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 2002, 2003, and 2004, the company has appointed Ernst &
Young Office Limited as an independent auditor. The auditing team
consists 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                   | 2001   | 2002   | 2003   | 2004   |
+--------------------------------+--------+--------+--------+--------+
| Financial Status               |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Cash and cash equivalents      | 74,9   | 228,1  | 309,0  | 198,8  |
|                                | 62,758 | 02,294 | 65,845 | 62,468 |
+--------------------------------+--------+--------+--------+--------+
| Long-term deposits at          | 14,2   | 24,2   | 39,2   | 64,5   |
| financial institutions         | 64,040 | 64,000 | 64,080 | 46,388 |
+--------------------------------+--------+--------+--------+--------+
| Net investment on securities   | 106,5  | 207,6  | 276,8  | 43,5   |
|                                | 15,086 | 95,233 | 84,137 | 54,908 |
+--------------------------------+--------+--------+--------+--------+
| Trading transact               | 79,3   | 25,1   | 16,5   | 16,6   |
| ions with securities companies | 33,002 | 00,775 | 50,374 | 05,531 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business            | 187,6  | 563,1  | 1      | 680,8  |
| Receivables and Accrued        | 54,620 | 43,106 | ,045,4 | 62,117 |
| Interest Receivables           |        |        | 71,236 |        |
+--------------------------------+--------+--------+--------+--------+
| A                              | (93,55 | (25,87 | (23,20 | (5,22  |
| llowance for Doubtful Accounts | 8,083) | 2,263) | 6,676) | 5,357) |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business        | 94,0   | 537,2  | 1,0    | 675,6  |
| Receivable and Accrued         | 96,537 | 70,843 | 22,560 | 36,760 |
| Interest Receivables           |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Total Assets                   | 414,8  | 1      | 1      | 1      |
|                                | 33,533 | ,097,9 | ,731,1 | ,075,9 |
|                                |        | 16,079 | 83,838 | 69,044 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Payable    | 174,5  | 418,0  | 694,9  | 128,5  |
|                                | 64,858 | 66,862 | 81,465 | 98,657 |
+--------------------------------+--------+--------+--------+--------+
| Total Liabilities              | 184,4  | 479,5  | 853,1  | 188,7  |
|                                | 74,532 | 59,096 | 74,749 | 14,045 |
+--------------------------------+--------+--------+--------+--------+
| Paid-up shares capital         | 304,3  | 537,0  | 580,6  | 618,5  |
|                                | 73,570 | 07,480 | 06,380 | 26,880 |
+--------------------------------+--------+--------+--------+--------+
| Retained earning (loss)        | (54,33 | 30,0   | 234,8  | 200,6  |
|                                | 1,524) | 49,035 | 50,248 | 91,863 |
+--------------------------------+--------+--------+--------+--------+
| Shareholders Equity            | 230,3  | 618,3  | 878,0  | 887,2  |
|                                | 59,001 | 56,983 | 09,089 | 54,999 |
+--------------------------------+--------+--------+--------+--------+
| Operation Results              |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Income     | 104,5  | 313,7  | 624,9  | 397,2  |
|                                | 32,246 | 10,325 | 99,321 | 60,957 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Expenses   | 5      | 1,9    | 3,8    | 4,2    |
|                                | 91,522 | 84,594 | 59,195 | 41,879 |
+--------------------------------+--------+--------+--------+--------+
| Bad debt and doubtful accounts | (50    | (2,54  | 7      | 6,3    |
|                                | 0,505) | 9,540) | 00,000 | 18,350 |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business Income | 103,4  | 309,1  | 621,8  | 399,3  |
| after bad debts and doubtful   | 40,219 | 76,191 | 40,126 | 36,428 |
| accounts                       |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Other Income                   | 6,8    | 1,0    | 8      | 5      |
|                                | 15,806 | 28,075 | 87,766 | 42,809 |
+--------------------------------+--------+--------+--------+--------+
| Operating Expenses             | 117,6  | 221,4  | 359,7  | 318,1  |
|                                | 93,118 | 70,055 | 98,935 | 74,379 |
+--------------------------------+--------+--------+--------+--------+
| Net Profit (Loss)              | (9,13  | 85,9   | 215,5  | 61,2   |
|                                | 5,265) | 62,087 | 80,224 | 01,945 |
+--------------------------------+--------+--------+--------+--------+
| Basic Earnings (Loss) per      | (0.16) | 0.97   | 1.98   | 0.50   |
| share                          |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
|                                |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+

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

 Unit : Percentage

+--------------+----+----+-------+----+----+-------+-------+-------+
|              | F  |    |       | 20 |    | 2002  | 2003  | 2004  |
|              | in |    |       | 01 |    |       |       |       |
|              | an |    |       |    |    |       |       |       |
|              | ci |    |       |    |    |       |       |       |
|              | al |    |       |    |    |       |       |       |
|              | R  |    |       |    |    |       |       |       |
|              | at |    |       |    |    |       |       |       |
|              | io |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Profita      |    |    |       |    |    |       |       |       |
| bility Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Gross Profit |    |    |       | 9  |    | 99.36 | 99.27 | 98.93 |
| Margin       |    |    |       | 9. |    |       |       |       |
|              |    |    |       | 43 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Profit   |    |    |       | (8 |    | 27.40 | 34.49 | 15.41 |
| Margin       |    |    |       | .2 |    |       |       |       |
|              |    |    |       | 0) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | (4 |    | 20.23 | 28.81 | 6.93  |
| Equity       |    |    |       | .1 |    |       |       |       |
|              |    |    |       | 2) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    | .  |       | 4. |    | 4.21  | 15.62 | (     |
| Investment   |    |    |       | 97 |    |       |       | 4.10) |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Effic        |    |    |       |    |    |       |       |       |
| iency Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | (2 |    | 11.37 | 15.24 | 4.39  |
| Assets       |    |    |       | .3 |    |       |       |       |
|              |    |    |       | 9) |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Fina         |    |    |       |    |    |       |       |       |
| ncial Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | 4  | 71.93 | 36.11 | 22.04 |
| Assets to    |    |    |       |    | 7. |       |       |       |
| Total Assets |    |    |       |    | 19 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | 5  | 82.44 | 78.65 | 70.55 |
| Assets to    |    |    |       |    | 5. |       |       |       |
| Total Assets |    |    |       |    | 59 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Debt to      |    |    |       |    | 0. | 0.77  | 0.97  | 0.21  |
| Equity Ratio |    |    |       |    | 80 |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Other Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net          |    |    |       |    | 2  | 18.91 | 15.99 | 4.04  |
| Investment   |    |    |       |    | 5. |       |       |       |
| in           |    |    |       |    | 68 |       |       |       |
| Securities   |    |    |       |    |    |       |       |       |
| to total     |    |    |       |    |    |       |       |       |
| Assets Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Liquid   |    |    |       |    | 11 | 1     | 1     | 5     |
| Capital to   |    |    |       |    | 2. | 33.85 | 45.90 | 10.85 |
| Total        |    |    |       |    | 27 |       |       |       |
| Liabilities  |    |    |       |    |    |       |       |       |
|              |    |    |       |    |    |       |       |       |
| (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, brokerage fee remained fixed. Together with a
fiercer competition in the securities business, the Company’s brokerage
incomes subsequently declined from Baht 498 million in 2003 to Baht 334
million last year. However, the Company still enjoyed incomes from other
fees and services, interest incomes and dividends despite suffering loss
from the securities trading. This resulted in its declining profit from
Baht 215.5 million in 2003 to Baht 61.2 million a year later.

2.  Operation Results

Incomes from Securities Business

In 2003, the Company recorded a jump in its incomes from all businesses
when compared to the previous year ranging from Baht 498 million in
brokerage income, Baht 62 million from service fees, Baht 43 million
from capital gains, and Baht 20 million from interests, dividends and
lending interests. As a result, the Company’s incomes from its
securities business increased to as high as Baht 624 million or a rise
by 99 per cent from the previous year. However, in 2004, its brokerage
income was down to Baht 334 million; its service fee was Baht 57.7
million; it suffered Baht 16.1 million loss from securities trading,
while interest, dividend and lending rates generated a total of Baht
20.2 million worth of revenue. In all, the Company’s incomes from
securities business totaled Baht 397 million or a 36-per cent decline
from 2003.

Expenses in Securities Business

Expenses in the securities business which consist of borrowing expenses
and service fees remained low as usual since the Company had neither
liabilities nor loans. At the same time, service fee expenses were
mainly based on trading volumes in 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 2003, there was a reverse of the Accounts of about 700,000 Baht
because of debt payment by debtors. In 2004, there was a reverse of bad
debts as high as 6.31 million Baht while there was no increase in bad
debts and doubtful accounts.

Operating Expenses

In 2004, operating expenses fell as staff expenses, marketing expenses
and director’s remunerations fell. The total operating expenses were
Baht 318 million or a 11-per cent decline from 2003.

Net Profit(Loss)

As a high proportion of the Company’s incomes was derived from its
securities brokerage business, although it had a policy to expand into
other businesses such as financial advisory, debt instrument trading and
debt instrument investment, this still dragged the Company’s securities
brokerage income down and therefore caused its profit to also fall from
Baht 215 million in 2003 to Baht 61 million in 2004, or a 71-per cent
decline year-on-year.

  3. Financial Status

Total Assets

Total assets had tended to increase starting from 2001, when it was at
Baht 414.83 million before rising to Baht 1,097.91 million in 2002,
peaked in 2003 at Baht 1,731 million and fell last year due to a decline
of securities investment. In 2004, the Company recorded a total asset of
Baht 1,075 million where it was still able to maintain cash flow and
investment fund at an appropriate and controlled level.

Investment in Securities

Investment in securities in 2003 totaled Baht 276 million, most of which
were short-term investments worth Baht 166 million, securities for
trading purpose worth Baht 85.5 million, securities for selling purpose
worth Baht 181.3 million and long-term securities investment worth
another Baht 10 million. In 2004, however, the Company reduced its
investment in securities where net temporary investment was Baht 35.7
million and net long-term investment was at Baht 7.8 million

Securities Business Receivables and Accrued Interest Receivables

Securities Business Receivables and Accrued Interest Receivables had
dropped from 1,045 million Baht in the year 2003 to 680 million Baht in
2004. 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 2004 decreased 88 million Baht resulted
from operations for 9 million Baht, cash received from converted
warrants to ordinary shares 38 million Baht and dividend payment of 92
million Baht while cash investment was about 25 million Baht.

Sources of Capital

In 2004. the Company had raised its capital for about 38 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, 2004 was 510.85%
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 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
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 Bt 530,000

  United Advisory Services Co., Ltd. paid Bt 100,000

  Siam Chaisri Co., Ltd. paid Bt 60,000

3.2 Non-audit fee : was amounted to Bt 2,413