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 year 2006, the Company appointed Ernst & Young Office Limited,
the same Office as the previous years, 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

And in the year 2008 and 2009, the Company also appointed the same
Office as independent auditor and there was an additional CPA in the
team from the year 2006 as follows:

Ms. Nongluk Poomnoi CPA No. 4172

(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.

Balance Sheet

  (Unit:: Thousand Baht)

+--------------------------+------+-----+------+-----+------+-----+
|                          | 2006 |     | 2007 |     | 2    |     |
|                          |      |     |      |     | 008* |     |
+--------------------------+------+-----+------+-----+------+-----+
|                          | Am   | %   | Am   | %   | Am   | %   |
|                          | ount |     | ount |     | ount |     |
+--------------------------+------+-----+------+-----+------+-----+
| Assets                   |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Cash and cash            | 66   | 5   | 24   | 1   | 22   | 1   |
| equivalents              | ,676 | .27 | ,031 | .71 | ,113 | .55 |
+--------------------------+------+-----+------+-----+------+-----+
| Long-term deposits at    | 58   | 4   | 63   | 4   | 63   | 4   |
| financial institutions   | ,008 | .59 | ,144 | .49 | ,004 | .41 |
+--------------------------+------+-----+------+-----+------+-----+
| Investments in debt and  | 344  | 27  | 341  | 24  | 694  | 48  |
| equity securities, net   | ,633 | .26 | ,108 | .26 | ,289 | .57 |
+--------------------------+------+-----+------+-----+------+-----+
| Receivable from clearing | 13   | 1   | 45   | 3   | 22   | 1   |
| house                    | ,626 | .08 | ,059 | .20 | ,843 | .60 |
+--------------------------+------+-----+------+-----+------+-----+
| Securities business      | 713  | 56  | 887  | 63  | 546  | 38  |
| receivables, net         | ,992 | .48 | ,316 | .11 | ,705 | .24 |
+--------------------------+------+-----+------+-----+------+-----+
| Premises improvement and | 42   | 3   | 20   | 1   | 23   | 1   |
| equipment, net           | ,841 | .39 | ,470 | .46 | ,575 | .65 |
+--------------------------+------+-----+------+-----+------+-----+
| Intangible assets, net   | 3    | 0   | 5    | 0   | 25   | 1   |
|                          | ,997 | .32 | ,235 | .37 | ,489 | .78 |
+--------------------------+------+-----+------+-----+------+-----+
| Other assets, net        | 20   | 1   | 19   | 1   | 31   | 2   |
|                          | ,358 | .61 | ,734 | .40 | ,521 | .20 |
+--------------------------+------+-----+------+-----+------+-----+
| Total assets             | 1    | 100 | 1    | 100 | 1    | 100 |
|                          | ,264 | .00 | ,406 | .00 | ,429 | .00 |
|                          | ,131 |     | ,097 |     | ,539 |     |
+--------------------------+------+-----+------+-----+------+-----+
| Liabilities and          |      |     |      |     |      |     |
| Shareholders’ equity     |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Liabilities              |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Domestic borrowings      | 70   | 5   | 80   | 5   | 70   | 4   |
|                          | ,204 | .55 | ,009 | .69 | ,000 | .90 |
+--------------------------+------+-----+------+-----+------+-----+
| Payables to clearing     | 28   | 2   | -    | -   | 21   | -   |
| house                    | ,374 | .24 |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Securities business      | 106  | 8   | 138  | 9   | 58   | 4   |
| payables                 | ,227 | .40 | ,231 | .83 | ,031 | .06 |
+--------------------------+------+-----+------+-----+------+-----+
| Liabilities under        | -    | -   | 99   | 7   | 296  | 20  |
| commercial paper sold    |      |     | ,969 | .11 | ,057 | .71 |
+--------------------------+------+-----+------+-----+------+-----+
| Corporate income tax     | -    | -   | 1    | 0   | -    | -   |
| payable                  |      |     | ,786 | .13 |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Accrued expenses         | 24   | 1   | 33   | 2   | 21   | 1   |
|                          | ,595 | .95 | ,032 | .35 | ,310 | .49 |
+--------------------------+------+-----+------+-----+------+-----+
| Provision for            | 4    | 0   | 8    | 0   | 8    | 0   |
| liabilities from         | ,381 | .35 | ,688 | .62 | ,856 | .62 |
| litigation               |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Liabilities under hire   | 1    | 0   | 160  | 0   | -    | -   |
| purchase agreement       | ,707 | .14 |      | .01 |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Other liabilities        | 457  | 0   | 743  | 0   | 7    | 0   |
|                          |      | .04 |      | .05 | ,373 | .51 |
+--------------------------+------+-----+------+-----+------+-----+
| Total liabilities        | 235  | 18  | 362  | 25  | 461  | 32  |
|                          | ,945 | .67 | ,618 | .79 | ,648 | .29 |
+--------------------------+------+-----+------+-----+------+-----+
| Shareholders’ equity     |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Issued and paid up       | 844  | 66  | 844  | 60  | 844  | 59  |
| capital                  | ,083 | .77 | ,083 | .03 | ,083 | .05 |
+--------------------------+------+-----+------+-----+------+-----+
| Premium on ordinary      | 53   | 4   | 53   | 3   | 53   | 3   |
| shares                   | ,227 | .21 | ,227 | .79 | ,227 | .72 |
+--------------------------+------+-----+------+-----+------+-----+
| Revaluation deficit on   | (    | (0. | (11) | -   | -    | -   |
| investments              | 255) | 02) |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Appropriated – Statutory | 15   | 1   | 16   | 1   | 16   | 1   |
| reserve                  | ,421 | .22 | ,173 | .15 | ,173 | .13 |
+--------------------------+------+-----+------+-----+------+-----+
| Unappropriated           | 115  | 9   | 130  | 9   | 41   | 2   |
|                          | ,710 | .15 | ,007 | .24 | ,780 | .93 |
+--------------------------+------+-----+------+-----+------+-----+
| Equity attributable to   | 1    | 81  | 1    | 74  | 955  | 66  |
| the parent’s             | ,028 | .33 | ,043 | .21 | ,264 | .83 |
| shareholders             | ,186 |     | ,479 |     |      |     |
|                          |      | -   |      | -   | 12   | 0   |
| Minority interest –      | -    |     | -    |     | ,627 | .88 |
| equity attributable to   |      |     |      |     |      |     |
| minority                 |      |     |      |     |      |     |
|                          |      |     |      |     |      |     |
| shareholders of          |      |     |      |     |      |     |
| subsidiary               |      |     |      |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Total Shareholders’      | 1    | 81  | 1    | 74  | 967  | 67  |
| equity                   | ,028 | .33 | ,043 | .21 | ,891 | .71 |
|                          | ,186 |     | ,479 |     |      |     |
+--------------------------+------+-----+------+-----+------+-----+
| Total liabilities and    | 1    | 100 | 1    | 100 | 1    | 100 |
| shareholders’ equity     | ,264 | .00 | ,406 | .00 | ,429 | .00 |
|                          | ,131 |     | ,097 |     | ,539 |     |
+--------------------------+------+-----+------+-----+------+-----+

*Remark: For the year 2008, the data was from consolidated financial
statement which was done the first year after having subsidiary company.

Income Statement

  (Unit: Thousand Baht)

  -------------------------- ---------- -------- --------- -------- ---------- ---------
                             2006                2007               2008*      

                             Amount     %        Amount    %        Amount     %

  Revenues                                                                     

  Brokerage fee from         197,219    74.16    171,938   63.06    145,388    55.14
  securities business                                                          

  Brokerage fee from         -          -        -         -        310        0.12
  derivatives business                                                         

  Fee and service income     9,879      3.72     13,085    4.80     19,446     7.38

  Gain (Loss) on trading in  6,583      2.48     8,340     3.06     1,171      0.44
  securities                                                                   

  Interest and dividend      28,321     10.65    24,555    9.01     44,255     16.79

  Interest on margin loans   21,500     8.08     44,770    16.42    47,051     17.84

  Other income               2,425      0.91     9,990     3.65     6,055      2.29

  Total Revenue              265,927    100.00   272,678   100.00   263,677    100.00

  Expenses                                                                     

  Expenses on borrowings     1,130      0.43     6,581     2.41     19,635     7.44

  Fee and service expenses   13,701     5.15     12,617    4.63     13,305     5.05

  Bad debts and doubtful     17         0.01     (4,062)   (1.49)   96,137     36.46
  accounts (Reversal)                                                          

  Operating expenses                                                           

  Personnel expenses         168,103    63.21    153,970   56.47    145,608    55.22

  Premises and equipment     76,640     28.82    60,816    22.30    53,182     20.17
  expenses                                                                     

  Tax and duties             1,794      0.68     2,598     0.95     1,585      0.60

  Directors’ remuneration    2,815      1.06     2,975     1.09     3,129      1.19

  Provision for liabilities  92         0.03     4,307     1.58     168        0.06
  from litigation                                                              

  Other expenses             20,617     7.75     15,317    5.62     14,310     5.43

  Total expenses             284,909    107.14   255,119   93.56    347,059    131.62

  Income (Loss) before       (18,982)   (7.14)   17,559    6.44     (83,382)   (31.62)
  income tax                                                                   

  Corporate income tax       -          -        (2,510)   (0.92)   -          -

  Net income (Loss) for the  (18,982)   (7.14)   15,049    5.52     (83,382)   (31.62)
  year                                                                         

  Basic earnings per share                                                     

  Net income (Loss) (Baht    (0.11)     -        0.09      -        (0.45)     -
  per share)                                                                   

  Weighted average number of 168,817             168,817            168,817    
  ordinary shares (Thousand                                                    
  shares)                                                                      
  -------------------------- ---------- -------- --------- -------- ---------- ---------

*Remark: For the year 2008, the data was from consolidated financial
statement which was done the first year after having subsidiary company.

Cash flow statements

  (Unit: Thousand Baht)

+--------------------------------------+---------+---------+---------+
|                                      | 2006    | 2007    | 2008*   |
+--------------------------------------+---------+---------+---------+
| Cash flows from operating activities |         |         |         |
+--------------------------------------+---------+---------+---------+
| Net income (Loss)                    | (       | 15,049  | (       |
|                                      | 18,982) |         | 83,382) |
+--------------------------------------+---------+---------+---------+
| Adjustments to reconcile net income  |         |         |         |
| (loss) to net cash                   |         |         |         |
+--------------------------------------+---------+---------+---------+
| provided by (paid for) operating     | (6,270) | (1,077) | 92,340  |
| activities;-                         |         |         |         |
+--------------------------------------+---------+---------+---------+
| Decrease (increase) in operating     |         |         |         |
| assets                               |         |         |         |
+--------------------------------------+---------+---------+---------+
| Long-term deposit at financial       | (4,611) | (5,136) | 139     |
| institutions                         |         |         |         |
+--------------------------------------+---------+---------+---------+
| Short-term investments               | (3      | 3,779   | (3      |
|                                      | 01,484) |         | 60,561) |
+--------------------------------------+---------+---------+---------+
| Receivable from clearing house       | 63,427  | (       | 22,216  |
|                                      |         | 31,433) |         |
+--------------------------------------+---------+---------+---------+
| Securities business receivables      | (2      | (1      | 244,474 |
|                                      | 94,406) | 69,262) |         |
+--------------------------------------+---------+---------+---------+
| Other assets                         | (3,435) | 901     | (       |
|                                      |         |         | 11,577) |
+--------------------------------------+---------+---------+---------+
| Increase (Decrease) in operating     |         |         |         |
| liabilities                          |         |         |         |
+--------------------------------------+---------+---------+---------+
| Payable to clearing house            | 21,562  | (       | 21      |
|                                      |         | 28,374) |         |
+--------------------------------------+---------+---------+---------+
| Securities business payables         | (       | 32,004  | (       |
|                                      | 96,538) |         | 80,200) |
+--------------------------------------+---------+---------+---------+
| Liabilities under commercial papers  | -       | 100,000 | 200,000 |
| sold                                 |         |         |         |
+--------------------------------------+---------+---------+---------+
| Other liabilities                    | 2,357   | 7,201   | (       |
|                                      |         |         | 11,728) |
+--------------------------------------+---------+---------+---------+
| Net cash flows from (used in)        | (6      | (       | 11,742  |
| operating activities                 | 38,380) | 73,838) |         |
+--------------------------------------+---------+---------+---------+
| Cash flows from investing activities |         |         |         |
+--------------------------------------+---------+---------+---------+
| Cash received from dividend          | 658     | 1,134   | 1,407   |
+--------------------------------------+---------+---------+---------+
| Cash received from disposal          | 2,770   | 11,248  | 1,478   |
| equipment                            |         |         |         |
+--------------------------------------+---------+---------+---------+
| Cash paid for purchase of equipment  | (       | (3,450) | (       |
|                                      | 10,059) |         | 14,578) |
+--------------------------------------+---------+---------+---------+
| Cash paid for purchase of intangible | (1,782) | (3,326) | (       |
|                                      |         |         | 17,042) |
+--------------------------------------+---------+---------+---------+
| Net cash flows from (used in)        | (8,413) | 5,606   | (       |
| investing activities                 |         |         | 28,735) |
+--------------------------------------+---------+---------+---------+
| Cash flows from financing activities |         |         |         |
+--------------------------------------+---------+---------+---------+
| Increase(decrease) in domestic       | 70,204  | 9,805   | (       |
| borrowing                            |         |         | 10,009) |
+--------------------------------------+---------+---------+---------+
| Dividend payment                     | -       | -       | (       |
|                                      |         |         | 11,817) |
+--------------------------------------+---------+---------+---------+
| Proceed from paid-up share capital   | -       | -       | 19,600  |
| from minority                        |         |         |         |
|                                      |         |         |         |
| shareholders of subsidiary           |         |         |         |
+--------------------------------------+---------+---------+---------+
| Net cash flows from financing        | 70,204  | 9,805   | (2,226) |
| activities                           |         |         |         |
+--------------------------------------+---------+---------+---------+
| Net increase (decrease) in cash and  | (5      | (       | (1,918) |
| cash equivalents                     | 51,098) | 42,645) |         |
+--------------------------------------+---------+---------+---------+
| Cash and cash equivalents at         | 617,774 | 66,676  | 24,031  |
| beginning of the year                |         |         |         |
+--------------------------------------+---------+---------+---------+
| Cash and cash equivalents at the end | 66,676  | 24,031  | 22,113  |
| of the year                          |         |         |         |
+--------------------------------------+---------+---------+---------+

*Remark: For the year 2008, the data was from consolidated financial
statement which was done the first year after having subsidiary company

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

 Unit : Percentage

+------------------------------------+----------+----------+----------+
| Financial Ratios                   | 2006     | 2007     | 2008*    |
+------------------------------------+----------+----------+----------+
| Profitability Ratio                |          |          |          |
+------------------------------------+----------+----------+----------+
| Gross Profit Margin                | 94.37    | 94.24    | 49.90    |
+------------------------------------+----------+----------+----------+
| Net Profit Margin                  | (7.14)   | 5.52     | (29.98)  |
+------------------------------------+----------+----------+----------+
| Return on Equity                   | (1.83)   | 1.45     | (8.00)   |
+------------------------------------+----------+----------+----------+
| Return on Investment               | 18.46    | 9.59     | 4.39     |
+------------------------------------+----------+----------+----------+
| Efficiency Ratio                   |          |          |          |
+------------------------------------+----------+----------+----------+
| Return on Assets                   | (1.48)   | 1.32     | (5.39)   |
+------------------------------------+----------+----------+----------+
| Assets Turnover                    | 0.25     | 0.20     | 0.19     |
+------------------------------------+----------+----------+----------+
| Financial Ratio                    |          |          |          |
+------------------------------------+----------+----------+----------+
| Liquid assets to Loan              | 1.78     | 1.09     | 1.22     |
+------------------------------------+----------+----------+----------+
| Performing assets to Loan          | 15.91    | 15.35    | 17.73    |
+------------------------------------+----------+----------+----------+
| Liquid Assets to Total Assets      | 9.86     | 6.02     | 6.00     |
+------------------------------------+----------+----------+----------+
| Performing Assets to Total Assets  | 88.83    | 87.36    | 86.64    |
+------------------------------------+----------+----------+----------+
| Debt to Equity                     | 0.23     | 0.35     | 0.48     |
+------------------------------------+----------+----------+----------+
| Dividend Payment                   | -        | -        |          |
+------------------------------------+----------+----------+----------+
| Other Ratios                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Net Investment in Securities to    | 27.26    | 24.26    | 48.57    |
| total Assets                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Net Capital Ratio                  | 370.22   | 230.20   | 94.90    |
|                                    |          |          |          |
| (based on SEC’s Net Capital Rules) |          |          |          |
+------------------------------------+----------+----------+----------+

  (2) Management Discussion and Analysis on Consolidated Financial
  Statements

1.  Operation Overview During the Past Year

In 2008, the situation of securities trading in the stock exchange was
highly volatile, which had been influenced by both domestic and
international factors. For example, the financial crisis in USA which
affected the domestic stock exchange, the inconsistency of the world oil
price and Thai political problems which affected the securities business
and resulting to a decline of the Company’s brokerage income from Baht
172 million in 2007 to Baht 145 million in 2008. Nevertheless, the
Company and its subsidiary still have some gain on fees and service
income, gain on trading in securities and interest and dividend income,
which had been escalated from Baht 91 million in 2007 to Baht 112
million in 2008. However, since the allowance for debt and doubtful
accounts was set at Baht 96 million, the Company had a net loss of Baht
76 million.

2.  Operation Results

Incomes

In 2008, the Company’s brokerage incomes dropped by 15.70% compared to
the year 2007, resulting from the decrease in the total securities
trading volume in the stock exchange as a whole and also the dropping of
Company’s trading volume, thus making the Company’s market share
declined from 0.82% in 2007 to 0.75% in 2008. The fees and service
income in 2008 was Baht 19.45 million rose by Baht 6.36 million due to
the increase in advisory fee and interest income on margin loan amounted
Baht 47.051 million in 2008, improved by Baht 2.28 million resulted from
the increase in interest rate on margin loan.

Expenses

Total expenses of the Company and its subsidiary for the year 2008 was
Baht 347.06 million increased from Baht 255.12 million in 2007 or
increased 36.04% due to the allowance for doubtful accounts amounted
Baht 96.17 million. Without the mentioned allowances, the Company and
its subsidiary’s total expense would decrease Baht 4.2 million which was
mainly resulted from the Company’s attempt to reduce expenses.

Net Income (Loss)

Because of the allowance for doubtful accounts set in 2008, the Company
and its subsidiary had operated a net loss of Baht 76.41 million,
comparing to a net profit of Baht 15.05 million in 2007.

3. Financial Status

Total Assets

In 2008, the Company and its subsidiary had total assets of Baht 1,429
million rose by Baht 23 million or 1.64% from the previous year resulted
from 50.9% increase in the investment in securities and 38.4% decrease
in securities business receivables.

Investment in Securities

The Company’s and its subsidiary’s net investment in securities for the
year 2008 was Baht 694.29 million rose by 50.9% from the previous year
and 99.93% and 97.70% of the investment were in short-term debt
securities in 2008 and 2007, respectively.

Net Securities Business Receivables

The net securities business receivables declined from Baht 887.32
million in 2007 to Baht 546.71 million in 2008. Such declining was due
to the decrease in receivables on margin loans by Baht 247.45 million
and the decrease in receivables on cash accounts from Baht 101.55
million in 2007 to Baht 65.28 million in 2008. The receivables on cash
accounts occurred by the overdue settlement later than 3 working days
after trading date and their overdue balances from securities cash
accounts would change in accordance with securities trading value of the
last 3 working days which was the normal changes of securities business
and the bad debts and doubtful accounts increased to Baht 98.24 million
in 2008 or an increase of Baht 96.14 million which resulted from the
debts and doubtful accounts provision policy as mentioned below.

The policy on provision for bad debts and doubtful accounts for
securities business receivables which should be settled within 3 days
was set according to the amount which were expected to be uncollectible
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.

Liquidity

Regarding the liquidity for the year 2008, the Company and its
subsidiary had a net cash flows decreased by Baht 1.92 million resulting
from the use in operating activities by Baht 29.04 million, mostly being
used in the investment in securities by earning more interest in return.
The cash flows from the investment activities dropped by Baht 28.74
million resulting from the investment in computers and the Thailand
Future Exchange member fees while the cash flows from financing
activities dropped by Baht 2.2 million resulting from the dividend
payment, the loan repayment and the receivable from minor shareholders
of the subsidiary.

Sources of Capital

Liabilities

In 2007 and 2008, there were short-term loans of Baht 80.01 million and
Baht 70.00 million, respectively for settlement with the Thailand
Securities Depository Co., Ltd. and for working capital of the firm.
Such borrowing was paid back in full.

The net capital ratio of the Company as at December 31, 2008 was 94.90%
which considerably exceeded the 7% of minimum rate regulated by the SEC.

Shareholders’ Equity

The shareholders’ equity of the Company and its subsidiary for the year
2008 was Baht 955.26 million decreased from Baht 1,043.48 million in
2007 resulting from the net loss from operating results in 2008.

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

The significant factors that may influence the Company’s future
operation and financial status are economic and political stabilities of
Thailand which impact not only on the investment decision of the
investors but also on the stock market as a whole. And while the
competition in securities business is still fierce, all aforementioned
factors may also have considerable influence on profits and financial
status of the company.

The Company has realized on such problems and prepared to expand its
customer base and to invest more in debt instrument in order to earn
sufficient income to continue growing in this business.

(3) Auditor’s Remunerations

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

  3.1 Audit fee: Baht 1,100,000 and the out-of-pocket expenses of Baht
  23,141.

  3.2 Non-audit fee : -None-