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 2005, the Company appointed Ernst & Young Office Limited as
an independent auditor. The auditing team consisted of

Ms. 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

And in the year 2007, 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)

  -------------------------- ----------- -------- ----------- -------- ----------- --------
                             2005                 2006                 2007        

                             Amount      %        Amount      %        Amount      %

  Assets                                                                           

  Cash and cash equivalents  617,774     47.92    66,676      5.27     24,031      1.71

  Long-term deposits at      53,397      4.14     58,008      4.59     63,144      4.49
  financial institutions                                                           

  Investments in debt and    33,503      2.60     344,633     27.26    341,108     24.26
  equity securities, net                                                           

  Receivable from clearing   77,053      5.98     13,626      1.08     45,059      3.20
  house                                                                            

  Securities business        419,602     32.55    713,992     56.48    887,316     63.10
  receivables, net                                                                 

  Premises improvement and   66,227      5.14     42,841      3.39     20,470      1.46
  equipment, net                                                                   

  Intangible assets, net     3,921       0.30     3,997       0.32     5,235       0.37

  Other assets, net          17,674      1.37     20,358      1.61     19,734      1.40

  Total assets               1,289,151   100.00   1,264,131   100.00   1,406,097   100.00

  Liabilities and                                                                  
  Shareholders’ equity                                                             

  Liabilities                                                                      

  Domestic borrowings        -           -        70,204      5.55     80,009      5.69

  Payables to clearing house 6,812       0.53     28,374      2.24     -           -

  Securities business        202,765     15.73    106,227     8.40     138,231     9.83
  payables                                                                         

  Liabilities under          -           -        -           -        99,969      7.11
  commercial paper sold                                                            

  Corporate income tax       -           -        -           -        1,786       0.13
  payable                                                                          

  Accrued expenses           22,635      1.76     24,595      1.95     33,032      2.35

  Provision for liabilities  4,288       0.33     4,381       0.35     8,688       0.62
  from litigation                                                                  

  Liabilities under hire     6,162       0.48     1,707       0.14     160         0.01
  purchase agreement                                                               

  Other liabilities          60          0.00     457         0.04     743         0.05

  Total liabilities          242,722     18.83    235,945     18.67    362,618     25.79

  Shareholders’ equity                                                             

  Issued and paid up capital 844,083     65.48    844,083     66.77    844,083     60.03

  Premium on ordinary shares 53,227      4.13     53,227      4.21     53,227      3.79

  Revaluation deficit on     (994)       (0.08)   (255)       (0.02)   (11)        0.00
  investments                                                                      

  Appropriated – Statutory   15,421      1.19     15,421      1.22     16,173      1.15
  reserve                                                                          

  Unappropriated             134,692     10.45    115,710     9.15     130,007     9.24

  Total shareholders’ equity 1,046,429   81.17    1,028,186   81.33    1,043,479   74.21

  Total liabilities and      1,289,151   100.00   1,264,131   100.00   1,406,097   100.00
  shareholders’ equity                                                             
  -------------------------- ----------- -------- ----------- -------- ----------- --------

Income Statement

  (Unit: Thousand Baht)

  -------------------------- ---------- -------- ---------- -------- --------- --------
                             2005                2006                2007      

                             Amount     %        Amount     %        Amount    %

  Revenues                                                                     

  Brokerage fee from         251,042    85.18    197,219    74.16    171,938   63.06
  securities business                                                          

  Fee and service income     14,611     4.96     9,879      3.72     13,085    4.80

  Gain (Loss) on trading in  (5,155)    (1.75)   6,583      2.48     8,340     3.06
  securities                                                                   

  Interest and dividend      10,009     3.40     28,321     10.65    24,555    9.01

  Interest on margin loans   23,465     7.96     21,500     8.08     44,770    16.42

  Other income               734        0.25     2,425      0.91     9,990     3.65

  Total Revenue              294,706    100.00   265,927    100.00   272,678   100.00

  Expenses                                                                     

  Expenses on borrowings     1,580      0.54     1,130      0.43     6,581     2.41

  Fee and service expenses   15,322     5.20     13,701     5.15     12,617    4.63

  Bad debts and doubtful     7,223      2.45     17         0.01     (4,062)   (1.49)
  accounts (Reversal)                                                          

  Share loss from investment 5,798      1.97     -          -        -         -
  in subsidiaries                                                              

  Loss on disposal of        790        0.27     -          -        -         -
  subsidiaries                                                                 

  Operating expenses                                                           

  Personnel expenses         171,405    58.16    168,103    63.21    153,970   56.47

  Premises and equipment     80,607     27.35    76,640     28.82    60,816    22.30
  expenses                                                                     

  Tax and duties             1,157      0.39     1,794      0.67     2,598     0.95

  Directors’ remuneration    4,005      1.36     2,815      1.06     2,975     1.09

  Provision for liabilities  1,382      0.47     92         0.03     4,307     1.58
  from litigation                                                              

  Other expenses             21,719     7.37     20,617     7.75     15,317    5.62

  Total expenses             310,988    105.52   284,909    107.14   255,119   93.56

  Income (Loss) before       (16,282)   (5.52)   (18,982)   (7.14)   17,559    6.44
  income tax                                                                   

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

  Net income (Loss) for the  (16,282)   (5.52)   (18,982)   (7.14)   15,049    5.52
  year                                                                         

  Basic earnings per share                                                     

  Net income (Loss) (Baht    (0.12)     -        (0.11)     -        0.09      -
  per share)                                                                   

  Weighted average number of 135,863             168,817             168,817   
  ordinary shares (Thousand                                                    
  shares)                                                                      
  -------------------------- ---------- -------- ---------- -------- --------- --------

Cash flow statements

  (Unit: Thousand Baht)

  -------------------------------------- ---------- ----------- -----------
                                         2005       2006        2007

  Cash flows from operating activities                          

  Net income (Loss)                      (16,282)   (18,982)    15,049

  Adjustments to reconcile net income                           
  (loss) to net cash                                            

  provided by (paid for) operating       44,508     19,128      6,967
  activities;-                                                  

  Decrease (increase) in operating                              
  assets                                                        

  Long-term deposit at financial         (51)       (4,611)     (5,136)
  institutions                                                  

  Current investment                     9,812      (301,484)   16,376

  Receivable from clearing house         (60,448)   63,427      (31,433)

  Securities business receivables        248,131    (294,406)   (169,262)

  Other assets                           3,953      (2,684)     624

  Increase (Decrease) in operating                              
  liabilities                                                   

  Payable to clearing house              6,493      21,562      (28,374)

  Securities business payables           74,166     (96,538)    32,004

  Liabilities under commercial papers    -          -           97,301
  sold                                                          

  Other liabilities                      (32,616)   2,357       8,962

  Net cash flows from (used in)          277,666    (612,231)   (56,922)
  operating activities                                          

  Cash flows from investing activities                          

  Cash received from disposal investment 16,380     -           -
  in subsidiaries                                               

  Dividend received from subsidiaries    8,000      -           -

  Cash received from disposal equipment  1,600      2,770       11,248

  Cash paid for purchase of equipment    (54,170)   (10,059)    (3,450)

  Cash paid for purchase of intangible   (2,014)    (1,782)     (3,326)

  Net cash flows from (used in)          (30,204)   (9,071)     4,472
  investing activities                                          

  Cash flows from financing activities                          

  Increase in domestic borrowing         -          70,204      9,805

  Dividend payment                       (49,718)   -           -

  Cash received from Warrants            225,557    -           -

  Net cash flows from financing          175,839    70,204      9,805
  activities                                                    

  Net increase (decrease) in cash and    423,301    (551,098)   (42,645)
  cash equivalents                                              

  Cash and cash equivalents at beginning 194,473    617,774     66,676
  of the year                                                   

  Cash and cash equivalents at the end   617,774    66,676      24,031
  of the year                                                   
  -------------------------------------- ---------- ----------- -----------

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

 Unit : Percentage

+------------------------------------+----------+----------+----------+
| Financial Ratios                   | 2005     | 2006     | 2007     |
+------------------------------------+----------+----------+----------+
| Profitability Ratio                |          |          |          |
+------------------------------------+----------+----------+----------+
| Gross Profit Margin                | 91.79    | 94.37    | 94.24    |
+------------------------------------+----------+----------+----------+
| Net Profit Margin                  | (5.52)   | (7.14)   | 5.52     |
+------------------------------------+----------+----------+----------+
| Return on Equity                   | (1.68)   | (1.83)   | 1.45     |
+------------------------------------+----------+----------+----------+
| Return on Investment               | 12.60    | 18.46    | 9.59     |
+------------------------------------+----------+----------+----------+
| Efficiency Ratio                   |          |          |          |
+------------------------------------+----------+----------+----------+
| Return on Assets                   | (1.38)   | (1.48)   | 1.32     |
+------------------------------------+----------+----------+----------+
| Assets Turnover                    | 0.21     | 0.25     | 0.20     |
+------------------------------------+----------+----------+----------+
| Financial Ratio                    |          |          |          |
+------------------------------------+----------+----------+----------+
| Liquid assets to Loan              | -        | 1.78     | 1.09     |
+------------------------------------+----------+----------+----------+
| Performing assets to Loan          | -        | 15.91    | 15.35    |
+------------------------------------+----------+----------+----------+
| Liquid Assets to Total Assets      | 52.06    | 9.86     | 6.02     |
+------------------------------------+----------+----------+----------+
| Performing Assets to Total Assets  | 39.29    | 88.83    | 87.36    |
+------------------------------------+----------+----------+----------+
| Debt to Equity                     | 0.23     | 0.23     | 0.35     |
+------------------------------------+----------+----------+----------+
| Dividend Payment                   | -        | -        | -        |
+------------------------------------+----------+----------+----------+
| Other Ratios                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Net Investment in Securities to    | 2.60     | 27.26    | 24.26    |
| total Assets                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Net Capital Ratio                  | 491.01   | 370.22   | 230.20   |
|                                    |          |          |          |
| (based on 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 197 million in 2006 to Baht 172 million last year
resulting from reduction of its branches from 12 branches in 2006 to 3
branches in 2007. In addition, fees and service income, gain on trading
in securities including interest incomes and dividends increased from
Baht 66 million in 2006 to Baht 91 million in 2007 resulting from the
closing of its branches made its expenses decreased. Consequently, the
Company’s operating results, earned a net profit of Baht 15.05 million
in 2007 while suffered a net loss of Bath 18.98 million in 2006.

2.  Operation Results

Incomes

In 2007 the Company’s brokerage incomes decreased by 12.82 per cent in
2007 compared to the previous year resulting from the closing of
branches and the reduction of its securities trading value but trading
situation in the stock exchange in general increased which caused the
Company’s market share declined by 0.81 per cent in 2007 from 0.99 per
cent in 2006. The fees and service income in 2007 was Baht 13.08 million
rose by Baht 3.21 million due to the increase in advisory fee and
interest on margin loan incomes amounting to Bath 44.77 million in 2007
rose by Baht 23.27 million resulting from the increase in interest rate
on margin loans and the high volume of margin loans.

Expenses

The Company’s total expenses for the year 2007 was Baht 255.12 decreased
from Baht 284.91 million in 2006 or 10.46 per cent due to the closing of
9 branches during 2007 and also the reduction of brokerage fees which
effected the personnel expenses and incentive reduced from Baht 168.1
million in 2006 to Baht 154.0 million in 2007. Besides, the premises and
equipment expenses decreased from Baht 76.6 million in 2006 to Baht 60.8
million in 2007 and other expenses declined according to the reduction
of branches as well.

Net Income (Loss) 

As the Company attempted to reduce expenses to be suitable for its
incomes, the Company’s operating results in 2007 had a net income of
Bath 15.05 million while in 2006 it had a net loss of Baht 18.98
million.

  3. Financial Status

Total Assets

In 2006, the Company had total assets of Baht 1,406 million rose by Baht
141.97 million or 11.23 per cent from the previous year as a result of
the rise in securities business receivables from Baht 713.99 million in
2006 to Baht 887.32 million or increased by Baht 173.33 million or 24.28
per cent.

Investment in Securities

The Company’ net investment in securities for the year 2007 was Baht
341.11 million which was quite similar to 2006. It was mainly 97.70 per
cent and 97.73 per cent of the investment in short-term debt securities
in 2007 and 2006, respectively.

Net Securities Business Receivables

The net securities business receivables increased from Baht 713.99
million in 2006 to Baht 887.32 million in 2007. Most receivables were
arisen from the increase in receivables of margin loans rose by Baht
164.77 million. For the remaining securities business receivables of
Baht 101.55 million in 2007 and Baht 92.19 million in 2006 were the
receivables of overdue cash accounts in which settlement must be made
within 3 working days after trading date and the balances of receivables
of overdue cash accounts would change in accordance with securities
trading value of the last 3 working days which was the normal change of
securities business.

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.

Liquidity

Regarding the liquidity for the year 2007, the net cash flows decreased
by Baht 42.65 million as a result of operating activities by Baht 56.92
million, mostly being used in margin loans (credit balance), and earning
more return of interest. The cash flows from the investment activities
rose by Baht 4.45 million resulting from selling of the closed branches’
assets while the cash flows from financing activities rose by Baht 9.8
million resulting from the rise in short-term loans for settlement with
the Thailand Securities Depository Co., Ltd.

Sources of Capital

Liabilities

There was no borrowing in 2005. However, in 2006 and 2007 the Company
had short-term loans of Baht 70.20 million and Baht 80.01 million,
respectively for settlement with the Thailand Securities Depository Co.,
Ltd. and such borrowing amount had been paid in full.

The net capital ratio of the Company as at December 31, 2007 was 230.20%
which considerably exceeded the 7% of minimum rate regulated by the SEC.

Shareholders’ Equity

The shareholders’ equity of the Company for the year 2007 was Baht
1,043.48 million increased from Baht 1,028.19 million in 2006 as a
result of the net profit from operating results in 2007.

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 700,000.

3.2 Non-audit fee : The Company paid the total of Baht 17,649.