success, and that the "HVM" mark
will become a symbol of quality products and services that will gain widespread
acceptance from both existing and new customers.

STRUCTURE
---------

The following diagram depicts the corporate structure of the Company as at
December 31, 2001.

                    -----------------------------
                    | OVM International Holding |
                    |   Corporation (Nevada)    |
                    -----------------------------
                                 |
                               100%
                                 |
                    -------------------------------
                    |   HVM Development Limited   |
                    |  (British Virgin Islands)   |
                    -------------------------------
                                 |
                                 |              -------------------------------
                                 |             |   Liuzhou OVM Joint Stock    |
                                 |             |       Company Limited        |
                                 |             | (People's Republic of China) |
                                 |              -------------------------------
                                70%                           |
                                 |                           30%
                                 |                               |
                   -------------------------------               |
                   |   Liuzhou HVM Construction  |               |
                   |  Machinery Company Limited  |---------------
                   |(People's Republic of China) |
                   -------------------------------
                                 |
                                 |
          ------------------------------------------------
          |                                               |
         50%                                            69.3%
          |                                               |
-----------------------                        ------------------------
|   OVM Prestress Co. |                        | Liuzhou OVM Prestress |
|  Pte Ltd. (Republic |                        | Construction Co. Ltd. |
|   of Singapore)     |                        | (People's Republic    |
|                     |                        |      of China)        |
-----------------------                        ---------------------- --

                                       5
<PAGE>


         HVM DEVELOPMENT LIMITED, formerly known as OVM Development Limited, is
a private limited company incorporated in the British Virgin Islands on May 3,
1994.

         LIUZHOU OVM JOINT STOCK COMPANY LIMITED, located in Liuzhou City,
Guangxi Zhuang Autonomous Region, the PRC, was the largest State-owned
manufacturer of prestressing equipment in China. The PRC Partner was a
State-owned enterprise and was subsequently reorganized into a limited liability
share capital company on January 10, 1995. The PRC Partner has been operating in
the PRC since 1967.

         LIUZHOU HVM CONSTRUCTION MACHINERY COMPANY LIMITED, formerly known as
Liuzhou OVM CONSTRUCTION MACHINERY COMPANY LIMITED, is a Sino-foreign equity
joint venture established under the laws of PRC on May 10, 1995 and owned 70% by
HDL and 30% by the PRC Partner. The registered capital of Liuzhou HVM is US$4
million.

         LIUZHOU OVM PRESTRESS CONSTRUCTION CO. LTD. is a limited liability
company established under the laws of PRC on February 28, 1987. The Construction
Company was previously a subsidiary company of the PRC Partner. In 1998, Liuzhou
HVM acquired a 69.3% interest in the Construction Company for consideration of
Rmb6,930,000 (US$837,000). The registered capital of the Construction Company is
Rmb10,000,000 (US$1,208,000).

         OVM PRESTRESS CO. PTE LTD ("OVM PTE") is a private limited company
incorporated in the Republic of Singapore on December 11, 1993 that is 50% owned
by Liuzhou OVM and 50% owned by Wee Poh Construction Co. (Pte) Ltd. ("Wee Poh"),
an unaffiliated third party, and is principally engaged in providing
prestressing and related engineering services. In March 2002, as a result of OVM
PTE's accumulated deficits and working capital deficit at December 31, 2001,
managament decided to sell this investment to Wee Poh, for a nominal amount.
Therefore, the Company made full provision on its investment in OVM PTE for the
year ended December 31, 2001, amounting to approximately Rmb2,166,000
(US$262,000) relating to the planned disposal.

SUMMARY OF BUSINESSES
---------------------

         The Company is principally engaged in the manufacture and sale of
prestressing equipment and ancillary products, and the rendering of engineering
services for prestress construction projects. Prior to the establishment of
Liuzhou HVM in May 1995, which took over the PRC Partner's business effective
January 1, 1995, the business was carried out by the Factory (and subsequently
the PRC Partner, which is the largest manufacturer of prestressing equipment and
related components in the PRC).

         The Company supplies a wide range of prestressing equipment and
ancillary products which are essential for the production of prestressed
concrete and are widely used in infrastructure projects such as highways,
railroads, bridges, buildings and power stations. The Company's products include
prestressing anchorage, stressing and lifting jacks, electric high-pressure oil
pumps, unbonded prestressing strand, stay cable, soil anchor drillers, pipe
pullers, steel ducts and ancillary products. The Company's PRC customers include
construction and engineering companies, and provincial, municipal and regional
construction bureaus throughout the PRC. At present the Company manufactures a
range of products which serve various applications including the construction of
bridges and buildings, structural strengthening and repairs, anchoring in rock
and soil and lifting and sliding of heavy loads. The Company also offers a
comprehensive range of professional engineering consulting services including
feasibility studies, structural design and construction assistance, as well as
engineering services for prestress construction projects.


                                       6
<PAGE>

         The Company has supplied products and provided technical support for
more than 100 major projects in the PRC including Shanghai Yangpu Bridge, one of
the largest cable-stayed bridges in the world, and the lifting of the antenna
masterpole of the Shanghai East Pearl TV and Broadcasting Tower, the tallest
television broadcasting tower in the PRC. The Company's products were also used
in SouthEast Asia projects, such as New Macau-Taipa Bridge in Macau, Mei Bridge
in Vietnam and Serangon Bridge in Singapore.

         Liuzhou HVM is one of several companies designated by the Ministry of
Construction of the PRC as approved manufacturers of prestressing equipment. The
following are some of the major projects in the PRC as well as other countries
in Asia in which products of Liuzhou HVM or its predecessors were used:

      o     Yangpu Bridge in Shanghai
      o     Nanpu Bridge in Shanghai
      o     Tianhong Bridge in Tianjin
      o     Aodang Bridge in Macau
      o     Reconstruction Engineering of Beijing International Airport
      o     Beijing-Shenzhen Expressway
      o     Shuikou Hydropower Station in Fujian Province
      o     The Dongming Yellow River Bridge
      o     The Huangshi Yangtze River Bridge
      o     The New Railway Station in Beijing
      o     Friendship Gate in Vietnam
      o     Bridge over Sungei Serangonn, part of Tampines Expressway
            Phase III, in Singapore
      o     East Pearl TV and Broadcasting Tower in Shanghai

OVERVIEW OF PRESTRESSED CONCRETE
--------------------------------

         Modern structural engineering tends to progress toward more economic
structures through gradually improved methods of design and the use of higher
strength materials. This results in a reduction of cross-sectional dimensions
and consequent weight savings. Significant savings can be achieved by the use of
high strength concrete and steel in conjunction with present-day design methods,
which permit an accurate appraisal of member strength. This process includes
inherent limitations due mainly to the interrelated problems of cracking and
deflection at service loads.

         The undesirable characteristics of ordinary reinforced concrete and
steel have been overcome by the development of prestressed concrete which
incorporates steels and concrete of very high strength. The steel, usually in
the form of wires or strands, is embedded in the concrete under high tension
that is held in equilibrium by compressive stresses in the concrete after
hardening.


                                       7
<PAGE>

         A prestressed concrete member can be defined as one in which there have
been introduced internal stresses of such magnitude and distribution that the
stresses resulting from the given external loading are counteracted to a desired
degree. A prestressed concrete member includes anchorage, jacks and its
ancillary equipment. Concrete is basically a compressive material, with its
strength in tension a low and unreliable value. Prestressing applies a
precompression to the member which reduces or eliminates undesirable tensile
stresses that would otherwise be present. Cracking under service loads can be
minimized or even avoided entirely. Deflections may be limited to an acceptable
level. In fact, members can be designed to have zero deflection under the
combined effects of service load and prestress force. Deflection and crack
control, achieved through prestressing, permit the engineer to make use of
efficient and economical high strength steels in the form of strands, wires or
bars, in conjunction with concrete of much higher strength than normal. Thus
prestressing achieves overall improvement in the performance of structural
concrete used for ordinary loads and spans, and extends the range of
applications far beyond traditional limits, leading not only to much longer
spans than previously thought possible, but permitting innovative new structural
forms to be employed.

         Prestressed concrete is particularly well suited for use in bridges of
all kinds because of its durability, rigidity, and economy, as well as the
comparative ease with which an aesthetic appearance can be achieved. Prestressed
concrete bridges frequently make use of composite action. Commonly the beams are
precast and placed in position by crane, eliminating the need for obstructing
traffic. The deck slab is then cast in place and locked to the precast units by
stirrups that project upward into the slab. The long-span concrete bridges
require the development of segmentally cast-in-place hollow prestressed concrete
box girders by post-tensioning.

HISTORY AND DEVELOPMENT OF LIUZHOU HVM
--------------------------------------

         The predecessor of Liuzhou HVM, is Liuzhou Construction Machinery
General Factory, which was founded in 1987 under the supervision of Liuzhou
Municipal Mechanical and Electrical Industrial Bureau. The Factory evolved out
of the former Liuzhou Construction and Machinery Plant founded in 1967. The
major products of the Factory included anchorage systems, electric high-pressure
oil pumps, jacks and other ancillary products which were widely used in
infrastructure projects such as the construction of highways, railroads, bridges
and hydro-power stations.

         In 1993, the Factory was granted independent import and export rights
by the Ministry of Foreign Trade and Economic Co-operation of the PRC, which
entitled the Factory to handle import and export transactions directly without
going through various independent import and export corporations. Thereafter,
the Factory was actively involved in exploring the overseas prestressing
equipment market, and its products have been sold for use in Hong Kong, Macau,
Vietnam, Japan, Pakistan, Singapore, Philippines and Taiwan. In the same year,
following approval by the Commission for Restructuring the Economic System of
Guangxi Zhuang Autonomous Region, the Factory established Orient Prestress
Company Ltd ("Orient"), a joint stock limited liability company, in conjunction
with other institutional shareholders which are mainly technical and research
institutes in the PRC. The PRC Partner, being the successor to the Factory, owns
approximately 41% of the equity in Orient and is its largest shareholder.
Liuzhou HVM holds a 21.7% interest in Orient with an investment cost
RMB3,730,000 (US$450,000). In March 2002, management determined that the value
of the investment in Orient had declined as a result of significant accumulated
losses through December 31, 2001. Management has estimated that the fair value
of this investment is approximately 50% of the original cost and therefore
recorded a valuation allowance of RMB1,865,000 (US$225,000).


                                       8
<PAGE>

         On January 10, 1995, upon receipt of approval of the Commission for
Restructuring the Economic System of Guangxi Zhuang Autonomous Region, the
Factory was reorganized into a limited liability share capital company known as
Liuzhou OVM Joint Stock Company Limited.

         On May 10, 1995, Liuzhou HVM was established as a Sino-foreign equity
joint venture enterprise. Following its establishment, Liuzhou HVM assumed,
effective January 1, 1995, certain assets and liabilities together with the
business of the PRC Partner which related to the manufacture and sale of
prestressing equipment and ancillary products and certain ancillary functions
including research and development, quality control, sales and marketing,
sourcing and other business support functions. The PRC Partner retained certain
assets and liabilities that were not assumed by Liuzhou HVM, principally
consisting of investments in various joint ventures and wholly-owned
subsidiaries as well as certain other non-production-related facilities such as
welfare facilities, education and training facilities, recreational, catering,
heat, water and electricity facilities. The PRC Partner also retained certain
production-related facilities that were leased to Liuzhou HVM.

         As discussed above under "Introduction", in January 2000, Liuzhou HVM
and the PRC Partner entered into various agreements to modify their original
joint venture arrangements. On April 29, 2001, HDL and the PRC Partner entered
into a Memorandum of Understanding which contemplates the transfer of the PRC
Partner's interest in Liuzhou HVM to HDL, and the transfer of Liuzhou HVM's
interest in the Construction Company to the PRC Partner. The terms of the
transfers are subject to separate transfer agreements which have not yet been
negotiated. Pursuant to another Memorandum of Understanding entered into by and
between Liuzhou HVM and the PRC Partner dated March 7, 2002, Liuzhou HVM agreed
to dispose of its 69.3% interest in the Construction Company to the PRC Partner,
for consideration based on the fair value of the Construction Company, to be
determined by an independent professional valuer, as of December 31, 2001. The
transfer of the PRC Partner's interest in Liuzhou HVM and the transfer of
Liuzhou HVM's in the Construction Company are subject to the approval by the
local PRC government. Government approval will require resolution to a dispute
between HDL and the PRC Partner over amounts owed to Liuzhou HVM by the PRC
Partner. The final determination will be made pursuant to an arbitration
proceeding administered by the local PRC government. At January 1, 2001, the
Company had amounts due from the PRC Partner of RMB5,799,000 (US$700,000), net
of allowance for uncollectible amounts of RMB21,623,000 (US$2,611,000). Based on
a preliminary arbitration report, Liuzhou HVM owes a net amount of Rmb649,000
(US$78,000) to the PRC Partner. Accordingly, management has written off the
remaining RMB5,799,000 (US$700,000) and has recorded a liability of RMB649,000
(US$78,000) per the preliminary arbitration report.

PRODUCTS
--------

         The Company produces a wide range of products which are mainly used in
prestressed concrete construction, using the pretensioning and post-tensioning
method, which are widely used in infrastructure projects including motorways,
railroads, bridges, buildings and hydro-power stations. These products include
prestressing anchorage systems, jacks, electric high-pressure oil pumps,
unbonded prestressing tendons, digital display sensors and the ancillary
components. The Company's products are summarized as follows:

         PRESTRESSING ANCHORAGE SYSTEMS AND ANCILLARY PRODUCTS. The primary
prestressing anchorage systems manufactured by the Company include tensile end
anchorage, fixed end anchorage and connectors. Prestressing anchorage systems
are used for prestressed concrete construction and construction units using
pretensioning and postensioning methods, as well as rock and soil anchorage,
external cable and stay cable construction.


                                       9
<PAGE>

         JACKS. The Company produces various types of jacks including platform,
pushing and cold-drawn jacks which are used for tensioning of strand, lifting
and pushing of engineering structures and cold drawing of reinforced steel with
different parameters such as nominal oil pressure (MPa), jacking/stressing force
(kN) and/or jacking stroke (mm).

         ELECTRIC HIGH-PRESSURE OIL PUMPS. The Company produces several types of
electric high-pressure oil pumps and hydraulic pressure stations. The oil pumps
and stations are always used with various jacks for lifting and anchoring heavy
objects.

         DIGITAL DISPLAY SENSORS. Model SC sensor is equipped with proprietary
capabilities and mainly used for digitally displaying technical parameters of
various jacks and in checking the degree of stress in a short period of time.

         UNBONDED PRESTRESSING TENDONS. The Company produces two types of
unbonded prestressing tendons with single or double layer of plastic sheaths,
which are used in the construction of prestressed concrete under the
post-tensioning method.

         SCREW THREAD STEEL PIPE FOR PRESTRESSED COMPONENTS. The pipe is made of
low carbon steel band, some are zinc coated, and then rolled up spirally. The
pipe is used for forming a hole in the prestressed concrete using the
post-tensioning method.

         OTHERS. The Company produces machinery and equipment for its site test
facilities used in the concrete or rock shear test and rock shear elasticity
test in the construction or survey of a dam for a hydraulic power station, and
soil anchor driller for drilling holes in various texture of soils and strong
decayed rock. In the process of dry drilling, the soil is removed with the
blades of the spiral drill. This drilling method is used under good soil
conditions where no collapse will occur.

SALES AND MARKETING
-------------------

         The following table sets forth the Company's aggregate net sales
revenue by product category for each of the two years ended December 31, 2000
and 2001, respectively.
                                            Year Ended December 31
                                            ----------------------
                                       2000                       2001
                                       ----                       ----
                                           (Amounts in Thousands)

Product                          Rmb      US$     %        Rmb      US$     %
-------

Engineering service income     10,454    1,263   10.6    11,952    1,443    9.8
Anchorage system               46,315    5,594   46.8    73,833    8,917   60.9
Jack                           12,308    1,486   12.5    10,226    1,235    8.4
High-pressure oil pump          2,360      285    2.4     3,648      441    3.0
Cable, tendon, steel wire
   and other equipment*        27,343    3,302   27.7    21,696    2,620   17.9
                               ------   ------  -----   -------   ------   ----

Total                          98,780   11,930  100.0   121,355   14,656  100.0
                               ======   ======  =====   =======   ======  =====

*Other equipment include rubber engineering products, corrugation pipes and
digital display sensors.


                                       10
<PAGE>

         The largest ten customers of the Company for each of the two years
ended December 31, 2000 and 2001 accounted for approximately 14.1% and 22.3%,
respectively, of the Company's total sales. The largest customer of the Company
for each of the two years ended December 31, 2000 and 2001 accounted for
approximately 4.2% and 10.9%, respectively, of the Company's total sales. No
other single customer accounted for more than 10% of total sales in either 2000
or 2001.

         For each of the two years ended December 31, 2000 and 2001,
approximately 83% and 85%, respectively of the Company's total sales was derived
from products sold in the PRC with the balance attributable to products exported
to customers outside the PRC.

         The Company sells its products directly to end-users mainly through its
in house sales and marketing and after sales staff, consisting of 41 full-time
employees. These personnel are responsible for conducting marketing research,
training seminars, sales planning, marketing strategy, order consultation with
customers, sales coordination and control, and payment collection. The Company
maintains sales offices in major cities including Liuzhou, Guangzhou, Shanghai,
Beijing, Fujian and Wuhan. The Company also maintains overseas offices in Hong
Kong and Singapore. The Company's marketing efforts include visits to existing
and prospective customers and participation in various exhibitions and trade
fairs held in the PRC at which the Company's products are marketed to local and
overseas customers.

         The Company also sells its products through agency companies. However,
sales through these agency arrangements were not significant and accounted for
less than 1% of the Company's total sales for each of the two years ended
December 31, 2000 and 2001.

         The Company has been expanding its penetration into foreign markets.
Its products have been exported from the PRC and sold in Pakistan, Singapore,
Japan, Hong Kong, Sudan, Vietnam and Taiwan. Export sales accounted for
approximately 17% and 15% of the Company's total sales for each of the two years
ended December 31, 2000 and 2001, respectively. All export sales are denominated
in U.S. dollars. The Company competes with domestic manufacturers mainly on its
product quality, after sales services and support. It is the Company's strategy
to develop and design new products and production techniques to maintain its
competitiveness and market share in the industry.

         As most infrastructure construction projects are capital intensive and
extend for a relatively long time, most of the equipment and products
manufactured by the Company are sold under fixed price contracts. The production
cycle of the Company's products varies from two months to six months. For
certain large contracts, customers are usually required to pay a cash deposit
(the amount of which differs from customer to customer as each contract is
individually negotiated) upon signing of the relevant sales and purchase
contracts, with the remaining balance payable after delivery or on-site
installation by way of bank collection. All of the contracts concluded with
domestic customers are denominated in Renminbi. For export sales, customers are
required to pay a deposit of at least 30% upon signing of a sales contract, and
the balance is payable after delivery of products by way of telegraphic transfer
or bank collection. Depending on the credit standing of the customer and the
contract sum involved, the Company generally offers credit terms of up to 90
days to customers.

AFTER SALES SERVICE
-------------------

         The Company's after sales services form an integral part of its
operations. The Company offers a wide range of after sales service to customers
located both in the PRC and overseas. These services include: providing on-site
installation services upon the request of the customer; organizing training
seminars in the PRC for customers from time to time regarding the operations and
technical attributes of the Company's products; responding to customers' request



                                       11
<PAGE>

to modify and assist in the technical operation of the Company's products;
processing of inquiries and feedback from customers and prompt provision of
parts and components; and conducting visits on a regular basis to customers in
order to identify customers' specific needs and level of satisfaction with the
Company's products.

RAW MATERIALS AND COMPONENTS
----------------------------

         The major raw materials and components required by the Company include
metallurgical products including steel and rubber products such as high-pressure
rubber pipes as well as mechanical and electrical components such as bearings
and motors. In prior years, all of the raw materials and components used by the
Company were sourced from PRC suppliers. For each of the two years ended
December 31, 2000 and 2001, the cost of raw materials and components accounted
for approximately 54% and 59%, respectively, of the Company's total production
costs.

         The Company has formulated a material supply management policy in
respect of the raw materials and components used in the Company's production
operations. Under this policy, the stock level of raw materials and components
is determined by reference to planned annual consumption and a predetermined
inventory level for different kinds of raw materials and components. The average
inventory level of the Company's raw materials and components is approximately
two months usage.

         It is the policy of the Company to maintain more than one supplier for
certain major materials in order to avoid over reliance on a single source of
supply. The Company has long standing relationships with major suppliers and has
not experienced any significant difficulties in sourcing raw materials and
components. The Company has not entered into any long-term purchase arrangements
with any supplier. However, the Company does not anticipate that it will incur
significant difficulties in the sourcing of its raw materials and components.

         For each of the two years ended December 31, 2000 and 2001, the largest
ten suppliers of raw materials and components of the Company accounted for
approximately 50.4% and 70.4%, respectively, of the Company's total cost of
purchases. The largest supplier accounted for approximately 16.0% and 10.2% of
the Company's total cost of purchases, respectively, for the same periods. Two
other suppliers accounted for more than 10% of total cost of purchases in 2001.
No other single supplier accounted for more than 10% of total cost of purchases
for the two years ended December 31, 2000 and 2001, respectively. Although the
Company does not rely on any single supplier for its raw materials, the Company
enjoys lower costs on bulk purchases from one single supplier.

PRODUCTION FACILITIES AND PROCESS
---------------------------------

PRODUCTION FACILITIES

         The Company's head office and production facilities are located in
Liuzhou Municipality, the industrial city of Guangxi Zhuang Autonomous Region,
the PRC, with a total gross floor area of 46,000 square meters. The land and
buildings, comprised of production facilities and structures, are leased by
Shuangma, an unaffiliated third party, to Liuzhou HVM, for a term of 25 years
effective January 1, 2000, at an annual rental of Rmb1 million (US$121,000) for
the first five years, to be increased by 1% each year thereafter. Pursuant to a
separate agreement, Liuzhou HVM has agreed to sub-lease a portion of the land
and buildings, having a total gross floor area of 6,639 square meters, to an
unaffiliated third party, for one year, at an annual rental of Rmb220,000
(US$27,000) effective June 1, 2001.


                                       12
<PAGE>

         Pursuant to an agreement dated December 12, 1999 between Liuzhou HVM
and Weilesi, an unaffiliated third party, Weilesi has agreed to lease certain
production and transportation equipment to Liuzhou HVM for a term of 20 years
effective January 1, 2000 at an annual rental of Rmb564,000 (US$68,000).
Commencing January 1, 2001, the annual rental was reduced to approximately
Rmb348,000 (US$42,000) in light of an adjustment in the quantity and value of
equipment leased. Pursuant to a separate agreement, Liuzhou HVM has also agreed
to sub-lease certain excessive production equipment to an unaffiliated third
party, for one year, at an annual rental of Rmb73,000 (US$9,000) effective June
1, 2001.

         The Company's production facilities and equipment include lathe
machines, planers, milling machines, boring machines, drilling machines and
other ancillary production machines such as forklifts, air compressors, welding
machines, shearing machines, jigs, dies, tools and hardening furnaces.

PRODUCTION PROCESS

         The production process can be divided into three stages. The first
stage is the production of various parts and components, which involves milling,
grinding, boring, heat treatment, welding, refining and painting and coating.
The second stage is the in-house assembly and testing of the products
manufactured. The final stage is the on-site installation and test run.

PRODUCTION CAPACITY
-------------------

         The Company currently manufactures a wide range of prestressing
equipment and ancillary products. The production capacity of the Company is
mainly dependent on the product mix of the Company, which is subject to
adjustment from time to time, the production floor area available for operation,
the quantity of production equipment and the number and working hours of the
Company's workforce. The Company's product mix and the production output for
each product in a given period are determined by management after considering
factors including the number of orders received by the Company for each product,
the forecast of future market demand for different products and the estimated
gross profit margins of different products. The majority of the Company's
production facilities can be used, with or without adaptation, for the
manufacture of different products, although certain facilities are dedicated to
the manufacture of certain components and special parts only.

         The Company's capital expenditure on production equipment for each of
the two years ended December 31, 2000 and 2001 were Rmb10,523,000 (US$1,271,000)
and Rmb3,060,000 (US$370,000), respectively. The Company also acquired certain
property, machinery and equipment by capital leases amounting to Rmb16,469,000
(US$1,989,000) for the year ended December 31, 2000. However, as a result of an
adjustment in the quantity and value of equipment leased, machinery and
equipment acquired by capital leases in 2000 were reduced by Rmb2,250,000
(US$272,000) in 2001.

COMPETITION
-----------

         The Company, through its indirect ownership of Liuzhou HVM and
inclusive of the operations of the Factory, has over 30 years' history of
manufacturing prestressing equipment and ancillary components and was the
largest manufacturer in the PRC of these specialized products. The Company
believes that Liuzhou HVM has established and should continue to maintain a
strong competitive position in the PRC prestressing equipment industry. There
are only several companies designated by the Ministry of Construction of the PRC
as the manufacturers of these specialized products. The Company believes that,
apart from Liuzhou HVM and the PRC Partner, the prestressing market in the PRC
is dominated by only a few major domestic manufacturers, namely, Henan Kaifeng
Zhongyuan Mechanical Factory, Guizhou Equipment Factory, Dalian Construction
Engineering Factory and Liaoning Xiping Construction Equipment Factory.


                                       13
<PAGE>

         Since the January 2000 modifications to the relationship between
Liuzhou HVM and the PRC Partner since January 2000, Liuzhou HVM has faced direct
competition from the PRC Partner. The PRC Partner has established its own
production line for manufacturing prestressing equipment which is marketed under
the "OVM" trademark and shares the technical know-how of Liuzhou HVM's existing
products which were developed before January 1, 2000. Liuzhou HVM's products are
now marketed under the new trademark "HVM". As certain prestressed products sold
by Liuzhou HVM and the PRC Partner are produced under common specifications and
technical know-how, management believes that the competitive advantages of
Liuzhou HVM mainly rest on its ability to develop new products and technical
know-how. Competition from the PRC Partner contributed significantly to the
Company's fiscal 2000 net loss. However, management believes that Liuzhou HVM
enjoys competitive advantages over the PRC Partner in areas such as after-sales
services, quality production, strong research and development team, modernized
facilities and management skills and lower cost of production.

         Despite the increasing demand for prestressed equipment in the PRC
market, Liuzhou HVM's products also face severe competition from both overseas
and other domestic suppliers other than the PRC Partner. Management estimates
that products from overseas manufacturers are even less costly than those of
domestic manufacturers and the quality is comparable. Management also believes
that the Company can maintain its competitiveness due to its accessibility and
efficiency of after sales services and the timely availability of components and
special parts.

         The major export markets of the Company are both developing and
developed countries in Asia. In the domestic market, management believes that
the Company has a competitive advantage over other domestic manufacturers in
terms of product technology and product quality. In addition, the Company's
ability to continuously manufacture and supply parts and components for its
products and provide after sales services strengthen its competitiveness.

QUALITY CONTROL
---------------

         The Company is committed to manufacturing high quality products and to
providing a high level of after sales service to its customers. Management
believes that product quality is vital to enhancing the Company's
competitiveness, market position and reputation. The Company has received ISO
9001 Certificate of Quality Management System ("ISO 9001") issued by the British
Standards Institution in 1996. In order to maintain and improve the quality of
its products and production standards, the Company has adopted a comprehensive
quality control system that conforms to the internationally recognized ISO 9001
standards.

         The Company has established a quality control team consisting of 39
full-time employees to ensure that the quality of products is consistently
maintained. The major responsibilities of the quality control department
include: (i) devising, implementing and improving quality control procedures in
order to comply with ISO 9001; (ii) conducting inspection of raw materials,
work-in-progress and finished products on a sampling basis; (iii) examining of
parts and components manufactured at each stage of the production process; and
(iv) reviewing and improving quality testing procedures and carrying out
stringent testing of the Company's products.


                                       14
<PAGE>

RESEARCH AND DEVELOPMENT
------------------------

         The Company has established a technical process design and control
department and a research and development department. The technical process
design and control department is responsible for developing new production
skills and designing new production processes. The research and development
department is responsible for development of new products and the technological
improvement of products. These two departments of Liuzhou OVM employed 27
full-time employees including 12 engineers. Since 1989, the Company has
developed over 60 new products, of which 18 have obtained scientific awards from
State, provincial and municipal governmental authorities.

         Most of the research and product development programs undertaken by the
Company operate in conjunction with universities and research institutions in
the PRC. Since 1995, the Company has collaborated with over 200 universities,
testing facilities, research institutes and local provincial and municipal
construction bureaus in its development projects. Currently, the Company is
working with over 50 universities or construction bureaus on its construction
projects in progress.

         The Company's annual research and development expenditure accounted for
1.5% and 1.1% of total sales for each of the two years ended December 31, 2000
and 2001. For each of the two years ended December 31, 2000 and 2001, the
aggregate research and development expenses incurred by the Company amounted to
approximately Rmb1,443,000 (US$174,000) and Rmb1,373,000 (US$166,000),
respectively.

ENVIRONMENTAL PROTECTION
------------------------

         The Company has adopted measures to reduce the level of pollution
caused by its operation and has continuously complied with the PRC's
environmental protection law and regulations. Environmental protection measures
adopted by the Company include the treatment of emulsified effluent and smoke
and dust emitted from boilers of the Company's production facilities. The
Company has never been fined for violation of environmental laws in the PRC.

INTELLECTUAL PROPERTY RIGHTS
----------------------------

         Since the establishment of Liuzhou HVM in 1995, Liuzhou HVM has
registered numerous utility model patents in the PRC in its name as follows.
Liuzhou HVM has an exclusive license for a term equivalent to the period of
validity (including such extended period as may be permitted under the law of
the relevant jurisdiction) to use these patents. However, in connection with the
January 2000 agreements, Liuzhou HVM has granted approval to the PRC Partner to
use those patents together with the related technology which were registered
before December 31, 1999. In return, the PRC Partner has granted approval to
Liuzhou HVM to use the patents together with the related technology which are
registered in the PRC in the name of the PRC Partner before the establishment of
Liuzhou HVM in 1995. All patents registered after January 1, 2000 by Liuzhou HVM
are used exclusively by Liuzhou HVM and the PRC Partner is not entitled to use
them.

         The following is the list of patents registered by Liuzhou HVM which
can be used by both Liuzhou HVM and the PRC Partner:
<TABLE>
<CAPTION>

                                 Registration      Date of
Patent                            Number          Application        Date of expiry
------                            ------          -----------        --------------
<S>                             <C>             <C>                  <C>
Light-weight fire proof
  adhesive board                95229844.9      December 29, 1995    December 29, 2005
Anchor bottom board             97204768.9      February 4, 1997     February 4, 2007
High-vibration stranded wire
  and bunched steel wire
  anchorage                     97204767.0      February 4, 1997     February 4, 2007


                                       15
<PAGE>

Internal supporter of
  hydraulic lifting jack        97223202.8      May 23, 1997         May 23, 2007
Clipping device of
  hydraulic lifting jack        97223201.X      May 23, 1997         May 23, 2007
Protector of steel cable        97217686.1      May 23, 1997         May 23, 2007
Lifting device of hydraulic
  jack                          97219235.2      June 20, 1997        June 20, 2007
Squeezing machine               97220322.2      July 1, 1997         July 1, 2007
Prestressed external cable      97220321.4      July 1, 1997         July 1, 2007
Prestressed anchorage of
  suspension bridge             97220320.6      July 1, 1997         July 1, 2007
Fixing device of bunched
  steel wire multi-anchorage    97220324.9      July 1, 1997         July 1, 2007
Hydraulic drilling device       97220318.4      July 1, 1997         July 1, 2007
Fixing device of bunched
  steel wire multi tensioning
  anchorage                     97220323.0      July 1, 1997         July 1, 2007
Positioning device of
  suspension tube               97219481.9      July 5, 1997         July 5, 2007
Squeezing spring                97220194.7      July 11, 1997        July 11, 2007
Sealing device                  97219876.8      July 16, 1997        July 16, 2007
Anti-vibration device           97219875.X      July 16, 1997        July 16, 2007
Prestressed anchorage           97219877.6      July 16, 1997        July 16, 2007
Adhesive anti-corrosive
  bunched steel wire            97221872.6      July 25, 1997        July 25, 2007
Manual controller of
  hydraulic lifting anchorage   97224527.8      August 13, 1997      August 13, 2007
Anchorage working clip          97224320.8      August 8, 1997       August 8, 2007
Anchorage chipping tool         97244491.2      August 8, 1997       August 8, 2007
Angle precision tool of
  anchor head                   97224536.7      August 15, 1997      August 15, 2007
Spring steel wire tensioning
  mode                          97224192.2      August 16, 1997      August 16, 2007
Digital hydraulic lifting
  and lazar inspecting tool     97229729.4      October 10, 1997     October 10, 2007
Cohesive device                 97250188.6      November 24, 1997    November 24, 2007
Heavy-weight hydraulic
  lifting controller            97226645.3      September 15, 1997   September 15, 2007
Heavy object descending
  hydraulic controller          97248226.1      November 4, 1997     November 4, 2007
Hydraulic bore jack             97244363.0      November 16, 1997    November 16, 2007
Flat anchor bottom board        97244362.2      November 16, 1997    November 16, 2007
Exchanging conducting device    97230012.0      December 3, 1997     December 3, 2007
Non-adhesive anchor head
  anti-corrosive device         98209920.7      January 8, 1998      January 8, 2008
Prestressed multi-angle
  expansion device              98209919.3      January 8, 1998      January 8, 2008
Compressor                      98210896.6      January 15, 1998     January 15, 2008
Steel wire drill                98210897.4      January 15, 1998     January 15, 2008
Diversified pressure
  protective anchor             98211605.5      March 11, 1998       March 11, 2008
Inspection device on
  lasting capacity of jacks     98209419.1      April 12, 1998       April 12, 2008
Inspection device on
  internal leakage of jacks     98209418.3      April 12, 1998       April 12, 2008
Inspection device on over-
  loading capacity of jacks     98209417.5      April 12, 1998       April 12, 2008
Fully integrated steel wire     98209796.4      April 27, 1998       April 27, 2008
Continuous unfixing device
  of steel wire                 98209737.9      April 27, 1998       April 27, 2008


                                       16
<PAGE>

Large scale hydraulic
  lifting device                98214318.4      May 15, 1998         May 15, 2008
Spiral fixing machine           98215351.1      June 11, 1998        June 11, 2008
Single cable fore-fixing jack   98215971.4      June 29, 1998        June 29, 2008
Fixing device                   98216832.2      July 3, 1998         July 3, 2008
Flat-shaped anchor bottom
  board                         98217098.X      July 16, 1998        July 16, 2008
Compressor                      98244544.X      October 1,1998       October 1, 2008
Single cable fixing device      98244545.8      October 1, 1998      October 1, 2008
Adjusting device of steel
  wire tensioning               98245539.9      December 18, 1998    December 18, 2008
Head lifting jack               98250791.7      December 18, 1998    December 18, 2008
Change direction button         98250790.0      December 18, 1998    December 18, 2008
Parallel steel wire bundle
  connector                     98250761.5      December 18, 1998    December 18, 2008
Pre-burial anchorage            99201864.1      January 8, 1999      January 22, 2010
Correction device               99201876.5      January 8, 1999      January 22, 2010
Pre-expanded connector          99201863.3      January 8, 1999      January 22, 2010
Drill and fixing device         99202477.3      January 26, 1999     January 22, 2010
End-fixing anchorage with
  steel wire tensioning         99202435.8      January 13, 1999     January 22, 2010
End-fixing anchorage with
  steel wire tensioning         99202476.5      January 26, 1999     January 26, 2009
Jacks                           99202849.3      February 3, 1999     January 22, 2010
Pre-tensioned jacks             99206347.7      March 17, 1999       March 17, 2009
Cable protector                 99210405.X      May 14, 1999         May 14, 2009
Anchorage cable extention
  device                        99210310.X      May 21, 1999         May 21, 2009
Dual head drill                 99202295.9      July 3, 1999         July 3, 2009
Triple head drill               99202296.7      July 3, 1999         July 3, 2009
Stripping turn table            99202294.0      July 3, 1999         July 3, 2009
Powder jet device               99202297.5      July 3, 1999         July 3, 2009
Closed jacks                    99216369.2      July 8, 1999         July 8, 2009
Exterior steel cable            99216370.6      July 8, 1999         July 8, 2009
Closed anchorage cable          99242380.5      September 3, 1999    September 3, 2009
Clipping steel wire
  anchorage bundle              98245540.2      November 9, 1998     November 9, 2008
Single hole anchorage board     99317929.0      October 19, 1999     October 19, 2009

</TABLE>

         The following is the list of patents registered by Liuzhou HVM which
can only be used by Liuzhou HVM:
<TABLE>
<CAPTION>

                                 Registration        Date of
Patent                              Number         Application       Date of expiry
------                              ------         -----------       --------------
<S>                             <C>             <C>                  <C>
Flat head connector             00204219.3      February 25, 2000    February 25, 2010
Prestressed anchorage board     00204217.7      February 25, 2000    February 25, 2010
Conducting device               00204218.5      February 25, 2000    February 25, 2010
Connector                       00204215.0      February 25, 2000    February 25, 2010
Anchor equipment with jacks     00237529.X      June 8, 2000         June 8, 2010
Single hole trail anchor
  board (1)                     00332471.0      July 6, 2000         July 6, 2010
Single hole trail anchor
  board (2)                     00332477.X      July 6, 2000         July 6, 2010
Dual hole trail anchor
  board (1)                     00332476.1      July 6, 2000         July 6, 2010
Dual hole trail anchor
  board (2)                     00332472.9      July 6, 2000         July 6, 2010
Flat-shaped anchor board        00332473.7      July 6, 2000         July 6, 2010
Anchorage clips                 00246992.8      August 16, 2000      August 16, 2010
Prestressed jack                00262627.6      November 13, 2000    November 13, 2010
Prestressed connector           00262625.X      November 13, 2000    November 13, 2010
Anchor board                    00345356.1      November 13, 2000    November 13, 2010
Anchor tool chip                00262626.8      November 13, 2000    November 13, 2010
Filling machine                 00264283.2      December 7, 2000     December 7, 2010
Stirring wheel                  00264285.9      December 7, 2000     December 7, 2010
Stirring container              00264284.0      December 7, 2000     December 7, 2010
</TABLE>


                                       17
<PAGE>

         Liuzhou HVM entered into an agreement with the PRC Partner on June 5,
1995 and a supplementary agreement dated December 18, 1995 pursuant to which the
PRC Partner granted to Liuzhou HVM an exclusive and assignable right to use the
"OVM" trademark, various patented technical know-how, ISO9001 system, goodwill
and sales network in connection with the manufacturing operations assumed by the
Company following the establishment of the Liuzhou HVM for a term equivalent to
the period of validity (including such extended period as may be permitted under
the law of the relevant jurisdiction) of the trademark or the relevant patented
technical know-how in consideration of the sum of Rmb8 million (US$966,000). The
Company has also developed and registered over 80 patented technical processes
since the establishment of Liuzhou HVM.

         Pursuant to an agreement dated December 12, 1999 between the PRC
Partner and Liuzhou HVM, Liuzhou HVM agreed to cease using the trademark "OVM"
effective February 1, 2000. Since January 2000, the Company's products have been
marketed under a new trademark, "HVM", which is registered in the name of Hong
Da, a PRC entity wholly owned by Ching Lung Po, President and Chief Executive
Officer of the Company. Hong Da has granted the exclusive right to Liuzhou HVM
to use the "HVM" trademark at an annual fee equal to 1.5% of sales under "HVM"
trademark pursuant to an agreement dated November 18, 2000. The fee is
calculated based on projected sales attributable to the "HVM" mark and estimated
annual advertising and promotion expenses incurred by Hong Da in establishing
market recognition for the mark.

EMPLOYEES
---------

         As at December 31, 2001, the Company had a total of 580 full-time
employees, 513 and 60 of which were employed by Liuzhou HVM and the Construction
Company, respectively, with the balance being employed in administrative
positions by the Company (5 employees) and ODL (2 employees). These employees
are employed as follows:

      Production                                               366
      Administration and management                             91
      Quality control                                           39
      Research and development, technical,
        process design and control                              27
      Sales, marketing and after sales service                  41
      Raw materials supply                                      11
      Others                                                     5
                                                               ---
                                                               580
                                                               ===
         OVM Prestress Co. Pte. Ltd., a company 50% owned by Liuzhou HVM,
employs a total of 20 full-time employees.

LEGAL SYSTEM
------------

         Since 1979, many laws and regulations addressing economic matters in
general have been promulgated in the PRC. Despite this activity in developing
the legal system, the PRC does not have a comprehensive system of laws. In
addition, enforcement of existing laws may be uncertain and sporadic, and
implementation and interpretation thereof inconsistent. The PRC judiciary is



                                       18
<PAGE>

relatively inexperienced in enforcing the laws that exist, leading to a higher
than usual degree of uncertainty as to the outcome of any litigation. Even where
adequate law exists in the PRC, it may be difficult to obtain swift and
equitable enforcement of such law, or to obtain enforcement of a judgment by a
court of another jurisdiction. The PRC's legal system is based on written
statutes and, therefore, decided legal cases are without binding legal effect,
although they are often followed by judges as guidance. The interpretation of
PRC laws may be subject to policy changes reflecting domestic political changes.
As the PRC legal system develops, the promulgation of new laws, changes to
existing laws and the pre-emption of local regulations by national laws may
adversely affect foreign investors. The trend of legislation over the past 22
years has, however, significantly enhanced the protection afforded foreign
investors in enterprises in the PRC. However, there can be no assurance that
changes in such legislation or interpretation thereof will not have an adverse
effect upon the business operations or prospects of the Company.

         Currently, there are no regulations prohibiting joint venture partners
from competing with their joint venture. Therefore, Liuzhou HVM's business may
be aversely affected by competition from the PRC Partner. Liuzhou HVM's
activities in the PRC are by law subject, in some particular cases, to
administrative review and approval by various national and local agencies of the
PRC government. In particular, part of the Liuzhou HVM's current operations and
the realization of its future expansion programs in the PRC will be subject to
PRC government approvals.

                        ITEM 2. DESCRIPTION OF PROPERTIES

         The Company leases approximately 46,000 square meters of production
facilities in the Liuzhou Municipality, PRC, from an unaffiliated third party.
The lease is for a term of 25 years, which commenced on January 1, 2000. These
facilities are further discussed above, under "Production Facilities and
Process."

                            ITEM 3. LEGAL PROCEEDINGS

         There are no legal proceedings pending or threatened against the
Company or any of its subsidiaries as of December 31, 2001.

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

         Not applicable.


                                       19
<PAGE>

                                     PART II

        ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is currently only a limited trading market for the Common Stock
of the Company. The Common Stock of the Company trades on the OTC Bulletin Board
under the symbol "OVMI". The Company's Common Stock was included on the OTC
Bulletin Board on April 21, 1997. The following table sets forth the high and
low bid prices for the Company's Common Stock for each fiscal quarter of 2000
and 2001.
                                                           High             Low

           2001 Fiscal Year, quarter ended
                   March 31, 2001                         $0.13            $0.03
                   June 30, 2001                          $0.08            $0.05
                   September 30, 2001                     $0.63            $0.07
                   December 31, 2001                      $1.19            $0.38
           2000 Fiscal Year, quarter ended
                   March 31, 2000                         $2.44            $0.75
                   June 30, 2000                          $2.28            $0.50
                   September 30, 2000                     $2.38            $1.31
                   December 31, 2000                      $2.00            $0.50

         As of March 29, 2002, the approximate number of record holders of the
Company's Common Stock was 750.

         The Company also had outstanding warrants to purchase 4,000,000 shares
at US$3.00 per share which were expired on December 23, 2001.

         The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price of less than $5.00 per share, subject to certain exceptions. Depending on
market fluctuations, the Company's common stock could be considered to be a
"penny stock". A penny stock is subject to rules that impose additional sales
practice requirements on broker/dealers who sell these securities to persons
other than established customers and accredited investors. For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of these securities. In addition he must receive
the purchaser's written consent to the transaction prior to the purchase. He
must also provide certain written disclosures to the purchaser. Consequently,
the "penny stock" rules may restrict the ability of broker/dealers to sell the
Company's securities, and may negatively affect the ability of holders of shares
of the Company's common stock to resell them.

         The Company understands that, in 2003, subject to approval of the
Securities and Exchange Commission, The Nasdaq Stock Market intends to phase out
the OTC Bulletin Board, and replace it with the "Bulletin Board Exchange" or
"BBX". As proposed, the BBX will include an electronic trading system to allow
order negotiation and automatic execution. The Nasdaq Stock Market has indicated
its belief that the BBX will bring increased speed and reliability to trade
execution, as well as improve the overall transparency of the marketplace.
Specific criteria for listing on the BBX have not yet been announced, and the
BBX may provide for listing criteria which the Company does not meet. If the OTC
Bulletin Board is phased out and the Company does not meet the criteria
established by the BBX, there may be no transparent market on which the
Company's securities may be included. In that event, investors may have
difficulty buying and selling the Company's securities and the market for the
Company's securities may be adversely affected thereby.


                                       20
<PAGE>

         The Company has not paid any cash dividends on its Common Stock since
incorporation. As the Company has significant capital requirements in the
future, it is not anticipated that funds will be available for the issuance of
dividends in the foreseeable future. It is the management's intention to
reinvest all the income attributable to the Company to finance the expansion of
its business. The Company's share in the undistributed earnings of the Company's
foreign subsidiaries amounted to Rmb25,386,000 (US$3,066,000) and Rmb29,831,000
(US$3,603,000) at December 31, 2000 and 2001, respectively, and these earnings
are considered to indefinitely invested.

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

OVERVIEW
--------

THE COMPANY

         The Company is a Nevada holding company whose only significant asset is
a wholly-owned British Virgin Islands subsidiary, HVM Development Limited, which
owns a 70% interest in Liuzhou HVM, a Sino-foreign equity joint venture company
established under the laws of the PRC which is principally engaged in the
manufacture and sale of prestressing equipment, components and hardware used in
the construction of motorways, bridges, railroads, buildings, hydroelectric dams
and power stations in the PRC and a 69.3% interest in the Construction Company,
a PRC company which is principally engaged in providing engineering services for
prestress construction projects. Accordingly, the Company will derive its
revenues from the distributions paid to the Company by HDL resulting from
distributions paid by Liuzhou HVM and the Construction Company, in accordance
with the percentage interests held by the shareholders.

         The Company's Financial Statements appearing elsewhere in this Form
10-KSB consist of the audited consolidated financial statements of the Company
for the two years ended December 31, 2000 and 2001.

         The discussion below is presented in the Company's primary operating
currency which is the Renminbi Yuan ("Rmb"). For information purposes these
amounts have been translated into U.S. dollars at an exchange rate of $1.00 =
Rmb8.28 which represents the single rate of exchange as quoted by the People's
Bank of China on December 31, 2001. This U.S. dollars information is presented
for convenience only. No representation is made that Renminbi amounts could have
been, or could be, converted into U.S. dollars at that rate throughout the years
presented.

RESULTS OF OPERATIONS

         The following table sets forth, for the years indicated, certain items
from the Company's Statement of Operations expressed as a percentage of the
Company's net sales.
                                                 Years ended December 31,
                                                    2001          2000
                                                    ----          ----

Net sales                                          100.0%        100.0%
Cost of sales                                      (57.1)        (61.7)
Gross profit                                        42.9          38.3
Selling and administrative expenses                (40.3)        (77.5)
Valuation allowance on investment                   (1.5)            -
Loss on disposal of equity investment               (1.8)            -
Loss on disposal of fixed assets                    (0.1)            -
Interest expenses, net                              (2.0)         (2.2)
Other income                                         1.1           0.9
Foreign exchange gain                                  -             -
Income/(loss) before income taxes                   (1.7)        (40.5)
Income taxes                                        (1.9)         (6.3)
Net income/(loss) after income taxes                (3.6)        (46.8)
Minority interests                                   3.6          11.1
Equity in (losses)/earnings of equity investee      (2.4)            -
Net loss                                            (2.4)        (35.7)


                                       21
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000.

         NET SALES AND GROSS PROFIT. Net sales for the year ended December 31,
2001 increased by Rmb22,575,000 (US$2,726,000) or 22.9% to Rmb121,355,000
(US$14,656,000) compared to Rmb98,780,000 (US$11,930,000) in the prior year. The
increase in net sales was mainly due to the Company's receipt of several large
contracts during the year in light of the improved infrastructure industry. The
Company also relocated its production and office facilities in early 2000 and
the production facilities were not operated at full capacity in the first half
of 2000. Full operating capacity was achieved in the second half of 2000.

         Gross profits increased by Rmb14,156,000 (US$1,710,000) or 37.4% to
Rmb52,015,000 (US$6,282,000) for the year ended December 31, 2001 compared to
Rmb37,859,000 (US$4,572,000) in 2000. The gross profit margin increased by 4.6%
points to 42.9% for the year ended December 31, 2001 from 38.3% for the
corresponding period in 2000. Certain infrastructure projects completed during
2001 were sold at prices higher than normal due to less competition in bidding
these projects which resulted in a higher gross profit margin in 2001. The
increase in gross profit margin was also attributable to improved control over
production costs.

         SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses decreased by Rmb27,694,000 (US$3,345,000) or 36.2% to Rmb48,889,000
(US$5,904,000) for the year ended December 31, 2001 compared to Rmb76,583,000
(US$9,249,000) in the prior year. The decrease was mainly due to a provision of
Rmb21,623,000 (US$2,611,000) made on an amount due from the PRC Partner which,
in management's opinion, was unrecoverable and the write-off of intangible
assets of Rmb3,217,000 (US$389,000) related to goodwill arising from the
acquisition of the Company's interest in Liuzhou HVM in 2000. The decrease was
also due to a write back of overprovision of Rmb2,491,000 (US$301,000) of
allowance made on amount due from the PRC Partner in 2001.

         VALUATION ALLOWANCE ON INVESTMENT. The Company recorded a valuation
allowance of RMB1,865,000 (US$225,000) on its investment in Orient in 2001 as a
result of significant accumulated losses incurred by Orient through December 31,
2001. (See "History and Development of Liuzhou HVM")

         LOSS ON DISPOSAL OF EQUITY INVESTMENT. The Company recorded a loss of
RMB2,166,000 (US$262,000) relating to the planned disposal of OVM PTE. (See
"Structure")

         INTEREST EXPENSES, NET. Net interest expenses increased by Rmb209,000
(US$25,000) or 9.6% to Rmb2,373,000 (US$267,000) for year ended December 31,
2001 compared to Rmb2,164,000 (US$261,000) in the prior year. The increase in
net interest expenses was mainly due to a decrease in interest income from bank
deposits.

         OTHER INCOME. Other income increased from Rmb933,000 (US$113,000) for
the year ended December 31, 2000 to Rmb1,419,000 (US$171,000)for the year ended
December 31, 2001. The increase was mainly due to the sub-lease income earned in
2001 for land, building and other equipment.


                                       22
<PAGE>

         INCOME TAXES. According to an approval issued by the State Tax Bureau
of the Liuzhou City dated July 22, 1996, the income of Liuzhou HVM is fully
exempt from corporate income tax for three years commencing from the first
profitable year of operations followed by a 50% exemption for the next four
years, after which income is taxable at the full rate of 30% exclusive of local
tax of 3%. Liuzhou HVM is also exempt from the local income tax rate throughout
the term of the joint venture. However, the National Tax Bureau revoked the
preferential rate approval in 2000 such that the income of Liuzhou HVM is only
fully exempted from Chinese national income tax for two years commencing from
first profitable year of operation in 1995 followed by a 50% exemption for the
next three years, after which the income is taxable at the full rate of 30%
exclusive of the local income tax of 3%. Accordingly, the Company made
additional provision of Rmb4,476,000 (US$541,000) in 2000 for the income taxes
assessed for fiscal year 1997. For the years ended December 31, 2000 and 2001,
provision for income tax of 30% has been made. It is management's intention to
reinvest all of the income attributable to the Company derived from Liuzhou HVM
and, accordingly, no US tax liability was provided.

         The Construction Company is subject to business tax of 3% on sales and
national and local income tax of 33%.

         During the year ended December 31, 2001, the PRC Government introduced
the Western Exploitation income tax incentive for certain enterprises invested
in the Western Provinces of the RPC. Both Liuzhou HVM and the Construction
Company are entitled to this incentive.. Accordingly, income tax provision for
the year ended December 31, 2001 are calculated based on a preferential tax rate
of 15%.

         EQUITY IN EARNINGS OF EQUITY INVESTEE. The equity in earnings of equity
investee arose from the 50% ownership interest held by Liuzhou HVM in OVM
Prestress Co. Pte Ltd., a company incorporated in the Republic of Singapore.

         MINORITY INTERESTS. Minority interests represent the 30% equity
interest in Liuzhou HVM, owned by the PRC Partner, and 30.7% equity interest in
Liuzhou Prestress Construction Co. Ltd.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         The Company's primary liquidity needs are to fund inventories, accounts
receivable and capital expenditures. The Company has financed its working
capital requirements through a combination of internally generated cash and
short term bank loans.

         The Company had a working capital surplus of Rmb15,662,000
(US$1,892,000) and Rmb21,005,000 (US$2,537,000) as of December 31, 2000 and
2001, respectively. Net cash provided by operating activities was Rmb10,173,000
(US$1,229,000) and Rmb2,056,000 (US$249,000) for the years ended December 31,
2000 and 2001, respectively. Net cash flows from the Company's operating
activities are attributable to the Company's income and changes in operating
assets and liabilities.

         For the two years ended December 31, 2000 and 2001, the cash flow used
in investing activities related principally to the acquisition of property,
machinery and equipment.

         Capital expenditures for production equipment for the two years ended
December 31, 2000 and 2001 were Rmb10,523,000 (US$1,271,000) and Rmb3,060,000
(US$370,000) and, respectively. For the year ended December 31, 2000, the
Company also acquired certain property, machinery and equipment amounted to
Rmb16,469,000 (US$1,989,000) which were financed by capital leases. As a result
of an adjustment in the quantity and value of equipment leased, machinery and
equipment acquired by capital leases in 2000 were reduced by Rmb2,250,000
(US$272,000) in 2001.


                                       23
<PAGE>

         The Company's capital expenditure has been funded by internally
generated funds and notes payable. As at December 31, 2000 and 2001, the Company
had outstanding notes payables of Rmb16,000,000 (US$1,932,000) and Rmb14,600,000
(US$1,764,000) and, respectively.

         The Company estimates that its on-going operations will be funded by
its internally generated funds together with available bank credit. Management
believes that it is and will continue to be able to secure the external debt
financing and cash flows from operations to satisfy its anticipated working
capital needs for the next twelve months.

SIGNIFICANT ACCOUNTING POLICIES
-------------------------------

         Our financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
assumptions. We believe that the following are some of the more significant
judgment areas in the application of our accounting policies that currently
affect our financial condition and results of operations.

Trade receivables

         The allowance for doubtful debts is provided based on management's
judgment and on the evaluation of collectibility and aging analysis of trade
receivables. A considerable amount of judgment is required in assessing the
ultimate realization of these receivables including the current
credit-worthiness and the past collection history of each customer. If the
financial condition of customers were to deteriorate, resulting in an impairment
of their ability to make payments, additional allowances may be required.

Inventories

         Inventories are stated at lower of cost or market value. Cost is
determined on the weighted average basis and, in the case of work in progress
and finished goods, comprised of direct materials, direct labour and overhead.
An allowance for loss on decline in market value and obsolescence is provided
based upon estimations about future demand and market conditions. If actual
market conditions are less favourable than those projected by management, an
additional inventory provision may be required.

Deferred tax asset

         As of December 31, 2001, the Company had unrecognized deferred tax
assets amounted to approximately RMB6,094,000 (US$736,000) related to
undistributed earnings of the Company's foreign subsidiaries, less the Company's
expenses available for deduction for tax purposes. Management estimates that the
Company will not have taxable income for the foreseeable future.

Investments

         Investments in companies that are 20% to 50% owned, and over which the
Company is in a position to exercise significant influence but does not control
the financial and operating decisions, are accounted for by the equity method.
All other equity investments, not being a subsidiary and which do not have a
readily determinable fair value, are accounted for by the cost method. The
Company periodically reviews investments for any permanent impairment based on
market prices, earnings trends, dividend payment, assets quality and the
long-term prospect of the investment. The Company will make a provision if
permanent impairment of the investment is observed.


                                       24
<PAGE>


FACTORS RELATING TO FORWARD-LOOKING STATEMENTS

         Factors that could cause our actual results of operations to differ
materially from those contained in forward looking statements include the
following:

Risks Associated with Foreign Operations

o    The activities of the Company's principal subsidiaries in China are by law
     subject, in some cases, to administrative review and approval by various
     national, provincial, and local agencies of the Chinese government. The
     Company's future investment plans in China will also be subject to PRC
     government approvals. Due to the enhancement and continuous changes of the
     PRC legal system, there can be no assurance that changes in such
     legislation will not have adverse effect upon the Company's business
     operations or prospects.

o    The Company's operations and financial results could be adversely affected
     by economic conditions and changes in the policies of the PRC government,
     such as changes in laws and regulations (or the interpretation thereof),
     including measures which may be introduced to regulate or stimulate the
     rate of economic growth. The rate of deflation of the PRC economy, based on
     published consumer price information, was 2.6 percent for 1998, 3.0 percent
     for 1999 and 0.4 percent for 2000. The PRC government has taken certain
     measures to stimulate domestic demand and consumption. There can be no
     assurance that these measures will be successful.

o    All of the Company's sales and purchases are made domestically and are
     denominated in Renminbi. Accordingly, the Company and its subsidiaries do
     not have material market risk with respect to currency fluctuation. As the
     reporting currency of the Company's consolidated financial statements is
     also Renminbi, there is no significant translation difference arising on
     consolidation. However, the Company may suffer exchange loss when it
     converts Renminbi to other currencies, such as Hong Kong dollars or United
     States dollars.

o    The Company's interest income is sensitive to changes in the general level
     of Renminbi and Hong Kong dollars interest rates. In this regard, changes
     in interest rates affect the interest earned on the Company's cash
     equivalents. As of December 31, 2001, the Company's cash equivalents are
     mainly Renminbi and Hong Kong Dollar deposits with financial institutions,
     bearing market interest rates without fixed term.

o    Many laws and regulations addressing economic matters in general have been
     promulgated in the PRC. Despite this activity, the PRC does not have a
     comprehensive system of laws. In addition, enforcement of existing laws may
     be uncertain and sporadic, and implementation and interpretation thereof
     inconsistent. The PRC judiciary is relatively inexperienced in enforcing
     the laws that exist, leading to a higher than usual degree of uncertainty
     as to the outcome of any litigation. Decided legal cases are without
     binding legal effect in the PRC, although they are often referred to for
     guidance. The interpretation of PRC laws may be subject to policy changes
     reflecting domestic political changes.


                                       25
<PAGE>

o    Laws in the PRC do not prohibit a joint venture partner from engaging in
     activities that compete with the joint venture. We may continue to be
     adversely affected by direct competition from the PRC Partner.

o    While we are a Nevada corporation, our officers and directors are
     non-residents of the United States, our assets are located in the PRC and
     our operations are conducted in the PRC; therefore, it may not be possible
     to effect service of process on such persons in the United States, and it
     may be difficult to enforce any judgments rendered against us or such
     persons.

General Risks of Operations

o    The Company incurred losses in fiscals 2000 and 2001, and as of December
     31, 2001, the Company had an accumulated deficit of Rmb9.3 million (US$1.1
     million). We may not achieve profitability from our operations due to keen
     competition, in particular, from the PRC Partner, as most prestressed
     products sold by the Company and the PRC Partner are produced under common
     specifications and technical know-how. The Company's future prospect is
     substantially dependent upon its ability to develop new products and
     enhanced technologies. There can be no assurances that the Company will be
     able develop new products, maintain its market share and achieve
     profitability.

o    Unless we are able to reduce expenses and/or increase our profit margins,
     we will likely continue to incur losses and investors in our shares may be
     unable to recoup their investment.

o    The Company and the PRC Partner are parties to a dispute over amounts, if
     any, owed by the PRC Partner to Liuzhou HVM. This dispute has been
     submitted to arbitration being administered by the local PRC government.
     Based on the draft arbitration report, Liuzhou HVM owed a net amount of
     Rmb649,000 (US$78,000) to the PRC Partner. Although the Company has
     provided for this liability as of December 31, 2001, there can be no
     assurance that the final arbitration award will not deviate from this
     amount. The Company's operating results may be adversely affected if the
     final arbitration award requires the Company to pay significantly more than
     the liability provided for.

o    The Company's success depends to a significant degree upon the contribution
     of our Chief Executive Officer, Ching Lung Po, and other key personnel in
     the Company's research and development department. The Company and Mr.
     Ching are parties to an employment agreement, but such agreements have not
     been entered into with other key personnel. Due to the costs associated
     with compensating the chief executive officer and other key personnel of a
     public company, and the competition for highly qualified personnel, we
     cannot be certain that we will be able to attract or retain these or other
     qualified personnel.

o    The market for our common stock is not active and the limited trading
     volume in our shares could result in substantial market volatility in the
     price for our shares.

o    We do not intend to pay dividends for the foreseeable future - we intend to
     reinvest earnings from operations, if any, back into our operations.

RECENTLY ISSUED ACCOUNTING PRONOUCEMENTS
----------------------------------------

         In July 2001, The Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, Business Combinations, and SFAS no. 142, Goodwill and Other
Tangible Assets. SFAS No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001. Use of the



                                       26
<PAGE>

pooling-of-interests method will be prohibited after that date. SFAS No. 142
changes the accounting for goodwill and intangible assets with indefinite lives
from an amortization method to an impairment-only approach and requires
intangible assets with finite lives to be amortized over their useful lives.
Thus, amortization of goodwill and intangible assets with indefinite lives will
cease upon adoption of the statement. SFAS No. 142 is required to be applied in
fiscal years beginning after December 15, 2001. The Company does not expect that
the adoption of SFAS No. 141 or SFAS No. 142 will have a significant immediate
impact on the financial condition or results of operations of the Company, as
the Company has no current planned business combinations, nor does it have any
goodwill or other intangible assets as of December 31, 2001.

         In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment
or Disposal of Long-Lived Assets, which addresses accounting and financial
reporting for the impairment or disposal of long-lived assets. This statement is
effective for fiscal years beginning after December 15, 2001. The Company is
currently assessing the impact, if any, that SFAS No. 144 may have on its
financial condition and results of operations.

                          ITEM 7. FINANCIAL STATEMENTS

         The Company's audited consolidated financial statements for two years
ended December 31, 2001 and 2000 are included herewith and incorporated herein
by reference.

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

         None.

                                    PART III

      ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The following table sets forth the names, positions with the Company
and ages of the executive officers and directors of the Company and Liuzhou HVM
as at March 29, 2002. Directors of the Company serve for one year or until their
successors are elected and qualify. Officers are elected by the Board and their
terms of office are, except to the extent governed by employment contract, at
the discretion of the Board.

Name                    Age         Position
----                    ---         --------

Ching Lung Po           55          Chairman of the Board of Directors,
                                    President and CEO of the Company and
                                    Vice Chairman of the Board of
                                    Directors of Liuzhou HVM

Deng Xiao Qiong         50          Director and Chief Financial Officer
                                    of the Company and Deputy General
                                    Manager of Liuzhou HVM

Peng Fang               41          Director of the Company and Director and
                                    Deputy General Manager of Liuzhou HVM

Cheung Lai              48          Director and Treasurer of the Company and
                                    Director of Liuzhou HVM

Wan Wai On              28          Director and Corporate Secretary of
                                    the Company

Tang Xiao Ping          40          Vice President of the Company and
                                    Deputy General Manager of Liuzhou HVM

Ding Yong Gui           45          Vice President of the Company and
                                    General manager of Liuzhou HVM


                                       27
<PAGE>

         MR. CHING LUNG PO, aged 55, is the Chairman of the Board of Directors,
CEO and President of the Company and Vice Chairman of the Board of Directors of
Liuzhou HVM. Mr. Ching has more than 20 years experience in the management of
production and technology of industrial enterprises in PRC. In 1988, Mr. Ching
started his own business and established the Shenzhen Hongda Science &
Technology Company Limited in Shenzhen which manufactures electronic products.
Mr. Ching has been the Chairman of Asia Fiber Holdings Limited (OTC Bulletin
Board: AFBR), a U.S. corporation, which is included on the OTC Bulletin Board
operated by the Nasdaq, since January 2000. He has also been the Director of
China Resources Development, Inc. (Nasdaq: CHRB), a U.S. corporation, since
February 1998. Mr. Ching graduated from the Harbin Military and Engineering
Institute and holds the title of Senior Engineer. Mr. Ching is responsible for
the overall corporate policy and development strategy of the Company. Mr. Ching
devotes approximately 50% of his time to the affairs of the Company and its
subsidiaries.

         MS.DENG XIAO QIONG, aged 50, is a Director and Chief Financial Officer
of the Company. She is also a Director and Deputy General Manager of Liuzhou
HVM. Ms. Deng graduated from Guangxi Broadcasting Television University
specializing in industrial accounting and achieved the title of accountant in
1987. She joined the Factory as the deputy accounting supervisor in July 1984.
In March 1988, she became the Deputy Chief Accountant of the Factory and in
January 1991, she became the Chief Accountant of the Factory. Ms. Deng has many
years' of experience in financial management. She is responsible for financial
management and control of Liuzhou OVM and is also responsible for the Company's
finance and tax matters, as well as the overall accounting operations of the
Company. Ms. Deng devotes all of her time to the affairs of the Company and its
subsidiaries.

         MR. PENG FANG, aged 41, is a Director of the Company and Director and
Deputy General Manager of Liuzhou HVM. He graduated from Dilian Polytechnic
Institute specializing in structural engineering and obtained the title of
senior engineer in 1993. He was also awarded a masters degree and Ph.D. degree
from the institute. He completed his master degree in December 1986 and a Ph.D.
degree in December 1990. From December 1990 to June 1994, he served as senior
engineer in the Foreign Office of the Ministry of Communications. He joined the
Factory in February 1994 and continues to serve as its Deputy General Manager.
He has considerable knowledge and experience in governmental planning for
transportation and communication. He is responsible for development of the
overseas market of Liuzhou OVM. Mr. Peng devotes all of his time to the affairs
of the Company and its subsidiaries.

         MS. CHEUNG LAI, aged 48, is the Director and Treasurer of the Company
and a Director of Liuzhou HVM. Ms. Cheung graduated from Heilongjiang
Broadcasting Television University specializing in the English language. From
October 1988 to August 1992, she served as sales manager of the Shenzhen Zhenbao
Enterprise Company. In September 1992, she joined Shenzhen Hongda Science &
Technology Enterprise Company Limited and continues to serve as its finance
manager. Ms. Cheung devotes approximately 50% of her time to the affairs of the
Company and its subsidiaries.


                                       28
<PAGE>

         MR. WAN WAI ON, aged 28, is a Director and Corporate Secretary of the
Company. Mr. Wan is a graduate of Rutgers University, New Brunswick, New Jersey
where he received a Bachelors of Arts degree. Since graduation in May 1996, he
has been employed as a general manager of a computer company based in Hong Kong.
Mr. Wan devotes approximately 50% of his time to the affairs of the Company.

         MS. TANG XIAO PING, aged 40, is the Vice President of the Company and
Deputy General Manager of Liuzhou HVM. She graduated from Guangxi Broadcasting
Television University specializing in machinery manufacturing. She received the
title of engineer in 1992. She joined the Factory in 1985 and has been a Deputy
General Manager of the Factory since December 1993. She has many years
experience in sales and marketing. She was recognized as one of the "Ten Most
Outstanding Sales Person" by the Liuzhou Mechanical and Electrical Industry
Bureau in 1993. She is also the council member of Huadong Prestressing
Technology United Development Center. She is responsible for the sales of
Liuzhou HVM's products. Ms. Tang devotes all of her time to the affairs of the
Company and its subsidiaries.

         MR. DING YONG GUI, aged 45, is a Director of the Company and General
Manager of Liuzhou HVM. Mr. Ding graduated from Guangxi Broadcasting Television
University specializing in Mechanical Engineering. He received the title of
senior engineer in 1997. He joined the Factory in 1979 and his last position in
the Factory was Deputy General Manager. Mr. Ding has many years technical
experience and knowledge in the prestressing industry and is one of the
engineers in exploring various anchorage products of the Company. He is
responsible for the production, research and development and quality control
system of Liuzhou HVM. Mr. Ding devotes all of his time to the affairs of the
Company and its subsidiaries.

                         ITEM 10. EXECUTIVE COMPENSATION

CASH COMPENSATION
-----------------

         The following table shows, for each of the three years ended December
31, 1999, 2000 and 2001, the cash and other compensation paid by the Company to
its Chief Executive Officer and each of its four other most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

Name and                                               Other          All
Principal                                              Annual        Other
Position                Year    Salary   Bonus     Compensation   Compensation
--------                ----    ------   -----     ------------   ------------

                        2001   $153,846   -0-            -0-              -0-
Ching Lung Po,          2000   $115,385   -0-            -0-              -0-
 President and CEO      1999    $61,538   -0-            -0-              -0-

         On June 1, 2000, the Company entered into a Service Agreement with Mr.
Ching Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching
has been employed by the Company as Chief Executive Officer and to perform such
duties as the Board of Directors shall from time to time determine. Mr. Ching
shall receive a base salary of HK$1,200,000 (US$153,846) annually. The Service
Agreement has a term of two years and shall be automatically renewed unless
earlier terminated as provided therein. See "Certain Relationships and Related
Transactions."

         On June 1, 2000, the Company entered into an Employment Agreement with
Mr. Wan Wai On. In accordance with the terms of the Employment Agreement, Mr.
Wan has been employed by the Company as Corporate Secretary and to perform such
duties as the Board of Directors shall from time to time determine. Mr. Wan
shall receive a base salary of HK$480,000 (US$61,538) annually. The Employment
Agreement has a term of two years and shall be automatically renewed unless
earlier terminated as provided therein. See "Certain Relationships and Related
Transactions."


                                       29
<PAGE>

         Except for the foregoing, the Company has no employment contracts with
any of its officers or directors or maintains no retirement, fringe benefits or
similar plans for the benefit of its officers and directors. Mr. Peng Fang, Ms.
Tang Xiao Ping, Ms. Deng Xiao Qiong and Mr. Ding Yong Gui, being officers of
Liuzhou HVM, are eligible to participate in the retirement and pension fund
established by Liuzhou HVM in the PRC. See discussion under "Retirement and
Pension Fund."

OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------

         The following table sets forth information with respect to the grant of
options to purchase shares of Common Stock during the fiscal year ended December
31, 2001 to each person named in the Summary Compensation Table.

                       Number of      % of Total
                       Securities     Options/SARs
                       Underlying     Granted to      Exercise or
                       Options/SARs   Employees in    Base Price      Expiration
Name                   Granted        Fiscal Year     ($/Shares)      Date
----                   -------        -----------     ----------      ----

Ching Lung Po,            -0-              -0-             -0-             -0-
 President and CEO

OPTION EXERCISES AND HOLDINGS
-----------------------------

         The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stock during the fiscal year ended
December 31, 2001 to each person named in the Summary Compensation Table and the
unexercised options held as of the end of the 2001 fiscal year.

         AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
                                OPTION/SAR VALUES
-------------------------------------------------------------------------------
                                                    Number of
                                                   Securities        Value of
                                                   Underlying     Unexercised
                                                  Unexercised     in-the-Money
                            Shares               Options/SARs    Options/SARs
                          Acquired                  at FY-End       at FY-End
                                on      Value    Exercisable/    Exercisable/
                          Exercise   Realized   Unexercisable   Unexercisable
-------------------------------------------------------------------------------

Ching Lung Po,                -0-        -0-            -0-           -0-
 President and CEO

INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
---------------------------------------------

         The Board of Directors and a majority of the Company's shareholders
adopted the Company's 1996 Stock Option Plan (the "Plan") on September 5, 1996.

         Under the Plan, the Company has reserved an aggregate of 1,000,000
shares of Common Stock for issuance pursuant to options granted under the Plan
("Plan Options"). The Board of Directors or a Committee of the Board of
Directors (the "Committee") of the Company will administer the Plan including,
without limitation, the selection of the persons who will be granted Plan
Options under the Plan, the type of Plan Options to be granted, the number of
shares subject to each Plan Option and the Plan Option price.


                                       30
<PAGE>

         Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). Any Incentive Option granted under the Plan must
provide for an exercise price of not less than 100% of the fair market value of
the underlying shares on the date of such grant, but the exercise price of any
Incentive Option granted to an eligible employee owning more than 10% of the
Company's Common Stock must be at least 110% of such fair market value as
determined on the date of the grant. The term of each Plan Option and the manner
in which it may be exercised is determined by the Board of the Directors or the
Committee, provided that no Plan Option may be exercisable more than 10 years
after the date of its grant and, in the case of an Incentive Option granted to
an eligible employee owning more than 10% of the Company's Common Stock, no more
than five years after the date of the grant.

         The exercise price of Non-Qualified Options shall be determined by the
Board of Directors or the Committee.

         The per Share purchase price of shares subject to Plan Options granted
under the Plan may be adjusted in the event of certain changes in the Company's
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.

         Officers, directors, key employees and consultants of the Company and
its subsidiaries (if applicable in the future) will be eligible to receive
Non-Qualified Options under the Plan. Only officers, directors and employees of
the Company who are employed by the Company or by any subsidiary thereof are
eligible to receive Incentive Options.

         All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, or if an optionee is not an employee of the Company but is a member of
the Company's Board of Directors and his service as a Director is terminated for
any reason, other than death or disability, the Plan Option granted to him shall
lapse to the extent unexercised on the earlier of the expiration date or three
months following the date of termination. If the optionee dies during the term
of his employment, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date of the Plan Option or the date
one year following the date of the optionee's death. If the optionee is
permanently and totally disabled within the meaning of Section 22(c)(3) of the
Internal Revenue Code of 1986, the Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability.

         The Board of Directors or the Committee may amend, suspend or terminate
the Plan at any time, except that no amendment shall be made which (i) increases
the total number of shares subject to the Plan or changes the minimum purchase
price therefor (except in either case in the event of adjustments due to changes
in the Company's capitalization), (ii) affects outstanding Plan Options or any
exercise right thereunder, (iii) extends the term of any Plan Option beyond ten
years, or (iv) extends the termination date of the Plan. Unless the Plan shall
theretofore have been suspended or terminated by the Board of Directors, the
Plan shall terminate on September 4, 2006. Any such termination of the Plan
shall not affect the validity of any Plan Options previously granted thereunder.

         As of March 29, 2002, no incentive stock options had been granted.


                                       31
<PAGE>


RETIREMENT AND PENSION FUND
---------------------------

         The Company does not currently have any retirement and pension fund
program at the level of the parent Company. However, in accordance with
applicable government regulations in the PRC, Liuzhou HVM participates in a
central retirement and pension fund. Mr. Peng Fang, Ms. Tang Xiao Ping, Ms. Deng
Xiao Qiong and Mr. Ding Yong Gui, as officers of Liuzhou HVM, are eligible to
participate in the retirement and pension fund established by Liuzhou HVM in the
PRC. The Company currently makes an annual contribution representing 20% of the
total wages of employees to the retirement and pension fund out of which the
pensions of the Company's retired workers are paid. Effective from January 1,
1995, Liuzhou HVM has internally implemented an additional retirement plan for
its staff. Under this additional plan, the Company is required to contribute 5%
of the total wages of the employees to the retirement plan. The aggregate
pension costs incurred by the Company for each of the two years ended December
31, 2000 and 2001 amounted to Rmb777,000 (US$94,000) and Rmb1,205,000
(US$146,000), respectively.

         At the end of 1997, Liuzhou HVM implemented an additional retirement
plan of a PRC insurance company for its staff. Under this retirement plan, the
staff will only benefit from the plan if they work in Liuzhou HVM until the
defined age of retirement. The qualified staff is entitled to receive a defined
monthly pension benefit starting from the date of defined age of retirement for
the rest of his life. The total one time premium for the retirement plan of
Rmb4,661,000 (US$563,000) was paid by Liuzhou HVM in 1998.

     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 29, 2002, certain
information regarding the Company's Common Stock beneficially owned by each
shareholder known by the Company to be the beneficial owner of five (5%) percent
or more of the Company's outstanding Common Stock. In general, a person is
deemed to be a "beneficial owner" of a security if that person has or shares the
power to vote or direct the voting of such security, or the power to dispose or
to direct the disposition of such security. A person is also deemed to be a
beneficial owner of any securities of which the person has the right to acquire
beneficial ownership within sixty (60) days. As of March 29, 2001, there were
12,070,000 shares of Common Stock outstanding.

   Name and Address or               Amount and Nature of        Percentage
    Beneficial Owner                Beneficial Ownership(1)       of Class
    ----------------                -----------------------       --------

Hoi Wai Investments Limited               5,057,000(2)             41.9%
P.O. Box 116, Road Town
Tortola, British Virgin Islands

NJI No. 1 (A) Investment Fund               685,750(3)              5.7%
6 Battery Road #42-01 Singapore
049909, Republic of Singapore

NJI No. 1(B) Investment Fund                685,750(3)              5.7%
6 Battery Road #42-01n Singapore
049909, Republic of Singapore

Nomura/Jafco East Asia Growth Fund          1,371,500              11.4%
6 Battery Road #42-01 Singapore
049909, Republic of Singapore

Mr. Ching Lung Po                         6,057,000(2)             50.2%
Room 1015, Blck M, Telford Garden
Kowloon Bay, Hong Kong(4)

Ms. Cheung Lai                                -0-(2)                   -
Flat A18, 10/F, Block A,
Proficient Centre, 6 Wang Kwun Road,
Kowloon Bay, Hong Kong (5)


                                       32
<PAGE>

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

(1)      The inclusion herein of any shares deemed beneficially owned does not
         constitute an admission of beneficial ownership of these shares.

(2)      Includes 1,000,000 shares of capital stock directly owned by Mr. Ching
         Lung Po. The balance of 5,057,000 shares of capital stock indicated as
         held by Mr. Ching Lung Po and Ms. Cheung Lai are held of record by Hoi
         Wai Investments Limited. Mr. Ching has a 75% controlling interest in
         Hoi Wai Investments Limited and, accordingly, all of its shares have
         been attributed to Mr. Ching.

(3)      All shares of capital stock held by NJI No. 1(A) Investment Fund and
         NJI No. 2(B) Investment Fund are held of record by Nomura International
         (Hong Kong) Limited, a nominee shareholder for NJI No. 1(A) Investment
         Fund and NJI No. 2(B) Investment Fund.

(4)      Mr. Ching Lung Po is Chairman of the Board and President of the
         Company.

(5)      Ms. Cheung Lai is a Director of the Company.

         The following table sets forth, as of March 30, 2001, certain
information regarding the Company's Common Stock beneficially owned by (i) each
of the Company's directors, (ii) each of the Company's executive officers and
(iii) all directors and executive officers as a group.

   Name and Address or               Amount and Nature of       Percentage
    Beneficial Owner                Beneficial Ownership(1)      of Class
    ----------------                -----------------------      --------

Ching Lung Po                             6,057,000(2)             50.2%

Cheung Lai                                   -0-(2)                   -

Deng Xiao Qiong                              -0-                      -

Peng Fang                                    -0-                      -

Wan Wai On                                   -0-                      -

Tang Xiao Ping                               -0-                      -

Ding Yong Gui                                -0-                      -

Officers and Directors as a group         6,057,000                50.2%
(7 persons)
----------------------

(1)      The inclusion herein of any shares deemed beneficially owned does not
         constitute an admission of beneficial ownership of these shares.

(2)      Includes 1,000,000 shares of capital stock directly owned by Mr. Ching
         Lung Po. The balance of 5,057,000 shares of capital stock indicated as
         held by Mr. Ching Lung Po and Ms. Cheung Lai are held of record by Hoi
         Wai Investments Limited. Mr. Ching has a 75% controlling interest in
         Hoi Wai Investments Limited and, accordingly, all of its shares have
         been attributed to Mr. Ching.


                                       33
<PAGE>

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Based solely on a review of Forms 3, 4 and 5 furnished to the Company
for the fiscal year ended December 31, 2001, Chen Xue Ming failed to timely file
Form 4 to report that, as of September 26, 2001, he is no longer a director of
the Company.

             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 18, 1995, Kolcari Investments Limited (predecessor of HDL) and
the PRC Partner entered into a Joint Venture Contract (the "Contract"), pursuant
to which such parties agreed to establish Liuzhou HVM as a joint venture limited
liability company in accordance with the Laws of the PRC on Sino-Foreign Equity
Joint Venture. The Contract provided that Liuzhou HVM's total initial registered
capital of US$4 million was to be contributed in assets and/or cash as follows:
the PRC Partner (30%) and Kolcari (70%).

         Pursuant to an agreement dated June 5, 1995 between Liuzhou HVM and the
PRC Partner (successor in interest to the Factory), operating assets and
production facilities of the Factory valued at US$1,423,324, according to a
valuation performed by the PRC State-approved assets valuer, were transferred to
Liuzhou HVM. Of the total value of assets transferred into Liuzhou HVM,
US$1,200,000 represented a capital contribution by the PRC Partner for its 30%
equity interest in Liuzhou HVM and the balance of US$223,325 was recorded as a
loan to Liuzhou HVM. The remaining 70% of the issued capital was provided by
Kolcari through the contribution of cash in the approximate amount of
US$2,800,000, of which US$2,170,000 was paid as at December 31, 1996 with the
balance of US$630,000 paid as at December 31, 1998.

         In accordance with an agreement dated June 5, 1995 and a supplementary
agreement dated December 18, 1995 between Liuzhou HVM and the PRC Partner, the
PRC Partner agreed to transfer its intangible assets including trademarks,
patents, technology and know-how related to existing products and products under
development to Liuzhou HVM at a total consideration of Rmb8,000,000 (US$966,000)
(the "Transfer Fee"). An annual royalty equal to 0.6% of the net sales (after
deducting VAT) was payable by Liuzhou HVM until the full Transfer Fee was
settled. The royalty was payable by Liuzhou HVM each year commencing January 1,
1997. Pursuant to an agreement dated December 12, 1999 between Liuzhou HVM and
the PRC Partner, Liuzhou HVM agreed to cease using the intangible assets
(principally the "OVM" trademark) effective February 1, 2000. Pursuant to
another agreement dated January 6, 2000 between the PRC Partner and Liuzhou HVM,
all technology and know-how upon which the existing products manufactured by
Liuzhou HVM are based may be used by the PRC Partner. Liuzhou HVM also agreed to
transfer certain inventories, fixed assets and financial assets related to
former employees of Liuzhou HVM to the PRC Partner amounting to Rmb29,600,000
(US$3,575,000).

         The Company purchases and sells a significant portion of its raw
materials and finished goods to the PRC Partner and its affiliates. The amount
of such sales and purchases were Rmb915,000 (US$110,000) and Rmb5,042,000
(US$609,000), respectively, for the year ended December 31, 2000 and nil and
Rmb4,810,000 (US$581,000), respectively, for the year ended December 31, 2001.
The purchases and sales transactions with the PRC Partner and its affiliates
were made based on prevailing market prices.


                                       34
<PAGE>

         Liuzhou HVM also leases certain plant and machinery to the PRC
Partner's affiliates. For each of the two years ended December 31, 2000 and
2001, rental income of Rmb64,000 (US$8,000) and nil, respectively, was received
by Liuzhou HVM. At the same time, the PRC Partner's affiliates also lease
certain plant and machinery to Liuzhou HVM and a rental expense of Rmb24,000
(US$7,000) and nil, respectively, was incurred by Liuzhou HVM for each of the
two years ended December 31, 2000 and 2001. The leases with the PRC Partner's
affiliates were negotiated at arm's length.

         The PRC Partner charged rental on leasing of certain land and building,
plant and machinery, and motor vehicles, and intangible asset fee to the
Construction Company. The Construction Company paid rental and intangible asset
fee of Rmb285,000 (US$35,000) and Rmb512,000 (US$62,000), respectively, for the
year ended December 31, 2000 and nil and nil, respectively, for the year ended
December 31, 2001.

         In accordance with an agreement dated November 18, 2000 between Liuzhou
HVM and Hong Da, a PRC entity wholly owned by Ching Lung Po, Hong Da has granted
to Liuzhou HVM the exclusive right to use the "HVM" trademark at an annual fee
based on 1.5% of Liuzhou HVM's sales under "HVM" trademark. Intangible asset
fees charged by Hong Da amounted to Rmb1,128,000 (US$136,000) and Rmb1,539,000
(US$186,000) for the years ended December 31, 2000 and 2001, respectively.

         From time-to-time during the years ended December 31, 2001 and 2000,
Ching Lung Po, the Company's President and Chief Executive Officer, paid certain
expenses on behalf of and made advances to the Company. These payments and
advances were primarily to facilitate the Company's payment of operating
expenses in Hong Kong, in light of currency expatriation restrictions imposed by
the PRC government. The amount of such payments and advances during the years
ended December 31, 2001 and 2000 were Rmb1,579,000 (US$191,000) and Rmb954,000
(US$115,000), respectively.

         As at January 1, 2000, Mr. Ching was indebted to the Company in the
amount of Rmb13,948,000 (US$1,685,000). This amount consisted of (i)
Rmb11,029,000 (US$1,332,000) in relation to cash advances to his affiliates;
(ii) Rmb6,300,000 (US$761,000) in relation to interest owed by the PRC Partner
to the Company but its recoverability was undertaken by Mr. Ching. The debt was
partly offset by (i) Rmb1,588,000 (US$192,000) in relation to expenses paid and
advances made by Mr. Ching on behalf of the Company; (ii) director remuneration
payable to Mr. Ching of Rmb511,000 (US$62,000) and (iii) accounts receivable of
Rmb1,282,000 (US$155,000) collected by the Company on behalf of his affiliates.

         During the year ended December 31, 2000, the Company made further
advances to Mr. Ching of Rmb170,000 (US$21,000). The Company made advances to
Mr. Ching and his affiliates for expenses incurred by them for registering and
promoting the HVM mark. During the year ended December 31, 2000, certain of his
debts were settled by offsetting trademark fee payable of Rmb1,128,000
(US$136,000), expenses paid and advances made by Mr. Ching on behalf of the
Company of Rmb954,000 (US$115,000) and director remuneration payable of
Rmb957,000 (US$116,000). The net result of the foregoing transactions is that,
as of December 31, 2000, Mr. Ching was indebted to the Company in the amount of
Rmb11,079,000 (US$1,338,000). The amount due from Mr. Ching was unsecured and
non-interest bearing. Rmb3,072,000 (US$371,000) was expected to be repaid in
2001 and 2002, respectively, and the balance of Rmb4,935,000 (US$596,000) in
2003.

         During the year ended December 31, 2001, the Company made further
advances to Mr. Ching of Rmb5,196,000 (US$628,000). Rmb4,583,000 (US$554,000)
was repaid, Rmb1,539,000 (US$186,000) was offset against trademark fee payable,
Rmb1,274,000 (US$154,000) was offset against director remuneration payable and
Rmb1,579,000 (US$191,000) was offset against expenses paid and advances made by
Mr. Ching on behalf of the Company. The net result of the foregoing transactions
is that, as of December 31, 2001, Mr. Ching was indebted to the Company in the
amount of Rmb7,300,000 (US$882,000).The amount due from Mr. Ching is unsecured
and non-interest bearing. Rmb3,072,000 (US$371,000) is expected to be repaid in
2002 and balance of Rmb4,228,000 in 2003.


                                       35
<PAGE>

                                     PART IV

                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K


FINANCIAL STATEMENTS AND SCHEDULES
----------------------------------

         The following financial statements are filed as a part of this Form
10-KSB in Appendix A hereto:

         Independent auditors' report, together with consolidated financial
statements for the Company and subsidiaries, including:

a.       Consolidated balance sheet as of December 31, 2001
b.       Consolidated statements of operations for the two years ended December
         31, 2001 and 2000
c.       Consolidated statements of shareholders' equity (deficit) and
         comprehensive income (loss) for the two years ended December 31, 2001
         and 2000
d.       Consolidated statements of cash flows for the two years ended December
         31, 2001 and 2000
e.       Notes to consolidated financial statements

REPORTS ON FORM 8-K
-------------------

         During the last quarter of the fiscal year ended December 31, 2001, the
Company filed no reports on Form 8-K.


EXHIBITS
--------

Exhibits          Exhibit Description
--------          -------------------

2.1      Acquisition Agreement dated November 4, 1996(1)
3.1      Articles of Incorporation and Amendments thereto(1)
3.2      Bylaws(1)
4.1      Form of Common Stock Purchase Warrant dated December 16, 1996(1)
4.2      Specimen of Common Stock Certificate(2)
10.1     Joint Venture Contract between Liuzhou OVM Joint Stock Co. Ltd. and
         Kolcari Investments Limited and Articles of Association for
         Sino-Foreign Equity Joint Venture(1)
10.2     1996 Stock Option Plan(1)
10.3     Agreement on Termination of Use of Intangible Assets (Incorporated by
         reference to Exhibit 10.20 filed with the Company's Form 10-KSB for the
         fiscal year ended December 31, 1999)
10.4     Agreement on the Division of Technical Information and Personnel and
         Other Issues (Incorporated by reference to Exhibit 10.21 filed with the
         Company's Form 10-KSB for the fiscal year ended December 31, 1999)
10.5     Agreement on Termination of Tangible Assets Leasing Agreement
         (Incorporated by reference to Exhibit 10.22 filed with the Company's
         Form 10-KSB for the fiscal year ended December 31, 1999)
10.6     Agreement on Leasing of Production and Transportation Equipment
         (Incorporated by reference to Exhibit 10.23 filed with the Company's
         Form 10-KSB for the fiscal year ended December 31, 1999)

                                       36
<PAGE>

10.7     Agreement on Leasing of Production and Operating Premises and Buildings
         (Incorporated by reference to Exhibit 10.24 filed with the Company's
         Form 10-KSB for the fiscal year ended December 31, 1999)
10.8     Agreement on the Use of Trademark (Incorporated by reference to Exhibit
         10.25 filed with the Company's Form 10-KSB for the fiscal year ended
         December 31, 2000)
10.9     Service Agreement with Ching Lung Po (Incorporated by reference to
         Exhibit 10.26 filed with the Company's Form 10-KSB for the fiscal year
         ended December 31, 2000)
10.10    Employment Agreement with Wan Wai On (Incorporated by reference to
         Exhibit 10.27 filed with the Company's Form 10-KSB for the fiscal year
         ended December 31, 2000)
10.11    Memorandum of Understanding dated April 29, 2001 (Incorporated by
         reference to Exhibit 10.28 filed with the Company's Form 10-KSB for the
         fiscal year ended December 31, 2000)
10.12    Memorandum of Understanding dated March 7, 2002 (3)
21       Subsidiaries of the Registrant (3)

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

(1)      Incorporated by reference to the exhibit of the same number filed with
         the Company's Registration Statement on Form SB-2 (File No. 333-27119).

(2)      Incorporated by reference to Exhibit 4 to the Company's Registration
         Statement on Form 8-A filed January 8, 1998.

(3)      Filed herewith.


                                       37
<PAGE>


                                    SIGNATURE


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


                                          OVM INTERNATIONAL HOLDING CORP.



                                          By:/s/Ching Lung Po
                                              -------------------------------
                                              Ching Lung Po, Chairman of
                                              Board, President and Chief
                                              Executive Officer

         In accordance with the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>

       SIGNATURE                                 TITLE                                             DATE
       ---------                                 -----                                             ----
<S>                                       <C>                                                    <C>
/S/ Ching Lung Po                         Chief Executive Officer,                               May 10, 2002
-----------------------------------
Ching Lung Po                             President and Chairman
                                          of the Board of Directors


/s/ Deng Xiao Qiong                       Chief Financial                                        May 10, 2002
-----------------------------------
Deng Xiao Qiong                           Officer and Director


/s/ Cheung Lai                            Treasurer and Director                                 May 10, 2002
-----------------------------------
Cheung Lai


/s/ Wan Wai On                            Secretary and Director                                 May 10, 2002
-----------------------------------
Wan Wai On


/s/ Peng Fang                             Director                                               May 10, 2002
-----------------------------------
Peng Fang


/s/ Tang Xiao Ping                        Vice President                                         May 10, 2002
-----------------------------------
Tang Xiao Ping


/s/ Ding Yong Gui                         Vice President                                         May 10, 2002
-----------------------------------
Ding Yong Gui
</TABLE>




                                       38
<PAGE>



                                   APPENDIX A


         Independent auditors' report, together with consolidated financial
statements for the Company and subsidiaries, including:

         a.       Consolidated balance sheet as of December 31, 2001

         b.       Consolidated statements of operations for the two years ended
                  December 31, 2001 and 2000

         c.       Consolidated statements of shareholders' equity (deficit) and
                  comprehensive income (loss) for the two years ended December
                  31, 2001 and 2000

         d.       Consolidated statements of cash flows for the two years ended
                  December 31, 2001 and 2000

         e.       Notes to consolidated financial statements



                                       39


<PAGE>



                    OVM INTERNATIONAL HOLDING CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000



<PAGE>
================================================================================
                     OVM INTERNATIONAL HOLDING CORPORATION
================================================================================

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>


Contents                                                                                                Page

<S>                                                                                                     <C>
Report of Independent Auditors                                                                           F-2


Consolidated balance sheet                                                                               F-3


Consolidated statements of operations                                                                    F-4


Consolidated statements of shareholders' equity and comprehensive income (loss)                          F-5


Consolidated statements of cash flows                                                                    F-6


Notes to consolidated financial statements                                                             F-7 to 23
</TABLE>

                                      F-1

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholders,
OVM INTERNATIONAL HOLDING CORPORATION



         We have audited the accompanying consolidated balance sheet of OVM
International Holding Corporation and its subsidiaries as of December 31, 2001,
and the related consolidated statements of operations, shareholders' equity and
comprehensive income (loss), and cash flows for each of the years in the two
year period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of OVM
International Holding Corporation and its subsidiaries as of December 31, 2001,
and the results of their operations and their cash flows for each of the years
in the two year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.





HORWATH GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
March 14, 2002



                                      F-2
<PAGE>


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

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------

                  CONSOLIDATED BALANCE SHEET DECEMBER 31, 2001
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                               Note           US$               RMB
                                                                                              ---               ---
<S>                                                                                       <C>                   <C>
ASSETS
Current assets:
  Cash and bank balances                                                                  $    880              7,286
  Restricted cash                                                                              212              1,754
  Accounts receivable, net of allowance of RMB22,312                                         6,162             51,021
  Inventories                                                                   5            2,209             18,291
  Prepayments, deposits and other receivables, net of allowance of RMB4,666                    330              2,736
  Due from related parties                                                     17              371              3,072
  Net assets held for disposition                                               4              679              5,621
                                                                                          --------           --------
Total current assets                                                                        10,843             89,781

Restricted cash                                                                 6               67                556
Property, machinery and equipment, net                                          7            1,584             13,113
Leased property, machinery and equipment, less accumulated amortization         8            1,592             13,179
Investments                                                                    17              225              1,865
Due from related parties                                                                       511              4,229
Other assets:
  Deferred assets                                                               9              196              1,624
  Staff housing loans                                                          10               82                675
                                                                                          --------           --------
Total assets                                                                              $ 15,100            125,022
                                                                                          ========           ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes payable                                                                11         $  1,522             12,600
  Other debt                                                                   12               87                720
  Current portion of capital leases                                                             23                190
  Accounts payable                                                                           3,738             30,949
  Advance payments by customers                                                                879              7,277
  Other payables and accrued liabilities                                                     1,449             12,000
  Taxes payable                                                                                530              4,391
  Due to related parties                                                                        78                649
                                                                                          --------           --------
Total current liabilities                                                                    8,306             68,776

Notes payable                                                                                  242              2,000
Capital leases, net of current portion                                                       1,662             13,762
                                                                                          --------           --------
Total liabilities                                                                           10,210             84,538
                                                                                          --------           --------

Minority interests in consolidated subsidiaries                                              2,068             17,122
                                                                                          --------           --------

Commitments and contingencies                                                  22

Shareholders' equity:
  Common stock, 40,000,000 shares, par value of US$0.0001 authorized;
   12,070,000 shares issued and outstanding                                    13                1                 10
  Additional paid-in capital                                                   13            3,732             30,899
  Accumulated deficit                                                                         (953)            (7,892)
  Accumulated comprehensive income                                                              42                345
                                                                                          --------           --------
Total shareholders' equity                                                                   2,822             23,362
                                                                                          --------           --------

Total liabilities and shareholders' equity                                                $ 15,100            125,022
                                                                                          ========           ========
</TABLE>

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


                                      F-3
<PAGE>

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

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                                    2001                    2000
                                                                                    ----                    ----
                                                                 Note          US$          RMB              RMB
                                                                               ---          ---              ---
<S>                                                              <C>        <C>            <C>                 <C>
Sales:
  Related parties                                                17         $     --            --             915
  Others                                                                      14,656       121,355          97,865
                                                                            --------      --------        --------

Net sales                                                                     14,656       121,355          98,780

Cost of sales, including costs incurred to related
 parties of RMB Nil and RMB5,351 in 2001
 and 2000, respectively                                                       (8,374)      (69,340)        (60,921)
                                                                            --------      --------        --------

Gross profit                                                                   6,282        52,015          37,859

Selling and administrative expenses                                           (5,904)      (48,889)        (76,583)
                                                                            --------      --------        --------

Income (loss) from operations                                                    378         3,126         (38,724)

Valuation allowance on investment                                8              (225)       (1,865)             --
Loss on disposal of equity investment                            8              (262)       (2,166)             --
Loss on disposal of fixed assets                                                 (14)         (115)             --
Interest expense, including amounts to related
 parties of RMB35 and RMB Nil in 2001
 and 2000, respectively                                                         (294)       (2,432)         (2,364)
Interest income                                                                    7            59             200
Other income                                                                     171         1,419             933
Foreign exchange                                                                 (13)         (110)            (84)
                                                                            --------      --------        --------

Loss before income taxes                                                        (252)       (2,084)        (40,039)
Income taxes                                                     14             (275)       (2,275)         (6,191)
                                                                            --------      --------        --------

                                                                                (527)       (4,359)        (46,230)

Minority interests                                                               529         4,383          10,931

Equity in (losses) earnings of equity investee                   8              (350)       (2,906)             32
                                                                            --------      --------        --------

Net loss                                                                    $   (348)       (2,882)        (35,267)
                                                                            ========      ========        ========

Basic and diluted loss per share                                 3(i)       $  (0.03)        (0.24)          (2.92)
                                                                            ========      ========        ========
</TABLE>


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


                                      F-4
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                                                  Accumulated
                                      Number of                    Additional                       other
                                      shares of       Common         paid-in         Retained     comprehensive
                                       common          stock         capital         earnings     income (loss)        Total
                                        stock           RMB            RMB             RMB            RMB               RMB
                                    ------------    ------------   ------------    ------------    ------------    ------------
<S>     <C>                           <C>                     <C>        <C>             <C>                 <C>         <C>
Balances at
January 1, 2000                       12,050,000              10         30,795          30,257              61          61,123
                                                                                                                   ------------
Comprehensive loss:
   Net loss                                   --              --             --         (35,267)             --         (35,267)
   Currency translation
    adjustments                               --              --             --              --            (118)           (118)
                                    ------------    ------------   ------------    ------------    ------------    ------------

Total comprehensive loss                                                                                                (35,385)
                                                                                                                   ------------
Balances at
December 31, 2000                     12,050,000              10         30,795          (5,010)            (57)         25,738
Issuance of common stock
 for services                             20,000              --            104              --              --             104
Comprehensive loss:
   Net loss                                   --              --             --          (2,882)             --          (2,882)
   Currency translation
    adjustments:
      Disposal of equity investment           --              --             --              --             398             398
      Other                                   --              --             --              --               4               4
                                    ------------    ------------   ------------    ------------    ------------    ------------

Total comprehensive loss                                                                                                 (2,480)
                                                                                                                   ------------
Balances at
December 31, 2001                     12,070,000              10         30,899          (7,892)            345          23,362
                                    ============    ============   ============    ============    ============    ============

U.S.$                                               $          1   $      3,732   $       (953)   $         42    $      2,822
                                                    ============   ============    ============    ============    ============
</TABLE>


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


                                      F-5
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                                   2001             2000
                                                                                   ----             ----
                                                                               US$        RMB        RMB
                                                                             -------    -------    -------
<S>                                                                          <C>         <C>       <C>
Cash flows from operating activities:
  Net loss                                                                   $  (348)    (2,882)   (35,267)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Common stock issued for services                                             13        104         --
     Research and development expense recovered                                   (7)       (60)        --
     Valuation allowance on investment                                           225      1,865         --
     Minority interests                                                         (529)    (4,383)   (10,931)
     Equity in losses (earnings) of equity investment                            350      2,906        (32)
     Loss on disposal of equity investment                                       263      2,166         --
     Loss on write off of receivable from equity investee                         90        756
     Loss on write off of intangible assets                                       --         --      3,217
     Loss on disposal of property, plant & equipment                              14        115      1,415
     Depreciation                                                                526      4,350      3,323
     Amortization                                                                 71        590        217
     Provision for doubtful accounts                                             158      1,306     30,808
  Decrease (increase) in assets (net of assets held for disposition):
     Restricted cash                                                            (301)    (2,495)        --
     Accounts receivable                                                      (2,256)   (18,679)    (9,449)
     Inventories                                                                (373)    (3,091)    (3,110)
     Prepayments, deposits and other receivables                                  29        240      2,452
     Due from related parties                                                  1,156      9,577     27,459
     Staff housing loans                                                          16        135        (13)
     Receivable from equity investee                                              --         --       (910)
  Increase (decrease) in liabilities (net of assets held for disposition):
     Accounts payable                                                           (393)    (3,256)     8,676
     Advance payments by customers                                               410      3,394     (1,509)
     Other payables and accrued liabilities                                      434      3,591     (4,412)
     Due to related parties                                                      596      4,934         --
     Taxes payable                                                               105        873     (1,761)
                                                                             -------    -------    -------
Net cash provided by operating activities                                        249      2,056     10,173
                                                                             -------    -------    -------

Cash flows from investing activities:
   Proceeds from sale of subsidiary, net of cash transferred                     (57)      (474)        --
  Acquisition of property, machinery and equipment                              (370)    (3,060)   (10,523)
  Proceeds on disposal of property, machinery and equipment                       21        173        239
                                                                             -------    -------    -------
Net cash used in investing activities                                           (406)    (3,361)   (10,284)
                                                                             -------    -------    -------

Cash flows from financing activities:
  Increase in other debts                                                         36        300         --
  Repayment of other debts                                                       (69)      (570)        --
  Increase in notes payable                                                    1,763     14,600     12,000
  Repayment of notes payable                                                  (1,932)   (16,000)   (24,000)
  Repayment of principal of capital lease                                        (21)      (175)      (311)
                                                                             -------    -------    -------
Net cash used in financing activities                                           (223)    (1,845)   (12,311)
                                                                             -------    -------    -------

Net decrease in cash and cash equivalents                                       (380)    (3,150)   (12,422)
Exchange difference                                                               --          3         (4)
Cash and cash equivalents at beginning of year                                 1,260     10,433     22,859
                                                                             -------    -------    -------

Cash and cash equivalents at end of year                                     $   880      7,286     10,433
                                                                             =======    =======    =======
</TABLE>

The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (Amounts in thousands except share data)

1.       Organization and principal activities

                  The accompanying consolidated financial statements include the
         accounts of OVM International Holding Corporation (the "Company"), and
         its subsidiaries, HVM Development Limited ("HDL"), Liuzhou HVM
         Construction Machinery Company Limited ("Liuzhou HVM" or the "Joint
         Venture" or the "JV") (formerly known as Liuzhou OVM Construction
         Machinery Company Limited ("Liuzhou OVM")) and Liuzhou OVM Prestress
         Construction Company Limited ("OVM Prestress").

                  OVM International Holding Corporation was incorporated in the
         State of Nevada, in the United States of America.

                  OVM Development Limited was incorporated in the British Virgin
         Islands on May 3, 1994. On August 10, 2000, the company changed its
         name to HVM Development Limited. ("HDL")

                  In 1995, HDL entered into an agreement with Liuzhou OVM Joint
         Stock Company Limited (the "JV Partner") to set up a Sino-foreign
         equity joint venture in the PRC. The JV Partner was incorporated in the
         People's Republic of China (the "PRC") and was principally engaged in
         the manufacture and sale of prestress products used in the construction
         of highways, bridges and buildings. The Joint Venture operates under
         the name of Liuzhou OVM Construction Machinery Company Limited. On July
         26, 2001, the Joint Venture changed its name to Liuzhou HVM
         Construction Machinery Company Limited ("Liuzhou HVM").

               As provided in the joint venture agreement, the total investment
         for the JV was US$4,000 (RMB34,000). The JV Partner transferred certain
         of its property, machinery and equipment to the JV as its 30%
         contribution. In addition, the business operations of the JV Partner
         were acquired by the JV. The remaining 70% investment was provided by
         HDL in cash of US$2,800 (RMB23,800). Accordingly, HDL has a controlling
         interest in the JV through a majority voting interest of 70%.

                  The net income of the JV, after provision for income taxes and
         appropriations to various statutory and discretionary reserves, is
         shared by the Company and the JV Partner according to their respective
         equity interests and is subject to the board of directors' approval.
         The term of the JV is 30 years.

                  Currently, there are no regulations governing the prohibition
         of joint venture partners from competing with the joint ventures.
         Therefore, Liuzhou HVM's business may be adversely affected by
         competition from its Joint Venture Partner. Liuzhou HVM's activities in
         the PRC are by law subject, in some particular cases, to administrative
         review and approval by various national and local agencies of the PRC
         government. In particular, part of Liuzhou HVM's current operations and
         the realization of its future expansion programs in the PRC will be
         subject to PRC government approvals.


                                      F-7
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


1.       Organization and principal activities (continued)

                  The JV owns 69.3% of OVM Prestress, an entity that was
         incorporated in the PRC. The remaining interests of OVM Prestress are
         held by an affiliate of the JV Partner (20%) and a third party (10.7%)
         in the PRC. OVM Prestress is principally engaged in the provision of
         engineering services for prestress construction projects.

                  In January 2000, the JV and the Joint Venture Partner entered
         into various agreements resulting in the following:

         a.       Termination of the JV's lease of land, buildings, property and
                  equipment from the JV Partner.

         b.       Allocation of JV personnel to the JV Partner resulting in the
                  reduction of JV personnel and financial assets related
                  thereto.

         c.       Termination of the JV's rights to use certain intangible
                  assets, including the "OVM" trademark.

         d.       Transfer of approximately 1/3 of the JV's inventories to the
                  Joint Venture Partner at normal selling prices excluding value
                  added tax at 17%.

         e.       Transfer of certain fixed assets.

                  In April 2001, HDL and the JV Partner entered into a
         Memorandum of Understanding which provides for the transfer of the JV
         Partner's interest in the JV to HDL; and the transfer of the JV's
         interest in OVM Prestress to the JV Partner. The terms of the transfers
         are subject to separate transfer agreements which have not yet been
         finalized.

                  Notwithstanding these agreements, at December 31, 2001, both
         HDL and the JV Partner continue to hold their respective interests in
         the JV and have retained their respective rights under the terms of the
         Joint Venture agreement.

2.       Basis of presentation

                  The consolidated financial statements of the Company include
         the accounts of the Company and its subsidiaries. All material
         intercompany balances and transactions have been eliminated on
         consolidation. On March 7, 2002, the JV and the JV Partner entered into
         a Memorandum of Understanding under which the JV agreed to sell its
         69.3% interest in OVM Prestress to the JV Partner effective December
         31, 2001. The sales price is to be determined by an independent PRC
         valuer and is to be based on fair values as of December 31, 2001.
         Accordingly, the results of OVM Prestress have been consolidated
         through December 31, 2001 and the net assets and liabilities of OVM
         Prestress have been classified as assets held for disposition.

                  Minority interest at December 31, 2001 represents the 30% of
         Liuzhou HVM and the 30.7% of OVM Prestress not held by the Joint
         Venture. During the year ended December 31, 2001 net losses incurred by
         OVM Prestress exceeded the minority interest in the equity of OVM
         Prestress. As a result, the excess of losses applicable to the minority
         interest have been charged to the Company.

                  The consolidated financial statements are prepared in
         accordance with accounting principles generally accepted in the United
         States of America ("US GAAP"). This basis of accounting differs from
         that used in the statutory financial statements of the JV and its
         subsidiaries which are prepared in accordance with the accounting
         principles and the relevant financial regulations established by the
         Ministry of Finance of the PRC.



                                      F-8
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


2.       Basis of presentation (continued)

                  The principal adjustments made to the statutory financial
         statements of the JV and its subsidiaries to conform to US GAAP include
         the following:

         o        Allowance for doubtful accounts receivable and obsolete
                  inventories;

         o        Allowance for impairment of investments;

         o        Reclassification of certain expense items from equity
                  appropriations to charges against income; and

         o        Recognition of sales and cost of sales upon delivery of
                  product to customers.

                  The preparation of financial statements in conformity with US
         GAAP 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 year. Actual results could differ from those estimates.

3.       Summary of significant accounting policies

         (a)      Cash and cash equivalents

                           Cash and cash equivalents include cash on hand and
                  deposits with banks with an original maturity of three months
                  or less.

         (b)      Restricted cash

                           Restricted cash consists of "guarantee" deposits with
                  PRC banks. These guarantee deposits are required under the
                  terms of certain Company contracts and will be refunded to the
                  Company upon contract completion.

         (c)      Inventories

                           Inventories are stated at the lower of cost or market
                  value. Cost is determined on the weighted average basis and in
                  the case of work in progress and finished goods, comprises
                  direct materials, direct labor and overhead.

         (d)      Property, machinery and equipment

                           Property, machinery and equipment are stated at cost
                  less accumulated depreciation.

                           Depreciation is calculated on a straight-line basis
                  to write off the cost of each asset over its estimated useful
                  life. The principal annual rates used for this purpose are as
                  follows:

                           Buildings                                   8.4%
                           Leasehold improvements                        4%
                           Plant, machinery and equipment         12% - 20%


                                      F-9
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


3.       Summary of significant accounting policies (continued)

         (d) Property, machinery and equipment (continued)

                           Management assesses the carrying values of its
                  long-lived assets for impairment when circumstances warrant
                  such a review. Generally, long-lived assets are considered
                  impaired if the expected net sales value is less than the
                  assets' carrying values. If an impairment is indicated, the
                  loss is measured based on the amounts by which the assets'
                  carrying values exceed their fair values.

         (e)      Investments

                           Affiliated entities in which the Company does not
                  have a controlling interest are accounted for using the equity
                  method of accounting.

                           Other long-term investments, which are neither
                  subsidiaries nor equity investments, are stated at cost less
                  impairment losses.

         (f)      Revenue recognition

                           Sales represent the invoiced value of goods, net of
                  returns and allowances, recognized upon delivery of goods to
                  customers.

         (g)      Income taxes

                           Deferred tax assets and liabilities are recognized
                  for the future tax consequences attributable to differences
                  between the financial statement carrying amounts of existing
                  assets and liabilities and their respective tax bases.
                  Deferred tax assets and liabilities are measured using enacted
                  tax rates expected to apply to taxable income in the years in
                  which those temporary differences are expected to be recovered
                  or settled. The effect on deferred tax assets and liabilities
                  of a change in tax rates is recognized in the consolidated
                  statement of income in the period that includes the enactment
                  date.

         (h)      Foreign currency translation

                           The functional currency of the operations in the PRC
                  is the Renminbi ("RMB"). The accounts of foreign operations
                  are prepared in their functional currency which is their
                  respective local currency and are translated into RMB using
                  the closing rate method. Under the closing rate method, the
                  balance sheet of foreign operations is translated at the rate
                  of exchange (the "Exchange Rate") quoted by the People's Bank
                  of China at the balance sheet date and the statement of income
                  is translated at the average rate for the year. Resulting
                  translation adjustments are reported as a separate component
                  of comprehensive income.

                           The financial records of the JV and its subsidiaries
                  are maintained in RMB.

                           In preparing these financial statements, foreign
                  currency transactions have been translated into RMB using the
                  Exchange Rate at the date of transactions. Monetary assets and
                  liabilities denominated in foreign currencies have been
                  translated into RMB using the Exchange Rate at the balance
                  sheet date. The exchange gains or losses were credited or
                  charged to the statement of income.



                                      F-10
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


3.       Summary of significant accounting policies (continued)

                           Translation of amounts from RMB into United States
                  dollars (US$) for the convenience of the reader has been made
                  at the Exchange Rate on December 31, 2001 of US$1.00 equal to
                  RMB8.28 and accordingly, differs from the underlying foreign
                  currency amounts. No representation is made that the RMB
                  amounts could have been, or could be, converted into United
                  States dollars at that rate on December 31, 2001 or at any
                  other date.

         (i)      Earnings per share

                           Basic earnings per share amounts are calculated using
                  the weighted average number of shares of common stock
                  outstanding during the period. Diluted earnings per share
                  assumes the conversion, exercise or issuance of all potential
                  common stock instruments, such as options and warrants, unless
                  the effect is to reduce a loss or increase earnings per share.
                  The basic and diluted weighted average shares outstanding
                  during each of the years ended December 31, 2001 and 2000 were
                  12,059,425 and 12,050,000 respectively.

         (j)      Research and development costs

                           Research and development costs are expensed as
                  incurred and amounted to RMB1,373 and RMB1,443, net (Note 12),
                  for 2001 and 2000 respectively.

         (k)      Advertising costs

                           Advertising costs are expensed by the Company as
                  incurred. Total advertising costs incurred by the Company
                  during 2001 and 2000 were RMB564 and RMB608 respectively.

         (l)      Retirement benefits

                           The contributions to the PRC and internally
                  implemented retirement plans for existing employees are
                  charged to expenses as services are provided.

                           Contributions of RMB2,296 to an additional Company
                  administered retirement plan for existing employees is being
                  amortized over 20 years as future services are provided (Notes
                  9 and 16).

         (m)      Comprehensive income:

                           Statement of Financial Accounting Standard ("SFAS")
                  No. 130, Reporting Comprehensive Income, establishes
                  requirements for disclosure of comprehensive income which
                  includes certain items previously not included in the
                  statements of operations, including minimum pension liability
                  adjustments and foreign currency translation adjustments,
                  among others. The Company's only components of comprehensive
                  income are foreign currency translation adjustments.



                                      F-11
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


3.    Summary of significant accounting policies (continued)

         (n)      Recently issued accounting pronouncements:

                           In July 2001, The Financial Accounting Standards
                  Board ("FASB") issued SFAS No. 141, Business Combinations, and
                  SFAS no. 142, Goodwill and Other Intangible Assets. SFAS No.
                  141 requires that the purchase method of accounting be used
                  for all business combinations initiated after June 30, 2001.
                  Use of the pooling-of-interests method will be prohibited
                  after that date. SFAS No. 142 changes the accounting for
                  goodwill and intangible assets with indefinite lives from an
                  amortization method to an impairment-only approach and
                  requires intangible assets with finite lives to be amortized
                  over their useful lives. Thus, amortization of goodwill and
                  intangible assets with indefinite lives will cease upon
                  adoption of the statement. SFAS No. 142 is required to be
                  applied in fiscal years beginning after December 15, 2001. The
                  Company does not expect that the adoption of SFAS No. 141 or
                  SFAS No. 142 will have a significant immediate impact on the
                  financial condition or results of operations of the Company,
                  as the Company has no current planned business combinations,
                  nor does it have any goodwill or other intangible assets as of
                  December 31, 2001.

                           In August 2001, the FASB issued SFAS No. 144,
                  Accounting for Impairment or Disposal of Long-Lived Assets,
                  which addresses accounting and financial reporting for the
                  impairment or disposal of long-lived assets. This statement is
                  effective for fiscal years beginning after December 15, 2001.
                  The Company is currently assessing the impact, if any, that
                  SFAS No. 144 may have on its financial condition and results
                  of operations.

4.       Assets held for disposition:

                  Effective December 31, 2001 the net assets and liabilities of
         OVM Prestress are held for disposition and are included in the
         accompanying balance sheet as follows:
<TABLE>
<CAPTION>

                                                                     US Dollars         RMB
                                                                     ----------         ---
<S>                                                                      <C>            <C>
                  Cash                                                   57             474
                  Restricted cash                                        22             185
                  Accounts receivable                                   131           1,088
                  Inventories                                           659           5,459
                  Prepayments, deposits and other
                        receivables                                     300           2,486
                  Property, machinery and equipment, net                656           5,431
                  Advance payments by customers                       (288)         (2,382)
                  Other payables and accrued liabilities              (270)         (2,241)
                  Amounts due to the JV Partner                       (517)         (4,285)
                  Taxes payable                                        (71)           (594)
                                                                     ------        --------

                  Net                                                   679           5,621
                                                                     ======        ========
</TABLE>



                                      F-12
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


5.       Inventories

                  At December 31, 2001, inventories consist of the following:
<TABLE>
<CAPTION>

                                                                                US Dollars      RMB
                                                                                ----------      ---
<S>                                                                              <C>            <C>
         Raw materials                                                           $    418       3,462
         Work in progress                                                             525       4,342
         Finished goods                                                             1,266      10,487
                                                                                 --------   ---------

                                                                                 $  2,209      18,291
                                                                                  =======   =========
</TABLE>

6.    Property, machinery and equipment, net

                  At December 31, 2001, property, machinery and equipment
         consist of:
<TABLE>
<CAPTION>
                                                                                US Dollars      RMB
                                                                                ----------      ---
<S>                                                                              <C>            <C>
         Cost:
           Buildings                                                             $    209       1,729
           Leasehold improvement                                                      313       2,591
           Plant, machinery and equipment                                           2,403      19,899
                                                                                 --------   ---------

                                                                                    2,925      24,219
                                                                                 --------   ---------
         Accumulated depreciation:
           Buildings                                                                   24         195
           Leasehold improvement                                                       22         186
           Plant, machinery and equipment                                           1,295      10,725
                                                                                 --------   ---------

                                                                                    1,341      11,106
                                                                                 --------   ---------

         Property, machinery and equipment, net                                  $  1,584      13,113
                                                                                 ========   =========
</TABLE>


7.       Leased property, machinery and equipment, net

                  The Company has a lease agreement with an unaffiliated third
         party for the lease of land and buildings in which the Company's main
         operating facilities are located. The term of the lease is 25 years,
         beginning January 1, 2000, with annual rent of RMB1,000 for the first
         five years and escalating at 1% each year thereafter.

                  In addition, the Company has a capital lease with another
         unaffiliated third party for the lease of production and transportation
         equipment. The term of the lease is 20 years beginning January 1, 2000,
         with annual rent of approximately RMB564. Effective January 1, 2001,
         the annual rent was revised to approximately RMB348. Accordingly, plant
         machinery and equipment, and capital lease obligation were both reduced
         by RMB 2,250.

                  Both of the above leases are classified as capital leases.



                                      F-13
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


7.       Leased property, machinery and equipment, net (continued)

                  At December 31, 2001, property, machinery and equipment under
         capital leases consist of:
<TABLE>
<CAPTION>

                                                                 US Dollars      RMB
                                                                 ----------      ---
<S>                                                             <C>             <C>
         Cost:
            Buildings                                           $    1,322      10,948
            Plant, machinery and equipment                             395       3,271
                                                                ----------   ---------

                                                                     1,717      14,219
         Accumulated amortization                                      125       1,040
                                                                ----------   ---------

         Leased property, machinery and equipment, net          $    1,592      13,179
                                                                ==========   =========
</TABLE>

                  At December 31, 2001, future minimum payments under capital
         leases together with the present value of the net minimum lease
         payments are as follows:

                                                                 RMB
                                                                 ---

                    2002                                        1,348
                    2003                                        1,348
                    2004                                        1,348
                    2005                                        1,358
                    2006                                        1,368
                    Thereafter                                 24,733
                                                            ---------

                    Total minimum lease payments               31,503
                    Less: Amount representing interest       (17,551)
                                                            ---------
                                                            $  13,952

8.       Investments

                  At December 31, 2001, investments consist of:
<TABLE>
<CAPTION>

                                                                                 US Dollars     RMB
                                                                                 ----------     ---
<S>                                                                              <C>            <C>
         Investment in Orient Prestress Company Limited                          $     450      3,730
         Valuation allowance                                                          (225)    (1,865)
                                                                                 ---------   --------

                                                                                 $     225      1,865
                                                                                 =========   ========
</TABLE>

                  The JV holds a 21.7% interest in Orient Prestress Company
         Limited ("Orient Prestress"), which was incorporated in the PRC. The
         Company has not adopted the equity method of accounting for Orient
         Prestress in the consolidated financial statements as the Company is
         not in a position to exercise any significant influence on the
         day-to-day management and operation of Orient Prestress.



                                      F-14
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


8.       Investments (continued)

                  In March 2002, management determined that the value of the
         investment in Orient Prestress had declined as a result of significant
         accumulated losses through December 31, 2001. Management has estimated
         that the fair value of this investment is approximately 50% of the
         original cost and therefore recorded a valuation allowance of RMB
         1,865.

                  The Company also has a 50% equity investment in OVM Prestress
         Co. Pte. Ltd ("OVM Singapore"), a company incorporated in the Republic
         of Singapore and principally engaged in the provision of prestressing
         and related engineering services.

                  In March 2002, as a result of OVM Singapore's accumulated
         deficits and working capital deficit at December 31, 2001, management
         decided to sell this investment to the other 50% investor for a nominal
         amount. Accordingly the carrying amount of the investment has been
         reduced to zero at December 31, 2001 and the Company has recorded a
         loss on disposal of RMB2,166 relating to the planned disposal. The
         Company has also included in selling and administrative expenses RMB756
         relating to the write off of the Company's receivable from OVM
         Singapore.

                  Summarized unaudited financial information of OVM Singapore as
         of and for the years ended December 31, 2001 and 2000 is as follows:
<TABLE>
<CAPTION>

                                                                       2001                  2000
                                                            US Dollars         RMB            RMB
                                                            ----------         ---            ---
<S>                                                         <C>                 <C>          <C>
                  Current assets                            $     82            675          5,078
                  Non-current assets                        $    155          1,279          2,027
                  Total liabilities, all current            $    271          2,243          1,359
                  Net Sales                                 $    479          3,966          4,575
                  Gross (loss) profit                       $   (508)        (4,211)         1,099
                  Net (loss) income                         $   (702)        (5,811)            63
</TABLE>


9.    Deferred assets
                                                    US Dollars       RMB
                                                    ----------       ---

         Housing loans (a)                         $      14           117
         Retirement costs (b)                            182         1,507
                                                   ---------   -----------

                                                   $     196         1,624
                                                   =========   ===========

         (a)      This represents employment incentives comprising housing loans
                  made to two senior management staff members of the JV for the
                  purchase of residential properties. The loans are
                  collateralized by the properties and are interest free. The
                  loans are being amortized as compensation expense over the
                  period of service required of 5 to 10 years. Amortization for
                  the years ended December 31, 2001 and 2000 was RMB213 and
                  RMB152, respectively.

         (b)      This represents the cost of a retirement plans entered into by
                  the JV during 1998 for its staff and is being amortized over
                  20 years. Amortization for the years ended December 31, 2001
                  and 2000 was RMB94 and RMB101, respectively.


                                      F-15
<PAGE>

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

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


10.      Staff housing loans

                  At December 31, 2001 staff housing loans of RMB675 consist of
         housing loans advanced to the staff of the JV for the purchase of
         residential properties. The loans are collateralized by the properties
         purchased, bear interest at approximately 0.3% per annum and are
         repayable over periods of 3 to 15 years. During the year ended December
         31, 2001 loans of RMB57 were made and RMB192 was repaid.

11.      Notes payable

                  At December 31, 2001, notes payable consists of amounts
         payable to various banks in the PRC. Notes of RMB7,600 are
         collateralized by plant and machinery. Additional notes of RMB5,000 are
         guaranteed by third parties and guarantee fees of RMB48 were paid to
         the third parties during the year ended December 31, 2001. All notes
         are due within one year of the balance sheet date except one note for
         RMB2,000 which is due in 2003. This note is secured by land use rights
         owned by a third party. Interest at a weighted average rate of 7.0% per
         annum was incurred during 2001 (2000: 7.5%).

12.      Other debts

                  At December 31, 2001, other debt consists of loans from the
         Technical Department of the Liuzhou City Government for the purpose of
         carrying out research and development projects. The loans are
         unsecured, non-interest bearing, are guaranteed by a subsidiary of the
         JV Partner and are repayable in 2002. At December 31, 2001, repayment
         of an additional RMB120 is contingent upon whether the Company
         successfully completes certain remaining projects.

                  During the year ended December 31, 2001, as a result of the
         successful completion of a research and development project, a loan for
         RMB60 was applied against research and development expenses.

13.      Common stock and additional paid-in capital

                  The Company had issued 4,000,000 stock purchase warrants for
         the purchase of the Company's common stock at an exercise price of
         US$3.00 per warrant through December 23, 2001. An aggregate of
         4,000,000 shares of common stock had been reserved for issuance upon
         exercise of the stock purchase warrants. All stock purchase warrants
         expired in December 2001.

                  The Company has a stock option plan (the "Plan") that allows
         the Company to grant stock options to officers, directors, key
         employees, consultants and affiliates of the Company. An aggregate of
         1,000,000 shares of common stock have been reserved for issuance upon
         exercise of stock options granted under the Plan. Pursuant to the Plan,
         the exercise price must be at least equal to the fair market value of
         the shares of common stock at the date of grant. At December 31, 2001,
         no stock options have been granted under the Plan.

                  In 2001, 20,000 shares of common stock were issued in exchange
         for consulting services and compensation expense of RMB104, equal to
         the market value of the stock at the date of issuance, is included in
         selling and administrative expense.


                                      F-16
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


14.      Income taxes

                  It is management's intention to reinvest all the income
         attributable to the Company earned by its operations outside the United
         States. Accordingly no U.S. corporate income taxes have been provided
         in these financial statements.

                  Under the current laws of the British Virgin Islands (the
         "BVI"), dividends and capital gains arising from the Company's
         investments in the BVI are not subject to income taxes and no
         withholding tax is imposed on payments of dividends to the Company.

                  Pursuant to an approval issued by the State Tax Bureau of the
         Liuzhou City dated July 22, 1996, the income of the JV is fully exempt
         from Chinese national income tax for three years commencing from the
         first profitable year of operations followed by a 50% exemption for the
         next four years, after which the income is taxable at the full rate of
         30% exclusive of local income tax of 3%. The JV is also exempt from the
         local income tax rate throughout the term of the joint venture.
         However, the National Tax Bureau revoked the preferential rate approval
         in 2000 and the income of the JV is only fully exempted from Chinese
         national income tax for two years commencing from its first profitable
         year of operation (1995) followed by a 50% exemption for the next three
         years, after which the income is taxable at the full rate of 30%
         exclusive of the local income tax of 3%. Accordingly, the Company made
         an additional provision of RMB4,476 in 2000 for additional income taxes
         for 1997. The Company's share in the JV's tax savings resulting from
         the tax holiday for the year ended December 31, 1999 amounted to RMB87
         (RMB0.01 per share).

                  OVM Prestress was formed in 1998 and is subject to business
         tax of 3% on sales and national and local income tax of 33%.

                  During the year ended December 31, 2001, the PRC Government
         introduced the Western Exploitation income tax incentive for certain
         enterprises invested in the Western Provinces of the PRC. Both the JV
         and OVM Prestress are entitled to this incentive. Accordingly, income
         tax provisions for the year ended December 31, 2001 are calculated
         based on a preferential tax rate of 15%.

                  A reconciliation of the effective income tax rates with the
         statutory income tax rate in the PRC is as follows:
<TABLE>
<CAPTION>

                                                                                    2001        2000
                                                                                    ----        ----
                                                                                     RMB         RMB
<S>                                                                                   <C>         <C>
                  Statutory income tax                                                33%         33%

                  Computed expected tax expense
                  Impact of Western Exploitation incentive                        (1,933)          -
                  Impact of revoked preferential tax (tax holiday)
                     of the JV                                                         -       4,476
                  Item which gives rise to no tax benefit:
                     Net loss of the Company and HDL                                 931         757
                  PRC permanent differences, primarily related
                     to losses on investments                                      1,951           -
                  Effect of change in valuation allowance                            924
                  Other                                                              402         958
                                                                                --------     -------

                  Taxation charges for the year                                    2,275        6,191
                                                                                ========      =======
</TABLE>


                                      F-17
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


14.      Income taxes (continued)

                  At December 31, 2001, the Company's deferred tax assets and
         liabilities are as follows:

                                                       US Dollars         RMB
                                                       ----------         ---

                  Plant, machinery and equipment        $     (7)         (60)
                  Accrued expenses                            57          476
                  Allowance for bad debts                     22          186
                  Allowance for obsolete inventory            39          322
                                                        --------     --------
                                                             111          924
                  Valuation allowance                       (111)        (924)
                                                        --------     --------
                  Net deferred tax assets               $      -            -
                                                        ========     ========

                  A valuation allowance has been provided to reduce the deferred
         tax assets to zero, as realization is not assured.

                  The Company's share in the undistributed earnings of the
         Company's foreign subsidiaries amounted to RMB29,831 and RMB25,386 at
         December 31, 2001 and 2000 respectively. Because those earnings are
         considered to be indefinitely invested, no provision for United States
         corporate income taxes on those earnings has been provided. Upon
         distribution of those earnings in the form of dividends or otherwise,
         the Company would be subject to U.S. corporate income taxes.
         Unrecognized deferred U.S. corporate income tax in respect of these
         undistributed earnings, less the Company's expenses available for
         deduction for tax purposes, as at December 31, 2001 and 2000 was
         RMB6,094 and RMB5,602 respectively.

15.      Foreign currency exchange

                  The Renminbi ("RMB") is not freely convertible into foreign
         currencies.

                  A single rate of exchange is quoted daily by the People's Bank
         of China. Enterprises operating in the PRC can enter into exchange
         transactions through the People's Bank of China or other authorized
         institutions. Payments for imported materials are subject to the
         availability of foreign currency, which is dependent on the foreign
         currency denominated earnings of the enterprises, or must be arranged
         through the authorized institutions. Approval for exchange at the
         authorized institutions is granted to enterprises in the PRC for valid
         reasons such as purchases of imported materials and remittance of
         earnings. While conversion of RMB into United States dollars or other
         foreign currencies can generally be effected at the authorized
         institutions, there is no guarantee that it can be effected at all
         times. At December 31, 2001 and 2000, RMB2,447 and RMB5,574,
         respectively, of shareholders' equity is subject to exchange conversion
         restrictions.


                                      F-18
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------

16.      Retirement plans

                  As stipulated by PRC government regulations, the JV is
         required to make pension contributions of 20% of basic salaries to PRC
         insurance companies which are organized by the PRC government. The PRC
         insurance companies are responsible for the payment of pension benefits
         to retired staff. Contributions made by the JV during the years ended
         December 31, 2001 and 2000 amounted to RMB1,205 and RMB756
         respectively.

                  The JV also operates two additional retirement plans for its
         staff. Under one of the plans, the JV contributes 5% of basic salaries.
         On retirement, the staff members are entitled to a lump sum payment of
         the balance in their accounts. Costs incurred by the JV for this plan
         during the year ended December 31, 2000 amounted to RMB21. No
         contribution was made after March 2000.

                  Under the second retirement plan, the JV made a one-time
         contribution of RMB2,296 in 1998. Under this retirement plan, the staff
         will only benefit from the plan if they work in the JV until
         retirement, as defined. Upon retirement, qualifying staff will receive
         a defined monthly pension benefit.

                  The JV has no obligation for the payment of pension benefits
         beyond the contributions described above.

17.      Related party transactions and balances

                  A significant portion of the business undertaken by the
         Company during the years has been effected with other State-owned
         enterprises in the PRC and on such terms as determined by the relevant
         PRC authorities. All these transactions including the transactions
         summarized in this note represent realized revenues and expenses to the
         Company.

                  After the commencement of operation of the JV in 1995, the JV
         Partner became an investment holding company and engaged in the trading
         of building and construction materials, import and export of
         construction equipment, construction design and consultation services
         which are in different segments from the products and services provided
         by the JV. The JV Partner remains a State-owned enterprise of which the
         majority is owned by the Mechanical and Electrical Industrial Bureau of
         the Liuzhou City Government.

                  At January 1, 2001, the Company had amounts due from the JV
         partner of RMB5,799 (net of allowance for uncollectible amounts of
         RMB21,623). The amounts owed to Liuzhou HVM are the subject of
         arbitration under a proceeding being administered by the local PRC
         government. Based on a preliminary arbitration report, Liuzhou HVM owes
         a net amount of RMB649 to the JV partner. Accordingly, management has
         written off the remaining RMB5,799 and has recorded a liability of
         RMB649 per the preliminary arbitration report. In addition, included in
         nets assets held for disposition is RMB4,825 representing amounts owed
         by OVM Prestress to the JV Partner, primarily as a result of the
         following transactions:



                                      F-19
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


17.        Related party transactions and balances (continued)

                  Significant transactions with the JV partner during 2001 are
summarized below:
<TABLE>
<CAPTION>

                                                                2001            2000
                                              US Dollars         RMB             RMB
                                              ----------         ---             ---
<S>                                               <C>           <C>               <C>
Sales of raw materials                            --              --              10
Sales of finished goods                           --              --             905
Rental income from leasing of
   Plant and machinery                            --              --              64
Rental expenses for leasing of
  Land and buildings, plant and
  Machinery and motor vehicles                    --              --             285
Purchases of raw materials                       (39)           (320)             --
Interest expense                                  (4)            (35)             --
Purchases of finished goods                     (542)         (4,490)         (4,908)
Purchases of packing materials                    --              --             (92)
Intangible asset fee                              --              --            (512)
Accounts receivable transferred to JV
          Partner                                 54             450              --
</TABLE>


                  In addition, the Company had transactions with affiliates of
         the JV Partner, as summarized below:
<TABLE>
<CAPTION>

                                                                        2001             2000
                                                  US Dollars             RMB              RMB
                                                  ----------             ---              ---

<S>                                                                                         <C>
      Rental income                                       --              --                1
      Rental expenses for leasing of
        Plant and machinery                               --              --             (24)
      Purchases of finished goods                         --              --             (42)
</TABLE>


                  During the years ended December 31, 2001 and 2000, the Company
         made sales of RMBNil and RMB719, respectively to OVM Prestress.

                  At January 1, 2001, the Company was owed RMB11,709 by a
         director. During the year ended December 31, 2001, the Company made
         advances to the director of RMB5,196. RMB4,583 was repaid and RMB1,539
         was offset against trademark fees payable, RMB1,274 was offset against
         directors' remuneration payable and RMB1,579 was paid by the director
         on behalf of the Company. At December 31, 2001, a balance of RMB7,300
         is due from the director. This balance is unsecured and is non-interest
         bearing. RMB3,072 is expected to be repaid in 2002 and the balance of
         RMB4,228 in 2003.


                                      F-20
<PAGE>

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

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


18.   Supplemental cash flow information
<TABLE>
<CAPTION>

                                                                                   2001         2000
                                                                 US Dollars         RMB          RMB
                                                                 ----------         ---          ---
<S>                                                               <C>               <C>          <C>
         Interest paid                                            $    294          2,432        2,364
                                                                  ========        =======       ======
         Income taxes paid                                        $    128          1,060        4,026
                                                                  =========       ========      =======
</TABLE>

         Non-cash investing and financing activities:

                  Capital lease obligations of RMB16,469 were incurred during
         2000. Inventories of approximately RMB15,035, prepayments, deposits and
         other receivables of approximately RMB731, fixed assets of
         approximately RMB9,435, deferred assets of approximately RMB2,365 and
         staff housing loans of approximately RMB2,034 were transferred to the
         JV Partner in 2000 in exchange for a receivable of approximately
         RMB29,600.

                  During the year ended December 31, 2001, the cost of leased
         property, machinery and equipment and capital leases obligation were
         each reduced by RMB2,250 as a result of the renegotiation of the
         Company's capital lease.

19.      Financial instruments

                  The carrying amounts reported in the Company's balance sheet
         for current assets and current liabilities, except for bank loans and
         amounts resulting from related party transactions, qualifying as
         financial instruments approximate their fair values because of the
         short maturity of such instruments. The carrying amounts of bank loans
         approximate their fair value based on the borrowing rates currently
         available for bank loans with similar terms and average maturities. The
         fair value of the amount resulting from related party transactions
         cannot be determined due to the related party nature of the
         transactions.

20.      Nature of operations and concentration of risk

                  The Company manufacturers and sells substantially all
         prestress products used in the construction of highways, bridges and
         buildings in the PRC. Accordingly, the credit risk arising from
         accounts receivable of the JV is concentrated with the PRC government
         which is usually the initiator of these large scale capital projects.
         During the years ended December 31, 2001 and 2000, the Company also had
         foreign sales (primarily in Japan and Vietnam) comprising approximately
         15% and 17% of total sales, respectively.

                  One of the Company's customers accounted for 11% of the total
         sales of the Company in 2001. No customer accounted for more than 10%
         of sales in 2000.

                  Approximately 10% and 16% of the Company's purchases in 2001
         and 2000, respectively, were from one supplier. Two other suppliers
         accounted for approximately 14% and 12% of purchases in 2001.


                                      F-21
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------

20.      Nature of operations and concentration of risk (continued)

                  The PRC economy has, for many years, been a centrally planned
         economy, operating on the basis of annual, five-year and ten-year state
         plans adopted by central PRC governmental authorities which set out
         national production and development targets. The PRC government has
         been pursuing economic reforms since it first adopted its "open-door"
         policy in 1978. There is no assurance that the PRC government will
         continue to pursue economic reforms or that there will not be any
         significant change in its economic or other policies, particularly in
         the event of any change in the political leadership of, or the
         political, economic or social conditions in the PRC. There is also no
         assurance that the Company will not be adversely affected by any such
         change in government policies or any unfavorable change in the
         political, economic or social conditions, the laws or regulations or
         the rate or method of taxation in the PRC.

                  As many of the economic reforms which have been or are being
         implemented by the PRC government are unprecedented or experimental,
         they may be subject to adjustment or refinement which may have adverse
         effects on the Company. Further, through state plans and other economic
         and fiscal measures, it remains possible for the PRC government to
         exert significant influence on the PRC economy.

21.      Distribution of profits

                  The Company's ability to pay dividends is primarily dependent
         on the Company receiving distributions from the JV in the PRC.

                  Pursuant to the relevant laws and regulations of Sino-foreign
         joint venture enterprises, and the JV's articles of association, the JV
         is required to make appropriations to a general reserve fund, an
         enterprise development fund and an employee welfare and incentive fund,
         in which the percentage of annual appropriations are subject to the
         decision of the JV's board of directors. The appropriations to the
         employee welfare and incentive fund have been charged to the statements
         of income. The other appropriations, if any, are accounted for as
         reserve funds in the balance sheet and are not available for
         distribution as dividends to the joint venture partners of the JV. In
         accordance with a board resolution, no appropriations were made to the
         reserve funds by the JV for 2001 and 2000.

                  Net income of the JV and its subsidiaries reported under US
         GAAP differs from that reported under PRC Rules and Regulations.
         Profits available for distribution are based on financial statements
         prepared under PRC Rules and Regulations. At December 31, 2001 and
         2000, the Company's share in the distributable profits of the JV and
         its subsidiaries were approximately RMB40,867 and RMB40,342,
         respectively.



                                      F-22
<PAGE>
--------------------------------------------------------------------------------

                      OVM INTERNATIONAL HOLDING CORPORATION
--------------------------------------------------------------------------------


22.   Operating lease commitments

                  At December 31, 2001, future minimum payments under operating
         leases for the leasing of land and buildings, plant and machinery and
         motor vehicles in Liuzhou including from the JV Partner were as
         follows:

                                                          RMB
                                                      ----------
                           2002                       $      377
                           2003                              338
                           2004                              274
                           2005                              256
                           2006                              256
                           Thereafter                        917
                                                       ---------

                                                      $    2,418
                                                       =========

                  Rent expense under operating leases was RMB442 and RMB761 for
         the years ended December 31, 2001 and 2000, respectively.





                                      F-23
<PAGE>



                                INDEX TO EXHIBITS


EXHIBIT
NUMBERS                          DESCRIPTION
-------                          -----------

10.12             Memorandum of understanding dated March 7, 2002

21                Subsidiaries of the Registrant