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, 2000

[ ]      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 21, 2001 computed by reference to the closing bid price
of the registrant's Common Stock as reported by THE WALL STREET JOURNAL on that
date. $7,950,000

                      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 30, 2001, was 12,050,000.

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 OVM Construction Machinery
Company Limited ("Liuzhou OVM") 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, 2000, 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, 2000, 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

         The following discussion regarding the Company and its business and
operations contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. 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. The reader is cautioned that all
forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking-statements. The
Company does not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that silence by management of the
Company over time means that actual events are bearing out as estimated in such
forward-looking statements.


                                       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 OVM Construction
Machinery Company Limited ("Liuzhou OVM"), a Sino-foreign equity joint venture
incorporated in the People's Republic of China (the "PRC") on May 10, 1995. The
PRC joint 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 "Stock Company"). HDL and
the Stock Company 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 OVM 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 OVM in 1995, the Stock Company has become 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 Stock Company. During 1998,
Liuzhou OVM acquired a 69.3% interest in the Construction Company for
consideration of Rmb6,930,000 (US$837,000), with the remaining interests being


                                       3
<PAGE>


held by an affiliate of the Stock Company (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 OVM 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 lease to Liuzhou OVM for a term of 25 years
effective January 1, 2000. Liuzhou OVM 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 OVM and the Stock Company 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 Stock Company, as lessor, and Liuzhou OVM, as lessee, were
terminated effective January 1, 2000;

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

         o Liuzhou OVM sold one-third of its inventories to the Stock Company at
cost;

         o Liuzhou OVM sold certain fixed assets to the Stock Company at their
carrying values;

         o all technology and know-how upon which the existing products
manufactured by Liuzhou OVM are based may be used by Liuzhou OVM and the Stock
Company;

         o certain employees of Liuzhou OVM ceased to be employed by Liuzhou OVM
and become employees of the Stock Company; and

         o HDL and the Stock Company have discussed the possibility of, but no
agreements have yet been entered into for, the buy back of the Stock Company's
30% interest in the joint venture. In the event that the Stock Company sells its
interest in Liuzhou OVM to HDL, Liuzhou OVM would become a wholly-owned
subsidiary of HDL.

         On April 29, 2001, HDL and the Stock Company entered into a Memorandum
of Understanding which provides for the transfer of the Stock Company's interest
in Liuzhou OVM to HDL, and the transfer of Liuzhou OVM's interest in the
Construction Company to the Stock Company. The terms of the transfers are
subject to separate transfer agreements which have not yet been negotiated. The
Memorandum of Understanding also requires Liuzhou OVM to change its name prior
to July 31, 2001. HDL's acquisition of the Stock Company's interest in Liuzhou
OVM is also subject to resolution of a dispute over amounts owed by the Stock
Company to Liuzhou OVM. This dispute has been submitted for arbitration being
administered by the local PRC government. See "History and Development of
Liuzhou OVM" and Note 17 of "Notes to Financial Statements".

                                       4
<PAGE>

         As a result of these modifications, the Stock Company now competes with
the Company in product sales and services. Because of the direct competition
from the Stock Company, 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.

         Beginning January 1, 2000, Liuzhou OVM's products are 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 Stock Company'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 Stock Company, but they will not be involved in
day-to-day operations and management of the joint venture. HDL still controls a
majority of the board of directors and the appointment of the General Manager
and Deputy General Managers of Liuzhou OVM. Management also believes that since
its inception, Liuzhou OVM 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 OVM 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, 2000.

                    -----------------------------
                    | 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 OVM 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 ("HDL"), 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 (the "Stock Company"), located
in Liuzhou City, Guangxi Zhuang Autonomous Region, the PRC, was the largest
State-owned manufacturer of prestressing equipment in China. The Stock Company
was a State-owned enterprise and was subsequently reorganized into a limited
liability share capital company on January 10, 1995. The Stock Company has been
operating in the PRC since 1967.

         LIUZHOU OVM CONSTRUCTION MACHINERY COMPANY LIMITED. ("Liuzhou OVM") 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 Stock Company. The registered capital
of Liuzhou OVM is US$4 million.

         LIUZHOU OVM PRESTRESS CONSTRUCTION CO. LTD. (the "Construction
Company") 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 Stock Company. In 1998, Liuzhou OVM 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 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., an unaffiliated third
party, and is principally engaged in providing prestressing and related
engineering services.


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 OVM in May 1995, which took over the Stock Company's business effective
at January 1, 1995, the business was carried out by the Factory (and
subsequently the Stock Company, 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

                                       6
<PAGE>

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
the provision of engineering services for prestress construction projects.

         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 OVM is one of the 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 OVM 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.

         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 include 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

                                       7
<PAGE>

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 tranditional 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 OVM
--------------------------------------

         The predecessor of Liuzhou OVM, 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. Liuzhou OVM is also a shareholder of Orient. The Stock
Company, being the successor to the Factory, owns approximately 41% of the
equity in Orient and is its largest shareholder.

         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 OVM was established as a Sino-foreign equity
joint venture enterprise. Following its establishment, Liuzhou OVM assumed,
effective January 1, 1995, certain assets and liabilities together with the
business of the Stock Company 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 Stock Company retained
certain assets and liabilities that were not assumed by Liuzhou OVM, 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 Stock Company also retained certain
production-related facilities that were leased to Liuzhou OVM.

                                       8
<PAGE>

         As discussed above under "Introduction", in January 2000, Liuzhou OVM
and the Stock Company entered into various agreements to modify their original
joint venture arrangements. On April 29, 2001, HDL and the Stock Company entered
into a Memorandum of Understanding which contemplates the transfer of the Stock
Company's interest in Liuzhou OVM to HDL, and the transfer of Liuzhou OVM's
interest in the Construction Company to the Stock Company. The terms of the
transfers are subject to separate transfer agreements which have not yet been
negotiated. The transfer of the Stock Company's interest in Liuzhou OVM is
also subject to approval by the local PRC government. Government approval will
require resolution to a dispute between HDL and the Stock Company over amounts
owed to Liuzhou OVM by the Stock Company. The final determination will be made
pursuant to an arbitration proceeding administered by the local PRC government.
It is premature for the Company to determine the exact amount, if any, which
will be recovered at the conclusion of the arbitration. However, the Company has
provided an allowance for amounts which may not be collectible from the Stock
Company of Rmb21,623,000 (US$2,611,000) in 2000.


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.

         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.

                                       9
<PAGE>

         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, 1999
and 2000, respectively.
<TABLE>
<CAPTION>

                                            Year Ended December 31
                                       1999                       2000
                                       ----                       ----
                                           (Amounts in Thousands)

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

<S>                            <C>      <C>      <C>       <C>       <C>     <C>
OVM anchorage system           92,181   11,133   49.0      51,797    6,255   52.4
Jack                           39,509    4,772   21.0      13,766    1,663   13.9
High-pressure oil pump          4,610      557    2.4       2,639      319    2.7
Cable, tendon and steel wire   16,969    2,049    9.0       6,341      766    6.4
Other equipment and parts      27,524    3,324   14.6      21,612    2,610   21.9
*Others                         7,469      902    4.0       2,625      317    2.7
                              -------   ------  -----     -------   ------   ----

Total                         188,262   22,737  100.0      98,780   11,930  100.0
                              =======   ======  =====     =======   ======  =====
</TABLE>

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

         The largest ten customers of the Company for each of the two years
ended December 31, 1999 and 2000 accounted for approximately 22.1% and 14.1%,
respectively, of the Company's total sales. The largest customer of the Company
for each of the two years ended December 31, 1999 and 2000 accounted for
approximately 5.2% and 4.2%, respectively, of the Company's total sales. No
single customer accounted for more than 10% of total sales in either 1999 or
2000.

         For each of the two years ended December 31, 1999 and 2000,
approximately 88% and 83%, respectively of the Company's total sales was derived
from products sold in the PRC with the balance attributable to products exported
to overseas customers.

         The Company sells its products directly to end-users through its in
house sales and marketing and after sales staff, consisting of 49 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.

                                       10
<PAGE>

         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, 1999 and 2000.

         The Company has been expanding overseas markets. Its products have been
exported from the PRC and sold in Pakistan, Singapore, Japan, Hong Kong, Sudan
and Vietnam. The export sales accounted for approximately 12% and 17% of the
Company's total sales for each of the two years ended December 31, 1999 and
2000, 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
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, 1999 and 2000, the cost of raw materials and components accounted
for approximately 63% and 54%, 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.

                                       11
<PAGE>

         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, 1999 and 2000, the largest
ten suppliers of raw materials and components of the Company accounted for
approximately 35.4% and 50.4%, respectively, of the Company's total cost of
purchases. The largest supplier accounted for approximately 20.1% and 16.0% of
the Company's total cost of purchases, respectively, for the same periods. No
other single supplier accounted for more than 10% of total cost of purchases for
the two years ended December 31, 1999 and 2000, 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 were previously
located in Liuzhou Municipality, the industrial city of Guangxi Zhuang
Autonomous Region, the PRC, with a site area of approximately 60,000 square
meters. The total gross floor area of production workshops and premises was
approximately 13,042 square meters. Long term land use rights for the land and
buildings on which these facilities were situated were held by the Stock Company
and leased to Liuzhou OVM at an annual rental of Rmb836,000 (US$101,000) for a
period up to December 31, 2000. Pursuant to an agreement dated January 6, 2000,
the lease was terminated effective January 1, 2000. The Stock Company also
leased certain production equipment, office equipment and motor vehicles to
Liuzhou OVM at an annual rental of Rmb1,821,000 (US$220,000) for a period up to
December 31, 2000. Such lease was also terminated by mutual agreement following
Liuzhou OVM's relocation of head office and production facilities

         Pursuant to an agreement dated December 11, 1999 between Liuzhou OVM
and Shuangma, an unaffiliated third party, Shuangma has agreed to lease certain
land and buildings in Liuzhou Municipality, comprising production facilities and
structures, to Liuzhou OVM 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 another agreement dated December 12, 1999 between Liuzhou
OVM and Weilesi, an unaffiliated third party, Weilesi has agreed to lease
certain production and transportation equipment to Liuzhou OVM for a term of 20
years effective January 1, 2000 at an annual rental of Rmb564,000 (US$68,000).

         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.


                                       12
<PAGE>

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 the Company's management after
considering several 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, though certain facilities
can be used for certain components and special parts only.

         The Company's capital expenditure on production equipment for each of
the two years ended December 31, 1999 and 2000 were Rmb4,562,000 (US$551,000)
and Rmb10,523,000 (US$1,271,000), respectively. The Company also acquired
certain property, machinery and equipment by capital leases amounted to
Rmb16,469,000 (US$1,989,000) for the year ended December 31, 2000 (1999: nil).


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

         The Company, through its indirect ownership of Liuzhou OVM 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 OVM 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 OVM and the Stock Company, the prestressing market in the PRC
is dominated by only a few major domestic manufacturers, namely, Zhongyuan
Prestressed Equipment Factory, Shanghai Railway Institute Anchorage Factory,
Guizhou Equipment Factory, Dalian onstruction Engineering Factory, Xiping
Construction Equipment Factory.

         Due to the changes to the relationship between the joint venture and
the Stock Company since January 2000, Liuzhou OVM faces direct competition by
the Stock Company. The Stock Company 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 OVM's existing products which were
developed before January 1, 2000. Liuzhou OVM's products are now marketed under
the new trademark "HVM". As both Liuzhou OVM and the Stock Company sell
prestressed products with the same specification and technical know-how,
management believes that the competitive advantages of Liuzhou OVM mainly rest
on its ability to develop new products and technical know-how. Competition from
the Stock Company contributed significantly to the Company's fiscal 2000 net
loss. However, management believes that Liuzhou OVM has competitive advantages
over the Stock Company for its after-sales services, quality production, strong
research and development team, modernized facilities and management skills and
lower cost of production.

         Despite the increasing demand of prestressed equipment in the PRC
market, Liuzhou OVM's products also face severe competition from both overseas
and other domestic suppliers other than the Stock Company. Excluding the import

                                       13
<PAGE>

VAT and import tariff, management estimates that products from overseas
manufacturers are even less costly than those of domestic manufacturers and the
quality is comparable. Although Liuzhou OVM's competitive advantage over
imported products in terms of pricing (including import VAT and import tariff)
may be partially undermined by the PRC's entry into the World Trade
Organization, management 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 41
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.


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 13 engineers. Since 1989, the Company has
developed over 60 new products, of which 18 have obtained scientific awards from
the State, provincial and municipal governmental authorities.

         Most of the research and products 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 accounts for
0.2% and 1.5% of total sales for each of the two years ended December 31, 1999
and 2000. For each of the two years ended December 31, 1999 and 2000, the
aggregate research and development expenses incurred by the Company amounted to
approximately Rmb382,000 (US$46,000) and Rmb1,443,000 (US$174,000),
respectively.


                                       14
<PAGE>

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 OVM in 1995, Liuzhou OVM has
registered numerous utility model patents in the PRC in its name as follows.
Liuzhou OVM 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 OVM has granted approval to the Stock Company
to use those patents together with the related technology which were registered
before December 31, 1999. In return, the Stock Company has granted approval to
Liuzhou OVM to use the patents together with the related technology which are
registered in the PRC in the name of the Stock Company before the establishment
of Liuzhou OVM in 1995. All patents registered after January 1, 2000 by Liuzhou
OVM are used exclusively by Liuzhou OVM and the Stock Company is not entitled to
use them.
<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
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

                                       15
<PAGE>

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
Large scale hydraulic
  lifting device              98214318.4   May 15, 1998        May 15, 2008
Spiral fixing machine         98215351.1   June 11, 1998       June 11, 2008 S
ingle 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

                                       16
<PAGE>

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
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
</TABLE>

         Liuzhou OVM entered into an agreement with the Stock Company on June 5,
1995 and a supplementary agreement dated December 18, 1995 pursuant to which the
Stock Company granted to Liuzhou OVM 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 OVM 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 OVM.

         Pursuant to an agreement dated December 12, 1999 between the Stock
Company and Liuzhou OVM, Liuzhou OVM agreed to cease using the trademark "OVM"
effective February 1, 2000. All technology and know-how upon which the existing
products manufactured by Liuzhou OVM were based may be used by the Stock
Company. Beginning in January, 2000, the Company's products are 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 OVM 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 the
estimated annual advertising and promotion expenses incurred by Hong Da in
establishing the market recognition of the mark.


EMPLOYEES
---------

         As at December 31, 2000, the Company had a total of 561 full-time
employees, 494 and 60 of which were employed by Liuzhou OVM and the Construction

                                       17
<PAGE>

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                                               348
      Administration and management                             50
      Quality control                                           41
      Research and development, technical,
        process design and control                              27
      Sales, marketing and after sales service                  49
      Raw materials supply                                      11
      Others                                                    35
                                                               ---

                                                               561
                                                               ===

         OVM Prestress Co. Pte. Ltd., a company 50% owned by Liuzhou OVM,
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
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 18
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 OVM's business may
be adversely affected by competition from the Stock Company. Liuzhou OVM'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 OVM'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. Annual
rental is Rmb1 million (US$121,000). See above discussion under "Production
Facilities and Process."

                                       18
<PAGE>


                            ITEM 3. LEGAL PROCEEDINGS

         There are no material legal proceedings pending or threatened against
the Company or any of its subsidiaries as of December 31, 2000.


           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 highly 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" which is a limited market and subject to
substantial restrictions and limitations in comparison to the NASDAQ System. 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 1999 and 2000.

                                                        High             Low
           1999 Fiscal Year, quarter ended
                   March 31, 1999                      $0.13            $0.03
                   June 30, 1999                       $0.08            $0.05
                   September 30, 1999                  $0.63            $0.07
                   December 31, 1999                   $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 12, 2001, the approximate number of record holders of the
Company's Common Stock was 789.

         The Company also has outstanding warrants to purchase 4,000,000 shares
at US$3.00 per share on or prior to December 23, 2001.

         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 and Rmb35,587,000 at December 31,
2000 and 1999, respectively, and these earnings are considered to be
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 OVM, 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 OVM and the Construction Company, in accordance
with the percentage interests held by the shareholders.

                                       20
<PAGE>

         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, 1999 and 2000.

         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, 2000. 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,
                                                    2000          1999
                                                    ----          ----

Net sales                                          100.0%        100.0%
Cost of sales                                      (61.7)        (58.1)
Gross profit                                        38.3          41.9
Selling and administrative expenses                (77.5)        (38.5)
Interest expenses, net                              (2.2)         (1.5)
Other income                                         0.9           0.9
Foreign exchange gain                                  -             -
Income/(loss) before income taxes                  (40.5)          2.8
Income taxes                                        (6.3)         (1.5)
Net income/(loss) after income taxes               (46.8)          1.3
Minority interests                                  11.1          (0.7)
Equity in earnings of equity investee                  -             -
Net income/(loss)                                  (35.7)          0.6


YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998.

         NET SALES AND GROSS PROFIT. Net sales for the year ended December 31,
2000 decreased by Rmb89,482,000 (US$10,807,000) or 47.5% to Rmb98,780,000
(US$11,930,000) compared to Rmb188,262,000 (US$22,737,000) in the prior year.
The decrease in net sales was mainly due to direct competition from the Stock
Company in 2000, which reduced the Company's sales to unaffiliated customers by
approximately 45%. Apart from that, the Company 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 decreased by Rmb40,988,000 (US$4,950,000) or 52.0% to
Rmb37,859,000 (US$4,572,000) for the year ended December 31, 2000 compared to
Rmb78,847,000 (US$9,523,000) in 1999. The gross profit margin decreased by 3.6%
points to 38.3% for the year ended December 31, 2000 from 41.9% for the
corresponding period in 1999. The decrease in gross profit margin was also due
to the competition from the Stock Company.

         SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses increased by Rmb4,171,000 (US$504,000) or 5.8% to Rmb76,583,000
(US$9,249,000) for the year ended December 31, 2000 compared to Rmb72,412,000

                                       21
<PAGE>

(US$8,745,000) in the prior year. The increase was mainly due to a provision of
Rmb21,623,000 (US$2,611,000) made on an amount due from the Stock Company 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 OVM. The increase in selling
and administrative expenses was partly offset by a decrease in selling expenses
as a result of a decrease in sales.

         INTEREST EXPENSES, NET. Net interest expenses decreased by Rmb732,000
(US$87,000) or 25.3% to Rmb2,164,000 (US$262,000) for year ended December 31,
2000 compared to Rmb2,896,000 (US$349,000) in the prior year. Although there was
a decrease in interest expense on notes payable for the year ended December 31,
2000, resulting from the decrease in average bank borrowing rates and
outstanding notes payable, it was partially offset by the interest expense
arising from the capital lease obligation to finance the Company's acquisition
of property, machinery and equipment.

         OTHER INCOME. Other income decreased from Rmb1,665,000 (US$201,000) for
the year ended December 31, 1999 to Rmb933,000 (US$113,000) for the year ended
December 31, 2000. The decrease in other income was due to decreased income
generated from the sales of accessory products such as packaging materials in
2000.

         INCOME TAXES. According to an approval issued by the State Tax Bureau
of the Liuzhou City dated July 22, 1996, the income of Liuzhou OVM is fully
exempted 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 will be taxable at the full rate of 30% exclusive of
local tax of 3%. Liuzhou OVM is also exempt from the local income tax rate
throughout the term of the joint venture. However, the National Tax Bureau has
revoked the preferential rate approval in 2000 such that the income of Liuzhou
OVM 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 has made additional provision of Rmb4,476,000 (US$541,000) in the
current year for the income taxes assessed for fiscal year 1997. As 1999 and
2000 were the fifth and the sixth profitable years (based on incomes assessed
under the generally accepted accounting principles of the PRC), respectively,
income taxes were provided for the year ended December 31, 1999 and 2000 at the
income tax rates of 15% and 30%, respectively. It is management's intention to
reinvest all of the income attributable to the Company derived from Liuzhou OVM
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%.

         EQUITY IN EARNINGS OF EQUITY INVESTEE. The equity in earnings of equity
investee arose from the 50% ownership interest held by Liuzhou OVM 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 OVM, owned by the Stock Company, the PRC joint venture
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.

                                       22
<PAGE>

         The Company had a working capital surplus of Rmb58,930,000
(US$7,118,000) and Rmb15,662,000 (US$1,892,000) as of December 31, 1999 and
2000, respectively. Net cash provided by operating activities was Rmb10,608,000
(US$1,283,000) and Rmb10,173,000 (US$1,229,000) for the year ended December 31,
1999 and 2000, 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, 1999 and 2000, 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, 1999 and 2000 were Rmb4,562,000 (US$551,000) and Rmb10,523,000
(US$1,271,000), 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) (1999: nil) which were financed by capital leases.

         The Company's capital expenditure has been funded by short-term bank
loans. As at December 31, 1999 and 2000, the Company had outstanding short term
bank loans of Rmb28,000,000 (US$3,382,000) and Rmb16,000,000 (US$1,932,000),
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.


IMPACT OF INFLATION ON RESULTS OF OPERATIONS, LIABILITIES AND ASSETS
--------------------------------------------------------------------

         The Company's operations and financial results could be adversely
affected by economic and changes in the policies of the PRC government, such as
changes in laws and regulations (or the interpretation thereof), 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 per cent. for 1998 and 3.0 per cent. for 1999. The PRC government has
taken certain measures to stimulate domestic demand and consumption. There can
be no assurance that these measures will be successful.


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

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"), which is effective for financial statements for all fiscal quarters of
all fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at fair value. SFAS No. 133 also addresses the accounting for certain hedging
activities. The Company currently does not have any derivative instruments nor
is it engaged in hedging activities, thus the Company does not believe
implementation of SFAS No. 133 will have a material impact on its financial
statement presentation or disclosures.

         In December 1999, the Staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in
Financial Statements. SAB No. 101, as amended by SAB No. 101A and SAB No. 101B,
is effective no later than the fourth fiscal quarter of fiscal years beginning
after December 15, 1999. SAB No. 101 provides the Staff's views in applying
generally accepted accounting principles to selected revenue recognition issues.
The Company believes that it complies with the accounting and disclosure
described in SAB No. 101; therefore, management believes that SAB No. 101 will
not impact the Company's consolidated financial statements.


                                       23
<PAGE>

                          ITEM 7. FINANCIAL STATEMENTS

         The Company's audited consolidated financial statements for two years
ended December 31, 2000 and 1999 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 OVM
as at March 30, 2001. 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           54          Chairman of the Board of Directors,
                                    President and CEO of the Company and
                                    Vice Chairman of the Board of
                                    Directors of Liuzhou OVM

Deng Xiao Qiong         49          Director and Chief Financial Officer
                                    of the Company and Deputy General
                                    Manager of Liuzhou OVM

Peng Fang               40          Director of the Company and Director and
                                    Deputy General Manager of Liuzhou OVM

Cheung Lai              47          Director and Treasurer of the Company and
                                    Director of Liuzhou OVM

Wan Wai On              27          Director and Corporate Secretary of
                                    the Company

Tang Xiao Ping          39          Vice President of the Company and
                                    Deputy General Manager of Liuzhou OVM

Ding Yong Gui           44          Vice President of the Company and
                                    General manager of Liuzhou OVM

Chen Xue Ming           63          Director of the Company

                                       24
<PAGE>


         MR. CHING LUNG PO, aged 54, is the Chairman of the Board of Directors
and President of the Company and Vice Chairman of the Board of Directors of
Liuzhou OVM. 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 49, is a Director and Chief Financial Officer
of the Company. She is also a Director and Deputy General Manager of Liuzhou
OVM. 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 40, is a Director of the Company and Director and
Deputy General Manager of Liuzhou OVM. 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 47, is the Director and Treasurer of the Company
and a Director of Liuzhou OVM. 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.

         MR. WAN WAI ON, aged 27, 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 39, is the Vice President of the Company and
Deputy General Manager of Liuzhou OVM. 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

                                       25
<PAGE>

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 OVM's products. Ms. Tang devotes all of her time to the affairs of the
Company and its subsidiaries.

         MR. DING YONG GUI, aged 44, is a Director of the Company and General
Manager of Liuzhou OVM. 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 OVM. Mr. Ding devotes all of his time to the affairs fo the
Company and its subsidiaries.

         MR. CHEN XUE MING, aged 63, is a Director of the Company. Mr. Chen
graduated from Xiamen University specializing in economics. He received the
title of senior economist in 1992. Mr. Chen worked in Guangxi Engineering
Factory as Deputy General Manager from August 1989 to March 3, 1997. Mr. Chen
does not involve in the day-to-day management of the Company.


                         ITEM 10. EXECUTIVE COMPENSATION

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

         The following table shows, for each of the two years ended December 31,
1999 and 2000, the cash and other compensation paid by the Company to its
officers and directors.
<TABLE>
<CAPTION>

                                 SUMMARY COMPENSATION TABLE

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

<S>                        <C>    <C>         <C>            <C>              <C>
Ching Lung Po,             2000   $115,385   -0-            -0-              -0-
 President and CEO         1999    $61,538   -0-            -0-              -0-

Wan Wai On,                2000    $35,897   -0-            -0-              -0-
 Director and Secretary    1999       -0-    -0-            -0-              -0-
</TABLE>

         The Company paid its President, Mr. Ching Lung Po, an annual salary of
US$115,385 in 2000. Except for Mr. Ching Lung Po, no director or executive
officer of the Company or any of its subsidiaries was paid a total annual salary
and bonus in excess of US$100,000 during the fiscal years ended December 31,
1999 and 2000.

         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.

         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.

                                       26
<PAGE>

         Except for the foregoing, the Company has no employment contracts with
any of its officers or directors or maintain 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 OVM, are eligible to participate in the retirement and pension fund
established by Liuzhou OVM 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, 2000 to each person named in the Summary Compensation Table.

<TABLE>
<CAPTION>


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

<S>                           <C>               <C>              <C>             <C>
Ching Lung Po,               -0-               -0-              -0-             -0-
 President and CEO

Wan Wai On,                  -0-               -0-              -0-             -0-
 Director and Secretary

</TABLE>

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, 2000 to each person named in the Summary Compensation Table and the
unexercised options held as of the end of the 2000 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

Wan Wai On,                   -0-        -0-            -0-           -0-
 Director and Secretary


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.

                                       27
<PAGE>

         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.

         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 30, 2001, no incentive stock options had been granted.

                                       28
<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 OVM 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 OVM, are eligible to
participate in the retirement and pension fund established by Liuzhou OVM 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 OVM 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, 1999 and 2000 amounted to Rmb1,701,000 (US$205,000) and Rmb777,000
(US$94,000), respectively.

         At the end of 1997, Liuzhou OVM 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 OVM 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
Rmb2,296,000 (US$277,000) was paid by Liuzhou OVM in 1998.


     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 30, 2001, 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 30, 2001, there were
12,050,000 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)              5.8%
6 Battery Road #42-01 Singapore
049909, Republic of Singapore

NJI No. 1(B) Investment Fund                685,750(3)              5.8%
6 Battery Road #42-01n Singapore
049909, Republic of Singapore

                                       29
<PAGE>

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)

Li Kin Hang                              1,215,000(6)               9.2%
20/F King Jnin Mansion,
13-15 Yik Yam Street
Happy Valley, Hong Kong

Law Shun Ping                              826,200(7)               6.4%
86 Shun Ling Street
3/F San Po Kong,
Kowloon, Hong Kong
----------------------

(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 on 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 on 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.

(6)      Includes 1,200,000 Warrant Shares.

(7)      Includes 816,000 Warrant Shares.

         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-                      -

                                       30
<PAGE>

Peng Fang                                    -0-                      -

Wan Wai On                                   -0-                      -

Tang Xiao Ping                               -0-                      -

Ding Yong Gui                                -0-                      -

Chen Xue Ming                                -0-                      -

Shao Hou Kun                                 -0-                      -

Officers and Directors as a group         6,057,000                50.2%
(8 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 on 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.

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

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of the Company's Common Stock. Such persons are required by
SEC regulations to furnish the Company with copies of all such reports they
file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, Ding Yong Gui and Tang Xiao Ping filed
Form 3s on May 30, 2000 to report their status as officers, which commenced on
October 8, 1999. Deng Xiao Qiong filed Form 3 on March 31, 2000 to report her
status as director, which commenced on January 29, 1999. Chen Xue Ming and Shao
Hou Kun filed Form 3s on March 31, 2000 to report their status as directors,
which commenced on May 6, 1998. Cheung Lai and Peng Fang filed Form 3s on March
31, 2000 to report their status as directors, which commenced on October 8,
1999. Kwok Kwan Hung filed Form 4 on March 31, 2000 to report that he is no
longer a director since January 29, 1999. Wu Guo Sen and Wan Ying Lin filed Form
4s on March 31, 2000 to report that they are no longer directors since October
8, 1999.


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 18, 1995, Kolcari Investments Limited (predecessor of HDL) and
the Stock Company entered into a Joint Venture Contract (the "Contract"),
pursuant to which such parties agreed to establish Liuzhou OVM 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 OVM's
total initial registered capital of US$4 million was to be contributed in assets
and/or cash as follows: the Stock Company (30%) and Kolcari (70%).

                                       31
<PAGE>

         Pursuant to an agreement dated June 5, 1995 between Liuzhou OVM and the
Stock Company (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 OVM. Of the total value of assets transferred into Liuzhou OVM,
US$1,200,000 represented a capital contribution by the Stock Company for its 30%
equity interest in Liuzhou OVM and the balance of US$223,325 was recorded as a
loan to Liuzhou OVM. The remaining 70% of the issued capital is being provided
by Kolcari through the contribution of cash in the approximate amount of
US$2,800,000, of which US$2,170,000 had been paid as at December 31, 1996 with
the balance of US$630,000 had been paid as at December 31, 1998.

         Following the establishment of Liuzhou OVM, a series of comprehensive
services, leases and assets transfer agreements were entered into between
Liuzhou OVM and the Stock Company and its affiliates. Descriptions of these
agreements are set forth below.

         Pursuant to a lease agreement dated June 5, 1995 between Liuzhou OVM
and the Stock Company, the Stock Company agreed to lease the land use rights
with gross area of approximately 60,000 sq. meters, production plants and
premises with a gross area of approximately 9,463 sq. meters and 22
transportation vehicles, to Liuzhou OVM. The lease covering the land use rights,
production plants and premises is for a term equal to the period of duration of
Liuzhou OVM. The rental rate is renewable every three years with each increment
capped below 10%. With respect to the leasing of the transportation vehicles,
the initial lease term is for a period of three years from the date of the
agreement. Pursuant to a supplementary agreement dated September 28, 1995, the
aggregate cost of such rentals for each of the years ended December 31, 1995 and
1996 was agreed to be Rmb300,000 (US$36,000). The rental rate and lease term for
the year ended December 31, 1997 and subsequent years is subject to further
negotiation between the parties. Pursuant to another supplementary agreement
dated December 1, 1997, the aggregate cost of such rentals for each of the three
years ended December 31, 1997, 1998 and 1999 was agreed to be Rmb300,000
(US$36,000). Pursuant to the third supplementary agreement dated January 15,
1998, 22 transportation vehicles were reduced to 18. The aggregate rentals for
all of the leases for each of the three years ended December 31, 1998, 1999 and
2000 was agreed to be Rmb1,106,000 (US$134,000). Pursuant to an agreement dated
January 6, 2000, the above lease was terminated effective January 1, 2000.

         Pursuant to a lease agreement dated October 5, 1995 between Liuzhou OVM
and the Stock Company, the Stock Company agreed to lease 80 pieces of production
equipment, 73 pieces of office equipment and 12 motor vehicles, to Liuzhou OVM.
The rental is renewable every three years. Pursuant to a supplementary agreement
dated January 15, 1998, the aggregate rental for the above items for each of the
three years ended December 31, 1998, 1999 and 2000 was agreed to be Rmb1,821,000
(US$206,000). Following the relocation of production premises, the lease was
also terminated by agreement of the parties effective January 1, 2000.

         As provided under an agreement dated June 5, 1995 among Liuzhou OVM,
the Stock Company and the heat treatment plant (the "Plant") wholly owned by the
Stock Company, the Plant agreed to provide Liuzhou OVM heat treatment
subcontracting services at a discount of 3-5% from the prevailing market rate.
The aggregate subcontracting charges for each of the two years ended December
31, 1999 and 2000 amounted to Rmb10,621,000 (US$1,283,000) and nil,
respectively.

         In accordance with an agreement dated June 5, 1995 and a supplementary
agreement dated December 18, 1995 between Liuzhou OVM and the Stock Company, the
Stock Company agreed to transfer its intangible assets including trademarks,
patents, technology and know-how related to existing products and products under
development to Liuzhou OVM 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) is payable by Liuzhou OVM until the full Transfer Fee is settled.
The royalty is payable by Liuzhou OVM each year commencing January 1, 1997.

                                       32
<PAGE>

Pursuant to an agreement dated December 12, 1999 between Liuzhou OVM and the
Stock Company, Liuzhou OVM has 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 Stock Company and Liuzhou
OVM, all technology and know-how upon which the existing products manufactured
by Liuzhou OVM are based may be used by the Stock Company. Liuzhou OVM also
agreed to transfer certain inventories, fixed assets and financial assets
related to former employees of Liuzhou OVM to the Stock Company amounted to
Rmb28,302,000 (US$3,418,000).

         Liuzhou OVM purchases and sells a significant portion of its raw
materials and finished goods to the Stock Company and its affiliates. The amount
of such sales and purchases were Rmb11,922,000 (US$1,440,000) and Rmb7,970,000
(US$963,000), respectively, for the year ended December 31, 1999 and Rmb915,000
(US$110,000) and Rmb5,042,000 (US$609,000), respectively, for the year ended
December 31, 2000.

         Liuzhou OVM also leases certain plant and machinery to the Stock
Company's affiliates. For each of the two years ended December 31, 1999 and
2000, a rental income of Rmb61,000 (US$7,000) and Rmb64,000 (US$8,000),
respectively, was received by Liuzhou OVM. At the same time, the Stock Company's
affiliates also lease certain plant and machinery to Liuzhou OVM and a rental
expense of Rmb784,000 (US$95,000) and Rmb24,000 (US$3,000), respectively, was
incurred by Liuzhou OVM for each of the two years ended December 31, 1999 and
2000.

         In accordance with an agreement dated November 18, 2000 between Liuzhou
OVM and Hong Da, a PRC entity wholly owned by Ching Lung Po, Hong Da has granted
to Liuzhou OVM the exclusive right to use the "HVM" trademark at an annual fee
based on 1.5% of Liuzhou OVM's sales under "HVM" trademark. Intangible asset
fees charged by Hong Da amounted to Rmb1,127,000 (US$136,000) for the year ended
December 31, 2000.




                                       33
<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, 2000
b.       Consolidated statements of operations for the two years ended
         December 31, 2000 and 1999
c.       Consolidated statements of shareholders' equity and
         comprehensive income (loss)for the two years ended December 31, 2000
         and 1999
d.       Consolidated statements of cash flows for the two years ended
         December 31, 2000 and 1999
e.       Notes to consolidated financial statements


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

         During the last quarter of the fiscal year ended December 31, 2000, 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     Agreement Concerning Entrustment of the Heat Treatment Plant with
         Processing Tasks(1)
10.3     Agreement Concerning Transfer of Intangible Assets(1)
10.4     Agreement Concerning the Provision of Power, Water Supply and
         Welfare Facilities(1)
10.5     Supplementary Agreement on the Transfer of Intangible Assets(1)
10.6     Agreement Concerning the Leasing of Land, Buildings and Motor
         Vehicles(1)
10.7     Supplementary Agreement on the Leasing of Land, Buildings and
         Motor Vehicles(1)
10.8     Agreement Concerning Matters Relating to the Establishment of the
         Financial Accounts for the Joint Venture(1)
10.9     Agreement Concerning the Injection of Assets of Three Production
         Workshops(1)

                                       34
<PAGE>

10.10    Supplementary Agreement Concerning Collection of Accounts Receivable
         and Allocation of Expenses Incurred on the Collection of Accounts
         Receivable(1)
10.11    1996 Stock Option Plan(1)
10.12    Employment Agreement with Kwok Kwan Hung(1)
10.13    Agreement to Extend Date of Installment Contribution(1)
10.14    Supplementary Agreement on the Leasing of Land, Buildings and Motor
         Vehicles(3)
10.15    Supplementary Agreement Concerning the Provision of Welfare
         Facilities(3)
10.16    Agreement Concerning Interest on the Amounts due from OVM Joint Stock
         Co. Ltd. and its Affiliates(3)
10.17    Supplementary Agreement to Extend the Date of Installment
         Contribution(3)
10.18    Supplementary Agreement on the Leasing of Land, Buildings and Motor
         Vehicles(4)
10.19    Agreement and Supplementary Agreement Concerning the Leasing of
         Production Equipment, Office Equipment and Motor Vehicles (4)
10.20    Agreement on Termination of Use of Intangible Assets (5)
10.21    Agreement on the Division of Technical Information and Personnel and
         Other Issues (5)
10.22    Agreement on Termination of Tangible Assets Leasing Agreement (5)
10.23    Agreement on Leasing of Production and Transportation Equipment (5)
10.24    Agreement on Leasing of Production and Operating Premises and
         Buildings (5)
10.25    Agreement on the Use of Trademark (6)
10.26    Service Agreement with Ching Lung Po (6)
10.27    Employment Agreement with Wan Wai On (6)
10.28    Memorandum of Understanding (6)
21       Subsidiaries of the Registrant(6)

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

(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)      Incorporated by reference to exhibit of the same number filed with the
         Company's Form 10-KSB for the fiscal year December 31, 1997.

(4)      Incorporated by reference to exhibit of the same number filed with the
         Company's Form 10-KSB for the fiscal year December 31, 1998

(5)      Incorporated by reference to exhibit of the same number filed with the
         Company's Form 10-KSB for the fiscal year December 31, 1999

(6)      Filed herewith



                                       35
<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,                               April 29, 2001
-----------------------------------       President and Chairman
Ching Lung Po                             of the Board of Directors


/s/ Deng Xiao Qiong                       Chief Financial                                        April 29, 2001
-----------------------------------       Officer and Director
Deng Xiao Qiong


/s/ Cheung Lai                            Treasurer and Director                                 April 29, 2001
-----------------------------------
Cheung Lai


/s/ Wan Wai On                            Secretary and Director                                 April 29, 2001
-----------------------------------
Wan Wai On


/s/ Peng Fang                             Director                                               April 29, 2001
-----------------------------------
Peng Fang


/s/ Chen Xue Ming                         Director                                               April 29, 2001
-----------------------------------
Chen Xue Ming


/s/ Tang Xiao Ping                        Vice President                                         April 29, 2001
-----------------------------------
Tang Xiao Ping


/s/ Ding Yong Gui                         Vice President                                         April 29, 2001
-----------------------------------
Ding Yong Gui

</TABLE>


                                       36
<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, 2000
b.       Consolidated statements of operations for the two years ended
         December 31, 2000 and 1999
c.       Consolidated statements of shareholders' equity and
         comprehensive income (loss) for the two years ended December 31, 2000
         and 1999
d.       Consolidated statements of cash flows for the two years ended
         December 31, 2000 and 1999
e.       Notes to consolidated financial statements




<PAGE>








                      OVM INTERNATIONAL HOLDING CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999





<PAGE>


                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<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 - F-24
</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, 2000,
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, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 2000,
and the results of their operations and their cash flows for each of the years
in the two year period ended December 31, 2000 in conformity with generally
accepted accounting principles.



HORWATH GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
March 16, 2001, except for Note 24, as to which the date
   is April 29, 2001




                                      F-2
<PAGE>

                      OVM INTERNATIONAL HOLDING COPRORATION

                  CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                                Note                 US$             RMB
                                                                                                     ---             ---
<S>                                                                                         <C>                   <C>
ASSETS
Current assets:
  Cash and bank balances                                                                    $      1,260          10,433
  Accounts receivable, net of allowance of RMB21,063                                               4,188          34,678
  Inventories                                                                     4                2,495          20,659
  Prepayments, deposits and other receivables, net of allowance of RMB4,791                          667           5,520
  Due from related parties, net of allowance of RMB21,623                        17                2,038          16,878
                                                                                            ------------     -----------

Total current assets                                                                              10,648          88,168

Property, machinery and equipment, net                                            5                2,364          19,577
Leased property, machinery and equipment, less accumulated amortization           6                1,903          15,755
Investments                                                                       7                1,106           9,160
Other assets:
  Deferred assets                                                                 8                  267           2,214
  Staff housing loans                                                             9                   99             810
                                                                                            ------------     -----------

Total assets                                                                                $     16,387         135,684
                                                                                            ============     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes payable                                                                  11         $      1,932          16,000
  Other debt                                                                     12                  127           1,050
  Current portion of capital leases                                                                   27             223
  Accounts payable                                                                                 4,131          34,205
  Advance payments by customers                                                                      757           6,266
  Other payables and accrued liabilities                                                           1,285          10,650
  Taxes payable                                                                                      497           4,112
                                                                                            ------------     -----------

Total current liabilities                                                                          8,756          72,506

Capital leases net of current portion                                                              1,925          15,935
                                                                                            ------------     -----------


Total liabilities                                                                                 10,681          88,441
                                                                                            ------------     -----------

Minority interests in consolidated subsidiaries                                                    2,598          21,505
                                                                                            ------------     -----------

Commitments and contingencies                                                   22,23

Shareholders' equity:
  Common stock, 40,000,000 shares, par value of US$0.0001 authorized;
   12,050,000 shares, issued and outstanding                                     13                    1              10
  Additional paid-in capital                                                     13                3,719          30,795
  Retained earnings                                                                                 (605)         (5,010)
  Accumulated comprehensive loss                                                                      (7)            (57)
                                                                                            -------------    ------------

Total shareholders' equity                                                                         3,108          25,738
                                                                                            ------------     -----------

Total liabilities and shareholders' equity                                                  $     16,387         135,684
                                                                                            ============     ===========
</TABLE>

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


                                      F-3
<PAGE>

                      OVM INTERNATIONAL HOLDING COPRORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>

                                                                                            2000                   1999
                                                                                            ----                   ----
                                                                 Note                 US$            RMB             RMB
                                                                                      ---            ---             ---
<S>                                                               <C>        <C>                     <C>          <C>
Sales:
  Related parties                                                 17         $        110            915          11,922
  Others                                                                           11,820         97,865         176,340
                                                                             ------------    -----------    ------------

Net sales                                                                          11,930         98,780         188,262

Cost of sales, including costs incurred to related
 parties of RMB5,351 and RMB19,328 in 2000
 and 1999, respectively                                                             7,358         60,921         109,415
                                                                             ------------    -----------    ------------

Gross profit                                                                        4,572         37,859          78,847

Selling and administrative expenses                                                 9,249         76,583          72,412
                                                                             ------------    -----------    ------------

(Loss) / income from operations                                                    (4,677)       (38,724)          6,435

Interest expense, including amounts to related
 parties of RMB Nil and RMB489 in 2000
 and 1999, respectively                                                              (286)        (2,364)         (3,224)
Interest income                                                                        24            200             328
Other income                                                                          113            933           1,665
Foreign exchange (loss) gain                                                          (10)           (84)             32
                                                                             ------------    -----------    ------------

(Loss) income before income taxes                                                  (4,836)       (40,039)          5,236
Income taxes                                                      14                 (748)        (6,191)         (2,846)
                                                                             ------------    -----------    ------------

                                                                                   (5,584)       (46,230)          2,390

Minority interests                                                                  1,320         10,931          (1,298)

Equity in earnings of equity investee                              7                    4             32             127
                                                                             ------------    -----------    ------------

Net (loss) income                                                            $     (4,260)       (35,267)          1,219
                                                                             =============   ===========    ============

Basic and diluted earnings per share                             3(i)        $     (0.35)         (2.93)            0.10
                                                                             ============    ==========     ============
</TABLE>




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


                                      F-4
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
                    (Amounts in thousands except share data)

<TABLE>
<CAPTION>

                                 Number of                                                Accumulated
                                 shares of                   Additional                         other
                                    common        Common        paid-in       Retained  comprehensive
                                     stock         stock        capital       earnings   income (loss)          Total
                                                                             (deficit)

                                                     RMB            RMB            RMB            RMB             RMB
                               ----------     ----------     ----------     ----------      ----------      ----------
<S>                            <C>                    <C>        <C>            <C>                 <C>         <C>
Balances at
December 31, 1998              12,050,000             10         30,795         29,038              34          59,877
                                                                                                            ----------
Comprehensive income:
Net income                             --             --             --          1,219              --           1,219
Currency translation
 adjustments                           --             --             --             --              27              27
                               ----------     ----------     ----------     ----------      ----------      ----------

Total comprehensive income             --             --             --             --              --           1,246
                                                                                                            ----------
Balances at
December 31, 1999              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               --             --             --         (5,010)             --         (35,385)
                                                                                                            ----------
Balances at
December 31, 2000              12,050,000             10         30,795         (5,010)            (57)         25,738
                               ==========     ==========     ==========     ==========      ==========      ==========

U.S.$                                         $        1     $    3,719     $     (605)     $       (7)     $    3,108
                                              ==========     ==========     ==========      ==========      ==========
</TABLE>



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


                                      F-5
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>
                                                                                            2000                    1999
                                                                                            ----                    ----
                                                                                      US$            RMB             RMB
                                                                                      ---            ---             ---
<S>                                                                          <C>                 <C>               <C>
Cash flows from operating activities:
  Net (loss) income                                                           $    (4,260)       (35,267)          1,219
  Adjustments to reconcile net (loss) income to net cash provided
   by operating activities:
     Minority interests                                                            (1,320)       (10,931)          1,298
     Equity in earnings of equity investee                                             (4)           (32)           (127)
     Loss on write off of intangible assets                                           389          3,217            (791)
     Loss on disposal of property, machinery and equipment                            171          1,415               -
     Depreciation                                                                     401          3,323           2,848
     Amortization                                                                      26            217             286
     Allowance for doubtful accounts                                                3,721         30,808               -
  Decrease (increase) in assets:
     Accounts receivable                                                           (1,141)        (9,449)         30,036
     Inventories                                                                     (376)        (3,110)           (267)
     Prepayments, deposits and other receivables                                      296          2,452           6,191
     Due from related parties                                                       3,316         27,459          (5,162)
     Deferred assets                                                                    -              -             318
     Staff housing loans                                                               (2)           (13)           (440)
     Receivable from equity investee                                                 (109)          (910)            668
  Increase (decrease) in liabilities:
     Accounts payable                                                               1,048          8,676         (10,733)
     Advance payments by customers                                                   (182)        (1,509)         (4,396)
     Other payables and accrued liabilities                                          (533)        (4,412)         (1,700)
     Due to related parties                                                             -              -          (2,147)
     Taxes payable                                                                   (212)        (1,761)         (6,493)
                                                                              ------------   ------------    -----------
Net cash provided by operating activities                                           1,229         10,173          10,608
                                                                              -----------    -----------     -----------

Cash flows from investing activities
  Acquisition of property, machinery and equipment                                 (1,271)       (10,523)         (4,562)
  Proceeds on disposal of property, machinery and equipment                            28            239               -
                                                                              -----------    -----------     -----------
Net cash used in investing activities                                              (1,243)       (10,284)         (4,562)
                                                                              -----------    -----------     -----------

Cash flows from financing activities:
  Increase in notes payable                                                         1,449         12,000           6,000
  Repayment of notes payable                                                       (2,899)       (24,000)        (14,860)
  Repayment of principal of capital lease                                             (37)          (311)              -
                                                                              ------------   ------------    -----------
Net cash used in financing activities                                              (1,487)       (12,311)         (8,860)
                                                                              ------------   ------------    ------------

Net (decrease) increase in cash and cash equivalents                               (1,501)       (12,422)         (2,814)
Exchange difference                                                                     -             (4)            254
Cash and cash equivalents at beginning of year                                      2,761         22,859          25,419
                                                                              -----------    -----------     -----------

Cash and cash equivalents at end of year                                      $     1,260         10,433          22,859
                                                                              ===========    ===========     ===========
</TABLE>


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


                                      F-6
<PAGE>



                      OVM INTERNATIONAL HOLDING COPRORATION

                   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") (formally known as OVM
      Development Limited ("ODL")), Liuzhou OVM Construction Machinery Company
      Limited ("Liuzhou OVM" or the "Joint Venture" or the "JV") 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 ("ODL") 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 JV operates under the name of Liuzhou
      OVM Construction Machinery Company Limited.

            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, are 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 OVM's business may be adversely affected by competition from its
      Joint Venture Partner. Liuzhou OVM'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 OVM'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 COPRORATION


1.    Organization and principal activities (continued)

            In January 2000, the JV and the JV 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 part 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 to the JV Partner including the
            amount classified as Assets held for Sale at December 31, 1999.

            Notwithstanding these agreements, 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.

            As discussed in Note 17, the Company and the JV Partner have not
      been able to agree on the final determination of the amount owed to the JV
      by the JV Partner as a result of the above agreements. The final
      determination will be made pursuant to an arbitration proceeding
      administered by the PRC government. Thus, it is currently premature for
      the Company to be able to determine the exact amount which will be
      received. However, the Company has provided an allowance which it believes
      is adequate for amounts which may not be collectible from the JV Partner.

            During 1998, the JV acquired 69.3% of OVM Prestress, a newly formed
      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.

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. 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 COPRORATION


2.    Basis of presentation (cont'd)

            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     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)   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.

      (c)   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%



                                      F-9
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


3.    Summary of significant accounting policies (continued)

      (d)   Intangible assets

                  Intangible assets, which include goodwill and proprietary
            technology and trademarks, are stated at cost less accumulated
            amortization. Through 2000, amortization was calculated on a
            straight-line basis over 30 years.

                  Management assesses the carrying values of its long-lived
            assets for impairment when circumstances warrant such a review.
            Generally, assets to be used in operations are considered impaired
            if the sum of expected undiscounted future cashflows 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. In 2000, management determined that
            the total remaining intangible assets were impaired and an
            impairment loss was recorded (Note 10).

      (e)   Investments

                  Affiliated entities in which the Company has significant
            influence but 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.

      (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.



                                      F-10
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


3.    Summary of significant accounting policies (continued)

      (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.

                  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, 2000 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, 2000 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, 2000
            and 1999 were 12,050,000.

      (j)   Research and development costs

                  Research and development costs are expensed as incurred and
            amounted to RMB1,443 and RMB382, net (Note 12), for 2000 and 1999
            respectively.

      (k)   Advertising costs

                  Advertising costs are expensed by the Company as incurred.
            Total advertising costs incurred by the Company during 2000 and 1999
            were RMB608 and RMB606 respectively.



                                      F-11
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


3.    Summary of significant accounting policies (continued)

      (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 (Note 8 and
            16).

      (m)   Comprehensive income:

                  The Company has adopted Statement of Financial Accounting
            Standard ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS
            No. 130 establishes standards for the reporting and display of
            comprehensive income, its components and accumulated balances in a
            full set of general-purpose financial statements. SFAS No. 130
            defines comprehensive income to include all changes in equity except
            those resulting from investments by owners and distributions to
            owners. Among other disclosures, SFAS No. 130 requires that all
            items that are required to be recognized under current accounting
            standards as components of comprehensive income be reported in a
            financial statement that is presented with the same prominence as
            other financial statements. The Company's only current component of
            comprehensive income is foreign currency translation adjustments.

      (n)   Segment reporting:

                  The Company adopted SFAS No. 131, "Disclosures about Segments
            of an Enterprise and Related Information" (SFAS No. 131"). The
            Company's results of operations and financial position are not
            affected by implementation of SFAS No. 131 as it operates in only
            one segment.

      (o)   Pension and other post retirement benefits:

                  The Company adopted SFAS No. 132, "Employers' Disclosures
            about Pensions and Other Post Retirement Benefits". SFAS No. 132
            requires comparative information for earlier years to be restated.
            The Company's results of operations and financial position are not
            affected by implementation of SFAS No. 132.



                                      F-12
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


3.    Summary of significant accounting policies (continued)

      (p)   Recently issued accounting pronouncements:

                  In June 1998, the Financial Accounting Standards Board issued
            SFAS No. 133, "Accounting for Derivative Instruments and Hedging
            Activities" ("SFAS No. 133"), which is effective for financial
            statements for all fiscal quarters of all fiscal years beginning
            after June 15, 2000. SFAS No. 133 standardizes the accounting for
            derivative instruments, including certain derivative instruments
            embedded in other contracts, by requiring that an entity recognize
            those items as assets or liabilities in the statement of financial
            position and measure them at fair value. SFAS No. 133 also addresses
            the accounting for certain hedging activities. The Company currently
            does not have any derivative instruments nor is it engaged in
            hedging activities, thus the Company does not believe implementation
            of SFAS No. 133 will have a material impact on its financial
            statement presentation or disclosures.

                  In December 1999, the staff of the Securities and Exchange
            Commission issued Staff Accounting Bulletin ("SAB") No. 101, Revenue
            Recognition in Financial Statements. SAB No. 101, as amended by SAB
            No. 101A and SAB No. 101B, is effective no later than the fourth
            fiscal quarter of fiscal years beginning after December 15, 1999.
            SAB No. 101 provides the Staff's views in applying generally
            accepted accounting principles to selected revenue recognition
            issues. The Company believes that it complies with the accounting
            and disclosure described in SAB No. 101; therefore, management
            believes that SAB No. 101 will not impact the Company's consolidated
            financial statements.

      4.    Inventories

                  At December 31, 2000, inventories consist of the following:

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

            Raw materials                         $        690         5,714
            Work in progress                               695         5,757
            Finished goods                               1,110         9,188
                                                  ------------   -----------

                                                  $      2,495        20,659
                                                  ============   ===========

            During the year ended December 31, 2000, approximately RMB15,035 of
            inventories were transferred to the JV partner at cost.




                                      F-13
<PAGE>



                      OVM INTERNATIONAL HOLDING COPRORATION



      5.    Property, machinery and equipment, net

                  At December 31, 2000, property, machinery and equipment
            consists of:
<TABLE>
<CAPTION>

                                                                                     US Dollars                RMB
                                                                                     ----------                ---
<S>                                                                             <C>                          <C>
            Cost:
             Buildings                                                          $           151              1,253
             Leasehold improvement                                                          250              2,072
             Plant, machinery and equipment                                               3,253             26,936
                                                                                ----------------     --------------

                                                                                           3,654             30,261
                                                                                ----------------     --------------
            Accumulated depreciation:
             Buildings                                                                        65                537
             Leasehold improvement                                                            10                 83
             Plant, machinery and equipment                                                1,215             10,064
                                                                                ----------------     --------------

                                                                                           1,290             10,684
                                                                                ----------------     --------------

            Property, machinery and equipment, net                              $          2,364             19,577
                                                                                ================     ==============
</TABLE>

            During the year ended December 31, 2000, approximately RMB9,435 of
            fixed assets were transferred to the JV Partner at their carrying
            amounts.

      6.    Leased property, machinery and equipment, net

                  On December 11, 1999, as a result of the termination of the
            Company's lease of land, buildings, property and equipment from the
            JV Partner, the Company entered into a new 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, on December 12, 1999 the Company entered into a
            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. Both of the above leases are classified as capital leases.

                  At December 31, 2000, property, machinery and equipment under
            capital leases consists of:

<TABLE>
<CAPTION>

                                                                                         US Dollars                RMB
                                                                                         ----------                ---
            Cost:
<S>                                                                              <C>                            <C>
             Buildings                                                           $            1,322             10,948
             Plant, machinery and equipment                                                     667              5,521
                                                                                 ------------------   ----------------

                                                                                              1,989             16,469
            Accumulated amortization                                                             86                714
                                                                                 ------------------   ----------------

            Leased property, machinery and equipment, net                        $            1,903             15,755
                                                                                 ==================   ================
</TABLE>



                                      F-14
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION
<TABLE>
<CAPTION>

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

                  At December 31, 2000, future minimum payments under capital
            leases together with the present value of the net minimum lese
            payments are as follows:

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

<S>                         <C>                                                  <C>                       <C>
                            2001                                                 $          189            1,564
                            2002                                                            189            1,564
                            2003                                                            189            1,564
                            2004                                                            189            1,564
                            2005                                                            190            1,574
                          Thereafter                                                      3,517           29,125
                                                                                 --------------    -------------

                          Total minimum lease payments                                    4,463           36,955
                          Less: Amount representing interest                             (2,512)         (20,797)
                                                                                 --------------    -------------

                                                                                 $        1,951           16,158
                                                                                 ==============    =============
      7.    Investments

                  At December 31, 2000, investments consist of:

                                                                                     US Dollars              RMB
                                                                                     ----------              ---
            Equity investment (a)
            Cost                                                                 $          569            4,709
            Share of post-acquisition retained earnings                                      43              363
            Currency translation adjustment                                                 (69)            (568)
                                                                                 --------------       ----------

                                                                                            543            4,504
            Investment at cost (b)                                                          450            3,730
            Receivable from equity investee                                                 113              926
                                                                                 --------------       ----------

                                                                                 $        1,106            9,160
                                                                                 ==============       ==========
</TABLE>

<TABLE>
<CAPTION>

            (a)   The Company has a 50% equity investment in OVM Prestress Co.
                  Pte. Ltd, ("OVM Singapore") a company incorporated in the
                  Republic of Singapore. OVM Singapore. is principally engaged
                  in the provision of prestressing and related engineering
                  services. The Company's share of earnings of OVM Singapore is
                  included in income as earned.

                  Summarized unaudited financial information of OVM Singapore as
                  of and for the year ended December 31, 2000 and 1999 is as
                  follows:
                                                                                       2000                    1999
                                                                          US Dollars            RMB             RMB
                                                                          ----------            ---             ---
<S>                                                                       <C>                 <C>              <C>
                  Current assets                                          $      613          5,078            4,403
                  Non-current assets                                      $      244          2,027            2,229
                  Total liabilities, all current                          $      164          1,359              688
                  Net Sales                                               $      553          4,575            3,310
                  Gross profit                                            $      133          1,099              540
                  Net income                                              $        8             63               10
</TABLE>



                                      F-15
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      7.    Investments (continued)

            (b)   During 1998, the JV acquired 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.


      8.    Deferred assets

                                                       US Dollars           RMB

            Housing loans (a)                         $        40           329
            Retirement costs (b)                              227         1,885
                                                      -----------   -----------

                                                      $       267         2,214
                                                      ===========   ===========

            (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.

            (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. In January 2000, approximately RMB2,365 was
                  transferred to the JV Partner in relation to staff retained by
                  the JV Partner. Amortization for the years ended December 31,
                  2000 and 1999 was RMB101 and RMB241, respectively. (Note 16).


      9.    Staff housing loans

                  At December 31, 2000 staff housing loans of RMB810 consist of
            housing loans advanced to the existing 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, 2000 loans of RMB170 were made and RMB157
            was repaid. In addition, an amount of RMB2,034 was transferred to
            the JV Partner in 2000 in relation to staff retained by the JV
            Partner. (Note 1)


      10.   Impairment of intangible assets

                  During the year ended December 31, 2000, the Company included
            in selling and administrative expense, impairment losses of
            approximately RMB3,217 related to goodwill arising from its
            acquisition of its interest in the JV. During the fourth quarter of
            2000, management determined that, as a result of the various
            agreements with the JV Partner, the value of the goodwill was
            uncertain and was therefore written off.



                                      F-16
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      11.   Notes payable

                  At December 31, 2000, notes payable consists of amounts
            payable to various banks in the PRC. RMB6,000 is collateralized by
            plant and machinery owned by the JV. Another note of RMB5,000 is
            guaranteed by a third party, and a guarantee fee of RMB80 was paid
            for such guarantee. All remaining notes are unsecured. All notes are
            due within one year of the balance sheet date and interest at a
            weighted average rate of 7.2% per annum was incurred during 2000
            (1999: 8.3%).


      12.   Other debt

                  At December 31, 2000, 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 2001. At December 31, 2000,
            repayment of an additional RMB60 is contingent upon whether the
            Company successfully completes certain remaining projects.


      13.   Common stock and additional paid-in capital

                  The Company has granted 4,000,000 stock purchase warrants for
            the purchase of one share 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 has been reserved for
            issuance upon exercise of the stock purchase warrants. All stock
            purchase warrants remained outstanding at December 31, 2000.

                  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, 2000, no stock options have been granted under the
            Plan.

      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.



                                      F-17
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      14.   Income taxes (continued)

                  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. 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 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 has made additional provision of
            RMB4,476 in the current year for the additional income taxes for
            1997. The five year tax exemption expired in 2000.

                  The Company's share in the JV's tax savings resulting from
            this tax holiday for the years 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%.

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

                                                                                        2000           1999
                                                                                        ----           ----
                                                                                         RMB            RMB

<S>                                                                                      <C>            <C>
                  Statutory income tax                                                   33%            33%

                  Computed expected tax expense (benefit)                                  -          1,728
                  Impact of revoked preferential tax (tax holiday)
                     of the JV                                                         4,476           (124)
                  Item which gives rise to no tax benefit:
                     Net loss of the Company and HDL                                     757            413
                     Others                                                              958            829
                                                                                ------------     ----------

                  Taxation charges for the year                                        6,191          2,846
                                                                                ============     ==========
</TABLE>

                  The Company's share in the undistributed earnings of the
            Company's foreign subsidiaries amounted to RMB25,386 and RMB34,587
            at December 31, 2000 and 1999 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, 2000 and 1999 was
            RMB5,602 and RMB10,447 respectively.

                  No deferred income taxes have been provided as the effect of
            all temporary differences is not material.



                                      F-18
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      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, 2000 and 1999, RMB15,899 and
            RMB38,217, respectively, of shareholders' equity is subject to
            exchange conversion restrictions.


      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, 2000 and 1999 amounted to RMB756
            and RMB1,494 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 years ended December 31, 2000 and 1999
            amounted to RMB21 and RMB207 respectively. 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.



                                      F-19
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      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, 2000, the Company had amounts due from the JV
            Partner of RMB22,412. Additional amounts of approximately RMB29,600
            became due from the JV Partner as a result of the transfer of
            certain inventories, fixed assets and financial assets related to
            former JV employees to the JV Partner under the various January 2000
            agreements.

                  Other significant transactions with the JV Partner during 2000
            are summarized below:
<TABLE>
<CAPTION>

                                                                                            2000                1999
                                                                  US Dollars                 RMB                 RMB
                                                                  ----------                 ---                 ---
<S>                                                                     <C>                   <C>              <C>
                Sales of raw materials                                  $  1                  10               2,283
                Sales of finished goods                                  109                 905               9,619
                Rental income from leasing of
                   Plant and machinery                                     8                  64                  61
                Sales of machinery                                         -                   -                  34
                Transportation income                                      -                   -                 235
                Services fee income                                        -                   -                  34
                Rental expenses for leasing of
                  Land and buildings, plant and
                  Machinery and motor vehicles                           (34)               (285)             (2,505)
                Purchases of raw materials                                 -                   -                (196)
                Sub-contracting charges                                    -                   -             (10,621)
                Interest expense                                           -                   -                (489)
                Purchases of finished goods                             (593)             (4,908)             (3,443)
                Purchases of packing materials                           (11)                (92)                  -
                Management fees                                            -                   -                (310)
                Trademark use fee                                        (62)               (512)                  -
</TABLE>



                                      F-20
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      17.   Related party transactions and balances (continued)

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

                                                                                            2000                1999
                                                                  US Dollars                 RMB                 RMB
                                                                  ----------                 ---                 ---
<S>                                                                      <C>                                      <C>
                 Sales of raw materials                                  $ -                   -                  20
                 Rental income                                             1                   1                   -
                 Rental expenses for leasing of
                   Plant and machinery                                   (3)                (24)               (784)
                 Sub-contracting charges                                   -                   -               (246)
                 Purchases of raw materials                                -                   -             (1,533)
                 Purchases of finished goods                             (5)                (42)                   -

</TABLE>

                  During the years ended December 31, 2000 and 1999, the Company
            made sales of RMB719 and RMB1,783, respectively, to OVM Prestress
            Engineering Company Pte. Ltd.

                  Amounts due from the Joint Venture Partner are the subject of
            arbitration under a proceeding being administered by the local PRC
            government. However, at this time, it is too early to determine the
            outcome of the arbitration and the Company has provided an allowance
            for uncollectible amounts of RMB21,623.

                  At December 31, 2000 the balances with related parties are as
            follows:
<TABLE>
<CAPTION>

                                                                                      US Dollars                   RMB
                                                                                      ----------                   ---
<S>                                                                            <C>                   <C>
                  Due from related parties:
                     JV Partner                                                $             700                 5,799
                     Director - Mr. Ching Lung Po                                          1,338                11,079
                                                                               -----------------      ----------------

                                                                               $           2,038                16,878
                                                                               =================      ================
</TABLE>


                  These balances are unsecured, non-interest bearing and due on
            demand.


      18.   Supplemental cash flow information

<TABLE>
<CAPTION>
                                                                                                       2000                1999
                                                                             US Dollars                 RMB                 RMB
                                                                             ----------                 ---                 ---
<S>                                                                            <C>                    <C>                 <C>
                 Interest paid                                                 $    286               2,364               2,772
                                                                               =========          ==========          ==========

                 Income taxes paid                                             $    486               4,026               2,861
                                                                               =========          ==========          ==========
</TABLE>


            Non-cash investing and financing activities

                  Capital leases obligation of RMB16,469 were incurred during
            2000. Inventories of approximately RMB 15,035, prepayments, deposits
            and other receivables of approximately RMB 731, fixed assets of
            approximately RMB9,435, deferred assets of approximately RMB2,365
            and staff housing loans of approximately RMB2,034 were transferred
            to the joint venture partner in 2000 in exchange for a receivable of
            approximately RMB29,600.



                                      F-21
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION


      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, 2000 and 1999,
            the Company also had foreign sales (primarily in Japan and Vietnam)
            comprising approximately 17% and 12% of total sales, respectively.

                  No customers accounted for 10% or more of the total sales of
            the Company during 2000 or 1999.

                  Details of the Company's purchases from suppliers, which
            accounted for 10% or more of the total purchases, are as follows:

                                                               2000         1999
                                                               ----         ----
                                                                  %            %
                  Purchases:
                     Hubei Huangshi Daye Steeling Factory        16           20
                     Others                                      84           80
                                                           --------     --------

                                                                100          100
                                                           ========     ========

                  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.


                                      F-22
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION

      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 2000 and
            1999.

                  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, 2000 and
            1999, the Company's share in the distributable profits of the JV and
            its subsidiaries were approximately RMB 40,342 and RMB39,360,
            respectively.


      22.   Operating lease commitments

                  At December 31, 2000, 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
                                                                     ---

                           2001                                      367
                           2002                                      331
                           2003                                      292
                           2004                                      256
                           2005                                      256
                           Thereafter                              1,429
                                                               ---------
                                                                   2,931
                                                               =========

                  Rent Expense under operating leases was RMB761 and RMB3,461
            for the years ended December 31, 2000 and 1999, respectively.



                                      F-23
<PAGE>


                      OVM INTERNATIONAL HOLDING COPRORATION



      23.   Commitments and Contingencies

                  In accordance with an agreement dated June 5, 1995 (the
            "Original Agreement"), the JV Partner agreed to transfer certain
            intangible assets including trademarks and proprietary technology
            and know-how relating to its products and products under development
            to Liuzhou OVM for a total consideration of RMB24,000 (US$2,899)
            (the "Transfer fee"). An annual royalty (the "Annual Royalty")
            calculated at 1.5% on the net sales (before VAT) is payable by
            Liuzhou OVM each year commencing January 1, 1997 until the Transfer
            fee is fully settled. By a supplementary agreement dated December
            18, 1995 (the "Supplementary Agreement") entered into between
            Liuzhou OVM and the JV Partner, the Transfer fee was revised from
            RMB24,000 to RMB8,000 and the calculation of Annual Royalty was
            revised from 1.5% to 0.6% on the net sales before VAT. In addition,
            pursuant to an agreement with the JV Partner dated December 12,
            1999, Liuzhou OVM agreed to stop to use the trademarks and the JV
            Partner agreed to waive the remaining unsettled Transfer fee. A
            disagreement has arisen regarding the calculation of the Transfer
            fee. The JV Partner is calculating the Transfer fee on the basis of
            the Original Agreement at 1.5% on the net sales before VAT and
            ignored the Supplementary Agreement. The accumulated difference in
            Annual Royalty as calculated from the two agreements for the period
            from January 1, 1997 to December 31, 1999 amounted approximately to
            RMB4,500. Management of Liuzhou OVM is in the process of negotiation
            with the JV Partner for the resolution of this matter and are
            confident that agreement will be reached and the Supplementary
            Agreement will prevail.

                  Beginning in January 2000, Liuzhou OVM's products are marketed
            under a new trademark ("HVM") which is registered in the name of a
            related company, Shenzhen Hong Da Technical Company Limited ("Hong
            Da"). Hong Da has granted the JV the exclusive right to use the HVM
            trademarks at an annual fee based on 1.5% of sales. Intangible asset
            fees charged by Hong Da amounted to RMB1,127 for the current year.

                  At December 31, 2000, the Company had no outstanding capital
            commitments for purchases of equipment and moulds.

      24.   Subsequent event

                  On April 29, 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 negotiated.





                                      F-24



<PAGE>




                                INDEX TO EXHIBITS


EXHIBIT
NUMBERS             DESCRIPTION

10.25    Agreement on the Use of Trademark

10.26    Service Agreement with Ching Lung Po

10.27    Employment Agreement with Wan Wai On

10.28    Memorandum of Understanding

21       Subsidiaries of the Registrant