2.12 Financial Status and Performance

(1) Financial Statement: Summary of the Company’s financial status and
    its operations for the past 3 years

  (a) Independent Auditor

In the years 2001, 2002, and 2003, the company has appointed Ernst &
Young Office Limited as an independent auditor. The auditing team
consisted of

Miss Rungnapa Lertsuwankul CPA No.3516

Mr. Ruth Chaowangawi CPA No.3247

Mr. Sophon Permsiriwallop CPA No.3182

(b) Report of Independent Auditor

For the past 3 years, the company’s financial statements had been given
an unqualified opinion from the Independent Auditor every year.

  Table below summarizes the Company and consolidated Financial
  Statement. (Unit : Baht)

+--------------------------------+--------+--------+--------+--------+
| Consolidated                   | 2000   | 2001   | 2002   | 2003   |
+--------------------------------+--------+--------+--------+--------+
| Financial Status               |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Cash and cash equivalents      | 15,7   | 74,9   | 228,1  | 309,0  |
|                                | 31,155 | 62,758 | 02,294 | 65,845 |
+--------------------------------+--------+--------+--------+--------+
| Long-term deposits at          | 34,2   | 14,2   | 24,2   | 39,2   |
| financial institutions         | 64,000 | 64,040 | 64,000 | 64,080 |
+--------------------------------+--------+--------+--------+--------+
| Net investment on securities   | 106,3  | 106,5  | 207,6  | 276,8  |
|                                | 76,375 | 15,086 | 95,233 | 84,137 |
+--------------------------------+--------+--------+--------+--------+
| Trading transact               | 42,5   | 79,3   | 25,1   | 16,5   |
| ions with securities companies | 53,860 | 33,002 | 00,775 | 50,374 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business            | 288,3  | 187,6  | 563,1  | 1      |
| Receivables and Accrued        | 87,158 | 54,620 | 43,106 | ,045,4 |
| Interest Receivables           |        |        |        | 71,236 |
+--------------------------------+--------+--------+--------+--------+
| A                              | (      | (93,55 | (25,87 | (23,20 |
| llowance for Doubtful Accounts | 213,29 | 8,083) | 2,263) | 6,676) |
|                                | 4,205) |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business        | 75,0   | 94,0   | 537,2  | 1,0    |
| Receivable and Accrued         | 92,953 | 96,537 | 70,843 | 22,560 |
| Interest Receivables           |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Total Assets                   | 348,8  | 414,8  | 1      | 1      |
|                                | 84,738 | 33,533 | ,097,9 | ,731,1 |
|                                |        |        | 16,079 | 83,838 |
+--------------------------------+--------+--------+--------+--------+
| Borrowings                     | 3,6    | -      | -      | -      |
|                                | 44,126 |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Payable    | 105,3  | 174,5  | 418,0  | 694,9  |
|                                | 19,130 | 64,858 | 66,862 | 81,465 |
+--------------------------------+--------+--------+--------+--------+
| Total Liabilities              | 135,3  | 184,4  | 479,5  | 853,1  |
|                                | 95,629 | 74,532 | 59,096 | 74,749 |
+--------------------------------+--------+--------+--------+--------+
| Paid-up shares capital         | 258,3  | 304,3  | 537,0  | 580,6  |
|                                | 74,000 | 73,570 | 07,480 | 06,380 |
+--------------------------------+--------+--------+--------+--------+
| Retained earning (loss)        | (45,19 | (54,33 | 30,0   | 234,8  |
|                                | 6,259) | 1,524) | 49,035 | 50,248 |
+--------------------------------+--------+--------+--------+--------+
| Shareholders Equity            | 213,4  | 230,3  | 618,3  | 878,0  |
|                                | 89,109 | 59,001 | 56,983 | 09,089 |
+--------------------------------+--------+--------+--------+--------+
| Operations Results             |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Income     | 173,6  | 104,5  | 313,7  | 624,9  |
|                                | 48,302 | 32,246 | 10,325 | 99,321 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Expenses   | 1,8    | 5      | 1,9    | 3,8    |
|                                | 55,791 | 91,522 | 84,594 | 59,195 |
+--------------------------------+--------+--------+--------+--------+
| Bad debt and doubtful accounts | 2,9    | (50    | (2,54  | 7      |
|                                | 72,211 | 0,505) | 9,540) | 00,000 |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business Income | 174,7  | 103,4  | 309,1  | 621,8  |
| after bad debts and doubtful   | 64,722 | 40,219 | 76,191 | 40,126 |
| accounts                       |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Other Income                   | 3      | 6,8    | 1,0    | 8      |
|                                | 97,046 | 15,806 | 28,075 | 87,766 |
+--------------------------------+--------+--------+--------+--------+
| Operating Expenses             | 211,7  | 117,6  | 221,4  | 359,7  |
|                                | 06,336 | 93,118 | 70,055 | 98,935 |
+--------------------------------+--------+--------+--------+--------+
| Net Profit (Loss)              | (37,06 | (9,13  | 85,9   | 215,5  |
|                                | 8,807) | 5,265) | 62,087 | 80,224 |
+--------------------------------+--------+--------+--------+--------+
| Basic Earnings (Loss) per      | (0.72) | (0.16) | 0.97   | 1.98   |
| share                          |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+

(c) Significant Financial Ratio which reflects the Company’s financial
Status and Securities Business Operation Results.

 Unit : Percentage

+--------------+----+----+-------+----+----+-------+-------+-------+
|              | F  |    |       | 20 |    | 2001  | 2002  | 2003  |
|              | in |    |       | 00 |    |       |       |       |
|              | an |    |       |    |    |       |       |       |
|              | ci |    |       |    |    |       |       |       |
|              | al |    |       |    |    |       |       |       |
|              | R  |    |       |    |    |       |       |       |
|              | at |    |       |    |    |       |       |       |
|              | io |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Profita      |    |    |       |    |    |       |       |       |
| bility Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Gross Profit |    |    |       | 9  |    | 99.43 | 99.36 | 99.27 |
| Margin       |    |    |       | 8. |    |       |       |       |
|              |    |    |       | 93 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Profit   |    |    |       | (  |    | (     | 27.40 | 34.49 |
| Margin       |    |    |       | 21 |    | 8.20) |       |       |
|              |    |    |       | .3 |    |       |       |       |
|              |    |    |       | 0) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | (  |    | (     | 20.23 | 28.81 |
| Equity       |    |    |       | 15 |    | 4.12) |       |       |
|              |    |    |       | .9 |    |       |       |       |
|              |    |    |       | 7) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    | .  |       | 1  |    | 4.97  | 4.21  | 15.62 |
| Investment   |    |    |       | 0. |    |       |       |       |
|              |    |    |       | 90 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Effic        |    |    |       |    |    |       |       |       |
| iency Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | (9 |    | (     | 11.37 | 15.24 |
| Assets       |    |    |       | .3 |    | 2.39) |       |       |
|              |    |    |       | 9) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Assets       |    |    |       | 0. |    | 0.29  | 0.42  | 0.44  |
| turnover     |    |    |       | 44 |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Fina         |    |    |       |    |    |       |       |       |
| ncial Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | 4  | -     | -     | -     |
| Assets to    |    |    |       |    | 2. |       |       |       |
| total        |    |    |       |    | 91 |       |       |       |
| Borrowing    |    |    |       |    |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | 4  | -     | -     | -     |
| Assets to    |    |    |       |    | 9. |       |       |       |
| total        |    |    |       |    | 80 |       |       |       |
| Borrowings   |    |    |       |    |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | 4  | 47.19 | 71.93 | 36.11 |
| Assets to    |    |    |       |    | 4. |       |       |       |
| Total Assets |    |    |       |    | 82 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | 5  | 55.59 | 82.44 | 78.65 |
| Assets to    |    |    |       |    | 2. |       |       |       |
| Total Assets |    |    |       |    | 01 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Debt to      |    |    |       |    | 0. | 0.80  | 0.77  | 0.97  |
| Equity Ratio |    |    |       |    | 63 |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Other Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net          |    |    |       |    | 3  | 25.68 | 18.91 | 15.99 |
| Investment   |    |    |       |    | 0. |       |       |       |
| in           |    |    |       |    | 49 |       |       |       |
| Securities   |    |    |       |    |    |       |       |       |
| to total     |    |    |       |    |    |       |       |       |
| Assets Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Liquid   |    |    |       |    | 18 | 1     | 1     | 1     |
| Capital to   |    |    |       |    | 7. | 12.27 | 33.85 | 45.90 |
| Total        |    |    |       |    | 56 |       |       |       |
| Liabilities  |    |    |       |    |    |       |       |       |
|              |    |    |       |    |    |       |       |       |
| (Calculated  |    |    |       |    |    |       |       |       |
| according to |    |    |       |    |    |       |       |       |
| the SEC’s    |    |    |       |    |    |       |       |       |
| Net Capital  |    |    |       |    |    |       |       |       |
| Rules)       |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+

(2) Explanations and Analysis on Company’s Financial Status and
Operations Results

1. Past year’s operations Overview

Because of high expansion in securities trading volume of the stock
market together with the fixing of brokerage fee rate, the competition
in securities business was somehow lessen. The income from brokerage fee
as well as related incomes were favorably affected. The brokerage fee
income of the Company had been increased from 247 million bath in the
year 2002 to 498 million in 2003. In addition to the brokerage fee
income, the Company also had profit from Fees and service income,
securities trading income as well as interest and dividend income. Thus
the Company’s net profit had been increased considerably from 85.9
million in the year 2002 to 215.5 million in the year 2003.

2. Operations Results

Income from Securities Business

In 2003, the total income from securities business of the Company was
624 million Baht which was a 99% increase compared to the year 2002 of
313.7 million Baht. Such income was arisen from brokerage fee which had
increased from 247.8 million Baht to 498 million, Fees and service from
57.4 million to 62 million. Moreover, there were gain on trading in
securities of 43 million and interest and dividend including interest on
margin loan of 20 million Baht.

Expenses from Securities Business

The Securities Business Expenses consisting of Borrowing Cost and the
fees and services expenses were still low because the company had no
obligations on debts, no borrowings and the Fees and service expenses
was mainly dependent on the total trading volume of the stock exchange.

Bad Debts and Doubtful Accounts

By way of the Risk Management Control policy, customers are carefully
screened and settlement period is strictly controlled. However, in the
year 2002, margin loan was granted under Credit Balance system and there
was about 2.54 million Baht Bad debts and Doubtful Accounts while in
2003, there was no increase in Bad Debts and Doubtful Account but in
turn there was a reverse of the Accounts of about 0.7 million Baht
because of debt payment by debtors.

Operating Expenses

In 2002, the Company’s operating expenses were 221.47 million Baht which
resulted mainly from Personnel Expenses of 131.37 million Baht and
Premises Improvement and Equipment 49.52 million Baht. In 2003, the
operating expenses increased from incentive payment of marketing
personnel, Premises Improvement and Equipment as well as Directors’
remunerations which made the total operating expenses to be 359 million
or an increase of 62%.

Net Profit(Loss)

The policy of profit scattering into other securities businesses such as
financial advisory, debt securities trading and investment on bond,
instead of depending on only brokerage fee income had resulted on the
Company’s net profit growth in the year 2003 which was 215 million Baht
compared to 85.96 million Baht in the year 2002 or an increase of 150%.

  3. Financial Status

Total Assets

Total assets of the Company has been growing since the year 2001 to 2003
ranging from 414.83 million, 10,097.91 million and 1,731 million Baht,
respectively. Most of the assets were in the form of securities business
receivables and investment in securities. However, the Company was able
to balance its working capital in terms of cash and investment so that
it was in a suitable level and well under control.

Investment on Securities

Investment on Securities had been increased continuously since the year
2001 of 106.51 million Baht to 207.69 million Baht in 2002 and 276
million Baht in 2003. Most of the investment on securities were short
term investment for the total of 166 million Baht and was divided into
securities held for trading of 85.5 million Baht and investment in
available-for-sale securities of 181.3 million Baht. For long term
investment totaled 10 million Baht was divided into investment in
available-for-sale securities of 2.3 million Baht and other investment
of 7.8 million Baht. Both kinds of investment were considered to have a
suitable and expected yield rate and the company had set allowance for
impairment of the non marketable equity securities which the Company
held as other investment of 8.5 million Baht which is considered to be
sufficient.

Securities Business Receivables and Accrued Interest Receivables

Securities Business Receivables and Accrued Interest Receivables had
been increasing to 1,045 million Baht in the year 2003. Such receivables
were the securities business receivables which were overdue for payment
for over 6 months together with the installment receivables for the
total of 20 million Baht which the Company had already set a full amount
on allowance for doubtful accounts and in which were under legal
proceedings. The rest amount of securities business receivables accounts
would depend on the trading volume of the Company as they were the
overdue cash customers accounts which would be settled on the third
working day after trading date.

The policy on allowance for doubtful debts for the normal securities
business receivables within 3 days settlement was set according to the
amount which were expected to be uncollectable by setting aside the
allowance for doubtful debts every month at 100% of the debts not fully
covered by collaterals otherwise such allowance will not be necessary.

Borrowings

The Company has had no borrowings since the year 2001. The Company
raised fund by increasing capital.

Liquidity

The net cash flow in the year 2003 was increased 80.96 million Baht
resulted from the increase in operating activities of 49 million Baht,
cash received from converted warrants to ordinary shares 43 million Baht
while cash investment was about 12 million Baht.

Sources of Capital

In 2003. the Company had raised its capital for about 43 million Baht
which arisen from the conversion of warrant to ordinary shares and the
amount was spent on the Company’s working capital.

The Net Capital ratio of the Company as at 31 December, 2003 was 135.90%
which was considerably more than the 7% minimum rate regulated by SEC.

4. Significant Factors that influence the Future Operations and
Financial Status

The significant factors that may have an influence on the company’s
future operations and financial status are the stability of Thai
Economics and the political stability which will not only have much
impact on the investment decision of the investors but also on the
volume of the stock market as a whole. And while the competition in
securities business is still fierce, all factors abovementioned may also
have considerable influence on the profit and financial status of the
company.

The company has realized on such problems and has prepared to expand its
business to Investment Banking Business, investment in financial
instrument especially debts instrument and to the securities
underwriting business in order to earn sufficient income to continue to
survive in this field of business.