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 2004 and 2005, the Company 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 Permsirivallop CPA No.3182

In the year 2006, the Company appointed the same Office as independent
auditor but the auditing team had changed to be as follows :

Mr. sophon Permsirivallop CPA No. 3182

Ms. Sumalee Reevarabundit CPA No. 3970

Ms. Vissuta Chariyathanakorn CPA No. 3853

(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                   | 2003   | 2004   | 2005   | 2006   |
+--------------------------------+--------+--------+--------+--------+
| Financial Status               |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Cash and cash equivalents      | 309,0  | 198,8  | 617,7  | 66,6   |
|                                | 65,845 | 62,468 | 73,939 | 75,926 |
+--------------------------------+--------+--------+--------+--------+
| Long-term deposits at          | 39,2   | 64,5   | 53,3   | 58,0   |
| financial institutions         | 64,080 | 46,388 | 97,296 | 08,140 |
+--------------------------------+--------+--------+--------+--------+
| Net investment on securities   | 276,8  | 43,5   | 33,5   | 344,6  |
|                                | 84,137 | 54,908 | 02,910 | 33,104 |
+--------------------------------+--------+--------+--------+--------+
| Trading transact               | 16,5   | 16,6   | 77,0   | 13,6   |
| ions with securities companies | 50,374 | 05,531 | 53,199 | 26,020 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business            | 1      | 680,8  | 429,3  | 723,7  |
| Receivables and Accrued        | ,045,4 | 62,117 | 39,338 | 45,465 |
| Interest Receivables           | 71,236 |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| A                              | (23,20 | (5,22  | (9,73  | (9,75  |
| llowance for Doubtful Accounts | 6,676) | 5,357) | 7,050) | 3,971) |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business        | 1,0    | 675,6  | 419,6  | 713,9  |
| Receivable and Accrued         | 22,560 | 36,760 | 02,288 | 91,494 |
| Interest Receivables           |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Total Assets                   | 1      | 1      | 1      | 1      |
|                                | ,731,1 | ,075,9 | ,289,1 | ,264,1 |
|                                | 83,838 | 69,044 | 51,376 | 30,654 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Payable    | 694,9  | 128,5  | 202,7  | 106,2  |
|                                | 81,465 | 98,657 | 65,003 | 26,937 |
+--------------------------------+--------+--------+--------+--------+
| Total Liabilities              | 853,1  | 188,7  | 242,7  | 235,9  |
|                                | 74,749 | 14,045 | 22,735 | 45,059 |
+--------------------------------+--------+--------+--------+--------+
| Paid-up shares capital         | 580,6  | 618,5  | 844,0  | 844,0  |
|                                | 06,380 | 26,880 | 83,520 | 83,520 |
+--------------------------------+--------+--------+--------+--------+
| Retained earning (loss)        | 234,8  | 200,6  | 136,6  | 115,7  |
|                                | 50,248 | 91,863 | 91,556 | 09,971 |
+--------------------------------+--------+--------+--------+--------+
| Shareholders Equity            | 878,0  | 887,2  | 1      | 1      |
|                                | 09,089 | 54,999 | ,046,4 | ,028,1 |
|                                |        |        | 28,641 | 85,595 |
+--------------------------------+--------+--------+--------+--------+
| Operation Results              |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Income     | 624,9  | 397,2  | 300,5  | 263,5  |
|                                | 99,321 | 60,957 | 41,851 | 01,569 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Expenses   | 3,8    | 4,2    | 16,9   | 14,8   |
|                                | 59,195 | 41,879 | 62,939 | 31,356 |
+--------------------------------+--------+--------+--------+--------+
| Bad debt and doubtful accounts | 7      | 6,3    | 7,2    | 1      |
|                                | 00,000 | 18,350 | 23,392 | 09,351 |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business Income | 621,8  | 399,3  | 276,3  | 248,5  |
| after bad debts and doubtful   | 40,126 | 36,428 | 55,520 | 60,862 |
| accounts                       |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Other Income                   | 8      | 5      | 7      | 2,4    |
|                                | 87,766 | 42,809 | 72,216 | 25,788 |
+--------------------------------+--------+--------+--------+--------+
| Operating Expenses             | 359,7  | 318,1  | 219,2  | 269,9  |
|                                | 98,935 | 74,379 | 38,185 | 68,235 |
+--------------------------------+--------+--------+--------+--------+
| Net Profit (Loss)              | 215,5  | 61,2   | (16,28 | (18,98 |
|                                | 80,224 | 01,945 | 2,490) | 1,585) |
+--------------------------------+--------+--------+--------+--------+
| Basic Earnings (Loss) per      | 1.98   | 0.50   | (0.12) | (0.11) |
| share                          |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
|                                |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+

Remark : The weighted average number of ordinary shares is 168,816,704
shares.

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

 Unit : Percentage

+--------------+----+----+-------+---+----------+-------+-------+-------+
|              | F  |    |       |   | 2003     | 2004  | 2005  | 2549  |
|              | in |    |       |   |          |       |       |       |
|              | an |    |       |   |          |       |       |       |
|              | ci |    |       |   |          |       |       |       |
|              | al |    |       |   |          |       |       |       |
|              | R  |    |       |   |          |       |       |       |
|              | at |    |       |   |          |       |       |       |
|              | io |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Profita      |    |    |       |   |          |       |       |       |
| bility Ratio |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Gross Profit |    |    |       |   | 99.27    | 98.93 | 94.35 | 94.37 |
| Margin       |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Net Profit   |    |    |       |   | 34.49    | 15.41 | (     | (     |
| Margin       |    |    |       |   |          |       | 5.40) | 7.14) |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Return on    |    |    |       |   | 28.81    | 6.93  | (     | (     |
| Equity       |    |    |       |   |          |       | 1.68) | 1.83) |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Return on    |    | .  |       |   | 15.62    | (     | (1    | 1.91  |
| Investment   |    |    |       |   |          | 4.10) | 5.37) |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Effi         |    |    |       |   |          |       |       |       |
| ciency Ratio |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Return on    |    |    |       |   | 15.24    | 4.39  | (     | (     |
| Assets       |    |    |       |   |          |       | 0.74) | 1.37) |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Fin          |    |    |       |   |          |       |       |       |
| ancial Ratio |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Liquid       |    |    |       | 3 |          | 22.04 | 52.06 | 9.86  |
| Assets to    |    |    |       | 6 |          |       |       |       |
| Total Assets |    |    |       | . |          |       |       |       |
| Ratio        |    |    |       | 1 |          |       |       |       |
|              |    |    |       | 1 |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Performing   |    |    |       | 7 |          | 70.55 | 41.10 | 84.82 |
| Assets to    |    |    |       | 8 |          |       |       |       |
| Total Assets |    |    |       | . |          |       |       |       |
| Ratio        |    |    |       | 6 |          |       |       |       |
|              |    |    |       | 5 |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Debt to      |    |    |       | 0 |          | 0.21  | 0.23  | 0.23  |
| Equity Ratio |    |    |       | . |          |       |       |       |
|              |    |    |       | 9 |          |       |       |       |
|              |    |    |       | 7 |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Other Ratios |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Net          |    |    |       | 1 |          | 4.04  | 2.59  | 27.26 |
| Investment   |    |    |       | 5 |          |       |       |       |
| in           |    |    |       | . |          |       |       |       |
| Securities   |    |    |       | 9 |          |       |       |       |
| to total     |    |    |       | 9 |          |       |       |       |
| Assets Ratio |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+
| Net Liquid   |    |    |       | 1 |          | 5     | 4     | 3     |
| Capital to   |    |    |       | 4 |          | 10.85 | 91.01 | 70.22 |
| Total        |    |    |       | 5 |          |       |       |       |
| Liabilities  |    |    |       | . |          |       |       |       |
|              |    |    |       | 9 |          |       |       |       |
| (based on    |    |    |       | 0 |          |       |       |       |
| SEC’s Net    |    |    |       |   |          |       |       |       |
| Capital      |    |    |       |   |          |       |       |       |
| Rules)       |    |    |       |   |          |       |       |       |
+--------------+----+----+-------+---+----------+-------+-------+-------+

(2) Management Discussion and Analysis on Consolidated Financial
Statements

1.  Operation Overview During the Past Year

Although securities trading in the stock exchange constantly expanded
throughout the year, together with a fierce competition in the
securities business, the Company’s brokerage incomes subsequently
declined from Baht 251 million in 2005 to Baht 197 million last year.
However, the Company still enjoyed incomes from securities trading,
interest incomes and dividends but the income decreasing rate was
greater than the expenses decreasing rate. Consequently, in 2006, the
Company suffered a net loss of Baht 18.98 million compared to the net
loss of Baht 16.28 million in 2005.

2.  Operation Results

Incomes from Securities Business

In 2006, the Company’s brokerage incomes, fee and service incomes fell
from 2005 while there was a profit from its securities trading portfolio
and interest incomes rose. The brokerage income was Baht 197.22 million
while the fee and service income was Baht 9.88 million. There was a
profit from securities trading accounted for Baht 6.58 million while the
interest income stood at Baht 49.82 million and other income was Baht
2.42 million. Therefore, its total income was Baht 265.92 million or a
decline by 9.76 per cent from the previous year.

Expenses in Securities Business

In 2006, Expenses in the securities business which consist of borrowing
expenses and service fees dropped 12.57% from Baht 16.96 million from
the year 2005 to Baht 14.83 million of which 92.38% was resulted from
the dropping of fee and services which was in relation to the trading
volume in the stock exchange.

Bad Debts and Doubtful Accounts

In 2006, the Company’s bad debts and doubtful accounts were Baht 16,921
only and was decreased from the year 2005 which had 7.22 million baht
which resulted from the efficient risk control management by carefully
screening the qualified and potential customers as well as the control
and monitor of securities trading settlement to be paid on time so as to
minimize bad debts.

Operating Expenses

Operating expenses consists of personnel expenses, premises and
equipment expenses, director’s remunerations and other expenses fell
while there was an increase in tax expense which resulted to the total
operating expenses of Baht 269.97 million or a 3.20-per cent decline
from 2005.

Net Profit(Loss)

As a high proportion of the Company’s incomes was derived from its
securities brokerage business and in 2006 the securities business had
adversely high impact from various events, the Company’s main income was
affected by a decreasing of Baht 37.04 million from Baht 300.54 million
to be Baht 263.50 million in 2006 or 12.32 %. Although the income from
interest, dividend and securities trading increased, the Company still
had an increase in net loss of Baht 2.70 million from last year’s net
loss of Baht 16.28 million.

  3. Financial Status

Total Assets

In 2006, the Company recorded a total assets of Baht 1,264 million, a
decrease of 1.94% from the year 2005, where it was still able to
maintain cash flow and investment fund at an appropriate and controlled
level.

Investment in Securities

In 2006, the Company’s net investment in securities was Baht 344.63
million increased from 2005 for Baht 311.13 million or an increase of
928.67% where net temporary investment was Baht 336.80 million and net
long-term investment was at Baht 7.84 million.

Net Securities Business Receivables

The net Securities Business Receivables had increased from Baht 419.60
million in the year 2005 to Baht 713.99 million in 2006. Most of the
receivables were arisen from the securities business receivables from
credit balance accounts by Baht 332.19 million from Baht 288.78 million
in 2005 to Baht 620.97 million in 2006. Moreover, it also consists of
securities receivables overdue for payment for over 6 months together
with the installment receivables for the total of Baht 10.26 million
which the Company had already set a full amount on allowance for
doubtful accounts and in which were under legal proceedings and interest
receivables of Baht 0.32 million. The rest amount of securities business
receivables accounts of Baht 92.19 million 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

Since the year 2001-2005, the Company has had no borrowings. However, in
2006 the Company had a short term borrowings of Baht 70.20 million for
settlement with the Thailand Securities Depository Company and the whole
amount had been settled.

Liquidity

The net cash flow in the year 2006 decreased Baht 551.10 million
resulted from operations for Baht 612.23 million in short-term
investment and loan for securities trading (credit balance) which
resulted in income from purchase discount and interest income,
respectively. The cash flow decreased Baht 9.07 million from investment
activity while Baht 70.20 million increased from financial sourcing.

Sources of Capital

In 2006, the Company had working capital from the conversion of warrant
to ordinary shares since 2005 for about Baht 225.5 million and also from
short-term borrowings

The Net Capital ratio of the Company as at 31 December, 2006 was 370.22%
which was considerably higher 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 operation and financial status are the stability of Economics and
the political stability of Thailand 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
customers base and to invest more in debt instrument in order to earn
sufficient income to continue to grow in this field of business.

(3) Auditor’s Remunerations

  From the past fiscal year, the Company and its subsidiaries had paid
  the following fees:

1.  Audit fee : The Company paid the total of Baht 625,000.

3.2 Non-audit fee : The Company paid the total of Baht 13,889.