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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-KSB

|(Mark One)                                  |  |                                                                                    
|------------------------------------------- |  | -----------------------------------------------------------------------------------
|                                            |  |                                                                                    
|ý                                           |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.    
|For the fiscal year ended December 31, 2003
|OR                                         
|o                                           |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from            to

Commission file number 000-49738

Carroll Shelby International Inc.(Exact Name of Small Business Issuer as Specified in Its Charter)

Nevada(State or Other Jurisdiction of Incorporation or Organization)

86-1012155(I.R.S. Employer Identification No.)

11150 W. Olympic Boulevard, Suite 1050 Los Angeles, CA 90064(Address of Principal Executive Offices)

(310) 914-1843(Issuer's Telephone Number, Including Area Code)

Ginseng Forest, Inc.(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

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

Title of Each Class

Name of Each Exchange
on Which RegisteredNone

None


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

Common Stock, $0.001 par value per share

(Title of Class)

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

Check if there is no 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. o

State issuer's revenues for its most recent fiscal year. $2,326,137

State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange
Act.) $52,066,257 as of April 14, 2004.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.12,855,866 shares of Common Stock as of December 31,
2003.

Transitional
Small Business Disclosure Format (check one):

Yes o    No ý

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB
(e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any
proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990). No documents are
incorporated by reference.



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TABLE OF CONTENTS

CARROLL SHELBY INTERNATIOAL INC.
INDEX TO FORM 10-KSB
FOR THE YEAR ENDED
DECEMBER 31, 2003



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|PART II. 
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|PART III.
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Forward-Looking Statements

This document contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should," "except," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking
statements after the date of this report to conform such statements to actual results or to changes in our expectations.

Readers
are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors that affect our business, including
without limitation the disclosures made under the caption "Management's Discussion and Analysis of Financial Condition or Plan of Operation" and under the caption "Risk Factors" included herein.

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

General

Carroll Shelby's name is synonymous with performance. From the initial production of the first Shelby Cobra in the 1960s to the recent announcement of teaming
with Ford to develop specialty vehicles, Carroll Shelby continues to participate in the development of high performance automobiles.

Carroll
Shelby International, Inc. ("CSI")has three wholly owned subsidiaries, Shelby Automobiles, Inc.("Autos") Carroll Shelby Licensing, Inc.("CSL")
and Shelby Automotive South Africa (called the "Shelby Companies") Together, the Shelby Companies are engaged in the manufacturing and marketing of performance automobiles and related accessories as
well as the licensing of the Shelby brand to third parties in connection with various products, including vehicles, memorabilia, video games, models, toys, branded apparel, styling and performance
parts. Shelby Automobiles is currently producing authentic Shelby continuation Cobras, including the Cobra 427 S/C, the Cobra 289 FIA and the Cobra 289 S/C, and selling the same as component vehicles
(i.e. without engines or drive trains)("Component Vehicles"). All Shelby Cobras are offered through a proprietary network of more than 20 dealers in North America and Europe. Shelby Automobiles also
sells aftermarket styling and performance parts under the Carroll Shelby brand name.

CSI
was originally organized under the laws of the State of Nevada on December 4, 2000 (date of inception) as Ginseng Forest, Inc. ("GFI") GFI had no operations through
June 23, 2003 and was considered a development stage company in accordance with Statement of Financial Accounting Standards No. 7. On June 23, 2003, GFI acquired all of the
outstanding common stock of CSL and Autos, a recently formed entity, for 9,087,866 shares of GFI common stock and a $2,000,000 secured promissory note to Carroll Shelby.

In
the third quarter of 2003 Autos began the production of Cobra automobiles due to the financial failure of a licensee Shelby American Inc. ("SAI") who was engaged in
manufacturing these component cars. Shelby American Inc. lost its license to produce Shelby licensed automobiles due to its failure to make its required royalty payments to CSL. Shelby
Automobiles finished the production of the ordered Shelby Cobras in order to protect the Company's brand name and maintain its customer loyalty. The Company believes these properties are the
foundation of its future development.

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On
December 30, 2003, the U.S. Bankruptcy court for the Eastern District of Michigan Southern Division approved the purchase and sale of assets by Shelby Automobiles, Inc.,
a wholly-owned subsidiary of Carroll Shelby International, Inc., from Venture Molds and Engineering Corporation ("Venture"). The Court had approved Venture's foreclosure under its security
interest in all personal property owned by Shelby American, Inc. The purchase price of $1,200,000 is evidenced by a promissory note secured by the assets sold. Payment will be made in
40 monthly installments funded by CSI
working capital and shareholder loans. The assets were sold free and clear of any other liens, claims, and encumbrances.

The
acquired assets include leasehold improvements, equipment and furniture used in the manufacture of Shelby Series I automobiles, several autos in various stages of completion
and parts used in manufacturing.

CSI
plans to analyze the assets acquired to determine whether the highest value can be obtained by piecemeal sale, bulk liquidation or use in the production of vehicles.

Carroll
Shelby International, Inc. and Carroll Shelby Licensing Inc. are headquartered in Los Angeles, California. Shelby Automobiles Inc. is headquartered in Las
Vegas, Nevada. The Shelby Companies in the aggregate, currently employ approximately 55 persons.

Our Products

Carroll Shelby Licensing Inc.

Carroll Shelby Licensing Inc., founded in 1988, is the exclusive holder of Carroll Shelby's intellectual property rights, which include trademarks such as
Shelby Cobra, the GT-350, GT-500, 427 S/C, 289 and 289 FIA and trade names and vehicle design rights. These trademarks and designs are intimately associated with some of the
better known "muscle" cars and high-performance vehicles, including the one that brought home to the U.S. its first and only FIA World Manufacturers Championship in 1965, the Shelby Cobra
Daytona Coupe. Carroll Shelby Licensing has over 80 licensees throughout Europe, Asia and the US. The licensed product lines include cars, car parts, component vehicles, aftermarket styling and
performance parts, toys and hobby products, collectables and memorabilia, computer and electronic games, graphics and art, branded apparel, and accessories.

Shelby Automobiles Inc

CobraThe Company currently manufactures a complete line of Shelby Cobras
component vehicles which include:

CSX1000CSX 7500Shelby/AC Cobra 427S/C & Shelby/AC Cobra 289 FIAThese very premium cars
offers the first collaboration between Shelby and AC Cars in more than 40 years. The first handcrafted aluminum bodied Shelby AC Cobra rolling chassis, produced at AC's plant in Surrey, United
Kingdom, are expected to be shipped to Shelby Automobiles in Las Vegas for final assembly, fit and finish by year end 2004.

These
Cobras are expected to be offered in two limited production models, the Shelby AC Cobra 427 S/C and the Shelby AC Cobra 289 FIA, and registered as the CSX 1000 and the CSX 7500
Series, respectively and will be limited in production. Both models are authentic recreations of the iconic sports car, which set records for muscle-power and customer appeal in the early 1960's.

The
reunited partnership between Shelby and AC provides a platform that allows the CSX 1000 and CSX 7500 distribution by more than 20 Shelby dealers across the United States and Europe.

CSX3000Shelby Cobra 427 S/C ContinuationAluminum (Hand Rolled)The CSX 3000 series represents one of
the most exclusive of the Shelby product lines, and is sold as a component vehicle. This vehicle is hand crafted on original Shelby Cobra chassis along with its original CSX chassis

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number.
This vintage series is currently under the most limited of production schedules and its originality demands the most premium price point within the Shelby Cobra line. This car is often
featured in museums race tracks and collector shows throughout the world.

CSX4000Shelby Cobra 427 S/CFiberglass & Aluminum (Stamped)This series offers the high
quality and performance found in a Shelby vehicle at a price point that competes directly with the imitation "knock-off" cobra (kit car) market. This handcrafted vehicle is offered in
either composite fiberglass or stamped aluminum bodies with a variety of styling and performance upgrades available.

This
series has provided the Company with an incremental market reach by expanding the trial and exposure age from the mid $50,000's down to the mid $40,000's. This provides reach into
the younger first time Cobra buying market while continuing to meet the needs of the high-end Cobra collector and enthusiast market.

CSX7000Shelby Cobra 289 FIAFiberglass & Aluminum (Stamped)This handcrafted vehicle traces
its roots to the winning heritage of the 60's. Offered in either composite fiberglass or aluminum, this model appeals to collectors and enthusiasts. With all its lines and curves, the Shelby Cobra 289
FIA offers the aerodynamics and overall look of its ancestors of the Cobra racing past.

CSX8000Shelby Cobra 289 Street CarFiberglass & Aluminum (Stamped)Offering the craftsmanship
and performance of its on track version, the Shelby Cobra 289 FIA, model features upgrades and accessories that allow its owner the luxury of an on and off track experience. Priced comparable to the
track version, the Shelby Cobra 289 FIA Street Car reaches the collector and enthusiast, as well as the weekend pleasurist.

Cobra Daytona CoupeUnder the direct supervision of Carroll Shelby, a vintage continuation version of the highly coveted Cobra
Daytona Coupe is expected to be produced in limited quantities. This Cobra won the 24 hour Le Mans and subsequently captured the FIA World Manufacturer's Championship in 1965.

Shelby GT500E "Eleanor"The Shelby GT500E Mustang enthusiast with its custom styling and high octane performance. It reached
its most notable exposure by being featured in one of Hollywood's most successful car movies. Built under license by Carroll Shelby Licensing Inc. the Shelby GT500E enjoys a long list a
consumers awaiting the production and delivery of there car. Shelby Automobiles will offer to its customers and dealers this specially built Shelby GT500E in the second quarter of 2004.

Secondary ManufacturingApplying the Shelby brand to late model vehicles will provide automotive manufacturers with a
performance and styling enhanced product, using their current new model year product offering as basis. A Shelby styled and tuned vehicle can be expected to draw a premium and bring an added level of
style and performance to many product lines.

The
first in a series of these endeavors is expected to be a Shelby Ford Expedition. Shelby engineers have begun their performance and styling work which has resulted in exterior body
styling enhancements, interior styling package, performance wheels and tires, a performance tuned suspension, as well as a variety of engine and drive train performance upgrades. This product is
expected to be produced in limited quantities and sold through the Ford and Shelby dealer networks. An addition revenue channel will be the styling and performance parts kits made available to all
existing Ford Expedition owners. These kits will represent each of the styling and performance upgrades engineered
in the Shelby Ford Expedition and is expected to be made available through the Ford dealer parts network.

Additional
co-branded Shelby vehicles are currently under review and may include sports car, compact (tuner), pickup and exotic car products.

Shelby Performance ProductsThis line of business is designed to reach Shelby and standard performance vehicle owners through
the development and installation of performance drive train,

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suspension
and styling vehicle upgrades. These products include aftermarket performance parts upgrades and installation for Cobra and Series 1 owners, late model car performance parts upgrades,
as well as a line of Carroll Shelby Signature Series branded aftermarket parts for the do-it-yourselfer. The Company expects to grow this line of business with an increased
distribution through performance parts catalogs and online sales.

Research and Development Activities

Ford Shelby CobraThe Company and its partner Ford Motor Company are currently evaluating the possible
introduction of a Ford Shelby Cobra expected to be sold through the Ford Dealer Network. The prototype of this car received its first distinguished recognition Autoweek's Editor's Choice awards at
this year's North American International Auto Show (NAIAS) where the Ford Shelby Cobra Concept Car unveiled in Detroit took top honors, being named "Best in Show." This Cobra is modern in its design
philosophy with cues to past Shelby creations like the yawning, semicircular air dam, side vents and all the curvaceous sheet metal needed to accommodate the 19-inch tires in the rear.
There's a 6.4-liter, aluminum-block V10 engine providing 605 hp and 501 lb-ft torque. The Ford Shelby Cobra concept car was developed in just five months by the Ford
Advanced Product Creation team with a healthy dose of input from Shelby.

In
the 1960s Carroll Shelby and Ford worked together on both racing and production vehicle programs, from the original Ford-powered Shelby Cobra to the Le
Mans-winning Ford GT40 racing cars and the Shelby GT350 and GT500 Mustangs that are widely recognized to have started the pony car craze. It was a decade of performance punctuated by Ford
muscle and Shelby engineering. Ford and Shelby hope to rejuvenate this success during the first decade of the new millennium.

Shelby MustangDesign and development discussions are underway to once again produce a "Shelby Mustang". This new model year
pony car would sport the styling and performance that made the original Shelby mustangs famous. The effects of the publicity and impact on sales for the Performance division could be significant.

Shelby Hydrogen CobraThe Company is currently in preliminary discussions to assist in the design and production of a line of
Shelby Hydrogen Cobras with the Los Angeles, California based Hydrogen Car Company Inc. (HDC). This collaboration could provide incremental brand awareness for the Shelby brand as well as
provide the Hydrogen Car Company with a "top of mind" brand appeal for their first alternative fuel (hydrogen) vehicle project.

As
of December 31`, 2003 the Company has incurred no direct expense as related to the Research and Development projects listed above.

Competition

The component car industry generates approximately 1600 component cars (kit cars) annually with overall gross revenue of approximately $75,000,000. Of the
numerous producers of these component (kit car) vehicles, 75% of all cars produced are generated by less than a dozen good size companies, such as Shelby Automobiles Inc., Superformance
International Inc., Factory Five Inc., etc. From a small garage setup to an elaborate multi-million dollar facility, this industry experiences a wide range of suppliers and product in
the market.

Regulatory Requirements

The component car (kit car) industry is governed by very few regulatory requirements. By virtue of the "rolling chassis" component guidelines, the few Department
of Transportation certifications required pertain to supplied parts such as lights, wheels, tires, windshields, etc.

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Litigation
is always subject to uncertainties. The outcome of individually litigated matters is not predictable with any high level of assurance. Various legal actions, governmental
investigations, claims and proceedings are pending against the Company, including those arising out of governmental
regulations relating to Environmental Protection Agency and National Highway Traffic & Safety Agency; licensee, dealer, supplier and other contractual relationships.

Sources of Income

The Company realizes income streams through the following sources:

Carroll
Shelby Licensing Inc.Through the licensing of the Carroll Shelby trademarks, signature, likeness, design and shape, CSL realizes a royalty of approximately 5%
to 7% of each licensee's net licensed product revenue which is paid quarterly. In addition companies, who license Shelby intellectual properties for use in computer and electronic games, pay a one
time fee per title which is also paid quarterly.

Shelby
Automobiles Inc.expects to realize a larger source of income through this wholly owned subsidiary. Sales of the Company's Cobra CSX1000, CSX300, CSX4000,
CSX7000, CSX7500, CSX8000 and Cobra Daytona Coupe component vehicles, and parts and service for such vehicles. Auto's secondary manufacturing division, and styling and performance parts kits business
is expected to account for a significant contribution to revenue. The Shelby Performance Parts division will also provide an incremental source of income through the sales and installation of Carroll
Shelby branded styling and performance parts. This division will also market and install a select number of "best in brand" performance parts and upgrades.

Sources and Availability of Materials and Names of Principal Suppliers

The Company currently sources materials and supplies from various vendors throughout the world. The Company believes it has sufficient availability of materials
through its primary and secondary vendors.

Trademarks and Patents

CSL has been granted the exclusive rights to license all Carroll Shelby intellectual properties, including trademarks, names and designs. This grant is protected
by a license agreement with Carroll Shelby and the Carroll Shelby Trust.

Employees

The Company employs two executives within the Carroll Shelby International Inc. parent company, our Chief Executive Officer and our President and CFO. The
company also employs a vice president within its wholly owned subsidiary, Shelby Automobile Inc., as well as approximately 52 leased staff employees. The Carroll Shelby
International Inc. executives also act as CEO and president respectively of its wholly owned subsidiary, Carroll Shelby Licensing Inc. The Company is currently evaluating the need to
hire additional employees to assist in the daily operations and market placement within each of the companies. The Company also engages consultants who receive fees for their services.

Other Agreements

In November 2003 the Company commenced their first equity raise through the private placement of unregistered common shares. As of April 14, 2004,
the Company had raised gross proceeds of approximately $3,600,000 through the sale of approximately 1,774,000 shares at $2.25 per share, net of commissions. As of the year ending December 31,
2003, the Company had received approximately $2,072,000 of funds, net of fees, resulting from the sale of 1,080,665 unregistered common shares.

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Risk Factors

You should carefully consider the following risks and the other information contained in this Report and in our other filings with the Securities and Exchange
Commission before you decide to invest in us or to maintain or increase your investment. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties
may also adversely impact and impair our business. If any of the following risks actually occurs, our business, results of operations or financial condition would likely suffer. In such case, the
trading price of our Common Stock could decline, and you may lose all or part of your investment.



ITEM 2. DESCRIPTION OF PROPERTY

The Company leases approximately 4,000 sq. ft. of office space for its licensing company and headquarters office in Los Angeles, California. Product design and
development utilize approximately 120,000 sq. ft. of leased space in Las Vegas, Nevada. Management believes that both location suite the needs of each operation and expect no change in the foreseeable
future.

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ITEM 3. LEGAL PROCEEDINGS





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

None

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Part II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On June 23, 2003, the common stock of Carroll Shelby International Inc. began trading under the symbol "CSBI".

The
following table sets forth the range of high and low bid information for CSI's common stock for each quarterly period within the last fiscal year.

|                              |                    | High               |  | Low
|----------------------------- | ------------------ | ------------------ |  | ---
|Year Ended December 31, 2003: |                    |                    |  |    
|                              | Three Months Ended |                    |  |    
|                              |                    | March 31, 2003     |  |    
|                              |                    | June 30, 2003      |  | $  
|                              |                    | September 30, 2003 |  |    
|                              |                    | December 31, 2003  |  |    

As
of December 31, 2003, CSI had 57 stockholders of record.

Holders
of common stock are entitled to receive dividends, as and when declared by the Board of Directors out of funds legally available therefore, subject to the dividend and
liquidation rights of any preferred stock that may be issued and outstanding. Presently, no preferred stock is outstanding. CSI has never declared or paid any dividends on its common stock.

In
2003 the Company raised capital through a "Private Placement" of unregistered common stock. The Company has received approximately $2,072,025 of cash, net of costs of $359,475 from
the sales of approximately 1,080,665 shares of common stock at $2.25 per share. As of December 31, 2003 the shares were not issued but are shown as outstanding in the consolidated statement of
shareholder deficit.

In
the first quarter of 2004 the Company continued to raise capital through a private placement of unregistered common stock. The Company has received approximately $1,560,000 of cash
from the sales of approximately 693,450 shares of common stock at $2.25 per share.

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

Cautionary Statement

You should read the following discussion and analysis in conjunction with the Financial Statements and related Notes thereto contained elsewhere in this
Form 10-KSB ("Report"). The information in this Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to
carefully review and consider the various disclosures made by us in this Report and in our other reports filed with the SEC.

The
section entitled "Risk Factors" set forth in this Report and in our other SEC filings discuss some of the important risk factors that may affect our business, results of operations
and financial condition. You should carefully consider those risks, in addition to the other information in this Report and in our other filings with the SEC, before deciding to invest in our Company
or to maintain or increase your investment.

This
Report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements
by terminology such as "may," "will," "should," "except," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology.
These statements are only predictions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.

Therefore,
our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this
Report to conform such statements to actual results or to changes in our expectations.

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Overview

The Company was originally organized on December 4, 2000 (date of inception) under the laws of the State of Nevada, as Ginseng Forest, Inc. Through
June 23, 2003 the Company had no operations and in accordance with Statement of Financial Accounting Standards No. 7, the Company was considered a development stage company.

On
June 23, 2003, the Company closed an agreement (the "Exchange Agreement") to acquire all of the outstanding common stock of CSL and Autos (the "Shelby Companies") for 9,087,866
shares of its common stock and a promissory note issued by Ginseng Forest, Inc. to the Shelby Companies' security holders in the amount of $2,000,000 originally due December 31, 2003 of
which $500,000 was paid in March 2004 and $1,500,000 has been extended to June 30, 2004.

In
addition, the Company manufactures component cars (sometimes referred to as "kit" cars as they generally do not have engines or transmissions installed at time of delivery to the
customer) under the
brand name "Shelby Cobra" at its facilities in Las Vegas, Nevada. It began manufacturing a new series of the Cobra automobile to replicate the original Cobra last produced in
1967 and of which only approximately 1,000 units were ever produced. The Company's Cobra is substantially built to its original specifications for enthusiasts desiring a genuine replica
of the first and only American produced sports car to claim the aforementioned championship. We believe significant enthusiast market exists in the United States for this historic automobile.

The
Company's strategy is to aggressively pursue new licensing channels for our historic and prominent intellectual properties and hallmark brands such as Shelby Cobra, 427 S/C, FIA 289,
Cobra Daytona Coupe, GT 350 and GT 500, and to continue building and augmenting both component cars (i.e. 289, 289 FIA, 427 S/C and Daytona Coupe) and model year 2005, and beyond, vehicles which meet
all current federal and state emissions and safety standards (i.e. the Ford Shelby Cobra Concept Car, and Ford Expedition). Our strategy includes acquisitions and strategic alliances. The Company will
promote its products as natural enhancements to various products in the retail automotive industry, as well as auto racing and after market automotive accessories.

On
October 31, 2003, the Company announced it has entered into a letter of intent to acquire automotive supercharger developer and manufacturer Allen Engine
Development Inc. This acquisition will be a combination of cash and equity and if completed, would provide an extended reach for the Shelby brand into the growing automotive aftermarket and
performance parts market. In addition, if the Allen Engine Development acquisition is completed, it will give us depth in engineering services, which include research and development, CAD support,
prototyping as well as full CNC machining services. There can be no assurance that this acquisition will be completed.

Critical Accounting Policies

Certain accounting policies and estimates used by us in preparing our financial statements in accordance with generally accepted accounting principles are
considered critical in providing readers context that is helpful in understanding our results of operations and financial position. Please keep these policies in mind regarding the following
narrative. We believe these policies are critical to our financial statements.

We
assess the fair value and recoverability of our long-lived assets whenever events and circumstances indicate the carrying value of an asset may not be recoverable from
estimated future cash flows expected to result from its use and eventual disposition. In doing so, we make assumptions and estimates regarding future cash flows and other factors to make our
determination. The fair value of our long-lived assets is dependent upon the forecasted performance of our business, changes in the various industries, and the overall economic
environment. When we determine that the carrying value of our long-lived assets may not be recoverable, we measure any impairment based upon the excess of

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the
carrying value that exceeds the estimated fair value of the assets. As a result of our reviews, we have determined there is no impairment loss to be recognized at December 31, 2003.

Our
accounting policy for inventories is a critical accounting policy because it requires that we determine the cost of our inventory at the lower of cost or market for raw materials,
work in process and finished goods pending the sale of that inventory. We determine our inventory by purchase cost for raw materials and by accumulating actual costs during production for work process
and finished goods. We evaluate the lower of cost or market based on current and historical data. As a result of our evaluations, we have determined that our inventory is properly stated at
December 31, 2003.

Our
accounting policy for recognition of revenue is a critical accounting policy because it determines the amount of sales we recognize from the sale of Cobra automobiles
and the revenues we recognize from the licensing of our trade names, trademarks and intellectual properties. We have determined that sales of automobiles and accessories are recognized when the sale
transaction is complete including physical delivery of the merchandise and transfer of title for automobiles. Deposits received from customers for sales contracts are recorded as a liability pending
completion of the sales transaction. Revenues from our licensing activities are recognized when earned, based on actual reporting from licensees or may be estimated when historical data related to a
licensee is adequate.

Results of Operations

Revenues

The Company's revenues increased in 2003 primarily from the sales of Cobra automobiles as Autos began such production in the third quarter of 2003 as
discussed above. Total revenues increased $1,727,149 or 288% from $598,988 in 2002 to $2,326,137 in 2003. While our
revenues from licensing were consistent at $500,162 in 2002 to $499,408 in 2003, we added revenues of $1,826,729 from the sales of automobiles, including the sale of one of several vintage automobiles
owned by the Company for $357,696. The Company's subsidiary Autos sold 22 Cobra automobiles during 2003. During 2002, the Company received $98,826 from the rental of its tractor-trailer
display used to promote various Shelby licensed automobiles by an entity partially owned by its majority shareholder but no such revenues were received in 2003. For 2002, this affiliate also accounted
for nearly one half of the Company's royalty revenue. However, in fiscal 2003, it did not provide any royalty revenue indicating the Company has been successful in expanding and improving its royalty
and licensee base.

Cost of Goods Sold

The Company did not previously have a cost of goods sold caption in its statement of operations. Cost of goods sold for 2003 was 89% of total revenue. For 2003,
cost of goods sold represents the costs of Cobra automobiles and performance and other related automotive products sold. Cost of goods sold for 2003 includes unabsorbed overhead expenses associated
with the start up of the Cobra car production operation of $1,006,623 or 43% of total revenue.

Selling and Marketing Expense

The Company's entry into the production of Cobra automobiles meant establishing a sales and administrative organization. With this new activity,
there has been a substantial increase in selling and marketing expenses of $98,219 or 31% from $314,667 for 2002 to $412,886 for 2003. The increase between periods is substantially related to the
addition of the Cobra operations in 2003. The Company's selling and marketing expenses included expenditures for transportation, depreciation, meals and entertainment, printing and
reproduction, promotion and public relations, research, trademark support, travel and video duplication. Its activities in this area have included promoting the 40th anniversary of the
Shelby Cobra, travel and display at scheduled automobile races and events and

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payments
related to trademark support. The Company will continue to promote its trademarks and trade names on a regular basis.

General and Administrative Expenses

As discussed above, the Company has established an administrative organization related to its Cobra operations. These operations are located in
separate facilities in Las Vegas, Nevada and there are additional expenses related to occupancy. Both CSL and Autos have increased its general and administrative activities and personnel to comply
with its public reporting obligations. General and Administrative expense increased by $541,829 or 60% from $906,484 for 2002, to $1,448,313 for 2003. The periods are not comparable based on the
significant change in operations discussed above. The Company's facility in Las Vegas is adequate for the foreseeable future and its personnel complement is not expected to increase substantially. The
expense category with significant changes between years not directly related to the Cobra operations were professional fees, primarily legal fees, incurred in 2002 by CSL in prosecuting
its trademark infringement lawsuit against Superformance International Inc.

Protection
of the Company's trade name and trademarks is paramount to the Company's existence. During fiscal 2002, the Company incurred approximately $400,000 in legal fees associated
with its Superformance Inc. litigation. In 2003 the Company only spent $20,000 in prosecuting and successfully obtaining a permanent injunction to settle the trademarks aspect of the suit.
Total legal and professional fees for CSL in 2002 amounted to $516,193 and in 2003 were $107,377.

Expenditures
offsetting the reduction in legal fees with CSL were the increased cost in CSI which consisted of (i) approximately $111,000 related to professional fees for the
reverse merger and subsequent public filings (ii) $50,000 in brokers' fees paid to a shareholder relating to a bridge line of credit and (iii) approximately $25,000 for other expenses
related to rent and travel.

Other Income and (Expense)

Other income and (expense) increased $234,450 or 383% from income of $61,138 in 2002 to expense of $173,312. The substantial increase in interest expense in 2003
is attributable to the increased interest expense associated with the notes payable issued to the Company's majority shareholder at the time of its merger and the continued advances from the majority
shareholder in connection with its expanded operations.

In
2002 other income consisted of sublease rental income from a law firm and the reimbursement of a truck and trailer rental. In 2003 we received no reimbursement from this truck and
trailer rental.

Provision for Income Taxes

Carroll Shelby Licensing, Inc. was an S Corporation prior to the June 23, 2003 Exchange Agreement. The impact of conversion from an
S Corporation to a C Corporation for tax purposes was not material to the financial position or statement of operations of the Company.

The
Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes, pursuant to which the Company accounts for deferred income taxes by applying enacted
statutory rates in effect for periods in which the difference between the book value and the tax bases of assets and liabilities are scheduled to reverse. The resulting deferred tax asset or liability
is adjusted to reflect changes in tax laws or rates. Because the Company has incurred losses from operations, no benefit is realized for the tax effect of the net operating loss carry forward due to
the uncertainty of its realization.

The
income tax expense for December 31, 2003 represents the minimum state taxes due.

13

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The total net operating losses as of December 31, 2003 of approximately $1,533,000 can be carried forward through 2023.

At
December 31, 2003 the Company had a deferred tax asset of $586,000 consisting primarily of net operating loss carry forwards for federal and state income tax purposes of
$527,000, non-deductible accrued interest and compensation to a shareholder of $54,000 and depreciation of $5,000. As of December 31, 2003 the Company recorded a $586,000 valuation
allowance against this deferred tax asset.

Liquidity and Capital Resources

The Company has not achieved profitable operations through December 31, 2003. It is not presently able to determine when profitable operations will be
obtained. Its financing and capital have been provided by advances from its majority shareholder (approximately $1.5 million), from the private placement of its common shares (approximately
$2.0 million) from customer deposits (approximately $1.2 million) and from long term debt ($1.2 million). Customer deposits are received in connection with the production of
Cobra automobiles generally with placement of the order and when actual production of the car is started. The Company has a substantial cash balance $2,025,997 at December 31,
2003. The Company also has substantial current liabilities due including $3.5 million due to its shareholder, $1.2 million of customer deposits to be "offset" when cars are completed and
delivered and $312,000 of current maturities of its long term debt. The Company's balance sheet and financial position are not comparable between years because of the addition of the
Cobra production operations.

Operations
used cash resources of approximately $326,000 in 2002 and used approximately $2,248,000 in 2003. While not directly comparable, the increase in cash resources applied to
operations is substantially related to the Cobra production operations added in the third quarter and specifically to acquiring and producing the inventory to support these operations.

Net
cash used in investing activities in 2002 was approximately $5,000 as compared to $121,000 for 2003. This substantial increase was primarily a result of the purchase of property and
equipment associated with the start up of the Cobra production activities.

The
Company's financing activities in 2002 provided cash resources of approximately $175,000 from shareholder advances. During 2003, financing activities have provided approximately
$4.4 million, primarily from the sources mentioned above.

In
August 2003, the Company retained an investment banker to provide, among other services, assistance with Company's financing efforts as it attempts to secure additional capital
for product development, possible acquisitions and working capital an assist the Company with general business strategy and advice regarding listing on a national exchange. The Company intends to
continue to raise additional capital through the sale of its common shares. Through the first quarter of 2004 the Company raised capital through a private placement of unregistered common stock. The
Company received approximately $1,560,000 of cash from the sale of approximately 693,450 shares of common stock at $2.25 per share.

On
October 31, 2003, the Company announced it has entered into a letter of intent to acquire automotive supercharger developer and manufacturer Allen Engine
Development Inc. This acquisition will be a combination of cash and equity and if completed, would provide an extended reach for the Shelby brand into the growing automotive aftermarket and
performance parts market. In addition, if the Allen Engine Development acquisition is completed, it will give us depth in engineering services, which include research and development, CAD support,
prototyping as well as full CNC machining services. There can be no assurance that this acquisition will be completed.

14

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Currently,
the Company is dependent upon its majority shareholder or sales of its common stock to provide liquidity from any shortfall in cash provided by operations. If this shareholder
was unable to provide funding for the Company or it were unable to raise additional equity capital, a resulting lack of capital could have an adverse material impact on the statement of financial
position for the Company and its operations.

The
Company believes that inflation has not had a material impact on it operations.

Management
believes through its existing cash and cash equivalent of $2,055,997 as of December 31, 2003 and its "Private Placement" proceeds received through the first quarter of
2004, the Company will have adequate cash reserves to continue operations through 2004.

Off Balance Sheet Arrangements

CSI enters into indemnification provisions under its agreements with other companies in its ordinary course of business. Under these provisions, CSI generally
indemnifies the indemnified party for losses suffered or incurred by the indemnified party as a result of CSI's activities. These indemnification provisions generally survive termination of the
underlying agreement. CSI has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, CSI believes the estimated fair value of these
agreements is minimal. Accordingly, CSI has no liabilities recorded for these agreements as of December 31, 2003.

Contractual Obligations, Contingent Liabilities and Commitments

CSI has contractual obligations and commitments primarily with regard to facilities leases, an insurance finance agreement and an inventory commitment. The
following table aggregates CSI's expected contractual obligations and commitments subsequent to December 31, 2003.

|                        |                                      | Payments Due by Period
|----------------------- | ------------------------------------ | ----------------------
|
|Contractual Obligations |                                      |                       
|                        | Insurance Finance Agreement          |                       
|                        | Corporate Office Lease               |                       
|                        | Manufacturing Facility Lease         |                       
|                        | Manufacturing Facility Lease(2)      |                       
|                        | Phone System                         |                       
|                        | Aluminum Body Frames for Shelby Cars |                       
|                        |                                      |                       
|                        |                                      | Total                 
|                        |                                      |                       

All accounts payable and accrued expenses as presented on the consolidated financial statement are excluded from this table.

Recent Accounting Pronouncements:

In November 2002, the FASB issued Financial Interpretation No. (FIN) 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" (FIN 45). The provisions of FIN 45 are effective for year-end 2002. Recognition and measurement provisions of
FIN 45 become effective for guarantees issued or modified on or after January 1, 2003. We adopted FIN 45 with no material impact on our results of operations, financial position,
or liquidity. In an effort to expand upon and strengthen existing accounting guidance that addresses when a company should include in its financial statements the assets, liabilities and activities of
another entity, the FASB issued Financial Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). Many variable interest entities have commonly been referred to as
special-purpose entities or off-balance sheet structures, but the guidance applies to a larger population of

15

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entities.
In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors
with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. The objective of FIN 46 is not to restrict the
use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. Until now, one company generally has included another entity in its
consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a variable interest entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. To further assist financial
statement users in assessing a company's risks, FIN 46 also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a
significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after
January 31, 2003, regardless of when the variable interest entity was established. we do not have any interests in variable interest entities, and, therefore, the adoption of FIN 46 did
not have a significant impact on the financial position or results of operation of CSI

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS No. 150). This
Statement affects the classification, measurement and disclosure requirements of the following three types of freestanding financial instruments: 1) mandatory redeemable shares, which the
issuing company is obligated to buy back with cash or other assets; 2) instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets, which
include put options and forward purchase contracts; and 3) obligations that can be settled with shares, the monetary value of which is fixed, or tied solely or predominantly to a variable such
as a market index, or varies inversely with the value of the issuers' shares. In general, SFAS No. 150 is effective for all financial instruments entered into or modified after May 31,
2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have an impact on CSI's consolidated
financial position or disclosures.

16

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ITEM 7. FINANCIAL STATEMENTS

Carroll Shelby International, Inc.
Consolidated Financial Statements
December 31, 2003

17

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Report of Independent Certified Public Accountants

Board
of Directors
Carroll Shelby International, Inc.
Las Vegas, Nevada

We
have audited the accompanying consolidated balance sheet of Carroll Shelby International, Inc. as of December 31, 2003 and the related consolidated statements of
operations, stockholders' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We
conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Carroll Shelby International, Inc. at
December 31, 2003, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/
BDO Seidman, LLP

Los
Angeles, California

April 14,
2004

18

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INDEPENDENT AUDITORS' REPORT

To
the Board of Directors
Carroll Shelby Licensing, Inc.

We
have audited the accompanying statements of operations, changes in stockholder's equity, and cash flows of Shelby Licensing International, Inc. as of December 31, 2002
and for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our
audit.

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

In
our opinion, the financial statements referred to above present fairly, in all material respects, the results of its operations and cash flows for the year ended December 31,
2002 in conformity with accounting principles generally accepted in the United States of America.

/s/
Spicer Jeffries, LLP
Denver, Colorado
May 22, 2003

19

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CARROLL SHELBY INTERNATIONAL, INC.        CONSOLIDATED BALANCE SHEETS        December 31, 2003

|ASSETS                                      |                                                                                                                                         |                             |           |           
|------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | --------- | ----------
|CURRENT ASSETS:                             |                                                                                                                                         |                             |           |           
|                                            | Cash and cash equivalents                                                                                                               |                             | $         | 2,055,997 
|                                            | Accounts receivable                                                                                                                     |                             |           | 142,459   
|                                            | Inventories                                                                                                                             |                             |           | 2,357,439 
|                                            | Prepaids                                                                                                                                |                             |           | 285,456   
|                                            | Other current assets                                                                                                                    |                             |           | 17,468    
|                                            |                                                                                                                                         |                             |          
|                                            |                                                                                                                                         | Total current assets        |           |           
|                                            |                                                                                                                                         |                             |          
|                                            | Property and equipment, net                                                                                                             |                             |           | 234,568   
|                                            | Other assets                                                                                                                            |                             |           | 33,136    
|                                            |                                                                                                                                         |                             |          
|                                            |                                                                                                                                         | Total assets                |           | $         
|                                            |                                                                                                                                         |                             |          
|LIABILITIES AND STOCKHOLDERS' DEFICIT       |                                                                                                                                         |                             |           |           
|CURRENT LIABILITIES:                        |                                                                                                                                         |                             |           |           
|                                            | Accounts payable                                                                                                                        |                             | $         | 557,886   
|                                            | Accrued expenses                                                                                                                        |                             |           | 245,277   
|                                            | Insurance payable                                                                                                                       |                             |           | 104,534   
|                                            | Taxes payable                                                                                                                           |                             |           | 800       
|                                            | Customer deposit                                                                                                                        |                             |           | 1,265,145 
|                                            | Current, portion of long term debt                                                                                                      |                             |           | 312,015   
|                                            | Current portion of capital lease                                                                                                        |                             |           | 2,464     
|                                            | Advances from shareholder                                                                                                               |                             |           | 136,434   
|                                            | Notes payable to shareholder                                                                                                            |                             |           | 2,980,000 
|                                            | Convertible note payable to shareholder, net of unamortized beneficial conversion feature of $81,250                                    |                             |           | 418,750   
|                                            |                                                                                                                                         |                             |          
|                                            |                                                                                                                                         | Total current liabilities   |           |           
|                                            |                                                                                                                                         |                             |          
|LONG TERM LIABILITIES:                      |                                                                                                                                         |                             |           |           
|                                            | Long term debt                                                                                                                          |                             |           | 786,645   
|                                            | Capital lease liability                                                                                                                 |                             |           | 5,292     
|                                            |                                                                                                                                         |                             |          
|                                            |                                                                                                                                         | Total long term liabilities |           |           
|COMMITMENTS AND CONTINGENCIES               |                                                                                                                                         |                             |           |           
|STOCKHOLDERS' DEFICIT                       |                                                                                                                                         |                             |           |           
|                                            | Common stock-25,000,000 shares authorized, 14,065,331 issued and outstanding; $.001 par value as of December 31, 2003; 9,087,866 issued |                             |           | 14,066    
|                                            | Additional paid in capital                                                                                                              |                             |           | 228,433   
|                                            | Accumulated deficit                                                                                                                     |                             |           | (1,931,218
|                                            |                                                                                                                                         |                             |          
|                                            |                                                                                                                                         | Total stockholders' deficit |           |           
|                                            |                                                                                                                                         |                             |          
|Total liabilities and stockholders' deficit |                                                                                                                                         | $                           | 5,126,523 |           
|                                            |                                                                                                                                         |                             |          

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

20

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\

CARROLL SHELBY INTERNATIONAL, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS        For the years ended December 31, 2002 and 2003

|                                                                        |                                    | 2003 |            | 2002      |  
|----------------------------------------------------------------------- | ---------------------------------- | ---- | ---------- | --------- | -
|Revenues:                                                               |                                    |      |            |           |  
|                                                                        | Royalty income                     |      | $          | 499,408   |  
|                                                                        | Automobile and automobile products |      |            | 1,469,033 |  
|                                                                        | Equipment rental (related party)   |      |            |          |  
|                                                                        | Vintage automobile sales, net      |      |            | 357,696   |  
|                                                                        |                                    |      |            |           |  
|Total revenues                                                          |                                    |      | 2,326,137  |           |  
|Cost of good sold automobilies and automobile products                  |                                    |      | 2,064,650  |           |  
|                                                                        |                                    |      |            |           |  
|Gross profit                                                            |                                    |      | 261,487    |           |  
|                                                                        |                                    |      |            |           |  
|Expenses:                                                               |                                    |      |            |           |  
|                                                                        | Selling and marketing              |      |            | 412,886   |  
|                                                                        | General and administrative         |      |            | 1,448,313 |  
|                                                                        |                                    |      |            |           |  
|                                                                        |                                    |      | 1,861,199  |           |  
|                                                                        |                                    |      |            |           |  
|Loss from operations                                                    |                                    |      | (1,599,712 | )         |  
|                                                                        |                                    |      |            |           |  
|Other income (expense):                                                 |                                    |      |            |           |  
|                                                                        | Sublease rental income             |      |            | 24,000    |  
|                                                                        | Interest income (expense), net     |      |            | (197,312  | )
|                                                                        | Other                              |      |            |          |  
|                                                                        |                                    |      |            |           |  
|Total other income (expense)                                            |                                    |      | (173,312   | )         |  
|                                                                        |                                    |      |            |           |  
|Net loss before provision for income taxes                              |                                    |      | (1,773,024 | )         |  
|Provision for income taxes                                              |                                    |      | 1,600      |           |  
|                                                                        |                                    |      |            |           |  
|Net loss                                                                |                                    | $    | (1,774,624 | )         | $
|                                                                        |                                    |      |            |           |  
|Basic and diluted net income (loss) per share                           |                                    | $    | (0.14      | )         | $
|Weighted average number of common shares outstandingBasic and dilutive |                                    |      | 13,021,864 |           |  

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

21

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CARROLL SHELBY INTERNATIONAL, INC.        CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT

|                                                                       |  | Common Stock |  |   |        |  |   |            |   |   |  
|---------------------------------------------------------------------- |  | ------------ |  | - | ------ |  | - | ---------- | - | - | -
|
|
|Balance, January 1, 2002                                               |  | 9,087,866    |  | $ | 1,000  |  | $ |           |   | $ | 
|Net loss                                                               |  |             |  |   |       |  |   |           |   |   | 
|                                                                       |  |              |  |   |        |  |   |            |   |   |  
|Balance, December 31, 2002                                             |  | 9,087,866    |  |   | 1,000  |  |   |           |   |   | 
|                                                                       |  |              |  |   |        |  |   |            |   |   |  
|Stock issued as a result of reverse merger                             |  | 3,768,000    |  |   | 11,856 |  |   | (11,856    | ) |   | 
|Note payable to shareholder in connection with reverse merger          |  |             |  |   |       |  |   | (2,000,000 | ) |   | 
|Common stock issue in connection with exercise of warrants             |  | 128,800      |  |   | 129    |  |   | 6,845      |   |   | 
|Private placement of common stock, net of palcemment fees              |  | 1,080,665    |  |   | 1,081  |  |   | 2,070,944  |   |   | 
|Beneficial conversion feature on note payable to shareholder affiliate |  |             |  |   |       |  |   | 162,500    |   |   | 
|Net loss                                                               |  |             |  |   |       |  |   |           |   |   | 
|                                                                       |  |              |  |   |        |  |   |            |   |   |  
|Balance, December 31, 2003                                             |  | 14,065,331   |  | $ | 14,066 |  | $ | 228,433    |   | $ | 
|                                                                       |  |              |  |   |        |  |   |            |   |   |  

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

22

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CARROLL SHELBY INTERNATIONAL, INC.        STATEMENTS OF CASH FLOWS        For the years ended December 31, 2003 and 2002

|                                                                           |                                                                             | 2003                                            |   | 2002       |           
|-------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------------- | - | ---------- | ----------
|Cash Flow from operating activities:                                       |                                                                             |                                                 |   |            |           
|                                                                           | Net loss                                                                    |                                                 | $ | (1,774,624 | )         
|Adjustments to reconcile net loss to net cash used in operating activities |                                                                             |                                                 |   |            |           
|                                                                           | Depreciation and amortization                                               |                                                 |   | 90,363     |           
|                                                                           | Beneficial conversion feature on note payable to shareholder addiliate      |                                                 |   | 81,250     |           
|                                                                           | Decrease (increase) in accounts receivables                                 |                                                 |   | (10,316    | )         
|                                                                           | Increase in inventory                                                       |                                                 |   | (2,357,439 | )         
|                                                                           | Increase in prepaids                                                        |                                                 |   | (285,456   | )         
|                                                                           | Increase in other assets                                                    |                                                 |   | (17,468    | )         
|                                                                           | (Decrease) increase in accounts payables                                    |                                                 |   | 409,277    |           
|                                                                           | Increase in accrued expenses                                                |                                                 |   | 245,277    |           
|                                                                           | Increase in insurance payable                                               |                                                 |   | 104,534    |           
|                                                                           | Increase in taxes payable                                                   |                                                 |   | 800        |           
|                                                                           | Increase in customer deposits                                               |                                                 |   | 1,265,145  |           
|                                                                           |                                                                             |                                                 |   |            |           
|                                                                           |                                                                             | Net cash flows used in operating activities     |   |            | (2,248,657
|                                                                           |                                                                             |                                                 |   |            |           
|Cash flows from investing activities:                                      |                                                                             |                                                 |   |            |           
|                                                                           | Purchase of property and equipment                                          |                                                 |   | (113,894   | )         
|                                                                           | Sale of fixed asset, net                                                    |                                                 |   | 17,304     |           
|                                                                           | Increase in other assets                                                    |                                                 |   | (24,856    | )         
|                                                                           |                                                                             |                                                 |   |            |           
|                                                                           |                                                                             | Net cash flows used in investing activities     |   |            | (121,446  
|                                                                           |                                                                             |                                                 |   |            |           
|Cash flow from financing activities:                                       |                                                                             |                                                 |   |            |           
|                                                                           | Decrease in note receivable related party                                   |                                                 |   | 7,321      |           
|                                                                           | Repayment of notes payable                                                  |                                                 |   | (83,167    | )         
|                                                                           | Net advances from shareholder                                               |                                                 |   | (178,033   | )         
|                                                                           | Decrease in due from related parties                                        |                                                 |   |           |           
|                                                                           | Funds receieved from notes payable to shareholder and shareholder affiliate |                                                 |   | 1,480,000  |           
|                                                                           | Additions to long term debt                                                 |                                                 |   | 1,098,660  |           
|                                                                           | Repayments of capital lease liability                                       |                                                 |   | (609       | )         
|                                                                           | Funds received from private placement of securities, net of fees            |                                                 |   | 2,072,025  |           
|                                                                           | Redemption of warrants                                                      |                                                 |   | 6,974      |           
|                                                                           |                                                                             |                                                 |   |            |           
|                                                                           |                                                                             | Net cash flows provided by financing activities |   |            | 4,403,171 
|                                                                           |                                                                             |                                                 |   |            |           
|                                                                           | Net increase (decrease) in cash and equivalents                             |                                                 |   | 2,033,068  |           
|                                                                           | Cash and cash equivalents, at beginning of period                           |                                                 |   | 22,929     |           
|                                                                           |                                                                             |                                                 |   |            |           
|                                                                           | Cash and cash equivalents, at end of period                                 |                                                 | $ | 2,055,997  |           
|                                                                           |                                                                             |                                                 |   |            |           

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

23

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Carroll Shelby International, Inc.        Notes to Consolidated Financial Statements        December 31, 2003

1.Business Description

The Carroll Shelby International, Inc. ("CSI" or "the Company") is the exclusive holder of automotive manufacturer and entrepreneur Carroll Shelby's
trademarks, vehicle design rights and other intellectual properties, which include some of the world's most famous muscle cars and high performance vehicles, including the car that brought home to the
U.S. it first and only FIA World Manufacturers Championship in 1965, the famous Shelby Cobra Daytona Coupe. Carroll Shelby Licensing, Inc. ("CSL") (a Texas corporation formed on
April 18, 1988) holds trade name and trademark rights for Shelby branded apparel, accessories and collectibles.

In
addition, the Company manufactures component cars (sometimes referred to as "kit" cars as they generally do not have engines or transmissions installed at time of delivery to the
customer) under the brand name "Shelby Cobra" at its wholly owned subsidiary Shelby Automobiles, Inc. ("Autos") (a Nevada corporation formed in May, 2003) in Las Vegas, Nevada. It began
manufacturing a new series of the Cobra automobile to replicate the original Cobra last produced in 1967 and of which only approximately 1,000 units were ever produced. The
company's Cobra is substantially built to its original specifications for enthusiasts desiring a genuine replica of the first and only American produced sports car to claim the
aforementioned championship. A significant enthusiast market exists in the United States for this historic automobile.

CSI
was originally organized under the laws of the State of Nevada on December 4, 2000 (date of inception) as Ginseng Forest, Inc. ("GFI") GFI had no operations through
June 23, 2003 and was considered a development stage company in accordance with Statement of Financial Accounting
Standards No. 7. On June 23, 2003, GFI acquired all of the outstanding common stock of CSL and Autos, a recently formed entity, for 9,087,866 shares of GFI common stock and a $2,000,000
secured promissory note to Carroll Shelby. The Company recorded the offset of this Note Payable as a distribution. The exchange of stock constituted a reverse merger with CSL as the acquiring company.
GFI changed its name to Carroll Shelby International, Inc. in September 2003.

In
the third quarter of 2003 Autos began the production of Cobra automobiles due to the financial failure of a licensee Shelby American Inc. ("SAI") who was engaged in
manufacturing these component cars. SAI lost its license to produce Shelby licensed automobiles due to its failure to make its required royalty payments to CSL. Autos finished the production of the
ordered Shelby Cobras in order to protect the Company's brand name and maintain its customer loyalty. The Company believes these properties are the foundation of its future development. Through the
third and fourth quarter of 2003, Autos assumed approximately $1,100,000 of costs to complete the production of outstanding SAI automobile orders.

On
December 30, 2003, the U.S. Bankruptcy Court approved the purchase of certain assets of Venture Molds and Engineering Corporation ("Venture") by the Company. Venture is the
parent Company of SAI. The Company purchased these assets for $1,200,000 through a promissory note secured by the assets sold. Payment will be made in 40 monthly installments of $30,000. The
Company imputed the interest on the note at 5.5% and recorded the principal of the note at $1,098,660 as of December 31, 2003 (See Note 4). The assets were sold free and clear of any
other liens, claims, and encumbrances.

The
acquired assets include leasehold improvements, equipment and furniture primarily used in the manufacture of Shelby Series I automobiles, several autos in various stages of
completion and parts used in manufacturing.

24

---

Carroll
Shelby, director and principal shareholder of CSI, is a 25% shareholder in SAI.

In
December 2003, the Company formed a wholly owned subsidiary Shelby Automotive South Africa. The purpose of this subsidiary is to produce Cobra chassis. This subsidiary had no
activity during 2003.

2.Summary of Significant Accounting Policies

Consolidation:The consolidated financial statements include the accounts of CSI and all majority-owned domestic and foreign
subsidiaries in which it has control. All significant intercompany accounts and transactions are eliminated in consolidation.

The
financial statements as of and for the year ended December 31, 2002 represents the activities and statement of financial position of CSL.

Cash and Cash Equivalents:The Company considers all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. The Company places its cash and temporary investments with high quality institutions. At December 31, 2003, the Company had deposits with high quality
institutions in excess of FDIC insured limits of $1,786,701. The Company performs periodic evaluations of the relative credit standing of these financial institutions.

Accounts Receivable and Allowance for Doubtful Accounts:A valuation allowance is provided on the Company's accounts
receivable in management's judgment that will not be collected. All accounts receivable are reviewed on a case by case basis for collectibility. There is no valuation allowance on the accounts
receivable as of December 31, 2003.

Inventories:Parts and material inventories are valued at the lower of standard cost (which approximates computation on a
first-in first-out basis) or market (net realizable value or replacement cost). Work in process inventory primarily represents uncompleted vehicles valued at the total of
accumulated standard cost of parts and materials plus labor and overhead based upon the estimated percentage of completion for each vehicle. Variances from standard costs or hours to complete are
charged to cost of goods sold.

The
components of inventory as of December 31, 2003 are as follows:

Parts and materials

$
1,404,217Work in process


953,222Finished vehicles


$
2,357,439


The
Company had no inventory as of December 31, 2002.

Advertising Costs:The Company expenses advertising costs as incurred. Advertising costs amounted to $118,420 and $58,680 for
the years ended December 31, 2003 and 2002, respectively.

Property, Plant & Equipment:Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is recorded principally using the straight-line method based upon the estimated useful lives of the assets (leasehold improvements 5 years, machinery and equipment
5-7 years, office furniture and equipment 5-7 years). Normal repairs and maintenance are expensed as incurred. Expenditures, which materially increase values,
change capacities or extend useful lives, are capitalized. Replacements are capitalized and the property and equipment accounts are relieved for the items being replaced. The related costs and
accumulated depreciation of disposed assets are eliminated and any gain or loss on disposition is included in the statement of operations. The Company capitalizes assets in excess of $500.

25

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Impairment of Long Lived Assets:The Company reviews long-lived assets to be held and used for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the asset, the Company would recognize an impairment loss based on the estimated fair value of the asset.

Policy and Warranty:Provisions for estimated expenses related to product warranties are made at the time products are sold.
These estimates are established using historical information on the nature, frequency, and average cost of warranty claims. Management actively studies trends of warranty claims and takes action to
improve vehicle quality and minimize warranty claims. Historically warranty costs have been minimal and due to the custom nature of the manufactured automobile no warranty accrual has been recorded
for the years ended December 31, 2003, and 2002.

Fair Value of Financial Instruments:Cash, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities
are reflected in the accompanying financial statements at fair value due to the short-term nature of those instruments. The carrying amount of notes payable and long-term debt
approximates fair value on the balance sheet date based on borrowing rates currently available to the Company for loans with similar terms and maturities.

Revenue Recognition:Revenue from automobiles and accessories sales is recognized when the sale transaction is complete
including physical delivery of the merchandise and/or transfer of title. Deposits received from customers for sales contracts are recorded as a liability pending completion of the sales transaction.
CSL recognizes revenue from royalties when earned, in accordance with the terms of the licensing agreements with manufacturers of automobiles, accessories, clothing, video games and other. For other
product sales, revenue is recognized at the time of shipment. All revenue is shown net of discounts and returns taken.

Income Taxes:Carroll Shelby Licensing, Inc. was an S Corporation prior to the June 23, 2003 Exchange
Agreement. The impact of conversion from an S Corporation to a C Corporation for tax purposes was not material to the financial position or statement of operations of the Company.

The
Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes, pursuant to which the Company accounts for deferred income taxes by applying enacted
statutory rates in effect for periods in which the difference between the book value and the tax bases of assets and liabilities are scheduled to reverse. The resulting deferred tax asset or liability
is adjusted to reflect changes in tax laws or rates. Because the Company has incurred losses from operations, no benefit is realized for the tax effect of the net operating loss carry forward due to
the uncertainty of its realization.

The
income tax expense for December 31, 2003 represents the minimum state taxes due.

The
total net operating losses as of December 31, 2003 of approximately $1,533,000 can be carried forward through 2023.

At
December 31, 2003 the Company had a deferred tax asset of $586,000 consisting primarily of net operating loss carry forwards for federal and state income tax purposes of
$527,000, non-deductible accrued interest and compensation to a shareholder of $54,000 and depreciation of $5,000. As of December 31, 2003 the Company recorded a $586,000 valuation
allowance against this deferred tax asset.

26

---

The
following is a reconciliation of the effective income tax rate as of December 31, 2003:

Federal statutory income tax rate

(34
)%State income tax rate

(6
)%Increase in valuation allowance on deferred tax asset

40
%Effective income tax rate

0
%


Loss per Share:Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average
number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Because the Company has incurred net losses, basic and diluted loss per
share is the same. No warrant or options were issued or outstanding as of December 31, 2003.

Comprehensive Income:The Company utilizes SFAS No. 130, "Reporting Comprehensive Income". This statement establishes
standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from
non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments and unrealized gains and
losses on available-for-sale securities. Comprehensive income is not presented in the Company's financial statements since the Company did not have any of the items of
comprehensive income in any period presented.

Use of Estimates:The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Statement of Cash Flows Supplementary Information:In connection with the acquisition of CSL and Autos, the following
non-cash transaction was recorded for the year ended December 31, 2003:

Issuance of 3,768,000 sharesIssuance of Note Payable for common stock

$
2,000,000


For
the year ended December 31, 2003 income taxes paid were $800. The Company paid no income taxes for the year ended December 31, 2002. Interest paid for the year ended
December 31, 2003 and 2002 was $35,265, and $10,026, respectively.

In
2003 the Company purchased $8,365 of office equipment under a capital lease which was recoded as a non cash transaction on the statement of cash flows.

In
2003, the Company recorded a beneficial conversion feature of $27,788 against the principal balance of a convertible note payable to a shareholder and shareholder affiliate.

New Accounting Standards:

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity.
In accordance with the standard, financial instruments that embody obligations for the issuer are required to be classified as liabilities. SFAS No. 150 is effective

27

---

for
financial instruments entered into or modified after May 31, 2003. This statement does not have an impact on the Company's statement of financial position.

In
January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities," which requires the consolidation of variable interest
entities, as defined. FIN 46 is applicable to financial statements issued after 2002, however, disclosures are required currently if the Company expects to consolidate any variable interest
entities. The Company does not expect to identify any
variable interest entities that must be consolidated. The maximum exposure of any investment that may be determined to be in a variable interest entity is limited to the amount invested.

3.Property and Equipment

Property and equipment at December 31, 2003 consisted of the following:

Truck with trailer

$
478,079Airplane


310,384Automobiles


248,700Furniture and equipment


50,328Tooling and equipment


9,105Leasehold improvements


59,3011,155,897Less accumulated depreciation


(921,329
)$
234,568


The
Company has acquired certain equipment under a capital lease. Total equipment recorded on the balance sheet under capital lease for the year ended December 31, 2003 is $8,365.

Depreciation
expense for years ended December 31, 2003 and 2002 is $90,363 and $143,014, respectively.

4.Debt

Debt consists of the following at December 31, 2003:

Note payable to shareholder

$
2,000,000Note payable to shareholder affiliate, net of unamortized beneficial conversion feature of $81,250


418,750Bridge line of credit from shareholder


980,000Other long term debt


1,098,6604,497,410Less Current Portion


(3,710,765
)$
786,645


Note Payable to Shareholder

Notes payable to shareholder consists of a $2,000,000 non-interest bearing note payable to Carroll Shelby originally due on December 31, 2003.
The note is secured by all the assets of CSI. This note was extended by mutual agreement between the parties and is currently due as follows: $500,000 due by March 31, 2004 and $1,500,000 due
by June 30, 2004. On March 31, 2004 the Company paid $500,000 to reduce this obligation. Beginning January 1, 2004 the Company will be required to accrue interest on this note at
the maximum interest rate allowable by law not to exceed 1.5% per month.

28

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Note Payable to Shareholder affiliate

Note payable to shareholder affiliate consists of a $500,000 note payable, issued on September 30, 2003 to Carroll Shelby and Bill Murphy, originally due
March 31, 2004 and bearing interest at 18% annually.

This
note is convertible at the option of the shareholder affiliate at any time during the term of the note into common stock of the Company at a conversion rate of $4.00 per share. The
common shares have piggyback registration rights.

At
the time of issuance of this note the Company's common stock market value was $4.50 per share, and accordingly this note had a deemed "beneficial conversion feature" of $.50 per share
associated with its issuance. In addition, the Company included in the "beneficial conversion feature" the value of the underlying warrants associated with the conversion. The warrants are valued at
$120,000. The warrant's value was calculated using the "Black Shoales Model" with assumptions of a 2.23% discount interest rate, 3 year term, 42% volatility and a dividend rate of zero. The result of
this beneficial conversion feature is to record additional interest expense to the consolidated statement of operations of $81,250 for the year ended December 31, 2003 and $81,250 of
unamortized beneficial conversion feature net of the outstanding principal balance.

If
the note holder converts they shall receive one share of common stock at a conversion rate of $4.00 per share and one warrant to purchase a share of common stock at an exercise price
of $6.00 per share and shall mature 3 years from issuance. The common stock underlying the Warrant has piggyback registration rights.

The
Company repaid $250,000 of this note in March 2004 and was given extended terms to pay the remainder of the note by June 30, 2004. No consideration was given for
extending the term of this note.

Bridge line of credit from shareholder

The Company also obtained a $980,000 bridge line of credit from Carroll Shelby on July 1, 2003. This note matured on January 1, 2004 and bears
interest at 18% annually on funds advanced under the line. The Company repaid this line in first quarter of 2004.

Under
the terms of this line of credit, in the event of non-payment upon maturity, the Company will issue 300,000 options to purchase common stock at $1.50 per share to the
note holder. The options will vest ratably over a three-year period beginning January 1, 2004. The Company did not pay this note on the maturity date and therefore will issue
100,000 options to the shareholder on January 1, 2004, 2005 and 2006.

Other long term debt

On December 30, 2003, the U.S. Bankruptcy Court approved the purchase of certain assets of Venture Molds and Engineering Corporation ("Venture"). Venture
is the parent Company of SAI. The Company purchased these assets for $1,200,000 through a promissory note secured by the assets sold. Payment will be made in 40 monthly installments of $30,000.
The Company imputed the interest on the note at 5.5% and recorded the principal of the note at $1,098,660 as of December 31, 2003. The assets were sold free and clear of any other liens,
claims, and encumbrances.

The
acquired assets include leasehold improvements, equipment and furniture primarily used in the manufacture of Shelby Series I automobiles, several autos in various stages of
completion and parts used in manufacturing.

Carroll
Shelby, director and principal shareholder of CSI, is a 25% shareholder in SAI.

29

---

The
following represents the payout of debt as of December 31, 2003:

2004

$
3,710,7652005


324,8422006


343,1662007


118,6372008


Thereafter


4,497,410Less: Current Portion


(3,710,765
)$
786,645


5.Shareholders' Deficit

In 2003 the Company raised capital through a "Private Placement" of unregistered common stock. The Company has received approximately $2,072,025 of cash, net of
costs of $359,475 from the sales of approximately 1,080,665 shares of common stock at $2.25 per share. As of December 31, 2003 the shares were not issued but are shown as outstanding in the
consolidated statement of shareholder deficit.

6.Related Party Transactions

See Note 4. "Debt" for description of related party debt. As of December 31, 2003 accrued interest expense related to the related party debt
outstanding to the majority shareholder and an affiliate is $82,410. For the year ended December 31, 2003 total interest expense associated with a majority shareholder is $193,340.

The
Company's principal shareholder was responsible for the creation of the trademarks, trade names and trade dress now owned by CSL and the subject of its licensing agreements. CSL had
a non-exclusive licensing agreement for use of the trademarks with SAI, a related entity
25%-owned by the Company's principal shareholder. This agreement was canceled in 2002. CSL received $79,250 in royalties for the year ended December 31, 2002. CSL entered into a
non-exclusive licensing agreement for use of the trademarks with Autos, its sister company, in June 2003. No royalty payments are provided under this inter-company arrangement.

CSL
rented its truck and trailer to SAI. In June 2003, CSL ceased rental to SAI and began renting this equipment to Autos. For the year ended December 31, 2002 CSL received
$49,413 from SAI. No rents are provided under this inter-company arrangement.

The
Company's principal shareholder advances funds for operating capital as needed. These advances are non-interest bearing and do not have a due date. Repayments are made as
working capital is deemed adequate. The outstanding balances of such advances as of December 31, 2003 were $136,434.

In
2003 the Company was repaid on a related party Note Receivable for $7,321.

In
connection with the issuance of the $980,000 bridge line of credit (See Note 4 "Debt") a shareholder of the Company received a $50,000 financing fee during the quarter ended
September 30, 2003.

One
of the Company's three directors is an attorney whose firm performs legal services for the Company and sublets office space. For the years ended December 31, 2003 and 2002,
legal fees paid to this firm amounted to $13,548 and $2,188, respectively.

30

---

See
Note 7 "Commitments and ContingenciesLicensing Agreement".

7.Commitments and Contingencies

Commitments:

Leases

The Company leases certain office and manufacturing space under the noncancellable operating leases having remaining terms in excess of one year, primarily for
headquarters in Los Angeles and its manufacturing facility in Las Vegas. In addition, the Company subleases a portion of this space to unrelated third parties.

In
addition, the Company leases $8,365 of office equipment as a capital lease.

The
yearly lease obligations at December 31, 2003 are:

Year

Operating
Lease

Capital
Lease2004

$
665,345

$
3,4542005


595,787


3,4542006


145,479


2,3032007


147,476


2008


100,264


Thereafter





$
1,654,351


9,211Interest at 14.89%





(1,455
)$
7,756Less: Current Portion





(2,464
)$
5,292


Rental
expenses under operating leases were $220,878 and $27,587 for the years ended December 31, 2003 and 2002, respectively.

The
Company subleases a portion of its headquarters to a law firm. Total rental income received for the years ended December 31, 2003 and 2002 is $24,000 and $22,000,
respectively.

Licensing Agreement

In 2003 the Company entered into a three year licensing agreement with an unaffiliated company to license certain of its intellectual properties associated with
the manufacturing of the aluminum bodies and frames of the Shelby produced cars.    The Company prepaid $131,500 for frames related to its Cobra production from this unaffiliated company,
which is included in prepaid assets at December 31, 2003. The Company will amortize $5,000 of this prepaid towards each frame purchased. Minimum frames to be purchased in 2004 are 30. Under the
terms of the agreement the Company is required to purchase an addition 20 frames in 2005. As part of this purchase agreement the Company purchased 10% of the outstanding stock of this unaffiliated
company for $25,000, which is included in other long term assets at December 31, 2003. This investment is recorded at cost under the cost method.

Finance Agreement

The company finances its insurance through a finance company. As of December 31, 2003 total principal and interest paid on this policy is $179,993 and
$4,824, respectively. Future commitments

31

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under
this agreement extend to 2004 and total $110,571 of which $6,037 is for interest and $104,534 is for principal payments.

Letter of Intent

On October 31, 2003, the Company announced it has entered into a letter of intent to acquire automotive supercharger developer and manufacturer Allen
Engine Development Inc. This acquisition will be a combination of cash and equity and if completed, would provide an extended reach for the Shelby brand into the growing automotive aftermarket
and performance parts market. In addition, if the Allen Engine Development acquisition is completed, it will give us depth in engineering services, which include research and development, CAD support,
prototyping as well as full CNC machining services. There can be no assurance that this acquisition will be completed.

Contingencies:

Litigation is always subject to uncertainties. The outcome of individually litigated matters is not predictable with any high level of assurance. Various legal
actions, governmental investigations, claims and proceedings are pending against the Company, including those arising out of governmental regulations relating to Environmental Protection Agency and
National Highway Traffic & Safety Agency; licensee, dealer, supplier and other contractual relationships. Management believes the ultimate outcome will not be material to the financial
statement.

In
connection with the 2003 assumption of SAI's Cobra vehicle production (See Note 1) by Autos, the Company made the decision to protect the Shelby trade name and reputation by
completing those vehicles started by SAI, but unfinished due to a lack of working capital and cessation of business. This decision and the ultimate disposition of the personal property utilized in
completion of the vehicles are the subject of a legal action brought by entities related to the 75% shareholder of SAI. Management cannot determine the probability of an unfavorable outcome or range
of possible loss if any.

8.Subsequent event

In the first quarter of 2004 the Company continued to raise capital through a private placement of unregistered common stock. The Company has received
approximately $1,560,000 of cash from the sales of approximately 693,450 shares of common stock at $2.25 per share.

9.Segment Reporting

Our business consists of two reportable segments: Royalty income generated from licensing and sale of one vintage automobile ("CSL"), revenue
generated from the production of automobiles and sale of automobile performance parts ("Autos') and corporate headquarters ("CSI"). These business segments are distinct and separate. There are no
allocations of costs amongst these segments or intercompany revenues.

32

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Business
segment information for the years ended December 31, 2003 and 2002 consists of:

2003

2002Revenue:CSL

$
857,104

$
598,988Autos


1,469,033$
2,326,137


598,988Operating income (loss):CSL

$
213,983


(622,163
)Autos


(1,601,477
)

CSI


(212,218
)

$
(1,599,712
)

(622,163
)Depreciation and amortization:CSL

$
84,030

$
143,014Autos


6,333


CSI





$
90,363

$
143,014Assets:CSL

$
235,272

$
390,669Autos


1,554,870


CSI


3,336,381


$
5,126,523

$
390,669Capital expenditures:CSL

$
10,384

$
5,383Autos


111,874


CSI





$
122,258

$
5,383


For
the year ended December 31, 2002 the Company operated CSL under one segment.

33

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

On March 12, 2004, the President and Chief Financial Officer of Registrant was notified by Spicer Jeffries LLP, Certified Public Accountants, ("Spicer")
that Spicer would be unable to provide an audit opinion on the Registrant's December 31, 2003 financial statements due to Spicer's loss of its insurance coverage. Spicer had served as the
independent auditor of the Registrant from August 15, 2003 through March 3, 2004.

On
April 6, 2004, the Registrant's Board of Directors, voted to replace its independent accountant, Spicer. Effective as of April 6, 2004, the Registrant's new independent
accountant is BDO Seidman, LLP ("BDO"). The Registrant authorized Spicer to respond fully to any inquiries from BDO and to make its work papers available to BDO.

The
reports of Spicer from August 15, 2003 through March 3, 2004, did not contain any adverse opinion, disclaimer or opinion, or qualification or modification as to the
certainty, audit scope or accounting principles. From August 15, 2003 through March 12, 2004, there were no disagreements between the Registrant and Spicer on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure. In addition, from August 15, 2003 through March 12, 2004, there were no "reportable events"
within the meaning of Item 304 of the Securities and Exchange Commission's Regulation S-K.

ITEM 8A. CONTROLS AND PROCEDURES

Management, including our principal executive officer and principal financial officer, has evaluated, as of the end of the period covered by this report, the
effectiveness of the design and operation of the Company's disclosure controls and procedures with respect to the information generated for use in this report. Based upon, and as of the date of that
evaluation, the principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective to provide reasonable assurances that information
required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in
the rules and forms of the Securities and Exchange Commission.

In
designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Based upon the above evaluation, management believes that its controls do provide such reasonable assurances. However, the Company currently has a small accounting
department and as a result segregation of duties are not always possible and the Company has retained outside consultants to assist with the financial close and financial reporting.

There
have been no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over financial reporting.

34

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Part III

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

Our current directors and executive officers, their ages and positions held in the Company as of April 14, 2003 are as follows:

Name

Age

Current PositionCarroll Shelby

81

CEO and DirectorJohn Luft

48

President, CFO and DirectorM. Neil Cummings

52

Secretary and Director


The
Company's directors will serve in such capacity until the next annual meeting of shareholders and until their successors have been elected and qualified. Our officers serve at the
discretion of the company's directors.

Carroll ShelbyCEO, Director

Carroll Shelby has been involved in the automobile racing industry as a successful driver and team manager for decades and during this time has manufactured both
on and off track cars. He has also worked as a consultant on some of the auto industry's most entrepreneurial projects.

After
leaving the Army Air Corps in WWII, Mr. Shelby joined the Aston Martin racing team in the 1950s. In 1958, teamed with Roy Salvadori, he won the famed LeMans 24 Hours for
Aston Martin, giving the team its only victory in the long-distance classic and setting a new race record of 112.569 mph average for the event.

One
year after his LeMans victory, Mr. Shelby was forced to give up race car driving for health reasons, turning his attention to building carsand creating what is
still considered one of the fastest road cars ever, the Shelby Cobra. The 289 and 427 Cobra models and the subsequent GT 350 and GT 500 Shelby Mustangs that Mr. Shelby built for Ford made him a
household name. Mr. Shelby then built the special Cobra Daytona Coupes, which captured the FIA World Manufacturer's
Championship in 1965. The next year a Shelby-led group of Ford GT 40s beat Ferrari at LeMans, putting him back in the winner's circle, this time as a manufacturer with two consecutive
victories at the famed 24-Hour classic, in 1966 and 1967.

In
the early 1980s, Lee Iacocca, the Chairman of Chrysler, selected Mr. Shelby to create a high-performance image for Chrysler. Between 1983 and 1989, Shelby created a
series of Chrysler-Dodge high-performance vehicles, including envisioning and inaugurating the prototype work on what ultimately became the Dodge Viper. In 1990, Mr. Shelby launched
his Can-Am Spec Racer, an affordable racing car for entry-level competitors which was sanctioned as a separate racing category by the Sports Car Club of American.

The
next few years brought Mr. Shelby a number of accolades, including his induction into the International and the Michigan Motorsports Halls of Fame, and his selection as the
official pace car driver of the Viper that started the 1991 Indy 500 race.

By
1995 Mr. Shelby commenced through the Shelby Companies another manufacturing project, the CSX4000 series Cobra S/C Roadsters, followed quickly by the design and manufacture of
the Shelby Series I exotic sports car. Currently, Mr. Shelby is building a lineup of performance cars including the CSX7000 series Cobras. Mr. Shelby has been our CEO and director
since June 2003. Mr. Shelby is a founder and director of Shelby American, Inc., Carroll Shelby International Inc., Carroll Shelby Licensing, Inc., Shelby
Technologies, Carroll Shelby Enterprises, Carroll Shelby Children's Foundation, International Chili Society, Shelby Automobiles, Inc.

35

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M. Neil CummingsSecretary, Director

M. Neil Cummings has practiced law for the past 25 years and since 1995 has served as President of the Law Offices of M. Neil Cummings & Associates,
PLC, a law firm located in Los Angeles that specializes in business and commercial law. He also currently serves as General Counsel for Carroll Shelby Licensing, Inc.

Prior
to his current position, Cummings was an associate and then a partner with the law firm of Walker, Wright, Tyler and Ward in Los Angeles from 1981 through 1995. He began his career
as an associate at the Law Offices of Hardin, Cook, Loper, Engel & Bergez in Oakland, California from 1977 through 1981.

Mr. Cummings
is a 1974 graduate of the University of California at Berkley and earned his law degree from Hastings College of Law. He is also a founding board member of the
American Magline Group, a joint venture of American industrial companies dedicated to building the Transrapid super speed 300+ mph Maglev train between Anaheim, California and Las
Vegas, in partnership with the California-Nevada Super Speed Train Commission.

John LuftPresident, CFO, Director

John Luft, President of Carroll Shelby International Inc. is responsible for the day-to-day management and operations and all
financial reporting of the Company which is the parent of Carroll Shelby Licensing and Shelby Automobiles. His responsibilities include; global brand extension and positioning, all sales, marketing,
advertising and branding opportunities, strategic partnerships and programs, existing and new product development, market and business plan development.

Mr. Luft
joined Carroll Shelby Licensing in 2000 after serving two years at SkyNet Holdings, Inc. as Sr. Vice President of Global Marketing and Sales and Business
Development. During his tenure, he was responsible for managing the company's global branding, planning launch strategies for international markets and developing and implementing all of SkyNet's
advertising and promotional initiatives.

Previously,
Mr. Luft spent 13 years with the Hilton Hotels Corporation. He served as Director of Global and Strategic Partnership & Product Development for four
years where he was responsible for developing various Hilton innovations. In his first seven years at Hilton, Mr. Luft served as corporate director of U.S. Marketing, where he helped improve
revenues and profitability as well as providing day-to-day supervisory support to Hilton's regional offices.

Mr. Luft
also worked for the Walt Disney Company as Director of Resorts/Attractions Marketing at the Walt Disney World (WDW) Resort in Orlando, Florida. In that capacity,
Mr. Luft developed and executed the company's annual marketing plan strategy and represented Walt Disney World resorts in Disney's Synergy's programs and initiatives. He was responsible for
regional, local, and national WDW Resort promotions and helped design and develop the WDW Resort web site.

A
graduate of the University of Southern California, Los Angeles, Mr. Luft holds a bachelors degree in Marketing and Speech Communications.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our officers and directors, and persons who beneficially own more than ten
percent of our Common Stock, file reports of ownership and changes in ownership with the commission. These reporting persons are also required to furnish us with copies of all Section 16(a)
forms they file. To our knowledge, the following persons

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have
failed to file, on a timely basis, the identified Section 16(a) reports during the most recent fiscal year:

Name and Principal Position

Number of Late
Reports

Known Failures to File
a Required ReportCarroll Shelby, CEO and Director

0

0Neil Cummings Secretary and Director

0

0John Luft, President, CFO, Director

0

0


Audit Committee Matters

The current members of Carroll Shelby International Inc.'s Audit Committee are John Luft (Chair) and M. Neil Cummings. While the Board believes that each
of the current Audit Committee members has
the financial sophistication necessary to read and understand Carroll Shelby International Inc.'s financial statements, none of the members have the background or experience required of an
"audit committee financial expert" under Securities and Exchange Commission rules. In addition, the Board of Directors has determined Mr. Luft and Mr. Cummings do not meet the
independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934. Accordingly, Carroll Shelby International Inc.'s Nominating and Corporate Governance
Committee has identified director nominees who are independent under Rule 10A-3 and at least one nominee who qualifies as an audit committee financial expert and the Board intends
to submit these nominees to a vote of stockholders at the next annual meeting.

Code of Ethics

Carroll Shelby International Inc. has adopted a code of business conduct and ethics for directors, officers (including Carroll Shelby
International Inc.'s principal executive officer, principal financial officer and controller) and employees, known as the Carroll Shelby International Inc.'s Code of Conduct.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth information regarding the annual and long-term compensation paid to our executive officers during the last fiscal year.

SUMMARY COMPENSATION TABLE

|                                    |  |                |  | Annual Compensation  |  | Long-Term Compensation
|----------------------------------- |  | -------------- |  | -------------------- |  | ----------------------
|
|
|Carroll Shelby,
CEO, Director       |  | 2003
2002
2001 |  | 75,000
0
0           |  | 

                 
|John Luft,
President, CFO, Director |  | 2003
2002
2001 |  | 62,500
57,812
50,000 |  | 

                 

Compensation of Directors

None.

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Option Grants in the Last Fiscal Year

None.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

None

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND RELATED SHAREHOLDER MATTERS.

The following table sets forth, as of December 31, 2003, the number of shares of Common Stock beneficially owned by (i) each person who was known by
us to own beneficially more than five percent (5%) of our Common Stock; (ii) our directors; (iii) our executive officers; and (iv) our directors and officers as a group. As of
December 31, 2003, there were 12,855,866 shares of Common Stock issued and outstanding.

|Name & Address Of Beneficial Owner                                                                                       |  | Amount and Nature of
Beneficial Ownership |  | Percent
Of Class(1) |  
|------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------- |  | ------------------- | -
|Carroll Hall Shelby
C/o Carroll Shelby International Inc.
11150 W Olympic Blvd, Suite 1050
Los Angeles, California 90064 |  | 9,087,866                                 |  | 70.6                | %
|John Luft
C/o Carroll Shelby International Inc.
11150 W Olympic Blvd, Suite 1050
Los Angeles, California 90064           |  | 275,00                                    |  | 2.1                 | %
|M. Neil Cummings
C/o Carroll Shelby International Inc.
11150 W. Olympic Blvd. Suite 1050
Los Angeles, California 90064   |  | 0                                         |  | 0                   | %
|John Cathcart
774 Mays Blvd, #10-450
Incline Village, NV 89451                                                           |  | 1,216,757                                 |  | 9.4                 | %
|Directors and Executive Officers as a Group                                                                              |  | 9,362,866                                 |  | 72.8                | %

---

Equity Compensation Plan Information

None

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

As a result of the reverse merger with Ginseng Forest and CSI, we have notes payable to shareholder consisting of a $2,000,000 non-interest bearing
note payable to Carroll Shelby originally due on December 31, 2003. The note is secured by all the assets of CSI. This note was extended by mutual agreement between the parties and is currently
due as follows: $500,000 due and paid on March 31, 2004 and $1,500,000 due by June 30, 2004. Beginning January 1, 2004 the Company is required to accrue interest on this note at
the maximum interest rate allowable by law not to exceed 1.5% per month.

In
order to fund working capital needs in 2003, CSI obtained a $500,000 note payable to a shareholder affiliate issued on September 30, 2003 to Carroll Shelby and Bill Murphy,
originally due March 31, 2004 and bearing interest at 18% annually.

This
note is convertible at the option of the shareholder affiliate at any time during the term of the note into common stock of the Company at a conversion rate of $4.00 per share. The
common shares have piggyback registration rights.

At
the time of issuance of this note the Company's common stock market value was $4.50 per share, and accordingly this note had a deemed "beneficial conversion feature" of $.50 per share
associated with its issuance. In addition, the Company included in the "beneficial conversion feature" the value of the underlying warrants associated with the conversion. The warrants are valued at
$120,000. The warrant's value was calculated using the "Black Shoales Model" with assumptions of a 2.23% discount interest rate, 3 year term, 42% volatility and a dividend rate of zero. The result of
this beneficial conversion feature is to record additional interest expense to the consolidated statement of operations of $81,250 for the year ended December 31, 2003 and $81,250 of
unamortized beneficial conversion feature net of the outstanding principal balance.

If
the note holder converts they shall receive one share of common stock at a conversion rate of $4.00 per share and one warrant to purchase a share of common stock at an exercise price
of $6.00 per share and shall mature 3 years from issuance. The common stock underlying the Warrant has piggyback registration rights.

The
Company repaid $250,000 of this note in March 2004 and was given extended terms to pay the remainder of the note by June 30, 2004. No consideration was given for
extending the term of this note.

In
order to fund operations through 2003, we obtained a $980,000 bridge line of credit from Carroll Shelby on July 1, 2003. This note matured on January 1, 2004 and bears
interest at 18% annually on funds advanced under the line. The Company repaid this line in the amount of $980,000 in the first quarter of 2004.

Under
the terms of this line of credit, in the event of non-payment upon maturity, the Company will issue 300,000 options to purchase common stock at $1.50 per share to the
note holder. The options will vest ratably over a three-year period beginning January 1, 2004. The Company did not pay this note on the maturity date and therefore will issue
100,000 options to the shareholder on January 1, 2004, 2005 and 2006.

As
of December 31, 2003 accrued interest expense related to the related party debt outstanding to the majority shareholder and an affiliate is $82,410. For the year ended
December 31, 2003 total interest expense associated with a majority shareholder is $193,340.

Mr. Shelby
was responsible for the creation of the trademarks, trade names and trade dress now owned by CSL and the subject of its licensing agreements. CSL had a
non-exclusive licensing agreement for use of the trademarks with SAI, a related entity 25%-owned by Mr. Shelby. This agreement was canceled in 2002. CSL received $79,250 in
royalties for the year ended December 31,

39

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2002.
CSL entered into a non-exclusive licensing agreement for use of the trademarks with Autos, in June 2003. No royalty payments are provided under this inter-company arrangement.

CSL
rented its truck and trailer to SAI. In June 2003, CSL ceased rental to SAI and began renting this equipment to Autos. For the year ended December 31, 2002 CSL received
$49,413 from SAI. No rents are provided under this inter-company arrangement.

Our
principal shareholder advances funds for operating capital as needed. These advances are non-interest bearing and do not have a due date. Repayments are made as working
capital is deemed adequate. The outstanding balances of such advances as of December 31, 2003 were $136,434.

In
2003 the Company was repaid on a related party Note Receivable for $7,321.

In
connection with the issuance of the $980,000 bridge line of credit our majority shareholder received a $50,000 financing fee during the quarter ended September 30, 2003.

One
of our three directors is an attorney whose firm performs legal services for the Company and sublets office space. For the years ended December 31, 2003 and 2002, legal fees
paid to this firm amounted to $13,548 and $2,188, respectively.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

Exhibits

|Number |  | Description                                                                                                                                              
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002Chief Executive Officer                                                          
|31.2   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002President, Chief Financial Officer                                               
|32.1   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Chief Executive Officer           
|32.2   |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 President, Chief Financial Officer

Reports on Form 8-K

Current
report, items 4 and 7 Form 8-K 2003-08-20
Current report, items 5 and 7 Form 8-K/A 2003-08-25

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

On April 6, 2004 the Company engaged BDO Seidman, LLP as its Independent Public accountants to audit the December 31, 2003 fiscal year. The estimated audit
fee for the 2003 audit is $40,000. The following table sets forth fees for services Spicer, Jeffries, LLP provided during fiscal year

Audit Fees(1)

$
28,050Audit-related fees(2)


0Tax fees(3)


2,500All other fees(4)


0Total

$
30,550


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Generally,
the Audit Committee approves in advance audit and non-audit services to be provided by the Company's independent auditors. In other cases, in accordance with
Rule 2-01(c)(7) of Securities and Exchange Commission Regulation S-X, the Audit Committee has delegated pre-approval authority to the Chairman of the
Audit Committee for matters which arise or otherwise require approval between regularly scheduled meetings of the Audit Committee, provided that the Chairman report such approvals to the Audit
Committee at the next regularly scheduled meeting of the Audit Committee.

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SIGNATURES

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

| |  | CARROLL SHELBY INTERNATIONAL INC.(Registrant)
| |  | ---------------------------------------------
| |  | By:                                          
| |  | Date:                                        

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

|By:   |  | /s/CARROLL SHELBY Carroll Shelby, Chief Executive Officer and Director                                |  | 
|----- |  | ----------------------------------------------------------------------------------------------------- |  | 
|Date: |  | April 14, 2004                                                                                        |  | 
|By:   |  | /s/JOHN LUFT John Luft, President, Chief Financial Officer, Principal Accounting Officer and Director |  | 
|Date: |  | April 14, 2004                                                                                        |  | 
|By:   |  | /s/M. NEIL CUMMINGS M. Neil Cummings, Secretary Director                                              |  | 
|Date: |  | April 14, 2004                                                                                        |  | 

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