<PAGE>

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

                                   FORM 10-K

(MARK ONE)
|X|    ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
       OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2007

OR

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

       FOR THE TRANSITION PERIOD FROM __________ TO __________

                                    000-791
                             (COMMISSION FILE NO.)

                          SUN MOTOR INTERNATIONAL INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               WYOMING                                     84-0217330
    (STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)

                   BLOCK B, G/F., PRINCE INDUSTRIAL BUILDING
                       106 KING FUK STREET, SAN PO KONG,
                          KOWLOON, HONG KONG SAR, PRC
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (852) 2321-6108


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE SECURITIES EXCHANGE ACT
OF 1934:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE SECURITIES EXCHANGE ACT
OF 1934:

COMMON STOCK, $0.01 PAR VALUE PER SHARE

<PAGE>

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes |_| No |X|

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Large accelerated filer |_| Accelerated filer |_| Non-Accelerated
filer |X|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

The aggregate market value of the common stock held by non-affiliates, based on
the average bid and asked prices reported on September 29, 2006 ( the last
business day of the registrant's most recently completed second fiscal quarter )
was $4,119,352.

As of Aug 13, 2007, there were 29,440,067 shares of registrant's common stock
outstanding.

<PAGE>

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

      The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. This Report contains a
number of forward-looking statements that reflect management's current views and
expectations with respect to its business, strategies, products, future results
and events and financial performance. All statements made in this Report other
than statements of historical fact, including statements that address operating
performance, events or developments that management expects or anticipates will
or may occur in the future, including statements related to volume growth,
revenues, profitability, new products, adequacy of funds from operations,
statements expressing general optimism about future operating results and
non-historical information, are forward looking statements. In particular, the
words "believe," "expect," "intend," " anticipate," "estimate," "may," "will,"
variations of such words, and similar expressions identify forward-looking
statements, but are not the exclusive means of identifying such statements and
their absence does not mean that the statement is not forward-looking. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below. Actual results, performance or achievements
could differ materially from historical results as well as those expressed in,
anticipated or implied by these forward-looking statements. The Company does not
undertake any obligation to revise these forward-looking statements to reflect
any future events or circumstances.

      Readers should not place undue reliance on these forward-looking
statements, which are based on management's current expectations and projections
about future events, are not guarantees of future performance, are subject to
risks, uncertainties and assumptions (including those described below) and apply
only as of the date of this Report. Actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below in "Risk
Factors" as well as those discussed elsewhere in this Report, and the risks to
be discussed in the next Annual Report on Form 10-K and in the press releases
and other communications to stockholders issued by the Company from time to time
which attempt to advise interested parties of the risks and factors that may
affect its business. The Company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

ADDITIONAL INFORMATION

      We are subject to the informational requirements of the Exchange Act and,
in accordance with the rules and regulations of the Securities and Exchange
Commission, we file reports, proxy statements and other information. The public
may read and copy such material at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. 20549, at prescribed rates. For further
information, the SEC maintains a website that contains reports, proxy and other
information statements at HTTP://WWW.SEC.GOV or call (800)SEC-0330.

      You may find us on the Web at WWW.SUNMOTOR.COM.HK. We do not intend to
incorporate by reference any information contained on our website into this Form
10-K, and you should not consider information contained on our website as part
of this Form 10-K.

                                       3
<PAGE>

TABLE OF CONTENT

PART I

ITEM 1.   BUSINESS                                                             5

ITEM 1A.  RISK FACTORS                                                        10

ITEM 1B.  UNRESOLVED STAFF COMMENTS                                           15

ITEM 2.   PROPERTIES                                                          15

ITEM 3.   LEGAL PROCEEDINGS                                                   16

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 16

PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS           16

ITEM 6.   SELECTED FINANCIAL DATA                                             17

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS                                           18

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK          22

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                         22

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE                                            22

ITEM 9A.  CONTROLS AND PROCEDURES                                             23

ITEM 9B.  OTHER INFORMATION                                                   23

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS                                    24

ITEM 11.  EXECUTIVE COMPENSATION                                              25

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT AND RELATED STOCKHOLDER MATTERS                          26

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                      27

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                              27

PART IV

ITEM 15.  SIGNATURES, EXHIBITS AND FINANCIAL STATEMENT SCHEDULES              28

                                       4
<PAGE>

ITEM 1. BUSINESS

HISTORY AND DEVELOPMENT

      The Company was incorporated in Wyoming on February 23, 1973. The Company
had insignificant assets and had not generated significant revenues between
April 2004 and the close of the reverse acquisition described below.

      On June 15, 2005, pursuant to the Securities Purchase Agreement and Plan
of Reorganization dated as of May 2, 2005 by and among the Company, Bestip
Development International Limited, a British Virgin Islands company ("Bestip"),
and the shareholders of Bestip, the shareholders of Bestip transferred to the
Company all of the outstanding capital shares of Bestip in exchange for the
issuance of 28,000,000 shares of the Company's common stock to the shareholders
of Bestip (representing approximately 95% of the Company's capital stock
outstanding after giving effect to its acquisition of Bestip) (the
"Reorganization"). As a result of the Reorganization, Bestip became a
wholly-owned subsidiary of the Company.

      Effective August 6, 2005, the Company changed its name from Wyoming Oil &
Minerals, Inc. to Sun Motor International, Inc. to reflect the change in the
Company's business.

      Since the shareholders of Bestip acquired approximately 95% of the
Company's issued and outstanding common shares and the Bestip management team
and board of directors became the management team and board of directors of the
Company, according to FASB Statement No. 141 - "Business Combinations," the
Reorganization has been treated as a recapitalization for accounting purposes,
in a manner similar to reverse acquisition accounting. In accounting for this
transaction:

      o     Bestip is deemed to be the purchaser and surviving company for
            accounting purposes. Accordingly, its net assets are included in the
            Company's balance sheet at their historical book values; and

      o     Control of the net assets and business of the Company was acquired
            effective June 15, 2005. This transaction has been accounted for as
            a purchase of the assets and liabilities of the Company by Bestip.
            The historical cost of the net liabilities assumed was $0.

SUMMARY

      Sun Motor International, Inc. (the "Company") through its operating
companies (see the organizational structure shown below) is an original design
manufacturer and supplier of micro-motors to the global market with a broad
range of applications in automotive parts, power tools, home appliances,
business equipment, medical equipment, personal care products and consumer
electronics. The Company operates in one industry segment, which includes the
design, manufacture and sales of custom-designed and standard micro-motors. As
used herein, the Company includes Bestip and its various operating companies.

      The Company, established by Mr. Simon Shi Kai Biu, Chairman and Chief
Executive Officer, in 1983 in Hong Kong, is headquartered in Hong Kong and
operates four manufacturing plants in China with a total manufacturing area of
approximately 484,000 square feet. The Company's plants, located in Gong Ming,
Xing Feng and Feng Gang in Guangdong Province of the People's Republic of China,
are vertically integrated to facilitate the manufacture of high quality products
at competitive prices. Production capability at the Company's manufacturing
facilities encompasses assembling, machining, pressing, tooling, mold making and
plastic injection molding to produce components and final products.

      The Company's products are distributed mainly through direct sales by its
Sales and Marketing Department and also through four exclusive agents for the
North America, Europe and Southeast Asian markets. The Company's agents act on
an exclusive basis and sell products on the basis of either product category or
geographic region. Agency arrangements are reviewed and renewed annually. The
Company provides technical support to the direct sales team and sales agents
together with in-house product engineering for customers to develop custom
solutions for micro-motor requirements.

                                       5
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                           <C>
      The following is a chart of the organizational structure of the Company.

                                                     ------------------
                                                          Sun Motor
                                                       International,
                                                            Inc.
                                                           (OTCBB
                                                       listed vehicle)
                                                     ------------------

                                                                   100%
                                                     ------------------
                                                           Bestip
                                                        Development
                                                       International
                                                          Limited
                                                      (British Virgin
                                                          Islands)
                                                     ------------------

          100%             90%            100%            100%            100%            100%            100%            100%
--------------  --------------  --------------  --------------  --------------  --------------  --------------  --------------
  Sun Motor       Sun Motor       Sun Motor       Sun Motor      Billion Top      Sun Motor       Sun Micro       Sun Motor
  Industrial     Manufactory      Precision          OEM         Developments      Holding          Motor         Auto Parts
  Co Limited       Limited        Products       Co Limited        Limited         Company        Technology       Company
                     ***           Limited                                         Limited         Limited         Limited
     (HK)            (HK)            (HK)           (HK)            (BVI)            (HK)            (HK)            (HK)

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

                                          100%            100%            100%            100%
                                --------------  --------------  --------------  --------------
                                   Fuvanka         Classic       Dragon Hero        Hysan
                                 Industries        Choice       International   International
                                  Limited        Investments       Limited       Investment
                                                  Limited                          Limited
                                    (HK)           (BVI)            (BVI)           (BVI)
                                --------------  --------------  --------------  --------------


                   ------------------------------------------------ ------------------------------------------------
                    COMPANY NAME                                     BUSINESS OPERATIONS
                   ------------------------------------------------ ------------------------------------------------
                    Bestip Development International Limited         Investment Holding
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor Industrial Co Limited                  Manufacturing and trading - AC motor
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor Manufactory Limited                    Manufacturing and trading - toys motor
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor Precision Products Limited             Manufacturing - metal and plastic parts
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor OEM Co Limited                         Manufacturing and trading - DC motor
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor Auto Parts Company Limited             Manufacturing and trading - auto parts
                   ------------------------------------------------ ------------------------------------------------
                    Sun Motor Holding Company Limited                Dormant
                   ------------------------------------------------ ------------------------------------------------
                    Sun Micro Motor Technology Limited               Staff employment
                   ------------------------------------------------ ------------------------------------------------
                    Billion Top Developments Limited                 Investment Holding
                   ------------------------------------------------ ------------------------------------------------
                    Fuvanka Industries Limited                       Property Holding
                   ------------------------------------------------ ------------------------------------------------
                    Classic Choice Investments Limited               Investment holding
                   ------------------------------------------------ ------------------------------------------------
                    Dragon Hero International Limited                Investment holding
                   ------------------------------------------------ ------------------------------------------------
                    Hysan International Investment Limited           Investment holding
                   ------------------------------------------------ ------------------------------------------------
</TABLE>

***Sun Motor Manufactory Limited is the toy motors trading arm of the Company;
it is 90% and 10% held by the Company and Miss Lau Lee Tsun, an unrelated third
party, respectively.

                                       6
<PAGE>

GROWTH STRATEGY

      The Company seeks to achieve continued revenue growth, improved profit
margins and increased market share as one of the premier global producers of
micro-motors. This growth strategy encompasses:

      o     PENETRATING THE RAPIDLY GROWING HIGH TECHNOLOGY AND AUTOMOTIVE
            SECTORS. As micro-motor applications in the automotive components
            and technology industries increase, the Company intends to exploit
            its production facilities to develop a key role in these sectors.
            China's automobile sales have expanded at over 30% per annum over
            the past two years. At the same time, China is being increasingly
            used by multinationals as a subcontract manufacturer for a wide
            variety of products, both automotive and technology based, utilizing
            an increasing level of micro-motor engineered components.
            Micro-motors are widely used, for example, in passenger sedans'
            power windows and door lock systems, ABS braking systems, headlamp
            adjusters, rear-view mirror adjusters, seat adjusters and air
            conditioning systems.

      o     EXPANSION OF PRODUCTION CAPACITY TO MEET INCREASING ORDERS FROM
            CUSTOMERS. The production lines of the Company's assembly
            manufacturing facilities are operating largely at full capacity.
            Currently, the Company produces approximately 500,000 micro-motors
            per day. Based on existing available factory area and with
            additional investment in assembly stations, dies, molds and
            machines, the Company believes it can increase the daily production
            capacity to 800,000 units, or 60% higher than current capacity. The
            Company intends to expand its existing manufacturing facilities to
            enable it to meet the needs of its customers and to address future
            needs from new customers

      o     BROADEN PRODUCT APPLICATION BY ACQUISITIONS. The Company will also
            consider strategic acquisitions that provide access to new markets
            or provide for manufacturing cost savings through utilization of the
            Company's Chinese manufacturing capabilities. The Company's strategy
            is based on acquisition of key clients and the ability to shift
            production from Europe and the US to its China facilities to enhance
            profitability and efficiency.

      o     MOVE UP THE VALUE CHAIN TO BECOME A SYSTEM SOLUTION PROVIDER. The
            Company intends to offer its customers complete solutions, which
            also carry higher margins than individual components. In addition,
            being a systems supplier will enable the Company to strengthen its
            customer relationships. The Company is actively developing its
            capacity to provide system or module solutions to its customers.

PRODUCT CATEGORIES

      Micro-motors are a category of motors typically applied to consumer and
business products. Motors are the devices that provide the actual speed and
torque in a drive. The Company's product line covers both AC (alternating
current) and DC (direct current) motors. Motors can be categorized into AC
motors (single and multiphase motors, universal motors, servo motors, induction
motors, synchronous motors, and gear motors) and DC motors (brushless motors,
servo motors, and gear motors) as well as linear, stepper and air motors, and
motor contactors and starters. AC motors require an alternating current or
voltage source, for their power, which can be accessed in wall outlets in one's
house, to function properly. DC motors require a direct current or voltage
source (like the voltage from batteries) to make them work.

AC MOTORS

      AC (alternating current) motors encompass single/multiphase, universal,
servo, induction, synchronous, and gear-motor types. The magnetic field
generated by AC motors is produced by an electromagnet powered by the same AC
voltage as the motor coil. There are many advantages in the use of AC motors
aside from the wide availability of AC power.

                                       7
<PAGE>

      Some types of AC motors do not use brushes or commutators. This eliminates
many problems of maintenance and wear, and also eliminates the problem of
dangerous sparking. AC motors are also particularly well-suited for
constant-speed applications, as the motor speed is determined by the frequency
of the AC voltage applied to the motor terminals.

      There are two distinct types of AC motors: synchronous and induction. A
synchronous motor consists of a series of three windings in the stator section
with a simple rotating area. A current is passed through the coil, generating
torque on the coil. Since the current is alternating, the motor will run
smoothly only at the frequency of the sine wave. This allows for constant,
unvarying speed from no load to full load with no slip.

      Induction motors are the more common of the two motor types. They use
electric current to induce rotation in the coils rather than supplying the
rotation directly. Induction motors use shorted wire loops on a rotating
armature and obtain their torque from currents induced in these loops by the
changing magnetic field produced in the field coils.

DC MOTORS

      DC motors are configured in many sizes and types, including brushless,
servo, and gear. DC motors consist of a rotor and a permanent magnetic field
stator. The magnetic field is maintained using either permanent magnets or
electromagnetic windings. DC motors are most commonly used in variable speed and
torque applications.

      Brushed DC motors have built-in commutation, meaning that as the motor
rotates, mechanical brushes automatically commutate coils on the rotor.
Brushless DC motors use an external power drive to allow commutation of the
coils on the stator. Brush-type motors are used when cost is a priority, while
brushless motors are selected to fulfill specific requirements, such as
maintenance-free operation, high speeds, and hazardous environments where
sparking could be dangerous.

PRODUCT MIX

      The Company's revenue growth by product type and product mix for the past
three years ended March 31 is as shown below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
              2007                                   2006                                   2005
             -------------------------------------- -------------------------------------- -------------------------
              Sales        %            Growth rate  Sales        %            Growth rate  Sales        %
                                        vs prior                               vs prior
                                        year                                   year
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S>           <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
AC Motors     $22.3m        40.0%       13.2%        $19.7 m       38.8%       21.6%        $16.2 m       33.3%
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
DC Motors     $33.5m        60.0%        7.7%        $31.1 m       61.2%       (4.3%)       $32.5 m       66.7%
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total         $55.8 m      100.0%        9.8%        $50.8 m      100.0%        4.3%        $48.7 m      100.0%
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>

The Company classifies product applications into five areas: automotive
products, home appliances, power tools, business and personal care products, and
audio and visual products.

SALES AND MARKETING

      The Company's sales methods encompass direct sales, agency arrangements,
participation in trade shows, referrals, advertising, and the Company's website.

      The Company sells to customers in Hong Kong, Japan, Shanghai and Shenzhen
by direct sales from our offices in China, Japan and Hong Kong. The Company
sells to US, European and Southeast Asian customers through four sales agents
that represent the Company in different geographic regions and for different
products.

                                       8
<PAGE>

      For markets in China, Hong Kong, Taiwan and Japan, we engage in direct
sales from our sales offices in China, Hong Kong and Japan. The sales team in
Hong Kong consists of 17 staff, including a Marketing Manager, six Engineers and
ten Account Managers.

      For US, European and other markets, the Company sells its products through
four agents including SMA Industrial LLC in the US, H3R Global Beschaffungs
Agenture in Germany, Eloy & Becker Sprl in Europe and Device Electronics Pte.
Ltd. in Southeast Asia.

      No end user accounted for more than 10% of total revenues. The Company
does not believe that the loss of any single customer would have a material
effect on its total business.

COMPETITION

      From its beginnings as a relatively simple component of basic toys,
household products and personal care equipment, the micro-motor has evolved into
an integral part of daily life with an enormous range of applications.
Increasing automation across the consumer spectrum has resulted in micro-motors
becoming a key component of the automotive, technology, communication and health
care markets. The ubiquitous nature of micro-motors in today's consumer market,
as well as the trend toward outsourcing to China the manufacturing of consumer
products have resulted in a largely fragmented industry with most of the
lower-end, basic motors being supplied by a large number of small manufacturers
based in China.

      Smaller competitors focus on supplying local manufacturers of lower-end
high-volume products in the mass market, and they generally lack the quality
standards, technology and efficiency demanded by international brand companies
necessary to meet higher-end applications.

      At the other end of the micro-motor spectrum, the industry is dominated by
two major companies, Johnson Electric Holdings Ltd of Hong Kong and Mabuchi
Motor Company of Japan, which together control approximately 80% of the global
micro-motor market. While both companies produce for the audio and visual,
automotive, business equipment, and home appliance markets, Johnson Electric is
the market leader in automotive products and Mabuchi has a larger market share
in business equipment and audio and visual products.

      In the past years, the Company has succeeded in obtaining orders from key
clients, including the largest printer company in the world, which were
originally intended for competitors. The Company was able to secure these orders
for inkjet printers on price and tolerance levels.

      The Company's competitive advantage over smaller firms lies in its
vertically integrated production capability, which enables the Company to
achieve better quality, better cost-controls and production schedules that meet
customers' demanding just-in-time production requirements.

      Although larger competitors have greater resources, the Company is often
able to offer lower prices and customized solutions. As the global outsource
trend persists, multinational customers typically prefer to diversify their
purchasing sources among more than two suppliers. The Company is considered by
major multinational customers as a premier supplier comparable to larger members
of the peer group. Smaller competitors are generally not vertically integrated
nor do they have the capability to provide any design and engineering services,
hence, they are typically unable to offer customized solutions or secure the
quality and cost advantages of outsourced components. As such, smaller
competitors can typically supply only to the lower-end of the market, such as
motors used in toys and personal care products.

RAW MATERIALS AND SUPPLIERS

      Key raw materials for micro-motors consist of (1) brushes, (2) cold rolled
steel, (3) copper wire, (4) magnets and (5) silica steel. The raw material
supply sources are widely available and diversified. The Company currently has
at least three suppliers for each of the five categories of raw materials. The
Company does not implement a hedging policy against the fluctuation of raw
material prices.

                                       9
<PAGE>

EMPLOYEES

      As of Aug 15, 2007 the Company had approximately 4,000 employees.

INTELLECTUAL PROPERTY

      The Company has obtained a trademark for the Company's logo. The Company
has not obtained patent protection for any of its intellectual property. The
Company has obtained agreements from its key employees with respect to
protecting the Company's trade secrets and confidential know-how.

ITEM 1A. RISK FACTORS

      The following risk factors relating to the Company should be carefully
considered. Any of the following risks could materially harm the business of the
Company.

OUR OPERATIONS DEPEND HIGHLY ON SHI KAI BIU, SIMON, OUR CHIEF EXECUTIVE OFFICER,
AND A SMALL NUMBER OF OTHER EXECUTIVES.

      The success of operations depends greatly on a small number of key
managers. The loss of the services of Mr. Shi Kai Biu, Simon, or any of the
other senior executives could adversely affect our ability to conduct our
business. Although we believe we would be able to find other managers to replace
any of these managers, the search for such managers and the integration of such
managers into our business will inevitably occur only over an extended period of
time. During that time the lack of senior leadership could affect adversely our
sales and manufacturing, as well as our research and development efforts.

THE COMPANY IS SUBJECT TO INTENSE COMPETITION IN WHICH IT MAY NOT BE ABLE TO
COMPETE EFFECTIVELY.

      The Company's business is subject to intense competition, changes in
consumer preferences and global economic conditions. Many of the Company's
competitors have longer operating histories and significantly greater financial,
technical, marketing and other resources than the Company has and may be able to
respond more quickly than it can to new or changing opportunities and customer
requirements. Increased competition can reduce sales for the Company. To be
successful, it must continue to:

      promote its brands successfully;
      anticipate and respond to new consumer trends;
      develop new products and markets in order to compete effectively;
      improve productivity; and
      respond effectively to changing prices for raw materials.

COMMODITY PRICE INCREASES WILL INCREASE OPERATING COSTS AND MAY REDUCE PROFITS.

      The Company uses a broad range of raw materials in its products. Such
materials are subject to price volatility caused by commodity market
fluctuations, supply and demand, currency fluctuations, and changes in
governmental regulation and we do not engage in hedging transactions. Price
increases will result in increases in cost of sales. The Company may not be able
to increase its product prices to offset these increased costs, and increasing
prices may result in reduced sales volume and profitability. However, we
currently have at least three suppliers for each of our key categories of raw
materials.

THE COMPANY'S QUARTERLY REVENUES, OPERATING RESULTS AND PROFITABILITY WILL VARY
FROM QUARTER TO QUARTER, WHICH MAY RESULT IN VOLATILITY OF ITS STOCK PRICE.

      The Company's quarterly revenues, operating results and profitability have
varied in the past and are likely to vary significantly from quarter to quarter.
This may lead to volatility in its stock price. The factors that are likely to
cause these variations may include the introduction of new products or services
by the Company or its competitors and a combination of the other adverse
developments as discussed in these risk factors. Additionally, the Company's
business has been seasonal. Historically, approximately 60% of the Company's
total revenues occurred in the six month period May 1 to October 30 in advance
of the Christmas retailing season. However, during the current fiscal year, the
Company's manufacturing facilities have been operating at substantially full
capacity. Accordingly, the Company does not believe that seasonality will be a
factor until such time as the Company's manufacturing capacity exceeds orders
for the Company's products.

                                       10
<PAGE>

NONDISCLOSURE AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT
DISCLOSURE OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.

      The Company has not obtained patent protection for its intellectual
property. In order to protect the Company's proprietary technology and
processes, it relies in part on nondisclosure agreements with its employees,
consultants, agents and other organizations to which it discloses its
proprietary information. These agreements may not effectively prevent disclosure
of confidential information and may not provide an adequate remedy in the event
of unauthorized disclosure of confidential information. In addition, others may
independently discover trade secrets and proprietary information, and in such
cases it could not assert any trade secret rights against such parties. Costly
and time-consuming litigation could be necessary to enforce and determine the
scope of its proprietary rights, and failure to obtain or maintain trade secret
protection could adversely affect its competitive business position. Since the
Company relies on trade secrets and nondisclosure agreements, to protect some of
its intellectual property, there is a risk that third parties may obtain and
improperly utilize its proprietary information to its competitive disadvantage.

THE COMPANY DOES NOT HAVE LONG TERM CONTRACTS WITH ITS CUSTOMERS

      The Company typically has not entered into written long term agreements
with customers. As a result, customers may, without notice or penalty, terminate
their relationship with the Company at any time. In addition, even if customers
should decide to continue their relationship with the Company, there can be no
guarantee that they will purchase the same amounts of products as in the past.
Any loss of a customer, or decrease in the volume of products purchased by a
customer could have a material adverse effect on the Company's business,
operating results and financial condition.

LOSS OF KEY EXECUTIVES AND FAILURE TO ATTRACT QUALIFIED MANAGEMENT COULD LIMIT
GROWTH AND NEGATIVELY IMPACT OPERATIONS.

      The Company depends highly upon its senior management team. It will
continue to depend on management personnel with industry experience. At this
time, the Company does not know the availability of such experienced management
personnel or how much it may cost to attract and retain such personnel. The loss
of the services of any member of senior management or the inability to hire
experienced management personnel could have a material adverse effect on the
operations and financial condition of the Company.

THE LACK OF PUBLIC COMPANY EXPERIENCE OF THE COMPANY'S MANAGEMENT COULD IMPAIR
ITS ABILITY TO COMPLY WITH LEGAL AND REGULATORY REQUIREMENTS.

      The Company's management team has historically operated its business as a
privately-owned company. Until recently, the individuals who now constitute the
Company's senior management have never had responsibility for managing a
publicly-traded company. Such responsibilities will include complying with
federal securities laws and making required disclosures on a timely basis. There
can be no assurance that our management will be able to effectively and timely
implement programs and policies that adequately respond to such increased legal,
regulatory compliance and reporting requirements.

THE COMPANY IS A HOLDING COMPANY WITH SUBSTANTIALLY ALL OF ITS OPERATIONS
CONDUCTED THROUGH ITS SUBSIDIARIES.

      The Company has no operations independent of those of Bestip and its
subsidiaries, and its principal assets are its investments in Bestip and its
subsidiaries. As a result, the Company is dependent upon the performance of
Bestip and its subsidiaries and will be subject to the financial, business and
other factors affecting Bestip as well as general economic and financial
conditions.

      As substantially all of the Company's operations are and will be conducted
through its subsidiaries, it will be dependent on the cash flow of its
subsidiaries to meet its obligations. Because virtually all of the Company's
assets are and will be held by operating subsidiaries, the claims of its
shareholders will be structurally subordinate to all existing and future
liabilities and obligations, and trade payables of such subsidiaries. In the
event of the Company's bankruptcy, liquidation or reorganization, the Company's
assets and those of its subsidiaries will be available to satisfy the claims of
its shareholders only after all of the Company's and its subsidiaries'
liabilities and obligations have been paid in full.

                                       11
<PAGE>

THE COMPANY IS SUBJECT TO ENVIRONMENTAL AND SAFETY REGULATIONS.

      The Company is subject to the requirements of environmental and
occupational safety and health laws and regulations in China. The Company cannot
assure you that it has been or will be at all times in full compliance with all
of these requirements, or that it will not incur material costs or liabilities
in connection with these requirement. Additionally, these regulations may change
in a manner that could have a material adverse effect on the Company's business,
results of operations and financial condition. We have made and will continue to
make capital and other expenditures to comply with environmental requirements.

NON-PERFORMANCE BY THE COMPANY'S SUPPLIERS MAY ADVERSELY AFFECT ITS OPERATIONS.

      The Company purchases various types of equipment, raw materials and
manufactured component parts from its suppliers. The Company would be materially
and adversely affected by the failure of its suppliers to perform as expected.
The Company could experience delivery delays or failures caused by production
issues or delivery of non-conforming products if its suppliers failed to
perform, and the Company also faces these risks in the event any of its
suppliers becomes insolvent or bankrupt.

THE COMPANY'S INTERNATIONAL EXPANSION PLANS SUBJECT IT TO RISKS INHERENT IN
DOING BUSINESS INTERNATIONALLY.

      The Company's long-term business strategy relies on the expansion of the
Company's international sales by targeting markets, such as the United States
and Europe. Risks affecting the Company's international expansion include
challenges caused by distance, language and cultural differences, conflicting
and changing laws and regulations, foreign laws, international import and export
legislation, trading and investment policies, foreign currency fluctuations, the
burdens of complying with a wide variety of laws and regulations, protectionist
laws and business practices that favor local businesses in some countries,
foreign tax consequences, higher costs associated with doing business
internationally, restrictions on the export or import of technology,
difficulties in staffing and managing international operations, trade and tariff
restrictions, and variations in tariffs, quotas, taxes and other market
barriers. These risks could harm the Company's international expansion efforts,
which could in turn materially and adversely affect the Company's business,
operating results and financial condition.

THE COMPANY FACES RISKS ASSOCIATED WITH CURRENCY EXCHANGE RATE FLUCTUATIONS.

      Although the Company is incorporated in the United States, the majority of
its current revenues are in Hong Kong dollars. Conducting business in currencies
other than U.S. dollars subjects the Company to fluctuations in currency
exchange rates that could have a negative impact on the Company's reported
operating results. Fluctuations in the value of the U.S. dollar relative to
other currencies impact the Company's revenues, cost of revenues and operating
margins and result in foreign currency translation gains and losses.
Historically, the Company has not engaged in exchange rate hedging activities.
Although the Company may implement hedging strategies to mitigate this risk,
these strategies may not eliminate the Company's exposure to foreign exchange
rate fluctuations and involve costs and risks of their own, such as ongoing
management time and expertise, external costs to implement the strategy and
potential accounting implications.

THE COMPANY IS RESPONSIBLE FOR THE INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS
WHICH COULD RESULT IN SUBSTANTIAL EXPENDITURES, WHICH WE MAY BE UNABLE TO
RECOUP.

      Our Bylaws provide for the indemnification of our directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of us. This
indemnification policy could result in substantial expenditures, which we may be
unable to recoup.

                                       12
<PAGE>

RISKS ASSOCIATED WITH DOING BUSINESS IN CHINA

CHANGES IN THE LAWS AND REGULATIONS IN THE PEOPLES REPUBLIC OF CHINA MAY
ADVERSELY AFFECT THE COMPANY'S ABILITY TO CONDUCT ITS BUSINESS.

      The Company's operating subsidiaries have all of their manufacturing
facilities located in China. Changes in existing laws or new interpretations of
such laws may have a significant impact on our methods and costs of doing
business. For example, new legislative proposals for manufacturing requirements
may be proposed and adopted. Such new legislation or regulatory requirements may
have a material adverse effect on our financial condition, results of operations
or cash flows, by, for example, making more difficult to enforce our rights
against the Chinese enterprises that own our manufacturing facilities or making
it more difficult or impossible to recover our assets located in such
facilities. In addition, we will be subject to varying degrees of regulation and
licensing by governmental agencies in The Peoples Republic of China. There can
be no assurance that the future regulatory, judicial and legislative changes
will not have a material adverse effect on the Company's Chinese operating
subsidiaries, that regulators or third parties will not raise material issues
with regard to its Chinese subsidiaries or its compliance or non-compliance with
applicable laws or regulations or that any changes in applicable laws or
regulations will not have a material adverse effect on our operations.

THE COMPANY MAY HAVE DIFFICULTY ESTABLISHING ADEQUATE MANAGEMENT, LEGAL AND
FINANCIAL CONTROLS IN THE PEOPLES REPUBLIC OF CHINA.

      The People's Republic of China historically has been deficient in Western
style management and financial reporting concepts and practices, as well as in
modern banking, computer and other control systems. The Company may have
difficulty in hiring and retaining a sufficient number of qualified employees to
work in The Peoples Republic of China. As a result of these factors, it may
experience difficulty in establishing management, legal and financial controls,
collecting financial data, books of account and records and instituting business
practices that meet Western standards.

RISKS RELATED TO THE COMPANY'S COMMON STOCK

THE COMPANY'S STOCK IS THINLY TRADED, SO YOU MAY BE UNABLE TO SELL YOUR SHARES
AT OR NEAR THE QUOTED BID PRICES IF YOU NEED TO SELL A SIGNIFICANT NUMBER OF
YOUR SHARES.

      The shares of the Company's common stock are thinly-traded on the OTC
Bulletin Board, meaning that the number of persons interested in purchasing its
common shares at or near bid prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors, including
the fact that the Company is a small company that is relatively unknown to stock
analysts, stock brokers, institutional investors and others in the investment
community that generate or influence sales volume, and that even if it came to
the attention of such persons, they tend to be risk-averse and may be reluctant
to follow the Company. As a consequence, there may be periods of several days or
more when trading activity in the shares is minimal or non-existent, as compared
to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share
price. The Company cannot give you any assurance that a broader or more active
public trading market for its common shares will develop or be sustained, or
that current trading levels will be sustained. Due to these conditions, the
Company can give you no assurance that you will be able to sell your shares at
or near bid prices or at all if you need money or otherwise desire to liquidate
your shares.

YOU MAY HAVE DIFFICULTY SELLING THE COMPANY'S SHARES BECAUSE THEY ARE DEEMED
"PENNY STOCKS".

      Since the Company's common stock is not listed on the Nasdaq Stock Market,
if the trading price of its common stock remains below $5.00 per share, trading
in its common stock will be subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a penny stock (generally, any non-Nasdaq
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally defined as an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or

                                       13
<PAGE>

$300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
the sale. The broker-dealer also must disclose the commissions payable to the
broker-dealer, current bid and offer quotations for the penny stock and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Such information
must be provided to the customer orally or in writing before or with the written
confirmation of trade sent to the customer. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in the Company's common stock, which could severely
limit the market liquidity of the common stock and the ability of holders of the
common stock to sell their shares.

POTENTIAL ISSUANCE OF ADDITIONAL COMMON AND PREFERRED STOCK COULD DILUTE
EXISTING SHAREHOLDERS.

      The Company is authorized to issue up to 50,000,000 shares of common stock
and 2,000,000 shares of preferred stock. To the extent of such authorization,
the Company's Board of Directors has the ability, without seeking shareholder
approval, to issue additional shares of common stock and/or preferred stock in
the future for such consideration as the Board of Directors may consider
sufficient. The issuance of additional capital stock in the future will reduce
the proportionate ownership and voting power of the common stock currently
outstanding.

THE COMPANY'S PRINCIPAL SHAREHOLDER HOLDS A SUBSTANTIAL AMOUNT OF ITS COMMON
STOCK AND MAY BE ABLE TO PREVENT OTHER SHAREHOLDERS FROM INFLUENCING SIGNIFICANT
CORPORATE DECISIONS.

      As of Aug 15, 2007, Mr. Simon Shi beneficially owns approximately 72.7% of
the Company's outstanding common stock. As a result, Mr. Shi is able to direct
the outcome of matters requiring approval of the shareholders, including the
election of its directors and other corporate actions such as:

      o     its merger with or into another company;

      o     a sale of substantially all of its assets; and

      o     amendments to its certificate of incorporation.

      The decisions of Mr. Shi may conflict with its interests or those of the
Company's other shareholders.

SUBSTANTIAL SALES OF COMMON STOCK COULD CAUSE THE STOCK PRICE TO FALL.

      As of Aug 15, 2007, the Company had outstanding 29,440,067 shares of
common stock, of which approximately 24,770,421 shares were "restricted
securities" (as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended). Only approximately 4,669,646 shares are
currently freely tradable shares. These 24,770,421 shares of restricted stock
will become eligible for public resale under Rule 144 at various times. Although
Rule 144 restricts the number of shares that any one holder can sell during any
three-month period under Rule 144, because more than one shareholder holds these
restricted shares, a significant number of shares could legally be sold
commencing in one year. No prediction can be made as to the effect, if any, that
sales of the shares subject to Rule 144 sales commencing in one year, or the
availability of such shares for sale, will have on the market prices prevailing
from time to time. Nevertheless, the possibility that substantial amounts of
common stock may be sold in the public market may adversely affect prevailing
market prices for its common stock and could impair its ability to raise capital
through the sale of its equity securities.

THE OCCURRENCE OF SALES OF A LARGE NUMBER OF SHARES OF OUR COMMON STOCK, OR THE
PERCEPTION THAT THESE SALES COULD OCCUR, MAY AFFECT OUR STOCK PRICE AND COULD
IMPAIR OUR ABILITY TO OBTAIN CAPITAL THROUGH AN OFFERING OF EQUITY SECURITIES.

      The occurrence of sales of a large number of shares of our common stock,
or the perception that these sales could occur, may affect our stock price and
could impair our ability to obtain capital through an offering of equity
securities. This will have an adverse affect on the business by restricting
access to working capital to fund growth and operations. Furthermore, the
current ratios of ownership of our common stock reduce the public float and
liquidity of our common stock which can in turn affect the market price of our
common stock.

                                       14
<PAGE>

THE MARKET PRICE OF THE COMPANY'S STOCK MAY BE ADVERSELY AFFECTED BY MARKET
VOLATILITY.

      The market price of the Company's common stock is likely to be volatile
and could fluctuate widely in response to many factors, including:

      o     announcements of technological innovations by the Company or its
            competitors;

      o     announcements of new products or new contracts by the Company or its
            competitors;

      o     actual or anticipated variations in its operating results due to the
            level of expenses and other factors;

      o     changes in financial estimates by securities analysts and whether
            its earnings meet or exceed such estimates;

      o     conditions and trends in the micro-motor and other industries;

      o     new accounting standards;

      o     general economic, political and market conditions and other factors;
            and

      o     the occurrence of any of the risks described in this Form 10-K.

WE DO NOT INTEND TO PAY DIVIDENDS ON SHARES OF OUR COMMON STOCK IN THE
FORESEEABLE FUTURE.

      We have never paid cash dividends on our common stock. Our current Board
of directors does not anticipate that we will pay cash dividends in the
foreseeable future. Indeed, we intend to retain future earnings for reinvestment
in our business and/or to fund future acquisitions.

ITEM 1B. UNRESOLVED STAFF COMMENTS

      Not applicable.

ITEM 2. PROPERTIES

      The Company believes that its facilities, including equipment and
machinery, are in good condition, suitable for current operations, adequately
maintained and insured. The following table contains information with respect to
the Company's properties.

                                       15
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                           <C>
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Location                  Area Sq/Ft              Primary Use                        Ownership
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Flat B, G/F, Prince       8,468 Sq/Ft             Headquarters                       Owned by Company
      Industrial Building,
      San Po Kong, Hong Kong,
      P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Third Industrial          86,120 Sq/Ft            AC motor production                Rent
      District, Gong Ming
      Town, Baoan District,
      Shenzhen, Guangdong,
      P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      8 Nan Huan Road, Gong     107,650 Sq/Ft           DC motor production                Rent
      Ming Town, Baoan
      District, Shenzhen,
      Guangdong, P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      44 Xi Ling Road, Fend     53,825 Sq/Ft            DC motor production                Rent
      Cheng Town, Xing Feng
      County, Zhao Guan City,
      Guangdong, P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Jin Feng Huang            236,830 Sq/Ft           Metal and plastic components,      Rent
      Industrial District,                              Mold making,
      Feng Gang District,                               Tooling
      Dong Guan, Guangdong,
      P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Flat A, 5/F, Prince       6105 Sq/Ft              Vacant                             Owned by Company
      Industrial Building,
      San Po Kong, Hong Kong,
      P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
      Flat B, 9/F, Prince       6071 Sq/Ft              Leased Out                         Owned by Company
      Industrial Building,
      San Po Kong, Hong
      Kong, P.R.C.
      ------------------------ ----------------------- ---------------------------------- -------------------------------
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

      The Company does not believe there are any pending or threatened legal
proceedings that, if adversely determined, would have a material adverse effect
on the Company.

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

      No matters were submitted to a vote of shareholders during the year ended
March 31, 2007.

      PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      The Company's common stock currently trades over the counter and
quotations are currently reported on the OTC Bulletin Board sponsored and
operated by the NASD. The following table shows the range of high and low bid
prices for our common stock for the last four fiscal quarters as reported by the
NASD. All prices have been adjusted to reflect a one for ten stock-split
effective January 19, 2004. Prices represent quotations between dealers, do not
include retail mark-ups, mark-downs or commissions, and do not necessarily
represent prices at which actual transactions occurred.

                                       16
<PAGE>

        FISCAL QUARTER ENDED                 HIGH           LOW
        ----------------------------------   -------------  -------------
        March 31, 2007                       3.25           0.60
        ----------------------------------   -------------  -------------
        December 31, 2006                    0.85           0.60
        September 30, 2006                   1.50           0.65
        June 30, 2006                        2.45           1.00
        March 31, 2006                       3.25           2.05

      As of March 31, 2007, there were 1,481 record holders of our common stock.

      The Company did not issue nor repurchase any common stock during the year
ended March 31, 2007. The Company has not implemented any equity compensation
plan.

      No cash dividends have been paid with respect to our common stock and we
have no plan to pay dividends in the foreseeable future. Payment of future
dividends, if any, will be a the discretion of our Board of Directors after
taking into account various factors, including our financial condition, results
of operations, current and anticipated cash needs and plans for expansion.

ITEM 6. SELECTED FINANCIAL DATA

      Information concerning revenues, net earnings per share, dividends per
share, long-term obligations and total assets from audited consolidated
financial statements for the fiscal years ended March 31, 2003 to March 31, 2007
are incorporated herein by reference.

<TABLE>
<CAPTION>
SUMMARY OF OPERATIONS:

(In millions, except  per share amounts)              2007         2006         2005         2004         2003
                                                  ----------------------------------------------------------------
<S>                                                   <C>          <C>          <C>          <C>          <C>
Revenues                                              $55.8        $50.8        $48.7        $40.0        $36.8
Earnings from operations before taxes                 ($2.5)       $ 3.2        $ 1.7        $ 1.5        $ 1.0
Taxes on earnings                                     ($0.6)       $ 0.1        $ 0.4        $ 0.4        $ 0.2
Minority interest                                     $ 0.0        $ 0.0        $ 0.0        $ 0.0        $ 0.0
Net earnings                                          ($1.9)       $ 3.1        $ 1.3        $ 1.1        $ 0.8
Net earnings per share--basic and diluted            ($0.07)       $0.11        $0.05        $0.04        $0.03

FINANCIAL POSITION AT FISCAL YEAR END:
Working capital                                       $ 1.0        $ 1.4        ($1.2)       $ 0.1        $ 3.6
Total Assets                                          $49.6        $45.9        $37.0        $35.3        $30.6
Long-term borrowing                                   $ 2.5        $ 2.3        $ 0.3        $ 0.9        $ 1.0
Stockholders'equity                                   $12.0        $13.9        $10.8        $12.5        $11.5
</TABLE>

                                       17
<PAGE>
<TABLE>
<CAPTION>

                                        Fiscal 2007 Quarter ended                       Fiscal 2006 Quarter ended
(In US$'000)                            Mar. 31    Dec. 31     Sept. 30    June 30      Mar. 31    Dec. 31     Sept. 30    June 30
<S>                                     <C>        <C>         <C>         <C>           <C>       <C>          <C>        <C>
Total net sales                         $10,294    $14,725     $15,996     $14,816       $8,249    $13,439      $15,464    $13,692

Cost of sales                           (11,800)   (11,642)    (12,450)    (11,412)      (6,893)   (10,205)     (12,272)   (10,531)
                                       ---------------------------------------------   ---------------------------------------------

Gross profit / ( loss )                  (1,506)     3,083       3,546       3,404        1,356      3,234        3,192      3,161

Depreciation and amortization              (238)       (78)        (82)        (82)        (152)       (88)         (89)       (83)

Selling, general and administrative
  expenses                               (2,472)    (2,472)     (2,749)     (2,677)      (3,001)    (2,352)      (2,425)    (2,376)
                                       ---------------------------------------------   ---------------------------------------------

Operating income / ( loss )              (4,216)       533         715         645       (1,797)       794          678        702

Gain on disposal                              -          -           -           -        3,466          -            -          -

Other income                                930       (120)        259         127          192         49           50         24

Interest expense                           (333)      (362)       (335)       (323)        (241)      (305)        (252)      (167)
                                       ---------------------------------------------   ---------------------------------------------

Income / ( loss ) before income tax      (3,619)        51         639         449        1,620        538          476        559

Income tax expenses                         769        (24)        (96)        (80)         198        (94)         (83)       (97)

Minority interests                           (2)        (1)         59         (60)         (33)         1           (2)        (1)
                                       ---------------------------------------------   ---------------------------------------------

Net income                               (2,852)        26         602         310        1,785        445          391        461
                                       =============================================   =============================================

Basic and diluted net income
  per share                              (0.097)     0.001       0.020        0.11        0.061      0.015        0.014      0.016
                                       =============================================   =============================================
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
--------------------------------------------------- -----------------------------------------------------------
                                                                        YEAR ENDED MARCH 31,
--------------------------------------------------- -----------------------------------------------------------
                                                                  2007                2006                2005
--------------------------------------------------- ------------------- ------------------- -------------------
<S>                                                        <C>                 <C>                 <C>
Total net sales                                            $55,831,013         $50,843,346         $48,698,580
--------------------------------------------------- ------------------- ------------------- -------------------
Cost of sales                                              (47,303,583)        (39,900,711)        (37,842,405)
--------------------------------------------------- ------------------- ------------------- -------------------
Depreciation and amortization                                 (480,304)           (411,650)           (479,529)
--------------------------------------------------- ------------------- ------------------- -------------------
Selling, general and administrative expenses               (10,370,163)        (10,153,902)         (8,402,972)
--------------------------------------------------- ------------------- ------------------- -------------------
Other income                                                 1,196,333             315,425             297,784
--------------------------------------------------- ------------------- ------------------- -------------------
Gain on disposal of a subsidiary                                     -           3,466,316                   -
--------------------------------------------------- ------------------- ------------------- -------------------
Interest expense                                            (1,353,286)           (964,999)           (553,615)
--------------------------------------------------- ------------------- ------------------- -------------------
Net income / ( loss )                                       (1,914,641)          3,081,753           1,309,300
--------------------------------------------------- ------------------- ------------------- -------------------
</TABLE>

NET SALES

      Net sales increased by $5.0 million, or 9.8% from $50.8 million in fiscal
year 2006 to $55.8 million in fiscal year 2007. The increase in net sales in
fiscal year 2007 is mainly attributable to the increased sales of AC motors for
home appliances from three existing customers, which represents increased sales
to PRC, Japan and France.

COST OF SALES

      Cost of sales for fiscal year 2007 increased to $47.3 million ( 84.8% of
net sales ), compared to $39.9 million ( 78.5% of net sales ) for fiscal year
2006. The decrease in gross margins was mainly attributable to a significant
increase in raw material costs in heavy metal including copper, steel and iron.

                                       18
<PAGE>

DEPRECIATION AND AMORTIZATION

      Depreciation and amortization expenses increased by $68,654 or 16.7% from
$411,650 in fiscal year 2006 to $480,304 in fiscal year 2007 owing to increase
in investments in fixed assets.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses increased by $216,260 (2.1%)
to $10.3 million for fiscal year 2007 compared with $10.1 million in the fiscal
year 2006. The increase was primarily due to the increase in staff cost as a
result of strengthening of the Hong Kong management team.

OTHER INCOME

      Other income increased by $880,908 (279%) from $315,425 in fiscal year
2006 to $1,196,333 in fiscal year 2007. This increase was mainly attributable to
the increase in services fee income of $476,334 charged to the former subsidiary
in Zhao Qing, China, increase in bank interest income and sale of scrap metal.

INTEREST AND CAPITAL LEASE CHARGES

      Interest and capital lease charges increased by $388,287 (40.2%) from
$964,999 in fiscal year 2006 to $1,353,286 in fiscal year 2007. The increase was
primarily due to the increased usage of bank facilities to finance the rise of
raw material costs, the credit tightening from suppliers of heavy metals and
continued investment in production equipment to enhance the quality of products.

NET INCOME

      Net income decreased by $4,996,394 from a net profit of $3,081,753 in
fiscal year 2006 to a net loss of $1,914,641in fiscal year 2007. The decrease
was a result of the increase in costs of heavy metal and the absence of profit
from the subsidiary which was sold in 2006.

OFF-BALANCE SHEET ARRANGEMENTS

      The Company does not have any off-balance sheet arrangements

LIQUIDITY AND CAPITAL RESOURCES

      The cash balance increased slightly by $0.10 million as at March 31, 2007,
as compared to $0.16 million as at March 31, 2006. The Company had a positive
cash flow of $3.0 million generated from operating activities which was partly
offset by the cash used in investing in plant and equipment amounting to $2.6
million to improve the product quality. The net cash of $0.9 million was mainly
used to repay bank loans and capital lease obligations.

      The Company believes that $1.0 million of working capital and the net cash
provided by operations as well as financing activities are sufficient to meet
the working capital needs for the next 12 months. The company is negotiating
with our bankers to increase the banking facilities in order to facilitate the
next 12 months' expected growth.

As of May 31, 2007, the Company had short term revolving banking facilities
(overdrafts and letters of credit), term loans and lease financing of $18.5
million, $1.9 million and $2.4 million, respectively from financial
institutions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company prepares its financial statements in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Management periodically evaluates the estimates and judgments made.
Management bases its estimates and judgments on historical experience and on
various factors that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates as a result of different
assumptions or conditions.

                                       19
<PAGE>

      The following critical accounting policies affect the more significant
judgments and estimates used in the preparation of the Company's financial
statements.

      For certain of the Company's financial instruments, including cash and
cash equivalents, trade receivables and payables, prepaid expenses, advances and
other current assets, short-term bank borrowings, and other payables and
accruals, the carrying amounts approximate fair values due to their short
maturities.

      A related party is generally defined as (i) any person that holds 10% or
more of the Company's securities and their immediate families, (ii) the
Company's management, (iii) someone that directly or indirectly controls, is
controlled by or is under common control with the Company, or (iv) anyone who
can significantly influence the financial and operating decisions of the
Company. A transaction is considered to be a related party transaction when
there is a transfer of resources or obligations between related parties.

ACCOUNTING METHOD

      The Company uses the accrual method of accounting which recognizes
revenues when earned and expenses when incurred.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

      The Company presents accounts receivable, net of allowance for doubtful
accounts. The allowance is calculated based on review of individual customer
accounts.

INVENTORIES

      Inventories are stated at the lower of cost or net realizable value. Cost
is calculated on the weighted average basis and includes all costs to acquire
and other costs incurred in bringing the inventories to their present location
and condition. The Company evaluates the net realizable value of its inventories
on a regular basis and records a provision for loss to reduce the computed
weighted-average cost if it exceeds the net realizable value. Net realizable
value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the
sale.

PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. The initial cost of the asset comprises its
purchase price and any directly attributable costs of bringing the asset to its
working condition and location for its intended use. Depreciation is provided
using the straight-line method over the assets estimated useful life for periods
ranging from five to fifty years. Significant improvements and betterments are
capitalized where it is probable that the expenditure resulted in an increase in
the future economic benefits expected to be obtained form the use of the asset
beyond its originally assessed standard of performance. Routine repairs and
maintenance are expensed when incurred. Gains and losses on disposal of fixed
assets are recognized in the income statement based on the net disposal proceeds
less the carrying amount of the assets.

INCOME TAXES

      The Company utilizes the asset and liability method of accounting for
income taxes whereby deferred taxes are determined based on the temporary
differences between the financial statements and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.

                                       20
<PAGE>

REVENUE RECOGNITION

      The Company recognizes revenue from product sales when goods are shipped
or delivered and rewards and risk of ownership and title pass to the customer.
Revenues consist of the invoice value of the sale of goods and services net of
rebates and discounts, certain sales incentives, trade promotions, and product
returns. Revenue dilution is accounted for as reductions in sales in the same
period the related sales are recorded.

CONCENTRATION OF CREDIT RISK

      Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of accounts receivable. The
Company performs ongoing credit evaluations with respect to the financial
condition of its creditors, but does not require collateral. In order to
determine the value of the Company's accounts receivable, the Company records a
provision for doubtful accounts to cover probable credit losses. Management
reviews and adjusts this allowance periodically based on historical experience
and its evaluation of the collectibility of outstanding accounts receivable. The
Company is exposed to the following risk factors:

      (i) Credit risks - The Company has policies in place to ensure that sales
of products are made to customers with an appropriate credit history.

      (ii) Liquidity risks - Prudent liquidity risk management implies
maintaining sufficient cash, the availability of funding through an adequate
amount of committed credit facilities and ability to close out market positions.

      (iii) Interest rate risk - The interest rate and terms of repayments of
short-term and long-term bank borrowings are approximately 9% per annum. The
Company has no significant interest-bearing assets. The Company maintains all of
its borrowings in floating rate instruments.

DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The Company has the following material capital expenditures commitments:

<TABLE>
<CAPTION>
------------------------------------------------------- ---------------- ---------------- ----------------
Parties involved                                            Contract         Deposits         Balance
                                                             amount            paid          to be paid
------------------------------------------------------- ---------------- ---------------- ----------------
<S>                                                        <C>                <C>              <C>
Hong Hao Mi Mo Precision                                     147,620.75       111,456.17        36,164.58
Ke Wei Da & Co.                                                2,087.06           626.12         1,460.94
Zhong Shan Kan Chang & Co.                                     1,788.91           536.67         1,252.24
Xing Long Ji Xei & Co.                                         5,963.03         2,385.21         3,577.82
Shi Xing                                                       7,908.17         3,163.27         4,744.90
Guang Zhou Jia Leng Zhi Equipment Manufacurer                 11,150.86         5,575.43         5,575.43
Zhung Dian Equipment Manufacturer                             13,118.66         3,935.60         9,183.06
Lu Chang & Co.                                                 6,296.96         1,889.09         4,407.87
Huo Shan Xian Diao Precision Machining Co. Ltd.               57,602.86        28,801.43        28,801.43
Guang Zhou Jia Leng Zhi Co. Ltd.                             220,125.64       110,062.82       110,062.82
Previal Technology Ltd.                                       17,692.31         7,076.92        10,615.38
Shenzhen XMJ Machine Electricity Equipment Co. Ltd.           20,250.45        10,368.52         9,881.93
Xian Dian                                                      3,434.70         1,717.35         1,717.35
Chang Le Machine Electric                                      4,174.12         1,669.65         2,504.47
Shen Zheng Shi Xi Gu Technological Co.                        61,842.58        19,945.14        41,897.44

                                       21
<PAGE>


Yong Xing Long Mechanical Equipment Manufacturer               5,963.03         2,385.21         3,577.82
Cheung Po Mould Mfg. Co.                                      14,102.56         4,230.77         9,871.79
Yin Sha Mould Mfg. Co.                                        13,169.23         6,584.62         6,584.62
Yuet Chung Mould Making Co.                                      641.03           256.41           384.62
Lung Fai Co.                                                   5,589.74         2,235.90         3,353.85
Cizhu                                                         13,118.66         6,559.33         6,559.33
Zuzumoto Co.                                                  72,307.69        25,307.69        47,000.00
Sun Lung Fai Mfg. Co.                                         28,846.15        11,538.46        17,307.69
Ming Shi Guing                                                 5,963.03         1,788.91         4,174.12
Cheong Tai Co.                                                14,102.56         4,230.77         9,871.79
Nittoku Jpy Co.                                               55,204.10        22,081.64        33,122.46
LK Machinery Ltd.                                             74,358.97        37,179.49        37,179.49
Sam Yau Mechanics & Equipment Co.                            108,333.33        32,500.00        75,833.33
New Millennium Electronics Co.                                14,053.33        12,615.72         1,437.61
Wah Shing Industrial Co.                                     126,500.00        22,800.00       103,700.00
Yong Xin Mould                                                 6,201.55         3,100.78         3,100.78
Hans Laser Technology Limited                                 17,412.05         8,706.02         8,706.02
Yong Tian Yi Precision Metal Mould Limited                     8,706.02         6,094.22         2,611.81
Huaxite                                                        2,941.76           882.53         2,059.23
Lu Chang Digital Company                                      10,733.45         9,660.11         1,073.35
Zhong Ji Electric Holding Limited                             21,228.38        10,614.19        10,614.19

------------------------------------------------------- ---------------- ---------------- ----------------
Total :                                                    1,200,533.72       540,562.15       659,971.57
------------------------------------------------------- ---------------- ---------------- ----------------
</TABLE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

      An increase in the cost of heavy metals would increase the cost of
production. The Company does not have any market risk with respect to such
factors as equity prices and other market changes that affect market risk
sensitive investments. A 10 basis point change in the Company's average debt
interest rate would not have a material effect on the Company's results of
operations.

      With respect to foreign currency exchange rates, the effect of a
devaluation or fluctuation of the HK dollar against the US dollar would affect
the Company's results of operations, financial position and cash flows, when
presented in US dollars (based on a current exchange rate) as compared to HK
dollars.

      As the Company's debt obligations are primarily short-term in nature, the
Company does not have any risk from an increase in market interest rates.
However, to the extent that the Company arranges new borrowings in the future,
an increase in market interest rates would cause a commensurate increase in the
interest expense related to such borrowings.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The financial statements required by this item are incorporated herein by
this reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None.

                                       22
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES

      We maintain disclosure controls and procedures that are designed to ensure
that material information required to be disclosed in the reports filed or
submitted under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's ("SEC") rules and forms.
Our disclosure controls and procedures are also designed to ensure that
information required to be disclosed in the reports the Company files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer and principal financial
officer as appropriate.

As of March 31, 2007, the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation of the
Company's management, including our Chief Executive Officer and our Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)), which are
designed to ensure that material information required to disclose in our reports
filed or submitted under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") is recorded, processed, summarized, and reported within the
required time periods specified in the SEC's rules and forms. Disclosure
controls and procedures are also designed to ensure that information required to
be disclosed in our reports filed or submitted under the Exchange Act is
accumulated and communicated to the Company's management including its principal
executive officer and principal financial officer as appropriate to allow timely
decision regarding required disclosures. Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that a high staff
turnover of senior finance staff affected the controls and timely submission of
reports. The top management is well aware of the importance of good internal
controls and procedures and will allocate more resources to improve the
effectiveness of controls in the coming year.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

      There was no change in our internal control over financial reporting that
occurred during the fourth fiscal quarter of the fiscal year covered by this
Annual Report that has materially affected or is reasonably likely to materially
affect our internal control over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

      A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact
that there are resources constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the control.

      The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can only be
reasonable assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

ITEM 9B. OTHER INFORMATION

      None.

                                       23
<PAGE>

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND  CORPORATE  GOVERNANCE

      Our executive officers, together with their respective information, are
set forth below:

Shi Kai Biu, Simon - President, Chief Executive Officer and Chairman of Board of
Directors

      Mr. Shi founded the Company and its predecessor in 1983 and currently
directs the Company's strategic planning and overall business development
efforts. He has over 25 years of manufacturing and marketing experience in
electrical products and the micro-motor industry. Mr. Shi has received numerous
awards, including: Young Industrialist of Hong Kong, Ten Outstanding Young
Persons of Hong Kong, and the Governor's Award for Industry. Mr. Shi is
currently President of the Hong Kong Small and Medium Enterprises Association,
President of the China National Micro-motor Industry Association and Vice
Chairman of the Hong Kong Productivity Council - Hong Kong Automotive Industry
Group. Mr. Shi received a Certificate in Electrical Engineering from Hong Kong
Polytechnic University.

Ho Koon Lun - Chief Operating Officer

      Mr. Ho joined the Company in 1988 and currently directs the Company's
product development and production engineering in DC motors. Mr. Ho's work
experience dates back to 1981, and prior to joining the Company, Mr. Ho managed
product design, quality assurance, research and development and production
departments for numerous industrial companies in Hong Kong. Mr. Ho received a
B.S. degree in Electrical Engineering from National Taiwan University.

Kenny Lo - Chief Financial Officer

      Mr. Lo joined the Company in 2007 and currently manages the Company's
finance department. Mr. Lo has 20 years of accounting and finance experience in
various industries including retail, manufacturing, logistics, securities and
M&A. Mr. Lo was the Associate Director in a construction and properties
development company from 2004 to 2007 and the Chief Financial Officer of a
multi-national logistic company from 2000 to 2004. Mr. Lo received a MBA degree
from Heriot-Watt University and is a member of the Chartered Institute of
Management Accountants in UK and a member of the Hong Kong Institute of
Certified Public Accountants.

Chang Yung Ying - Vice President of Sales and Marketing

      Miss Chang joined the Company in 2004. She is responsible for the
marketing and business development of the Company, with emphasis on the PRC and
Taiwan. From 1990 to 2003, Miss Chang was the General Manager of Cheng Ying
Company Limited, a building materials trading and construction engineering
company based in Taiwan.

Shi Kin Bon, Jacky - Vice President

      Mr. Jacky Shi joined the Company in 2005. Mr. Shi is responsible for sales
and business development of Sun Motor Japan. Mr. Shi is also responsible for
improving the efficiency of the manufacturing process for the purpose of optimal
cost structure. Mr. Shi graduated with the Bachelor of Law, Bachelor of Commerce
and Diploma in Japanese from the University of Melbourne, Australia in 2005. Mr.
Shi is Mr. Simon Shi's second eldest son.

Teruo Ito - Vice President of Research and Development

      Mr. Ito joined the Company in 2003 and currently manages the Company's R&D
department. Mr. Ito has over 38 years of experience in the micro-motor industry.
Prior to joining Sun Motor, Mr. Ito was a key member of the product development
department for Mitsumi Group of Japan, where he spent 33 years of his career.
Mr. Ito has a bachelor's degree in Electronic Engineering from Yamagata
University.

                                       24
<PAGE>

Bernard Lenormand - Vice President of Research and Development (Europe)

      Mr. Lenormand joined the Company in 2004 and is responsible for motor
research and development. From 1972 to 2004, Mr. Lenormand worked for Moulinex
and Euromoteurs of France in product research and development. He has extensive
experience in the design of micro-motors and electrical home appliances and
contributes much to the business development in Europe.

Hiroshi Tokoro - Vice President of Quality Assurance

      Mr. Tokoro joined the Company in 1999 and currently manages the Company's
quality assurance department. Mr. Tokoro has over 40 years of experience as a
quality assurance manager. Prior to joining Sun Motor, Mr. Tokoro was a key
member of the quality assurance department for Fuji Micro Corporation of Japan,
where he spent 32 years of his career.

Shi Kai Bon, Jeffrey - Director

      Mr. Jeffrey Shi joined the Company in 2001. Mr. Jeffrey Shi manages the
Company's metal parts operations and is also responsible for marketing and
business development of the Company. Mr. Shi was employed by Rockwell Automation
Australia Limited from January 2001 through December 2001 in software
programming. In 1999, Mr. Shi received a bachelor's degree in Computer Science
from the University of Monash in Australia. Mr. Jeffrey Shi is Mr. Simon Shi's
eldest son.

      The Company intends to add three additional directors who will be
independent under NASDAQ rules and who will constitute a majority of the board
of directors. The Company also intends to establish audit and compensation
committees, the members of which will be independent.

RELATED-PARTY TRANSACTIONS

      As of March 31, 2007, Mr. Simon Shi and certain of his affiliated
companies were indebted to the Company in the aggregate amount of $34,831. The
loans bear interest based on the Company's cost of funds plus 1.5% per annum and
are repayable on demand. The Company received interest income of $31,564,
$61,533 and $113,098 with respect to such loans during the years ended March 31,
2007, 2006 and 2005 respectively. Also,

      (a)   At March 31, 2007, in order to secure the banking facilities granted
            to the Company:

            o     Mr. Shi had issued personal guarantees amounting to $4.87
                  million; and

            o     Mr. Shi had issued unlimited personal guarantees; and

            o     Mr. Shi had pledged his own properties.

      (c)   The Company received market rental value of $1,795, $10,769 and
            $10,769 from a related company, of which Mr. Simon Shi holds 49%
            interest, during fiscal 2007, 2006, and 2005 respectively.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

      Based solely upon a review of Forms 3 and 4 forwarded to us pursuant to
      Rule 16a-3(e) of the Exchange Act during our most recent fiscal year, all
      officers, directors and owners of 10% or more of our outstanding shares
      have filed all forms required by Section 16(a) of the Exchange Act

ITEM 11. EXECUTIVE COMPENSATION

      The following table set forth certain information concerning the annual
and long-term compensation for services rendered to Bestip prior to the
Reorganization and to the Company subsequent to the Reorganization in all
capacities for the fiscal years ended March 31, 2007, 2006 and 2005 of (i) all
persons who served as the Chief Executive Officer of the Company during the
fiscal year ended March 31, 2007 and (ii) each other person who was an executive
officer of the Company on March 31, 2007 and whose total annual salary and bonus
during the fiscal year ended March 31, 2007 exceeded $100,000. Mr. Shi was not
an officer of the Company prior to the Reorganization.

                                       25
<PAGE>

                                              ANNUAL COMPENSATION
                                  ----------------------------------------------
NAME AND PRINCIPAL POSITION            YEAR           SALARY           BONUS
--------------------------------  --------------  --------------  --------------

Shi Kai Biu, Simon                   2006/2007       $338,462         $28,205
( Chief Executive Officer )          2005/2006       $338,462         $28,205
                                     2004/2005       $230,769         $28,205
Ho Koon Lun                          2006/2007        $84,615         $22,435
( Chief Operating Officer )          2005/2006        $84,615         $22,435

STOCK OPTION GRANT EXERCISES

      The Company presently does not have any equity incentive plans. None of
our named executive officers received any grants of options or other stock
compensation during the fiscal year ended March 31, 2007.

EMPLOYMENT AGREEMENTS

      The Company maintains employment relations with a number of its executive
officers through a set of standard labor contract or employment agreement. The
terms and conditions of these employment agreements are determined via
negotiations between the employee parties and the Company, and the framework and
structure of the agreements are in compliance with applicable laws governing
labor contract.

SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS

      There are no severance or change of control arrangements.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

      As permitted by Wyoming law, we have adopted provisions in our amended and
restated certificate of incorporation and bylaws, both of which will become
effective upon the closing of this offering, that limit or eliminate the
personal liability of our directors and officers to the fullest extent permitted
by Wyoming law, as it now exists or may in the future be amended, and against
all expenses and liabilities reasonably incurred in connection with their
service for or on behalf of the Company. In addition, certificate of
incorporation provides that our directors will not be personally liable for
monetary damages to us for breaches of their fiduciary duty as directors, unless
they violated their duty of loyalty to us or our stockholders, acted in bad
faith, knowingly or intentionally violated the law, authorized illegal dividends
or redemptions or derived an improper personal benefit from their action as
directors.

      At present, we are not aware of any pending or threatened litigation or
proceeding involving any of our directors, officer, employees or agents in which
indemnification would be required or permitted. We believe provisions in our
certificate of incorporation and indemnification agreements are necessary to
attract and retain qualified persons as directors and officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

      The table below sets forth certain information with respect to beneficial
ownership of our stock as of Aug 15, 2007 by:

      o     persons known by us to be the beneficial owners of more than five
            percent (5%) of our issued and outstanding common stock;

                                       26
<PAGE>

      o     each of our executive officers and directors; and

      o     all of our officers and directors as a group.

      Percentages are computed using a denominator of 29,440,067 shares of
      common stock outstanding.

<TABLE>
<CAPTION>
                                                               NUMBER OF
      NAME AND ADDRESS OF BENEFICIAL OWNER                     SHARES            PERCENT OF CLASS
      -------------------------------------------------------- ----------------- -------------------
<S>                                                            <C>                <C>
      Shi Kai Biu (Simon) (1)                                  21,401,545         72.7%
      Shi Kai Bon (Jeffrey) (1) (2)                                     -            -
      Ho Koon Lun (1)                                                   -            -
      Kenny Lo (1)                                                      -            -
      All officers and directors as a group (4 persons)        21,401,545         72.7%

      SAOF NO.3 Limited (3)                                     1,701,058          5.8%
</TABLE>

      (1)   Address is Block B, G/F., Prince Industrial Building, 106 King Fuk
            Street, San Po Kong, Kowloon, Hong Kong.

      (2)   Shi Kai Bon (Jeffrey) is Shi Kai Biu (Simon)'s eldest son.

      (3)   Address is c/o Mitsubishi UFJ Securities ( HK ) Company Limited,
            11/F, AIG Tower, No. 1 Connaught Road, Central, Hong Kong.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

      None of the company's directors is independent under the rules of NASDAQ.
      The company does not have a separate audit committee. The Board of
      Directors acts in the capacity of an Audit Committee.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      PKF, an independent registered public accounting firm, was selected as the
      Company's auditor for fiscal 2007. The table below sets forth fees for
      professional services rendered by PKF for the audit of financial
      statements for fiscal years 2007 and 2006, and fees for other services
      rendered by PKF during fiscal 2007 and 2006.

                                                          2007        2006
                                                          ----        ----
      Audit fees ( 2007 : including tax fees )           $97,436    $61,539

      Audit-related fees                                      --         --

      Tax fees                                            $5,128     $5,128

      All other fees                                     $23,077    $23,077


                                       27
<PAGE>

PART IV

ITEM 15. SIGNATURES, EXHIBITS, FINANCIAL STATEMENTS SCHEDULES

      SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 15th day of
Aug 2007.

                                           SUN MOTOR INTERNATIONAL, INC.

                                           By /s/ SHI KAI BIU
                                              ------------------------------

                                           Shi Kai Biu, Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                                                           <C>
SIGNATURE                      TITLE                                            DATE
------------------------------ ------------------------------------------------ ---------------

/s/ SHI KAI BIU                Chief Executive Office and Director               Aug 15, 2007
-----------------------------
Shi Kai Biu

/s/ KENNY  LO                  Chief Financial Officer                           Aug 15, 2007
-----------------------------  (principal financial and accounting officer)
Kenny  Lo

/s/ SHI KAI BON, JEFFREY       Director                                          Aug 15, 2007
-----------------------------
Shi Kai Bon, Jeffrey
</TABLE>

EXHIBITS

      The following is a list of exhibits filed or incorporated by reference
into this Report:

Exhibit 2(1)      Securities Purchase Agreement and Plan of Reorganization by
                  and among Wyoming Oil & Minerals, Inc., and Bestip Development
                  International Limited, an international business company
                  organized under the laws of the British Virgin Islands, dated
                  May 2, 2005.

Exhibit 3.1(2)    Articles of Incorporation of Wyoming Coal Corporation as filed
                  with the Wyoming Secretary of State effective February 23,
                  1973.

Exhibit 3.2(2)    Articles of Amendment to the Articles of Incorporation of
                  Wyoming Coal Corporation as filed with the Wyoming Secretary
                  of State effective March 5, 1974.

Exhibit 3.3(2)    Articles of Amendment to the Articles of Incorporation of
                  Wyoming Coal Corporation as filed with the Wyoming Secretary
                  of State effective August 18, 1981.

Exhibit 3.4(2)    Articles of Amendment to the Articles of Incorporation by
                  Shareholders of Wyoming Oil & Minerals, Inc. as filed with the
                  Wyoming Secretary of State effective February 18, 2000.

Exhibit 3.5(2)    By-laws of Wyoming Oil & Minerals, Inc., as amended.

Exhibit 3.6(3)    Articles of Amendment to the Articles of Incorporation by
                  Shareholders of Wyoming Oil & Minerals, Inc.

Exhibit 31.1(4)   Section 302 Certification --- Chief Financial Officer

Exhibit 31.2(4)   Section 302 Certification --- Chief Executive Officer

Exhibit 32(4)     Section 906 Certification --- Chief Executive Officer & Chief
                  Financial Officer

(1)   Filed as an Exhibit to the Company's Form 8-K May 2, 2005 and incorporated
      herein by reference.

(2)   Filed as an Exhibit to the Company's Registration Statement on Form S-8
      filed on March 3, 2000, SEC File No. 333-31936 and incorporated herein by
      reference.

(3)   Filed as an Exhibit to the Company's Information Statement on Schedule 14C
      filed on July 11, 2005 and incorporated herein by reference.

(4)   Filed with this Report.

                                       28
<PAGE>



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Sun Motor International, Inc.


We have audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the Consolidated Financial
Statements of Sun Motor International, Inc. and subsidiaries for 2007 and 2006
included in this Form 10-K, and have issued our report thereon dated August 3,
2007. Our audits for the years ended March 31, 2007, 2006 and 2005, were made
for the purpose of forming an opinion on the basic financial statements taken as
a whole. The Financial Statement Schedules listed in Item 15 for Sun Motor
International, Inc. and subsidiaries is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.


PKF
Certified Public Accountants
Hong Kong, China
August 3, 2007

<PAGE>
<TABLE>
<CAPTION>

SUN MOTOR INTERNATIONAL, INC.
FINANCIAL STATEMENT SCHEDULES :-
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED MARCH 31, 2007

                                                                                       PROVISION      WRITTEN OFF
                                         BALANCE AT                                       FOR           AGAINST
                                         BEGINNING      ACQUISITION      DISPOSAL       THE YEAR       ALLOWANCE      END OF YEAR
                                       -------------   -------------   ------------   ------------   -------------   -------------
<S>                                     <C>            <C>             <C>          <C>           <C>             <C>
                                       $               $               $              $              $               $
ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------

Year ended March 31, 2007                   233,373               -              -        202,765        (233,373)        202,765
Year ended March 31, 2006                 1,140,776               -              -        233,373      (1,140,776)        233,373
Year ended March 31, 2005                 1,810,813               -              -        764,163      (1,434,200)      1,140,776

PROVISION FOR OBSOLETE INVENTORIES
----------------------------------

Year ended March 31, 2007                   268,964               -              -        575,905        (268,964)        575,905
Year ended March 31, 2006                   108,332               -              -        268,964        (108,332)        268,964
Year ended March 31, 2005                   728,435               -              -        108,332        (728,435)        108,332

TAX VALUATION ALLOWANCE
-----------------------

Year ended March 31, 2007                 1,130,398               -              -         29,024               -       1,159,422
Year ended March 31, 2006                   393,099       1,114,364       (393,099)        16,034               -       1,130,398
Year ended March 31, 2005                   289,653               -              -        103,446               -         393,099
</TABLE>

<PAGE>





                                                   SUN MOTOR INTERNATIONAL, INC.

                                               Consolidated Financial Statements
                                               (Stated in United States Dollars)
                                                                  March 31, 2007


<PAGE>

SUN MOTOR INTERNATIONAL, INC.

CONSOLIDATED FINANCIAL STATEMENTS

(Stated in United States Dollars)



Contents


                                                                          Pages

    Report of Independent Registered Public Accounting Firm                   1

    Consolidated Balance Sheets                                               2

    Consolidated Statements of Income                                         3

    Consolidated Statements of Stockholders' Equity                           4

    Consolidated Statements of Cash Flows                                     5

    Notes to Consolidated Financial Statements                           6 - 27


<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Sun Motor International, Inc.

We have audited the accompanying consolidated balance sheets of Sun Motor
International, Inc. (the "Company") and its subsidiaries as of March 31, 2007
and 2006, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
2007. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company and
its subsidiaries as of March 31, 2007 and 2006 and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended March 31, 2007 in conformity with accounting principles generally accepted
in the United States of America.


PKF
Certified Public Accountants
Hong Kong, China
August 3, 2007

                                      -1-
<PAGE>

<TABLE>
<CAPTION>
SUN MOTOR INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(STATED IN UNITED STATES DOLLARS)


                                                                                           MARCH 31,
                                                                         -----------------------------------------
                                                                                       2007                  2006
                                                                                          $                     $
<S>                                                                              <C>                   <C>
ASSETS

Current assets

    Cash and cash equivalents                                                       623,352               525,990
    Restricted short-term bank deposits (Note 11(b))                              3,963,123             3,282,664
    Accounts receivable, net (Note 3)                                             9,837,813            10,407,547
    Inventories, net (Note 4)                                                    10,503,911            10,908,979
    Prepayments, deposits and other receivables (Note 5)                          5,336,635             2,257,734
    Amounts due from related companies (Note 10)                                      9,719                 8,381
    Amount due from a director (Note 6)                                             433,644               108,870
    Amount due from ultimate holding company (Note 7)                               126,009               126,009
    Current portion of promissory note receivable (Note 14)                       3,091,282             1,094,542
    Income tax recoverable                                                           17,855                38,194
    Deferred tax assets (Note 15)                                                    35,113                40,469
                                                                         -------------------   -------------------

Total current assets                                                             33,978,456            28,799,379
Property, plant and equipment, net (Note 8)                                      14,363,865            14,363,265
Deposits for acquisition of property, plant and equipment                           577,424                35,449
Promissory note receivable (Note 14)                                                      -             2,412,698
Deferred tax assets (Note 15)                                                       699,778               258,509
                                                                         -------------------   -------------------

Total assets                                                                     49,619,523            45,869,300
                                                                         ===================   ===================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

    Accounts payable                                                             11,276,606             8,928,238
    Accrued expenses and other payables (Note 9)                                  6,148,485             3,953,379
    Amount due to a related company (Note 10)                                        15,929                35,160
    Current maturities of bank borrowings (Note 11)                              14,409,980            13,498,256
    Current maturities of capital lease obligations (Note 12)                       901,496               765,374
    Dividend payable                                                                184,615               184,615
    Income tax payable                                                               33,193                31,813
                                                                         -------------------   -------------------

Total current liabilities                                                        32,970,304            27,396,835
Bank borrowings, less current maturities (Note 11)                                1,281,587             1,338,532
Capital lease obligations, less current maturities (Note 12)                      1,216,984               938,430
Deferred tax liabilities (Note 15)                                                1,946,196             2,080,544
                                                                         -------------------   -------------------

Total liabilities                                                                37,415,071            31,754,341
                                                                         -------------------   -------------------

Commitments and contingencies (Note 22)

Minority interests (Note 2)                                                         232,929               228,795
                                                                         -------------------   -------------------

Stockholders' equity
    Preferred stock, no par value :-
      2,000,000 shares authorized in 2007 and 2006
      None issued and outstanding in 2007 and 2006                                        -                     -
    Common stock, par value $0.01 per share (Note 20) :-
      50,000,000 shares authorized in 2007 and 2006
      29,440,067 shares issued and outstanding in 2007 and 2006                     294,401               294,401
    Additional paid-in-capital                                                      917,327               917,327
    Other comprehensive income                                                       19,774                19,774
    Retained profits                                                             10,740,021            12,654,662
                                                                         -------------------   -------------------

Total stockholders' equity                                                       11,971,523            13,886,164
                                                                         -------------------   -------------------

Total liabilities and stockholders' equity                                       49,619,523            45,869,300
                                                                         ===================   ===================

See Notes to consolidated financial statements

                                                        -2-
<PAGE>

SUN MOTOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(STATED IN UNITED STATES DOLLARS)


                                                                         YEAR ENDED MARCH 31,
                                                          --------------------------------------------------
                                                                   2007              2006              2005
                                                                      $                 $                 $

Total net sales                                              55,831,013        50,843,346        48,698,580

Cost of sales                                               (47,303,583)      (39,900,711)      (37,842,405)
                                                          --------------    --------------    --------------

Gross profit                                                  8,527,430        10,942,635        10,856,175

Depreciation and amortization                                  (480,304)         (411,650)         (479,529)

Selling, general and administrative expenses                (10,370,163)      (10,153,902)       (8,402,972)
                                                          --------------    --------------    --------------

Operating income / ( loss )                                  (2,323,037)          377,083         1,973,674

Other income (Note 13)                                        1,196,333           315,425           297,784

Gain on disposal of a subsidiary (Note 14)                            -         3,466,316                 -

Interest expense                                             (1,353,286)         (964,999)         (553,615)
                                                          --------------    --------------    --------------

Income / ( loss ) before income tax                          (2,479,990)        3,193,825         1,717,843

Income tax expenses / (income) (Note 15)                        569,483           (76,904)         (399,599)

Minority interests (Note 2)                                      (4,134)          (35,168)           (8,944)
                                                          --------------    --------------    --------------

Net income / ( loss )                                        (1,914,641)        3,081,753         1,309,300
                                                          ==============    ==============    ==============

Net income / (loss ) per share
  - Basic and diluted (Note 16)                                   (0.07)             0.11              0.05
                                                          ==============    ==============    ==============

Weighted average number of shares outstanding
  - Basic and diluted                                        29,440,067        29,140,820        28,000,000
                                                          ==============    ==============    ==============


See Notes to consolidated financial statements

                                                     -3-
<PAGE>

SUN MOTOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(STATED IN UNITED STATES DOLLARS)


                                            COMMON STOCK               ADDITIONAL           OTHER
                                    ------------------------------        PAID-IN   COMPREHENSIVE        RETAINED
                                           SHARES          AMOUNT         CAPITAL          INCOME         PROFITS           TOTAL
                                                                $               $               $               $               $

At April 1, 2004                       28,000,000         280,000         903,228          19,774      11,340,532      12,543,534
Net income                                      -               -               -               -       1,309,300       1,309,300
Dividend (Note 17)                              -               -               -               -      (3,076,923)     (3,076,923)
                                    --------------  --------------  --------------  --------------  --------------  --------------

At March 31, 2005
  and April 1, 2005                    28,000,000         280,000         903,228          19,774       9,572,909      10,775,911
Recapitalization (Notes 1 and 2)        1,430,067          14,301         (14,301)              -               -               -
Issuance of shares for investor
  relation services (Note 20)              10,000             100          28,400               -               -          28,500
Net income                                      -               -               -               -       3,081,753       3,081,753
                                    --------------  --------------  --------------  --------------  --------------  --------------

At March 31, 2006
  and April 1, 2006                    29,440,067         294,401         917,327          19,774      12,654,662      13,886,164
Net loss                                        -               -               -               -      (1,914,641)     (1,914,641)
                                    --------------  --------------  --------------  --------------  --------------  --------------

At March 31, 2007                      29,440,067         294,401         917,327          19,774      10,740,021      11,971,523
                                    ==============  ==============  ==============  ==============  ==============  ==============



See Notes to consolidated financial statements


                                                                -4-
<PAGE>

SUN MOTOR INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(STATED IN UNITED STATES DOLLARS)


                                                                                          YEAR ENDED MARCH 31,
                                                                        ----------------------------------------------------
                                                                                    2007              2006              2005
                                                                                       $                 $                 $
Cash flows from operating activities :-

    Net income/(loss)                                                        (1,914,641)        3,081,753         1,309,300
    Adjustments to reconcile net income/(loss) to net cash provided
      by operating activities :-
        Depreciation and amortization                                         3,261,254         2,939,562         2,348,357
        Interest income from a director                                         (31,564)          (61,533)         (113,098)
        Interest income on promissory note                                     (166,093)                -                 -
        (Gain)/loss on disposal of property, plant and equipment                      -           (24,364)          165,424
        Bad debts written off                                                         -           532,399            16,386
        Allowance for doubtful accounts                                         202,765           233,373           764,163
        Allowance for obsolete inventories                                      575,905           268,964           108,332
        Provision for other investment                                                -            29,069                 -
        Investor relation service fee                                                 -            28,500                 -
        Gain on disposal of a subsidiary                                              -        (3,466,316)                -
        Deferred tax                                                           (570,261)           75,215           355,226
        Minority interests                                                        4,134            35,168             8,944

    Changes in operating assets and liabilities :-
        Accounts receivable, prepayments, deposits
          and other receivables                                              (2,711,932)       (1,089,390)       (2,175,862)
        Inventories                                                            (170,837)       (4,021,963)       (1,473,250)
        Accounts payable, accrued expenses and
          other payables                                                      4,543,474         2,537,834         1,897,797
        Income tax recoverable                                                   20,339           (32,975)          119,177
        Income tax payable                                                        1,380           (39,674)           65,374
                                                                        ----------------  ----------------  ----------------

        Net cash provided by operating activities                             3,043,923         1,025,622         3,396,270
                                                                        ----------------  ----------------  ----------------

    Cash flows from investing activities :-

        Proceeds from disposal of property, plant and equipment                       -           346,290                 -
        Receipt from promissory notes                                           582,051                 -                 -
        Payments to acquire and for deposit for acquisition of
          property, plant and equipment                                      (2,626,209)       (2,345,145)       (2,832,969)
        Cash disposed on disposal of subsidiary (Note 14)                             -           (13,775)                -
                                                                        ----------------  ----------------  ----------------

        Net cash used in investing activities                                (2,044,158)       (2,012,630)       (2,832,969)
                                                                        ----------------  ----------------  ----------------

    Cash flows from financing activities :-

        New bank loans raised                                                  1,595,837       16,181,915                 -
        Repayment of bank loans                                               (1,420,684)     (13,262,701)         (770,598)
        Increase/(decrease) in bank overdrafts                                  (160,523)         773,301           145,279
        Increase/(decrease) in bills payable and trust receipt loans             840,149         (273,262)        2,031,797
        Repayment of capital lease obligations                                  (762,944)      (1,088,847)         (891,971)
        Advance to related companies                                             (20,569)         (86,298)          (49,485)
        Repayment by/(advance to) a director                                   (293,210)          565,673          (858,204)
        Advance to ultimate holding company                                           -            (2,450)             (550)
        Increase in short term bank deposits                                   (680,459)       (1,658,933)         (507,631)
                                                                        ----------------  ----------------  ----------------

        Net cash provided by/(used in) financing activities                    (902,403)        1,148,398          (901,363)
                                                                        ----------------  ----------------  ----------------

    Net increase/(decrease) in cash and cash equivalents                         97,362           161,390          (338,062)

    Cash and cash equivalents, beginning of year                                525,990           364,600           702,662
                                                                        ----------------  ----------------  ----------------

    Cash and cash equivalents, end of year                                      623,352           525,990           364,600
                                                                        ================  ================  ================

See Notes to consolidated financial statements


                                                             -5-
</TABLE>

<PAGE>

1.    CORPORATE INFORMATION

      Sun Motor International, Inc. (the "Company") was incorporated in State of
      Wyoming on February 23, 1973. The Company's shares are quoted for trading
      on the Over-The-Counter Bulletin Board in the United States of America.
      Following the reverse acquisition in 2005 as detailed below, the Company
      changed its name from Wyoming Oil & Minerals, Inc. to Sun Motor
      International, Inc. to reflect the change in the Company's business. The
      financial year end date of the Company has also been changed from February
      28 to March 31.

      Pursuant to the Plan of Reorganization dated May 2, 2005, the Company
      acquired 100% ownership interest in Bestip Development International
      Limited ("Bestip"), a limited company incorporated in the British Virgin
      Islands, in consideration for the issuance of the Company's 28,000,000
      common shares to the former stockholders of Bestip ("Bestip Former
      Stockholders").

      The aforesaid transaction was completed on June 15, 2005 and thereafter
      Bestip became a wholly owned subsidiary of the Company and Bestip Former
      Stockholders became the majority stockholders of the Company. This
      transaction constituted a reverse takeover transaction ("RTO").

      Following the RTO, the Company through Bestip and its subsidiaries acts as
      an original design manufacturer and supplier of both standard and
      custom-designed micro-motors to the global market with a broad range of
      applications in automotive parts, power tools, home appliances, business
      equipment, medical equipment, personal care products and consumer
      electronics.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF PRESENTATION AND CONSOLIDATION

      The RTO has been accounted for as a recapitalization of Bestip whereby the
      assets and liabilities and operations of Bestip become the assets and
      liabilities and operations of the Company with no adjustment to the
      historical basis of the assets and liabilities of Bestip and the
      operations consolidated.

      At the RTO completion date on June 15, 2005, the Company did not have any
      assets or liabilities. Thus the 1,430,067 shares of the Company's common
      stock issued and outstanding immediately prior to the RTO are accounted
      for at nil value. These financial statements reflect the recapitalization
      of the stockholders' equity as if the RTO occurred as of the beginning of
      the reporting years presented.

      The accompanying consolidated financial statements of the Company have
      been prepared in accordance with generally accepted accounting principles
      in the United States of America.

      The consolidated financial statements include the accounts of the Company
      and its subsidiaries. All significant inter-company accounts and
      transactions have been eliminated in consolidation.

      The results of subsidiaries acquired or disposed of during the years are
      included in the consolidated income statement from the effective date of
      acquisition or up to the effective date of disposal.

                                      -6-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      MINORITY INTERESTS

      Minority interests resulted from the consolidation of a 90% owned
      subsidiary, Sun Motor Manufactory Limited.

      USE OF ESTIMATES

      In preparing financial statements in conformity with accounting principles
      generally accepted in the United States of America, management makes
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosures of contingent assets and liabilities at the
      dates of the financial statements, as well as the reported amounts of
      revenues and expenses during the reporting years. These accounts and
      estimates include, but are not limited to, the valuation of accounts
      receivable, inventories, deferred income taxes and the estimation on
      useful lives of property, plant and machinery. Actual results could differ
      from those estimates.

      CONCENTRATION OF CREDIT RISK

      Financial instruments that potentially subject the Company to significant
      concentrations of credit risk consist principally of cash and cash
      equivalents, restricted cash, trade receivables and promissory note
      receivables. As of March 31, 2007 and 2006, substantially all of the
      Company's cash and cash equivalents and restricted cash were held by major
      financial institutions located in Hong Kong, which management believes are
      of high credit quality. With respect to trade receivables, the Company
      extends credit based on an evaluation of the customer's financial
      condition, generally without requiring collateral. The Company maintains
      an allowance for doubtful accounts of trade receivables. In respect of the
      promissory note receivable, the Company requests securities for its
      acceptance. More details of the securities are set out in note 14.

      The Company's five largest customers accounted for approximately 36%, 26%
      and 50% respectively, of net sales during 2007, 2006 and 2005. No
      customers accounted for sales of 10% or more during the years.

      CASH AND CASH EQUIVALENTS

      Cash and cash equivalents include all cash, deposits in banks and other
      highly liquid investments with initial maturities of three months or less.
      As of March 31, 2007 and 2006, the cash and cash equivalents denominated
      in Hong Kong Dollars amounted to $487,292 and $363,653 respectively whilst
      the remaining balances were denominated in Renminbi ("RMB") of $123,623
      and $127,558, which are not freely convertible into foreign currencies,
      and in other currencies of $12,437 and $34,779 respectively.

      RESTRICTED CASH

      Restricted cash consists primarily of bank deposits held as collateral
      under pledge for bank borrowings.

                                      -7-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      ALLOWANCE FOR DOUBTFUL DEBTS

      The Company establishes an allowance for doubtful accounts based on
      management's assessment of the collectibility of accounts receivable. A
      considerable amount of judgment is required in assessing the realization
      of the receivables, including the current creditworthiness of each
      customer and the related ageing analysis.

      Based on the above assessment, during the reporting years, the management
      establishes the general provisioning policy, which is considered to be
      adequate, for the potentially uncollectible amounts as follows :-

                              General
                              provision
            Age of Debts      Percentage
            ------------      ----------

            1 - 2 years       50%
            Over 2 years      100%

      In the normal course of business the Company extends unsecured credit to
      customers ranging from 30 to 60 days after the invoice date. The Company
      does not accrue interest on trade accounts receivable.

      If accounts receivable in excess of the provided allowance is determined
      uncollectible, they are charged to expense in the year that determination
      is made. Bad debts are written off when identified.

      PROMISSORY NOTE

      The promissory note receivable is initially measured at fair value and
      subsequently measured at amortized cost using the effective interest rate
      method. Appropriate allowances for estimated irrecoverable amounts are
      recognized in profit or loss when there is objective evidence that the
      asset is impaired. The allowance recognized is measured as the difference
      between the asset's carrying amount and the present value of estimated
      future cash flows discounted at the effective interest rate computed at
      initial recognition.

      INVENTORIES

      Inventories are stated at the lower of cost or market. Cost is determined
      on a weighted average basis and includes all expenditures incurred in
      bringing the goods to the point of sale and putting them in a saleable
      condition. In assessing the ultimate realization of inventories, the
      management makes judgments as to future demand requirements compared to
      current or committed inventory levels. Our reserve requirements generally
      increase as our projected demand requirements; decrease due to market
      conditions, product life cycle changes.

                                      -8-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      INVENTORIES (cont'd)

      During the reporting years, the management establishes the general
      provisioning policy for inventories based on past experience as follows :-

                                    General
                                    provision
            Age of Inventories      Percentage
            ------------------      ----------

            1 - 2 years             50%
            Over 2 years            100%

      PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are stated at cost less accumulated
      depreciation and amortization. Maintenance, repairs and betterments,
      including replacement of minor items, are charged to expense; major
      additions to physical properties are capitalized.

      Depreciation and amortization are provided using the straight-line method
      over the estimated useful lives at the following annual rates :-

            Land                              Over the term of the lease
            Buildings                         2%
            Building improvements             20%
            Machinery and equipment           10% - 20%

      IMPAIRMENT OF ASSETS OF LONG-LIVED ASSETS

      Long-lived assets are tested for impairment whenever events or changes in
      circumstances indicate that the carrying amount of the assets may not be
      recoverable. The Company recognizes impairment of long-lived assets in the
      event that the net book values of such assets exceed the future
      undiscounted cashflows attributable to such assets.

      During the reporting years, the Company has not identified any indicators
      that would require testing for impairment and no impairment was made.

      STOCK-BASED COMPENSATION

      The Company adopted the SFAS No. 123R, "Share-Based Payment" ("SFAS 123R")
      using the modified prospective method. Under SFAS 123R, equity instruments
      issued to service providers for their services are measured at the
      grant-date fair value and recognized in the statement of operations over
      the vesting period. The company has not issued any options and accordingly
      the adoption of SFAS 123R has not effect on the current period financial
      statements.

                                      -9-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      REVENUE RECOGNITION

      The company recognizes revenue, net of discounts and returns, when risks
      and rewards of ownership of the products have been transferred to buyers,
      persuasive evidence of an arrangement exists, delivery has occurred, the
      selling price is fixed or determinable and collectibility is reasonably
      assured.

      Revenue from product sales is generally recognized upon shipment of the
      products to the buyers in accordance with the terms of the sales
      agreement.

      COST OF SALES

      Cost of sales consists primarily of material costs, employee compensation,
      depreciation and related expenses, which are directly attributable to the
      production of products. Write down of inventory to lower of cost or market
      is also recorded in cost of sales.

      ADVERTISING, TRANSPORTATION, RESEARCH AND DEVELOPMENT EXPENSES

      Advertising, transportation, research and development, and other
      product-related costs are charged to expense as incurred.

      Advertising expenses amounted to $69,024, $177,783 and $106,744 during
      2007, 2006 and 2005 respectively are included in selling expenses.

      Transportation expenses amounted to $590,648, $565,388 and $455,937 during
      2007, 2006 and 2005 respectively are included in selling expenses.

      No research and development expenses are incurred during 2007, 2006 and
      2005.

      INCOME TAXES

      The Company utilizes the asset and liability method of accounting for
      income taxes whereby deferred taxes are determined based on the temporary
      differences between the financial statements and tax bases of assets and
      liabilities using enacted tax rates in effect in the years in which the
      differences are expected to reverse. Valuation allowances are established
      when necessary to reduce deferred tax assets to the amount expected to be
      realized.

      DIVIDENDS

      Dividends are recorded in Company's financial statements in the period in
      which they are declared.

      OFF-BALANCE SHEET ARRANGEMENTS

      The Company does not have any off-balance sheet arrangements.

                                      -10-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      COMPREHENSIVE INCOME

      The Company has adopted SFAS 130, "Reporting Comprehensive Income", which
      establishes standards for reporting and display of comprehensive income,
      its components and accumulated balances.

      Comprehensive income during the reporting years is analyzed as below :-

<TABLE>
<CAPTION>
                                                       YEAR ENDED MARCH 31,
                                       ------------------------------------------------
                                                 2007            2006             2005
                                                    $               $                $
<S>                  <C>                  <C>               <C>              <C>
      Comprehensive income
        Net income / ( loss )             (1,914,641)       3,081,753        1,309,300
        Others                                     -                -                -
                                       --------------   --------------   --------------

                                          (1,914,641)       3,081,753        1,309,300
                                       ==============   ==============   ==============
</TABLE>

      The other comprehensive income shown on the consolidated statements of
      stockholders' equity represents the foreign currency translation in prior
      periods.

      FOREIGN CURRENCY TRANSLATION

      The functional currency of the Company is Hong Kong Dollars ("HKD"). The
      Company maintains its financial statements in the functional currency.
      Monetary assets and liabilities denominated in currencies other than the
      functional currency are translated into the functional currency at rates
      of exchange prevailing at the balance sheet dates. Transactions
      denominated in currencies other than the functional currency are
      translated into the functional currency at the exchanges rates prevailing
      at the dates of the transactions. Exchange gains or losses arising from
      foreign currency transactions are included in the determination of net
      income for the respective years.

      For financial reporting purposes, the financial statements of the Company
      which are prepared using the functional currency have been translated into
      United States Dollars ("$"). Assets and liabilities are translated at the
      exchange rates at the balance sheet dates and revenue and expenses are
      translated at the average exchange rates and stockholders' equity is
      translated at historical exchange rates. Any translation adjustments
      resulting are not included in determining net income but are included in
      foreign exchange adjustment to other comprehensive income, a component of
      stockholders' equity.

      During 2007, 2006 and 2005, there has been no significant change in
      exchange rates. The exchange rates in effect throughout the reporting
      years were approximately HKD7.8 for $1.

      FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying values of the Company's financial instruments, including cash
      and cash equivalents, restricted cash, accounts and other receivables,
      amounts due from related parties, accounts and other payables and amounts
      due to related parties approximate their fair values due to the short-term
      maturity of such instruments. The carrying amounts of promissory note
      receivable and bank borrowings approximate their fair values because the
      applicable interest rates approximate current market rates.

                                      -11-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      FAIR VALUE OF FINANCIAL INSTRUMENTS (cont'd)

      It is management's opinion that the Company is not exposed to significant
      price or credit risks arising from these financial instruments.

      In respect of foreign currency risk, the Company is exposed to this risk
      arising from import purchase and export sales transactions and recognized
      trade receivables and payables as they will affect the future operating
      results of the Company. The Company did not have any hedging transactions
      during the reporting years.

      The Company is also exposed to interest rate risk arising from bank
      borrowings. The changes in market interest rates may affect the operating
      results of the Company. The Company did not have any hedging transactions
      during the reporting years.

      BASIC AND DILUTED EARNINGS PER SHARE

      The Company reports basic earnings per share in accordance with SFAS No.
      128, "Earnings Per Share". Basic earnings per share are computed using the
      weighted average number of shares outstanding during the periods
      presented. The weighted average number of shares of the Company represents
      the common stock outstanding during the years. The weighted average number
      of shares outstanding for 2005 represents the number of shares issued by
      the Company in conjunction with the RTO (Notes 1 and 2).

      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

      In July 2006, the FASB issued FASB Interpretation No. 48 "Accounting for
      Uncertainty in Income Taxes". This interpretation provides recognition
      thresholds and measurement of a tax position taken or expected to be taken
      in a tax return. This interpretation is effective for fiscal years
      beginning after December 15, 2006. The Company does not anticipate that
      the adoption of this standard will have a material impact on these
      consolidated financial statements.

      In September 2006, the FASB issued SFAS No. 157 "Fair Value Measurement".
      SFAS No. 157 defines fair value, establishes a framework for measuring
      fair value, and expands disclosures about fair value measurements. This
      Statement shall be effective for financial statements issued for fiscal
      years beginning after November 15, 2007, and interim periods within those
      fiscal years. Earlier application is encouraged, provided that the
      reporting entity has not yet issued financial statements for that fiscal
      year, including any financial statements for an interim period within that
      fiscal year. The provisions of this statement should be applied
      prospectively as of the beginning of the fiscal year in which this
      statement is initially applied, except in some circumstances where the
      statement shall be applied retrospectively. The Company is currently
      evaluating the effect of SFAS No. 157 on these consolidated financial
      statements.

      In September 2006, the FASB released SFAS No. 158 "Employers' Accounting
      for Defined Benefit Pension and Other Postretirement Plans: an amendment
      of FASB Statements No. 87, 88, 106, and 132(R) " which requires an
      employer to recognize the over funded or under funded status of defined
      benefit and other postretirement plans as an asset or liability in its
      statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through an adjustment to
      comprehensive income. This statement also requires an employer to measure
      the funded status of a plan as of the date of its year-end statement of
      financial position, with limited exceptions. This statement is effective
      for fiscal year ending after December 15, 2006. The adoption of this
      standard did not have a material impact on the Company's consolidated
      financial statements.

                                      -12-
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (cont'd)

      In September 2006, the SEC issued SAB No. 108, which provides guidance on
      the process of quantifying financial statement misstatements. In SAB
      No.108, the SEC staff establishes an approach that requires quantification
      of financial statement errors, under both the iron-curtain and the
      roll-over methods, based on the effects of the error on each of the
      Company's financial statements and the related financial statement
      disclosures. SAB No. 108 is generally effective for annual financial
      statements in the first fiscal year ending after November 15, 2006. The
      transition provisions of SAB No. 108 permits existing public companies to
      record the cumulative effect in the first year ending after November 15,
      2006 by recording correcting adjustments to the carrying values of assets
      and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings. The
      adoption of this standard did not have a material impact on the Company's
      consolidated financial statements.

      In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of
      FASB Statement No. 115". SFAS 159 permits entities to choose to measure
      many financial instruments and certain other items at fair value. Entities
      that elect the fair value option will report unrealized gains and losses
      in earnings at each subsequent reporting date. The fair value option may
      be elected on an instrument-by-instrument basis, with few exceptions. SFAS
      159 also establishes presentation and disclosure requirements to
      facilitate comparisons between companies that choose different measurement
      attributes for similar assets and liabilities. SFAS No. 159 is effective
      for fiscal years beginning after November 15, 2007. The Company is
      currently evaluating the effect of SFAS No. 159 on these consolidated
      financial statements.

3.    ACCOUNTS RECEIVABLE, NET
                                                            MARCH 31,
                                                  ------------------------------
                                                            2007           2006
                                                               $              $

      Accounts receivable                            10,040,578     10,640,920
      Less : Allowance for doubtful accounts           (202,765)      (233,373)
                                                  --------------  --------------

                                                      9,837,813     10,407,547
                                                  ==============  ==============

      The Company incurred $202,765, $233,373 and $764,163 of doubtful debt
      expense during 2007, 2006 and 2005 respectively.

      In 2007, 2006 and 2005, the Company wrote off $233,373,$1,673,175 and
      $1,449,810 of bad debts of which $233,373, $1,140,776 and $1,434,200 were
      against the allowance for doubtful debts whilst $nil, $532,399 and $16,386
      were charged to its statement of income respectively.

                                      -13-
<PAGE>

4.    INVENTORIES, NET

                                                            MARCH 31,
                                                  ------------------------------
                                                            2007           2006
                                                               $              $

      Raw materials                                   8,650,785       8,302,395
      Work in progress                                  548,295         602,252
      Finished goods                                  1,880,736       2,273,296
                                                  --------------  --------------

                                                     11,079,816      11,177,943
      Less : Allowance for obsolete inventories        (575,905)       (268,964)
                                                  --------------  --------------

                                                     10,503,911      10,908,979
                                                  ==============  ==============

      The Company charged $575,905, $268,964 and $108,332 of allowance for
      obsolete inventories during 2007, 2006 and 2005 respectively which were
      included in cost of sales.

      In 2007, 2006 and 2005, the Company wrote off $268,964, $108,332 and
      $728,435 of inventories against the allowance for obsolete inventories
      respectively.

5.    PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

      At March 31, 2007 and 2006, the balances comprised of the following :-

<TABLE>
<CAPTION>
                                                                              MARCH 31,
                                                                   ------------------------------
                                                                            2007            2006
                                                                               $               $
<S>                                                                    <C>             <C>
      Prepayments                                                        341,858         251,604
      Rental and other deposits                                          645,232         581,157
      Deposits for purchases of raw materials                            412,363         743,273
      Other receivables                                                1,264,864         681,700
      Temporary payments (Note 5(a))                                   1,567,374               -
      Due from the Subsidiary disposed of in 2006 (Note 14)            1,104,944               -
                                                                   --------------  --------------

                                                                       5,336,635       2,257,734
                                                                   ==============  ==============
</TABLE>

      a)    Temporary payments are repayable by several installments, all of
            which are due within 12 months.

6.    AMOUNT DUE FROM A DIRECTOR

      The amount is due from the Company's director, Mr. Shi Kai Bui Simon
      ("Simon Shi") who is also a major stockholder of the Company. It is
      unsecured, bears interest calculated based on the cost of funding of the
      Company plus 1.5% per annum which approximates 8.5% per annum during the
      reporting years (Note 24(a)) and is repayable on demand.


7.    AMOUNT DUE FROM ULTIMATE HOLDING COMPANY

      The entire issued and outstanding common stock of the ultimate holding
      company is owned by Simon Shi. The amount represents advance to ultimate
      holding company and is interest-free, unsecured and repayable on demand.

                                      -14-
<PAGE>

8.    PROPERTY, PLANT AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                                         MARCH 31,
                                                              --------------------------------
                                                                      2007              2006
                                                                         $                 $
<S>                                                              <C>               <C>
      Land and buildings                                          1,422,639         1,422,639
      Building improvements                                         375,286           375,286
      Machinery and equipment                                    39,125,499        35,863,645
                                                              --------------    --------------

                                                                 40,923,424        37,661,570
      Less : Accumulated depreciation and amortization          (26,559,559)      (23,298,305)
                                                              --------------    --------------

                                                                 14,363,865        14,363,265
                                                              ==============    ==============
</TABLE>

      (i)   Machinery and equipment with net book values of $2,485,590 (cost of
            $4,220,226 less accumulated depreciation of $1,734,636) and
            $2,775,232 (cost of $4,131,758 less accumulated depreciation of
            $1,356,526) were under capital lease obligations at March 31, 2007
            and 2006 respectively.

            Depreciation on machinery and equipment under capital lease
            obligations amounted to $402,452, $358,502 and $293,627 for 2007,
            2006 and 2005 respectively.

      (ii)  At March 31, 2007, land and buildings with carrying amount of
            $932,783 was pledged to banks for banking facilities granted to the
            Company (Note 11(b)).

      (iii) Depreciation and amortization expenses for 2007, 2006 and 2005 were
            $3,261,254, $2,939,562 and $2,348,357 respectively and $2,780,950 ,
            $2,527,912 and $1,868,828 of these expenses were included in factory
            overheads.

      (iv)  No disposal of machinery and equipment was made in 2007. During 2006
            and 2005, machinery and equipment with carrying amounts of $16,021
            and $471,329 value were disposed of at considerations of $40,385 and
            $305,905 resulting in gain of $24,364 and loss of $165,424
            respectively.

9.    ACCRUED EXPENSES AND OTHER PAYABLES

      At March 31, 2007 and 2006, accrued expenses and other payables comprised
      of the following :-

<TABLE>
<CAPTION>
                                                                          MARCH 31,
                                                              --------------------------------
                                                                      2007              2006
                                                                         $                 $
<S>                                                              <C>               <C>
      Acquisitions of property, plant and equipment                  65,841            65,841
      Auditors' remuneration                                        102,564            66,667
      Utilities, consumables and other operating expenses         2,095,682         2,183,569
      Customers' and other deposits received                      1,545,281           181,470
      Payroll and other staff costs                                 835,063           575,109
      Receipt in advance for sales of scrap materials                     -           241,050
      Rental expense                                                364,036           228,463
      Temporary receipt from potential investors                    797,025                 -
      Others                                                        342,993           411,210
                                                              --------------    --------------

      Total                                                       6,148,485         3,953,379
                                                              ==============    ==============
</TABLE>

                                      -15-
<PAGE>

10.   AMOUNTS DUE FROM/TO RELATED COMPANIES

      The related companies are controlled by Simon Shi. These amounts are
      interest-free, unsecured and repayable on demand.

11.   BANK BORROWINGS

      (a)   Bank borrowings composed of the followings :

<TABLE>
                                                                    MARCH 31,
                                                          ------------------------------
                                                                    2007            2006
                                                                       $               $
<S>                                                         <C>             <C>

            Bills payable and trust receipts loans             9,157,356       8,317,207
            Bank overdrafts                                    3,407,793       3,568,316
            Bank loans - short term                            1,844,831       1,612,733
                       - long term                             1,281,587       1,338,532
                                                          --------------  --------------

                                                              15,691,567      14,836,788
            Less: Current maturities                         (14,409,980)    (13,498,256)
                                                          --------------  --------------

                                                               1,281,587       1,338,532
                                                          ==============  ==============
</TABLE>

            The Company is obliged to make the following principal payments :-

<TABLE>
                                                                    MARCH 31,
                                                          ------------------------------
                                                                    2007            2006
                                                                       $               $
<S>                                                         <C>             <C>
            Years ending March 31 :-
            2007                                                       -      13,498,256
            2008                                              14,409,980         119,964
            2009                                                 195,186         130,244
            2010                                                 141,963         141,401
            2011                                                 153,746         153,517
            2012                                                 166,367         166,673
            2013                                                 180,315         180,955
            2014                                                 195,281         196,462
            2015                                                 211,489         213,297
            2016                                                  37,240          36,019
                                                          --------------  --------------
                                                              15,691,567      14,836,788
                                                          ==============  ==============
</TABLE>

      (b)   At March 31, 2007, the Company's available banking facilities to the
            extent of approximately $24.01 million were secured by the
            following:

            (i)   The Company's short-term bank deposits;

            (ii)  The Company's land and buildings (Note 8 (ii));

            (iii) Limited to the extent of $3.68 million together with
                  outstanding interest and unlimited guarantees executed by the
                  Company's subsidiaries in favor of banks for outstanding
                  facilities granted to the Company;

                                      -16-
<PAGE>

11.   BANK BORROWINGS (CONT'D)

      (b)   (cont'd)

            (iv)  Limited to the extent of $4.87 million together with
                  outstanding interest and unlimited personal guarantees put up
                  by Simon Shi in favor of banks for outstanding facilities
                  granted to the Company (Note 24(b));

            (v)   The properties owned by Simon Shi; and

            (vi)  The guarantees including those executed by the subsidiaries
                  and Simon Shi are exercisable by the banks upon default on
                  repayment by the Company. The maximum exposure to these
                  guarantees is $24.01 million representing available banking
                  facilities together with outstanding interest. At March 31,
                  2007, the guaranteed amount utilized by the Company amounted
                  to $15.69 million.

            In addition, the Company was obliged to meet the covenants of
            maintaining tangible net worth and net worth at certain levels. The
            Company was not in breach of any such covenants throughout the
            years.

            At March 31, 2007, the amount of unused available banking
            facilities, including unused letters of credit of approximately
            $7.59 million, was approximately $8.32 million.

            The interest rates of bank borrowings were Hong Kong best lending
            rate minus 0.65% to plus 2.5% per annum, HIBOR plus 0% to 2.5% per
            annum and prime rate plus 0% to plus 2.5% per annum.

12.   CAPITAL LEASE OBLIGATIONS

      The Company leases certain machinery and equipment under non-cancelable
      leases classified as capital leases. The following is a schedule of future
      minimum lease payments for capital leases together with the present value
      of the net minimum lease payments :-

<TABLE>
                                                                    MARCH 31,
                                                          ------------------------------
                                                                    2007            2006
                                                                       $               $
<S>                                                         <C>             <C>
      Years ending March 31:
      2007                                                             -         859,243
      2008                                                     1,033,056         638,818
      2009                                                       630,101         285,700
      2010                                                       395,073          53,680
      2011                                                       313,521          25,374
      2012                                                           286               -
                                                          --------------  --------------

      Total minimum lease payments                             2,372,037       1,862,815
      Less: Capital lease charges                               (253,557)       (159,011)
                                                          --------------  --------------

      Present value of lease payments                          2,118,480       1,703,804
      Less: current maturities                                  (901,496)       (765,374)
                                                          --------------  --------------

                                                               1,216,984         938,430
                                                          ==============  ==============
</TABLE>

      Details of capitalized assets are set out in note 8(i).

                                      -17-
<PAGE>

13.   OTHER INCOME

      Other income included the followings:

<TABLE>
                                                                         YEAR ENDED MARCH 31,
                                                             ----------------------------------------------
                                                                       2007            2006            2005
                                                                          $               $               $
<S>                                                               <C>               <C>             <C>
      Bank interest income                                          124,625          63,472           8,962
      Interest income on promissory note                            166,903               -               -
      Gain on disposal of property, plant and equipment                   -          24,364               -
      Interest income from a director                                31,564          61,533         113,098
      Service income                                                476,334               -               -
      Other income                                                  396,907         166,056         175,724
                                                             --------------  --------------  --------------

                                                                  1,196,333         315,425         297,784
                                                             ==============  ==============  ==============
</TABLE>

14.   DISPOSAL OF A SUBSIDIARY

      Pursuant to a sale and purchase agreement entered into between the Company
      and an independent third party (the "Purchaser") on March 31, 2006, the
      Company agreed to dispose of a wholly owned subsidiary (the "Subsidiary"),
      which owns and operates a production line in the People's Republic of
      China (the "PRC"), to the Purchaser at a consideration of $3,800,000. This
      consideration was settled by a Promissory Note issued by the Purchaser
      with interest-free installments payable as follows:

                INSTALLMENTS        PAYMENT DATES
                           $

                     380,000        September 30, 2006
                     760,000        March 31, 2007
                   2,660,000        March 31, 2008
            ----------------

                   3,800,000
            ================

      As continuing securities for the Promissory Note accepted by the Company,
      the Purchaser executed a First Fixed Charge on the entire equity interest
      in the Subsidiary (i.e. its entire issued and outstanding common stock) in
      favor of the Company. In addition, the Subsidiary also entered into a
      Debenture which incorporates a Fixed and Floating Charges on all of its
      assets in favor of the Company.

      The promissory note receivable is analyzed as below:

                                                                              $
      Note receivable                                                 3,800,000
      Discount                                                         (292,760)
                                                                 --------------
      Adjusted fair value                                             3,507,240
                                                                 ==============

                                      -18-
<PAGE>

14.   DISPOSAL OF A SUBSIDIARY (CONT'D)

      The face value of note receivable is adjusted using interest rate of 5%
      per annum resulting in a discount of $292,760. The 5% is determined by the
      management after consideration of credit standing of the Purchaser, the
      securities given and current market interest rate. The discount is
      amortized as an interest income using effective interest rate method over
      2 years the term of the promissory note.

      This disposal transaction completed on March 31, 2006 and resulted in a
      gain of $3,466,316 calculated as follows:

                                                                              $
      Consideration
        Note receivable                                               3,800,000
        Discount                                                       (292,760)
                                                                 --------------
                                                                      3,507,240

      The Subsidiary's net assets
        - Machinery and equipment                       417,752
        - Receivables                                   363,660
        - Cash                                           13,775
        - Payables                                     (754,263)         40,924
                                                 --------------  --------------

      Gain on disposal                                                3,466,316
                                                                 ==============

      As the consideration was settled by the promissory note, net cash outflow
      from the disposal amounted to $13,775.

      This Subsidiary did not generate any revenue from external customers
      during the reporting years. It was responsible for certain production
      processes of low-end products of the Company. During the years ended March
      31, 2006 and 2005, the Subsidiary incurred production cost of $708,388 and
      $nil, which is included in cost of sales, and administrative expenses of
      $380,673 and $316,824 respectively.

      Subsequent to its disposal, this Subsidiary continues to be a
      sub-contractor for the Company's low-end products in its capacity as a
      third party and the Company pays the relevant charge for the
      subcontracting service rendered.

      In view that the Company continues to be engaged in the distribution of
      such products, the disposal did not constitute a discontinued operation.

      At March 31, 2007 and 2006, the promissory note receivable is analyzed as
      follows:

<TABLE>
                                                                    MARCH 31,
                                                         ------------------------------
                                                                   2007            2006
                                                                      $               $
<S>                                                         <C>             <C>
      Note receivable at amortized cost                       3,091,282       3,507,240
      Portion classified as current asset                    (3,091,282)     (1,094,542)
                                                         --------------  --------------

      Non-current portion                                             -       2,412,698
                                                         ==============  ==============
</TABLE>

                                      -19-

<PAGE>

15.   INCOME TAXES

      The components of the income/(loss) from continuing operations before
      income taxes are:

<TABLE>
                                                                         YEAR ENDED MARCH 31,
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>
      Hong Kong                                                 (2,470,759)      3,224,325       1,717,843
      The United States                                             (9,231)        (30,500)              -
                                                            --------------  --------------  --------------

      Total income/(loss) before income tax                     (2,479,990)      3,193,825       1,717,843
                                                            ==============  ==============  ==============
</TABLE>

                                      -20-
<PAGE>

15.   INCOME TAXES (CONT'D)

      The income tax expenses/(income) consists of the following:

<TABLE>
                                                                         YEAR ENDED MARCH 31,
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>
      Current tax :-
         Hong Kong                                                     778           1,689          44,373

      Deferred tax :-
         Hong Kong                                                (570,261)         75,215         355,226
                                                            --------------  --------------  --------------

      Total expenses/(income) for income tax                      (569,483)         76,904         399,599
                                                            ==============  ==============  ==============
</TABLE>

      The Company is subject to income tax rate in the United States as follows:

            Statutory federal rate                              34.00%
            State income tax rate                                4.95%
                                                            --------------

                                                                38.95%
                                                            ==============

      The Company's subsidiaries incorporated in BVI are not subject to income
      taxes under the current laws of the BVI.

      The Company's subsidiaries operating in Hong Kong are subject to profits
      tax rate of 17.5% on the estimated assessable profits during the reporting
      years.

      The Company's subsidiary operating in the PRC is subject to enterprise
      income tax rate of 33%. No provision for PRC enterprise income tax has
      been made as the PRC subsidiary had no assessable profits throughout the
      years.

      The effective income tax expenses differs from the statutory rate of 34%
      in the United States as follows:

<TABLE>
                                                                         YEAR ENDED MARCH 31,
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>

      Provision for income tax at 34%                             (843,197)      1,085,901         584,067
      Foreign tax rate differential                                409,199        (526,982)       (283,444)
      Income/expenses not taxable/deductible for
        tax purposes                                              (114,356)       (518,064)         46,034
      Under/(over) provision of current tax for
        previous years                                                (602)             31            (539)
      Valuation allowances                                          29,024          16,034         103,446
      Others                                                       (49,551)         19,984         (49,965)
                                                            --------------  --------------  --------------

      Income tax expenses                                         (569,483)         76,904         399,599
                                                            ==============  ==============  ==============
</TABLE>

                                      -21-
<PAGE>

15.   INCOME TAXES (CONT'D)

      The major components of deferred tax recognized in the consolidated
      balance sheets as of March 31, 2007 and 2006 are as follows:

<TABLE>
                                                                                 MARCH 31,
                                                                       ------------------------------
                                                                                 2007            2006
                                                                                    $               $
<S>                                                                      <C>             <C>
      Excess of tax depreciation expenses over book
        depreciation expenses
        - Hong Kong                                                        (1,879,493)     (2,036,544)
                                                                       --------------  --------------

      Allowances for doubtful debts that are reported in financial
        statements prior to becoming deductible for tax purposes
        - Hong Kong                                                            35,113          40,469
                                                                       --------------  --------------

      Tax losses
        - Hong Kong                                                           664,625         220,174
        - The United States                                                 1,127,872       1,124,733
                                                                       --------------  --------------

                                                                            1,792,497       1,344,907
      Less : Valuation allowances                                          (1,159,422)     (1,130,398)
                                                                       --------------  --------------

                                                                              633,075         214,509
                                                                       --------------  --------------

                                                                           (1,211,305)     (1,781,566)
                                                                       ==============  ==============
</TABLE>

      The deferred taxes recognized can be analyzed as follows:

<TABLE>
                                                                                 MARCH 31,
                                                                       ------------------------------
                                                                                 2007            2006
                                                                                    $               $
<S>                                                                      <C>             <C>
      Current assets :-
          Deferred tax assets                                                  35,113          40,469

      Non-current assets (liabilities) :-
          Deferred tax assets                                                 699,778         258,509
          Deferred tax liabilities                                         (1,946,196)     (2,080,544)
                                                                       --------------  --------------

                                                                           (1,211,305)     (1,781,566)
                                                                       ==============  ==============
</TABLE>

      At March 31, 2007, the Company had tax losses carried forward amounting to
      $7,115,125. $3,797,855 of these tax losses can be utilized for an
      unlimited period of time in Hong Kong and the remaining $3,317,270, if
      unutilized, will expire through to 2026 in the United States.

      At March 31, 2006, the Company had tax losses carried forward amounting to
      $4,566,177. $1,258,138 of these tax losses can be utilized for an
      unlimited period of time in Hong Kong and the remaining $3,308,039, if
      unutilized, will expire through to 2025 in the United States.

      In 2007, the management determined that the tax losses of $3,317,270 in
      the United States and of $180,285 in Hong Kong did not meet the
      realization criteria and thereby valuation allowance of $1,159,422 was
      made against the deferred tax asset as of March 31, 2007.

      In 2006, the management determined that the tax losses of $3,308,039 in
      the United States and of $32,370 in Hong Kong did not meet the realization
      criteria and thereby valuation allowance of $1,130,398 was made against
      the deferred tax asset as of March 31, 2006.

                                      -22-
<PAGE>

16.   BASIC AND DILUTED NET INCOME/(LOSS) PER SHARE

      The Company has no dilutive instruments and accordingly the basic and
      diluted net income per share are the same.

17.   DIVIDEND

      During the year ended March 31, 2005, an interim dividend of $30,769.23
      per share totaling $3,076,923 was declared by Bestip.

18.   SEGMENT INFORMATION

      The Company solely designs, manufactures, sells and distributes micro
      motors of different functions and features, and they are used for toys,
      electrical appliances, office equipment, automobile accessories, camera,
      Digital Video Disc ("DVD") and Moving Picture Experts Group Audio Layer 3
      ("MP3") player.

      The Company has two reportable segments, Alternating Current ("AC") and
      Direct Current ("DC") motors, based on manufacturing processes.
      Information for the two segments is disclosed under FAS 131, "Disclosures
      about Segments of an Enterprise and Related Information" as below:

<TABLE>
                                         AC                                 DC                                 TOTAL
                         ----------------------------------  ----------------------------------  ----------------------------------
                               2007        2006        2005        2007        2006        2005        2007        2006        2005
                                  $           $           $           $           $           $           $           $           $
<S>                      <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
 Revenue from
   external customers    22,327,382  19,741,705  16,260,502  33,503,631  31,101,641  32,438,078  55,831,013  50,843,346  48,698,580
 Bank interest income       137,906      24,645       2,992     153,622      38,827       5,970     291,528      63,472       8,962
 Interest expense           620,991     374,695     184,853     732,295     590,304     368,762   1,353,286     964,999     553,615
 Depreciation             1,377,796   1,141,388     784,119   1,883,458   1,798,174   1,564,238   3,261,254   2,939,562   2,348,357
 Segment profit/(loss)   (3,483,665)    128,957      84,933     576,188   2,837,279   1,344,088  (2,907,477)  2,966,236   1,429,021
 Segment assets          18,033,269  16,617,581  13,684,344  30,264,136  28,671,287  22,193,874  48,297,405  45,288,868  35,878,218
 Expenditure for
   segment assets         1,493,387   1,534,757   1,768,538   1,768,468   2,417,899   3,528,057   3,261,855   3,952,656   5,296,595
                         ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>

      A reconciliation is provided for unallocated amounts relating to corporate
      operations which is not included in the segment information.

<TABLE>
                                                                         YEAR ENDED MARCH 31,
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>
      Total consolidated revenue                                55,831,013      50,843,346      48,698,580
                                                            ==============  ==============  ==============

      Total profit/(loss) for reportable segments               (2,907,477)      2,966,236       1,429,021
      Unallocated amounts relating to operations :-
           Interest income from a director                          31,654          61,533         113,098
           Other income                                            395,833         166,056         175,724
                                                            --------------  --------------  --------------

      Income/(loss) before income tax                           (2,479,990)      3,193,825       1,717,843
                                                            ==============  ==============  ==============
</TABLE>

                                      -23-
<PAGE>

18.   SEGMENT INFORMATION (CONT'D)

<TABLE>
                                                                                 MARCH 31,
                                                                       ------------------------------
                                                                                 2007            2006
                                                                                    $               $
<S>                                                                      <C>             <C>
      Total assets for reportable segments                                 48,297,405      45,288,868
          Amount due from a director                                          433,644         108,870
          Amount due from ultimate holding company                            126,009         126,009
          Deferred tax assets                                                 734,891         298,978
          Others                                                               27,574          46,575
                                                                       --------------  --------------

                                                                           49,619,523      45,869,300
                                                                       ==============  ==============
</TABLE>

      Long-lived assets with net book value of $13,428,747 and $13,319,992 are
      located in the PRC and $935,118 and $1,043,273 are located in Hong Kong at
      March 31, 2007 and 2006 respectively.

      Geographic information about the revenues is set out as follows :-


<TABLE>
                                                                            REVENUES (NOTE)
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>
         Japan                                                  20,732,200      19,533,643      19,168,957
         Taiwan                                                 13,822,460      13,274,366      13,026,538
         PRC                                                     1,576,171       1,310,462         977,956
         Europe                                                  6,233,703       4,669,788       3,467,613
         United States & Canada                                  3,543,465       2,855,720       2,802,405
         Other countries                                         9,923,014       9,199,367       9,255,111
                                                            --------------  --------------  --------------

         Total                                                  55,831,013      50,843,346      48,698,580
                                                            ==============  ==============  ==============
</TABLE>

      Note: They are classified based on location of the customers.

19.   PENSION PLANS

      The Company participates in a defined contribution pension scheme under
      the Mandatory Provident Fund Schemes Ordinance ("MPF Scheme") for all of
      its eligible employees in Hong Kong.

      The MPF Scheme is available to all employees aged 18 to 64 with at least
      60 days of service in the employment in Hong Kong. Contributions are made
      by the Company's subsidiary operating in Hong Kong at 5% of the
      participants' relevant income with a ceiling of HK$20,000. The
      participants are entitled to 100% of the Company's contributions together
      with accrued returns irrespective of their length of service with the
      Company, but the benefits are required by law to be preserved until the
      retirement age of 65.

                                      -24-
<PAGE>

19.   PENSION PLANS (CONT'D)

      As stipulated by the PRC government regulations, the Company's subsidiary
      operating in the PRC is required to contribute to the PRC insurance
      companies organized by the PRC Government which are responsible for the
      payments of pension benefits to retired staff. The monthly contribution
      was equal to 28.5% of the salaries of the staff. The Company has no
      obligation for the payment of pension benefits beyond the annual
      contributions described above.

      The assets of the schemes are controlled by trustees and held separately
      from those of the Company. Total pension cost was $154,392, $94,030 and
      $58,159 during 2007, 2006 and 2005 respectively.

20.   COMMON STOCK

      On June 15, 2005, the Company issued 28,000,000 common shares to Bestip
      Former Stockholders as a consideration for the acquisition of Bestip in
      conjunction with the RTO. As detailed in note 1, this transaction
      constituted a reverse takeover transaction and accordingly the 28,000,000
      common shares issued by the Company for the acquisition was taken as the
      outstanding number of common shares for the year 2005.

      The Company's 1,430,067 outstanding common shares immediately prior to the
      RTO were regarded as the shares issued for recapitalization.

      On October 15, 2005, the Company issued 10,000 restricted common shares at
      $2.85 per share to an independent contractor for investor relation service
      provided to the Company. These shares were fully vested to this contractor
      upon issuance of such shares. The $2.85 was the market price on the same
      date.

21.   STOCK OPTION AND STOCK GRANT PLAN

      In April 2004, the Company approved the Non-Qualified Stock Option and
      Stock Grant Plan (the "Plan"). This Plan expires in April 2014 and
      provides that the board of directors is authorized to appropriate, grant
      options and make stock grants with respect to, and otherwise issue and
      sell for the purposes of the Plan, a total number not in excess of 250,000
      shares of the Company's common stock. No option was granted under the
      Plan.

      The Plan was terminated immediately prior to the RTO.

                                      -25-
<PAGE>

22.   COMMITMENTS AND CONTINGENCIES

      (i)   The Company leases office and factory premises under various
            non-cancelable operating lease agreements that expire at various
            dates through years 2007 to 2013. Minimum future commitments under
            these agreements with term in excess of one year as of March 31,
            2007 were as follows:

            YEAR                                                           $

            2008                                                     400,367
            2009                                                     355,873
            2010                                                     350,015
            2011                                                     345,006
            2012                                                     345,006
            Thereafter                                                28,751
                                                       ---------------------

                                                                   1,825,018
                                                       =====================

            Rental expense was $838,229, $858,601 and $850,858 during 2007,
            2006, and 2005 respectively.

      (ii)  At March 31, 2007, the Company has capital commitments in respect of
            acquisition of property, plant and equipment, which are contracted
            for but not provided for in the financial statements amounting to
            $660,927.

23.   SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
                                                                               MARCH 31,
                                                            ----------------------------------------------
                                                                      2007            2006            2005
                                                                         $               $               $
<S>                                                               <C>               <C>             <C>
      Interest paid                                              1,353,286         964,999         553,615
      Income tax paid/(refund)                                     (20,941)         74,338        (140,178)
      Non-cash activities
          Property, plant and equipment
            acquired under capital lease obligations             1,177,620       1,704,225         244,879
          Sale proceeds of property, plant and
            equipment not yet settled and included in
            other receivables                                            -               -         305,905
          Interest income settled via current account
            with a director                                         31,564          61,533         113,098
          Dividend payment to a director settled via
            his current account                                          -               -       2,892,308
          Recapitalization                                               -          14,301               -
          Consideration for disposal of a subsidiary
            settled by a promissory note                                 -       3,800,000               -
                                                            ==============  ==============  ==============
</TABLE>

                                       -26-
<PAGE>

24.   RELATED PARTY TRANSACTIONS

      Apart from the transactions as disclosed elsewhere in these financial
      statements, the Company entered into the following related party
      transactions during the reporting years :-

      (a)   Interest income amounting to $31,564, $61,533 and $113,098 were
            received from Simon Shi during 2007, 2006 and 2005 respectively. The
            interest was calculated based on the cost of funding of the Company
            plus 1.5% per annum, which approximates 8.5% for each of 2007, 2006
            and 2005 on the outstanding amount (Note 6).

      (b)   At March 31, 2007, in order to secure the banking facilities granted
            to the Company, Simon Shi has issued the following guarantees (Note
            11(b)) :-

            -     Limited personal guarantees to the extent of $4.87 million to
                  four banks; and
            -     Unlimited personal guarantee to four banks.

      (c)   Rentals of $1,795, $10,769 and $10,769 were received from a related
            company, of which Simon Shi holds 49% issued and outstanding common
            stock, during 2007, 2006 and 2005 respectively. In November 2003, a
            rental agreement was signed between this related company and the
            Company for leasing certain portion of land and buildings at a
            monthly rent of $1,795, which was determined by both parties with
            reference to the market rental. The arrangement covered the period
            from January 1, 2004 to December 31, 2005 with a six-month rent-free
            period per annum in the leasing period. Since January 1, 2006, both
            parties verbally agreed to continue the leasing arrangement. The
            leasing arrangement was subsequently terminated in June 2006.

25.   COMPARATIVE AMOUNTS

      Certain amounts included in prior years' consolidated balance sheet and
      the consolidated statements of income and cash flows have been
      reclassified to conform to the current year's presentation. These
      reclassifications had no effect on reported total assets, liabilities,
      shareholders' equity, or net income.

                                      -27-