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<SEC-DOCUMENT>0001116502-04-002703.txt : 20041115
<SEC-HEADER>0001116502-04-002703.hdr.sgml : 20041115
<ACCEPTANCE-DATETIME>20041115165407
ACCESSION NUMBER:		0001116502-04-002703
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20040930
FILED AS OF DATE:		20041115
DATE AS OF CHANGE:		20041115

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHINA RESOURCES DEVELOPMENT INC
		CENTRAL INDEX KEY:			0000793628
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-ADVERTISING [7310]
		IRS NUMBER:				870263643
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26046
		FILM NUMBER:		041146256

	BUSINESS ADDRESS:	
		STREET 1:		ROOM 2105 WEST TOWER SHUN TAK CENTRE
		STREET 2:		200 CONNAUGHT ROAD C
		CITY:			SHEUNG WAN
		STATE:			K3
		ZIP:			-
		BUSINESS PHONE:		01185228107205

	MAIL ADDRESS:	
		STREET 1:		ROOM 2105 WEST TOWER SHUN TAK CENTRE
		STREET 2:		200 CONNAUGHT ROAD C
		CITY:			SHEUNG WAN HONG KONG
		STATE:			K3
		ZIP:			-

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MAGENTA CORP
		DATE OF NAME CHANGE:	19940217
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>crdi10qsbsep04.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
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<TITLE>53779 -- China Resources -- 10QSB</TITLE>
<META NAME="author" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="date" CONTENT="11/11/2004">
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>Washington, D.C. 20549</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align=center><B>FORM 10-QSB</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Wingdings">&#253;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:27pt; width:459pt; font-family:Times New Roman">For the quarter period ended <B>September 30, 2004</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Wingdings">&#168;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:27pt; width:459pt; font-family:Times New Roman">For the transition period from ___________ to _____________</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; line-height:18pt; font-family:Times New Roman; font-size:16pt" align=center><B>CHINA RESOURCES DEVELOPMENT, INC.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>(Exact Name of registrant as Specified in Charter)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=center><B>Nevada</B></P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=center><B>0-26046</B></P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=center><B>87-263643</B></P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>(State&nbsp;or&nbsp;Other&nbsp;Jurisdiction</P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>of&nbsp;Incorporation)</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>(Commission</P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>File&nbsp;Number)</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>(I.R.S.&nbsp;Employer</P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>Identification&nbsp;No.)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>Room 2105, West Tower, Shun Tak Centre,</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>200 Connaught Road C., Sheung Wan, Hong Kong</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>Telephone: 011-852-2810-7205</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>(Address and telephone number of</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>principal executive offices)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>Yes&nbsp;<FONT FACE="Wingdings">&#253;</FONT>&nbsp;&nbsp;No&nbsp;<FONT FACE="Wingdings">&#168;</FONT></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of the latest practicable date: 1,247,823 shares of common stock, $0.001 par value, as of November 15, 2004.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:CG Times"><BR></P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>Forward-Looking Statements</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">This report contains statements that constitute forward-looking statements. Those statements appear in a number of places in this report and include, without limitation, statements regarding the intent, belief and current expectations of the Company, its directors or its officers with respect to the Company's policies regarding investments, dispositions, financings, conflicts of interest and other matters; and trends affecting the Company's financial condition or results of operations. Any such forward-looking statement is not a guarantee of future performance and involves risks and uncertainties, and actual results may differ materially from those in the forward-looking statement as a result of various factors. The accompanying information contained in this report, including without limitation the information set forth above and the information set forth under the heading, &#147;Manag
ement's Discussion and Analysis or Plan of Operation,&#148; identifies important factors that could cause such differences. With respect to any such forward-looking statement that includes a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; width:486pt; font-family:Times New Roman" align=center><B>PART I &#150; FINANCIAL INFORMATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; width:486pt; font-family:Times New Roman"><B>ITEM 1.&nbsp;&nbsp;&nbsp;FINANCIAL STATEMENTS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; width:486pt; font-family:Times New Roman" align=center><B>CHINA RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>(LOSS) (UNAUDITED)</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; width:486pt; font-family:Times New Roman" align=center>(Amounts in thousands, except share and per share data)</P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom colspan=7><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Three&nbsp;Months&nbsp;Ended&nbsp;September&nbsp;30,</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom colspan=7><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Nine&nbsp;Months&nbsp;Ended&nbsp;September&nbsp;30,</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>US$</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>US$</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right>&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">NET SALES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>435</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>853</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>53</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,077</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,297</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>130</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">COST OF SALES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(352</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(761</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(43</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(727</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,205</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(88</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">GROSS PROFIT</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>83</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>92</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>10</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>350</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>92</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>42</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">DEPRECIATION</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(65</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(60</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(8</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(187</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(128</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(22</P>
</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">SELLING, GENERAL AND</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; text-indent:8pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">ADMINISTRATIVE EXPENSES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,988</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(16,036</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(240</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(5,405</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(24,834</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(653</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">INTEREST INCOME</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>86</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>32</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>345</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>4</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">OTHER INCOME, NET</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>2</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,084</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>3,220</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,153</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>389</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">LOSS FROM</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;CONTINUING OPERATIONS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,967</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(14,834</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(238</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,990</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(23,372</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(240</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin-top:3.75pt; margin-bottom:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">DISCONTINUED OPERATIONS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">Loss from operations of discontinued</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;supermarket segment and</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;Xubu operations</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,202</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(2,210</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">NET LOSS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,967</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(16,036</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(238</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,990</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(25,582</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(240</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">Other comprehensive income (loss):</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;Foreign currency translation</P>
<P style="margin:0pt; text-indent:9pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;adjustments</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>2</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(4</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt"><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(2</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt"><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(4</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt"><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=right><BR></P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">COMPREHENSIVE LOSS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,965</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(16,040</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(238</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1,992</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(25,586</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(240</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">LOSS PER SHARE:</P>
<P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;basic and diluted</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;Continuing operations</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1.59</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(14.40</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(0.19</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1.69</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(25.89</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(0.20</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;Discontinued operations</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1.16)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(2.45)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1.59</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(15.56</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(0.19</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(1.69</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(28.34</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>(0.20</P>
</TD><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">WEIGHTED AVERAGE NUMBER </P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">&nbsp;OF SHARES OUTSTANDING</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,239,910</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,030,345</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,239,910</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,176,204</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>902,702</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=right>1,176,204</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:3.35pt; margin-right:126pt; margin-bottom:3.35pt; width:486pt; font-family:Times New Roman; font-size:9pt" align=center>See notes to condensed consolidated financial statements.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>3</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:4.15pt; margin-right:126pt; margin-bottom:4.15pt; width:486pt; font-family:Times New Roman" align=center><B>CHINA RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CONDENSED CONSOLIDATED BALANCE SHEETS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; width:486pt; font-family:Times New Roman" align=center>(Amounts in thousands, except share and per share data)</P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>December&nbsp;31,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>US$</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Notes</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>(Unaudited)</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>(Note)</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>(Unaudited)</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">ASSETS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt" align=center>&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">CURRENT ASSETS:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Cash and cash equivalents</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>13,584</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>10,472</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,641</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Trading securities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>54</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>598</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>7</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Trade receivables</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>247</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>722</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>30</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Other receivables, deposits and prepayments</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>267</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>182</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>32</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Short term loans receivable</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>583</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,060</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>70</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Assets held for sale</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=center>4</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2,088</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL CURRENT ASSETS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>14,735</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>15,122</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,780</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">PROPERTY AND EQUIPMENT</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=center>5</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,188</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,266</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>143</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">INVESTMENTS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>44,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>44,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>5,314</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">GOODWILL</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>6,296</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>6,296</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>760</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL ASSETS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>66,219</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>66,684</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>7,997</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">LIABILITIES AND SHAREHOLDERS&#146; EQUITY</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">CURRENT LIABILITIES:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Accounts payable</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>156</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>467</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>19</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Other payables and accrued liabilities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=center>6</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2,089</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2,641</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>252</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Amount due to an officer</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>1,603</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Current portion of capital lease</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>177</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>151</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>21</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Amounts due to related companies</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>296</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>296</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>36</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Liabilities related to assets held for sale</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=center>4</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>857</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL CURRENT LIABILITIES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2,718</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>6,015</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>328</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">Capital lease, net of current portion</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>254</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>321</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>31</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL LIABILITIES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2,972</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>6,336</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>359</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">SHAREHOLDERS&#146; EQUITY</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Preferred stock, authorized -</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;10,000,000 shares</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series B preferred stock, US$0.001 par value: </P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Authorized - 320,000 shares</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issued and outstanding &#150; 320,000 shares</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in 2004 and 2003</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>3</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>3</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;Common stock, US$0.001 par value:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;Authorized &#150; 200,000,000 shares</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;Issued and outstanding &#150; 1,247,823 and 1,143,823</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares in 2004 and 2003</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>10</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>9</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>2</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">Additional paid-in capital</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>186,571</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>181,681</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>22,532</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">Reserves</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>28,028</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>28,028</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>3,385</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">Accumulated deficit</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>(151,519</P>
</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>(149,529</P>
</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>(18,299</P>
</TD><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">Accumulated other comprehensive income</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>154</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>156</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>18</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL SHAREHOLDERS&#146; EQUITY</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>63,247</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>60,348</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>7,638</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin-top:2.15pt; margin-bottom:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">TOTAL LIABILITIES AND SHAREHOLDERS&#146;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt">&nbsp;&nbsp;EQUITY</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>66,219</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>66,684</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; line-height:10.5pt; font-family:Times New Roman; font-size:8.5pt" align=right>7,997</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:2.25pt; margin-right:126pt; margin-bottom:1.5pt; width:486pt; line-height:11pt; font-family:Times New Roman; font-size:9pt">Note: The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align=center>See notes to condensed consolidated financial statements.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>4</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CHINA RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>(Amounts in thousands)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom colspan=7><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Nine&nbsp;months&nbsp;ended&nbsp;September&nbsp;30,</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>US$</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net cash (used in)/provided by operating activities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(4,332</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,515</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(523</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">INVESTING ACTIVITIES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Purchases of property and equipment</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(25</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(418</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(3</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Proceeds from disposal of property and equipment</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>151</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Repayment of short term loans from third parties</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>2,703</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>159</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>326</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net cash provided by (used in) investing activities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>2,678</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(108</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>323</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">FINANCING ACTIVITIES</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Proceeds from issuance of common stock</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>4,891</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>6,637</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>591</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Repayment of principal of capital leases</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(125</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(118</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(15</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net cash provided by financing activities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>4,766</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>6,519</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>576</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net cash used in discontinued operations</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>61</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">NET INCREASE IN CASH AND CASH </P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;EQUIVALENTS</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>3,112</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>7,987</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>376</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Cash and cash equivalents, at beginning of period</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>10,472</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>4,082</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,265</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Cash and cash equivalents, at end of period</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>13,584</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>12,069</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,641</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Non-cash investing activities:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Property and equipment acquired by capital lease</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>84</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>637</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>10</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Business acquisition:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Fair value of assets acquired</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>6,197</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Liabilities assumed</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(203</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Common stock issued</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>5,994</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>See notes to condensed consolidated financial statements.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>5</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CHINA RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>(Amounts in thousands, except share and per share data)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>1.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>BASIS OF PRESENTATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2004, are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company&#146;s annual report on Form 10-KSB for the year ended December 31, 2003.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">For the convenience of the reader, amounts in Renminbi (&#147;RMB&#148;) have been translated into United States dollars (&#147;US$&#148;) at the rate of US$1.00 = RMB8.28 quoted by the People&#146;s Bank of China as at September 30, 2004. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Certain comparative amounts have been reclassified to conform with the current period classifications.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>2.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>ORGANIZATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">In September 2004, the Company entered into an Agreement and Plan of Merger (the &#147;Merger Agreement&#148;) with its wholly-owned subsidiary, Billion Luck Company, Inc. (&#147;Billion Luck&#148;), a British Virgin Islands (&#147;BVI&#148;) corporation. Upon completion of the merger, expected to be in late November 2004, the Company will merge with and into Billion Luck and will cease existence as a Nevada corporation and become a BVI corporation.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>3.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>STOCK BASED COMPENSATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">On May 19, 2004, the Company granted options to certain employees and officers to purchase an aggregate of 104,000 shares for RMB47.03 (US$5.68) per share, which was the market price at the grant date. On July 8, 2004, options to purchase 104,000 shares of the Company&#146;s Common Stock for RMB47.03 (US$5.68) per share were exercised, and the Company issued 104,000 shares for RMB4,891 (US$591).</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The Company applies APB Opinion No. 25, &#147;Accounting for Stock Issued to Employees,&#148; and related Interpretations in accounting for its stock-based employee compensation plans. Accordingly, no compensation expense has been recognized for options granted to employees at fair market value. The following table illustrates the effect on net income/(loss) and income/(loss) per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation to its stock-based employee plans.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>6</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Three&nbsp;Months</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Nine&nbsp;Months</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top colspan=4><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Ended&nbsp;September&nbsp;30,&nbsp;2004</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net loss, as reported</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,967</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,990</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Deduct: Total stock-based employee</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;compensation expense determined</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;under fair value based method</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(946</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Pro forma net income/(loss)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,967</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(2,936</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Loss per share:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Basic and diluted - as reported</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1.59</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1.69</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Basic and diluted &#150; pro forma</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1.59</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(2.50</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
</TABLE>
<P style="margin-top:5pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The fair value for these options was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 0.96%; no dividend yield; volatility factor of the expected market price of the Company&#146;s common stock of 109.10%; and the life of the options of 2 months. There was no stock based compensation in 2003.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>4.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>DISPOSITION OF ASSETS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">On February 10, 2004, the Registrant&#146;s wholly-owned subsidiary, Hainan Cihui Industrial Co. Ltd. (&#147;HARC&#148;), disposed of its 100% equity interest in Shenzhen Xubu Investment Co. Ltd. (&#147;Xubu&#148;) to an unaffiliated third party for total consideration of RMB17,256 (US$2,084) (the &#147;Purchase Consideration&#148;). &nbsp;The Purchase Consideration was offset by capital in the amount of RMB16,026 (US$1,935) that had been withdrawn from Xubu by HARC. The net Purchase Consideration of RMB1,231 (US$149) was received by the Company on May 5, 2004. The assets and liabilities of Xubu have been classified as held for sale as of December 31, 2003 and consisted of fixed assets of RMB1,102 (US$133), cash of RMB812 (US$98), other receivables of RMB174 (US$21) and other payables of RMB857 (US$103). The results of operations of Xubu have been retroactively restated as discontinue
d operations. Revenues from discontinued Xubu operations were nil for the three months and nine months ended September 30, 2004 and 2003. Losses before income taxes from discontinued operations were nil and RMB2,210 (US$267) for the nine months ended September 30, 2004 and 2003, respectively. Losses before income taxes from discontinued operations were nil and RMB1,202 (US$145) for the three months ended September 30, 2004 and 2003, respectively.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><B>5.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><B>PROPERTY AND EQUIPMENT</B></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B><U>2004</U></B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>December&nbsp;31,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B><U>2003</U></B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">At cost:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Buildings</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>509</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>509</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;Machinery, equipment and motor vehicles</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,155</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,050</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,664</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,559</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Accumulated depreciation</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(476</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(293</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,188</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,266</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:5pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">As at September 30, 2004, property and equipment included two leased motor vehicles with cost and accumulated depreciation of RMB1,064 (US$129) and RMB351 (US$42), respectively.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>7</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>6.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:3.35pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>OTHER PAYABLES AND ACCRUED LIABILITIES</B></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>December&nbsp;31,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Other payables</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,401</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,668</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Accrued liabilities</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>688</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>973</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>2,089</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>2,641</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:3.35pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>7.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; text-indent:35.45pt; width:486pt; font-family:Times New Roman"><B>TRADING SECURITIES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><B></B>Included in other income/(expenses) for the nine months ended September 30, 2004 and 2003 are unrealized losses on trading securities of nil and RMB50 (US$6), respectively. Included in other income/(expenses) for the three months ended September 30, 2004 and 2003 are unrealized losses on trading securities of nil and RMB748 (US$90), respectively.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; width:486pt; font-family:Times New Roman"><B>8.</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:3.35pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><B>SEGMENT FINANCIAL INFORMATION</B></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom colspan=4><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Three&nbsp;months&nbsp;ended</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom colspan=4><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Nine&nbsp;months&nbsp;ended</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-top:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Net&nbsp;sales:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Advertising:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:20pt; font-family:Times New Roman">Net sales to unaffiliated customers</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>284</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>239</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>926</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>239</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Copper:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:20pt; font-family:Times New Roman">Net sales to unaffiliated customers</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>151</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>614</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>151</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1,058</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Total consolidated net sales</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>435</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>853</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>1,077</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>1,297</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Segment profit:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Advertising</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>14</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>81</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>169</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>81</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Copper</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Total segment profit</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>14</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>81</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>169</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>81</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Reconciling items:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Corporate expenses</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,982</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(15,001</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(2,191</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(23,798</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Interest income</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>1</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>86</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>32</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>345</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Total consolidated loss from</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">continuing operations</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,967</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(14,834</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(1,990</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>(23,372</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">)</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2004</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>December&nbsp;31,</B></P>
<P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2003</B></P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Segment&nbsp;assets:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Advertising</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>409</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>779</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Copper</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>780</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>942</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Total segment assets</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>1,189</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>1,721</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Reconciling items:</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Corporate assets</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>21,030</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>20,963</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; text-indent:10pt; font-family:Times New Roman">Investments</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>44,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>44,000</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman">Total consolidated assets</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>66,219</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top><P style="margin-top:3.35pt; margin-bottom:0pt; font-family:Times New Roman" align=right>66,684</P>
</TD></TR>
</TABLE>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>8</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 2.&nbsp;&nbsp;&nbsp;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>NET SALES AND GROSS PROFIT</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Sales for the nine months ended September 30, 2003 consisted of trading of copper of RMB1,058,000 (US$128,000) with zero gross profit margin, and revenues from advertising and public relations services of RMB239,000 (US$29,000) with gross profit margin of 38%. Sales for the nine months ended September 30, 2004 consisted of trading of copper of RMB151,000 (US$18,000) with zero gross profit margin, and revenues from advertising and public relations services of RMB926,000 (US$112,000) with gross profit margin of 38%.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Sales for the third quarter of 2003 consisted of trading of copper of RMB614,000 (US$74,000) with zero gross profit margin and revenues from advertising and public relations services of RMB239,000 (US$29,000) with gross profit margin of 38%. Sales for the third quarter of 2004 consisted of trading of copper of RMB151,000 (US$18,000) with zero gross profit margin and revenues from advertising and public relations services of RMB284,000 (US$34,000) with gross profit margin of 29%. The Company acquired the advertising and public relations business in the third quarter of 2003. Net sales from supermarket operations included in discontinued operations totaled RMB1,758,000 (US$212,000) respectively for the three months and nine months ended September 30, 2003. Profit from discontinued supermarket operations was reported net of income tax expense, if any.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>SELLING, GENERAL AND ADMINISTRATIVE EXPENSES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Selling, general and administrative expenses decreased by RMB19,429,000 (US$2,346,000) or 78% to RMB5,405,000 (US$653,000) for the nine months ended September 30, 2004 from RMB24,834,000 (US$2,999,000) for the nine months ended September 30, 2003. The decrease was primarily attributable to the write off of VAT receivables of RMB3,126,000 (US$378,000) and the provision made on loan receivable from an unaffiliated third party of RMB2,684,000 (US$324,000) and impairment loss on investment of RMB15,000,000 (US$1,812,000) in 2003. The decrease was partially offset by an increase in legal and professional fees in 2004.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Selling, general and administrative expenses decreased by RMB14,048,000 (US$1,697,000) or 87% to RMB1,988,000 (US$240,000) for the third quarter of 2004 from RMB16,036,000 (US$1,937,000) for the third quarter of 2003. The decrease was primarily attributable to the impairment loss on investment of RMB15,000,000 (US$1,812,000) in the third quarter of 2003. The decrease was partially offset by an increase in legal and professional fees in 2004.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>INTEREST INCOME, NET</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Interest income decreased by RMB313,000 (US$38,000) or 91% to RMB32,000 (US$4,000) for the nine months ended September 20, 2004 from RMB345,000 (US$42,000) for the nine months ended September 30, 2003. The decrease was primarily due to the decrease in short term loans to unaffiliated third parties.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Interest income was RMB86,000 (US$10,000) for the third quarter of 2003 compared to RMB1,000 for the third quarter of 2004. The Company did not accrue interest income on third party loans for the third quarter of 2004 because the Company is currently negotiating the repayment terms with the debtor and the interest may be reduced.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>OTHER (EXPENSE)/INCOME, NET</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Other income, net for the nine months ended September 30, 2003 primarily consisted of a net gain on trading of marketable securities of RMB1,135,000 (US$137,000) and gain on disposal of fixed assets of RMB25,000 (US$3,000). Other income, net for the nine months ended September 30, 2004 primarily consisted of a net gain on trading of marketable securities of RMB376,000 (US$46,000) and recovery of a short term loan receivable of RMB2,226,000 (US$269,000) which had been provided for in 2003, together with related interest and costs of RMB614,000 (US$74,000). </P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Other income, net for the third quarter of 2003 primarily consisted of a net gain on trading of marketable securities. </P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>9</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>INCOME TAXES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">It is management&#146;s intention to reinvest all income attributable to the Company earned by its operations outside the US. Accordingly, no US corporation income taxes are included in these consolidated financial statements.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Under the current laws of the BVI, dividends and capital gains arising from the Company&#146;s investments in the BVI are not subject to income taxes and no withholding tax is imposed on payments of dividends to the Company.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>LIQUIDITY AND CAPITAL RESOURCES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">The Company&#146;s primary liquidity needs are to fund operating expenses and to expand business operations. The Company has financed its working capital requirements primarily through internally generated cash.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Net cash used in operating activities for the nine months ended September 30, 2004 was approximately RMB4,332,000 (US$523,000), as compared to net cash provided by operating activities of RMB1,515,000 (US$183,000) for the corresponding period in 2003. Net cash inflows/outflows from the Company&#146;s operating activities are attributable to the Company&#146;s net loss and changes in operating assets and liabilities. Net cash provided by investing activities for the nine months ended September 30, 2004 was primarily attributable to repayments of short term loans from third parties. Net cash provided by financing activities for the nine months ended September 30, 2004 was primarily attributable to proceeds from issuance of common stock for options exercised during the period.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">The following summarizes the Company&#146;s financial condition and liquidity at the dates indicated:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>September&nbsp;30,&nbsp;<BR>
2004</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>December&nbsp;31,&nbsp;<BR>
2003</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Current&nbsp;ratio&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>5.5x</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>2.5x</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Working capital</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>12,017,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>9,107,000</P>
</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Ratio of long-term debt to</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">total shareholders&#146; equity</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>0.004x</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>0.005x</P>
</TD><TD valign=top>&nbsp;</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:9pt; text-indent:-9pt; width:477pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:9pt; text-indent:-9pt; width:477pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">The Company has the following contractual obligations and commercial commitments as at September&nbsp;30, 2004:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>Total</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>&lt;&nbsp;1&nbsp;year</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>2-5&nbsp;years</B></P>
</TD></TR>
<TR><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom>&nbsp;</TD><TD valign=bottom><P style="margin:0pt; line-height:10pt; font-family:Times New Roman; font-size:8pt" align=center><B>RMB</B></P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Operating&nbsp;leases</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>32,000</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>32,000</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>-</P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Capital&nbsp;lease&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>431,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>177,000</P>
</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman" align=right>254,000</P>
</TD></TR>
</TABLE>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Except as disclosed above, there have been no other significant changes in financial condition and liquidity since the fiscal year ended December&nbsp;31, 2003. The Company believes that internally generated funds will be sufficient to satisfy its anticipated working capital needs for at least the next twelve months.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>OFF BALANCE SHEET ARRANGEMENTS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>10</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>FACTORS RELATING TO FORWARD-LOOKING STATEMENTS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Factors that could cause our actual results of operations to differ materially from those contained in forward looking statements include the following:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:18pt; width:486pt; font-family:Times New Roman"><B>Risks Associated with Foreign Operations</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Our principal subsidiaries operate in the People&#146;s Republic of China, and are, by law, subject to administrative review by various national, provincial and local agencies of the Chinese government &#150; governmental oversight and/or changes to existing rules and regulations could adversely affect our results of operations.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The Company&#146;s operations and financial results could be adversely affected by economic conditions and changes in the policies of the PRC government, such as changes in laws and regulations (or the interpretation thereof), including measures which may be introduced to regulate or stimulate the rate of economic growth. &nbsp;There can be no assurance that these measures will be successful.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The PRC does not have a comprehensive system of laws and enforcement of existing laws may be uncertain and sporadic, and the implementation and interpretation thereof inconsistent. Even where adequate law exists in the PRC, it may be difficult to obtain swift and equitable enforcement of such law, or to obtain enforcement of a judgment by a court of another jurisdiction. Decided legal cases are without binding legal effect, although judges are often guided by prior decisions. The interpretation of PRC laws may be subject to policy changes reflecting domestic political changes, and new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. The activities of the Company&#146;s subsidiaries in China are subject to PRC regulations governing PRC companies. In particular, the realization of the Company&#146;s future p
lans in China will also be subject to PRC government approvals.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The Company&#146;s revenues and expenses are mainly denominated in HK$ and US$. The Company and its subsidiaries do not have material market risk with respect to currency fluctuation as HK$ is linked to US$. As the reporting currency of the Company&#146;s consolidated financial statements is in RMB, translation differences may arise on consolidation. The Company may also suffer exchange loss when it converts RMB to other currencies, such as the Hong Kong Dollar or United States Dollar.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The Company&#146;s interest income is sensitive to changes in the general level of HK$ and US$ interest rates. In this regard, changes in HK$ and US$ interest rates affect the interest earned on the Company&#146;s cash equivalents. At September 30, 2004, the Company&#146;s cash equivalents are primarily HK$ or US$ deposits with financial institutions, bearing market interest rates without fixed term.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">While we are a Nevada corporation, and will become a British Virgin Islands corporation upon completion of our redomicile, our officers and directors are non-residents of the United States, our assets are located in the PRC and our operations are conducted in the PRC. &nbsp;As a result, it may not be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against us or them.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">As a British Virgin Islands corporation we will no longer be subject to Nevada law, and British Virgin Islands law provides our board of directors with somewhat greater flexibility to govern our operations without stockholder authorization than does Nevada law.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Once our merger with and into our British Virgin Islands corporation is completed, we will become a foreign private issuer and there will be less information publicly available about us than if we continued to report with the Securities and Exchange Commission as a &#147;small business&#148; issuer; as a result of which decisions whether to buy and/or sell our securities may become more difficult to evaluate.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>11</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:18pt; width:486pt; font-family:Times New Roman"><B>General Risks of Operations</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Unless we are able to reduce expenses, increase our profit margins and/or acquire profitable operations, we will likely continue to incur losses and investors in our shares may be unable to recoup their investment.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">We intend to investigate and evaluate potential business opportunities, including acquisition candidates; however, we may be unable to acquire business operations that prove to be profitable; we will continue to incur administrative and professional expenses in connection with our evaluation and acquisition of business operations, without corresponding revenues from those operations prior to acquisition.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">We will continue to incur administrative and professional expenses in connection with our evaluation and acquisition of business operations, without corresponding revenues from those operations prior to completion of any acquisition.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">At September 30 2004, the Company had short-term investments in trading securities in the Hong Kong stock market with a total market value of RMB54,000 (US$7,000). These investments expose the Company to market risks that may cause the future value of these investments to be lower than the original cost of such investments.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:5pt; padding-left:36pt; width:450pt; font-family:Times New Roman">The market for our Common Stock is not active and the limited trading volume in our shares could result in substantial market volatility in the price for our shares.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; width:450pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">We do not intend to pay dividends for the foreseeable future &#150; we intend to reinvest earnings from operations, if any, back into our operations. The payment of dividends is subject to numerous restrictions imposed under PRC law.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 3.&nbsp;&nbsp;&nbsp;CONTROLS AND PROCEDURES</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">On November 15, 2004, the Company&#146;s management concluded its evaluation of the effectiveness of the design and operation of the Company&#146;s disclosure controls and procedures. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Annual Report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">The Company&#146;s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system&#146;s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The d
esign of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">As of the evaluation date, the Company&#146;s Chief Executive Officer and its Chief Financial Officer concluded that the Company maintains disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in the Company&#146;s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to the Company&#146;s management, including its Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">There have been no significant changes in the Company&#146;s internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>12</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<BR>
<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>PART II &#150; OTHER INFORMATION</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 2.&nbsp;&nbsp;&nbsp;CHANGES IN SECURITIES:</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">On May 19, 2004, the Company granted options to certain employees and officers to purchase an aggregate of 104,000 shares at an exercise price of RMB47.03 (US$5.68) per share. On July 8, 2004, options to purchase 104,000 shares of the Company&#146;s Common Stock for RMB47.03 (US$5.68) per share were exercised and the Company issued 104,000 shares for RMB4,891,000 (US$591,000). The options and shares were issued under the Company&#146;s 1995 Stock Option Plan (as to 24,000 shares) and its 2003 Equity Compensation Plan (as to 80,000 shares). &nbsp;Each recipient (a) had a preexisting business relationship with the Company, (b) had access to business and financial information about the Company, and (c) represented that he or she was acquiring the shares for investment purposes and not with a view towards distribution or resale except in compliance with applicable law. In addition, the sha
res issued upon exercise of the options contained a legend restricting their transferability absent registration under the Securities Act of 1933, as amended (the &#147;Act&#148;) or the availability of an applicable exemption from registration. &nbsp;The foregoing transactions were exempt from the registration requirements of the Act by reason of Section 4(2) thereof.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 4.&nbsp;&nbsp;&nbsp;SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 5.&nbsp;&nbsp;&nbsp;OTHER INFORMATION:</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">On September 15, 2004, our board of directors authorized us to enter into an Agreement and Plan of Merger (the &#147;Merger Agreement&#148;) with our wholly owned subsidiary, Billion Luck Company, Inc., a British Virgin Islands corporation (&#147;Billion Luck&#148;). On September 15, 2004, holders of a majority of our outstanding voting securities approved the Merger Agreement. In furtherance of the Merger Agreement, we anticipate that we will merge with and into Billion Luck (the &#147;Merger&#148;) on or about November 22, 2004. The shares of Billion Luck&#146;s common stock issuable to our stockholders in connection with the Merger have been registered on Form S-4, filed with and declared effective by the Securities and Exchange Commission (SEC File No. 333-119277). Upon completion of the Merger:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will merge with and into Billion Luck, we will cease our existence as a Nevada corporation and we will become a British Virgin Islands corporation.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">Billion Luck will change its name to China Natural Resources, Inc,</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">Our trading symbol on the Nasdaq stock market will be changed (to a yet to be designated symbol).</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will cease reporting with the Securities and Exchange Commission as a &#147;small business issuer&#148; and will assume the status of a &#147;foreign private issuer&#148;.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Once we begin reporting as a foreign private issuer:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will file with the SEC, annual reports on Form 20-F, containing audited financial statements prepared in accordance with US GAAP.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will file with the SEC such other reports and information as we are required to file in the British Virgin Islands, or, as we file with Nasdaq or any other exchange on which our shares are listed, or as we disseminate to our stockholders.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will no longer be required to file quarterly financial reports with the SEC, although we may elect to do so in the future.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will no longer be required to file current reports on Form 8-K, although we may disclose material information in reports on Form 6-K.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">We will no longer be subject to the SEC&#146;s proxy rules contained in Section 14 of the Exchange Act.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; width:414pt; font-family:Times New Roman">&#8226;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:72pt; width:414pt; font-family:Times New Roman">Our officer, directors and affiliates will no longer be required to file beneficial ownership reports on Forms 3, 4 and 5, and will no longer be subject to the &#147;short swing profit&#148; provisions of Section 16(b) of the Exchange Act.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<BR>
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>13</P>
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<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><B>ITEM 6.&nbsp;&nbsp;&nbsp;EXHIBITS</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">2.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Agreement and Plan of Merger dated September 15, 2004, by and between China Resources Development, Inc. and Billion Luck Company Limited (1)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">3.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Amended and Restated Memorandum of Association of Billion Luck Company Limited (n/k/a China Natural Resources, Inc. (2)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:45pt; text-indent:-45pt; width:441pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">3.2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">Articles of Association of Billion Luck Company Limited (n/k/a China Natural Resources, Inc. (3)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">31.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">31.2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">32.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-36pt; width:450pt; font-family:Times New Roman">32.2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:36pt; width:450pt; font-family:Times New Roman">CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">&#151;&#151;&#151;&#151;&#151;&#151;&#151;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">(1)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Incorporated by reference to Annex C to the Company&#146;s information statement/prospectus dated October 15, 2004, included in its registration statement on Form S-4 (SEC File No. 333-119277).</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">(2)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Incorporated by reference to Annex A to the Company&#146;s information statement/prospectus dated October 15, 2004, included in its registration statement on Form S-4 (SEC File No. 333-119277).</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">(3)</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Incorporated by reference to Annex B to the Company&#146;s information statement/prospectus dated October 15, 2004, included in its registration statement on Form S-4 (SEC File No. 333-119277).</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center>14</P>
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<P style="page-break-before:always; margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>SIGNATURES</B></P>
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:36pt; width:486pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
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<TABLE style="margin-right:126pt; font-size:10pt" cellspacing=0><TR><TD valign=top>&nbsp;</TD><TD valign=top colspan=2><P style="margin:0pt; font-family:Times New Roman"><B>CHINA&nbsp;RESOURCES&nbsp;DEVELOPMENT,&nbsp;INC.</B></P>
</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
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<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top><P style="margin:0pt; font-family:Times New Roman">November 15, 2004</P>
</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">By:&nbsp;</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman">/s/<SMALL>&nbsp;<BIG>C<SMALL>HING<BIG>&nbsp;L<SMALL>UNG<BIG>&nbsp;P<SMALL>O</SMALL></P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Ching&nbsp;Lung&nbsp;Po,&nbsp;Chief&nbsp;Executive&nbsp;Officer</P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">By:</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top><P style="margin:0pt; font-family:Times New Roman">/s/<SMALL>&nbsp;<BIG>T<SMALL>AM<BIG>&nbsp;C<SMALL>HEUK<BIG>&nbsp;H<SMALL>O</SMALL></P>
</TD></TR>
<TR><TD valign=top>&nbsp;</TD><TD valign=top>&nbsp;</TD><TD valign=top><P style="margin:0pt; font-family:Times New Roman">Tam&nbsp;Cheuk&nbsp;Ho,&nbsp;Chief&nbsp;Financial&nbsp;Officer</P>
</TD></TR>
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<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>certification311.htm
<DESCRIPTION>CERTIFICATION
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<TITLE>53779 -- China Resources -- Exhibit 31.1</TITLE>
<META NAME="keywords" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="author" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="date" CONTENT="11/11/2004">
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=right>Exhibit 31.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CERTIFICATION PURSUANT TO RULE 13a-15(e) OR 15d-15(e) OF THE SECURITIES EXCHANGE ACT <BR>
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">I, Ching Lung Po, certify that:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18.1pt; width:468pt; font-family:Times New Roman">1.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">I have reviewed this quarterly report on Form 10-QSB of China Resources Development, Inc.;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">2.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">3.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">4.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:</P>
<P style="margin-top:4.15pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">c) disclosed in this report any change in the small business issuer&#146;s internal control over financial reporting that occurred during the small business issuer&#146;s most recent fiscal quarter (the small business issuer&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer&#146;s internal control over financial reporting; and</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">5.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer&#146;s auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions): </P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman">Date: November 15, 2004</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><U>/s/ Ching Lung Po</U></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:122.7pt; width:464.7pt; font-family:Times New Roman"><U><BR></U></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman">Chief Executive Officer</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>certification312.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
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<HEAD>
<TITLE>53779 -- China Resources -- Exhibit 31.2</TITLE>
<META NAME="keywords" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="author" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="date" CONTENT="11/11/2004">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman" align=right>Exhibit 31.2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.3pt; text-indent:-21.3pt; width:464.7pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CERTIFICATION PURSUANT TO RULE 13a-15(e) OR 15d-15(e) OF THE SECURITIES EXCHANGE <BR>
ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">I, Tam Cheuk Ho, certify that:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">1.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">I have reviewed this quarterly report on Form 10-QSB of China Resources Development, Inc.;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">2.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">3.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">4.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:18pt; width:468pt; font-family:Times New Roman">The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: </P>
<P style="margin-top:4.15pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and </P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">c) disclosed in this report any change in the small business issuer&#146;s internal control over financial reporting that occurred during the small business issuer&#146;s most recent fiscal quarter (the small business issuer&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer&#146;s internal control over financial reporting; and; </P>
<P style="margin-top:4.15pt; margin-right:126pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; width:468pt; font-family:Times New Roman">5.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer&#146;s auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions): </P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and </P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:4.15pt; padding-left:18pt; width:468pt; font-family:Times New Roman">b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman">Date: &nbsp;November 15, 2004</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:-12pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman"><U>/s/ Tam Cheuk Ho</U></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:122.8pt; width:464.8pt; font-family:Times New Roman"><U><BR></U></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; padding-left:21.2pt; text-indent:-21.2pt; width:464.8pt; font-family:Times New Roman">Chief Financial Officer</P>
<BR>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>certification321.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>53779 -- China Resources -- Exhibit 32.1</TITLE>
<META NAME="keywords" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="author" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="date" CONTENT="11/11/2004">
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<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=right>Exhibit 32.1</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:28.35pt; width:486pt; font-family:Times New Roman">In connection with the Quarterly Report of China Resources Development, Inc. (the &quot;Company&quot;) on Form 10-QSB for the quarter ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the &quot;Report&quot;), I, Ching Lung Po, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.&nbsp;1350, as adopted pursuant to ss.&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">/s/ Ching Lung Po</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Ching Lung Po</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Chief Executive Officer</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">November 15, 2004</P>
<BR>
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>certification322.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>53779 -- China Resources -- Exhibit 32.2</TITLE>
<META NAME="keywords" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="author" CONTENT="Bassett Press, Inc. 954-928-2862">
<META NAME="date" CONTENT="11/11/2004">
</HEAD>
<BODY style="line-height:12pt; font-size:10pt; color:#000000">
<BR>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=right>Exhibit 32.2</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman" align=center><B>AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; text-indent:28.35pt; width:486pt; font-family:Times New Roman">In connection with the Quarterly Report of China Resources Development, Inc. (the &quot;Company&quot;) on Form 10-QSB for the quarter ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the &quot;Report&quot;), I,<FONT COLOR=#0000FF> </FONT>Tam Cheuk Ho, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.&nbsp;1350, as adopted pursuant to ss.&nbsp;906 of the Sarbanes-Oxley Act of 2002, that:</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">/s/ Tam Cheuk Ho</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Tam Cheuk Ho</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">Chief Financial Officer</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman">November 15, 2004</P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-right:126pt; margin-bottom:0pt; width:486pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<BR>
<BR>
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