SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                     FORM 10

                                 AMENDMENT No.5

                       GENERAL FORM FOR REGISTRATION OF SECURITIES

    Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

                               Yi Wan Group, Inc.
             (Exact name of registrant as specified in its charter)

          Florida                                       33-0960062
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

       No. 189 Middle Min Zhu Road
       Jiaozuo, Henan, P.R. China                            454150

      (Address of principal                                (Zip Code)
        executive offices)

       Registrant's telephone number, including area code: 86-391-262-3227

        Securities to be registered pursuant to Section 12(b) of the Act:
     Title of each class                          Name of each exchange on which
     to be so registered                          each class is to be registered
                                      None

        Securities to be registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                (Title of class)

                                 Preferred Stock
                                (Title of class)

                 Information Required in Registration Statement


ITEM 1.  BUSINESS
                              HOW WE ARE ORGANIZED

We were incorporated in Florida in May 1999. We are authorized to issue
50,000,000 shares of common stock, of which 16,256,250 shares of common stock
are issued and outstanding. We are authorized to issue 20,000,000 shares of
preferred stock, of which no shares are issued and outstanding.

We were incorporated to explore the feasibility of acquiring interests in
several businesses located in China in which our president, Mr. Cheng Wan Ming,
had an ownership interest. On January 1, 2000, we acquired controlling equity
interests in three such China registered companies, which had ongoing business
operations in the hotel, agriculture, and communications industries in China.
Since our inception, neither we, nor any of our three subsidiaries, have ever
been subject to any bankruptcy, receivership or similar proceedings. We are
filing this registration statement to become a Securities and Exchange
Commission reporting company and so that our common stock will become quoted on
the Over-the-Counter Bulletin Board; however, we have not located a market maker
or otherwise made arrangements to have our common stock quoted on the
Over-the-Counter Bulletin Board. Our hotel, agriculture, and communications
subsidiaries are described below:

Jiaozuo Yi Wan Hotel Co., Ltd.

On January 1, 2000, we acquired a 90% controlling interest in Jiaozuo Yi Wan
Hotel Co. Ltd., a Sino-Foreign Joint Venture company that was originally formed
in China in 1996. The remaining 10% equity interest in our hotel subsidiary is
owned by Shun'ao Industry and Commerce Company, a company registered in China.
Our president has a 41.7% ownership interest in Shun'ao Industry and Commerce
Company. Our hotel subsidiary provides upscale lodging, food and beverage,
entertainment, and conference and meeting services at:

Jiaozuo Yi Wan Hotel Co., Ltd.
No.189. Middle Min Zhu Road
Jiaozuo, Henan - P.R. China 454150
Tel:  86-391-262-3227
Fax: 86-391-262-3767
Email: YIWAN@PUBLIC2.LYPTT.HA.CN

Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.

On January 1, 2000, we acquired a 90% controlling interest in Yi Wan Maple Leaf
High Technology Agriculture Developing Ltd. Co., a Sino-Foreign Joint Venture
that was originally formed in China in 1996. The remaining 10% equity interest
in our agriculture subsidiary is owned by Shun'ao Industry and Commerce Company.
Our president has a 41.7% ownership interest in Shun'ao Industry and Commerce
Company. Our agriculture subsidiary produces and sells specialty freshwater
fish, fish products, and vegetables, and is located at:

                                        2

Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.
Maying Village, Zhandian Town, Wuzhi County
Jiaozuo, Henan - P.R. China 454971
Tel:  86-391-759-1632
Fax: 86-391-759-1632
Email: YWCWM1@PUBLIC2.LYPTT.HA.CN

Shun de Yi Wan Communication Equipment Plant Co. Ltd.

On January 1, 2000, we acquired 100% of the equity interest in Shun de Yi Wan
Communication Equipment Plant Company, Ltd., which was originally established as
a foreign investment joint venture in China in 1993. This company, our
telecommunications subsidiary, manufactures exchange distribution frames
equipment, and is located at:

Shun de Yi Wan Communication Equipment Plant Co. Ltd.
No 3., 5th Street Fengxiang Road, Daliang Town
Shun de, Guangdong - P.R. China 528300
Tel:  86-765-222-0984, 222-2097
Fax: 86-765-223-8363
Email: gzsdywt1@pub.sdnet.gd.cn

Nothing on our websites is part of this Form 10.

              ORGANIZATIONAL STRUCTURE OF OUR FOREIGN SUBSIDIARIES

Our 90% owned joint venture hotel and agriculture companies are classified in
China as Foreign Invested Enterprise Joint Ventures. Our wholly owned foreign
telecommunications subsidiary is classified in China as a Wholly Foreign Owned
Enterprise company. Both Foreign Invested Enterprise Joint Ventures and Wholly
Foreign Owned Enterprise companies in China are referred to as Foreign Invested
Enterprise companies.

Each of our subsidiaries is registered as independent Chinese registered limited
liability companies, with legal structures similar to regular corporations and
limited liability companies organized under state laws in the United States. The
respective Articles of Association of our Foreign Invested Enterprise hotel and
agriculture subsidiaries provide for a 30 year term while our telecommunications
company provides for a 15 year term. The term of our agreements and business
licenses for our joint venture hotel and agriculture companies are 30 years. The
term can be extended or terminated prior to the date of expiration if
unanimously decided by the board of directors of those subsidiaries and approved
by the original examination and approval authority in China. We control the
board of directors for our joint venture hotel and agriculture companies. In
addition, we have the ability to select six of the seven board members for our
hotel and agriculture subsidiaries. The operational, management and corporate
governance decisions of the board are by a simple majority, except for the
revision of the Articles of Association, the increase or assignment of the
registered capital, the business combination of the joint venture and, with
certain limitations, the termination of the joint venture, which require a
unanimous vote.

                                       3

The term of our business license for our Wholly Foreign Owned Enterprise
telecommunications company is 15 years. The term of this venture may be
terminated prior to the date of expiration if unanimously decided by the board
of directors and approved by the original examination and approval authority. We
own 100% of the equity interests of the subsidiary and control the selection of
its board of directors.

Each of our three subsidiaries is operated as a separate division, as well as a
separate business segment, as defined by generally accepted accounting
principles. Detailed financial information concerning the revenues, income and
assets of each of our business segments is provided in our financial statements
and accompanying notes. Accordingly, we conveniently refer to our three
subsidiaries as our:

o    hotel division or hotel company;
o    agriculture division or agriculture company; and
o    telecommunications division or telecommunications company.

              ORGANIZATIONAL HISTORIES OF OUR SUBSIDIARY COMPANIES

Prior to our acquisition of our hotel, agriculture, and telecommunications
companies, these companies were owned by:
o    Shun'ao Industry and Commerce Company, a company established under the laws
     of the People's Republic of China;
o    Canadian Maple Leaf International, Inc., a company established under the
     laws of Canada and which had an ownership only in our agriculture company;
o    Marco Wan Da Construction, a company established under the laws of Macao, a
     Portuguese overseas territory located in the South China area; and
o    Shun De Zhiyuan Developing Co. (relating to Telecommunications only), a
     company established under the laws of the People's Republic of China.

As a result of the below-described transactions, all of the individual owners of
Shun'ao Industry and Commerce Company are also our shareholders. In addition, as
a result of the below-described transactions we have the following ownership
interests in our subsidiaries:

o    90% ownership in our hotel company;
o    90% ownership in our agriculture company; and
o    100% ownership in our telecommunications company.

Jiaozuo Yi Wan Hotel Co., Ltd.

Our hotel division was originally formed in December 1996, as a Foreign Invested
Enterprise Joint Venture in the Jiaozuo City region of Henan Province, China.
Originally, Shun'ao Industry and Commerce Company, a China based company, owned
a 70% equity interest in the hotel company, and Marco Wan Da Construction, a
company established under the laws of Macao, owned a 30% equity interest. All of
the individual owners of the China and Macao based companies are also our

                                       4

shareholders. In November 1999, the China and Macao based companies agreed to
transfer 90% of their total equity in the hotel company to us, with 60% being
transferred by the China based company and 30% being transferred by the Macao
based investor. The amended articles of association, the joint venture contract
and the equity transfer agreement among the original joint venture parties and
us provide that we assume the total capital contribution requirement of the
foreign investor in the amount of RMB 7,500,000, approximately US $906,000, and
a portion of the China based company's capital contribution requirement in the
amount of RMB 15,000,000, approximately US $1.8 million. In addition, the joint
venture contract, the articles and the equity transfer agreement require that an
additional investment of approximately US $3 million be made into the hotel
company above and beyond the joint venture's registered capital and that we pay
our share of the total investment (approximately US $2.7 million) within six
months of the issuance of a new business license for the joint venture. These
transfers were approved by the Chinese approval authorities; thereafter, the
equity split has been 10% for the China based company, while we have a 90%
interest. The original parties in the Hotel joint venture made the required
total investment and registered capital contributions to the joint venture.
Accordingly, our obligations to contribute to registered capital and the total
investment in the Hotel joint venture have been satisfied by our assumption of
90% of the equity interests of the original partners. Our obligations to the
original parties under the equity transfer agreement, however, amount to
RMB 22,500,000 or approximately US $2.7 million owed to the original partners to
the Hotel joint venture for their transfer to us of 90% of the joint venture's
equity interests.

The Hotel joint venture has recorded a payable of RMB 49,000,000 or
approximately US $5.2 million to the original parties in the joint venture. This
payable is the result of the reduction of the total investment in the joint
venture from the original RMB 99,000,000 or approximately $11.9 million, which
was paid in full, to RMB 50,000,000 or approximately US $6 million in the
amended joint venture.

Jiaozuo Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.

Our agriculture company was originally formed in April 1997, as a Foreign
Invested Enterprise Joint Venture, by Shun'ao Industry and Commerce Company, a
China based company, and Canadian Maple Leaf International Inc., a company
established under the laws of Canada, in the Jiaozuo City region of Henan
Province, China. The China based company and the Canada based company originally
received a 51% and 49% equity interest, respectively. In November 1999, both
equity owners agreed to transfer 90% of the total equity of the agriculture
company to us, with 41% and 49% transferred by the China based company and the
Canada based company, respectively. The amended articles of association, the
joint venture contract and the equity transfer agreement among the original
joint venture parties and us provide that we assume the total capital
contribution requirement of the Canada based company in the amount of RMB
20,000,000, or approximately US $2.42 million, which was not paid by the
Canadian party to the Farm joint venture. In addition, the equity transfer
agreement requires us to pay to the China based company a portion of the

                                       5

contribution to registered capital made by that company in the amount of RMB
16,900,000, or approximately US $2 million. The equity transfer agreement
requires that we pay our share of the registered capital (approximately US $2.4
million) within one year of the issuance of a new business license for the joint
venture. The articles and the joint venture contract, which reflect the equity
transfers, were approved by the appropriate Chinese approval authorities;
thereafter, the equity split of this company has been 10% for the China based
investor, Shun'ao Industry and Commerce Company, while we have a 90%
interest.

A new business license was issued for the agriculture company on June 7, 2000.
Until June 6, 2001, we failed to make any contribution payments towards our
share of the registered capital. On June 7, 2001, in accordance with a unanimous
written resolution of our agriculture company's board of directors, we received
an extension to June 7, 2002 to make the required payments.

Shun de Yi Wan Communications Equipment Plant Co., Ltd.

Our telecommunications company was originally formed in Shun de City, Guangdong
Province, China, as a Foreign Invested Enterprise Joint Venture in September
1993, by Shun de Zhiyuan Developing Co., a China based company, and Marco Wan Da
Construction, a Macao based company. In March 2000, both the China based
investor and the Macao based company agreed to transfer 100% of the equity in
the telecommunications company to us, with 35% and 65% being transferred by the
China based company and the Macao based company, respectively. The articles of
association provide that we assume the total capital contribution requirements
of the enterprise in the amount of US $1,500,000, approximately RMB 12,4000,000.
In addition, the articles require that an additional investment of approximately
$500,000 be made into the telecommunications company, above and beyond that
company's registered capital, and that we pay our share of the total investment
within one year of the issuance of a new business license for the joint venture.
The articles, which reflect the transfers and establish our telecommunications
company as a Wholly Foreign Owned Enterprise, were approved by the appropriate
Chinese approval authorities; thereafter, we own 100% of the telecommunications
company.

The original parties in the Telecommunications joint venture made the required
and registered capital contributions of US $1,500,000 to the joint venture.
Accordingly, the obligation to contribute to registered capital in this joint
venture has been satisfied. Pursuant to the articles of association, we have an
obligation to contribute an additional investment of US $500,000 to the joint
venture.

A new business license was issued for our telecommunications company on June 22,
2000. Until approximately June 21, 2001, we failed to make the required
additional investment contribution to our telecommunications company. On June
22, 2001, in accordance with a unanimous written resolution of our
telecommunications company's board of directors, we received an extension to
June 22, 2002 to make this payment.

                                       6

DESCRIPTION OF OUR BUSINESS OPERATIONS BY DIVISION

THE JIAOZUO YI WAN HOTEL CO., LTD.

The Jiaozuo Yi Wan Hotel Co., Ltd., our hotel division, manages and operates an
upscale hotel conference and entertainment facility in Jiaozue City, Henan
province. This division focuses on providing lodging, food and beverage,
entertainment, and conference and meeting products and services.

The significant events relating to the hotel company's history include:

o    In September 1996, the hotel company purchased the Tengfei Hotel located in
     the center of Jiaozuo City from the city government of Jiaozuo

o    In  September 1996, the hotel company began extensive renovation and
     remodeling of its hotel's main building and construction of a 150,695
     square foot lobby, commercial and common space addition to the main
     building. All renovation and construction was completed in October 1996.

o    In 1997, the hotel company began recruiting personnel and developing
     western style operational and management training systems.

o    In 1997, the Jiaozou Yi Wan Hotel received certification from the China
     National Tourism board.

o    Recently, our hotel division has focused its efforts on the development of
     the entertainment operations.

Products and Services

Our hotel has the following primary product and service offerings:

o    Lodging operations (including conference and meeting facilities);
o    Food and beverage operations; and
o    Entertainment operations.

The hotel also has an on-site travel agency, bank, business center, and sundries
and gift store.

Lodging Operations. The hotel has a total of 158 guest-sleeping rooms on 22
floors consisting of 131 standard guestrooms and 27 suites. All guest rooms are
equipped with either double or queen size beds, two telephones, remote
controlled television, full mini-bar, work station, large closets, in-room
climate control, sitting area and large working desk. Bathrooms include shower
and tub, western style toilet, spacious vanity, and complimentary travel
sundries. Suites include larger sitting and work areas, a second television, and
turn-down service. Executive suites feature all of the above as well as large
partitioned livingroom-style sitting area, two bathrooms, including one with a
Jacuzzi tub, fruit baskets, and two daily fresh flower arrangements.

                                       7

The hotel also has 12 rooms dedicated to meeting and conference space. These
rooms service small, medium, and large sized conferences and meetings, and
include:

o    Nine small meeting rooms capable of seating up to 20 people. Seven of these
     rooms have multi-functional seating configurations.  Two rooms have large,
     fixed position oval conference tables with side gallery space for
     individual chairs.  All rooms have climate control and private bathrooms.

o    Two conference rooms within the hotel suitable for medium sized meetings of
     up to 60 people. These rooms feature large fixed positioned conference
     tables, built-in amplification equipment, and ample side gallery space for
     additional meeting attendees or small group break-out space.  These rooms
     also have climate control and private bathrooms.

o    One large, 8,180 square foot, meeting room capable of seating 460 people is
     configured in an auditorium style with a sloping floor and large front
     presentation stage.  The room features built-in sound system, lighting
     capabilities, built-in multi-lingual interpretation equipment, and rear and
     front screen projection capability.  The room has an attached large
     reception room and a separate, smaller, private VIP reception room. We
     believe that this meeting room is the largest non-government room of its
     kind in the province.

Food and Beverage Operations. The hotel has four food and beverage facilities:
two full service restaurants, a buffet coffee shop, and a lobby bar. The
combined capacity of all food and beverage service facilities is 1,500 people,
which we believe to be the largest single location of food and beverage
facilities in the city of Jiaozuo. All food and beverage facilities are open to
the public.

o    Main Floor Restaurant.  The main floor restaurant serves 700 people.  Its
     decor is considered traditional Chinese and it is comprised of a large main
     dining room with performance stage, stand-alone bar, two separate banquet
     rooms and 15 private suite dining rooms.  All suites have deluxe stereo and
     karaoke equipment and a private bathroom.  Each banquet room has a
     performance stage and sound system. The restaurant specializes in serving a
     unique blend of Cantonese and Henan style cuisine.  Additionally, the
     restaurant has a separate dining area serving 150 people with facilities
     for private table hot pot dining, a style of dining that requires a table
     with a center gas flame burner, and overhead table exhaust fan.

o    VIP Restaurant.  The second floor restaurant is a VIP dining facility with
     24 private suites ranging in capacity from 10 to 30 people.  Each suite
     contains a separate sitting area, large color television, high quality
     stereo system, karaoke equipment, and private bathroom.  The restaurant
     specializes in the creation and presentation of haute couture, gourmet
     cuisine that is fresh; and showcases the hotel's signature culinary style
     of blended Cantonese and Henan flavors.  Special attention is given to
     artistic and theatrical presentation of each dish.  Each course of the meal
     is presented and served to each guest individually.

                                       8

o    Buffet Coffee Shop.  The buffet coffee shop is located on the main floor
     adjacent to the hotel lobby and serves 50 people.  The decor is western
     style, with the restaurant open 24 hours a day. It offers full breakfast,
     lunch, and dinner buffets of western and Asian style dishes for each meal.

Entertainment Operations. Our hotel division operates the following three
entertainment facilities, which are open to the public:

o    Night Club. The nightclub is designed in a Las Vegas club style format with
     a large floor show performance area and a moveable front stage. The
     facility has computerized light show capabilities as well as a sound system
     with special effects capabilities. The floor show viewing area seats 330
     people through a combination of floor seating, private booth seating, and
     private balcony deluxe booth seating. The nightclub is located on the third
     floor of the main building and specializes in floorshow entertainment as
     well as celebrity entertainment events, which change weekly. The club
     offers 19 private karaoke suites suitable for 4-10 people. Each suite
     includes a serving area, karaoke equipment, and private bathroom.

o    Bowling Alley-Game Room. A 10 lane, Canadian hardwood bowling alley is
     located on the second floor. The bowling alley system has automatic
     computerized scoring and overhead display screens for each lane.  The
     bowling alley sponsors corporate and public tournaments; and provides
     lessons and items for purchase through a pro-shop. In conjunction with the
     bowling alley is a large game room offering snooker, pool, and ping-pong
     tables, and a wide variety of computer simulation games. A small snack bar
     provides pre-packaged food and beverage items. The bowling alley and game
     rooms are open 24 hours a day, seven days a week.

o    Sauna-Health Center. The sauna-health center is located on the second floor
     of the main building.  It offers beauty salon, acupuncture, and massage
     services, as well as self-guided health relaxation activities, such as
     soaking tubs, whirlpools, and saunas. The facility includes a beauty salon,
     waiting lounge, changing facilities, shower area, three large 15-person
     soaking pools, two large Jacuzzis, wet and dry multi-person saunas, 20
     private resting rooms, 20 semi-private massage rooms, large quiet room, 30
     private massage suites, and five executive suites consisting of private
     toilet and shower, sauna, Jacuzzi, massage area, and resting area. The
     sauna-health center has 100 massage beds and a total capacity of 150
     people.


For accounting purposes, our Hotel Operations are divided into three operating
segments:
o    Food and Beverage also known as restaurant operations;
o    Lodging; and
o    Entertainment.

                                       9

Set forth below for each of the last three fiscal years is the percentage of
total revenue from each such segment within our Hotel Division which,
collectively, accounted for more than approximately 15% of our consolidated
revenues during these fiscal years.



1999:
Food and Beverage Operations                                  47.2%
Lodging Operations                                            24.8%
Entertainment Operations                                      28.0%
Total of our consolidated revenues                      $7,991,164

2000:
Food and Beverage Operations                                  47.66%
Lodging Operations                                            25.10%
Entertainment Operations                                      27.24%
Total of our consolidated revenues                       $7,794,439


2001:
Food and Beverage Operations                                  48.64%
Lodging Operations                                            25.32%
Entertainment Operations                                      26.04%
Total of our consolidated revenues                       $7,752,916


Suppliers

The raw materials that our hotel division uses are many and varied and common to
all hotel and entertainment facilities. A general sampling of these items and
their sources are as follows:

Item                            Source
Seafood/vegetable               Yiwan Agricultural Advanced Technology
                                   Development Corporation, Jiaozuo City
Cured meat                      Guangdong Lawei shop, Zhengzhou City
Seafood                         Wuyang Seafood wholesale shop, Zhengzhou City
Seafood                         Haiyang da shi jie shop, Jiaozuo City
Seafood                         Xingli Haiyang Seafood shop, Zhengzhou City
Wine/Beer                       Jinfeng Jiuhang Corporation Ltd., Zhengzhou City
Cigarette/beverage              Donghui wholesale shop, Jiaozuo City
Cigarette/beverage              Youyi company, Jiaozuo City
Cigarette/beverage              Zhenhua shop, Jiaozuo City
General cooking ingredients     Yongsheng Ganxian shop, Jiaozuo City
Daily use Lodging items         Xinya shopping center, Jiaozuo City
Daily use Lodging items         Baolong Shiye Corporation Ltd., Henan Province

Our hotel division maintains a 10-day supply of common consumable goods, such as
alcohol products, guest room sundries and similar products, which is considered
standard industry practice. We believe that there are a number of alternative
suppliers for all of these products.

                                       10

Seasonal Variations

Our hotel division experiences minor seasonal variations in overall revenue:

o    Lodging Operations.  Lodging revenue peaks during the period of April
     through October. This time coincides with peak vacation travel season and
     the period of April through June when many Chinese companies hold bi-annual
     company meetings.

o    Food and Beverage Operations.  Food and beverage revenues peak during the
     period of January through April. This is the time in the lunar calendar
     traditionally associated with the Chinese New Year.

o    Entertainment Operations.  Entertainment revenues experience no seasonal
     variations.

o    Conference and Meeting Operations.  Conference and meeting revenues peak
     during the periods from April through June and November through December.
     These periods coincide with the times when many Chinese companies hold
     their biannual meetings and product shows.

Potential Future Growth and Operations

Our hotel division is involved in a number or projects scheduled for completion
within the next two years. These projects are in the development stage and,
accordingly, may never be completed.  These include:

o    Athletic Club. Our hotel division is researching the construction within
     the existing space of the main building fifth floor, a full-service,
     state-of-the-art western-style athletic club. The club would include:
     o    Handball and racquetball courts
     o    Indoor lap pool, locker room facilities
     o    Aerobics room with shock resistant flooring
     o    Resistance weight training equipment
     o    Aerobic conditioning equipment
     o    Training center
     o    Lounge area
     o    Athletic pro-shop
     o    Cafe style juice bar

o    Penthouse Suite.  Our hotel division is researching design options for
     constructing within the existing space of the 21st and 22nd floors of the
     main building a high quality Presidential Suite. The suite would include:
     o    Indoor pool
     o    Atrium
     o    Meeting conference room
     o    Roof garden
     o    Living room and dining rooms suitable for reception style entertaining
     o    Deluxe kitchen
     o    Jacuzzi
     o    Wet and dry saunas
     o    Private secured access
     o    Private balcony
     o    Two guest rooms

                                       11

o    Restaurant Expansion.  Our hotel division is researching the feasibility of
     opening one restaurant in Zhengzhuo City and one restaurant in Beijing. Our
     hotel division is researching, and has discussed with a number of
     interested parties, the terms of site specific management and ownership,
     including acquisition, franchise, partnership, and management agreement,
     regarding a restaurant opening.  Both restaurants would bear the Yi Wan
     name and specialize in a unique blend of Guangdong and Henan style cuisine.
     Both restaurants would target up-scale, urban customers.  We have not
     entered into any specific agreements regarding a restaurant opening and
     there are no assurances that we will be successful in securing any
     agreements relating to any such opening.

o    Lodging Expansion.  Our hotel division is researching the feasibility of
     hotel expansion through franchising the Yi Wan name and hotel-restaurant
     operating systems. At present, the Jiaozuo Industrial Institute is working
     with hotel management to draft the initial franchise offering framework.
     The target market for franchise operations would be formerly government
     owned hotel properties in the northern central provinces.

o    Lodging Association.  Our hotel division is researching the feasibility of
     joining an international hotel association such as "Leading Luxury Hotels
     of the World" or similar association.

o    Training Center.  Our hotel division is researching the feasibility of
     creating a hotel and restaurant management and operation training center.
     The program would utilize the proven training techniques of the Yi Wan
     developed training systems. The target market would be the owners of
     recently purchased formerly government owned hotels.  Training facilities
     would be located within existing space of the employee dormitory and the
     hotel main building.

If we are successful in completing these projects and implementing them into our
operations, we will be required to hire the following additional employees:
Athletic Club:
2 managers
20 employees

Penthouse Suite:
2 managers
15 employees

Restaurant Expansion:
5 managers
60 employees


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Lodging Expansion:
3 managers
3 employees

Training Center:
5 managers
30 employees

Our Market

Our hotel is located in the metropolitan city of Jiaozuo, Henan province, and
considers the city of Jiaozuo and all communities within a 30-mile radius to be
its primary market. Information regarding this metropolitan area is contained in
the Market Section relating to our Agricultural Division described above.

Our hotel division has two primary target markets:
o    Travelers
o    Local professionals.

Our "travelers" market includes individual business travelers, individual
leisure travelers, and group professional travelers. Our "local professionals"
market includes local individual business and government professionals, and
groups of professionals. In China, there are many conferences involving various
groups to exchange ideas and share study results, including marketing seminars
and fairs and exhibitions from different industries, city-wide, province-wide
and nationwide.

Examples of these conferences are:

Meetings held by government agencies:
o    Jiaozuo City No. 8 Women Representatives Meeting, 400 people
o    Henan Province Food Suppliers Planning Meeting, 350 people

Meetings held by companies:
o    Jiaozuo Jinlong Cable Co., meeting of directors, 40 people
o    Jiaozuo Electricity Plant 5th Anniversary Celebration, 400 people

Marketing seminars:
o    Shandong Industrial Machinery Co., product exhibit and sales meeting, 180
     people
o    Guangdong Kelon Electronic Co., product exhibit and sales meeting, 120
     people

Our hotel division uses a variety of methods to reach its customers, including
advertising and promotional events as described below.

Advertising. Our hotel division conducts extensive product promotional
advertising in several venues:
o    Local television advertising
o    Airport and train station billboards
o    City promotional materials
o    Local print media
o    On-site point-of-purchase

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Promotional Events. These promotional events are chiefly coordinated through our
hotel division's sales department in conjunction with its entertainment and food
and beverage operations. Primary on-going promotional events include city league
bowling tournaments, corporate bowling tournaments, big name celebrity
entertainment event ticket give-aways, regional or national cuisine tasting, and
other culinary events.

Charitable Giving and Sponsorship. Our hotel division promotes its hotel by
corporate sponsorship of charity events and donations to local philanthropic
efforts.

Competition

The hotel industry in China and, in particular, the Henan province is highly
competitive. Within the primary market, there are nine hotels licensed by the
government to accept foreign guests. Hotels are rated by the National Tourism
Administration in the following areas: fitness, maintenance of fitness,
sanitation, service level, and guest satisfaction. The highest rank is five
stars. The Jiaozou Yi Wan Hotel is the only four-star-rated hotel in the primary
area. There are two three-star-rated hotels in the primary area. For example,
Hilton and Holiday Inn Grand are rated as five stars, which meet the
international highest standard. Three star hotels are similar to Holiday Inn
Express. Hotels rated with three stars and above are permitted to accept foreign
tourists. The Jiaozou Yi Wan Hotel obtained the title Appointed Tourist Unit
issued by the Travel & Tourism Bureau of Henan Province as early as January
1997, thereby permitting it to receive foreign travelers.

Competition Relating to our Lodging Operations

Our hotel division's two main competitors are the Jiaozuo Yueji Hotel and
Jiaozuo Hotel. Both of these hotels are government owned and operated and have
received a three-star rating. These two hotels have a combined total of
approximately 130 guest rooms, and offer the following services and products:
o    Full service restaurant (less than 200 person capacity)
o    Beauty parlor, business center
o    Sundries and gift store
o    Night club and karaoke suites (150-200 person capacity)
o    Massage service
o    Small and medium sized meeting and conference rooms (less than 100 person
     capacity)

These competitors engage in some advertising efforts and compete primarily for
price sensitive travelers, including budget business, leisure, and group
travelers. We also believe that our Hotel Division has the ability to favorably
compete against these hotels within its primary markets for the following
reasons:
o    Higher quality guest room physical condition, due to recent renovation
o    We believe that these competing hotels are in need of overhaul and
     renovation
o    Cleaner guest rooms
o    Higher number of in-guest room amenities
o    Higher quality peripheral hotel services (restaurants, entertainment,
     meeting rooms)

                                       14

Our hotel division believes that it would take substantial effort for these
competitions to match our lodging product.

Competition Relating to our Food and Beverage Operations

Our hotel division offers what it considers to be a fresh and innovative fusion
blend of Cantonese and Henan style cuisines. This style has become its culinary
signature and all menus in each of the three food and beverage facilities
reflect this central theme.

To support this strategy, our hotel division has hired 12 chefs from Guangdong
and 16 from Henan. Two chefs are designated solely for the production of dim
sum, a Guangdong specialty.

To stimulate the generation of new menu items, our hotel division requires each
chef to create one new menu item each month and to daily meet and greet a
specific number of guests. This program is known as the Chef New Product
Development Program. Chefs are motivated to create new menu items through a
bonus system and promotion options. To our knowledge, no other competitor has a
similar program.

Our hotel division places heavy emphasis on the purchase of natural raw
ingredients and operates a special purchasing program to source these raw
ingredients. Our hotel division owns the only industrial size fruit juicer
machine in the primary area and is the only facility to offer a wide selection
of fresh fruit juices.

Competition Relating to our Entertainment Operations

Night Club.
Our hotel division faces competition from the two- and three-star hotel
nightclubs in our primary market, the Jiaozuo Yueji Hotel and Jiaozuo Hotel,
respectively. Both competitors are physically smaller and configured in a social
club format featuring a center dance area. Both offer occasional live local
entertainment. Neither of the competitors engages in wide promotion effort.

We believe that our hotel division has the ability to favorably compete because
the hotel has:
o    Higher quality lighting and special effects capabilities
o    Higher quality sound system
o    Distinctive atmosphere created through internal architectural detail and
     decoration
o    Larger physical size
o    Greater seating variations, including floor table, booth, and the deluxe
     balcony booth
o    Unique floor show offering
o    Greater variety entertainment (weekly changing floor show programs)
o    Unique "big name" celebrity entertainment events (no other entity in the
     province offers these events)
o    Higher quality karaoke suites

                                       15

Trademarks, Licenses and Concessions

Our hotel division has registered the Jiaozuo Yi Wan Hotel Co., Ltd. name and
the Yi Wan hotel operations logo with the Ministry of Administration and
Trademarks. Our hotel division has a business license in China, which currently
expires in December 2027. The trademark is registered in perpetuity provided
yearly fees are paid.

Our hotel division is considered to be a foreign investment joint venture by the
government in China and receives special income tax treatment from both the
provisional (Jiaozuo City) and central government in China, which concessions
were granted in 1997. Under the special tax treatment, the hotel company was
exempt from central and provincial government income tax for the years ended
December 31, 1997 and 1998, followed by a 50% reduction in the central and
provincial government income tax for the next three years ended December 31,
1999, 2000, and 2001. When this status expires, our hotel subsidiary will be
subject to central government income tax at a rate of 30% and a 3% provincial
government income tax.

The China National Tourism Board is the central government agency in China that
establishes regulations and requirements for the entire nation. The Travel and
Tourism Board of Henan Province is a legal government agency that governs
compliance to the central government's regulations and requirements that a hotel
must meet to be qualified to receive foreign travelers, as follows:
o    A high standard operating facility, including building and equipment;
o    A qualified management and service team;
o    A facility equipped to provide service to tourist groups; and
o    A facility that meets the health and fire safety standards.


An initial certification and annual review is conducted by the Travel and
Tourism Board of Henan Province to be qualified to receive foreign travelers. If
a hotel fails to meet the above standards, the certification may be withheld.
Our hotel received its certification on January 1, 1997 which has been renewed
every year up to and including January 2002. Our next annual inspection is
scheduled for approximately January 2003.


Employees

As of December 31, 2001, our hotel division employed a total of 595 full-time
employees, comprised of approximately 60 management personnel and 535 employees.

Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.

History

Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co., our
agriculture division, raises and sells specialty aquatic products, such as
perch, shrimp, crab, and soft-shelled turtles. In 1997, this agriculture company
acquired a land use permit from the Jiaozuo City government for three parcels of
land comprising 231 acres located near the southeastern perimeter of Jiaozuo. In
1997 and the first quarter of 1998, our technology agriculture company
recruited technical staff and constructed farming facilities. In 1998, the
agriculture company entered into several research and development and training
agreements with Henan Agricultural College, Zhanjiang Sea Products College, and
the Shenzhen Sea Products Institute. In 1997, the agriculture company began
limited cultivation of a wide variety of seasonal land-based vegetable crops.

Principal Products

Our agriculture division produces four major products, for which it derives over
90% of its annual revenues. Those products, which are considered traditional
gourmet items to the culinary palette of people in China, are as follows:
o    Fresh water shrimp
o    Fresh water crab
o    Soft-shell turtle
o    Perch

                                       16

Ancillary Products

Our agriculture division also produces a variety of vegetable crops, including
tomatoes, cabbage, and carrots from which it derives less than 10% of its total
revenues.

Operations

The main features of our agriculture division's production technology are:

o    Water Technology. Technologies, which allow shrimp to be born in salt water
     and raised in fresh water. The mature shrimp grow to twice the size of
     shrimp produced in salt water.

o    Production Space. Technologies, which allow for stacked production surface
     areas for crab and shrimp within a single tank.  This high density
     production technology yields increased production volume as well as
     production efficiencies.

o    Oxygenation. Technologies to oxygenate the water in which products are
     raised allow for the continual maintenance of optimum water oxygen content
     as well as allowing for higher density production areas.

o    Water Flow. Technologies to circulate the water in which the product is
     raised, known as micro-flow water circulation, allow for the continual
     maintenance of optimum water flow conditions as well as allowing for higher
     density production areas.

o    Water Purification. Organic technologies purify the water, in which
     products are raised, which eliminates contaminates often associated with
     chemical water purification. We believe that this technology results in
     better taste and a healthier product.

o    Ion Separation.  Separation technologies remove heavy metal ion from the
     water in which the products are raised.  We believe that separation
     technologies promote more rapid growth of our agriculture company's
     products.

o    Climate and Water Temperature Control. Technologies to maintain optimal
     water and ambient air temperatures for all products allow production of
     products in optimum conditions throughout the year regardless of seasonal
     weather variations.

There are several primary factors that could affect the production process of
our agriculture division, including:

o    Disease.  Although we take precautions necessary in the areas of disease
     prevention and disease testing, a new, unforeseen, and potentially
     non-treatable disease may occur in the future.


                                       17

o    Flooding.  Although the national and local governments have increased flood
     control efforts within the past year, our agricultural facility, due to its
     close proximity to the Yellow River, may experience flooding in the future.

Our agriculture division endeavors to provide products upon customer demand.
Because of its inability to rush production to meet demand, we must keep a
sizable volume of product in the work-in-process stage of production.

Within our agriculture division, the following products accounted for the
following percentage of revenues from 199 9 to 200 1 :


                                   1999                2000              2001

Crab                                37%                 29%              21%
Shrimp                              31%                 33%              28%
Perch                               15%                 15%              16%
Soft-shell turtle                   9%                  13%              35%
Vegetables                          8%                  10%



Seasonal Variations

Our agriculture division experiences seasonal variations in revenue from the
sale of its products. The reasons for these variations include:

o    Aquatic Products. Revenue from the sale of aquatic products peaks during
     the period of January through April, which is the time in the lunar
     calendar traditionally associated with the Chinese New Year. We have the
     only indoor production facility in the province capable of producing
     products in the freezing temperatures of winter.

o    Vegetable Products.  Revenue from the sale of land-based vegetable products
     peaks during the growing season of April through November.  We do not
     generate revenue from vegetable production during the non-growing season.

Suppliers

For the aquatic products and feed, our agriculture company has one year
contracts with certain suppliers. However, no price and no purchase quantity are
set in the purchase contracts. Prices may vary based on the market price. The
quantity purchased varies depending on our production plans.

We purchase hatchling perch, shrimp, crab, and soft shell turtles to raise. Our
current sources of these fish are:

o    Aquatic Product Research Institute, Shenzhen City, Guangdong province
o    Gong Cheng Trading Company, Zhanjiang City, Guangdong province
o    Jiang Xing Fishing Company, Shun de City, Guangdong province


                                       18

Purchases of other raw material are purchased from:

o    Jiaoxi Coal Transportation Company of Jiaozuo Mineral Bureau, Jiaozuo City,
     Henan province, provides coal.
o    It of Agricultural Materials of Wuzhi County, Henan province, provides
     fertilizer, pesticides, and seed.
o    Jiaozuo Wujaohua Materials Supply Centre, Jiaozuo City, Henan province,
     provides fertilizer, pesticides, and seed.
o    Zhengzhou Mingda Co., Ltd., Zhengzhou City, Henan province, provides fish
     food.

Our agriculture division has a number of sources of alternative vendors for raw
materials. We believe that we maintain good relationships with our current
suppliers. Management does not expect any difficulty in finding other suppliers
in the event that our existing supplier relationships would terminate.

Possible Future Operations Plans



During 2001, as a result of highway construction, the FARM has lost its source
of natural water necessary to raise and grow the farm's products. The FARM has
ceased its operations during December 2001 and management is in the process of
formalizing a plan to dispose of the FARM operations. The FARM is also in
negotiation with the local government concerning their land use right and
alternatives concerning the ultimate use of the land. Subsequent to December 31,
2001 there has been no formalized plan adopted to dispose of the FARM's
operations and no provision has been made within financial statements for the
year ending December 31, 2001 for the ultimate disposition of the FARM's
operation.


Trademarks, Licenses, and Concessions

In 1997, our agriculture company acquired land use permits from the government
for three land parcels comprising approximately 237 acres. These permits allow
us to conduct our operations on those parcels for a 50-year period. Our
Agriculture Division has also obtained a business license with a term from April
1997 until August 2028. We currently have no patents or trademarks relating to
our Agriculture Division.

Our agriculture company qualifies as a foreign investment joint venture by the
government in China and receives special income tax concessions from both the
provisional and central government in China, which were granted in 1997. Under
this special tax treatment: (a) our agriculture subsidiary was exempt from
central and provincial government income tax for two years, starting with its
first year of profitable operations, which was for the years ended December 31,
1997 and 1998; (b) followed by a 50% reduction in the central income tax; and
(c) a 100% exemption from provincial government income tax for the next three
years ended December 31, 1999, 2000, and 2001. When this status expires, our
agriculture company will be subject to a 30% central government income tax and a
3% provincial government income tax.

In 1996, China adopted the United States/China Intellectual Property Rights
Agreement. This agreement was adopted in conjunction with China's increased
efforts to enforce domestic and international property rights within China.
Trade secret technologies are protected in China under the PRC Anti-Unfair
Competition Law, adopted on September 2, 1993. Under this law, technical and
management information, including designs, processes, formulae, production
techniques and methods that are unknown to the public and of practical economic
value are protected. Similar to U.S. trade secret laws, the owner of such
property must take reasonable protective measures to keep the relevant
information secret.

Internal company enforcement of trade secret rights in China is commonly
accomplished through a monetary reward system. There can be no assurance,
however, that this system will be effective if the reward levels are
insufficient to provide an incentive for the reporting of trade secret
violations.

                                       19




External enforcement in China regarding trade secret violations is accomplished
through administrative complaints filed with the State Administration for
Industry and Commerce agency or the corresponding local Administration for
Industry and Commerce office. Articles 5, 6, 7 and 9 of the SAIC Certain
Provision Concerning the Prohibition of the Infringement of Trade Secrets
provide the agency with wide ranging powers to investigate, enjoin and fine
violators of trade secrets. In addition, owners of trade secrets can petition
the civil courts for damages under the PRC Anti-Unfair Competition Law. The
effectiveness of these enforcement techniques, however, is dependent upon the
extent of local protectionism and the lack of experience of local officials in
the application of a relatively new body of substantive law.

Our agriculture company has obtained its technologies by the use of traditional
technologies or new technologies developed by its research and development
department. In addition, our agriculture company has contracted with other
research institutes to develop new technologies.

The traditional technologies that we use are the basic and common technologies
used in the agriculture industry in China, examples of which are: (a) water
technology which allows shrimp to be born in salt water and raised in fresh
water; (b) oxygenation technology which oxygenates the water in which
aquaculture products are raised; and (c) ion separation which uses separation
technology to purify the water in which aquaculture products are raised. Because
these traditional technologies are standard in the aquaculture industry, there
are no patents on such standard technologies. As such, these technologies are
not subject to patent infringement.

Because agriculture technologies are characterized by rapid change, we have
chosen not to apply for patents. To protect our proprietary technologies from
unauthorized use or disclosure we attempt to retain and maintain employee
loyalty to our agriculture company through a higher wage scale. Our
director/manager and ten technicians in the research and development department
have been employed at our agriculture company since its inception. When we
contract with other research institutes, we require a "confidential period"
which prevents our contracting research institutes from using our technologies
or disclosing them to outside parties. These confidential periods vary in length
depending upon new technology being developed and technology obsolescence;
however, because these technologies are characterized by rapid change, the
confidential period typically ranges from six to twelve months.

There are no assurances that our methods of protecting our proprietary
technologies from unauthorized use or disclosure will be effective if: (a) our
monetary award system is insufficient to provide an incentive for the reporting
of trade secret violations; (b) external enforcement by government officials is
ineffective, minimal or non-existent; (c) we fail to take reasonable protective
measures to keep relevant information secret.

Number of Employees


As of December 31, 2001, we had 20 full-time employees. These employees consist
of 5 managers and 15 employees.


Shun Di Yi Wan Communication Equipment Plant Co. Ltd.

The business of Shun de Yi Wan Communication Equipment Plant Company, our
telecommunications division, focuses on:

o    Designing and manufacturing telephone network switching component parts for
     use in telephone main distribution frames; and


                                       20

o    Manufacturing and selling assembled telephone main distribution frames.

A telephone main distribution frame connects a company's or individual's
internal telephone system to the telephone company's external lines.

Our telecommunications division's initial design and production efforts focused
on developing analog switching component parts and the manufacture of a series
of analog main distribution frames. Recent design and production efforts have
expanded to include digital switching component parts and the manufacture of
digital telephone main distribution frames.

Some of the significant events in our telecommunications division's history
include:

o    In 1995, our telecommunications company earned the award for product
     excellence and development from the National Ministry of Post and
     Telecommunications, also known as the Ministry of Information and Industry
     in China.

o    In 1996, our telecommunications company received two patent certificates in
     China from the Ministry of Trademarks and Patents for design of a switching
     component part and a tool used in the assembly and on-going maintenance of
     telephone main distribution frames which provides for patent protection in
     China only.

o    In 1996, our telecommunications company received the public verbal
     commendation for product excellence and contribution to the development of
     the nation from the Vice Minister of the Ministry of Posts and
     Telecommunication, Mr. Xie Gaojue.

o    In 1997, our telecommunications company produced in China the telephone
     switching equipment industry's first intelligent management system software
     used for the monitoring and management of telephone distribution frame
     performance.  Although the main distribution frame management system is not
     proprietary software, our telephone communications manufacturing company
     has encrypted the software to protect its patent on the equipment.

Products and Services

Our telecommunications division specializes in producing communication
connecting and distributing equipment called main distribution frames for
telephone exchange systems. A main distribution frame is the main distribution
facility of a network, often described as a main hub or central hub, which is
used as the starting point of a site network. The main distribution facility is
typically used where the outside telephone line connections and internal
telephone line routers converge.

There are three primary types of main distribution frames:

o    Analog - Standard telephone line, some times referred to as plain old
     telephone service.

                                       21

o    Digital - Often referred to as integrated services digital network or
     referred to as ISDN, a digital line registers the human voice over the
     telephone network using a stream of ones and zeros.  The effectiveness of
     ISDN allows many advanced features to be programmed on these phones,
     including multiple call appearances and data transmission.

o    Optical - Uses fiber optic light cables that have larger capacity, higher
     speed, and wider bandwidth than ISDN.

Our telecommunications division manufactures two types of analog and one type of
digital main distribution frames. In addition, this division produces its own
component parts and assembles them into distribution frame configurations at its
manufacturing facility. The component parts and peripheral frame parts are
stored in inventory until an order is received. At the time an order is
received, parts are drawn from inventory and assembled to meet the customer's
specifications within existing product line parameters. The product is then
transported to the customer via third party delivery. Upon arrival at the
customer's site, a sales technician assists the customer in the installation of
the distribution main frame and reviewing operating procedures.

Every model produced by our telephone communications manufacturing company can
be specially designed to have different capacities according to the clients'
requirements for the nature and quantity of the lines. All of the distribution
frames can be combined, coupled, and matched to become a distribution frame
system with a much larger capacity.

Our telecommunications division experiences seasonal variations in revenue from
the sale of its products. Because the majority of this division's customers are
divisions of government ministries, its revenue stream closely follows the
government schedule of planning and procurement. Because ministries plan and
petition the government for funds to purchase equipment during the period from
March through June, revenue is at the lowest point of the year during this
period. During the period of July through December ministries place orders; as a
result, revenue peaks during the months of September through December. During
the period of January through February, final orders are filled and revenue
begins to decline.

Suppliers

The primary suppliers of raw materials to our telecommunications division, which
are located within an approximately 1300 mile radius are:
o    Sanshui Jin Hu Industrial Plastic Plant
o    Foshan No. 8 Telecommunication Co.
o    Foshan Wanxin Information Technology Co.
o    Zhuhai Economic Special Zone Southeast Electronic Co.
o    Shun de Lecong Trading Mall
o    Shun de Lunjiao Jizhou Weiye Paper Box Plant
o    Zhangjiaogang Electronic Plant
o    Simens Vacuum Component Co. Ltd.
o    Guangzhou Non-ferrous Metal Graduate School
o    Changshu Linzhi Electronic Co., Ltd.

                                       22

Seventy to eighty similar supplier companies are located in the same area as the
above suppliers. Consequently, we do not believe that our telephone
communications manufacturing company would have any difficulty in locating
alternative suppliers.

Market

The level of telephone network development varies greatly among China's various
regions. Generally, the level of development is highest in the southern and
coastal provinces where the majority of the market for our telecommunications
division is located. At present, large portions of China are not sufficiently
developed from a technological standpoint to utilize telephone network
distribution technologies. However, the national government has acknowledged
that China's central province areas are where the next wave of economic
development will occur. To this end, our telecommunications division has
targeted the northern central provinces as a secondary target market area.

In China all public telephone communication is coordinated by the government's
Ministry of Information and Industry, formerly known as the Ministry of Post and
Telecommunications, through a series of municipal ministry agencies. There are
no private telephone service providers. Additionally, other national ministries
maintain their own separate telephone communication networks.

Our telecommunications division's primary customers are municipal agencies of the
national Ministry of Post and Telecommunications, other national government
ministries such as the Ministry of Rail Transportation, Ministry of Electric
Power, the People's Liberation Army, and large government and private
businesses. Its principal customers are either local or national government
entities that could cancel an order or renegotiate the terms of sale at any
time. However, since all production is on a per job basis and there are no
long-term production agreements, the risk of cancellation or renegotiating is no
greater than with any non-government customer.

In order to sell its product to government entities, our telecommunications
division is required to obtain a permit from the Ministry of Information and
Industry. This permit is granted each year and is based on inspection of product
quality and the company's operations. Failure to obtain this permit could reduce
our revenues derived from Shun de Yi Wan Communication Equipment Plant Company.

Potential customers in China are primarily obtained through sales calls or
visits from its sales staff. In addition, our telecommunications division
undertakes the following activities:

o    Trade Shows. Promotion of its brand name through active participation in
     trade shows throughout China.  Participation often includes keynote seminar
     presentations.

                                       23

o    Advertising.  Promotion of its brand name through on-going advertising in
     industry trade publications and by maintaining a listing on the Ministry of
     Post and Telecommunication Internet website.

o    Public Relations.  The sales department promotes the telecommunications
     division's brand name by maintaining an active and on-going "client
     focused" public relations effort. This effort includes frequent telephone
     communication, on-site visits, and complimentary entertaining and gifts to
     existing clients.

o    Industry Trade Articles.  Promotion of its brand name by frequently
     contributing to trade publications research articles that highlight
     technological trends and developments.

Our telecommunications division only uses in-house sales persons. Each
individual sales person receives commissions of 1.5 - 2% of total sales.

Licenses, Trademarks, and Patents

Our telecommunications division has registered its name and its logo with the
Ministry of Administration and Trademarks.

The term of our telecommunications division's business license is from September
1993 to September 2019, which permits it to operate as a company in China for
that period. Business licenses in China are granted only for a specific period
of time. Upon a business license expiration date a company must make a
reapplication for a new license.

Our telecommunications division has received two patent registrations from the
Ministry of Administration and Trademarks in China; the patents are registered
in perpetuity, provided yearly fees of $7,300 are paid to the Ministry of
Administration and Trademarks:

1.   A component part used in the assembly of analog telephone main distribution
     frames registered as patent number 235727.
2.   A tool used by customers to simultaneously install two wire clips into a
     distribution frame, registered as patent number 213907.

Competition

The business of our telecommunications division is highly competitive. Many
companies that have greater capital resources and more established reputations
provide the same products and services that our telecommunications division
provides. If competitors lower their prices or our telecommunications division
is forced to lower its prices, our revenues derived from this division may be
reduced.

Moreover, our telecommunications division's competitors may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements. In addition, our telecommunications division's competitors may be
able to devote greater resources to the development, promotion, and sale of
their products and services.

                                       24

Nationwide, there are 60 companies in China licensed to produce telephone
distribution switching equipment. Competitors compete chiefly on the basis of
price and technological capabilities. Thirty of the 60 companies licensed by the
government to produce and sell telephone distribution frames in China are
approved by the government in China to be suppliers, one of which is our
telecommunications division. Of these 30 companies, the four largest competitors
have a combined market share of 60%. Our telecommunications division has an
approximately 10% market share according to the China Telecommunication Industry
Annual Report for the period from 1996 to 1999 published by the Ministry of Post
and Telecommunications. According to the same publication, the total demand for
telephone distribution switching equipment in China is 21,480,000 lines
nationwide, and our telecommunications division's sales are approximately
2,000,000 lines.

Future Product Research and Development

Our telecommunications division's plan of operations over the next 12 months
will primarily consist of its research and development into various proposed
products, as follows:

Digital Switching Components

Our telecommunications division is involved in research and development projects
concerning production of component parts capable of utilizing digital switching
technologies and the manufacture of digital switching telephone main
distribution frames. We produce a limited line of digital switching components
and manufacture one digital switching telephone main distribution frame. We are
also researching our building an expanded product line of digital switching
telephone main distribution frames.

Optical Switching Components

Our telecommunications division is involved in a number of research and
development projects concerning the production of component parts of optical
switching telephone main distribution frames. At present, our telecommunications
division does not posses the technology to produce optical switching components
or optical switching telephone main distribution frames.

Conference Language Interpretation System

Our telecommunications division is in its advanced stages of research,
development, and testing of equipment suitable for multi-lingual conference
communication, and audience response tabulation. This product is based on
existing switching component technologies and is capable of five language
channel simultaneous communication, audience voting tabulation, and five
category multi-choice response tabulation. The product utilizes touch pad
technology and is capable of visually communicating information on each audience
member's screen. There are two versions of this machine in the testing phase:
one intended for audience sizes from 1-100 persons and the other intended for
audience sizes from 101-400 persons. The results of these tests have been very
favorable with the results of the smaller unit showing slightly fewer required
modifications than the larger unit. We are proceeding with on going testing and
modification of both units.

                                       25

Our telecommunications division spends the following funds for research and
development purposes:

1999 - 104,391.69 RMB or approximately U.S. $12,600

2000 -  61,398.02 RMB or approximately U.S. $7,400


2001 - 80,000 RMB or approximately U.S. $9,638


In order to complete these projects, it will need to spend at least:
Digital Switching Components     8,800,000.00 RMB
                                    or approximately U.S. $1,060,000.

Optical Switching Components     6,100,000.00 RMB
                                    or approximately U.S. $736,000.

Conference Language
       Interpretation System     8,000,000.00 RMB
                                    or approximately U.S. $970,000.

We anticipate that these funds will be provided from our telecommunications
division's operating cash flow.

We anticipate hiring the following additional employees over the next 12 months
to accomplish our research and development projects: 10 technical employees.

Number of Employees

As of December 31, 2001 we had approximately 130 full-time employees,
consisting of 20 managers and 110 employees.

DOING BUSINESS IN CHINA AND GOVERNMENT REGULATIONS IN CHINA

CHINA'S ENTRY INTO THE WORLD TRADE ORGANIZATION

China became a member of the World Trade Organization (WTO) on December 11,
2001. The WTO is the only international organization dealing with the global
rules of trade between nations. Its main function is to ensure that trade flows
as smoothly, predictable and freely as possible. The WTO is the successor to the
General Agreement on Tariffs and Trade (GATT). China's entrance into the WTO
potentially will bring profits, and challenges as well, particularly for the
following industries:

     Agriculture - Overall average tariff on agricultural products are reduced
     to 17 percent by 2004. For U.S. Priority products, the reductions are
     greater, dropping to 14.5 percent. China agreed to lift immediately, upon
     signature of three bilateral agreements, "unjustified food safety bans on
     wheat, citrus and meat, resolving protracted disputes."

     Telecommunications  - China  agreed to drop geographic restrictions on
     imports of pagers, mobile/cellular phones and domestic wire-line services
     within six years of entry into the WTO. China will also allow up to 49
     percent foreign ownership of all services and 51 percent foreign ownership
     for value added and paging services within four years of entry.

     Banking - China agreed to allow foreign banks to conduct business in local
     currency within two years.

     Insurance - Foreign ownership of life insurance firms of up to 50 percent
     will be allowed upon WTO entry, increasing to 51 percent after one year.
     Non-life and reinsurance firms will be allowed to take a 51 percent stake
     in a joint venture immediately and be permitted to form wholly-owned
     subsidiaries in two years.

     Technology - By the year 2005, China will eliminate tariffs on
     semiconductors, computers computer equipment, telecommunications equipment
     and other technology products.

     Autos - Reduction in auto tariffs from their current 80-100 percent to 25
     percent in 2005, with auto parts tariffs cut to an average of 10 percent.
     Quotas on auto imports will be phased out by 2005.

     Travel and Tourism - China agreed to allow unrestricted access to the
     Chinese market for hotel operators immediately upon WTO entry, with 100
     percent foreign ownership allowed within three years of entry.

     Chemicals - China has pledged to reduce tariffs to the levels of other WTO
     members of around 5.5-6.5 percent.

     Wood and Paper - Tariffs cut from present levels of 12-18 percent for wood
     and 15-25 percent for paper to between 5 and 7 percent.

China's WTO membership brings opportunities to achieve greater market share,
introduce a wider range of products and services, streamline corporate
structures, and gain control over distribution and after-sales services.

China's WTO membership will likely leave far-reaching influences on China's
domestic industries. Chinese enterprises may benefit from multinational
management experience of other countries and, as a result, change their
management structure, possibly leading to business innovation and increased
international business. Some industries that previously enjoyed high tariff
protection, however, such as automobiles, agriculture, oil refining, chemical
fibers and drugs, will experience operational difficulties as tariff rates are
lowered, market access expands and intellectual property protection is tougher.

Agriculture:

In the next 5 years, China will reduce its average tariff rate on agricultural
imports from 22 to 17,5 percent. In the meantime, China will also reduce many of
its current non-tariff barriers to trade. This will result in the removal of
export subsidies, accepting international quarantine standards for food
products, enlarging import quotas significantly for major agricultural
commodities and allowing private traders to participate in international trade.

Now that China has entered the WTO era, the agricultural sector is facing a
higher demand for food as a result of population and income growth, as well as
an enlarged export market. Fast development of the economy will provide farmers
such as our farm division with more non-farming employment opportunities. New
technologies, especially information technology and biotechnology will
increasingly be available to farmers. New government regulations will be more
market-oriented. However, farmers such as our farm division still struggle with
uncertainties in land tenure system and suffer from heavy tax and levy burdens.
Small farm scale makes it costly for farmers to adopt new technology. Moreover,
we are facing the competition of cheap and high quality agricultural imports as
a result of the WTO entry.

Telecommunications

According to the terms of WTO membership, tariffs on IT products, such as
computers, semiconductors, and all Internet-related equipment will fall from the
current average of 13.5% to 0% by the year 2005. Foreign participation in
China's basic wireline telecom services will be permitted. Foreign participation
in basic telecom services will be allowed from 25% to 49% in about six years
after China's WTO entry, while geographic restrictions on different telecom
services will be phased out within five or six years.

An increase in the number of network operators could bring more business
opportunities to domestic equipment manufactures. Lower tariffs on telecom
equipment could have a limited impact as domestic makers do not count on
protection from high tariffs.


China's domestic telecom equipment manufacturers have as a whole achieved
breakthroughs in their development. The digital switching systems, which enjoy
independent intellectual property rights, have reached advanced international
standards. The signal and command systems, network administration systems, ISDN,
interfaces for various services and software functions are more suitable for the
Chinese telecom network. For these enterprises, such as our Telecommunications
division, China's WTO entry not only clears the way for us to march into the
international market; it also brings us more opportunities for further
development.


Hotel and Tourism

The accession into the WTO will provide opportunities for China's tourism
industry. The tourism sector in China will become more proactive in Asia and
play an important part in the global tourism market. China's accession into the
WTO will have a number of positive effects on inbound tourism in China. First,
it will be conducive to optimizing the development of all sectors related to
inbound tourism such as the financial industry, the information industry, and
the auto industry. Second, it also will be conducive to establishing operational
mechanisms that conform to international management practices so as to provide
an ideal situation for the development of inbound tourism. Third, it will be
conducive to increasing international arrivals. By becoming a WTO member, China
agreed to allow unrestricted access to the Chinese market for hotel operators
with the ability to see up 100 per cent foreign-owned hotels in three years,
with majority ownership allowed upon accession. Thus, foreign hotels with modern
management concept, service standards, by virtue of their advantage in scale,
customers, brands and network, will compete with our tourist enterprises and
hotel services.


                                       26

GOVERNMENTAL REGULATION OF OUR OPERATIONS IN CHINA

All of our subsidiary companies operate from facilities that are located in the
People's Republic of China. Accordingly, our subsidiaries' operations must
conform to the governmental regulations and rules of China.

Environmental Compliance

Our Hotel, Agriculture, and Telecommunications divisions are subject to the
People's Republic of China's national Environmental Protection Law, which was
enacted on December 26, 1989, as well as a number of other national and local
laws and regulations regulating air, water, and noise pollution and setting
pollutant discharge standards. Violation of such laws and regulations could
result in warnings, fines, orders to cease operations, and even criminal
penalties, depending on the circumstances of such violation. We believe that all
manufacturing and other operations of our three operating divisions are in
compliance with all applicable environmental laws, including those laws relating
to air, water, and noise pollution.

Bureaucratic Review and Approvals and Applicable Laws in China Affecting Our
Subsidiaries:

The Chinese government's involvement and influence in the operation of joint
venture companies is limited to a well defined legal/bureaucratic infrastructure
in three areas operated through three separate State entities:

1. Review by Foreign Investment Commission
Foreign Invested Enterprise joint ventures must be reviewed by the Foreign
Investment Commission, or its delegate, for approval as a Foreign Invested
Enterprise. Changes in ownership identity or registered capital of a Foreign
Invested Enterprise must be reviewed and approved by the Foreign Investment
Commission.

2. Industrial and Commercial Registration Administration Bureau
A Foreign Invested Enterprise must have a business license to operate, which is
issued by the Industrial and Commercial Registration Administration Bureau. In
addition, any change in a Foreign Invested Enterprise's ownership must be
reported to this bureau for a reissue of a business license.

3. Laws Associated with State-Owned Enterprises
The Chinese partners in joint venture Foreign Invested Enterprise companies or
Sino-Foreign Equity Joint Ventures may be State-Owned Enterprises. State-Owned
Enterprises have defined rights and areas of authority regarding a joint venture
as set forth in the joint venture's articles of association and the joint
venture contract. As such, the Foreign Investment Commission and the Industrial
and Commercial Registration Commission have a limited, defined area of
operation, responsibility, and authority. As discussed below, none of these State
entities has the ability to change the laws, the articles, or the contracts
governing the rights, obligations, operation, or existence of joint venture
companies. Further, the minority partners in our joint venture companies are not
State-Owned Enterprises. As a non-State-Owned Enterprise, the minority partners
have no direct relationship with the People's Republic of China government.

                                       27

Sino-Foreign Invested Enterprise Laws: FIE Laws

Both of our joint venture companies are Sino-Foreign Equity Joint Ventures
established under the law of the People's Republic of China in accordance with
the People's Republic of China Sino-Foreign Equity Joint Ventures Law, or EJV
Law. Article 2 of the EJV Law, which provides as follows:

     The Chinese Government, pursuant to the provisions of agreements,
     contracts, and articles of association that it has approved, shall protect
     in accordance with the law the investments, distributable profits, and
     other lawful rights and interests of foreign investors.

Further, the EJV Law provides:

     The State shall not subject joint ventures to nationalization or
     expropriation.  In special circumstances, however, in order to meet the
     requirements of the public interest, the State may carry out expropriation
     against a joint venture in accordance with legal procedures, but
     corresponding compensation must be made.

The first provision set forth above reflects the principle that the State must
protect the interest of the foreign investor based upon an approved Joint
Venture Contract and Articles of Association. This would extend to the control
provisions in the contracts and articles, as control is one of the rights and
interests of the foreign investor in a majority-owned EJV. The second statement
reflects the power that all national governments, including that of the United
States, reserve to them.

In addition, Article 33 of the Implementing Regulations to the Equity Joint
Venture Law provides that "the highest authority of a Joint Venture shall be its
board of directors, which shall decide all major issues concerning the Joint
Venture." Thus, control over the Joint Ventures is vested in the board of
directors, not in the State. While it is true that the State retains ultimate
control of State-Owned Enterprises, Equity Joint Ventures are not State-Owned
Enterprises, but are an entirely separate category of enterprise under the law
of the People's Republic of China. While the State can influence the operations
of a joint venture where a Chinese party is a State-Owned Enterprise, legally it
can do so only through the party's representatives on the Joint Venture board of
directors.

Our wholly-owned subsidiary, Shun de Yi Wan Communication Equipment Plant
Company Co. Ltd., exists in accordance with the People's Republic of China
Wholly Foreign-Owned Enterprise Law, or WFOE Law. Article 8 of the WFOE Law
provides as follows:

     An enterprise with foreign capital meets the conditions for being
     considered a legal person under Chinese law and shall acquire the status of
     a Chinese legal person, in accordance with the law.

Further, the WFOE Law provides in Article 4:

     The investments of a foreign investor in China, the profits it earns and
     its other lawful rights and interests are protected by Chinese law.


                                       28

And, in Article 5:

     The state cannot nationalize or requisition any enterprise with foreign
     capital. Under special circumstances, when public interest requires,
     enterprises with foreign capital may be requisitioned by legal procedures
     and appropriate compensation shall be made.

As with the Equity Joint Venture Law, the first two provisions set forth above
reflect the principle that the State must protect the interest of the foreign
investor based upon approved Articles of Association. The third statement
reflects the power of all national governments, including the United States that
are reserved to them.

Finally, with respect to the potential retroactive effect of any laws passed
concerning existing joint ventures, Article 40 of the Foreign Economic Contract
Law, or FECL, which was adopted in 1985, provides as follows:

     Even if the law makes new provisions, contracts for Sino-Foreign Joint
     Ventures, Sino-Foreign Cooperative Joint Ventures, and for Sino-Foreign
     Cooperative Exploration and Exploitation of natural resources which have
     already been approved by a competent authority of the State, may still be
     performed according to the stipulation of those contracts.

Accordingly, as the above laws indicate, the only realistic method by which the
Chinese Government can effect the operation of these Foreign Invested
Enterprises is provided by the respective Articles of Association. Those
Articles, combined with the Foreign Invested Enterprise laws, provide that the
Chinese Government does not and cannot have an intrusive role in the affairs of
a Foreign Invested Enterprise company. To the contrary, those laws place a
continuing duty on the government to ensure that the rights of foreign investors
in Foreign Invested Enterprise companies, as expressed in the approved
provisions of Articles of Association, are protected and preserved.

Foreign Companies Doing Business in China

There are three standard  investment  vehicles for foreigners  doing business in
China:
o    Equity Joint Venture
o    Cooperative or contract Joint Venture
o    Wholly Foreign-Owned Enterprise

Each of these investment vehicles is known as a Foreign Invested Enterprise.
The applicable legal framework for the establishment and continuation of Foreign
Invested Enterprise laws is as follows:

     General    - People's Republic of China Foreign Economic Contract Law

     Accounting - People's Republic of China Accounting Law
                - Laws Concerning Enterprises with Foreign Investments
                - The General Accounting Standard for Enterprises
                - The Specific Accounting Standards

                                       29

     Equity Joint
     Venture    - People's Republic of China Sino-Foreign Equity Joint
                     Venture Law
                - People's Republic of China Sino-Foreign Equity Joint
                     Venture Law Implementing Regulations

     Cooperative
     Venture    - People's Republic of China Sino-Foreign Cooperative Joint
                     Venture Law
                - Detailed Rules for the Implementation of the People's Republic
                     of China Sino-Foreign Cooperative Joint Venture
                     Law Regulations

     Wholly Foreign-
     Owned
     Enterprise - People's Republic of China Wholly Foreign-Owned Enterprise Law
                - Implementing Rules of the Wholly Foreign-Owned Enterprise Law
                - Interpretations on Various Provisions Concerning the
                     Implementing Rules of the Wholly Foreign-Owned
                     Enterprise Law

The Foreign Invested Enterprise laws specifically referenced in this prospectus
are the People's Republic of China Sino-Foreign Equity Joint Venture Law, the
People's Republic of China Wholly Foreign-Owned Enterprise Law, the People's
Republic of China Foreign Economic Contract Law, and the Accounting Laws.

The Chinese Legal System

The practical effect of the People's Republic of China legal system on our
business operations in China can be viewed from two separate but intertwined
considerations.

First, as a matter of substantive law, the Foreign Invested Enterprise laws
provide significant protection from government interference. In addition, these
laws guarantee the full enjoyment of the benefits of corporate Articles and
contracts to Foreign Invested Enterprise participants. These laws, however, do
impose standards concerning corporate formation and governance, which are not
qualitatively different from the General Corporation Laws of the several states.
Therefore, as a practical matter, a Foreign Invested Enterprise needs to retain
or have ready access to a local Chinese law firm for routine compliance
purposes.

Similarly, the People's Republic of China accounting laws mandate accounting
practices, which are not co-existent with U.S. Generally Accepted Accounting
Principles. The China accounting laws require that an annual "statutory audit"
be performed in accordance with People's Republic of China accounting standards
and that the books of account of Foreign Invested Enterprises are maintained in
accordance with Chinese accounting laws. Article 14 of the People's Republic of
China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned
Enterprise to submit certain periodic fiscal reports and statements to designate

                                       30

financial and tax authorities, at the risk of business license revocation. As a
practical matter, a Foreign Invested Enterprise must retain a local Chinese
accounting firm that has experience with both the Chinese standards and U.S.
Generally Accepted Accounting Principles. This type of accounting
firm can serve the dual function of performing the annual Chinese statutory
audit and preparing the Foreign Invested Enterprise's financial statements in a
form acceptable for an independent U.S. certified public accountant to issue an
audit report in accordance with Generally Accepted Accounting Auditing
Standards.

Second, while the enforcement of substantive rights may appear less clear than
United States procedures, the Foreign Invested Enterprises and Wholly Foreign-
Owned Enterprises are Chinese registered companies which enjoy the same status
as other Chinese registered companies in business-to-business dispute
resolution. Because the terms of the respective Articles of Association provide
that all business disputes pertaining to Foreign Invested Enterprises are to be
resolved by the Arbitration Institute of the Stockholm Chamber of Commerce in
Stockholm, Sweden applying Chinese substantive law, the Chinese minority partner
in our joint venture companies will not assume a privileged position regarding
such disputes. Any award rendered by this arbitration tribunal is, by the
express terms of the respective Articles of Association, enforceable in
accordance with the "United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (1958)." Therefore, as a practical
matter, although no assurances can be given, the Chinese legal infrastructure,
while different in operation from its United States counterpart, should not
present any significant impediment to the operation of Foreign Invested
Enterprises.

Earnings and Distributions of the FIE's

Both the Foreign Investment Equity Joint Venture laws and the Wholly Foreign-
Owned Enterprise laws provide for and guarantee the distribution of profits to
foreign investors in Chinese Foreign Invested Enterprises.

Article 7 of the People's Republic of China Sino-Foreign Equity Joint Venture Law
requires that profits of an equity joint venture be distributed among the
parties in proportion to their respective contributions to registered capital.
These distributions are made from net profits after deducting from gross
profits, a reserve fund, a bonus and welfare fund for workers and staff, and a
venture expansion fund, all as stipulated in the venture's Articles of
Association. The Yi Wan joint venture Articles of Association provide in Chapter
7, Article 43, that allocations for these statutory funds be determined by the
Board of Directors each year "...according to the actual business situation and
profitability of the Joint Venture from after-tax profit."

Article 10 of the People's Republic of China Sino-Foreign Equity Joint Venture
Law allows the net profit which a foreign investor receives as its share of the
Foreign Investment Equity Joint Venture profit to be "remitted abroad in
accordance with foreign exchange control regulations...." Logistically, when
the statutory funds are allocated in accordance with Article 43, and any loans

                                       31

are repaid by the joint venture in accordance with the terms thereof, the
after-tax profits of the joint venture are distributed based upon the ratio of
each party's registered capital. The profits are decided by the board of
directors, whether for distribution or for the expansion of the joint venture's
business; provided, however, that where profits are used for expansion, the
board of directors are required to distribute the profits that are available for
distribution in an amount sufficient to enable each party to pay the tax
liabilities, if any, that they each may incur with respect to the joint
venture's profits.

If the joint venture has incurred losses in previous years, the profits of the
current year must be first used to make up losses. The joint venture cannot
distribute profits until the previous losses are made up. Remaining profits from
previous years may be added to the current year for profits distribution, or for
distribution after making up the current year deficit. The profits of a party
may be used for further investment inside China or may be remitted outside
China.

Where the joint venture has foreign currency available for profit distribution,
each party can receive an amount of foreign currency in proportion to its
respective contribution to registered capital. The joint venture must assist
each party, upon request, in exchanging profits available for distribution in
RMB into United States Dollars using the Foreign Exchange Adjustment Centers and
any other reasonable methods that may be available to the joint venture or any
party. The costs of cash exchanges are the responsibility of the party receiving
the foreign currency profit distribution. All profits distributed to us in
foreign currency are freely remittable outside of China to a bank account
designated by us.

Similarly, Article 19 of the People's Republic of China Wholly Foreign Owned
Enterprise Law provides that a foreign investor may remit abroad profits that
are earned by a Foreign Invested Enterprise, as well as other funds remaining
after the enterprise is liquidated.

Because the three Chinese businesses are controlled foreign corporations, for
U.S. federal income tax purposes, we may be required to include in our gross
income for U.S. tax purposes:

o    Those companies' "Subpart F" income, which includes certain passive income
     and income from certain transactions with related persons, whether or not
     this income is distributed to it; and

o    Increases in those companies' earnings invested in certain U.S. property.

Based on the current and expected income, assets, and operations of the three
Chinese businesses, we believe that it will not have significant U.S. federal
income tax consequences under the controlled foreign corporation rules.


                                       32

Required Statutory Reserve Funds

In accordance with various regulations in China, a Foreign Invested Enterprise,
such as our hotel and agriculture divisions, can distribute their after tax
profit only after making transfers to certain statutory surplus reserves,
collectively referred to as "Surplus Funds." The order of distribution to
investors is:
o    Enterprise or corporate income tax payments;
o    Application to eliminate prior year losses;
o    Transfers to the three statutory funds per regulations;
o    Distribution to investors.


        o   Statutory surplus reserves are to be utilized to offset prior years'
losses, or to increase its share capital. When the statutory surplus reserve
fund of a limited liability company converts its surplus reserves to capital in
accordance with a shareholders' resolution, the company will either distribute
new shares in proportion to the number of shares held by the each shareholder,
or increase the par value of each share. Except for the reduction of losses
incurred, any other usage should not result in this reserve balance falling
below 25% of the registered capital.

        o   Enterprise expansion fund is to provide for capital expenditures and
working capital. When the fund is utilized, and amount equal to the lower of
cost of the assets and the balance of the fund is transferred from the expansion
fund to the general surplus reserve. This reserve is non-distributable other
than in liquidation. When the relevant asset are disposed of or written off, the
original transfers from the expansion fund are reversed.

        o   Public welfare fund is to be utilized for capital items for the
collective benefits of a company's employees such as the construction of
dormitories, cafeteria and other staff welfare facilities. This fund is
non-distributable other than in liquidation. When the fund is utilized, an
amount equal to the lower of cost of the assets and the balance of the fund is
transferred from the statutory public welfare fund to the general surplus
reserve, This reserve is non-distributable other than in liquidation. When the
relevant assets are disposed of or written off, the original transfers from the
statutory public welfare fund are reversed.

The separate allocation to each of the Statutory Surplus Reserve Funds are either
pre-set in the articles of association or joint venture contracts, or can be
determined by the board of directors of each entity. In Foreign Invested
Enterprises the directors determin the separate allocations on an annual basis.
The total allocations to the Surplus Funds required as a percentage of net profits
after income tax is not set by regulations for Foreign Invested Enterprise
joint ventures and is to be determined by the directors on an annual basis.
The allocations for each fund are recorded differently on the Foreign Invested
Enterprise financial statements. The reserve fund, enterprise expansion fund
and statutory public welfare fund are shown on the balance sheets as part of
owners' equity.

For all Foreign Invested Enterprises, once the contributions to the statutory
surplus reserve fund equal 50% of the Foreign Invested Enterprise's registered
capital, no further contributions to that fund need be made. No such limitation
exists for other funds. Foreign Invested Enterprises do not have to set up or
contribute to an enterprise expansion fund.

In wholly-owned Foreign Invested Enterprises, income after the payment of China
income taxes , shall be allocated to the statutory surplus reserves and
statutory public welfare fund for staff and workers. The proportion of
allocation for reserve funds is no less than 10 percent of the profit after tax
until the accumulative amount of allocation for statutory surplus reserve funds
reaches 50 percent of the registered capital, and then no more allocation may be
made. The proportion of allocation for statutory public welfare fund and
enterprise expansion fund is decided by the enterprise itself. A wholly
foreign-owned enterprise does not have to set up or contribute to an enterprise
expansion fund.


Political and Trade Relations with the United States

Political and trade relations between the United States and Chinese governments
within the past five years have been volatile and may continue to be in the
future. Major causes of volatility, the United States' considered revocation of
China's Most Favored Nation trade status, illegal transshipments of textiles
from China to the United States, issues surrounding the sovereignty of Taiwan,
and the United States' bombing of the Chinese embassy in Yugoslavia, have had no
direct connection to our operations; however, other on-going causes of
volatility, including the protection of intellectual property rights within
China and sensitive technology transfer from the United States to China have
closer potential connection to our operations. There can be no assurance that
the political and trade ramifications of these causes of volatility or the
emergence of new causes of volatility will not cause difficulties in our
operations in the China marketplace.

                                       33

Economic Reform Issues

Although the majority of productive assets in China are owned by the Chinese
government, in the past several years the government has implemented economic
reform measures that emphasize decentralization and encourage private economic
activity. Because these economic reform measures may be inconsistent or
ineffectual, there are no assurances that:
o    We will be able to capitalize on economic reforms;
o    The Chinese government will continue its pursuit of economic reform
     policies;
o    The economic policies, even if pursued, will be successful;
o    Economic policies will not be significantly altered from time to time; and
o    Business operations in China will not become subject to the risk of
     nationalization.

Negative impact upon economic reform policies or nationalization could result in
a total investment loss in our common stock.

Since 1978, the Chinese government has reformed its economic systems. Because
many reforms are unprecedented or experimental, they are expected to be refined
and improved. Other political, economic and social factors, such as political
changes, changes in the rates of economic growth, unemployment or inflation, or
in the disparities in per capita wealth between regions within China, could lead
to further readjustment of the reform measures. This refining and readjustment
process may negatively affect our operations.

Our telecommunications division is partially dependent upon the government's
allocation of funds in its budgeting processes. These budgetary processes are
not necessarily subject to fixed time schedules; accordingly, our telephone
communications manufacturing company's operations, quarterly revenues, and
operating results may be adversely affected by extended periods of budgeting
freezes or restraints.

In addition, our telecommunications division is partially dependent upon the
availability of bank credit to its customers as mandated by the government in
China. Recently, in response to inflationary concerns and other economic
factors, the Chinese government imposed restrictions on the funds available for
lending by the banking system. In addition, this company does not know whether
the restrictions on the availability of credit will ease and, if so, the nature
and timing of these changes. These fund restrictions could adversely affect the
operations of each of our subsidiaries.

Over the last few years, China's economy has registered a high growth rate.
Recently, there have been indications that rates of inflation have increased. In
response, the Chinese government recently has taken measures to curb this
excessively expansive economy. These measures have included devaluations of the
Chinese currency, the Rennin, restrictions on the availability of domestic
credit, reducing the purchasing capability of certain of its customers, and
limited re-centralization of the approval process for purchases of some foreign
products. These austerity measures alone may not succeed in slowing down the
economy's excessive expansion or control inflation, and may result in severe
dislocations in the Chinese economy. The Chinese government may adopt additional
measures to further combat inflation, including the establishment of freezes or
restraints on certain projects or markets. These measures may adversely affect
our telephone communications manufacturing company's operations.

                                       34

To date reforms to China's economic system have not adversely impacted our
telephone communications manufacturing company's operations and are not expected
to adversely impact operations in the foreseeable future; however, there can be
no assurance that the reforms to China's economic system will continue or that
we will not be adversely affected by changes in China's political, economic, and
social conditions and by changes in policies of the Chinese government, such as
changes in laws and regulations, measures which may be introduced to control
inflation, changes in the rate or method of taxation, imposition of additional
restrictions on currency conversion and remittance abroad, and reduction in
tariff protection and other import restrictions.

Currency Conversion and Exchange

The currency in China is designated as the Renminbi. Although the
Renminbi/United States dollar exchange rate has been relatively stable in the
past five years there can be no assurance that the exchange rate will not become
volatile or that the Renminbi will not be officially devalued against the United
States dollar by direction of the Chinese government.

Exchange rate fluctuations may adversely affect our financial performance
because of our foreign currency denominated assets and liabilities, and may
reduce the value, translated or converted, as applicable into United States
dollars, of our net fixed assets, our earnings and our declared dividends. We do
not engage in any hedging activities in order to minimize the effect of exchange
rate risks.

                  RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS

Telecommunications Division

Revenues from our Telecommunications Division may be reduced if the Chinese
government changes its policy on purchasing telecommunications equipment or
requires ministries and agencies to purchase products from government entities
or other providers.
The Ministry of Post and Telecommunication has government-affiliated telephone
main distribution frame production facilities. Our telecommunications division's
principal customers, including the city of Shenzhen Huawei, in Guangdong
province, are either local or national government entities. The government has
the power to require ministries and agencies to purchase products from
government entities or other providers. Government exercise of this power may
negatively affect our telecommunications division's revenues.

Because the city of Shenzhen Huawei in Guangdong province accounts for 17.6% of
our telecommunications division's revenues, loss of this customer account may
lead to reduced revenues from our telephone communication manufacturing
operations.
Because customer Shenzhen Huawei represents a large portion of our
telecommunications division's revenue, the loss of this customer would
significantly reduce our revenues derived from our telecommunications division.

                                       35

Our telecommunications division's revenues may be reduced if China enters into
the World Trade Organization.
When and if China is formally admitted into the World Trade Organization, it
will be required to relinquish its monopoly of the telecommunication industry
and reduce import tariffs on telecommunication products, currently at more than
10%, to zero. This event could increase competition in the telecommunications
equipment market and negatively affect our revenues derived from our
telecommunications division.

If we fail to make required capital contribution payments to our
telecommunications division under our acquisition agreement to purchase our
telecommunications company, our operations and financial results may be
negatively impacted.
We are required to make capital contribution payments of $500,000 to our
telecommunications division within one year of the issuance of the business
license for that division, which was issued on June 22, 2000. These payments are
required under the terms of a separate agreement that we executed in conjunction
with our acquisition agreement to purchase our telecommunications company. Until
June 21, 2001, we were in default on those payments. On June 22, 2001, we
received an extension until June 22, 2002 to make these required capital
contributions; however, we may be subject to other defaults on the required
payments for which no extensions will be granted. In addition, there are no
assurances that we will have sufficient cash reserves or other liquid assets to
make the required $500,000 payment when it again becomes due. Accordingly, if
legal action is brought against us regarding our default on those required
payments, our operations and financial results may be negatively impacted, as
follows:
o    Penalties could be levied against;
o    Damage awards may awarded against us; and
o    Rescission of our acquisition of our telecommunications company may be
     required.

Agriculture Division

Seasonal variations in the demand for our agriculture company's products may
negatively affect our revenues and stock price.
Revenue from the sale of aquatic products peaks during the period of January
through April, the time in the lunar calendar traditionally associated with
Chinese New Year. Revenue from the sale of land-based vegetable products peaks
during the growing season of April through November. During other periods our
sales may decline. Accordingly, our revenues could fluctuate due to fluctuating
revenues from our technology agriculture development company and affect our
profitability from period to period. This volatility in revenues and profit
could make our stock price more volatile and/or cause our stock price to
decline.

Our agriculture division's profitability could be reduced because it is required
by the marketplace to physically maintain a large amount of inventory; the
higher our inventory costs, the lower our profits.
Our agriculture division endeavors to provide products upon customer demand.
Because of its inability to rush production of aquaculture products to meet that
demand, our agriculture division must keep a sizable volume of product in the
work-in-process stage of production. The maintenance of this large inventory
increases operating costs, which may negatively impact upon potential profits of
this division.

                                       36

Revenues from our agriculture division may be reduced if the market's perception
of our aquaculture products, generally considered gourmet items in China,
changes.
Our agriculture division's primary products--fresh water shrimp, fresh water
crab, soft-shell turtle and perch--are considered traditional gourmet items to
the Chinese culinary palette. Consumer demand for our aquaculture products could
diminish more easily than for other types of aquaculture products which are not
considered gourmet items.

Our agriculture division's revenues may be reduced if China enters into the
World Trade Organization.
When and if China is formally admitted into the World Trade Organization, import
tariffs on a wide variety of agricultural products will be reduced by and
average of 10% to 12%. These actions may further increase competition in the
aquaculture market, which could have a materially adverse impact on the
operations of our agriculture division.

Poor quality aquaculture stock acquired from third parties or the inability to
secure sufficient stock would reduce our revenues.
Our agriculture division's success is contingent upon its ability to
consistently obtain consistent stock on reasonable terms and at reasonable
prices. Because our agriculture division is dependent on suppliers in China with
whom we have no long-term contracts, our revenues may be negatively impacted if
we lose those arrangements with our existing suppliers.

If we fail to make required capital contribution payments to our agriculture
division under our acquisition agreement to purchase our agriculture company,
our operations and financial results may be negatively impacted.
We are required to make registered capital contribution payments of $2,400,000
to our agriculture division within one year of the issuance of the business
license for that division, which was issued on June 7, 2000. These payments are
required under the terms of a separate agreement that we executed in conjunction
with our acquisition agreement to purchase our agriculture company. Until
approximately June 6, 2001, we were in default on those payments. On June 7,
2001, we received an extension until June 7, 2002 to make these required capital
contributions; however, we may be subject to other defaults on the required
payments for which no extensions will be granted. In addition, there are no
assurances that we will have sufficient cash reserves or other liquid assets to
make the required $8,912,719 payment when it again becomes due. Accordingly, if
legal action is brought against us regarding our default on those required
payments, our operations and financial results may be negatively impacted, as
follows:
o    Penalties could be levied against;
o    Damage awards may awarded against us; and
o    Rescission of our acquisition of our agriculture company may be required.

                                       37

Health problems associated with our agriculture division's aquaculture products
may lead to those products becoming unmarketable and negatively affect our
revenues.
Although our agriculture division takes measures to assure the health of its
inventory stock, there is always the possibility of unforeseen stock health
problems. Problems with health or diseases could reduce this division's
inventory stock or make that inventory unmarketable and negatively impact our
revenues.

Our agriculture division may encounter volatility in the price or availability
of supplies needed to operate; increases in the costs or decreases in the
availability of those supplies could have a materially adverse affect on our
operations.
Our agriculture division's operations are sensitive to changes in the cost and
availability of supplies necessary for producing its inventory stock. These
costs are affected by regional and seasonal availability and demand. Weather
conditions and other factors may also make feed and supplies more expensive to
obtain. If these conditions increase the cost of supplies, the revenues derived
from our technology agriculture development company will be negatively impacted.

Our agriculture division relies on outside vendors to transport a substantial
portion of its product to market; any problems associated with vendor's
transportation services in China, may negatively impact upon our position in the
market place.
If our vendors failed or ceased to provide satisfactory transportation service,
competing in the market place may become more difficult.

Our agriculture division is dependent on clean water, which might not remain
available in China.
Because our agriculture division obtains all of the water used in the production
of its products from a subterranean reservoir source, contamination of this
water source in China may harm its profitability and ability to compete.

Our agriculture division's revenues could be at risk from soil contamination.
Although there is no indication of present soil contaminates or reason to
believe soil contaminates, whether of natural origin or from industrial
operations in proximity to our production facilities, will enter the soil, there
is no assurance this will remain true in the future. Contamination of the soil
used for our vegetable production in China may cause economic harm to the
operations of our agriculture division.

Our agriculture division's revenues are at risk from flooding.
Although the national and local governments in China have increased flood
control efforts within the past year, there can be no assurance that our
agriculture facility, which is in close proximity to the Yellow River, will not
experience flooding in the future. Such damage or destruction from flooding
could harm our profitability and ability to compete.

                                       38

Our agriculture division is dependent on the Chinese government renewing
advanced technology agriculture as a Favored Industry.
Although the national State Planning Commission in its tenth five year plan
(2001-2005) announced the advanced technology agricultural production industry
as a favored industry for national growth and development in China, there can be
no assurance that this status will continue.

The Chinese government could shift its priorities in regional development, which
could affect our agriculture division's operations.
Although the national State Planning Commission in its tenth five year plan
(2001-2005) announced its intention to target the northern central provinces of
China for economic development, there can be no assurance that this economic
development will occur. Absence of this economic stimulus in the region may
cause this business segment to have difficulty developing expanded operations.

Local government may not follow through with promised infrastructure
improvements.
The provincial and local governments in their tenth five year plans (2001-2005)
announced intentions for extensive infrastructure development in the Hunan
province. However, these improvements may not be funded or completed. Absence of
this infrastructure development may negatively impact our planned future
operations.

Our agriculture division relies on a favorable tax policy from the national and
local government.
Our agriculture division has received favorable tax concessions from the central
and provincial governments in China. As a result of these concessions, our
agriculture division was exempt from central and provincial government income
tax for the two years ended December 31, 1997 and 1998 and is required to pay
only one-half of its income tax otherwise due for the years ended December 31,
1999, 2000, and 2001. If our agriculture division loses its favorable tax
position, it might have trouble competing in the marketplace.

Hotel Division

Our hotel division's revenues may be reduced if the Chinese government requires
ministries and agencies to use government-owned hotels.
Two hotels considered to be competition in our primary market are government-
owned and operated. The government could require ministries and agencies to
conduct all travel, conference, and entertainment-related business with
government-owned entities. This requirement could cause our hotel company to
have difficulty competing in the hotel market.

Seasonal variations in the demand for hotel rooms and related services may cause
our overall profitability to vary from period to period, which may cause stock
price volatility and negatively affect our shareholders' ability to sell their
stock when and at the price they want.
Lodging revenue peaks during the period of April through October, coinciding
with peak vacation travel season, and the period (April through June) when most
companies hold bi-annual company meetings.

                                       39

Food and beverage revenues peak during the period of January through April, the
time in the lunar calendar traditionally associated with Chinese New Year.

Conference and meeting revenue peak during April through June, and November
through December, when most companies hold bi-annual meetings and product shows.

Because other revenue periods may be less than the above periods, our revenues
from our hotel operations may be negatively impacted during certain periods.
Fluctuating revenues could lead to stock price volatility and negatively impact
shareholders' ability to sell their stock when and at the price they want.

Our hotel division relies on a favorable tax policy from the national and local
governments.
Our hotel division has received favorable tax concessions from the central and
provincial governments in China. As a result of these concessions, our hotel
division was exempt from central and provincial government income tax for the
two years ended December 31, 1997 and 1998, and is required to pay only one-half
of its income tax otherwise due for the years ended December 31, 1999, 2000, and
2001. If our hotel division loses its favorable tax position, it might have
trouble competing in the marketplace.

The operations of our hotel division would be negatively impacted if the Chinese
government failed to renew tourism as a Favored Industry.
Although the national State Planning Commission in its tenth five year plan
(2001-2005) announced tourism as a favored industry for national growth and
development in China, there can be no assurance that this status will continue.
Revocation of this status may negatively our hotel division's operations.

The Chinese government could shift its priorities in regional development, which
could hurt our hotel business.
Although the national State Planning Commission in its tenth five year plan
(2001-2005) announced its intention to target the northern central provinces of
China for economic development, there can be no assurance that this economic
development will occur. Absence of this economic stimulus in the region may
negatively impact our hotel division's operations.

ALL OPERATING DIVISIONS

Each of our foreign subsidiaries must obtain renewals of licenses and franchises
from the Chinese government.
Our hotel, agriculture, and telecommunications divisions operate under business
licenses granted by the Chinese government, which are currently scheduled to
expire in 2027, 2028, and 2019, respectively. There is no guarantee that any of
these licenses will be renewed when they expire. In addition, each of our three
divisions currently operates under land use permits from the government in
China, which are valid for approximately the next 40 years. When these land use
permits expire, there is no guarantee that the franchise will be renewed or that
the existing terms of the franchise will not be changed.

                                       40

All of our operating segments are dependent on Cheng Wan Ming, the president of
each of our three operating divisions. In the event we lose the services of Mr.
Cheng Wan Ming, our revenues and operations could be negatively impacted.
Mr. Cheng Wan Ming is the president of all three of our operating segments. His
leadership and management skills in this position are necessary to on-going
operations of each of our operating segments. No life insurance on Mr. Wan Ming
is maintained by any of the three operating segments or by us. If we lose the
services of Mr. Wan Ming, our revenues and operations may be negatively
impacted.

Our statutory reserves may hinder our ability to expand our operations or
allocate funds for specific purposes that may benefit our operating divisions.
In accordance with various regulations in China, a Foreign Invested Enterprise,
such as our hotel division and our agriculture division, can distribute their
after tax profit only after making transfers to certain statutory surplus
reserves, collectively referred to as "Surplus Funds." The order of distribution
of any profits is as follows:
o    Enterprise or corporate income tax payments;
o    Application to eliminate prior year losses;
o    Transfers to the three statutory funds per regulations;
o    Distribution to investors.

The three statutory funds are:
o    Reserve fund to protect against future losses;
o    Enterprise expansion fund to provide for capital expenditures and working
     capital; and
o    Staff bonus and welfare fund to provide for employee compensation.

The separate allocation to each of the Surplus Funds are either pre-set in the
articles of association or joint venture contracts, or can be determined by the
board of directors of each entity. In our Foreign Invested Enterprise hotel and
agriculture divisions, the directors make the separate allocations on an annual
basis. The total allocations to the Surplus Funds required as a percentage of
net profits is not set by regulations for Foreign Invested Enterprise joint
ventures and is to be determined by the directors on an annual basis. In Wholly-
Owned Foreign Invested Enterprises, such as our telecommunications division, 10%
of net profits must be set aside for the reserve fund with no set percentage
allocation for the staff bonus and welfare fund. In a Wholly-Owned Foreign
Invested Enterprise, there is no requirement to establish or maintain an
enterprise expansion fund.

Because we must allocate substantial amounts to the statutory reserves of each
of our divisions, our potential growth and profitability may be negatively
affected. In addition, because of these required reserve contributions, there
may be no monies remaining for distribution to our shareholders.

                        RISKS RELATED TO OWNING OUR STOCK

Our management has significant control over stockholder matters, which may
impact the ability of minority stockholders to influence our activities.
Our officers and directors and their families control the outcome of all matters
submitted to a vote of the holders of common stock, including the election of
directors, amendments to its certificate of incorporation and approval of
significant corporate transactions. These persons beneficially own, in the
aggregate, approximately 96% of our outstanding common stock. This consolidation
of voting power could have the effect of delaying, deterring, or preventing a
change in our control that might be beneficial to other stockholders.

                                       41

U.S. investors may experience difficulties in attempting to enforce liabilities
based upon U.S. federal securities laws against us, our operating segments, and
our non-U.S. resident directors.
Our operating subsidiaries are organized in Mainland China. All of our assets
and our subsidiaries' assets are located outside the United States. Our
directors are foreign citizens. As a result, it may be difficult or impossible
for U.S. investors to serve process within the United States upon us or to
enforce judgments upon us for civil liabilities in U.S. courts. In addition, you
should not assume that courts in the countries in which we or our subsidiaries
are incorporated or where our or the assets of our subsidiaries are located: (i)
would enforce judgments of U.S. courts obtained in actions against us or our
subsidiaries based upon the civil liability provisions of applicable U.S.
federal and state securities laws; or (ii) would enforce, in original actions,
liabilities against us or our subsidiaries based upon these laws.

Conflicts of interest may develop between us and our officers and directors,
which conflicts may not be resolved in our favor.
Our officers and directors are also involved in other business activities and
will continue to do so in the future. If a specific business opportunity becomes
available, our officers and directors may face a conflict in selecting between
us and their other business interests. We have not formulated a policy for the
resolution of such conflicts. We have entered into transactions and may do so in
the future with our officers, directors, and shareholders. These transactions
were not negotiated at "arms length" and there may be conflicts with respect to
the interpretation and enforcement of any agreement between us and our officers,
directors, and shareholders. Any dispute with respect to the interpretation or
enforcement of agreements between us and our officers, directors, and
shareholders may not be resolved in our favor. There can be no assurance that
future transactions or arrangements between with our officers, directors, and
shareholders will be advantageous to us, that conflicts of interest will not
arise with respect thereto, or that if conflicts do arise, that they will be
resolved in a favorable manner to our company.

REPORTS TO SHAREHOLDERS

We have filed this Form 10/A with the Securities and Exchange Commission. When
this Form 10/A becomes effective sixty days after its filing with the Securities
and Exchange Commission, or such shorter period of time as the SEC may
determine, we will become subject to the information and reporting requirements
of the Securities Exchange Act of 1934 and will file periodic reports, proxy
statements, and other information with the Securities and Exchange Commission.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

For further information about us and registration of our securities, please
refer to the registration statement and the exhibits and schedules thereto. The
registration statement and exhibits may be inspected, without charge, and copies
may be obtained at prescribed rates, at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The registration statement and other information filed with the SEC are also
available at the web site maintained by the SEC at http://www.sec.gov.

                                       42

ITEM 2. FINANCIAL INFORMATION

SELECTED FINANCIAL DATA

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements contained elsewhere in this prospectus. They
present the results of operations from January 1, 199 7 through December 31 ,
2001.

I.      OVERVIEW

We have three operating units each producing different products and services:
o    Our hotel division provides up-scale lodging, food and beverage,
     entertainment, and conference and meeting facility services.
o    Our telecommunications division produces digital and analog telephone
     network main distribution frames and their component parts.
o    Our agriculture division uses advanced cultivation techniques to produce
     specialty fresh water livestock and seasonal land-based vegetables.

All of its operating units are located in the People's Republic of China.

II.     RESULTS OF OPERATIONS



The following table represents selected financials on a combined or consolidated
basis for the years ended December 31, 1997, 1998, 1999, 2000 and 2001.

Prior to the acquisition of equity interests in what are now our hotel,
telecommunication and agriculture divisions in 2000. These three companies were
under common management and ownership. All the individual owners of the three
companies are also shareholders of Yi Wan Group, Inc. In the combined financial
position and operating results of each company for the year of 1997,1998 and
1999, intercompany transactions and profits and loss were eliminated.

Since the acquisitions of our hotel, telecommunication and agriculture divisions
were effective January 1, 2000; the 1997, 1998 and 1999 financial data has
been combined in the following table. Because this is only a financial summary,
it does not contain all the financial information that may be important to you.
Therefore, you should also carefully read all the information in this
prospectus, including the financial statements and their explanatory notes
before making an investment decision.


                                       45




YI WAN GROUP. INC. AND SUBSIDIARIES STATEMENT OF OPERATIONS




                               Combined     Combined      Combined     Consolidated    Consolidated
                             December 31,  December 31,  December 31,   December 31,    December 31,
                                 1997        1998          1999           2000            2001
                            ------------  -----------   ----------     -----------    ------------
                                 USD          USD          USD             USD             USD
                            ------------  -----------   ----------     -----------    ------------


Net Sales                   10,854,797      14,087,805    14,385,693    14,070,568     13,066,962

Cost of Sales                3,938,586       5,024,242     5,040,628     5,416,003      5,226,379

Gross profit                 6,916,211       9,063,563     9,345,065     8,654,565      7,840,583

Operating Expenses           3,767,823       3,684,813     4,038,854     4,068,658      4,248,955

Income From Operations       3,148,388       5,378,750     5,306,211     4,585,907      3,591,628

Other Income (Expense)         (93,492)        (52,597)       (9,364)       57,592        (36,021)

Net Income                   3,054,896       5,108,433     4,675,587     3,361,253      2,530,779

Earnings per share                0.19            0.32          0.30          0.21           0.16






BALANCE SHEET
                                December 31    December 31,   December 31,   December 31,   December 31,
                                   1997           1998           1999           2000          2001
                               -------------  -------------  -------------  ------------  -------------
                                   USD            USD            USD            USD
                               -------------  -------------  -------------  ------------  -------------

ASSETS


Total Current Assets           2,767,912        3,882,488      5,144,585     5,838,988      5,608,102

Other Assets                   27,650,565      26,060,098     25,114,407    23,713,156     22,412,040

Total Assets                   30,418,479      29,942,586     30,258,992    29,552,144     28,020,142

LIABILITES&STOCKHOLDER'S EQUITY

Current Liabilities:

Accounts Payable & Accrued

Liabilities                    9,433,992        5,514,033      3,429,983     3,567,913     3,453,778
Note Payable -Current

Portion                                                               -
Payable to Stockholders/other
                                   3,293        2,616,121      4,066,546    10,114,002     5,950,739

Total Current Liabilities     10,903,268        8,130,154      7,496,529    13,681,915     9,404,517


Long Term Liabilities:

Note Payable - Net of
Current Portion

Total Liabilities              10,903,268       8,130,154      7,496,529    13,681,915     9,404,517


Total Stockholder's Equity     19,515,209      21,812,432     22,762,463    14,609,796    17,151,131

Total Liabilities and
Stockholder Equity             30,418,477      29,942,586     30,258,992    29,552,144    28,020,142




                                       46


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS



The following discussion of the financial condition and results of operations
should be read in conjunction with the consolidated financial statements and
related notes thereto. The following discussion contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Yi Wan Group, Inc. is
referred to herein as "we" or "our." The words or phrases "would be," "will
allow," "intends to," "will likely result," "are expected to," "will continue,"
"is anticipated ," "estimate," "project," or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements include those
concerning our expected financial performance, our corporate strategy and
operational plans. Actual results could differ materially from those projected
in the forward-looking statements as a result of a number of risks and
uncertainties, including: (a) those risks and uncertainties related to general
economic conditions in China and elsewhere in the world, including regulatory
factors that may affect such economic conditions; (b) whether we are able to
manage our planned growth efficiently and operate profitable operations,
including whether our management will be able to identify, hire, train, retain,
motivate and manage required personnel or that management will be able to manage
and exploit existing and potential market opportunities successfully; (c)
whether we are able to generate sufficient revenues or obtain financing to
sustain and grow our operations; and (d) whether we are able to successfully
fulfill our primary requirements for cash which are explained below under
"Liquidity and Capital Resources." Statements made herein are as of the date of
the filing of this Form 10/A with the Securities and Exchange Commission and
should not be relied upon as of any subsequent date. Unless otherwise required
by applicable law, we do not undertake, and we specifically disclaim any
obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement.

III.     OVERVIEW

     In May 1999, several Chinese nationals formed YWG to explore possible
investment opportunities within the United States through, among others, the
acquisition of one or more China based businesses in which our president, Mr.
Cheng Wan Ming, had an ownership interest. In December 1999, our founders
determined that equity investments in joint ventures that they controlled
presented the most appropriate investment opportunity. Accordingly, on January
1, 2000, we acquired a 90% equity interest in Jiao Zuo Yi Wan Hotel, Ltd.
(Hotel) and Yi Wan Maple Leaf Technology Agriculture Developing Ltd. Co. (Farm)
and a 100% interest in Shun De Yi Wan Communication Equipment Plant Co., Ltd.
(Telecommunications). Our acquisition of the majority equity interests in all of
these companies was effected under and through the provisions of the Foreign
Invested Enterprise laws of the PRC.


     Our original founders control 100% of the equity interests in the companies
that presently hold the minority interests in our FIE joint ventures and 70.92%
of our equity. As such, we effectively control 100% of the two FIE joint venture
companies, Hotel, and Farm and the third wholly-owned subsidiary,
Telecommunications.


     Our three subsidiaries produce different products and services:

o    Hotel provides up-scale lodging, food and beverage, entertainment, and
     conference and meeting facility services.
o    Telecommunications produces digital and analog telephone network main
     distribution frames and their component parts.
o    Farm uses advanced cultivation techniques to produce specialty fresh water
     livestockand seasonal land-based vegetables.

     All of our operating units are located in the People's Republic of China.

                                       47




II.      RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001, COMPARED WITH THE YEAR ENDED DECEMBER 31, 2000.

The results of operations for the year 2001 are stated on a consolidated basis
and have been analyzed based on each operating unit for a detailed comparison
with year 2000.

Consolidated results

     Sales decreased $ 1,003,606, or approximately 7.1%, from $14,070,568 for
the year ended December 31, 2000 to $13,066,962 on a consolidated basis for the
year ended December 31, 2001. The decrease was a result of increased competition
in the hotel, farm and telecommunications industries in which we compete.

     Costs of goods sold decreased $189,624, or approximately 3.5% from
$5,416,003 for the year ended December 31, 2000 to $5,226,379 on a consolidated
basis for the year ended December 31, 2001. The increase in cost of goods sold
was the result of the increase in the cost of materials due to price
fluctuations in the market prices of the various raw materials.

     Gross profit decreased 9.4% from $8,654,565 for the year ended December 31,
2000 to $7,840,583 on a consolidated basis for the year ended December 31, 2001.
The decrease in gross profit was the result of lower sales prices and increased
costs.

     Selling and administrative expenses increased 4.4% from $4,068,658 for the
year ended December 31, 2000 to $4,248,955 on a consolidated basis for the year
ended December 31, 2001. The increase was due to an increase in travel and
advertisement, increased utility prices and increased maintenance and repair
expenses.

     Net income decreased 24.67% from $3,386,399 for the year ended December 31,
2000 to $2,551,143 on a consolidated basis for the year ended December 31, 2001.
The decrease was due to decrease in sales and increase in selling expenses for
our Hotel operations and higher operations costs for our Farm operation.

Segmented results

(1)  SALES.  An itemization of each operating unit's data and an explanation of
significant changes are as follows:

          Hotel operations: Sales decreased $41,523, or approximately 0.53%,
          from $7,794,439 for the year ended December 31, 2000 to $7,752,916 for
          the year ended December 31, 2001. The decrease was a result of lower
          sale prices and sale discount promotions to meet the market
          competition.

          Telecommunication operations:  Sales decreased $271,525, or
          approximately 5.9%, from $4,640,849 for the year ended December
          31,2000 to $4,369,324 for the year ended December 31, 2001. The
          decrease was a result of lower sale prices and sale discount
          promotions to meet the market competition.

                                       48




          Farm operations: Sales increased $707,562, or approximately 40.96%,
          From $1,727,399 for the year ended December 31, 2000 to $1,019,837
          for the year ended December 31, 2001.  The decrease in sales is due to
          temporally ceased operations prior to December  31, 2001.

(2)  COST OF GOODS SOLD. An itemization of each operating unit's data and an
explanation of significant changes is as follows:

          Hotel operations: Cost of goods sold increased $52,352, from
          $2,059,500 for the year ended December 31, 2000 to $2,111,852 for the
          year ended December 31, 2001.  Cost of goods sold as a percentage of
          sales increased to 27.2% for the year ended December 31, 2001 from
          26.4% for the year ended December 31, 2000.  The increased cost of
          goods sold  is attributed to the increase cost of raw material and to
          our Hotel operations increasing the number of discount items and
          incentive gift items to attract new customers and to retain our
          Hotel's old customer base.

          Telecommunication operations:  Cost of goods sold decreased $183,923,
          from  $2,493,706 for the year ended December 31, 2000 to $2,309,783
          for the year ended December 31, 2001. Cost of goods sold as a
          percentage of sales decreased to 52.86% for the year ended December 31,
          2001 from 53.7% for the year ended December 31, 2000.  The decrease
          was a result of the better management of purchase raw materialfor the
          production.

          Farm  operations:  Cost of goods sold decreased $75,057, from $954,916
          for the year ended December 31, 2000 to $879,859 for the year ended
          December 31, 2001.  Cost of goods sold as a percentage of sales
          increase to 86.27% for the year ended December 31, 2001 from 55.2% for
          the year ended December 31, 2000. This increase the cost of goods
          sold, as a percentage of sales was result of discontinuing purchase
          additional raw materials at the end of year 2001.

(3)  GROSS PROFIT.  An itemization of each operating unit's data and an
explanation of significant changes is as follows:

          Hotel operations: Gross profit decreased $93,875, from $5,734,939 for
          the year ended December 31, 2000 to $5,641,064 for the year ended
          December 31, 2001.  As a percentage of sales, gross profit decreased
          from 73.6% for the year ended December 31, 2000, to 72.6% for the year
          ended December 31, 2001. The decrease was a result of increasing cost
          of production and decreasing sales.


          Telecommunication operations:  Gross profit decreased $87,602, from
          $2,147,143 for the year ended December 31, 2000 to $2,059,541 for the
          year ended December 31, 2001. As a percentage of sales, gross profit
          decreased from 46.3% for the year ended December 31, 2000 to 47.1%
          for the year ended December 31, 2001.  The decrease was the result of
          lower sales prices, increase of sales discount, and sales promotions.

          Farm operations: Gross profit decreased $632,505, from $772,483for the
          year ended  December 31, 2000 to $139,978 for the year ended December
          31, 2001. As a percentage of sales, gross profit decreased from 44.7%
          for the year ended December 31, 2000 to 13.7% for the year ended
          December 31, 2001.  The decreased gross profit was a result of
          ceasing operations prior to December 31, 2001.

                                       49



(4)  SELLING AND ADMINISTRATIVE EXPENSES.  An itemization of each operating
unit's data and an explanation of significant changes are as follows:

          Hotel operations:  Selling and administrative expenses increased
          $218,507, from $2,908,026 for the year ended December 31, 2000  to
          $3,126,533 for the year ended December 31, 2001.  Selling and
          administrative expenses as a percentage of sales increase to 40.3%
          for the year ended December 31, 2001 from 37.3% for the year ended
          December 31, 2000. The increase was the result of increased
          depreciation expense in 2001 due to the additional building
          improvement.

          Telecommunication operations:  Selling and administrative expenses
          decreased $1,919, from $914,250 for the year ended December 31,
          2000 to $912,331 for the year ended December 31, 2001. Selling and
          administrative expenses as a percentage of sales increased to 20.8%
          for the year ended December 31, 2001 from 19.7% for the year ended
          December 31, 2000.

          Farm operations: Selling and administrative expenses decreased
          $41,291, from $246,382 for the year ended December 31, 2000 to
          $205,091 for the year ended December 31, 2001. Selling and
          administrative expenses as a percentage of sales decreased to 20.1%
          for the  year ended December 31, 2001 from 14.2% for the year ended
          December 31, 2000. The decrease in selling and administrative expenses
          was a combined result of reduced initial equipment installation and
          maintenance costs, and a reduction in staff travel costs.


(5)  NET INCOME.  An itemization of each operating unit's data and further
explanation of significant changes are as follows:

          Hotel operations:  Net income decreased $259,030, from $2,367,349, or
          30.4% of sales, for the year ended December 31, 2000 to $2,108,319,
          or 27.2 % of sales, for the year ended December 31, 2001. The decrease
          was a combined result of increase cost of raw material, decrease sales
          and increase depreciation expense from additional build improvements.

          Telecommunications operations:  Net income decreased $70,531, from
          $842,109, or 18.14% of sales, for the year ended December 31, 2000
          to $771,578, or 17.6% of sales, for the year ended December 31, 2001.


          Farm operations:  Net income decreased $578,842, from $459,148 for the
          year ended December 31, 2000 to loss of $119,694, or for the year
          ended December 31, 2001.  The decreased net income was a result of
          ceasing operations prior to December 31, 2001.


                                       50



YEAR ENDED DECEMBER 31, 2000, COMPARED WITH THE YEAR ENDED DECEMBER 31, 1999.

     Financial statements for Hotel, Farm, and Telecommunications were issued
and analyzed on an individual bases for the years prior to our acquisition of
these FIE companies. The year ended December 31, 2000 was the first time we
reported our financial affairs on a consolidated basis, which included the
results of operations of our FIE subsidiaries. The results of operations for the
year 2000 are stated on a consolidated basis and have been analyzed based on
each operating unit for a detailed comparison with year 1999.

Consolidated results

     Sales decreased 1.78% from a combined total of $14,324,893 for the year
ended December 31, 1999 to $14,070,568 on a consolidated basis for the year
ended December 31, 2000. The decrease in sales was the result of lower sales
prices and promotional discounts to meet competition in the Hotel and
Telecommunications operations.

     Costs of goods sold increased 8.76% from a combined total of $4,979,828
for the year ended December 31, 1999 to $5,416,003 on a consolidated basis for
the year ended December 31, 2000. The increase in cost of goods sold was the
result of the increase in the cost of materials due to price fluctuations in the
market prices of the various raw materials.

     Gross profit decreased 7.39% from a combined total of $9,345,065 for the
year ended December 31, 1999 to $8,654,565 on a consolidated basis for the year
ended December 31, 2000. The decrease in gross profit was the result of lower
sales prices and increased costs.

     Selling and administrative expenses decreased 0.63% from a combined total
of $4,043,363 for the year ended December 31, 1999 to $4,068,658 on a
consolidated basis for the year ended December 31, 2000. The increase in selling
and administrative expenses was the result of the decrease in depreciation
expenses, savings from better management control, and less capital expenditure
offset by increased utility costs and bonus expense.

Net income decreased 20.00% from a combined total of $4,230,893 for the year
ended December 31, 1999 to $3,386,399 on a consolidated basis for the year ended
December 31, 2000. The decrease in net income was the result of the increase in
Farm net income offset by increased costs of sales and lower sales prices in the
Hotel and Telecommunications operations.

Segmented results

(1)  SALES.  An itemization of each operating unit's data and an explanation of
significant changes are as follows:

          Hotel operations: Sales decreased $196,725, or approximately 2.5%,
          from $7,991,164 for the year ended December 31, 1999 to $7,794,439 for
          the year ended December 31, 2000. The decrease was a result of lower
          sale prices and sale discount promotions to meet the market
          competition.

          Telecommunication operations:  Sales decreased $145,736, or
          approximately 3.0%, from $4,786,585 for the year ended December
          31,1999 to $4,640,849 for the year ended December 31, 2000. The
          decrease was a result of lower sale prices and sale discount
          promotions to meet the market competition.

          Farm operations: Sales increased $119,455, or approximately 7.4%, from
          $1,607,944 for the year ended December 31, 1999 to $1,727,399 for the
          year ended December 31, 2000.  The increase in sales is attributed to
          the harvesting of some seasonal fishes and vegetables in 2000 that
          were not ready to be harvested in 1999.


                                       51



(2)  COST OF GOODS SOLD. An itemization of each operating unit's data and an
explanation of significant changes is as follows:

          Hotel operations: Cost of goods sold increased $55,549, from
          $2,003,951 for the year ended December 31, 1999 to $2,059,500 for the
          year ended December 31, 2000.  Cost of goods sold as a percentage of
          sales increased to 26.4% for the year ended December 31, 2000 from
          25.1% for the year ended December 31, 1999.  The increased cost of
          goods sold  is attributed the increase cost of raw material and to our
          Hotel operations increasing the number of discount items and incentive
          gift items to attract new customers and to retain our Hotel's old
          customer base.

          Telecommunication operations:  Cost of goods sold increased $357,627,
          from  $2,136,080 for the year ended December 31, 1999 to $2,493,707
          for the year ended December 31, 2000. Cost of goods sold as a
          percentage of sales increased to 53.7% for the year ended December 31,
          2000 from 44,6% for the year ended December 31, 1999.  The increase in
          cost of goods sold was the result of the increase in the cost of
          materials due to price fluctuations in the market prices of the
          various raw materials.


          Farm  operations:  Cost of goods sold increased $54,319, from $900,597
          for the year ended December 31, 1999 to $954,916 for the year ended
          December 31, 2000.  Cost of goods sold as a percentage of sales
          decreased to 55.3% for the year ended December 31, 2000 from 56.0% for
          the year ended December 31, 1999.

(3)  GROSS PROFIT.  An itemization of each operating unit's data and an
explanation of significant changes is as follows:

          Hotel operations: Gross profit decreased $252,274, from $5,987,213 for
          the year ended December 31, 1999 to $5,734,939 for the year ended
          December 31, 2000.  As a percentage of sales, gross profit decreased
          from 74.9% for the year ended December 31, 1999, to 73.6% for the year
          ended December 31, 2000. The decrease was a result of increasing cost
          of production and decreasing sales.


          Telecommunication operations:  Gross profit decreased $503,362, from
          $2,650,505 for the year ended December 31, 1999 to $2,147,143 for the
          year ended December 31, 2000. As a percentage of sales, gross profit
          decreased from 55.4% for the year ended December 31, 1999 to 46.3%
          for the year ended December 31, 2000.  The decrease was the result of
          lower sales prices, increase of sales discount, and sales promotions.

          Farm operations: Gross profit increased $65,136, from $707,347 for the
          year ended  December 31, 1999 to $772,483 for the year ended December
          31, 2000. As a percentage of sales, gross profit increased from 44.0%
          for the year ended December 31, 1999 to 44.7% for the year ended
          December 31, 2000.  The increased gross profit  was a result of some
          seasonal fishes and vegetables harvested in 2000 that were not ready
          to be harvested in 1999.

                                       52



(4)  SELLING AND ADMINISTRATIVE EXPENSES.  An itemization of each operating
unit's data and an explanation of significant changes are as follows:

          Hotel operations:  Selling and administrative expenses decreased
          $288,86 3 , from $2,619,163 for the year ended December 31, 1999  to
          $2,908,02 6 for the year ended December 31, 2000.  Selling and
          administrative expenses as a percentage of sales decreased to 37.3%
          for the year ended December 31, 2000 from 32.8% for the year ended
          December 31, 1999. The increase was the result of increased utility
          expenses and performance bonuses awarded.

          Telecommunication operations:  Selling and administrative expenses
          decreased $165,720, from $1,079,970 for the year ended December 31,
          1999 to $914,250 for the year ended December 31, 2000. Selling and
          administrative expenses as a percentage of sales decreased to 19.7%
          for the year ended December 31, 2000 from 22.6% for the year ended
          December 31, 1999. The decrease in selling and administrative expenses
          was due: (a) part of the fixed assets in the Telecommunication
          operation were fully depreciated in 1999, which resulted in the
          decrease of depreciation expense in 2000; and (b) better management
          and cost control led to decreased bad debts expense, traveling
          expenses, and entertainment expenses in 2000 compared with the prior
          year.

          Farm operations: Selling and administrative expenses decreased
          $93,339, from $339,721 for the year ended December 31, 1999 to
          $246,382 for the year ended December 31, 2000. Selling and
          administrative expenses as a percentage of sales decreased to 14.3%
          for the  year ended December 31, 2000 from 21.1% for the year ended
          December 31, 1999. The decrease in selling and administrative expenses
          was a combined result of reduced initial equipment installation and
          maintenance costs, and a reduction in staff travel costs.


(5)  NET INCOME.  An itemization of each operating unit's data and further
explanation of significant changes are as follows:

          Hotel operations:  Net income decreased $438,978, from $2,806,326, or
          35.1% of sales, for the year ended December 31, 1999 to $2,367,348,
          or 30.4 % of sales, for the year ended December 31, 2000. The decrease
          was a combined result of increased cost of sale, lower sale price,
          increase of sale discount, and sales promotions.

          Telecommunications operations:  Net income decreased $727,362, from
          $1,569,471, or 32.8% of sales, for the year ended December 31, 1999
          to $842,109, or 18. 1 % of sales, for the year ended December 31, 2000.
          The decrease was in part a result of the tax liability settlement with
          the tax authority in 1999.

          Farm operations:  Net income increased $159,35 9 , from $299,790, or
          18.6% of sales, for the year ended December 31, 1999 to $459,14 9 , or
          26.6% of sales, for the year ended December 31, 2000.  The increase
          was a combined result of increase of sales and decrease of selling and
          administrative expenses.

                                       53



HISTORICAL DATA: YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED
DECEMBER 31, 1998.

     The following analysis is based on the historical data and individual
operation results of Hotel, Farm, and Telecommunications:

(1)     SALES. An itemization of each operating unit's data and an explanation
of significant changes are as follows:

          Hotel operations: Sales increased $280,455, or approximately 3.6%,
          from $7,710,709 for the year ended December 31, 1998 to $7,991,164 for
          the year ended December 31, 1999.  The increase was a result of
          expanded food and beverage promotions and increased entertainment
          sales due to a greater number of celebrity performances in the
          nightclub facility.

          Telecommunication operations: Sales increased $319,639, or
          approximately 7.2%, from $4,466,946 for the year ended December
          31, 1998 to $4,786,585 for the year ended December 31, 1999. The
          increase was a result of a restructured sales system, increased sales
          in the number of JPX 136 main distribution frames, and a general
          increase in market demand.

          Farm operations: Sales decreased $302,206, or approximately 15.8%,
          from $1,910,150 for the year ended December 31, 1998 to $1,607,944
          for the year ended December 31, 1999. The decrease was the result of a
          two-month production down period due to  refurbishment and
          cleaning of several production pools.

(2)     COST OF GOODS SOLD. An itemization of each operating unit's data and an
explanation of significant changes are as follows:

          Hotel operations: Cost of goods sold increased $245,663, from
          $1,758,288 for the year ended December 31, 1998 to $2,003,951 for the
          year ended December 31, 1999.  Cost of goods sold as a percentage of
          sales increased to 25.1% for the year ended December 31, 1999 from
          22.8% for the year ended December 31, 1998. The increase was a result
          of the increase in the number of complementary in-room guest services
          and amenities and costs associated with celebrity performances in the
          nightclub.

          Telecommunication operations:  Cost of goods sold decreased $145,511,
          from $2,281,591 for the year ended  December 31, 1998 to $2,136,080
          for the year ended December 31, 1999.  Cost of goods sold as a
          percentage of sales decreased to 44.6% for the year ended December 31,
          1999 from 51.1% for the year ended December 31, 1998. The decrease
          was a result of strong sales and improved cost control measures.

          Farm operations:  Cost of goods sold decreased $83,766, from $984,363
          for the year ended December 31, 1998 to $900,597 for the year ended
          December 31, 1999.  Cost of goods sold as a percentage of sales
          increased to 56.0% for the year ended December 31, 1999 from 51.5%
          for the year ended December 31, 1998. The increase was a result of the
          down period of production and unsuccessful research and
          testing to breed fresh water lobsters.

                                       54



(3)     GROSS PROFIT. An itemization of each operating unit's data and an
explanation of significant changes are as follows:

          Hotel operations: Gross profit increased $34,792, from $5,952,421 for
          the year ended  December 31, 1998 to $5,987,213 for the year ended
          December 31, 1999.  As a percentage of sales, gross profit decreased
          from 77.2% for the year ended December 31, 1998 to 74.9% for the year
          ended December 31, 1999.

          Telecommunication operations: Gross profit increased $465,150, from
          $2,185,355 for the year ended December 31, 1998, to $2,650,505 for the
          year ended December 31, 1999. As a percentage of sales, gross profit
          increased from 48.9% for the year ended December 31, 1998 to 55.4%
          for the year ended December 31, 1999. The increase was the result of
          strong sales and continued cost control efforts.

          Farm operations: Gross profit decreased $218,440, from $925,787 for the
          year ended December 31, 1998 to $707,347 for the year ended December
          31, 1999. As a percentage of sales, gross profit decreased from 48.5%
          for the year ended December 31, 1998 to 40.0% for the year ended
          December 31, 1999. The decrease was a result of the aforementioned
          increase in cost of goods sold.

(4)     SELLING AND ADMINISTRATIVE EXPENSES.  An itemization of each operating
unit's data and an explanation of significant changes follows:

          Hotel operations: Selling and administrative expenses increased
          $173,098, from $2,446,065 for the year ended December 31, 1998 to
          $2,619,163 for the year ended December 31, 1999. Selling and
          administrative expenses as a percentage of sales increased to 32.8%
          for the year ended December 31, 1999 from 31.7% for the year ended
          December 31, 1998. The increase was the result of increased utility
          expenses and performance bonuses awarded.

          Telecommunication operations:  Selling and administrative expenses
          increased $91,778, from $988,192 for the year ended December 31, 1998
          to $1,079,970 for the year ended December 31, 1999.  Selling and
          administrative expenses as a percentage of sales increased to 22.6%
          for the year ended December 31, 1999 from 22.1% for the year ended
          December 31, 1998.  The increase was the result of increasing
          advertising expense, sales commission, research, development, and
          other administration expenses associated with increasing sales.

          Farm operations: Selling and administrative expenses increased $89,165,
          from $250,556 for the year ended December 31, 1998 to $339,721 for
          the year ended December 31, 1999. Selling and administrative expenses
          as a  percentage of sales increased to 21.1% for the year ended
          December 31, 1999 from 13.1% for the year ended December 31, 1998.
          The increase was the result of relatively fixed administrative costs
          during the period of down production referred to above.

(5)    NET INCOME. An itemization of each operating unit's data and further
explanation of significant changes follows:

                                       55



          Hotel operations: Net income decreased $715,159, from $3,521,484, or
          45.7% of sales, for the year ended December 31, 1998 to $2,806,325,
          or 35.1% of sales, for the year ended December 31, 1999. The decrease
          was in part a result of the expiration of favorable national tax
          status.

          Telecommunications operations: Net income increased $583,193, from
          $986,278, or 22.1% of sales, for the year ended December 31, 1998 to
          $1,569,471, or 32.8% of sales, for the year ended December 31, 1999.
          The increase was partially a result of the tax liability settlement
          with the tax authority.

          Farm operations: Net income decreased $300,881, from $600,671, or
          31.4% of sales, for the year ended December 31, 1998 to $299,790, or
          18.6% of sales, for the year ended December 31, 1999.  The decrease
          was a result of the interruption in production referred to above and
          partially as a result of the expiration of favorable national tax
          status.

III.     LIQUIDITY AND CAPITAL RESOURCES

     Historically, our subsidiary companies have financed operations principally
through cash generated from operations. Initial capital for each operating unit
was generated by contributions of initial shareholders (Hotel operations:
$11,960,000, Telecommunication operations: $1,580,000, Farm operations:
$2,410,000). No bank loans were obtained for this purpose.

     The cash contributions required to be made by June 2002 to our subsidiaries
for registered capital and the additional investment requirements of $7,371,730
and the $9,936,210 due to the former joint venture partners will be funded from
the profits generated from the operations of our subsidiaries. Our management
anticipates that we will be able to extend the June 2002 payment date for
capital contributions. However, if we are unable to extend the payment date and
our profits are insufficient to make these required cash contributions, we may
seek bank, debt, or equity financing. To date we have neither attempted or
secured potential equity financing. In addition, we have no known or expected
sources of financing for the purpose of making these cash contributions. Even if
we attempt to secure financing, there are no assurances that we will be
successful in obtaining financing for these purposes. The capital improvements
we intend to make to our hotel will be funded from positive cash flow generated
from hotel operations.

     In addition, we do not anticipate paying any dividends in the foreseeable
future.


WORKING CAPITAL.

     On December 31, 2001, we had consolidated working capital of negative
$3,796,415

     On December 31, 2000, we had consolidated working capital of negative
$7,842,927.

     On December 31, 1999, our subsidiary companies had working capital as
follows:
                Hotel operations:                             ($3,006,857)
                Telecommunication operations:                    $954,525
                Farm operations:                                ($299,564)


                                       56



On December 31, 1998, our subsidiary companies had working capital as
follows:
                Hotel operations:                             ($4,859,699)
                Telecommunication operations:                  $1,030,760
                Farm operations:                                ($418,727)

     The increase in working capital from 1998 to 1999 was a result of expanded
operations and an increase in net income. The decrease in working capital from
1999 to 2000 was a result of a payable to original owners in the aggregate
amount of $9,936,210 in connection with the acquisition of subsidiaries in
January 2000. The decrease in working capital from 2000 to 2001 was a result of
repayments to the payable to original owners.

CASH AND CASH EQUIVALENTS FROM ACCOUNTS RECEIVABLE.

     On December 31, 2001, we had consolidated accounts receivable of $1,044,576

     On  December 31, 2000, we had consolidated accounts receivable of
$1,097,388.

     On December 31, 1999, our subsidiary companies had accounts receivable as
follows:
                Hotel operations:                                $345,322
                Telecommunications operations:                   $886,578
                Farm operations:                                  $98,850

     On December 31, 1998, our subsidiary companies had accounts receivable as
follows:
                Hotel operations:                                $111,657
                Telecommunication operations:                    $753,746
                Farm operations:                                 $107,201

     The increase in accounts receivable from 1998 to 1999 was a result of an
increase in credit terms of Hotel operations and Telecommunication operations.

NET CASH FLOW.

     On December 31, 2001, we had a consolidated net cash flow of negative
$685,889


     On December 31, 2000, we had a consolidated net cash flow of $342,732:


     On December 31, 1999, our subsidiary companies had net cash flow as
follows:
                Hotel operations:                                $618,943
                Telecommunication operations:                    $166,184
                Farm operations:                                ($118,886)


     On December 31, 1998, our subsidiary companies had net cash flow as
follows:
                Hotel operations:                                $155,416
                Telecommunication operations:                    $237,303
                Farm operations:                                 ($18,563)


                                       57




The increase from 1998 to 1999 in consolidated net cash flow was a result
of the large increase in sales volume of our Hotel operations and
Telecommunications operations. The decrease from 2000 to 2001 in consolidated
net cash flow was a result of repayment to related party receivable in 2001.

CASH FLOW FROM OPERATING ACTIVITIES.

     For the year ended December 31, 2001, we had consolidated net cash flow
from operating activities of $3,636,180.

     For the year ended December 31, 2000, we had consolidated  net cash flow
from operating activities of $5,007,545.

     For the year ended December 31, 1999, our subsidiary companies had net cash
flow from operating activities as follows:

                Hotel operations:                              $4,230,731
                Telecommunication operations:                    $993,737
                Farm operations:                                 $723,908

     For the year ended December 31, 1998, our subsidiary companies had net cash
flow from operating activities as follows:

                Hotel operations:                              $5,034,580
                Telecommunication operations:                    $780,853
                Farm operations:                                 $749,434

     The increase from 1998 to 1999 was a result of a large increase in sales of
the Hotel operations and the Telecommunication operations.  The decrease from
1999 to 2000 was a result of extended  terms of payment offered to Hotel and
Telecommunication customers. The decrease from 2000 to 2001 was a result of
repayments to the related party receivables.

CASH FLOW FROM FINANCING ACTIVITIES.

            For the year ended December 31, 2001, we had consolidated net cash
flow from financing activities of negative $4,182,696.

            For the year ended December 31, 2000, we had consolidated net cash
flow from financing activities of negative $4,547,054.


     For the year ended December 31, 1999, our subsidiary companies had net cash
flow from financing activities as follows:

                Hotel operations:                             ($3,414,246)
                Telecommunication operations:                   ($805,367)
                Farm operations:                                ($818,778)

     For the year ended December 31, 1998, our subsidiary companies had net cash
flow from financing activities as follows:

                Hotel operations:                             ($4,855,105)
                Telecommunication operations:                   ($543,550)
                Farm operations:                                ($767,997)



                                       58




     The decrease in consolidated net cash flow from financing activities during
the period covered is primarily the result of the repayment of private debt for
the initial purchases of the Hotel and Farm facilities and the distribution of
profit to shareholders.

CASH FLOW FROM INVESTING ACTIVITIES.

            For the year ended December 31, 2001,our subsidiary companies had
consolidated net cash flow from investing activities of negative $139,373.

            For the year ended December 31, 2000, our subsidiary companies had
consolidated net cash flow from investing activities of negative $117,759.

     For the year ended December 31, 1999, our subsidiary companies had net cash
flow from investing activities as follows:

                Hotel operations:                               ($197,542)
                Telecommunication operations:                    ($22,186)
                Farm operations:                                 ($24,016)

     For the year ended December 31, 1998, our subsidiary companies had net cash
flow from investing activities as follows:

                Hotel operations:                               ($24,059)
                Telecommunication operations:                         $0
                Farm operations:                                      $0

     The negative net cash flow from investing activities reflected equipment
purchases and minor facility upgrades.

MANAGEMENT ASSUMPTIONS.

     We anticipate, based on our internal forecasts and assumptions relating to
our operations that our existing cash and funds generated from operations will
be sufficient to meet our working capital and capital expenditure requirements
for, at least, the next 12 months.

     In the event that our plans change, our assumptions change or prove
inaccurate or if other capital resources and projected cash flow otherwise prove
to be insufficient to fund operations (due to unanticipated expense, technical
problems, difficulties, or otherwise), we could be required to seek additional
financing. There can be no assurance that we would be able to obtain additional
financing on terms acceptable to it, or at all.


IMPACT OF INFLATION.

     We are subject to commodity price risk arising from price fluctuations in
the market prices of the various raw materials that comprise its products. Price
risks are managed by each business unit through productivity improvements, and
cost-containment measures. Management does not believe that inflation risk is
material to the Company's business or its consolidated financial position,
results of operations or cash flows.


                                       59




EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

            Our operating subsidiaries are located in China. These companies buy
and sell products in China using Chinese Renminbi as the functional currency.
Based on Chinese government regulation, all foreign currencies under the
category of current account are allowed to be freely exchanged with hard
currencies. During the past two years of operation, there were no significant
changes in exchange rates. However, there is no assurance that there will be no
significant change in exchange rates in the near future.


ITEM 3. PROPERTIES

The PRC Land Administration Law, initially revised to reflect modern land use
regulation in December 1988 and most recently revised effective January 1999,
governs land use in China. This revised legislation provides for the
transferability of legal term interests in land, otherwise treated under the
regulatory scheme as a fee simple. The government has rights of termination
similar in concept to eminent domain in common law, which can be exercised to
regulate land use to satisfy public need. These term interests in land are
evidenced by "Land Use Certificates" that set forth the location, size,
permitted use and "owner" of the respective parcels.

OUR HOTEL DIVISION'S FACILITIES

Our hotel division has a Hotel Land Use Certificate, which consists of 2.42
acres and has a term of 40 years expiring in January 2037. The land identified
in this Certificate is owned by our joint venture partner Shunde Shunao Industry
& Commerce Company, Ltd. and is located in Jiaozuo City. The use purpose of the
land as stated in the Certificate is "commerce"; accordingly the Certificate
enables us to operate hotel, entertainment, food and beverage, and conference
facilities. We have paid the government in China a one-time fee of 13,000,000
RMB, approximately US $1,570,000, for this land use permit.

Our hotel facilities are located in Jiaozuo City, Henan province at No. 189,
Middle Min Zhu Road. They include:
o    1 main building (approximately 22 stories/230 feet high/110,000 square
     feet)
o    131 standard guest rooms
o    25 guest suites
o    2 executive guest suites
o    1 (one) 500 bed employee dormitory
o    2 full service restaurants (700 person capacity)
o    1 buffet coffee shop (50 person capacity)
o    1 lobby bar (25 person capacity)
o    1 night club (334 person capacity)
o    1 bowling alley (10 lanes) and game room
o    1 sauna-health club (150 person capacity)
o    9 small and medium size conference and meeting rooms (10-60 person
     capacity)
o    1 large conference room (460 person capacity)
o    2 tennis courts
o    1 business center
o    1 travel agency
o    1 sundries and gift store
o    1 beauty salon (four stations)
o    full facility smoke detectors and water sprinklers

OUR TELECOMMUNICATIONS DIVISION'S FACILITIES

Our telecommunication division has a Land Use Certificate, which consists of
..676 acres of land and a building occupying 10,515.21 square feet of land, with
a permitted building size of 32,024 square feet. This Land Use Certificate has a
term of 50 years expiring in February 2045. The land identified in this
Certificate is owned by Cen Minhong, one of our shareholders, and is located in
Daliang Town, Shunde City. The permitted use of the land as stated in the
Certificate is "manufacturing"; accordingly the Certificate enables us to
operate our manufacturing facility. The Communications Land Use Certificate was
originally purchased by Cen Minhong, one of the initial partners of our
telecommunications company who granted the company the right to use the land for
a period of 50 years, beginning in March 1995. The original owner has assigned
the land use right to our telecommunications division for no additional
consideration for the remaining years. The original cost of the land use right
was RMB 2,300,000, or approximately US $280,000.

Our telecommunications division's facilities are located in Shun de City,
Guangdong province at No. 3. 5th Street Fengxiang Road, Daliang Town, and
include:
o    1 production, management, and research building, four floors
o    4 floor production facility (approximately 9750 square feet)
o    1 warehouse
o    50 sets of mechanical processing equipment
o    150 sets of various mold and pressure tools
o    40 kinds of testing and inspection equipment
o    3 production lines


                                       60

OUR AGRICULTURE DIVISION'S FACILITIES

Our agriculture division has a Land Use Certificate, which consists of three
land parcels. The first two parcels consist of 213 acres, with 29,052 square
feet being set aside for buildings. The third parcel consists of 24.7 acres,
with 5,486 square feet being set aside for buildings. This Land Use Certificate
has a term of 50 years, expiring September 2046. The land for these parcels as
identified in this Certificate is owned by our joint venture subsidiary, Jiaozuo
Yi Wan Hotel, Ltd., and is located in Maying Village, Zhandian Town, Wuzhi
County. The permitted use of the land as stated in the Certificate is
"agriculture"; accordingly the Certificate enables us to conduct our agriculture
operations. Our agriculture division paid 28,000,000 RMB, approximately US
$3,382,000, to the government to purchase its land use permit for 50 years.

The land is allocated in the following way:
o    12.4 acres crab production
o    8.3 acres soft shell turtle production
o    12.4 acres fish production
o    39.6 acres shrimp production
o    27.2 acres vegetable production
o    131.2 acres idle land

Our agriculture division's facilities include:
o    3 production areas
o    74 production pools consisting of:
o    40 pools--shrimp
o    10 pools--crab
o    10 pools--turtle
o    8 pools--fish
o    4 pools--fish incubation
o    2 pools--turtle incubation
o    2 research and management buildings
o    1 warehouse and storage facility
o    1 company dormitory, 30 beds

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No one other than our officers or directors hold in excess of 5% of our issued
shares. The following table sets forth certain information regarding security
ownership of our management as of December 31, 2001:


                                       61

Security Ownership of Management
------------------------------- ---------------------------- ----------------------------- -----------------------
Title of Class                       Name                        Amount and nature          Percentage of class
                                                               of beneficial ownership
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Cheng Wan Ming                    8,462,650                     52.1%*
                                                                   (Direct/Indirect)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Cen Minhong                       8,462,650                     52.1%*
                                                                   (Direct/Indirect)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               You Yingliu                       1,069,250                      6.6%
                                                                        (Direct)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Yang Huijuan                      1,527,500                      9.3%**
                                                                   (Direct/Indirect)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Zhang Haoyu                       1,527,500                      9.3%**
                                                                   (Direct/Indirect)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Wu Zeming                         1,069,250                      6.6%
                                                                        (Direct)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Luo Guanying                        763,750                      4.7%
                                                                        (Direct)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Chang Wanqing                       763,750                      4.7%
                                                                        (Direct)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               Cheng Deqiang                       763,750                      4.7%
                                                                        (Direct)
------------------------------- ---------------------------- ----------------------------- -----------------------
Common                               All officers and
                                         director                     14,419,600
                                  as a group (9 persons)                (Direct)                     88.7%
------------------------------- ---------------------------- ----------------------------- -----------------------



                                       62

This table is based upon information derived from our stock records. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, we believe that each of the shareholders named
in this table has sole or shared voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based upon
16,256,250 shares of common stock outstanding as of December 31, 2001.

There are two married couples in the above list of principal shareholders.
*Mr.Cheng Wan Ming is the husband of Ms. Cen Minhong.  Mr. Cheng Wan Ming
directly owns 6,369,975 shares; his wife, Ms. Cen Minhong, directly owns
2,092,675 shares. Collectively, Mr.Cheng Wan Ming and Ms. Cen Minhong,
beneficially 8,462,650 shares as reflected in the above table.
**Mr. Zhang Haoyu is the husband of Ms. Yang Huijuan.  Mr. Zhang Haoyu directly
owns 763,750 shares; his wife, Ms. Yang Huijuan, directly owns 763,750 shares.
Collectively, Mr. Zhang Haoyu and Ms. Yang Huijuan, beneficially own 1,527,500
shares as reflected in the above table.



                                       63

There are no pending or anticipated arrangements that we are aware of that may
cause a change in control of our company.

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS

The names and ages of our executive officers and directors as of December 31,
2001, are as follows:

--------------------- -------- --------------------------------- -------------------------- -----------------------
        Name            Age                Position                     Held Since               Current term
                                                                                                  To expire
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Wan Ming          39     Chairman of Board and President           May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
You Yingliu             59       Director and Vice-president             May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Zhang Haoyu             30                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Yang Huijuan            30                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Luo Guanying            54       Director and Vice-president             May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Liang Xiaogen           53                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Wu Zeming               48                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Manli             37                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cen Minhong             38                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Wanqing           31                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Deqiang           67                 Director                      May 1999                  Dec 2002
--------------------- -------- --------------------------------- -------------------------- -----------------------


The names and ages of our telecommunications company's executive officers and
directors as of December 31, 2001, are as follows:

--------------------- -------- --------------------------------- -------------------------- -----------------------
        Name            Age                Position                     Held Since              Current term
                                                                                                  to expire
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Wan Ming          39       Chairman of Board and President      September 1993            January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Wu Zeming               48           Vice-Chairman of Board           September 1993            January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
You Yingliu             59                 Director                   September 1993            January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Luo Guanying            54                 Director                   September 1993            January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
He Lei                  33                 Director                     April 2000               April 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------


                                       64

The names and ages of our hotel company's executive officers and directors as of
December 31, 2001, are as follows:

--------------------- -------- --------------------------------- -------------------------- -----------------------
        Name            Age                Position                     Held Since          Current term to expire
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Wan Ming          39      Chairman of Board and President       December 1996              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Chang Jufeng            40           Vice-Chairman of Board            January 2000              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Wu Zeming               48                 Director                   December 1996              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
You Yingliu             59                 Director                   December 1996              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cen Minhong             38                 Director                   December 1996              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Manli             37                 Director                   December 1996              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
He Lei                  33                 Director                    January 2000              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------


The names and ages of our agriculture company's executive officers and directors
as of December 31, 2001, are as follows:

--------------------- -------- --------------------------------- -------------------------- -----------------------
        Name            Age                  Position                     Held Since               Current term
                                                                                                    to expire
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Wan Ming          39       Chairman of Board and President         January 1997              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Chang Jufeng            40            Vice-Chairman of Board             January 2000              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Wu Zeming               48                   Director                    January 1997              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
You Yingliu             59                   Director                    January 1997              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cen Minhong             38                   Director                    January 1997              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
Cheng Manli             37                   Director                    January 1997              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------
He Lei                  33                   Director                    January 2000              January 2003
--------------------- -------- --------------------------------- -------------------------- -----------------------


                                       65


Mr. Cheng Wan Ming has been our President and Chairman of the Board from May
1999 until present. Mr. Cheng Wan Ming is also responsible for our accounting
and financial reporting. From September 1993 to April 2000, Mr. Wan Ming was a
member of the Board of Directors and President of our telecommunicationsS
company. Since May 2000, Mr. Wan Ming has served as the Chairman of the Board of
Directors and President of our telecommunications company. Mr. Wan Ming joined
our hotel company in December 1996 and has served as its Chairman of the Board
of Directors and President from December 1996 until present. Mr. Wan Ming joined
our agriculture company in January 1997 and has served as its Chairman of the
Board and President from January 1997 until present. Before September 1993, Mr.
Wan Ming was President of Shunao Industry and Commerce Company, in Guangdong
Province. Mr. Wan Ming received a bachelor degree from Foshan Junior College in
Guangdong province. Mr. Cheng Wan Ming is the husband of Ms. Cen Minhong. Mr.
Cheng Wan Ming is the brother of Mr. Cheng Wanqing and Ms. Cheng Manli.

Mr. You Yingliu has been our Director and Vice President from May 1999 until
present. He joined our telecommunications company in September 1993. Since
September 1993, Mr. Yingliu has been a Director of our telecommunications
company. Mr. Yingliu joined our hotel company in December 1996. Since then, Mr.
Yingliu has been a Director of our hotel company. Mr. Yingliu joined our
agriculture company in January 1997. From January 1997 to present, Mr. Yingliu
has been a Director and Vice-President of our agriculture company.

Mr. Zhang Haoyu has been a member of our Board of Directors since May 1999. Mr.
Haoyu has been a Vice-President of our hotel subsidiary since December 1996.
Mr. Haoyu served as a Director of our telecommunications company from September
1993 until April 2000. From December 1996 to January 2000, Mr. Haoyu was a
Director and Vice-President of our hotel company. Mr. Haoyu served as a Director
of our agriculture company. Mr. Haoyu previously received an associate degree
from the Metallurgical Junior College of Changsha City, Hunan province. From
September 1991 to October 1995, Mr. Haoyu was a department manager of the
Material Bureau of Qinyang City, Henan province. Mr. Zhang Haoyu is the husband
of Ms. Yang Huijuan.

Ms. Yang Huijuan has been a member of our Board of Directors since May 1999. Ms.
Huijuan served as a Director of our telecommunications company from September
1993 until January 2000. From June 1990 to present, Ms. Huijuan has been
employed as a manager in China Agriculture Bank, Jiaozuo Branch, in the Henan
province of China. From December 1996 until January 2000, Ms. Huijuan was a
Director of our hotel company. Ms. Yang Huijuan also served as a Director of our
agriculture company from January 1997 until January 2000. Ms. Huijuan previously
received a bachelor degree from Jiaozuo University in Henan province. Ms. Yang
Huijuan is the wife of Mr. Zhang Haoyu.

Ms. Luo Guanying has been a member of our Board of Directors and a
Vice-President since May 1999. Ms. Guanying has been a member of the Board of
Directors of our telecommunications company since September 1993. From December
1996 until January 2000, Ms. Guanying served as a member of the Board of
Directors of our hotel company. Ms. Guanying also served as a Director of our
agriculture company from January 1997 until January 2000. Ms. Guanying also is
presently a Vice-President of Shunao Industry & Commerce Company, in Guangdong
province, a position she has held since April 1993. Ms. Luo Guanying is the wife
of Mr. Liang Xiaogen.


                                       66

Mr. Liang Xiaogen has been a member of our Board of Directors since May 1999. He
served as a Director of our telecommunications company from September 1993 to
April 2000. From December 1996 until January 2000, Mr. Xiaogen also served as a
Director of our hotel company. In January 1997, Mr. Xiaogen became a Director of
our agriculture company and served in that capacity until January 2000. Mr.
Xiaogen has been the President of Shun de Zhiyuan Developing Company, in
Guangdong province, since March 1991. Mr. Xiaogen is the husband of Ms. Luo
Guanying.

Mr. Wu Zeming has been a member of our Board of Directors since May 1999. He
served as the Chairman of the Board of Directors and Vice President of our
telecommunications company from September 1993 until April 2000. Since May 2000,
Mr. Zeming has been the Vice-Chairman of our telecommunications company. Since
December 1996, Mr. Zeming has been a Director of our hotel company. Mr. Zeming
has also served as a Director of our agriculture company from January 1997 to
present. Mr. Zeming has also been the Chairman of the Board of Directors of Wan
Da Construction Inc., of Macao, since June 1991. Mr. Zeming is the husband of
Ms. Cheng Manli.

Ms. Cheng Manli has been a member of our Board of Directors since May 1999. Ms.
Manli has been the Representative of the Macao Office of our telecommunications
company since January 1999. She served as a Director of our telecommunications
company from September 1993 until April 2000. Ms. Manli has been a Director of
our hotel company since December 1996. Ms. Manli has also been a Director of our
agriculture company since January 1997. Since June 1991, Ms. Manli has been a
Directors of Wan Da Construction Inc. of Macao. Ms. Manli is the wife of Mr. Wu
Zeming. She is also the sister of Mr. Cheng Wan Ming and Mr. Cheng Wanqing.

Ms. Cen Minhong has been a member of our Board of Directors since May 1999. Ms.
Cen Minhong has been the Director of the Administrative Office of our
telecommunications company since March 2000. She served as a Director of our
telecommunications company from September 1993 until April 2000. Ms. Minhong has
also been a Director of our hotel company since December 1996. Ms. Minhong has
also served as a Director of our agriculture company since January 1997. Ms.
Minhong is the wife of Mr. Cheng Wan Ming.

Mr.Cheng Wanqing has been a member of our Board of Directors since May 1999. He
served as a director of our telecommunications company from September 1993 until
April 2000. From December 1996 until January 2000, Mr. Wanqing also served as a
Director of our hotel company. Mr. Wanqing served as a director of our
agriculture company from January 1997 until January 2000. From April 1993 to the
present, Mr. Wanqing has been Vice-President of Shunao Industry & Commerce
Company. Mr. Cheng Wanqing received a bachelor degree from the Television
Broadcasting College, in Guangdong province. Mr. Cheng Wanqing is the brother of
Mr. Cheng Wan Ming and Ms. Cheng Manli.

Mr. Cheng Deqiang has been a member of our Board of Directors since May 1999.
From August 1953 to May 1993, Mr. Deqiang was a department manager of the
Agriculture Bureau of Shun de City, Guangdong province. From June 1993 to the
present, Mr. Deqiang has been Vice-President of Shunao Industry & Commerce
Company, in Guangdong Province. Mr. Deqiang received a bachelor degree from the
Zhongkai Agriculture School in Guangdong province. Mr. Deqiang is the father of
Mr. Cheng Wan Ming, Mr. Cheng Wanqing, and Ms. Cheng Manli.


                                       67

Mr. Chang Jufeng has been a manager of our hotel company from June 1996 until
December 1999. In January 2000, Mr. Jufeng became the Vice Chairman of the Board
of Directors and the Assistant General Manager of our hotel company. In January
2000, Mr. Jufeng also became the Vice Chairman of the Board of Directors of our
agriculture company. Previously, between March 1992 and May 1996, Mr. Jufeng was
a department manager of the Police Bureau of Jiaozuo City, Henan province. Mr.
Chang Jufeng received a bachelor degree from the Technical College of Jiaozuo
City, Henan province.

Ms. He Lei has been a Director of our hotel company since January 2000. Ms. Lei
also has served as a Director of our agriculture company since January 2000. Ms.
Lei has been a director of our telecommunications company since April 2000.
Previously, from July 1995 until August 1997, Ms. Lei was a manager of the
Gang'ao Entrust Investment Co., Ltd., a financial and investment consulting firm
located in Beijing, P.R.China. Beijing office. Since September 1997 Ms. Lei has
also been a manager of Beijing Zhongyou Huashang Trading Company. Ms. Lei
received a bachelor degree from the Renmin University of China.


                                       68

ITEM 6. EXECUTIVE COMPENSATION

The following table sets forth summary information concerning the compensation
received for services rendered during the current year the year ended December
31, 200 1 by our President/Chairman of the Board, Cheng Wan Ming. No other
executive officers received aggregate compensation during our last fiscal year
which exceeded, or would exceed on an annualized basis, $100,000.

-------------------------- -------------------------------------------- ------------------------------------------
Summary Compensation Chart Annual Compensation                          Long Term Compensation
-------------------------- -------------------------------------------- ------------------------------------------
Name & Position     Year   Salary ($)*              Bonus ($) Other ($) Restricted Options ($) L/Tip ($) All Other
                                                                        Stock
                                                                        Awards
------------------- ------ ------------------------ --------- --------- ---------- ----------- --------- ---------
Cheng Wan Ming,     200 1   11,595                        0         0          0          0          0         0
Chairman/President         (Hotel Division)
------------------- ------ ------------------------ --------- --------- ---------- ----------- --------- ---------
                           3,333                        0         0          0          0          0         0
                           (Agriculture Division)
------------------- ------ ------------------------ --------- --------- ---------- ----------- --------- ---------
                           0                            0         0          0          0          0         0
                           (Communication Division)
------------------- ------ ------------------------ --------- --------- ---------- ----------- --------- ---------


*Cheng Wan Ming's salary he received from our Hotel and Agriculture Divisions
reflects payment by these Divisions.

Our officers and directors, including Cheng Wan Ming, did not receive any
monetary or security compensation from us during 200 1 . The only compensation
that our officers and directors received during 200 1 was from our hotel and
agriculture subsidiaries, as reflected above.

China's mandatory pension system for its urban labor force is a defined-benefit,
pay-as-you-go system for persons identified as "older workers" and retirees.
"Older workers" are those who retired prior to the period between October and
December 1997 which was the implementation of State Counsel Decision Number 26,
the mandatory pension system. In August 1997, China State Council Decision
adopted this unified, publicly managed system covering all urban workers. The
defined system for younger workers it is designed to be multi-pillar with
individual accounts, consisting of : (1) a basic benefit which is a
pay-as-you-go system entitling retirees to a defined-benefit of 20% of the last
year's average provincial, municipal or otherwise local monthly wage; (2)
individual accounts entitling retirees to a monthly annuity equal to 1/120 of
the account's notional accumulation, plus and indexation factor, (3) voluntary
supplementary individual accounts entitling retirees to a phased-withdrawal.
This Decision set forth the general parameters for contributions, fund accruals,
service recognition for those who have contributed under both the old and new
system, and benefits. In addition, the Decision provides some basis for regional
variation.

The Decision mandates one of three benefits according to when the worker begins
contributing to the system: (a) the so called "older men" are those who retired
prior to the implementation of the Decision between October and December 1997.
These workers retain the locally determined level of defined -benefit
entitlements they had been receiving; (b) "middle men" are those who began
contributing prior to the Decision, but who retire afterwards. Such workers are
entitled to the better of the defined-benefit formula applied to "older men" in
their community or the sum of the basic benefit, individual account distribution
and an accrual factor applicable to the years of service prior to the Decision;
and (c) "young men" are those who began contributing after the implementation of
the Decision. These individuals are entitled only to the sum of the basic
benefit and individual account distribution.

The State Counsel Decision and measures to adopt municipal and provincial
pooling represent important steps towards gradually reducing the unfunded
liability of the pension system.

Under the hotel division's pension plan, all other of the hotel's employees who
began contributing after the implementation of the system are entitled only to
the sum of the basic benefit and individual account distribution. This system
sets out general parameters for contributions, fund accruals, and service
recognition for those who have contributed under both old and new systems and
benefits but left some basis for regional variation. As regulated by the local
government, our hotel division pays an annual contribution of 33% of the City's
standard salary, which is approximately $30 per month currently, for all of its
eligible employees, to an insurance company who is responsible for the entire
pension obligation payable to the retired employees.

Term of Employment Agreements.

All of the above individuals have employment agreements with the entity or
entities for which they work. The term of all employment agreements listed in
the tables above is until September 2003. Salaries are renegotiated each year.

Our agriculture, telecommunications, and hotel subsidiaries each have employment
agreements with our President, Mr. Cheng Wan Ming. The employment agreement with
the agriculture subsidiary provides that Mr. Cheng Wan Ming serve as its
president from December 1998 to December 2001. The employment agreement with the
telecommunications subsidiary provides that Mr. Cheng Wan Ming serve as its
President from September 1999 to September 2002. The employment agreement with
the hotel subsidiary provides that Mr. Cheng Wan Ming serve as its President from
December 1999 to December 2002. Each employment agreement provides that monthly
salary shall be determined corresponding to the position and level of work
responsibility within the respective corporation and that Mr. Cheng Wan Ming
will be eligible for bonus payments according to the provisions of the
respective corporation's performance and bonus program.

Our telecommunications subsidiary has an employment agreement with our Director,
Ms. Luo Guanying, in her capacity as a Director of our telecommunications
subsidiary. The employment agreement provides that Ms. Guanying shall serve as
the Director of the telecommunications subsidiary from February 1, 2001 to
February 1, 2006. The employment agreement further provides that monthly salary
shall be determined corresponding to the position and level of work
responsibility within the corporation and that Ms. Guanying shall be eligible
for bonus payments according to the corporation's performance and bonus program.

Our agriculture subsidiary has an employment agreement with our Director, Mr.
You Yingliu, in his capacity as a Vice President of our agriculture subsidiary.
The employment agreement provides that Mr. Yingliu shall serve in a
Vice-President of our agriculture subsidiary from December 10, 1996 to December
10, 2001. The employment agreement further provides that monthly salary shall be
determined corresponding to the position and level of work responsibility within
the corporation and that Mr. Yingliu shall be eligible for bonus payments
according to the corporation's performance and bonus program. Mr. You Yingliu,
in his capacity as Representative for Seafood Purchasing, also has an employment
agreement with our hotel subsidiary. The employment agreement provides that Mr.
Yingliu shall serve in this capacity from December 25, 1998 to December 25, 2001
under the same salary and bonus provisions descried in Mr. Yingliu's employment
agreement with our agriculture subsidiary.

ITEM 7.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In 199 9 , 2000 , and 200 1 our telecommunications division purchased materials,
supplies, and paid for operating expenses in the amount of  $813,811,
 $1,055,159 , and $30,193 on behalf of Shun'ao Industry and Commerce Company, partner in
our agriculture and hotel divisions. Our telecommunications division verbally
agreed to pay for these expenses at its discretion and there are no fixed
repayment terms. There is no commitment to fund current or future operating
Shun'ao Industry and Commerce Company's expenses.

Our president has a 41.7% ownership interest in Shun'ao Industry and Commerce
Company.

                                       69

At December 31, 200 1 , Shun'ao Industry and Commerce Company, a partner in our
agriculture and hotel divisions, is owed $1,811,529 and $2,040,989, by our hotel
and agriculture divisions for acquisition of their interests in the hotel and
farm divisions and $ 710,394 as return of investment in the hotel division.
There are no repayment terms to pay principal or interest at this time. Our
management intends to negotiate terms of payment and interest at a later date.
These debts have been classified as a current liability and are due on demand.

At December 31, 200 1 , Marco Wan Da Construction, a former partner in our hotel
division, is owed $ 905,764 for its interest in the hotel division and $ 304,454
as return of investment in the hotel division. There are no repayment terms to
pay principal or interest at this time. Our management intends to negotiate
terms of payment and interest at a later date. These debts have been classified
as a current liability are due on demand.

Our director, Mr. Wu Zeming, is the president of Marco Wan Da Construction and
has a 51% ownership interest in that company. Our director, Ms. Cheng Manli is a
director of Marco Wan Da Construction and holds a 49% ownership interest in that
company.


In 1999, 2000, and 2001, we advanced Cheng Wan Ming, our president, $127,062,
and $341,166 as cash advances for cash-based business transactions incurred for
the payment of operating expenses and purchases from vendors. Due to the nature
of conducting business in China many financial transaction are completed in
cash, instead of by check or draft. Customarily, officers, managers and
employees of companies located in China, including our personnel, are advanced
cash on a daily basis to pay for normal business operating expenses. These
advances are accounted for when the officer or employee submits the paid invoice
to the accounting department to support the receipt of goods and services.

As of December 31, 2001, we advanced Chang Jufeng, Vice Chairman of the Board of
Directors and the Assistant General Manager of our hotel division and Vice
Chairman of the Board of Directors of our agriculture division $1,568,779 as a
loan. There is no promissory note reflecting the loan. There are no repayment
terms. The purpose of the loan is to invest or to make loans in possible
investment opportunities. There is an oral agreement to return the monies back
to the hotel if no suitable investment opportunities are found by December 31,
2001. There is no interest charged upon the loan.

Upon formation, we issued our officers, directors, and their affiliates
15,512,500 shares for services in connection with our formation

ITEM 8. LEGAL PROCEEDINGS

We are not a party to or aware of any pending or threatened lawsuits or other
legal actions against us.

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

Should our common stock become quoted on the Over-the-Counter Bulletin Board, of
the 16,256,250 shares of our common stock outstanding, 16,256,250 shares of our
common will be freely tradable without restrictions under the Securities Act of
1933, except for any shares held by our "affiliates", which will be subject to
the resale limitations of Rule 144 under the Securities Act of 1933.

In general, under Rule 144 as currently in effect, any of our affiliates and any
person or persons whose shares are aggregated, who has beneficially owned his or
her restricted shares for at least one year, may be entitled to sell in the open
market within any three-month period a number of shares that is 1% of the
outstanding shares of our common stock.

Sales under Rule 144 are also subject to certain limitations on manner of sale,
notice requirements, and availability of current public information about us.
Non-affiliates who have held their restricted shares for two years may be
entitled to sell their shares under Rule 144 without regard to any of the above
limitations, provided they have not been affiliates for the three months
preceding such sale.

Further, Rule 144A as currently in effect, in general, permits unlimited resales
of certain restricted securities of any issuer provided that the purchaser is an
institution that owns and invests on a discretionary basis at least $100 million
in securities or is a registered broker-dealer that owns and invests $10 million
in securities. Rule 144A allows our exiting stockholders to sell their shares of
common stock to such institutions and registered broker-dealers without regard
to any volume or other restrictions. Unlike Rule 144, restricted securities sold
under Rule 144A to non-affiliates do not lose their status as restricted
securities.

As of December 31 , 2001, there were 16,256,250 shares of common stock outstanding,
which were held of record by 63 stockholders.

Prior to the date hereof, there has been no trading market for our common stock.
No active public trading market, as that term is commonly understood, will
develop for the shares if at all, until after the SEC indicates they have no
further comments on this registration statement or 60 days from the date this
registration statement was filed, whichever occurs later. To date, we have made
no arrangements for a market maker to quote our common stock on the
Over-the-Counter Bulletin Board. There can be no assurance that a trading
market in our common stock will develop.

There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity.

The laws and regulations of the People's Republic of China require that before a
Sino-foreign cooperative joint venture enterprise distributes profits to its
partners, it must first satisfy all tax liabilities, provide for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors, after the statutory reserve. The Statutory reserves
included enterprise fund, employee benefits and general reserve. The enterprise
fund may be used to acquire fixed assets or to increase the working capital in
order to expend the production and operation of the joint venture; employee
benefit reserve is restricted to the payment of bonus and welfare for employees
and the general reserve may be used as a provisional financial cushion against
the possible losses of a joint venture. The minimum percentage to be reserved
for the general reserve is 10%. The board of directors decides upon the
percentage to be reserved for the employee benefit reserve. There is no minimum
provision required for enterprise fund.

Since our inception, we have not declared or paid any dividends on our common
stock, nor do we have any intentions of declaring such a dividend in the
foreseeable future.

                                       70

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES


On May 3, 1999, in conjunction with our formation, we issued the following
shares of common stock to our officers and directors:

We issued 6,369,675 shares to Cheng Wan Ming, our President/Chairman of the
Board valued at $.000004875 per share for a total of $31.

We issued 1,069,250 shares to Yingliu You, our Director/Vice President valued at
$.000004875 per share for a total of $5.

We issued 763,750 shares to HauYu Zhang, our Director, valued at $.000004875 per
share for a total of $4.

We issued 763,750 shares to HuiJuan Yang, our Director, valued at $.000004875
per share for a total of $4.

We issued 1,069,250 shares to ZeMing Wu, our Director, valued at $.000004875 per
share for a total of $5.

We issued 2,092,675 shares to MinHung Chen, our Director, valued at $.000004875
per share for a total of $10.

We issued 763,750 shares to GuanYing Luo, our Director/Vice President, valued at
$.000004875 per share for a total of $4.

We issued 763,750 shares to WanQing Cheng, our Director, valued at $.000004875
per share for a total of $4.

We issued 763,750 shares to DeQuing Cheng, our Director, valued at $.000004875
per share for a total of $4.

We issued 427,700 shares to ManLi Cheng, our Director, valued at $0.000004875
per share for a total of $2.

We issued 427,700 shares to ZiaoGen Liang, our Director, valued at $.00000485
per share for a total of $2.

The $.000004875 share valuation is based upon our organizational costs at our
formation of $78.

On May 3, 1999, at our formation, we issued the following shares of common stock
to the following individuals.

LAST NAME   FIRST NAME             # OF SHARES

Lee         Alberto                      4,333

Lee         Alfonso                      4,333

Scheer      Allen                        6,500

She         Angela                       4,333

Li          Angla                       50,375

Lee         Anie M                       4,333

Xie         Anna Q                       4,333

Grambo      Beth D                       4,333

Scheer      Beverly                      6,500

Scheer      Brain                        6,500



                                       71


Kelley      Carol A                      4,333

Chung       Ching Yee                   73,667

Wang        Guiyun                      33,583

Scheer      Edward                       6,500

Yu          Hang Tai                     8,667

He          Lei                         65,000

Kwok        Hon ho                       4,333

Lou         Hui Qi                      73,667

Peri        Jason                        8,667

Chung       Jennifer                    52,000

Lee         Jennifer F                   4,333

Chen        Jenny cheng hui              8,667

Mintz       Joelle P                     8,667

Warner      Katherine S                  8,667

Weng        Laura                        4,333

Yu          Linda                       41,167

Warner      Lloyd H                      8,667

Lee         Margarita                    4,333

Chan        Michael                      4,333

Chan        Mark                         4,333

Woo         Michelle                     8,667

Wang        Min                          8,667

Zhang       Ling                         8,667

Young       Peggy                        4,333

Li          Raymond                     50,375



                                       72


Young       Robert                       4,333

Warner      Ross                         8,667

Ma          Ruth                         2,167

Scheer      Shirley                      8,667

Chan        Steve                        4,333

Lan         Suk Lin                      4,333

Cheung      Theresa Yin Fun              8,667

Li          Tom                          4,333

Burkleo     Wang Van                     8,667

Wang        We                           8,667

Cheng       Sheng Xian                   8,667

Chen        Yee Ming                     8,667

Lee         Yi Lan                      33,583

Kwok        Yuen Yi                      4,333

Peri        Zhen Zhen                    8,667


The shares of common stock issued to officers and directors were issued to them
in connection with our formation and resulted in no cash consideration being
paid to us. The balance of the shares were issued to the remaining individuals
for non-cash consideration. The nature of the transaction was to establish a
U.S. stockholder base and the non-cash consideration received by us was the
establishment of a shareholder base in the U.S.

These shares were valued at $.000004875 per share based upon our organizational
costs at our formation. Because there was no cash consideration involved in the
investment and therefore little or no risk, little sophistication was required
to judge the merits of the investment. Investors were given the opportunity to
ask our management questions or receive any information or documents regarding
us or our business or future business. No underwriters were involved and no
commissions were paid. To the extent the issuance of these shares involved a
sale of securities, these shares and the shares that were issued to our officers
and directors were issued by us in reliance upon Section 4(2) of the 1933 Act in
view of the following:

o    None of these issuances involved underwriters, underwriting discounts, or
     commissions.
o    Restrictive legends are placed on all certificates issued.
o    The issuance did not involve general solicitation or advertising.


                                       73

On July 13, 2001, we issued 250,000 shares of our common stock to Brenda
Hamilton, Esq., as the sole shareholder of Hamilton, Lehrer and Dargan, P.A., in
return for legal services to be rendered in conjunction with this registration
statement. The shares were valued at $.02 for a total of $5,000. These shares
were issued in reliance upon Section 4(2) of the 1933 Act. We believed that
Section 4(2) of the 1933 Act was available because this issuance did not involve
a public offering. Pursuant to an agreement between us and Attorney Hamilton,
the resale of these shares were registered on a Form S-8.


ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

Common stock

We are authorized to issue 50,000,000 shares of no par common stock. As of
December 31, 2001, there were 16,256,250 shares of common stock outstanding.

The holders of our common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The common stock
has no preemptive or conversion rights or other subscription rights. There are
no sinking fund provisions applicable to the common stock. The holders of our
common stock will be entitled to share equally in any dividends that may be
declared by our Board, although we have never paid any dividends and we do not
expect to do so in the foreseeable future.

In the event of liquidation, dissolution, or winding up of our company, our
common stockholders would be entitled to receive, after payment or provision
for payment of all of our debts and liabilities, all of our remaining assets on
a pro rata basis.

Because our Board of Directors without stockholder approval, may issue preferred
stock with voting, dividend, liquidation, and conversion rights, the value of
the common shares held by our shareholders holding common shares may be diluted.
In addition, the issuance of preferred stock may have the effect of delaying or
preventing a change in control without further shareholder action and may
adversely affect the rights and powers, including voting rights, of the holders
of common stock. In certain circumstances, the issuance of preferred stock could
depress the market price of our common stock.

Preferred stock

We are authorized to issue 20,000,000 shares of preferred stock. There are no
shares of preferred stock outstanding. We have no current plans to issue any
shares of preferred stock. Preferred stock may be issued with preferences and
designations as the Board of Directors may from time to time determine. The
Board may, without stockholders approval, issue preferred stock with voting,
dividend, liquidation, and conversion rights that could dilute the voting
strength of our common stockholders and may assist management in impeding and
unfriendly takeover or attempted changes in control.

There are no restrictions on our ability to repurchase or reclaim our preferred
shares while there is any arrearage in the payment of dividends on our
preferred stock.

Transfer Agent And Registrar

Florida Atlantic Stock Transfer, Tamarac, FL will be the transfer agent and
registrar for its common stock.

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation provide that we shall indemnify any officer of
director, or any former officer or director, to the full extent by law.

Section 607.0850 of the Florida Statutes provides that a corporation has the
power to indemnify any person who was or is a party to any proceeding, by reason
of the fact that he or she is or was a director or officer...against
liability...if he or she acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the corporation. Although we
have not indemnified our officers or directors by agreement or otherwise, we may
do so in the future.

Section 607.0831 of the Florida Statutes provides that a director is not
personally liable for monetary damages to the corporation or any other person
for any statement, vote, decision, or failure to act regarding corporate
management or policy, by a director, unless the director breached or failed to
perform his or her duties as a director, those duties which constitute, among
other things: (1)a violation of criminal law...; (2) a transaction from which
the director derived an improper benefit, either director or indirectly; (3)
conscious disregard for he best interest of the corporation, or willful
misconduct; (4) recklessness or an act of omission which was committed in bad
faith or with malicious purpose or in a manner exhibiting wanton and willful
disregard of human rights, safety, or property.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, or persons controlling the registrant under
the foregoing provisions, the registrant has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against the
public policy and is therefore, unenforceable.

                                       74

ITEM 13.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA






                       YI WAN GROUP, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 2001 AND 2000









INDEPENDENT AUDITORS' REPORT


The Board of Directors
Yi Wan Group, Inc. and Subsidiaries


We have audited the consolidated balance sheets of Yi Wan Group, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of income and other comprehensive income, shareholders' equity and
cash flows for years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial positions of Yi Wan Group, Inc.
and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.


/s/ Moore Stephens Frazer and Torbet, LLP
Moore Stephens Frazer and Torbet, LLP




February 21, 2002
Walnut, California



                                       F-1






                       YI WAN GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2001 AND 2000

                                    ASSETS

                                                                        2001             2000
                                                                     ----------       -----------
CURRENT
ASSETS:
                                                                     ----------       -----------
 Cash                                                               $ 1,391,113       $ 2,077,002
 Accounts receivable, net of allowance for doubtful accounts of
  $6,950 and $8,200 at December 31, 2001 and 2000, respectively       1,044,576         1,097,388
 Due from related parties                                             2,584,104         1,779,955
 Inventories                                                            566,938           883,297
 Prepaid expenses                                                        21,371             1,346
                                                                     ----------       ------------
   Total current assets                                               5,608,102         5,838,988

                                                                     ----------       ------------
BUILDINGS, EQUIPMENT AND AUTOMOBILES, net                            17,744,121        18,918,251
                                                                     ----------       ------------
OTHER
ASSETS:
 Intangible asset, net                                                4,211,089         4,317,814
                                                                     ----------       ------------
 Deferred tax asset                                                     110,753            83,219
 Other non-current assets                                               346,077           393,872
                                                                     ----------       ------------
  Total other assets                                                  4,667,919         4,794,905
                                                                     ----------       ------------
   Total assets                                                     $28,020,142      $ 29,552,144
                                                                     ==========       ============


        L I A B I L I T I E S  A N D  S H A R E H O L D E R S'  E Q U I T Y



                                                                     ----------       ------------
CURRENT LIABILITIES:
 Accounts payable                                                   $   330,720      $    310,626
 Accounts payable - related party                                        10,788            10,799
 Accrued liabilities                                                    675,306           692,869
 Wage and benefits payable                                              335,859           306,401
 Sales tax payable                                                    1,011,777         1,011,389
 Income taxes payable                                                 1,075,680         1,202,564
 Due to shareholders                                                    177,609           177,792
 Due to prior owners of joint ventures                                5,773,130         9,936,210
 Notes payable                                                           13,649            33,265
                                                                     ----------       ------------
  Total current liabilities                                           9,404,518        13,681,915
                                                                     ----------       ------------

MINORITY INTEREST                                                     1,464,493         1,260,433
                                                                     ----------       ------------

SHAREHOLDERS' EQUITY:
 Common stock, no par value, authorized 50,000,000 shares,
  16,256,250 shares issued and outstanding                                5,078                78
 Paid-in-capital                                                      5,104,105         5,098,549
 Statutory reserves                                                   9,113,617         7,833,412
 Retained earnings                                                    2,945,701         1,674,763
 Accumulated other comprehensive income                                 (17,370)            2,994
                                                                     ----------       ------------
  Total shareholders' equity                                         17,151,131        14,609,796
                                                                     ----------       ------------

   Total liabilities and shareholders' equity                       $28,020,142      $ 29,552,144
                                                                     ==========       ============

                                       F-2




                       YI WAN GROUP, INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000



                                                              2001           2000
                                                            --------        --------

NET SALES                                                $ 13,066,962      $ 14,070,568

COST OF SALES                                               5,226,379         5,416,003
                                                         -------------     -------------

GROSS PROFIT                                                7,840,583         8,654,565

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES               4,248,955         4,068,658
                                                         -------------     -------------

INCOME FROM OPERATIONS                                      3,591,628         4,585,907
                                                         -------------     -------------

OTHER (EXPENSE) INCOME:
    Interest income                                            27,537            38,330
    Other (expense) income                                    (63,558)           19,262
                                                         -------------     -------------

             Total other (expense) income                     (36,021)           57,592
                                                         -------------     -------------

INCOME BEFORE PROVISION FOR INCOME TAXES
    AND MINORITY INTEREST                                   3,555,607         4,643,499

PROVISION FOR INCOME TAXES                                    800,404           974,893
                                                         -------------     -------------

INCOME BEFORE MINORITY INTEREST                             2,755,203         3,668,606

MINORITY INTEREST
                                                             (204,060)         (282,207)
                                                         -------------     -------------
NET INCOME                                                  2,551,143         3,386,399

OTHER COMPREHENSIVE INCOME:
    Foreign currency translation adjustment                   (20,364)          (25,146)
                                                         -------------     -------------
COMPREHENSIVE INCOME                                     $  2,530,779      $  3,361,253
                                                         =============     =============

Earnings per share, basic and diluted                    $       0.16      $       0.21
                                                         =============     =============

                                      F-3




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000




                                                       Number       Common          Due From        Paid-in          Statutory
                                                    of shares       stock         Shareholders      capital          reserves
                                                  -------------  -------------  --------------  ---------------  --------------
 BALANCE, December 31, 1999                        16,006,250     $     78         $     (78)      $      -       $        -
    Acquisition of subsidiaries                                                                    5,092,993        6,121,776
    Capital contribution                                                                  78
    Net income
    Additions to paid in capital                                                                       5,556
    Adjustment to statutory reserves                                                                                1,711,636
    Foreign currency translation adjustments
                                                  ------------  -------------  ---------------  ---------------  --------------
 BALANCE, December 31, 2000                        16,006,250     $     78         $     -       $  5,098,549     $ 7,833,412
    Net income
    Issuance of common stock                          250,000        5,000
    Additions to paid in capital                                                                        5,556
    Adjustment to statutory reserves                                                                                1,280,205
    Foreign currency translation adjustments
                                                  ------------  -------------  ---------------  ---------------  --------------
BALANCE, December 31, 2001                         16,256,250     $  5,078         $     -       $  5,104,105     $  9,113,617
                                                  ============  =============  ===============  ===============  ==============

-Continued-




                                                                             Accumulated
                                                      Retained           other comprehensive
                                                      earnings                 income                   Totals
                                                  ------------------  --------------------------  -------------------
BALANCE, December 31, 1999                          $          -               $       -            $         -
Acquisition of subsidiaries                                                        28,140             11,242,909
Capital contribution                                                                                          78
Net income                                              3,386,399                                      3,386,399
Additions to paid in capital                                                                               5,556
Adjustment to statutory reserves                       (1,711,636)                                            -
Foreign currency translation adjustments                                          (25,146)               (25,146)
                                                  ------------------  --------------------------  -------------------
BALANCE, December 31, 2000                          $   1,674,763              $    2,994          $   14,609,796
Net income                                              2,551,143                                       2,551,143
Issuance of common stock                                                                                    5,000
Additions to paid in capital                                                                                5,556
Adjustment to statutory reserves                       (1,280,205)                                             -
Foreign currency translation adjustments                                          (20,364)                (20,364)
BALANCE, December 31, 2001
                                                ------------------  --------------------------  -------------------
                                                   $    2,945,701              $  (17,370)         $   17,151,131
                                                ==================  ==========================  ===================






                                      F-4




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


                                                             2001            2000
                                                           ---------       --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                              $ 2,551,143      $ 3,386,399

 Adjustments to reconcile net income to cash
  provided by operating activities:
   Minority interest                                          204,060          282,207
   Depreciation                                             1,313,503        1,377,319
   Amortization                                               106,725          101,227
   Land use right                                               5,556            5,556
   Deferred tax assets                                        (27,534)         (21,270)
   Non-cash stock issuance for legal fees                       5,000               -
   Translation adjustment                                     (20,364)           2,994
   Decrease in accounts receivable                             52,812          233,362
   Increase in related party receivables                     (804,149)      (1,578,337)
   Decrease in inventories                                    316,359          162,145
   (Increase) decrease in prepaid expenses                    (20,025)           6,646
   Decrease in due from officers and employees                 47,795          825,572
   Increase (decrease) in accounts payable                     20,094          (37,119)
   (Decrease) increase in due to shareholders                    (183)              46
   Decrease in accounts payable - related party                   (11)         (19,398)
   Increase in wages and benefits payable                      29,458           66,668
   (Decrease) increase in accrued liabilities                 (17,563)         164,977
   Decrease in income taxes payable                          (126,884)            (647)
   Increase in sales tax payable                                  388           49,198
                                                             -----------     -------------
    Net cash provided by operating activities               3,636,180        5,007,545
                                                             -----------     -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of improvements and automobiles                    (139,373)        (117,759)
                                                             -----------     -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Distributions paid to prior owners of joint ventures      (4,163,080)      (4,521,978)
 Principal payments on notes payable                          (19,616)         (25,076)
                                                             -----------     -------------
Net cash used in financing activities                      (4,182,696)      (4,547,054)
                                                             -----------     -------------
(DECREASE) INCREASE IN CASH                                  (685,889)          342,732
CASH, beginning of year                                     2,077,002         1,734,270
                                                             -----------     -------------
CASH, end of year                                          $1,391,113        $2,077,002
                                                             ===========     =============



                                      F-5





                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies

The reporting entity

The financial statements of Yi Wan Group, Inc. and subsidiaries (referred to as
the Company or YWG in the accompanying financial statements) reflect the
activities and financial transactions of its subsidiaries, which are as follows:

                                                                  Percentage
              Subsidiary                                          Ownership
-------------------------------------------------------------     ----------------
Shun De Yi Wan Communication Equipment                              100 %
  Plant Co., Ltd. (TELECOMMUNICATIONS)

Jiao Zuo Yi Wan Hotel Co., Ltd. (HOTEL)                              90

Yi Wan Maple Leaf High Technology                                    90
  Agriculture Developing Ltd. Co. (FARM)


Yi Wan Group, Inc. was incorporated under the laws of the State of Florida in
the United States in May 1999. Yi Wan Group, Inc. is authorized to issue
50,000,000 shares of no par value common stock and 20,000,000 shares of no par
value preferred stock. The Company's TELECOMMUNICATIONS, HOTEL and FARM
subsidiaries are incorporated under the laws of the People's Republic of China
(PRC).

The Company's subsidiaries are classified as Foreign Invested Enterprises in the
PRC and are subject to the FIE laws of the PRC. The HOTEL and FARM are Foreign
Invested Enterprise Joint Ventures, known as FIEJV or Sino-Foreign Joint
Venture, and TELECOMMUNICATIONS is a Wholly Foreign Owned Enterprise company or
WFOE. All three of these companies are Chinese registered limited liability
companies, with legal structures similar to regular corporations and limited
liability companies organized under state laws in the United States. The
respective Articles of Association for these FIE subsidiaries provide a 30-year
term for the HOTEL and FARM companies and 15 years for the TELECOMMUNICATIONS.

Basis of presentation

In early 1999, several Chinese nationals began to explore possible investment
opportunities within the United States. These individuals formed YWG in May
1999, for the specific purpose of acquiring the majority interests in joint
venture companies that were registered in the People's Republic of China as
Foreign Invested Enterprises. The business plan of YWG called for the
acquisition of profitable businesses with growth potential, which would provide
the business and asset base for YWG becoming a publicly reporting and trading
company in the United States. After searching for suitable candidates with which
to implement this business plan, on January 1, 2000, YWG acquired a 90% equity
interest in Jiao Zuo Yi Wan Hotel Co., Ltd. (HOTEL) and Yi Wan Maple Leaf High
Technology Agriculture Developing Ltd. Co. (FARM), respectively, and a 100%
interest in Shun De Yi Wan Communication Equipment Plant Co., Ltd.
(TELECOMMUNICATIONS).

                                      -5-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

All of the individual owners of Shun'ao, Shun de and Marco are also shareholders
in Yi Wan Group, Inc. Mr. Cheng Wan Ming is the husband of Ms. Cen Minhong. Mr.
Cheng Wan Ming directly owns 6,369,975 shares; his wife, directly owns 2,092,675
shares of Yi Wan Group, Inc. Collectively, Mr. Cheng Wan Ming and Ms. Cen
Minhong, beneficially own 8,462,650 shares or 52.86% of Yi Wan Group, Inc.
stock. Mr. Cheng Wan Ming owns 54.73% interest in both Shun'ao Industry and
Commerce Company, majority partner in our Hotel and Farm subsidiaries pre-merger
and Shun de Zhiyuan Developing Co., minority owner in our Telecommunications
subsidiary pre-merger. Ms. Cen Minhong owns 57.98% in Marco Wan Da Construction,
minority partner in our Hotel and majority partner in our Telecommunication
subsidiary pre-merger and 57.98% in Canadian Maple Leaf, majority partner in our
Farm subsidiary pre-merger.

Effectively Mr. Cheng Wan Ming and Ms. Cen Minhong owned through their ownership
of Shun'ao Industry and Commerce Company, Shun de Zhiyuan Developing Co., Marco
Wan Da Construction and Canadian Maple Leaf a combined 55.5% of the Hotel, Farm
and Telecommunication subsidiaries pre-merger. These acquisitions were in
substance a transfer of net assets between companies under common control. In
accordance with Accounting Interpretations No. 39 of Accounting Principles Board
Opinion No. 16 (APB No. 16), Business Combinations, "Transfers and Exchanges
Between Companies Under Common Control", APB No. 16 does not apply to these
acquisitions and the assets and liabilities were transferred at their historical
cost basis in a manner similar to that in a pooling of interests accounting.

The HOTEL

Prior to YWG's acquisition of 90% of the equity of the HOTEL, this joint venture
was owned by Shun'ao Industry and Commerce Company (Shun'ao), a company
established under the laws of the People's Republic of China, and Marco Wan Da
Construction (Marco), a company established under the laws of Macao. Shun'ao
owned 70% of the HOTEL's equity and Marco owned the remaining 30%. The HOTEL was
a sino-foreign joint venture established under the laws of the People's Republic
of China, with registered capital of approximately $6,024,000 (RMB¥50,000,000).
In addition, the HOTEL had an additional investment requirement of approximately
$5,976,000 (RMB¥49,000,000), for a total required investment of approximately
$12,000,000 (RMB¥99,000,000). Shun'ao and Marco made 100% of these required
investment contributions to the HOTEL.

On January 1, 2000, YWG acquired Marco's 30% equity interest in the HOTEL and
60% of the remaining 70% of the HOTEL's equity held by Shun'ao.
Post-acquisition, YWG owns 90% of the total HOTEL equity and Shun'ao owns 10%.
Coincident with YWG's acquisition, the total required investment of HOTEL joint
venture was amended to reduce the registered capital to approximately $3,012,000
(RMB¥25,000,000) and to reduce the additional investment to approximately
$3,012,000 (RMB¥25,000,000) for an amended total investment of approximately
$6,024,000 (RMB¥50,000,000). This amendment resulted in the excess payment by
Shun'ao and Marco to the HOTEL's original required total investment by
approximately $5,976,000 (RMB¥49,000,000).


                                      -6-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

In consideration for the transfers to YWG of 90% of the HOTEL equity, YWG agreed
to pay the total of approximately $2,717,293 (RMB¥22,500,000) to Shun'ao
($1,811,529) and Marco ($905,764). In addition, the HOTEL will repay Shun'ao and
Marco the aggregate of $5,177,928 of the $5,976,000 in contributions that
Shun'ao and Marco made to the HOTEL to satisfy the original additional required
investment. This repayment is the result of the reduction in the total capital
and additional investment necessary under the amended joint venture Articles of
Association for the HOTEL.

Accordingly, on a consolidated basis, YWG has recorded $7,895,221 as due to the
prior joint venture partners in connection with the acquisition transaction for
the HOTEL. This amount is a combination of the $2,717,293 acquisition price
payable to the former HOTEL owners and the $5,177,928 payable by the HOTEL to
its former owners for their excess additional investment contributions to the
HOTEL. There are no other contingent payments or commitments made by YWG in
connection with the HOTEL purchase.

Because the shareholders of the Shun'ao and Marco are also majority shareholders
in Yi Wan Group, Inc., which is the majority owner of the Hotel, Shun'ao and
Marco signed an agreement with YWG to accept less consideration than their
original investments in the Hotel. The registered capital and additional
investment amounts were reduced from the original joint venture because the
owners believed that the reduced capital and investment amounts were sufficient
to fund the operations. In addition by reducing the capital and investment
amounts in the new joint venture agreement this helped to speed up the Chinese
government approval process of the new joint venture. There was no other
consideration given to Shun'ao or Marco other than the $7,895,221. Since the
individual shareholders of both Shun'ao and Marco are majority shareholders in
Yi Wan Group, Inc., and in an effort to help Yi Wan Group, Inc. to succeed in
this venture, Shun'ao and Marco have signed an agreement to leave $2,717,293
with our Hotel Division, which represents the difference in the original capital
and investment amounts in the Hotel and the $7,895,221. Thus YWG is not
contingently liable to Shun'ao or Marco for any difference in the original
capital and investment amounts that were retained in the Hotel subsidiary. The
$2,717,293 has been recorded as paid-in-capital in the consolidation. In
addition, the shareholders of Shun'ao and Marco agreed to leave $538 which
represents the accumulated undistributed earnings prior to January 1, 2000. The
$538 has been recorded as paid-in-capital in the consolidation.

Since the acquisition of the HOTEL occurred on January 1, 2000, the HOTEL's
operations for the years ended December 31, 2001 and 2000 have been included in
the accompanying income statement.

The FARM

Prior to YWG's acquisition of 90% of the equity of the FARM, this joint venture
was owned by Shun'ao Industry and Commerce Company (Shun'ao), a company
established under the laws of the People's Republic of China, and Canadian Maple
Leaf International Inc. (Canadian Maple Leaf) a company established under the
laws of Canada. Shun'ao owned 51% of the FARM's equity and Canadian Maple Leaf
owned the remaining 49%. The FARM was a sino-foreign joint venture established
under the laws of the People's Republic of China, with registered capital of
approximately $4,940,000 (RMB¥41,000,000). In addition, the FARM had an
additional investment requirement of approximately $4,940,000 (RMB¥41,000,000),
for a total required investment of approximately $9,880,000 (RMB¥82,000,000).

                                      -7-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

Shun'ao made its 51% contribution of the required $4,940,000 capital to the
FARM, while Canadian Maple Leaf failed to make its capital contribution. Neither
of the original parties to the FARM joint venture made contributions to the
additional investment requirement of $4,940,000.

On January 1, 2000, YWG acquired Canadian Maple Leaf's 49% equity interest in
the FARM and 41% of the remaining 51% of the FARM's equity held by Shun'ao.
Post-acquisition, YWG owns 90% of the total FARM equity and Shun'ao owns 10%. In
consideration for the transfers to YWG of 90% of the FARM equity, YWG agreed to
pay approximately $2,040,989 (RMB¥16,900,000) to Shun'ao and agreed to assume
the FARM's original capital contribution requirements of Canadian Maple Leaf in
the amount of $2,409,638 (RMB ¥20,000,000).

In addition, under the amended joint venture Articles of Association, YWG is
obligated to make 90%, or $4,456,359, of the additional investment requirement
over and above the registered capital of approximately $4,951,511
(RMB¥41,000,000) for a total investment of approximately $8,906,986
(RMB¥73,800,000). YWG is required to pay its share of registered capital
(approximately $2,409,638) within one year of the issuance of the new business
license, which was issued on June 7, 2000. As of June 30, 2001, no amounts have
been paid on this registered capital requirement. FARM's Board of Directors has
approved to extend YWG's obligation for one year to June 7, 2002. There are no
other contingent payments or commitments made by YWG in connection with the FARM
purchase.

There are no time requirements placed by any government agency, concerning when
the additional investment amount of $4,951,511 (RMB¥41,000,000) is required to
be paid by Yi Wan Group, Inc. Since this is a new joint venture, Yi Wan Group,
Inc. has no exposure concerning the registered capital payment of Canadian Maple
Leaf. However, under Chinese law, payment of the registered capital amount is
set forth in the joint venture agreement, which for the Farm was due June 7,
2001, and has been extended until June 7, 2002. Under Chinese law, the Farm's
registered capital is required to be paid no later than three years after the
business license has been issued. If the required registered capital payment has
not been made by this time, the Farm's approval certificate and business license
shall be revoked and the Farm will be unable to conduct business.

Since the individual shareholders of Shun'ao are majority shareholders in
Yi Wan Group, Inc., and in an effort to help Yi Wan Group, Inc. to succeed in
this venture, the shareholders of Shun'ao agreed to leave $549,992 which
represents the accumulated undistributed earnings prior to January 1, 2000. The
$549,992 has been recorded as paid-in-capital in the consolidation.

Since the acquisition of the FARM occurred on January 1, 2000, the FARM's
operations for the years ended December 31, 2001 and 2000 have been included in
the accompanying income statement.

                                      -8-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

The TELECOMMUNICATIONS

TELECOMMUNICATIONS was a foreign investment joint venture with registered
capital of established under the laws of the People's Republic of China on
September 3, 1993. Prior to YWG's acquisition of 100% of the equity of
TELECOMMUNICATIONS, this was owned by Shun de Zhiyuan Developing Co. (Shun de),
a company established under the laws of the People's Republic of China, and
Marco Wan Da Construction (Marco), a company established under the laws of
Macao. Shun de owned 35% of TELECOMMUNICATIONS' equity and Marco owned the
remaining 65%. The TELECOMMUNICATIONS was a sino-foreign joint venture
established under the laws of the People's Republic of China, with registered
capital of $1,500,000. The original parties in the TELECOMMUNICATIONS joint
venture made the required registered capital contributions of $1,500,000 to the
joint venture.

On January 1, 2000, YWG acquired 100% of the TELECOMMUNICATIONS' equity. In
consideration for the transfers to YWG of 100% of the TELECOMMUNICATIONS'
equity, YWG agreed to pay additional investment requirement in the amount of
$500,000.

Shun de and Marco have signed an agreement with YWG to receive no consideration
for their original investments in the TELECOMMUNICATIONS as the shareholders of
the Shun de and Marco are the majority shareholders of Yi Wan Group, Inc. Yi Wan
Group, Inc. is the sole owner of the TELECOMMUNICATIONS. Since the individual
shareholders of both Shun de and Marco are majority shareholders in Yi Wan
Group, Inc. and in an effort to help Yi Wan Group, Inc. to succeed in this
venture, Shun de and Marco have signed an agreement with YWG to leave the
original $1,587,635 capital investment in the TELECOMMUNICATIONS. Thus Yi Wan
Group, Inc. is not contingently liable for any payments of future consideration
due to Shun de or Marco. The $1,587,635 was recorded as paid-in-capital in the
consolidation. In addition, the shareholders of Shun de and Marco agreed to
leave $237,535, which represents the accumulated undistributed earnings prior to
January 1, 2000. The $237,535 has been recorded as paid-in-capital in the
consolidation.

In accordance with a board resolution of the TELECOMMUNICATIONS, the additional
investment of $500,000 will be paid to the TELECOMMUNICATIONS by Yi Wan Group,
Inc. Shun de and Marco are willing to accept this arrangement as consideration
for their ownership as they are also majority shareholders in Yi Wan Group, Inc.
and Yi Wan Group, Inc. owns 100% of TELECOMMUNICATIONS.

The TELECOMMUNICATIONS is now a WFOE with registered capital of $1,500,000 and
an additional investment requirement of $500,000. YWG is to pay the additional
investment requirement of $500,000 within one year of the issuance of the new
business license, which was issued on June 22, 2000. As of June 30, 2001, no
amounts have been paid on this additional investment. TELECOMMUNICATIONS' Board
of Directors has approved to extend YWG's obligation for one year to June 22,
2002. There is no exposure to Yi Wan Group, Inc. while the additional investment
of $500,000 due to the TELECOMMUNICATIONS is still outstanding.


                                      -9-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

There are no other contingent payments or commitments made by YWG in connection
with the TELECOMMUNICATIONS' purchase.

Since the acquisition of the TELECOMMUNICATIONS occurred on January 1, 2000, the
TELECOMMUNICATIONS operations for the years ended December 31, 2001 and 2000
have been included in the accompanying income statement.

In accordance with AIN No. 39 of APB No. 16, the Company has recorded the
acquisition of the Hotel, Farm and Telecommunications subsidiaries in a manner
similar to that in pooling of interest and accounted for all assets and
liabilities at their historical cost. Details are as follows:

                                                                                                        Tele-
                                                 Totals            Hotel             Farm           communications
                                             ---------------   ---------------   --------------   -------------------
                                             ---------------   ---------------   --------------   -------------------
Purchase price                             $     11,472,848  $     5,434,586       $ 4,450,627        $ 1,587,635
                                             ===============   ===============   ==============   ===================

     Allocated as follows:
Assets acquired, at historical cost        $     30,258,992  $    20,788,606   $     4,123,959        $ 5,346,427
Liabilities assumed, at historical cost         (8,101,647)       (4,977,239)         (730,510)        (2,393,898)
Due to prior joint venture partners
     for return of capital                      (5,177,928)       (5,177,928)
Due to prior joint venture partners
     for acquisitions                           (4,758,282)       (2,717,293)      (2,040,989)
Minority interest                                 (978,226)         (603,843)        (374,383)
Paid-in-capital *                               (5,092,993)       (2,717,831)        (549,992)         (1,825,170)
Statutory reserves                              (6,121,776)       (4,571,722)        (428,003)         (1,122,051)
Accumulated other comprehensive
     income                                        (28,140)          (22,750)             (82)             (5,308)
                                             ---------------   ---------------   --------------   -------------------
Totals                                     $            -     $           -      $         -        $          -
                                             ===============   ===============   ==============   ===================

*Paid -in capital:
Prior joint venture partners
     contributions                                4,304,928
                                                                    2,717,293                              1,587,635
Retained earnings as of
     January 1, 2000
                                                    788,065               538          549,992               237,535
                                             ---------------   ---------------   --------------   -------------------
                                             ---------------   ---------------   --------------   -------------------
Totals                                     $      5,092,993   $     2,717,831    $     549,992      $      1,825,170
                                             ===============   ===============   ==============   ===================

The accumulated other comprehensive income represents the accumulated
adjustments for foreign currency translation from Renminbi to US dollar.

Principles of consolidation

The financial statements represent the activities of Yi Wan Group, Inc. and its
subsidiaries. The consolidated financial statements of YWG include its
subsidiaries HOTEL, FARM and TELECOMMUNICATIONS. All significant inter-company
accounts and transactions have been eliminated in the consolidation.

                                      -10-





                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Foreign currency translation

The reporting currency of YWG is US dollar. The Company's foreign subsidiaries
use their local currency, Renminbi, as their functional currency. Results of
operations and cash flow are translated at average exchange rates during the
period, and assets and liabilities are translated at the end of period exchange
rates. Translation adjustments resulting from this process are included in
accumulated other comprehensive income in the statement of shareholders' equity.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred. These amounts are not
material to the financial statements.

Revenue recognition

The HOTEL's revenues are recognized when the rooms are occupied or when the
guest utilizes the hotel's services.

The FARM recognizes its revenue when the farm products are delivered to its
customers.

The TELECOMMUNICATIONS recognizes its revenue when the risk of loss for the
product sold passes to the customers which is when goods are installed at the
customers' premises and testing of the product is completed and accepted by the
customers.

Nature of operations and concentration of risk

The HOTEL is a four star rated hotel located in the best area of downtown of
Jiao Zuo City, He Nan Province, People's Republic of China. The Hotel's income
sources include income from rooms, restaurants, sauna, bowling center and
nightclub. The Hotel is a sino-foreign joint venture established under the laws
of the People's Republic of China on December 25, 1996. The expiration date of
the joint venture is December 18, 2027. The term can be extended or terminated
prior to the date of expiration if unanimously decided by the board of directors
and approved by the original examination and approval authority. The board of
directors is controlled by YWG, with YWG electing six of the seven board
members. The operational, management and corporate governance decisions of the
board are by a simple majority, except for the revision of the Articles of
Association, the increase or assignment of the registered capital, the business
combination of the joint venture and, with certain limitations the termination
of the joint venture, which require a unanimous vote.

The FARM provides training to local farmers with its advanced technology and
managerial system in farming and is located in Zhan Dian City, Wu Zhi County, He
Nan Province, in the People's Republic of China. The FARM's income sources
include income from the sales of seafood raised and produced in constructed
ponds. The Farm is a sino-foreign joint venture established under the laws of
the People's Republic of China on December 4, 1996. The expiration date of the
joint venture as stated in the joint venture agreement and business license is
August 5, 2028.

                                      -11-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Nature of operations and concentration of risk, (continued)

The term can be extended or terminated prior to the date of expiration if
unanimously decided by the board of directors and approved by the original
examination and approval authority. The board of directors is controlled by YWG,
with YWG electing six of the seven board members. The operational, management
and corporate governance decisions of the board are by a simple majority, except
for the revision of the Articles of Association, the increase or assignment of
the registered capital, the business combination of the joint venture and, with
certain limitations the termination of the joint venture, which require a
unanimous vote.

The TELECOMMUNNICATIONS is an electronic equipment manufacturer located in Shun
De City, Guang Dong Province, in the People's Republic of China. The Company's
income sources include income from the manufacturing of communication equipment
systems. The Company is a solely foreign funded company established under the
laws of the People's Republic of China on June 22, 2000. The expiration date of
this agreement and business license is June 22, 2015. The joint venture may be
terminated prior to the date of expiration if unanimously decided by the board
of directors and approved by the original examination and approval authority.
YWG, owning 100% of the equity interests of this company, controls the board of
directors.

Buildings, equipment and automobiles

Buildings, equipment, and automobiles are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Depreciation expense for the years ended December 31, 2001 and 2000
amounted to $1,313,503 and $1,377,319, respectively. Estimated useful lives of
the assets is as follows:

                                                    Estimated Useful Life
Buildings                                               20 years
Machinery and equipment                                 10 years
Computer, office equipment and furniture                 5 years
Automobiles                                              5 years


Maintenance, repairs and minor renewals are charged directly to expenses as
incurred. Major additions and betterment to property and equipment are
capitalized.

Long-term assets of the Company are reviewed annually as to whether their
carrying value has become impaired. The Company considers assets to be impaired
if the carrying value exceeds the future projected cash flows from related
operations. The Company also re-evaluates the periods of amortization to
determine whether subsequent events and circumstances warrant revised estimates
of useful lives. As of December 31, 2001, the Company expects these assets to be
fully recoverable.

                                      -12-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies, (continued)

Buildings, equipment and automobiles, (continued)

Buildings, equipment and automobiles consist of the following at December 31:

                                                          2001                 2000
                                                   -------------------   ------------------
Buildings and improvements                       $         19,321,631  $        18,997,301
Furniture and equipment                                     5,193,953            5,172,534
Automobiles                                                   234,238              201,043
Construction in progress                                       17,137              256,708
                                                   -------------------   ------------------
                                                   -------------------   ------------------
    Totals                                                 24,766,959           24,627,586
Less accumulated depreciation                               7,022,838            5,709,335
                                                   -------------------   ------------------
    Building, equipments and
        automobiles, net                         $         17,744,121  $        18,918,251
                                                   ===================   ==================



Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.

Recently issued accounting pronouncements

The Financial Accounting Standards Board has issued SFAS No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". These
statements will change the accounting for business combinations, goodwill and
other intangible assets in two significant ways. First, SFAS 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Use of the pooling-of-interests method will be
prohibited. Second, SFAS 142 changes the accounting for goodwill from an
amortization method to impairment only method. Accordingly, amortization of
goodwill, including goodwill recorded in past business combinations, will cease
upon adoption of that statement, which for companies with calendar year ends,
will be January 1, 2002. Certain other intangible assets with indefinite lives
are subject to the same rule.

The Company has adopted SFAS No. 141 during the year ending December 31, 2001
and there have been no business combinations since the time of adoption.

The Company has adopted SFAS No. 142 during the year ending December 31, 2002.
Upon adoption of this Statement, the amount attributed to excess of acquired net
assets over cost resulting from the acquisition of TELECOMMUNICATIONS will no
longer be amortized and will be recognized as income during the year ending
December 31, 2002.

                                      -13-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies, (continued)

Recently issued accounting pronouncements, (continued)

The Financial Accounting Standards Board has issued SFAS No. 143, "Accounting
for Asset Retirement Obligations". This Statement requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company expects that
the adoption of this Statement will not have a material affect on its
consolidated financial statements.

The Financial Accounting Standards Board has also issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This Statement
requires that one accounting model be used for long-live assets to be disposed
of by sale, whether previously held and used or newly acquired, and broadens the
presentation of discontinued operations to include more disposal transactions.
That accounting model retains the requirement of FASB No. 121 to measure a
long-lived asset classified as held for sale at the lower of its carrying amount
or fair value less cost to sell and to cease depreciation (amortization). This
Statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years.

The Company has adopted SFAS No. 144 during the year ending December 31, 2002
and there has been no material affect on its consolidated financial statements.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in
state-owned banks at December 31, 2001 and 2000 amounted to $1,391,113 and
$2,340,740, respectively of which no deposits are covered by insurance. YWG has
not experienced any losses in such accounts and believes it is not exposed to
any risks on its cash in bank accounts.

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out basis and consist of the following at December 31:

                                                    2001                       2000
                                              ------------------         -----------------
Hotel inventories                           $           216,940        $          172,725
Telecommunications inventories                          348,598                   447,911
Farm inventories                                                                  233,717
                                                              -
Other                                                                              28,944
                                                          1,400
                                              ------------------         -----------------
    Total inventories                       $           566,938        $          883,297
                                              ==================         =================


The HOTEL inventories consist of food products, alcohol, beverages and supplies.


                                      -14-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Inventories, (continued)

The TELECOMMUNICATIONS inventories consists of the following at December 31:

                                                     2001                      2000
                                              -------------------       --------------------
Raw materials                               $             92,686      $              98,205
Work in process                                          113,926                     65,798
Finished goods                                           141,986                    283,908
                                              -------------------       --------------------
    Total inventories                       $            348,598      $             447,911
                                              ===================       ====================


The FARM inventories consisted of fish, shrimp, soft-shelled turtles, crab,
feed, seeds, and supplies. Included as part of the inventoried costs of seafood
are direct labor and applicable overhead incurred over time to raise the seafood
products until taken to market. The quantities of live fish, shrimp,
soft-shelled turtles and crab inventories are determined monthly based upon
estimated growth from purchased hatchlings and fries in each pond and are
reduced for the actual quantities sold and estimated mortality rates. Each pond
is closed periodically and the estimated pounds adjusted to the actual harvest.
As further disclosed in Note 11, FARM has temporally ceased operations prior to
December 31, 2001 and there is no farm inventory as of December 31, 2001.

Intangible assets

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company. However, the government grants the user a
"land use right" (the Right) to use the land. The HOTEL and FARM have purchased
the Right to use the land for 40 years and 50 years, respectively, from the
government for a fee in the amount of $1,570,000 and $3,382,000. The HOTEL's
Right (Land Use Certificate) is registered under the name of one of the joint
venture partners, Shunde Shunao Industry & Commerce Company, Ltd. The FARM's
Right (Land Use Certificate) is registered under the name of the HOTEL. Both
HOTEL and FARM are in the process of applying for the name change of the Right,
which has not been finalized as of the date of this report.

The Right has been classified as an intangible asset on the accompanying
financial statements and is being amortized using the straight-line method over
the life of the Right. Amortization expense for the years ended December 31,
2001 and 2000 amounted to $106,725 and $101,227, respectively.

In March 1995, one of the shareholders of YWG purchased the land use right for
50 years where the TELECOMMUNICATIONS' operating facilities are located. Neither
the title or the Right has been transferred to TELECOMMUNICATIONS, nor is
TELECOMMUNICATIONS being charged for using the land. However, the owner has
assigned the Right to TELECOMMUNICATIONS for the remaining years. The original
cost of the land use right amounted to $277,800 and is being recognized as an
expense annually and as a capital contribution. The Right is being amortized
over 50 years and the expense for the years ended December 31, 2001 and 2000
amounted to $5,556 and $5,556, respectively.


                                      -15-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Income taxes

YWG has adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of deferred
income tax liabilities and assets for the expected future tax consequences of
temporary differences between income tax basis and financial reporting basis of
assets and liabilities. Provision for income taxes consist of taxes currently
due plus deferred taxes. The deferred tax asset of $110,753 and $83,219 as at
December 31, 2001 and 2000 represents taxes on expenses deducted for financial
statements purposes and not for tax purposes.

The HOTEL is considered as a foreign investment joint venture by the government
and receives special income tax treatment. The HOTEL is subject to central
government income tax at a rate of 30% and a 3% provincial government income
tax.

The HOTEL is exempt from central and provincial government income tax for a
period of two years (years ended December 31, 1997 and 1998), followed by a 50%
reduction in the central and provincial government income tax for a period of
three years (years ended December 31, 1999, 2000 and 2001).

The FARM is considered as foreign  investment  joint venture by the  government,
receiving  special  income  tax  treatment.  The FARM is  subject  to a  central
government income tax at a rate of 30% and 3% provincial  government income tax.
However,  the FARM is exempt from central and provincial  government  income tax
for two years,  starting  with the first year of  profitable  operations  (years
ended  December  31,  1997 and 1998),  followed  by a 50%  reduction  in central
government  income tax and full exemption from provincial  government income tax
for the next three years (years ended December 31, 1999, 2000 and 2001).

The  TELECOMMUNICATIONS is a wholly foreign owned foreign enterprise company and
therefore  receives special income tax treatment from the China government.  The
TELECOMMUNICATIONS  is subject to central government income tax at a rate of 30%
and 3% provincial  government income tax.  However,  the  TELECOMMUNICATIONS  is
exempt from central and provincial  government income tax for two years starting
from the first year of profitable  operations (years ended December 31, 1994 and
1995),  followed  by 50%  reduction  in the central  and full  exemption  in the
provincial  government income tax for the next three years (years ended December
31, 1996, 1997 and 1998). Starting from 1999,  TELECOMMUNICATIONS is being taxed
at full tax rates (30% for central  government  income tax and 3% for provincial
government).

The provision for income taxes at December 31, consisted of the following:

                                                         2001                          2000
                                                   ------------------            -----------------
Provision for China Income Tax                   $           752,794           $          912,881
Provision for China Local Tax                                 75,252                       83,264
Deferred taxes                                               (27,642)                     (21,252)
                                                   ------------------            -----------------
    Total provision for income taxes             $           800,404           $          974,893
                                                   ==================            =================


Certain revenues of the HOTEL, FARM and TELECOMMUNICATIONS operations are
subject to sales and cultural taxes ranging from 3% to 10%. This tax is shown as
a reduction of sales.

                                      -16-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Income taxes, (continued)

The following table reconciles the U.S. statutory rates to the Company's
effective tax rate:

                                                                     2001                   2000
                                                                  -----------           -------------
U.S. Statutory rates                                                      34   %                  34 %
Foreign income not recognized in U.S.                                    (34)                    (34)
China Income taxes                                                        22                      21
                                                                  -----------           -------------
      Effective tax rate                                                  22   %                  21 %
                                                                  ===========           =============



Earnings per share

YWG adopted Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" (SFAS 128). SFAS 128 requires the presentation of earnings per share
(EPS) as Basic EPS and Diluted EPS. There are no differences between Basic and
Diluted EPS at December 31, 2001 and 2000.

Note 2 - Notes payable

Notes payable represents amounts due to construction contractors. They are due
on demand, normally within one year. Notes payable at December 31, consisted of
the following:


                                                          2001                   2000

Notes payable to various

     vendors, unsecured, due on demand, no interes$       13,649           $     33,265
                                                       =============       =============


Note 3 - Supplemental disclosure of cash flow information

Income taxes paid amounted to $970,155 and $997,218 for the years ended December
31, 2001 and 2000, respectively. No interest expense payments were made for the
years ended December 31, 2001 and 2000.

The Company purchased the following joint venture interests as disclosed in Note
1 on January 1, 2000.

                                                                                               Tele-
                                  Totals               Hotel              Farm            communications
                             -----------------    ----------------   ---------------   ----------------------

Purchase price            $        11,472,848  $        5,434,586 $       4,450,627 $              1,587,635
                             =================    ================   ===============   ======================



Note 4 - Accounts receivable and credit risk

YWG's business operations are conducted mainly in the People's Republic of
China. During the normal course of business, YWG extends unsecured credit to its
customers. Management reviews its accounts receivable on a regular basis to
determine if the bad debt allowance is adequate at each year-end.

                                      -17-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 5 - Fair Value of Financial Instruments

The carrying amount of cash, trade accounts receivable, trade accounts payable
and accrued liabilities are reasonable estimates of their fair value because of
the short maturity of these items.

Note 6 - Due from related parties

YWG pays for various expenses, supplies, inventories and other goods on behalf
of a related party, whose shareholders are also the shareholders of YWG. Amounts
due from this related party at December 31, 2001 and 2000 amounted to $1,015,325
and $1,055,159, respectively.

A member of the Board of Directors has been advanced money for investment
opportunities on behalf of the HOTEL. Amounts due from this person at December
31, 2001 and 2000 amounted to $1,568,779 and $724,796, respectively.

All amounts due from related parties are non-interest bearing and have no fixed
repayment terms.

Note 7 - Pension contribution

Regulations in the People's Republic of China require YWG to contribute to a
defined contribution retirement plan for all permanent employees. All permanent
employees are entitled to an annual pension equal to their basic salary at
retirement. The HOTEL and TELECOMMUNICATIONS pay an annual contribution of 33%
and 20%, respectively, of the city's standard salary of their employees to an
insurance company, which is responsible for the entire pension obligation
payable to the retired employees. There were no contributions for the Farm's
employees due to their non-permanent status. For the years ended December 31,
2001 and 2000, YWG made pension contributions in the amount of $48,862 and
$36,750, respectively.

Note 8 - Other non-current assets

Other non-current assets represents cash advances to officers and employees for
cash based business transactions incurred for the payment of operating expenses
and purchases from various vendors.

Note 9 - Distribution of Income, Statutory Reserves and Restricted Retained Earnings

The laws and regulations of the People's Republic of China require that before a
Sino-foreign cooperative joint venture enterprise distributes profits to its
partners, it must first satisfy all tax liabilities, provide for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors, after the statutory reserve. The Statutory Reserves
included enterprise fund, employee benefits and general reserve. The enterprise
fund may be used to acquire fixed assets or to increase the working capital in
order to expend the production and operation of the joint venture; employee
benefit reserve is restricted to the payment of bonus and welfare for employees
and the general reserve may be used as a provisional financial cushion against
the possible losses of a joint venture. The minimum percentage to be reserved
for the general reserve is 10%. The board of directors decides upon the
percentage to be reserved for the employee benefit reserve. There is no minimum
provision required for enterprise fund.

                                      -18-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 9 - Distribution of Income, Statutory Reserves and Restricted Retained
         Earnings, continued

Consolidated statutory reserves at December 31, 2001 and 2000 amounted to
$9,113,617 and $7,833,412, respectively. No dividends or distributions were
declared to the owners for the years ended December 31, 2001 and 2000.

The Chinese government restricts distributions of registered capital and the
additional investment amounts required by the Chinese joint ventures. Approval
by the Chinese government must be obtained before distributions from these
amounts can be returned to their owners. There are no restricted retained
earnings on the accompanying balance sheets at December 31, 2001 and 2000.

Note 10 - Due to prior owners of joint ventures

Shun'ao and Marco, were the partners in the original joint ventures from which
YWG acquired its equity interests in the three FIE Chinese subsidiaries. At
December 31, 2001 and 2000, Shun'ao and Marco were owed the following amounts
for their respective equity interests and for the return of additional
investments in the old joint ventures. All amounts due to prior owners of joint
ventures are non-interest bearing and have no fixed repayment terms.

                                                                           2001                       2000
                                                                    --------------------      ---------------------
Payment due for acquistion of HOTEL:
       Payable to Shun'ao                                         $           1,811,529     $            1,811,529
       Payable to Marco                                                         905,764                    905,764
                                                                    --------------------      ---------------------
                                                                              2,717,293                  2,717,293
                                                                    --------------------      ---------------------

Payment due to Shun'ao for acquisition of FARM                                2,040,989                  2,040,989
                                                                    --------------------      ---------------------

Return of investment by HOTEL:
       Payable to Shun'ao                                                       710,394                  3,624,550
       Payable to Marco                                                         304,454                  1,553,378
                                                                    --------------------      ---------------------
                                                                              1,014,848                  5,177,928
                                                                    --------------------      ---------------------
       Totals                                                     $           5,773,130     $            9,936,210
                                                                    ====================      =====================



Note 11 - FARM Operations

During 2001, as a result of highway construction, the FARM has lost its source
of natural water necessary to raise and grow the farm's products. The FARM has
ceased its operations during December 2001 and management is in the process of
formalizing a plan to dispose of the FARM operations. The FARM is also in
negotiation with the local government concerning their land use right and
alternatives concerning the ultimate use of the land. Subsequent to December 31,
2001 there has been no formalized plan adopted to dispose of the FARM's
operations and no provision has been made within financial statements for the
year ending December 31, 2001 for the ultimate disposition of the FARM's
operation.

                                      -19-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Note 11 - FARM Operations, (continued)

The Company has adopted SFAS No. 144 "Accounting for the Impairment or Disposal
of Long-Lived Assets" during the year ending December 31, 2002 and once the
Company has adopted a formal plan to dispose of the FARM's operations the
provisions of SFAS No. 144 will be applied. As of December 31, 2001 the assets
and liabilities of the FARM consisted of the following:


Current assets                          $        582,642
Buildings and equipment, net                     437,596
Intangible assets                              2,117,364
Other non-current assets                          14,942
                                          ---------------
              Total assets              $      3,152,544
                                          ===============

Current liabilities                     $        330,294
                                          ===============

                                      -20-




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Segment Information

YWG includes five major operating segments: restaurant, lodging, entertainment,
farm and telecommunication equipment. YWG evaluates the performance of its
segments based primarily on operating profit before corporate expenses and
depreciation and amortization. The following table presents revenues and other
financial information by business segment for the year ended December 31:

                                                                            HOTEL
                                    -----------------------------------------------------------------------
                                      Restaurant          Lodging         Entertainment           Totals
                                    ----------------  ----------------   ----------------------------------
2001
Net sales                        $        3,770,926 $       1,963,345 $       2,018,645 $        7,752,916
Cost of sales                             1,832,803           123,327           155,722          2,111,852
                                    ----------------  ----------------   ---------------   ----------------
Gross profit                              1,938,123         1,840,018         1,862,923          5,641,064
Operating expenses                          436,983           295,734           248,636            981,353
Depreciation and
    amortization                                                                                 1,141,579
Unallocated expenses                                                                             1,003,601
Corporate expenses
                                    ----------------  ----------------   ---------------   ----------------
Income (loss) from operations    $        1,501,140 $       1,544,284 $       1,614,287 $        2,514,531
                                    ================  ================   ===============
Interest income                                                                                     17,835
Other expense                                                                                       (7,433)
Provision for income tax                                                                          (416,614)
                                                                                           ----------------
Income (loss) before minority
     interest                                                                           $        2,108,319
                                                                                           ================

Total assets                                                                            $       20,072,689
                                                                                           ================


-Continued-


                                      Farm         Telecommunications  Intersegmentelimination  Totals
                                 ----------------   ------------------ ------------------------ -----------
2001
Net sales                              1,019,837 $       4,369,324 $          (75,115)$        13,066,962
Cost of sales                            879,859         2,309,783            (75,115)          5,226,379
                                 ----------------   ---------------   ----------------   -----------------
Gross profit                             139,978         2,059,541                  -           7,840,583
Operating expenses                       132,478           890,504                              2,004,335
Depreciation and
    amortization                          72,613            21,827                              1,236,019
Unallocated expenses                                                                            1,003,601
Corporate expenses                                                                                  5,000
                                 ----------------   ---------------   ----------------   -----------------
Income (loss) from operations            (65,113)$       1,147,210 $                - $         3,591,628
Interest income                            1,520             8,182                                 27,537
Other expense                            (56,101)              (24)                               (63,558)
Provision for income tax                       -          (383,790)                              (800,404)
                                 ----------------   ---------------   ----------------   -----------------
Income (loss) before minority
     interest                           (119,694)$         771,578 $                - $         2,755,203
                                 ================   ===============   ================   =================

Total assets                           4,060,246 $       5,791,885 $       (1,904,678)$        28,020,142
                                 ================   ===============   ================   =================



                                      -21-



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 12 - Segment Information, (continued)

                                                                        HOTEL
                                -----------------------------------------------------------------------
                                  Restaurant          Lodging         Entertainment       Totals
                                ----------------   ---------------   ----------------------------------
2000
Net sales                     $       3,715,071 $       1,956,375 $        2,122,993 $       7,794,439
Cost of sales                         1,788,342           118,071            153,087         2,059,500
                                ----------------   ---------------   ----------------   ---------------
Gross profit                          1,926,729         1,838,304          1,969,906         5,734,939
Operating expenses                      430,673           300,148            264,845           995,666
Depreciation and
    amortization                                                                             1,120,339
Unallocated expenses                                                                           792,021
                                ----------------   ---------------   ----------------   ---------------
Income from operations        $       1,496,056 $       1,538,156 $        1,705,061 $       2,826,913
                                ================   ===============   ================
Interest income                                                                                 16,984
Other income (expense)                                                                            (241)
Provision for income tax                                                                      (476,307)
                                                                                        ---------------
Income before minority
     interest                                                                        $       2,367,349
                                                                                        ===============

Total assets                                                                         $      20,634,686
                                                                                        ===============


-Continued-




                                      Farm        Telecommunication  Intersegmentelimination  Totals
                                 ---------------  ------------------ ----------------------- ------------
2000
Net sales                     $       1,727,399 $        4,640,849 $         (92,119)$       14,070,568
Cost of sales                           954,916          2,493,706           (92,119)         5,416,003
                                 ---------------   ----------------   ---------------   ----------------
Gross profit                            772,483          2,147,143                 -          8,654,566
Operating expenses                      165,481            875,386                            2,036,533
Depreciation and
    amortization                         80,901             38,864                            1,240,104
Unallocated expenses                                                                            792,021
                                 ---------------   ----------------   ---------------   ----------------
Income from operations        $         526,101 $        1,232,893 $               - $        4,585,907
Interest income                           1,766              8,068                               26,818
Other income (expense)                   11,511             19,504                               30,774
Provision for income tax                (80,230)          (418,356)                            (974,893)
                                 ---------------   ----------------   ---------------   ----------------
Income before minority
     interest                 $         459,148 $          842,109 $               - $        3,668,606
                                 ===============   ================   ===============   ================

Total assets                  $       4,292,798 $        5,047,343 $        (422,683)$       20,552,144
                                 ===============   ================   ===============   ================




                                      -22-






                       YI WAN GROUP, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 2000 AND 1999






INDEPENDENT AUDITORS' REPORT


The Board of Directors
Yi Wan Group, Inc. and Subsidiaries


We have audited the consolidated balance sheets of Yi Wan Group, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of income and other comprehensive income, shareholders' equity and
cash flows for year ended December 31, 2000 and for the period from inception
(May 3, 1999) through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial positions of Yi Wan Group, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the year ended December 31, 2000 and the period from
inception through December 31, 1999 in conformity with generally accepted
accounting principles in the United States of America.

As disclosed in Note 13, the Statement of Shareholders' equity for the year
ended December 31, 2000 has been restated to properly reflect the stock issuance
in May 1999 and the acquisition of it's subsidiaries.


/s/ Moore Stephens Frazer and Torbet, LLP
Moore Stephens Frazer and Torbet, LLP



February 26, 2001
Walnut, California



                                       F-1




                               YI WAN GROUP, INC.

                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 2000 AND 1999



                                     ASSETS

                                                          2000              1999
                                                         --------          --------
                                                      (CONSOLIDATED)    (UNCONSOLIDATED)
                                                         --------          ---------
CURRENT ASSETS:
 Cash                                                  $ 2,077,002        $      -
 Accounts receivable, net of allowance for doubtful
  accounts of $8,200 at December 31, 2000                1,097,388               -
 Due from related parties                                1,779,955               -
 Inventories                                               883,297               -
 Prepaid expenses                                            1,346               -
                                                       ------------       ------------
Total current assets                                     5,838,988               -
                                                       ------------       ------------

BUILDINGS, EQUIPMENT AND AUTOMOBILES, net               18,918,251               -
                                                       ------------       ------------

OTHER
ASSETS:
 Intangible asset, net                                   4,317,814               -
                                                       ------------       ------------
 Deferred tax asset                                         83,219               -
 Other non-current assets                                  393,872               -
                                                       ------------       ------------
  Total other assets                                     4,794,905               -
                                                       ------------       ------------

  Total assets                                        $ 29,552,144         $     -
                                                       ============       ============


        L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y


CURRENT LIABILITIES:
 Accounts payable                                     $    310,626        $      -
 Accounts payable - related party                           10,799               -
 Accrued liabilities                                       692,869               -
 Wage and benefits payable                                 306,401               -
 Sales tax payable                                       1,011,389               -
 Income taxes payable                                    1,202,564               -
 Due to shareholders                                       177,792               -
 Due to prior owners of joint ventures                   9,936,210               -
 Notes payable                                              33,265               -
                                                       ------------       -------------
  Total current liabilities                             13,681,915               -
                                                       ------------       -------------
MINORITY INTEREST:                                       1,260,433               -
                                                       ------------       -------------

SHAREHOLDERS'
EQUITY:
 Common stock, no par value, authorized 50,000,000 shares,
  16,006,250 shares issued and outstanding                      78               78
 Less receivable due from shareholders                          -               (78)
 Paid-in-capital                                         5,098,549
 Statutory reserve                                       7,833,412               -
 Retained earnings                                       1,674,763               -
 Accumulated other comprehensive income                      2,994               -
                                                       ------------       -------------
  Total shareholders' equity                            14,609,796               -
                                                       ------------       -------------
  Total liabilities and shareholders' equity           $29,552,144         $     -
                                                       ============       =============




                                      F-2




                               YI WAN GROUP, INC.

               STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
             FOR THE YEAR ENDED DECEMBER 31, 2000 AND FOR THE PERIOD
             FROM INCEPTION (MAY 3, 1999) THROUGH DECEMBER 31, 1999



                                                                 2000            1999
                                                               ---------       --------
                                                            (CONSOLIDATED)   (UNCONSOLIDATED)
                                                               ----------      --------


NET SALES                                                    $ 14,070,568       $     -

COST OF SALES                                                   5,416,003             -
                                                             -------------     -------------
GROSS PROFIT                                                    8,654,565             -

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES                   4,068,658             -
                                                             -------------      ------------

INCOME FROM OPERATIONS                                          4,585,907             -
                                                            --------------      ------------
OTHER INCOME:
    Interest income                                                38,330             -
    Other income                                                   19,262             -
                                                            --------------      ------------

             Total other income                                    57,592             -
                                                            --------------      ------------
INCOME BEFORE PROVISION FOR INCOME TAXES
    AND MINORITY INTEREST                                       4,643,499             -


PROVISION FOR INCOME TAXES                                        974,893             -
                                                            --------------      ------------

INCOME BEFORE MINORITY INTEREST                                 3,668,606             -

MINORITY INTEREST                                                (282,207)            -
                                                            --------------      ------------

NET INCOME                                                      3,386,399             -

OTHER COMPREHENSIVE INCOME:

    Foreign currency translation adjustment                       (25,146)            -
                                                            --------------      -------------

COMPREHENSIVE INCOME                                         $  3,361,253       $     -
                                                            ==============      =============

Earnings per share, basic and diluted                        $       0.21             -
                                                            ==============      =============



                                      F-3





            FOR THE YEAR ENDED DECEMBER 31, 2000 AND FOR THE PERIOD
             FROM INCEPTION (MAY 3, 1999) THROUGH DECEMBER 31, 1999



                                                   Number       Common        Due From      Paid-in     Statutory
                                                  of shares     stock       Shareholders    capital     reserves
                                                -------------  -----------  ------------  ------------ -------------
 BALANCE from inception (May 3, 1999)                  -        $    -       $    -       $    -         $  -
                                                -------------  -----------  ------------  ------------ -------------
     Issuance of stock                          16,006,250          78           (78)
     Net income
                                                -------------  -----------  ------------  ------------ -------------
 BALANCE, December 31, 1999                     16,006,250      $   78       $   (78)     $    -         $  -
    Acquisition of subsidiaries                                                           5,092,993       6,121,776
    Capital contribution                                                          78
    Net income
    Additions to paid in capital                                                              5,556
    Adjustment to statutory reserves                                                                      1,711,636
    Foreign currency translation adjustments
                                                -------------  -----------  ------------  ------------ -------------
BALANCE, December 31, 2000                       16,006,250     $   78       $     -      $5,098,549     $7,833,412
                                                =============  ===========  ============  ============ =============


-Continued-





                                                          Retained         Accumulated
                                                          earnings      other comprehensive
                                                          (Deficit)          income              Totals
                                                         ------------   ---------------------   -----------
 BALANCE from inception (May 3, 1999)                     $    -            $    -              $      -
                                                          -----------   ---------------------   -----------
     Issuance of stock                                                                                 -
     Net income                                                -                                       -
                                                          -----------   ---------------------   -----------
 BALANCE, December 31, 1999                               $    -            $    -              $
    Acquisition of subsidiaries                                -             28,140              11,242,909
     Capital contribution                                                                                78
    Net income                                             3,386,399                              3,386,399
     additions to paid in capital                                                                     5,556
    Adjustment to statutory reserves                      (1,711,636)                                     0
    Foreign currency translation adjustments                                (25,146)                (25,146)
                                                          -----------   ---------------------   -----------

BALANCE, December 31, 2000                                $1,674,763       $  2,994              $14,609,796
                                                          ===========   =====================   ===========



                                      F-4




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                            STATEMENTS OF CASH FLOWS
             FOR THE YEAR ENDED DECEMBER 31, 2000 AND FOR THE PERIOD
             FROM INCEPTION (MAY 3, 1999) THROUGH DECEMBER 31, 1999



                                                                2000            1999
                                                            -----------       ----------
                                                           (CONSOLIDATED)   (UNCONSOLIDATED)
                                                            ------------      ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                 $  3,386,399      $      -

 Adjustments to reconcile net income to cash
  provided by operating activities:
   Minority interest                                              282,207             -
   Depreciation                                                 1,377,319             -
   Amortization                                                   101,227             -
   Land use right                                                   5,556             -
   Translation adjustment                                           2,994             -
   Decrease in accounts receivable                                233,362             -
   Increase in related party receivables                       (1,578,337)            -
   Decrease in inventories                                        162,145             -
   Decrease in prepaid expenses                                     6,646             -
   Decrease in deferred tax assets                                (21,270)            -
   Decrease in due from officers and employees                    825,572             -
   Decrease in accounts payable                                   (37,119)            -
   Increase in due to shareholders                                     46             -
   Decrease in accounts payable - related party                   (19,398)            -
   Increase in wages and benefits payable                          66,668             -
   Increase in accrued liabilities                                164,977             -
   Decrease in income taxes payable                                  (647)            -
   Increase in sales tax payable                                   49,198             -
                                                                -----------       ----------
    Net cash provided by operating activities                   5,007,545             -
                                                                -----------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of improvements and automobiles                       (117,759)            -
                                                                -----------       ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions paid to prior owners of joint ventures         (4,521,978)            -
  Principal payments on notes payable                             (25,076)            -
                                                                -----------       ----------
Net cash used in financing activities                          (4,547,054)            -
                                                                -----------       ----------
INCREASE IN CASH                                                  342,732             -

CASH, beginning of year                                         1,734,270             -
                                                                -----------       ----------

CASH, end of year                                              $2,077,002         $   -
                                                                ===========       ==========



                                      F-5




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

The reporting entity

The financial statements of Yi Wan Group, Inc. and subsidiaries (referred to as
the Company or YWG in the accompanying financial statements) reflect the
activities and financial transactions of its subsidiaries, which are as follows:

                                                      Percentage
              Subsidiary                               Ownership
-----------------------------------------------     ----------------
Shun De Yi Wan Communication Equipment                     100 %
  Plant Co., Ltd. (TELECOMMUNICATIONS)
Jiao Zuo Yi Wan Hotel Co., Ltd. (HOTEL)                     90
Yi Wan Maple Leaf High Technology                           90
  Agriculture Developing Ltd. Co. (FARM)


Yi Wan Group, Inc. was incorporated under the laws of the State of Florida in
the United States in May 1999. Yi Wan Group, Inc. is authorized to issue
50,000,000 shares of no par value common stock and 20,000,000 shares of no par
value preferred stock. The Company's TELECOMMUNICATIONS, HOTEL and FARM
subsidiaries are incorporated under the laws of the People's Republic of China
(PRC).

The Company's subsidiaries are classified as Foreign Invested Enterprises in the
PRC and are subject to the FIE laws of the PRC. The HOTEL and FARM are Foreign
Invested Enterprise Joint Ventures, known as FIEJV or Sino-Foreign Joint
Venture, and TELECOMMUNICATIONS is a Wholly Foreign Owned Enterprise company or
WFOE. All three of these companies are Chinese registered limited liability
companies, with legal structures similar to regular corporations and limited
liability companies organized under state laws in the United States. The
respective Articles of Association for these FIE subsidiaries provide a 30-year
term for the HOTEL and FARM companies and 15 years for the TELECOMMUNICATIONS.

Basis of presentation

In early 1999, several Chinese nationals began to explore possible investment
opportunities within the United States. These individuals formed YWG in May
1999, for the specific purpose of acquiring the majority interests in joint
venture companies that were registered in the People's Republic of China as
Foreign Invested Enterprises. The business plan of YWG called for the
acquisition of profitable businesses with growth potential, which would provide
the business and asset base for YWG becoming a publicly reporting and trading
company in the United States. After searching for suitable candidates with which
to implement this business plan, on January 1, 2000, YWG acquired a 90% equity
interest in Jiao Zuo Yi Wan Hotel. Ltd. (HOTEL) and Yi Wan Maple Leaf Technology
Agriculture Developing Ltd. Co. (FARM), respectively, and a 100% interest in
Shun De Yi Wan Communication Equipment Plant Co., Ltd. (TELECOMMUNICATIONS).

                                      F-6




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

All of the individual owners of Shun'ao, Shun de and Marco are also shareholders
in Yi Wan Group, Inc. Mr. Cheng Wan Ming is the husband of Ms. Cen Minhong. Mr.
Cheng Wan Ming directly owns 6,369,975 shares; his wife, directly owns 2,092,675
shares of Yi Wan Group, Inc. Collectively, Mr. Cheng Wan Ming and Ms. Cen
Minhong, beneficially own 8,462,650 shares or 52.86% of Yi Wan Group, Inc.
stock. Mr. Cheng Wan Ming owns 54.73% interest in both Shun'ao Indusrtry and
Commerce Company, majority partner in our Hotel and Farm subsidiaries pre-merger
and Shun de Zhiyuan Developing Co., minority owner in our Telecommunications
subsidiary pre-merger. Ms. Cen Minhong owns 57.98% in Marco Wan Da Construction,
minority partner in our Hotel and majority partner in our Telecommunication
subsidiary pre-merger and 57.98% in Canadian Maple Leaf, majority partner in our
Farm subsidiary pre-merger.

Effectively Mr. Cheng Wan Ming and Ms. Cen Minhong owned through their ownership
of Shun'ao Industry and Commerce Company, Shun de Zhiyuan Developing Co., Marco
Wan Da Construction and Canadian Maple Leaf a combined 55.5% of the Hotel, Farm
and Telecommunication subsidiaries pre-merger. These acquisitions were in
substance a transfer of net assets between companies under common control. In
accordance with Accounting Interpretations No. 39 of Accounting Principles Board
Opinion No. 16 (APB No. 16), Business Combinations, "Transfers and Exchanges
Between Companies Under Common Control", APB No. 16 does not apply to these
acquisitions and the assets and liabilities were transferred at their historical
cost basis in a manner similar to that in a pooling of interests accounting.

The HOTEL

Prior to YWG's acquisition of 90% of the equity of the HOTEL, this joint venture
was owned by Shun'ao Industry and Commerce Company (Shun'ao), a company
established under the laws of the People's Republic of China, and Marco Wan Da
Construction (Marco), a company established under the laws of Macao. Shun'ao
owned 70% of the HOTEL's equity and Marco owned the remaining 30%. The HOTEL was
a sino-foreign joint venture established under the laws of the People's Republic
of China, with registered capital of approximately $6,024,000 (RMB¥50,000,000).
In addition, the HOTEL had an additional investment requirement of approximately
$5,976,000 (RMB¥49,000,000), for a total required investment of approximately
$12,000,000 (RMB¥99,000,000). Shun'ao and Marco made 100% of these required
investment contributions to the HOTEL.

On January 1, 2000, YWG acquired Marco's 30% equity interest in the HOTEL and
60% of the remaining 70% of the HOTEL's equity held by Shun'ao.
Post-acquisition, YWG owns 90% of the total HOTEL equity and Shun'ao owns 10%.
Coincident with YWG's acquisition, the total required investment of HOTEL joint
venture was amended to reduce the registered capital to approximately $3,012,000
(RMB¥25,000,000) and to reduce the additional investment to approximately
$3,012,000 (RMB¥25,000,000) for an amended total investment of approximately
$6,024,000 (RMB¥50,000,000). This amendment resulted in the excess payment by
Shun'ao and Marco to the HOTEL's original required total investment by
approximately $5,976,000 (RMB¥49,000,000).


                                      F-7




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

In consideration for the transfers to YWG of 90% of the HOTEL equity, YWG agreed
to pay the total of approximately $2,717,293 (RMB¥22,500,000) to Shun'ao
($1,811,529) and Marco ($905,764). In addition, the HOTEL will repay Shun'ao and
Marco the aggregate of $5,177,928 of the $5,976,000 in contributions that
Shun'ao and Marco made to the HOTEL to satisfy the original additional required
investment. This repayment is the result of the reduction in the total capital
and additional investment necessary under the amended joint venture Articles of
Association for the HOTEL.

Accordingly, on a consolidated basis, YWG has recorded $7,895,221 as due to the
prior joint venture partners in connection with the acquisition transaction for
the HOTEL. This amount is a combination of the $2,717,293 acquisition price
payable to the former HOTEL owners and the $5,177,928 payable by the HOTEL to
its former owners for their excess additional investment contributions to the
HOTEL. There are no other contingent payments or commitments made by YWG in
connection with the HOTEL purchase.

Because the shareholders of Shun'ao and Marco are also majority shareholders in
Yi Wan Group, Inc., which is the majority owner of the Hotel, Shun'ao and Marco
signed an agreement with YWG to accept less consideration than their original
investments in the Hotel. The registered capital and additional investment
amounts were reduced from the original joint venture because the owners believed
that the reduced capital and investment amounts were sufficient to fund the
operations. In addition by reducing the capital and investment amounts in the
new joint venture agreement this helped to speed up the Chinese government
approval process of the new joint venture. There was no other consideration
given to Shun'ao or Marco other than the $7,895,221. Since the individual
shareholders of both Shun'ao and Marco are majority shareholders in Yi Wan
Group, Inc., and in an effort to help Yi Wan Group, Inc. to succeed in this
venture, Shun'ao and Marco have signed an agreement to leave $2,717,293 with our
Hotel Division, which represents the difference in the original capital and
investment amounts in the Hotel and the $7,895,221. Thus YWG is not contingently
liable to Shun'ao or Marco for any difference in the original capital and
investment amounts that were retained in the Hotel subsidiary. The $2,717,293
has been recorded as paid-in-capital in the consolidation. In addition, the
shareholders of Shun'ao and Marco agreed to leave $538 which represents the
accumulated undistributed earnings prior to January 1, 2000. The $538 has been
recorded as paid-in-capital in the consolidation.

Since the acquisition of the HOTEL occurred on January 1, 2000, the HOTEL's
operations for the year ended December 31, 2000 have been included in the
accompanying income statement.

The FARM

Prior to YWG's acquisition of 90% of the equity of the FARM, this joint venture
was owned by Shun'ao Industry and Commerce Company (Shun'ao), a company
established under the laws of the People's Republic of China, and Canadian Maple
Leaf International Inc. (Canadian Maple Leaf) a company established under the
laws of Canada. Shun'ao owned 51% of the FARM's equity and Canadian Maple Leaf
owned the remaining 49%. The FARM was a sino-foreign joint venture established
under the laws of the People's Republic of China, with registered capital of



                                      F-8




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

approximately $4,940,000 (RMB¥41,000,000). In addition, the FARM had an
additional investment requirement of approximately $4,940,000 (RMB¥41,000,000),
for a total required investment of approximately $9,880,000 (RMB¥82,000,000).
Shun'ao made its 51% contribution of the required $4,940,000 capital to the
FARM, while Canadian Maple Leaf failed to make its capital contribution. Neither
of the original parties to the FARM joint venture made contributions to the
additional investment requirement of $4,940,000.

On January 1, 2000, YWG acquired Canadian Maple Leaf's 49% equity interest in
the FARM and 41% of the remaining 51% of the FARM's equity held by Shun'ao.
Post-acquisition, YWG owns 90% of the total FARM equity and Shun'ao owns 10%. In
consideration for the transfers to YWG of 90% of the FARM equity, YWG agreed to
pay approximately $2,040,989 (RMB¥16,900,000) to Shun'ao and agreed to assume
the FARM's original capital contribution requirements of Canadian Maple Leaf in
the amount of $2,409,638 (RMB ¥20,000,000).

In addition, under the amended joint venture Articles of Association, YWG is
obligated to make 90%, or $4,456,359, of the additional investment requirement
over and above the registered capital of approximately $4,951,511
(RMB¥41,000,000) for a total investment of approximately $8,906,986
(RMB¥73,800,000). YWG is required to pay its share of registered capital
(approximately $2,409,638) within one year of the issuance of the new business
license, which was issued on June 7, 2000. As of June 30, 2001, no amounts have
been paid on this registered capital requirement.

FARM's Board of Directors has approved to extend YWG's obligation for one year
to June 7, 2002. There are no other contingent payments or commitments made by
YWG in connection with the FARM purchase.

There are no time requirements placed by any government agency concerning when
the additional investment amount of $4,951,511 (RMB¥41,000,000) is required to
be paid by Yi Wan Group, Inc. Since this is a new joint venture, Yi Wan Group,
Inc. has no exposure concerning the registered capital payment of Canadian Maple
Leaf. However, under Chinese law, payment of the registered capital amount is
set forth in the joint venture agreement, which for the Farm was due June 7,
2001, and has been extended until June 7, 2002. Under Chinese law, the Farm's
registered capital is required to be paid no later than three years after the
business license has been issued. If the required registered capital payment has
not been made by this time, the Farm's approval certificate and business license
shall be revoked and the Farm will be unable to conduct business.

Since the individual shareholders of Shun'ao are majority shareholders in
Yi Wan Group, Inc., and in an effort to help Yi Wan Group, Inc. to succeed in
this venture, the shareholders of Shun'ao agreed to leave $549,992 which
represents the accumulated undistributed earnings prior to January 1, 2000. The
$549,992 has been recorded as paid-in-capital in the consolidation.

Since the acquisition of the FARM occurred on January 1, 2000, the FARM's
operations for the year ended December 31, 2000 have been included in the
accompanying income statement.


                                      F-9




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

The TELECOMMUNICATIONS

TELECOMMUNICATIONS was a foreign investment joint venture with registered
capital of established under the laws of the People's Republic of China on
September 3, 1993. Prior to YWG's acquisition of 100% of the equity of
TELECOMMUNICATIONS, this was owned by Shun de Zhiyuan Developing Co. (Shun de),
a company established under the laws of the People's Republic of China, and
Marco Wan Da Construction (Marco), a company established under the laws of
Macao. Shun de owned 35% of TELECOMMUNICATIONS' equity and Marco owned the
remaining 65%. The TELECOMMUNICATIONS was a sino-foreign joint venture
established under the laws of the People's Republic of China, with registered
capital of $1,500,000. The original parties in the TELECOMMUNICATIONS joint
venture made the required registered capital contributions of $1,500,000 to the
joint venture.

On January 1, 2000, YWG acquired 100% of the TELECOMMUNICATIONS' equity. In
consideration for the transfers to YWG of 100% of the TELECOMMUNICATIONS'
equity, YWG agreed to pay additional investment requirement in the amount of
$500,000.

Shun de and Marco have signed an agreement with YWG to receive no consideration
for their original investments in the TELECOMMUNICATIONS as the shareholders of
Shun de and Marco are the majority shareholders of Yi Wan Group, Inc. Yi Wan
Group, Inc. is the sole owner of the TELECOMMUNICATIONS. Since the individual
shareholders of both Shun de and Marco are majority shareholders in Yi Wan
Group, Inc. and in an effort to help Yi Wan Group, Inc. to succeed in this
venture, Shun de and Marco have signed an agreement with YWG to leave the
original $1,587,635 capital investment in the TELECOMMUNICATIONS. Thus Yi Wan
Group, Inc. is not contingently liable for any payments of future consideration
due to Shun de or Marco. The $1,587,635 was recorded as paid-in-capital in the
consolidation. In addition, the shareholders of Shun de and Marco agreed to
leave $237,535 which represents the accumulated undistributed earnings prior to
January 1, 2000. The $237,535 has been recorded as paid-in-capital in the
consolidation.

In accordance with a board resolution of the TELECOMMUNICATIONS, the additional
investment of $500,000 will be paid to the TELECOMMUNICATIONS by Yi Wan Group,
Inc. Shun de and Marco are willing to accept this arrangement as consideration
for their ownership as they are also majority shareholders in Yi Wan Group, Inc.
and Yi Wan Group, Inc. owns 100% of TELECOMMUNICATIONS.

The TELECOMMUNICATIONS is now a WFOE with registered capital of $1,500,000 and
an additional investment requirement of $500,000. YWG is to pay the additional
investment requirement of $500,000 within one year of the issuance of the new
business license, which was issued on June 22, 2000. As of June 30, 2001, no
amounts have been paid on this additional investment. TELECOMMUNICATIONS' Board
of Directors has approved to extend YWG's obligation for one year to June 22,
2002. There is no exposure to Yi Wan Group, Inc. while the additional investment
of $500,000 due to the TELECOMMUNICATIONS is still outstanding.

There are no other contingent payments or commitments made by YWG in connection
with the TELECOMMUNICATIONS' purchase.

                                      F-10




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Basis of presentation, (continued)

Since  the   acquisition   of  the  HOTEL  occurred  on  January  1,  2000,  the
TELECOMMUNICATIONS  operations  for the year ended  December  31, 2000 have been
included in the accompanying income statement.

In  accordance  with AIN No. 39 of APB No.  16, the  Company  has  recorded  the
acquisition of the Hotel, Farm and  Telecommunications  subsidiaries in a manner
similar  to that in  pooling  of  interest  and  accounted  for all  assets  and
liabilities at their historical cost. Details are as follows:

                                                                                                        Tele-
                                                 Totals            Hotel             Farm           communications
                                             ---------------   ---------------   --------------   -------------------
Purchase price                             $   11,472,848    $     5,434,586   $     4,450,627  $            1,587,635
                                             ===============   ===============   ==============   ===================

     Allocated as follows:
Assets acquired, at historical cost        $     30,258,992  $     20,788,606  $     4,123,959  $          5,346,427
Liabilities assumed, at historical cost          (8,101,647)       (4,977,239)        (730,510)           (2,393,898)
Due to prior joint venture partners
     for return of capital                       (5,177,928)       (5,177,928)
Due to prior joint venture partners
     for acquisitions                            (4,758,282)       (2,717,293)      (2,040,989)
Minority interest                                  (978,226)         (603,843)        (374,383)
Paid-in-capital *                                (5,092,993)       (2,717,831)        (549,992)           (1,825,170)
Statutory reserves                               (6,121,776)       (4,571,722)        (428,003)           (1,122,051)
Accumulated other comprehensive
     income                                         (28,140)          (22,750)             (82)               (5,308)
                                             ---------------   ---------------   --------------   -------------------
Totals                                     $              -  $              -  $             -  $                  -
                                             ===============   ===============   ==============   ===================

*Paid -in capital:
Prior joint venture partners
     contributions                                4,304,928         2,717,293                              1,587,635
Retained earnings as of
     January 1, 2000                                788,065               538          549,992               237,535
                                             ---------------   ---------------   --------------   -------------------
                                             ---------------   ---------------   --------------   -------------------
Totals                                     $      5,092,993  $      2,717,831  $       549,992  $          1,825,170
                                             ===============   ===============   ==============   ===================

The accumulated other comprehensive income represents the accumulated
adjustments for foreign currency translation from Renminbi to US dollar.

Principles of consolidation

The 2000 financial statements represent the activities of Yi Wan Group, Inc. and
its subsidiaries. Since the acquisition of the subsidiaries occurred on January
1, 2000, the 1999 financial statements only represent the unconsolidated
financial activities of the parent Yi Wan Group, Inc. Pro forma information for
1999 as required by APB No. 16 is disclosed in Note 11.

The consolidated financial statements of YWG include its subsidiaries
TELECOMMUNICATIONS, HOTEL and FARM. All significant inter-company accounts and
transactions have been eliminated in the consolidation.

                                      F-11




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Foreign currency translation

The reporting currency of YWG is US dollar. The Company's foreign subsidiaries
use their local currency, Renminbi, as their functional currency. Results of
operations and cash flow are translated at average exchange rates during the
period, and assets and liabilities are translated at the end of period exchange
rates. Translation adjustments resulting from this process are included in
accumulated other comprehensive income in the statement of shareholders' equity.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred. These amounts are not
material to the financial statements.

Revenue recognition

The HOTEL's revenues are recognized when the rooms are occupied or when the
guest utilizes the hotel's services.

The MANUFACTURE recognizes its revenue when the risk of loss for the product
sold passes to the customers which is when goods are installed at the customers'
premises and testing of the product is completed and accepted by the customers.

The FARM recognizes its revenue when the farm products are delivered to its
customers.

Nature of operations and concentration of risk

The HOTEL is a four star rated hotel located in the best area of downtown of
Jiao Zuo City, He Nan Province, People's Republic of China. The Hotel's income
sources include income from rooms, restaurants, sauna, bowling center and
nightclub. The Hotel is a sino-foreign joint venture established under the laws
of the People's Republic of China on December 25, 1996. The expiration date of
the joint venture is December 18, 2027. The term can be extended or terminated
prior to the date of expiration if unanimously decided by the board of directors
and approved by the original examination and approval authority. The board of
directors is controlled by YWG, with YWG electing six of the seven board
members. The operational, management and corporate governance decisions of the
board are by a simple majority, except for the revision of the Articles of
Association, the increase or assignment of the registered capital, the business
combination of the joint venture and, with certain limitations the termination
of the joint venture, which require a unanimous vote.

The FARM provides training to local farmers with its advanced technology and
managerial system in farming and is located in Zhan Dian City, Wu Zhi County, He
Nan Province, in the People's Republic of China. The FARM's income sources
include income from the sales of seafood raised and produced in constructed
ponds. The Farm is a sino-foreign joint venture established under the laws of
the People's Republic of China on December 4, 1996. The expiration date of the
joint venture as stated in the joint venture agreement and business license is
August 5, 2028.

                                      F-12




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1 - Summary of significant accounting policies, (continued)

Nature of operations and concentration of risk (continued)

The term can be extended or terminated prior to the date of expiration if
unanimously decided by the board of directors and approved by the original
examination and approval authority. The board of directors is controlled by YWG,
with YWG electing six of the seven board members. The operational, management
and corporate governance decisions of the board are by a simple majority, except
for the revision of the Articles of Association, the increase or assignment of
the registered capital, the business combination of the joint venture and, with
certain limitations the termination of the joint venture, which require a
unanimous vote.

The TELECOMMUNNICATIONS is an electronic equipment manufacturer located in Shun
De City, Guang Dong Province, in the People's Republic of China. The Company's
income sources include income from the manufacturing of communication equipment
systems. The Company is a solely foreign funded company established under the
laws of the People's Republic of China on June 22, 2000. The expiration date of
this agreement and business license is June 22, 2015. The joint venture may be
terminated prior to the date of expiration if unanimously decided by the board
of directors and approved by the original examination and approval authority.
YWG, owning 100% of the equity interests of this company, controls the board of
directors.

Buildings, equipment and automobiles

Buildings, equipment, and automobiles are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Depreciation expense for the year ended December 31, 2000 amounted to
$1,377,319. Estimated useful lives of the assets is as follows:

                                                  Estimated Useful Life
Buildings                                                20 years
Machinery and equipment                                  10 years
Computer, office equipment and furniture                  5 years
Automobiles                                               5 years


Maintenance, repairs and minor renewals are charged directly to expenses as
incurred. Major additions and betterment to property and equipment are
capitalized.

Long-term assets of the Company are reviewed annually as to whether their
carrying value has become impaired, pursuant to the guidelines established in
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of".
The Company considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations. The Company also
re-evaluates the periods of amortization to determine whether subsequent events
and circumstances warrant revised estimates of useful lives. As of December 31,
2000, the Company expects these assets to be fully recoverable.


                                      F-13




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






Note 1 - Summary of significant accounting policies, (continued)

Buildings, equipment and automobiles (continued)

Buildings, equipment and automobiles consisted of the following at December 31,
2000:

                                                         Amount
                                                   -------------------
Buildings and improvements                       $         18,997,301
Furniture and equipment                                     5,172,534
Automobiles                                                   201,043
Construction in progress                                      256,708
                                                   -------------------
                                                   -------------------
    Totals                                                 24,627,586
Less accumulated depreciation                               5,709,335
                                                   -------------------
    Building, equipments and
        automobiles, net                         $         18,918,251
                                                   ===================



Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.

Recently issued accounting pronouncements

In June 1999, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued, which
establishes accounting and reporting standards for derivative financial
instruments and hedging activities. The adoption of this statement did not have
a material impact to the Company's consolidated financial position or results of
operations.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin 101, "Revenue Recognition in Financial Statements" (SAB 101). SAB 101
establishes accounting and reporting standards for the recognition of revenue.
It states that revenue generally is realized or realizable and earned when all
of the following criteria are met: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services have been rendered: (3) the
seller's price to the buyer is fixed or determinable; (4) collectibility is
reasonably assured. The adoption of this statement did not have a material
impact to the Company's consolidated financial statements.

The Financial Accounting Standards Board has issued SFAS No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". These
statements will change the accounting for business combinations, goodwill and
other intangible assets in two significant ways. First, SFAS 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Use of the pooling-of-interests method will be
prohibited. Second, SFAS 142 changes the accounting for goodwill from an
amortization method to impairment only method. Accordingly, amortization of
goodwill, including goodwill recorded in past business combinations, will cease
upon adoption of that statement, which for companies with calendar year ends,
will be January 1, 2002. Certain other intangible assets with indefinite lives
are subject to the same rule.

                                      F-14




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Recently issued accounting pronouncements (continued)

The Company has adopted SFAS No. 141 during the year ending December 31, 2001
and there have been no business combinations since the time of adoption.

The Company has adopted SFAS No. 142 during the year ending December 31, 2002.
Upon adoption of this Statement, the amount attributed to excess of acquired net
assets over cost resulting from the acquisition of TELECOMMUNICATIONS will no
longer be amortized and will be recognized as income during the year ending
December 31, 2002.

The Financial Accounting Standards Board has issued SFAS No. 143, "Accounting
for Asset Retirement Obligations". This Statement requires that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company expects that
the adoption of this Statement will not have a material affect on its
consolidated financial statements.

The Financial Accounting Standards Board has also issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This Statement
requires that one accounting model be used for long-live assets to be disposed
of by sale, whether previously held and used or newly acquired, and broadens the
presentation of discontinued operations to include more disposal transactions.

That accounting model retains the requirement of FASB No. 121 to measure a
long-lived asset classified as held for sale at the lower of its carrying amount
or fair value less cost to sell and to cease depreciation (amortization). This
Statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years.

The Company has adopted SFAS No. 144 during the year ending December 31, 2002
and expects that the adoption of this Statement will not have a material affect
on its consolidated financial statements.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in
state-owned banks at December 31, 2000 amounted to $2,340,740 of which no
deposits are covered by insurance. YWG has not experienced any losses in such
accounts and believes it is not exposed to any risks on its cash in bank
accounts.

                                      F-15



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Inventories

Inventories are stated at the lower of cost or market using the first-in, first-
out basis and consist of the following at December 31:

                                                    2000
                                              ------------------
Hotel inventories                           $           172,725
Telecommunication inventories                           447,911
Farm inventories                                        233,717
Others                                                   28,944
                                              ------------------
    Total inventories                       $           883,297
                                              ==================


The HOTEL inventory consists of food products, alcohol, beverages and supplies.

The TELECOMMUNICATION inventory consists of raw materials ($98,205), work in
process ($65,798) and finished goods ($283,908).

The FARM inventory consists of fish, shrimp, soft-shelled turtles, crab, feed,
seeds, and supplies. Included as part of the inventoried costs of seafood are
direct labor and applicable overhead incurred over time to raise the seafood
products until taken to market. The quantities of live fish, shrimp,
soft-shelled turtles and crab inventories are determined monthly based upon
estimated growth from purchased hatchlings and fries in each pond and are
reduced for the actual quantities sold and estimated mortality rates. Each pond
is closed periodically and the estimated pounds adjusted to the actual harvest.

Intangible assets

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company. However, the government grants the user a
"land use right" (the Right) to use the land. The HOTEL and FARM have purchased
the Right to use the land for 40 years and 50 years, respectively, from the
government for a fee in the amount of $1,570,000 and $3,382,000.

The HOTEL's Right (Land Use Certificate) is registered under the name of one of
the joint venture partners, Shunde Shunao Industry & Commerce Company, Ltd. The
FARM's Right (Land Use Certificate) is registered under the name of the HOTEL.
Both HOTEL and FARM are in the process of applying for the name change of the
Right, which has not been finalized as of the date of this report.

The Right has been classified as an intangible asset on the accompanying
financial statements and is being amortized using the straight-line method over
the life of the Right. Amortization expense for the year ended December 31, 2000
amounted to $101,227.

In March 1995, one of our shareholders of YWG purchased the land use right for
50 years where the TELECOMMUNICATIONS' operating facilities are located. Neither
the title or the Right has been transferred to TELECOMMUNICATIONS nor is
TELECOMMUNICATIONS being charged for using the land. However, the owner has
assigned the Right to TELECOMMUNICATIONS for the remaining years. The original
cost of the land use right amounted to $277,800 and is being recognized as an
expense annually and as a capital contribution. The Right is being amortized
over 50 years and the expense amounted to $5,556 for the year ended December 31,
2000.


                                      F-16



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Income taxes

YWG has adopted Statement of Financial Accountant Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of deferred
income tax liabilities and assets for the expected future tax consequences of
temporary differences between income tax basis and financial reporting basis of
assets and liabilities. Provision for income taxes consist of taxes currently
due plus deferred taxes. The deferred tax asset of $83,219 represents taxes on
expenses deducted for financial statements purposes and not for tax purposes.

The HOTEL is considered as a foreign investment joint venture by the government
and receives special income tax treatment. The HOTEL is subject to central
government income tax at a rate of 30% and a 3% provincial government income
tax.

The HOTEL is exempt from central and provincial government income tax for a
period of two years (years ended December 31, 1997 and 1998), followed by a 50%
reduction in the central and provincial government income tax for a period of
three years (years ended December 31, 1999, 2000 and 2001).

The FARM is considered as foreign investment joint venture by the government,
receiving special income tax treatment. The FARM is subject to a central
government income tax at a rate of 30% and 3% provincial government income tax.
However, the FARM is exempt from central and provincial government income tax
for two years, starting with the first year of profitable operations (years
ended December 31, 1997 and 1998), followed by a 50% reduction in central
government income tax and full exemption from provincial government income tax
for the next three years (years ended December 31, 1999, 2000 and 2001).

The TELECOMMUNICATIONS is a wholly foreign owned foreign enterprise company and
therefore receives special income tax treatment from the China government. The
TELECOMMUNICATIONS is subject to central government income tax at a rate of 30%
and 3% provincial government income tax. However, the TELECOMMUNICATIONS is
exempt from central and provincial government income tax for two years starting
from the first year of profitable operations (years ended December 31, 1994 and
1995), followed by 50% reduction in the central and full exemption in the
provincial government income tax for the next three years (years ended December
31, 1996, 1997 and 1998). Starting from 1999, TELECOMMUNICATIONS is being taxed
at full rate (30% for central government income tax and 3% for provincial
government).

The provision for income taxes at December 31, consisted of the following:

                                                         2000
                                                   ------------------
Provision for China Income Tax                   $           912,881
Provision for China Local Tax                                 83,264
Deferred tax                                                (21,252)
                                                   ------------------
    Total tax provision                          $           974,893
                                                   ==================


Certain revenues of the TELECOMMUNICATIONS, HOTEL and FARM operations are
subject to sales and cultural taxes ranging from 3% to 10%. This tax is shown as
a reduction of sales.

                                      F-17




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Earnings per share

YWG adopted Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" (SFAS 128). SFAS 128 requires the presentation of earnings per share
(EPS) as Basic EPS and Diluted EPS. There are no differences between Basic and
Diluted EPS at December 31, 2000.

Note 2 - Notes payable

Notes payable represents amounts due to construction contractors. They are due
on demand, normally within one year. Notes payable at December 31, consisted of
the following:

                                                       2000
Notes payable to various
     vendors, unsecured, due on demand, no         $    33,265
     interest
                                                   =============

Note 3 - Supplemental disclosure of cash flow information

The income taxes paid amounted to $997,218 for the year ended  December 31,
2000. No interest expense payments were made for the year ended December 31,
2000.

In May 1999, upon the incorporation of the Company, 16,006,250 shares of common
stock were issued in the amount of $78 and the amount was recorded as a
receivable due from shareholders.

Note 3 - Supplemental disclosure of cash flow information, continued

The Company purchased the following joint venture interests as disclosed in
Note 1.

                                                                                           Tele-
                                 Totals             Hotel              Farm           communications
                              --------------    --------------    ---------------   --------------------

Purchase price             $     11,472,848  $      5,434,586  $       4,450,627 $            1,587,635
                              ==============    ==============    ===============   ====================



Note 4 - Accounts receivable and credit risk

YWG's business operations are conducted mainly in the People's Republic of
China. During the normal course of business, YWG extends unsecured credit to its
customers. Management reviews its accounts receivable on a regular basis to
determine if the bad debt allowance is adequate at each year-end.

Note 5 - Fair Value of Financial Instruments

The carrying amount of cash, trade accounts receivable, trade accounts payable
and accrued liabilities are reasonable estimates of their fair value because of
the short maturity of these items.


                                      F-18



                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 6 - Due from related parties

YWG pays for various expenses, supplies, inventories and other goods on behalf
of a related party, whose shareholders are also the shareholders of YWG. Amounts
due from this related party at December 31, 2000 amounted to $1,055,159.

A member of the Board of Directors has been advanced monies for investment
opportunities on behalf of the HOTEL. Amounts due from this person at December
31, 2000 amounted to $724,796.

All amounts due from related parties are non-interest bearing and have no fixed
repayment terms.

Note 7 - Pension contribution

Regulations in the People's Republic of China require YWG to contribute to a
defined contribution retirement plan for all permanent employees. All permanent
employees are entitled to an annual pension equal to their basic salary at
retirement. The HOTEL and TELECOMMUNICATIONS pay an annual contribution of 24%
and 18%, respectively, of the city's standard salary of their employees to an
insurance company, which is responsible for the entire pension obligation
payable to the retired employees. There were no contributions for the Farm's
employees due to their non-permanent status. For the years ended December 31,
2000, YWG made pension contribution in the amount of $36,750.

Note 8 - Other non-current assets

Other non-current assets represents cash advances to officers and employees for
cash based business transactions incurred for the payment of operating expenses
and purchases from various vendors.

Note 9 - Distribution of Income, Statutory Reserves and Restricted Retained
            Earnings

The laws and regulations of the People's Republic of China require that before a
Sino-foreign cooperative joint venture enterprise distributes profits to its
partners, it must first satisfy all tax liabilities, provide for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors, after the statutory reserve. The Statutory Reserves
included enterprise fund, employee benefits and general reserve. The enterprise
fund may be used to acquire fixed assets or to increase the working capital in
order to expend the production and operation of the joint venture; employee
benefit reserve is restricted to the payment of bonus and welfare for employees
and the general reserve may be used as a provisional financial cushion against
the possible losses of a joint venture. The minimum percentage to be reserved
for the general reserve is 10%. The board of directors decides upon the
percentage to be reserved for the employee benefit reserve. There is no minimum
provision required for enterprise fund.

Consolidated statutory reserves at December 31, 2000 amounted to $7,833,412. No
dividends or distributions were declared to the owners for the year ended
December 31, 2000.

The Chinese government restricts distributions of registered capital and the
additional investment amounts required by the Chinese joint ventures. Approval
by the Chinese government must be obtained before distributions from these
amounts can be returned to their owners. There is no restricted retained
earnings on the accompanying balance sheet at December 31, 2000.

                                      F-19




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10 - Due to prior owners of joint ventures

Shun'ao and Marco, were the partners in the original joint ventures from which
YWG acquired its equity interests in the three FIE Chinese subsidiaries. At
December 31, 2000, Shun'ao and Marco were owed the following amounts for their
respective equity interests and for the return of additional investments in the
old joint ventures. All amounts due to prior owners of joint ventures are
non-interest bearing and have no fixed repayment terms.

                                                                            2000
                                                                    --------------------
Payment due for acquistion of HOTEL:
       Payable to Shun'ao                                         $           1,811,529
       Payable to Marco                                                         905,764
                                                                    --------------------
                                                                              2,717,293
                                                                    --------------------

Payment due to Shun'ao for acquisition of FARM                                2,040,989
                                                                    --------------------

Return of investment by HOTEL:
       Payable to Shun'ao                                                     3,624,550
       Payable to Marco                                                       1,553,378
                                                                    --------------------
                                                                              5,177,928
                                                                    --------------------
       Totals                                                     $           9,936,210
                                                                    ====================



Note 11 - Pro forma information (unaudited)

On January 1, 2000, YWG acquired a 90% equity interest in HOTEL and FARM,
respectively, and a 100% interest in TELECOMMUNICATIONS. The transaction was
accounted for under the purchase method of accounting. The following unaudited
pro forma information presents the results of operations as if the acquisitions
had occurred on January 1, 1999. The results of operations give effect to
certain adjustments, including elimination of significant inter-company accounts
and transactions. The pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the acquisitions been made at the beginning of 1999 as described above or of
the results that may occur in the future.

                                                               1999
                                                         ------------------
Net sales                                              $        14,385,693
                                                         ==================
Income before extraordinary items                                4,973,984
                                                         ==================
Net income                                                       4,973,984
                                                         ==================
Earnings per share, basic and diluted                                 0.31
                                                         ==================


                                      F-20




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 12 - Segment Information

YWG includes five major operating segments: restaurant, lodging, entertainment,
farm and telecommunication equipment. YWG evaluates the performance of its
segments based primarily on operating profit before corporate expenses and
depreciation and amortization. The following table presents revenues and other
financial information by business segment for the year ended December 31:

                                                                  HOTEL
                              ---------------------------------------------------------------------------
                                Restaurant          Lodging            Entertainment       Totals
                              ----------------  ----------------       ----------------- ----------------
2000
Net sales                   $       3,715,071 $       1,956,375   $           2,122,993$       7,794,439
Cost of sales                       1,788,342           118,071                 153,087        2,059,500
                              ----------------  ----------------       ----------------- ----------------
Gross profit                        1,926,729         1,838,304               1,969,906        5,734,939
Operating expenses                    430,673           300,148                 264,845          995,666
Depreciation and
    amortization                                                                               1,120,339
Unallocated expenses                                                                             792,021
                              ----------------  ----------------       ----------------- ----------------
Income from operations      $       1,496,056 $       1,538,156   $           1,705,061$       2,826,913
                              ================  ================       ================= ================
Interest income                                                                                   16,984

Other income (expense)                                                                              (242)
Provision for income tax                                                                        (476,307)
                                                                                         ----------------
Income before minority
     interest                                                                          $       2,367,348
                                                                                         ================

Total assets                                                                           $      20,634,686
                                                                                         ================

-Continued-


                                                   Telecommu       Intersegment-
                                   Farm           -nications        elimination         Totals
                              ----------------  ----------------  ---------------- -----------------
2000
Net sales                   $       1,727,399 $       4,640,849 $        (92,119)$       14,070,568
Cost of sales                         954,916         2,493,706          (92,119)         5,416,003
                              ----------------  ----------------  ---------------- -----------------
Gross profit                          772,483         2,147,143                           8,654,565
Operating expenses                    165,481           875,386                           2,036,533
Depreciation and
    amortization                       80,901            38,864                           1,240,104
Unallocated expenses                                                                        792,021
                              ----------------  ----------------  ---------------- ----------------
Income from operations      $         526,101 $       1,232,893 $             -  $        4,585,907
Interest income                        13,278             8,068                              38,330

Other income (expense)        -                          19,504                              19,262
Provision for income tax              (80,230)         (418,356)                           (974,893)
                              ----------------  ----------------  ---------------- -----------------
Income before minority
     interest               $         459,149 $         842,109  $            -  $        3,668,606
                              ================  ================  ================ =================

Total assets                $       4,292,798 $       5,047,343  $       (422,683)$      29,552,144
                              ================  ================  ================ =================




                                      F-21




                       YI WAN GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 13 - Restatement of shareholders' equity

The Company has restated its shareholders' equity for the year ended December
31, 2000 to properly reflect the issuance of stock in May 1999 and the
acquisition of its HOTEL, TELECOMMUNICATIONS and FARM subsidiaries in 2000. The
restatement is as follows:



                                 Common         Due from         Paid-in         Statutory
                                  stock       shareholders       capital         reserves
                               ------------  ----------------  -------------   --------------
Balance, December 31, 1999,
      as originally stated    $        -      $        -        $       -       $        -

Issuance of stock                      78             (78)                               -
                               ------------  ----------------  -------------   --------------
Balance, December 31, 1999,
      restated                         78             (78)              -                -
Acquisition of subsidiaries
      as originally stated                                        1,587,635       6,121,776
Acquisition of subsidiaries,
      restated                                                    3,505,358

Capital contribution                                   78
Net income

Additions to paid in capital                                          5,556
Adjustments to statutory
      reserves                                                                    1,711,636
Foreign currancy
transalation
     adjustments
                               ------------  ----------------  -------------   --------------
Balance, December 31, 2000      $       78      $     -          $5,098,549      $7,833,412
                               ============  ================  =============   ==============


-Continued-


                                                 Acccumulated
                                                    other
                                 Retained        comprehensive
                                 earnings           income              Totals
                                --------------   ----------------    ---------------
   Balance, December 31,
   1999, as originally stated    $      -         $       -            $     -
    Issuance of stock                   -                 -                  -
                                --------------   ----------------    ---------------
   Balance, December 31,
   1999, restated                       -                 -                  -
   Acquisition of subsidiaries
        as originally stated     3,505,358            28,140          11,242,909
   Acquisition of
   subsidiaries,
       restated                 (3,505,358)                                  -
   Capital contribution                                                       78
   Net income                    3,386,399                             3,386,399
   Additions to paid in                                                    5,556
   capital                                                                    -
   Adjustments to statutory
        reserves                (1,711,636)
   Foreign currancy
   transalation
        adjustments                                  (25,146)            (25,146)
                                --------------   ----------------    ---------------
   Balance, December 31, 2000  $ 1,674,763        $    2,994         $14,609,796
                                ==============   ================    ===============




                                      F-22









                         JIAOZUO YI WAN HOTEL CO., LTD.

                              FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 1999 AND 1998







MOORE STEPHENS FRAZER AND TORBET, LLP
Certified Public Accountants and Consultants

                                            1199 South Fairway Drive, 2nd Floor
                                                       Walnut, California 91789
                                                                    PO Box 3949
                                             City of Industry, California 91744
                                            (909) 594-2713   Fax (909) 594-2357
                                                                www.msftllp.com


Independent Auditors' Report



Jiaozuo Yi Wan Hotel Co., Ltd.


We have audited the accompanying balance sheets of Jiaozuo Yi Wan Hotel Co.,
Ltd. (the Hotel) as of December 31, 1999 and 1998, and the related statements of
income and other comprehensive income, owners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Hotel's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jiaozuo Yi Wan Hotel Co., Ltd.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.



/s/ Moore Stephens Frazer and Torbet, LLP
Moore Stephens Frazer and Torbet, LLP



Walnut, California

March 13, 2000


                                      - 1 -

                       JIAOZUO YI WAN HOTEL CO., LTD.

                               BALANCE SHEETS
                      AS OF DECEMBER 31, 1999 AND 1998

         A S S E T S


                                                      1999               1998
                                               ---------------   ---------------

CURRENT ASSETS:
      Cash                                     $      835,854    $      216,911
      Accounts receivable, net of
         allowance for doubtful
         accounts of $2,040 in 1999,
         $470 in 1998, respectively                   345,322           111,657
      Related party receivable                         49,990                -
      Inventories                                     123,649            83,868
      Prepaid expenses                                  5,011             5,194
                                               ---------------   ---------------
          Total current assets                      1,359,826           417,630
                                               ---------------   ---------------

BUILDINGS, EQUIPMENT AND AUTOMOBILES, net          17,639,778        18,507,906
                                               ---------------   ---------------
OTHER ASSETS:
      Intangible asset, net                         1,452,242         1,491,744
      Deferred tax asset                               13,331                -
      Other non-current assets                        323,429            88,444
                                               ---------------   ---------------
          Total other assets                        1,789,002         1,580,188
                                               ---------------   ---------------
              Total assets                     $   20,788,606    $   20,505,724
                                               ===============   ===============


         L I A B I L I T I E S  A N D  O W N E R S'  E Q U I T Y


CURRENT LIABILITIES:
      Accounts payable                         $      151,629    $       90,280
      Accounts payable - related party                 19,400            57,588
      Accrued liabilities                             408,322           297,103
      Sales tax payable                               630,907           398,524
      Income taxes payable                            529,878                -
      Distribution payable to owners                2,557,410         2,047,952
      Contracts payable                                69,137         2,385,882
                                               ---------------   ---------------

          Total current liabilities                 4,366,683         5,277,329
                                               ---------------   ---------------

COMMITMENTS AND CONTINGENCIES                              -                 -
                                               ---------------   ---------------

OWNERS' EQUITY:
      Owners' equity                               11,828,669        12,639,868
      Statutory reserve                             4,570,505         2,559,939
      Accumulated other comprehensive income           22,749            28,588
                                               ---------------   ---------------

          Total owners' equity                     16,421,923        15,228,395
                                               ---------------   ---------------
              Total liabilities
                  and owners' equity           $   20,788,606    $   20,505,724
                                               ===============   ===============

         The accompanying notes are an integral part of this statement.

                                     - 2 -


                         JIAOZUO YI WAN HOTEL CO., LTD.

               STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                      1999              1998
                                               ---------------   ---------------

NET SALES                                      $    7,991,164    $    7,710,709

COST OF SALES                                       2,003,951         1,758,288
                                               ---------------   ---------------

GROSS PROFIT                                        5,987,213         5,952,421

SELLING, GENERAL AND
    ADMINISTRATIVE EXPENSES                         2,619,163         2,446,065
                                               ---------------   ---------------

INCOME FROM OPERATIONS                              3,368,050         3,506,356
                                               ---------------   ---------------

OTHER INCOME:
    Interest income                                     3,838            20,232
    Other expense                                      (9,110)           (5,104)
                                               ---------------   ---------------

             Total other income (expense)              (5,272)           15,128
                                               ---------------   ---------------

INCOME BEFORE PROVISION FOR INCOME TAXES            3,362,778         3,521,484

PROVISION FOR INCOME TAXES                            556,452                -
                                               ---------------   ---------------

NET INCOME                                          2,806,326         3,521,484

OTHER COMPREHENSIVE INCOME:
    Foreign currency translation adjustment            (5,839)            1,009
                                               ---------------   ---------------
COMPREHENSIVE INCOME                           $    2,800,487    $    3,522,493
                                               ===============   ===============


         The accompanying notes are an integral part of this statement.

                                     - 3 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                          STATEMENTS OF OWNERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                      1999              1998
                                               ---------------   ---------------

OWNERS' EQUITY

Owners' Equity - beginning of year             $   12,639,868     $  13,726,102
      Distributions                                (1,606,959)       (2,047,779)
      Net Income                                    2,806,326         3,521,484
      Adjustment to Statutory Reserve              (2,010,566)       (2,559,939)
                                               ---------------   ---------------

Owners' Equity - end of year                   $   11,828,669     $  12,639,868
                                               ===============    ==============

STATUTORY RESERVE

Statutory Reserve - beginning of year          $    2,559,939     $          -
      Adjustment to Statutory Reserve               2,010,566         2,559,939
                                               ---------------   ---------------

Statutory Reserve - end of year                $    4,570,505     $   2,559,939
                                               ===============    ==============

ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance - beginning of year                    $       28,588     $      27,579

      Adjustment for currency translation              (5,839)            1,009
                                               ---------------   ---------------

Balance - end of year                          $       22,749     $      28,588
                                               ===============    ==============


         The accompanying notes are an integral part of this statement.

                                     - 4 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                       1999             1998
                                                 --------------   --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                     $   2,806,326    $   3,521,484
  Adjustments to reconcile net income to cash
    provided by operating activites:
       Depreciation                                  1,065,670        1,058,982
       Amortization                                     39,236           39,260
       Increase in accounts receivable                (233,665)         (20,588)
       Increase in related party receivable            (49,990)              -
       Increase in other non-current assets           (234,985)         (21,506)
       (Increase) decrease in inventories              (39,781)           5,163
       Decrease (increase) in prepaid expenses             183           (4,832)
       Increase in deferred tax asset                  (13,331)              -
       Increase in accounts payable                     61,349            6,159
       (Decrease) increase in accounts
          payable - related party                      (38,188)          37,632
       Increase in accrued liabilities                 111,485          178,914
       Increase in income taxes payable                529,878               -
       Increase in sales tax payable                   232,383          232,903
       Translation adjustment                           (5,839)           1,009
                                                 --------------   --------------
         Net cash provided by operating
            activities                               4,230,731        5,034,580
                                                 --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of improvements and automobiles            (197,542)         (24,059)
  Acquisition of intangible asset                           -                -
                                                 --------------   --------------
       Net cash used in investing activities          (197,542)         (24,059)
                                                 --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from borrowings                              -                -
      Owners' contribution                                  -                -
      Principal payments on contracts payable       (2,461,667)      (4,855,105)
      Proceeds contracts and notes payable             144,922               -
      Distributions to owners                       (1,097,501)              -
                                                 --------------   --------------
         Net cash (used in) provided by
            financing activities                    (3,414,246)      (4,855,105)
                                                 --------------   --------------
INCREASE IN CASH                                       618,943          155,416

CASH, beginning of year                                216,911           61,495
                                                 --------------   --------------
CASH, end of year                                $     835,854    $     216,911
                                                 ==============   ==============


         The accompanying notes are an integral part of this statement.

                                     - 5 -


                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

The reporting entity

The financial statements reflect the activities and financial transactions of
Jiaozuo Yi Wan Hotel Co., Ltd. (the Hotel) also known as Yi Wan Hotel.

The Hotel is a sino-foreign joint venture with registered capital of
approximately $3,012,000 (RMB¥25,000,000) established under the laws of the
People's Republic of China on December 25, 1996. The expiration date of the
joint venture as stated in the business license and joint venture agreement is
December 18, 2027. The term can be extended or terminated prior to the date of
expiration if unanimously decided by the board of directors and approved by the
original examination and approval authority. The Hotel's income sources include
income from rooms, restaurants, sauna, bowling center and nightclub.

Basis of accounting

The financial statements are prepared in accordance with generally accepted
accounting principles of the United States of America.

The financial statements are presented on the accrual basis of accounting.
Revenues are recognized when services are provided and billed to customers.
Expenses recognized when incurred.

Foreign currency translation

The reporting currency of the Hotel is US dollar. The Company used its local
currency, Renminbi, as its functional currency. Results of operations and cash
flow are translated at average exchange rates during the period, and assets and
liabilities are translated at end of period exchange rates. Translation
adjustments resulting from this process are included in accumulated other
comprehensive (loss) income in the statement of shareholders' equity.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred. These amounts are not
material to the financial statements.

Buildings, equipment and automobiles

Buildings, equipment, and automobiles are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $1,065,670 and $1,058,982, respectively. Estimated useful lives of
the assets is as follows:

                                                   Estimated Useful Lives

Buildings                                               20 years
Machinery and equipment                                 10 years
Computer, office equipment and furniture                 5 years
Automobiles                                              5 years


                                     - 6 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Buildings, equipment and automobiles, (continued)

Maintenance,  repairs and minor  renewals  are  charged  directly to expenses as
incurred.   Major  additions  and  betterment  to  property  and  equipment  are
capitalized.

Buildings, equipment and automobiles consisted of the following at December 31:

                                            1999                1998
                                     ---------------      ---------------
Buildings and improvements           $    17,481,817      $    17,250,728
Furniture and equipment                    3,046,172            3,079,710
Automobiles                                   57,514               57,523
                                     ---------------      ---------------
    Totals                                20,585,503           20,387,961
Less accumulated depreciation              2,945,725            1,880,055
                                     ---------------      ---------------
    Buildings, equipment and
        automobiles, net             $    17,639,778      $    18,507,906
                                     ===============      ===============


Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in
state-owned banks at December 31, 1999 and 1998 amounted to $814,445 and
$149,135, respectively, of which no deposits are covered by insurance. The Hotel
has not experienced any losses in such accounts and believes it is not exposed
to any risks on its cash in bank accounts.

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out basis. The Hotel's inventory consists of food products, alcohol and
beverages, and supplies.

Intangible assets

All land in the People's Republic of China is owned by the government and can
not be sold to any individual or company. However, the government grants the
user a "land use right" (the Right) to use the land. The Hotel has purchased the
Right to use the land for 40 years from the government for a fee in the amount
of approximately $1,570,000. The Hotel's Right has been registered under the
name of one of the joint venture partners. The Hotel is in the process of
applying for a name change of the Right, which has not been finalized as of the
date of this report.

                                     - 7 -


                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Intangible assets, (continued)

The Right has been classified as an intangible asset on the accompanying
financial statements and is being amortized using the straight-line method over
the life of the Right. Amortization expense for the years ended December 31,
1999 and 1998 amounted to $39,236 and $39,260, respectively. Accumulated
amortization for the years ended December 31, 1999 and 1998 amounted to $117,749
and $78,513, respectively.

Taxes

Certain revenues of the Hotel operations are subject to sales and cultural taxes
ranging from 3% to 10%. This tax is shown as a reduction of sales.

A partner of the Hotel is a foreign company, which results in the Hotel being
considered as a foreign investment joint venture by the government and receives
special income tax treatment. The Company is subject to central government
income tax at a rate of 30% and a 3% provincial government income tax. The Hotel
is exempt from central and provincial government income tax for a period of two
years (years ended December 31, 1997 and 1998), followed by a 50% reduction in
the central and provincial government income tax for a period of three years
(years ended December 31, 1999, 2000 and 2001).

The provision for income taxes consist of the following:

                                                          1999
                                                    -----------------
Provision for China Income Tax                    $          517,984
Provision for China Local Tax                                 51,799
                                                    -----------------
                                                             569,783
Deferred taxes                                               (13,331)
                                                    -----------------
Total tax provision                               $          556,452
                                                    =================

The deferred taxes on the accompanying financial statements represents temporary
differences relating to the deduction of expenses deducted for financial
statement purposes and not for tax purposes.

New Authoritative Pronouncements

The Financial Accounting Standards Board has issued SFAS No. 132, "Employer's
Disclosure about Pensions and Other Postretirement Benefits" and SFAS No. 133,
"Accounting for Derivative and Hedging Activities." These new accounting
standards do not have any impact on the Hotel's financial statements or
financial reporting.

                                     - 8 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 2 - Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist of the following as of December 31:

                                            1999               1998
                                       -------------      -------------
Supplies and other inventory           $      70,327      $      32,372
Food, cigarettes and liquor                   53,322             51,496
                                       -------------      -------------
Total                                  $     123,649      $      83,868
                                       =============      =============

Note 3 - Other non-current assets

Other non-current assets represents cash advances to officers and employees for
cash based business transactions incurred for the payment of operating expenses
and purchases from various vendors.

Note 4 - Year 2000 issue

The Year 2000 Issue results from the fact that certain computer programs have
been written using two digits rather than four digits to define the applicable
year. Computer programs that have sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

As of December 31, 1999, the Hotel had completed any required modifications to
its software to ensure that its software systems were Year 2000 compliant. The
cost of such modifications was not material. Since the date rollover on January
1, 2000, the Hotel has not experienced any material adverse effect from the Year
2000 Issue. While the primary risk to the Hotel with respect to the Year 2000
Issue continues to be the ability of third parties to provide goods and services
in a timely and accurate manner, the Hotel has not experienced any such
disruption to date.

The costs of the Hotel's Y2K compliance efforts are expensed as incurred and are
being funded with cash flows from operations. The Hotel does not expect any
remaining risks with respect to the Year 2000 Issue to have a material adverse
effect on the Hotel.


Note 5 - Contracts payable

Contracts payable represented amounts due to construction contractors. They are
due on demand, normally within one year. Contracts payable at December 31
consist of the following:

                                           1999                 1998
                                       ------------       ---------------
Contracts payable, various
   vendors, unsecured, due on
   demand, no interest                 $     69,137       $     2,385,882
                                       ============       ===============

                                     - 9 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 6 - Supplemental disclosure of cash flow information

No interest expense payments were made for the years ended December 31, 1999 and
1998. For the year ending December 31, 1999, $39,642 of income tax payments were
made as compared to none for the prior year.


Note 7 - Accounts receivable and credit risk

The Hotel's business operations are conducted mainly in the People's Republic of
China. During the normal course of business, the Hotel extends unsecured credit
to its customers. Management reviews its account receivables on a regular basis
to determine if the bad debt allowance is adequate at each year-end.


Note 8 - Fair value of financial instruments

The carrying amount of cash, trade accounts receivable, trade accounts payable
and accrued liabilities are reasonable estimates of their fair value because of
the short maturity of these items.


Note 9 - Pension contribution

Regulations in the People's Republic of China require the Hotel to contribute to
a defined contribution retirement plan for all permanent employees. All
permanent employees are entitled to an annual pension equal to their basic
salary at retirement. The Hotel pays an annual contribution of 24% of the city's
standard salary of its employees to an insurance company which is responsible
for the entire pension obligation payable to the retired employees. For the
years ended December 31, 1999 and 1998, the Hotel made pension contributions in
the amount of $14,934 and $18,836, respectively.


Note 10 - Related party transactions

During the year, the Hotel had borrowed and advanced money with one of the
partners of the Hotel. At December 31, 1999 and 1998, amounts payable to this
related party amounted to $4,304 and $4,305, respectively. In addition, the
Hotel also purchases seafood from a related party through common ownership.
Inter-company accounts payable amounted to $10,635, and $53,283 at December 31,
1999 and 1998, respectively. Intercompany cost of sales amounted to $60,800 and
$56,202 for the years ended December 31, 1999 and 1998, respectively.

                                     - 10 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 11 - Distribution of income and statutory reserve

The laws and regulations of the People's Republic of China require that before a
Sino-foreign cooperative joint venture enterprise distributes profits to its
partners, it must first satisfy all tax liabilities, provide for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors, after the statutory reserve. The Statutory reserves
included enterprise fund, employee benefits and general reserve. The enterprise
fund may be used to acquire fixed assets or to increase the working capital in
order to expend the production and operation of the joint venture; employee
benefit reserve is restricted to the payment of bonus and welfare for employees
and the general reserve may be used as a provisional financial cushion against
the possible losses of a joint venture. The minimum percentage to be reserved
for the general reserve is 10%. The board of directors decides upon the
percentage to be reserved for the employee benefit reserve. There is no minimum
provision required for enterprise fund. The combined statutory reserves at
December 31, 1999 and 1998 amounted to $4,570,505 and $2,559,939, respectively.
Since 1997 was the first year of business operation, statutory reserves are not
required by the Chinese government. Distributions declared to owners for the
year ended December 31, 1999 and 1998 amounted to $1,606,959 and $2,047,779,
respectively.


Note 12 - Segment information

The Hotel includes three major operating segments: restaurants, lodging and
entertainment. The Restaurant operations include all food and beverage
activities relating to the restaurants. Lodging includes room, food and beverage
and other miscellaneous activities directly relating to the operations of the
rooms. Entertainment includes all activities incurred relating to the sauna,
bowling center and night club operations. The Hotel evaluates the performance of
its segments based primarily on operating profit before general and
administrative expenses and depreciation and amortization. The following table
presents revenues and other financial information by business segment for the
years ended December 31:

Net sales

                                            1999                   1998
                                     ----------------       ----------------
Restaurant                           $      3,773,728       $      3,534,488
Lodging                                     1,981,209              2,021,142
Entertainment                               2,236,227              2,155,079
                                     ----------------       ----------------
Total Net Sales                      $      7,991,164       $      7,710,709
                                     ================       ================

                                     - 11 -

                         JIAOZUO YI WAN HOTEL CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 12 - Segment information, (continued)

Operating profit before corporation expenses and depreciation and amortization

                                                   1999                  1998
                                           ----------------     -----------------
Restaurant                                 $     2,021,269      $      2,011,977
Lodging                                          1,853,208             1,897,223
Entertainment                                    2,112,736             2,043,221
                                           ----------------     -----------------
Gross profit                                     5,987,213             5,952,421
Less: operating expenses
   Restaurant                                     (418,857)             (396,652)
   Lodging                                        (243,226)             (213,689)
   Entertainment                                  (207,957)             (195,801)
                                           ----------------     -----------------
Operating profit                           $     5,117,173      $      5,146,279
                                           ================     =================




Reconciliation of segment information


                                                   1999                  1998
                                           ----------------     -----------------
Total sales for all segments               $     7,991,164      $      7,710,709
                                           ----------------     -----------------
Net sales per income statement                   7,991,164      $      7,710,709
                                           ================     =================

Total operating profit before
  general and administrative expenses
  and depreciation and amortization
  for all segments                         $     5,117,173      $      5,146,279
General and administrative expenses               (644,217)             (541,681)
Depreciation and amortization                   (1,104,906)           (1,098,242)
                                           -----------------    -----------------
Income from operations                     $     3,368,050      $      3,506,356
                                           =================    =================


                                     - 12 -
================================================================================

                          SHUN DE YI WAN COMMUNICATION
                            EQUIPMENT PLANT CO., LTD.

                              FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 1999 AND 1998




MOORE STEPHENS FRAZER AND TORBET, LLP
Certified Public Accountants and Consultants

                                            1199 South Fairway Drive, 2nd Floor
                                                       Walnut, California 91789
                                                                    PO Box 3949
                                             City of Industry, California 91744
                                            (909) 594-2713   Fax (909) 594-2357
                                                                www.msftllp.com

Independent Auditors' Report


Shun De Yi Wan Communication Equipment Plant Co., Ltd.


We have audited the accompanying balance sheets of Shun De Yi Wan Communication
Equipment Plant Co., Ltd. as of December 31, 1999 and 1998, and the related
statements of income and other comprehensive income, owners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shun De Yi Wan Communication
Equipment Plant Co., Ltd. as of December 31, 1999 and 1998, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles in the United States of America.

As disclosed in Note 13, the 1999 and 1998 financial statements have been
restated to properly record the tax settlement for the years ended December 31,
1995 through 1998.


/s/Moore Stephens Frazer and Torbet, LLP
Moore Stephens Frazer and Torbet, LLP


Walnut, California

March 13, 2000, except for
  Note 12 which is March 20, 2000


                                      - 1 -


             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 1999 AND 1998


         A S S E T S
                                               1999                   1998
                                       ------------------    -------------------
CURRENT ASSETS:
      Cash                              $        852,324      $         686,140
      Accounts receivable trade                  886,578                753,746
      Related party receivable                   813,811                250,454
      Inventories                                653,573                591,209
      Deposits                                   147,246                573,201
      Prepaid expenses                               199                      -
                                       ------------------    -------------------
          Total current assets                 3,353,731              2,854,750
                                       ------------------    -------------------
BUILDINGS, EQUIPMENT AND AUTOMOBILES, net      1,825,283              2,104,242
                                       ------------------    -------------------
OTHER ASSETS:
      Deferred tax asset                          35,287                      -
      Intangible asset, net                            -                  2,230
      Other non-current assets                   132,126                103,098
                                       ------------------    -------------------
          Total other assets                     167,413                105,328
                                       ------------------    -------------------
              Total assets              $      5,346,427      $       5,064,320
                                       ==================    ===================



         L I A B I L I T I E S  A N D  O W N E R S'  E Q U I T Y

CURRENT LIABILITIES:
      Accounts payable                  $        119,212      $         459,374
      Accounts payable - related party                 -                 10,176
      Customer deposits                                -                174,309
      Accrued liabilities                        112,270                138,974
      Wage and benefits payable                  218,755                199,340
      Sales tax payable                          189,761                187,148
      Income tax payable                         603,203                560,034
      Due to owner                                88,873                      -
      Distribution payable to owners           1,067,180                 94,635
                                       ------------------    -------------------
          Total current liabilities            2,399,254              1,823,990
                                       ------------------    -------------------
OWNERS' EQUITY:
      Owners' equity                           1,820,125              2,399,451
      Statutory reserve                        1,121,740                834,173
      Accumulated other comprehsive income         5,308                  6,706
                                       ------------------    -------------------
          Total owners' equity                 2,947,173              3,240,330
                                       ------------------    -------------------
              Total liabilities
                and owners' equity      $      5,346,427      $       5,064,320
                                       ==================    ===================


       The accompanying footnotes are an integral part of this statement.

                                      - 2-

             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

               STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                          1999                   1998
                                  -----------------      -----------------

NET SALES                          $     4,786,585        $     4,466,946

COST OF SALES                            2,136,080              2,281,591
                                  -----------------      -----------------
GROSS PROFIT                             2,650,505              2,185,355

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES               1,079,970                988,192
                                  -----------------      -----------------

INCOME FROM OPERATIONS                   1,570,535              1,197,163
                                  -----------------      -----------------
OTHER INCOME:
    Interest income                          6,916                  6,835
                                  -----------------      -----------------
INCOME BEFORE PROVISION
    FOR INCOME TAXES                     1,577,451              1,203,998
PROVISION FOR INCOME TAXES                   7,980                217,720
                                  -----------------      -----------------
NET INCOME                               1,569,471                986,278

OTHER COMPREHENSIVE INCOME:
   Foreign currency
     translation adjustment                 (1,398)                   254
                                  -----------------      -----------------
COMPREHENSIVE INCOME               $     1,568,073        $       986,532
                                  =================      =================


       The accompanying footnotes are an integral part of this statement.

                                      - 3-


             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                          STATEMENTS OF OWNERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                  1999               1998
                                           -----------------  ------------------
OWNERS' EQUITY

Owners' Equity - Beginning of the year      $     2,399,451    $      2,713,538
  as restated in 1998
      Contribution                                    5,555               5,556
      Distributions                              (1,866,785)           (634,892)
      Net Income                                  1,569,471             986,278
      Adjustment to Statutory Reserve              (287,567)           (671,029)
                                           -----------------  ------------------
Owners' Equity - End of the year            $     1,820,125    $      2,399,451
                                           =================  ==================

      STATUTORY RESERVE

Statutory Reserve - Beginning of the year   $       834,173    $        163,144
      Adjustment to Statutory Reserve               287,567             671,029
                                           -----------------  ------------------
Statutory Reserve - End of the year         $     1,121,740    $        834,173
                                           =================  ==================

      ACCUMULATED OTHER COMPREHENSIVE INCOME

Balance - beginning of year                 $         6,706    $          6,452
      Adjustment for Currency Translation            (1,398)                254
                                           -----------------  ------------------
Balance - end of year                       $         5,308    $          6,706
                                           =================  ==================


       The accompanying footnotes are an integral part of this statement.

                                      - 4-

             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                                    1999                 1998
                                                           -----------------   ------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                             $      1,569,471    $         986,278
    Adjustments to reconcile net income to net cash
       provided operating activities:
          Depreciation                                              301,145              301,072
          Amortization                                                2,230               26,191
          Land use cost                                               5,555                5,556
          Increase in accounts receivable                          (132,832)            (356,903)
          Increase in accounts receivable-related party            (563,357)            (105,507)
          (Increase) Decrease in prepaid expenses                      (199)             105,865
          (Increase) Decrease in inventories                        (62,364)             172,500
          (Increase) Decrease in other non-current assets           (29,028)             172,036
          Decrease (Increase) in deposits                           425,955             (573,201)
          Increase in deferred tax asset                            (35,287)                   -
          Decrease in accounts payable                             (340,162)            (325,347)
          (Decrease) Increase in accounts payable
            - related party                                         (10,176)              10,176
          (Decrease) Increase in customer deposits                 (174,309)              52,405
          (Decrease) Increase in accrued liabilities                (26,704)              28,502
          Increase in wage and benefit payable                       19,415               36,193
          Increase in income tax payable                             43,169              217,750
          Increase in sales tax payable                               2,613               27,046
          Currency translation adjustment                            (1,398)                 254
                                                           -----------------   ------------------
             Net cash provided by operating activities              993,737              780,853
                                                           -----------------   ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to equipment                                          (22,186)                   -
                                                           -----------------   ------------------
             Net cash used in investing activities                  (22,186)                   -
                                                           -----------------   ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase in due to owner                                         88,873                    -
    Distributions to owners                                        (894,240)            (543,550)
                                                           -----------------   ------------------
             Net cash used in financing activities                 (805,367)            (543,550)
                                                           -----------------   ------------------

INCREASE IN CASH                                                    166,184              237,303
CASH, beginning of year                                             686,140              448,837
                                                           -----------------   ------------------
CASH, end of year                                          $        852,324    $         686,140
                                                           =================   ==================


       The accompanying footnotes are an integral part of this statement.

                                      - 5-

             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

The reporting entity

The financial statements of Shun De Yi Wan Communication Equipment Plant Co.,
Ltd. reflects the activities and financial transactions of the company also
known as Yi Wan Manufacture (the Company).

The Company is a foreign investment joint venture with registered capital of
$1,500,000 established under the laws of the People's Republic of China on
September 3, 1993. The expiration date on the joint venture agreement and
business license is September 3, 2019. The joint venture may be terminated prior
to the date of expiration if unanimously decided by the board of directors and
approved by the original examination and approval authority. The Company's
income sources include income from the manufacturing of communication equipment
systems.

Foreign currency translation

The reporting currency of the Yi Wan Manufacture is US dollar. The Company uses
its local currency, Renminbi, as its functional currency. Results of operations
and cash flow are translated at average exchange rates during the period, and
assets and liabilities are translated at end of period exchange rates.
Translation adjustments resulting from this process are included in accumulated
other comprehensive income in the statement of owners' equity.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency, are
included in the results of operations as incurred. These amounts are not
material to the financial statements.

Buildings, equipment and automobiles

Buildings, equipment, and automobiles are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $301,145 and $301,072, respectively. Estimated useful lives of the
assets are as follows:

                                      Estimated Useful Lives
        Buildings                            20 years
        Machinery and Equipment              10 years
        Computer, Office Equipment
                and Furniture                5 years
        Automobiles                          5 years

Maintenance, repairs and minor renewals are charged directly to expenses as
incurred. Major additions and betterment to property and equipment are
capitalized.

                                      -6-

             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                       NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Buildings, equipment and automobiles, (continued)

Buildings, equipment and automobiles consisted of the following at December 31:


                                                    1999              1998   
        Buildings and improvements              $   891,747       $   891,898
        Furniture and equipment                   2,062,005          2,039646
        Automobiles                                 128,503           128,525
          Totals                                  3,082,255         3,060,069
        Less accumulated depreciation             1,256,972           955,827
          Buildings, equipment and
            Automobiles net                     $ 1,825,283       $ 2,104,242
                                                 ==========        ==========

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.

Revenue recognition

The Company recognizes revenue when the risk of loss for the product sold passes
to the customers which is when goods are installed at the customers' premises
and testing of the product is completed and accepted by the customers.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in
state-owned banks at December 31, 1999 and 1998 amounted to $851,730 and
$685,355, of which no deposits are covered by insurance. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out basis. The Company's inventory consists of raw materials, work in
process, and finished goods.

                                      -7-

             SHUN DE YI WAN COMMUNICATION EQUIPMENT PLANT CO., LTD.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Intangible assets

All land in the People's Republic of China is owned by the government and can
not be sold to any individual or company. However, the government grants the
user a "land use right" (the Right) to use the land. One of the partners of the
Company purchased the Right for 50 years starting from March 1995. Neither the
title or the Right has been transferred to the Company nor is the Company being
charged for using the land. However, the owner has assigned the Right to the
Company for the remaining years. The original cost of the land use right
amounted to approximately $277,108 and is being recognized as an expense
annually and as a capital contribution. The Right is being amortized over 50
years and the expense amounted to $5,555, and $5,556 for the years ended
December 31, 1999 and 1998, respectively.

Taxes

The Company's income is subject to a 17% value added tax (VAT).

The Company is a sole foreign investment company and therefore receives special
income tax treatment from the China government. The Company is subject to
central government income tax at a rate of 30% and 3% provincial government
income tax. However, the Company is exempt from central and provincial
government income tax for two years starting from the first year of profitable
operations (years ended December 31, 1994 and 1995), followed by 50% reduction
in the central and full exemption in the provincial government income tax for
the next three years (years ended December 31, 1996, 1997 and 1998). Provincial
government income tax has been exempted until further notice.

The provision for income taxes consisted of the following, see note 12 for
further explanations on income taxes:

                                             1999                 1998
                                      ------------------    ----------------
Provision for China Income Tax         $       459,187       $     181,433
Provision for China Local Tax                   51,021              36,287
                                      ------------------    ----------------
                                               510,208             217,720
Deferred taxes                                 (35,287)               -
Tax settlement                                (466,941)               -
                                      ------------------    ----------------
       Total tax provision             $         7,980       $     217,720
                                      ==================    ================

                                     - 8 -

The deferred taxes on the accompanying financial statements represents temporary
differences relating to the deduction of the bad debts and expenses deducted for
financial statement purposes and not for tax purposes.

New Authoritative Pronouncements

The Financial Accounting Standards Board (FASB) has issued SFAS No. 132,
"Employer's Disclosure about Pensions and Other Postretirement Benefits" and
SFAS No. 133, "Accounting for Derivative and Hedging Activities." These new
accounting standards do not have any impact on the Company's financial
statements or financial reporting.



Note 2 - Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist of the following as of December 31:

                                              1999                  1998
                                      ------------------    -----------------
Raw materials                          $       113,451       $      202,423
Work in process                                140,055               60,858
Finished goods                                 398,281              321,808
Operating supplies                               1,786                6,120
                                      ------------------    -----------------
Totals                                 $       653,573       $      591,209
                                      ==================    =================


Included in 1999 finished goods is $152,979 of equipment currently being
installed at the customers' site. The sale will be recorded once the customer
has approved the installation and a final sales price has been agreed upon.

Note 3 - Year 2000 Issue

The Year 2000 Issue results from the fact that certain computer programs have
been written using two digits rather than four digits to define the applicable
year. Computer programs that have sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

As of December 31, 1999, the Company had completed any required modifications to
its software to ensure that its software systems were Year 2000 compliant. The
cost of such modifications was not material. Since the date rollover on January
1, 2000, the Company has not experienced any material adverse effect from the
Year 2000 Issue. While the primary risk to the Company with respect to the Year
2000 Issue continues to be the ability of third parties to provide goods and
services in a timely and accurate manner, the Company has not experienced any
such disruption to date.

                                     - 9 -

The costs of the Company's Y2K compliance efforts are expensed as incurred and
are being funded with cash flows from operations. The Company does not expect
any remaining risks with respect to the Year 2000 Issue to have a material
adverse effect on the Company.

Note 4 - Supplemental disclosure of cash flow information

There was no interest expense or income tax payments paid for the years ended
December 31, 1999 and 1998, respectively.


Note 5 - Accounts receivable and credit risk

The Company's business operations are conducted mainly in the People's Republic
of China. During the normal course of business, the Company extends unsecured
credit to its customers located in the province of QuangZhou. Management reviews
its account receivables on a regular basis to determine if the bad debt
allowance is adequate at each year-end. At December 31, 1998, the Company's
accounts receivable included $56,481 of balances over two years old. According
to government regulations with respect to enterprise financial affairs, the
enterprise may write off bad debts (for tax purposes) of accounts receivable
that remain uncollectible after three years. These accounts have been written
off for financial statement purposes. Management believes that the accounts
receivable at December 31, 1999 and 1998 are collectible and no allowance for
bad debts has been provided for these accounts as of December 31, 1999 and 1998,
respectively.

Note 6 - Other non-current assets

Other non-current assets include cash advances to officers and employees for
cash based business transactions incurred for the payment of operating expenses
and purchases from various vendors.

Other non-current assets consisted of the followings as of December 31:


                                              1999                  1998
                                      ------------------    -----------------
Advances made to officers              $        34,172       $       47,972
Advances made to employees                      97,954               55,126
                                      ------------------    -----------------
Totals                                 $       132,126       $      103,098
                                      ==================    =================


Note 7 - Fair Value of Financial Instruments

The carrying amount of cash, trade accounts receivable, trade accounts payable
and accrued liabilities are reasonable estimates of their fair value because of
the short maturity of these items.

                                     - 10 -

Note 8 - Pension contribution

Regulations in the People's Republic of China require the Company to contribute
to a defined contribution retirement plan for all permanent employees. All
permanent employees are entitled to an annual pension equal to their basic
salary at retirement. The Company pays an annual contribution of 18% of the
city's standard salary of its employees to an insurance company, which is
responsible for the entire pension obligation payable to the retired employees.
For the years ended December 31, 1999 and 1998, the Company made a pension
contribution, which amounted to $18,810 and $14,656, respectively.

Note 9 - Related party transactions

During the year, the Company had borrowed and advanced money with one of the
joint venture's partner of Yi Wan Company. At December 31, 1999 and 1998, the
receivable from this related party amounted to $813,811 and $250,454,
respectively. No amounts were owed to the related party at December 31, 1999 as
compared to $10,176 owed as of December 31, 1998.

Note 10 - Property Insurance

As of December 31, 1998 the Company had no property insurance in place. However,
property insurance was purchased in September of 1999 which covers all
buildings, equipment, automobiles and inventories of the Company.

Note 11 - Distribution of Income and Statutory Reserve

The laws and regulations of the People's Republic of China require that before a
foreign investment joint venture enterprise distributes profits to its joint
venture partners, it must first satisfy all tax liabilities, provide for losses
in previous years and make allocations in proportions determined at the
discretion of the board of directors, after the statutory reserves. The
Statutory reserves included enterprise fund, employee benefits and general
reserve. The enterprise fund may be used to acquire fixed assets or to increase
the working capital in order to expend the production and operation of the joint
venture; employee benefit reserve is restricted to the payment of bonus and
welfare for employees and the general reserve may be used as a provisional
financial cushion against the possible losses of a joint venture. The minimum
percentage to be reserved for the general reserve is 10%. The board of directors
decides upon the percentage to be reserved for the employee benefit reserve.
There is no minimum provision required for enterprise fund. The combined
statutory reserves at December 31, 1999 and 1998 amounted to $1,121,740 and
$834,173, respectively. Distributions declared to owners for the years ended
December 31, 1999 and 1998 amounted to $1,866,785 and $634,892, respectively. At
December 31, 1999 and 1998 $1,067,180 and $94,635 remained unpaid.

                                     - 11 -

Note 12 - Subsequent Event

On March 20, 2000, the Company negotiated a settlement of all China income taxes
and China local taxes due for the years ending December 31, 1995 through 1998 of
approximately $72,498. Taxes provided in the prior years in excess of the tax
settlement amount have been recorded as a credit against the tax provision in
1999.


Total taxes provided for the
    years ended December
    31, 1995 through 1998                 $         539,439
Tax settlement amount                               (72,498)
                                         --------------------
   Credit from tax settlement             $         466,941
                                         ====================



Note 13 - Restatement of 1999 and 1998 financial statements

The Company has restated its 1999 and 1998 financial statements to properly
record the tax settlement as discussed in Note 12. Details are as follows:


                                            1999                1998
                                      ---------------    ----------------
Net income for the year ended
   December 31, 1999 and 1998,
   as previously reported              $   1,102,549      $    1,170,010
Record credit from tax settlement
   income tax effects of the
   adjustment                                466,922            (183,732)
                                      ---------------    ----------------
Restated net income for the
   years ended December 31,
   1999 and 1998                       $   1,569,471      $      986,278
                                      ===============    ================



The balance of owners' equity as of December 31, 1997 has been restated to
reflect the credit for income tax settlement amounting to $283,190 recorded in
prior years.

                                     - 12 -
================================================================================

                       YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                              FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                           DECEMBER 31, 1999 AND 1998




MOORE STEPHENS FRAZER AND TORBET, LLP
Certified Public Accountants and Consultants

                                            1199 South Fairway Drive, 2nd Floor
                                                       Walnut, California 91789
                                                                    PO Box 3949
                                             City of Industry, California 91744
                                            (909) 594-2713   Fax (909) 594-2357
                                                                www.msftllp.com

Independent Auditors' Report


Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.


We have audited the accompanying balance sheets of Yi Wan Maple Leaf High
Technology Agriculture Developing Ltd. Co. (the Farm) as of December 31, 1999
and 1998, and the related statements of income and other comprehensive income,
owners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Farm's management. Our responsibility
is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yi Wan Maple Leaf High
Technology Agriculture Developing Ltd. Co. as of December 31, 1999 and 1998, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles in the United States of
America.

As disclosed in Note 13, the 1999 and 1998 financial statements have been
restated to properly record the note payable and the related interest expense
and cost of land use right.


/s/Moore Stephens Frazer and Torbet, LLP
Moore Stephens Frazer and Torbet, LLP


Walnut, California

March 13, 2000



                                      - 1 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                                 BALANCE SHEETS
                        AS OF DECEMBER 31, 1999 AND 1998

           A S S E T S
                                                 1999                  1998
                                       -----------------     -----------------
CURRENT ASSETS:
     Cash                               $        46,092       $       164,978
     Accounts receivable, net of
         allowance for doubtful
         accounts of $2,358 for
         1999, $3,260 for 1998,
         respectively                            98,850               107,201
     Related party receivable                    10,635                53,283
     Other receivable                             6,749                24,317
     Inventories                                265,920               258,662
     Prepaid expenses                             2,782                 1,667
                                       -----------------     -----------------
          Total current assets                   431,028               610,108
                                       -----------------     -----------------

BUILDINGS, EQUIPMENT AND
   AUTOMOBILES, net                             712,749               731,946
                                       -----------------     -----------------
OTHER ASSETS:
     Intangible asset, net                    2,966,851             3,030,488
     Deferred tax asset                          13,331                     -
                                       -----------------     -----------------
         Total other assets                   2,980,182             3,030,488
                                       -----------------     -----------------
            Total assets                $     4,123,959       $     4,372,542
                                       =================     =================



           L I A B I L I T I E S  A N D  O W N E R S'  E Q U I T Y

CURRENT LIABILITIES:
     Accounts payable                   $        76,913       $        80,368
     Accrued liabilities                          7,580                 4,761
     Payable - related party                     60,384                     -
     Wage and benefits payable                   20,978                 6,672
     Sales tax payable                          141,524               103,444
     Income taxes payable                        70,130                     -
     Distribution payable to owners             264,210               135,604
     Payable to shareholder                      88,873                     -
     Note payable                                     -               697,986
                                       -----------------     -----------------
         Total current liabilities              730,592             1,028,835
                                       -----------------     -----------------

COMMITMENTS AND CONTINGENCIES                         -                     -
                                       -----------------     -----------------
OWNERS' EQUITY:
     Owners' equity                           2,965,282             3,196,858
     Statutory reserve                          428,003               146,035
     Accumulated other
        comprehensive income                         82                   814
                                       -----------------     -----------------
         Total owners' equity                 3,393,367             3,343,707
                                       -----------------     -----------------
            Total liabilities and
               owners' equity           $     4,123,959       $     4,372,542
                                       =================     =================

         The accompanying notes are an integral part of this statement.

                                     - 2 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

               STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                 1999                 1998
                                        -----------------    -----------------

NET SALES                                $     1,607,944      $     1,910,150

COST OF SALES                                    900,597              984,363
                                        -----------------    -----------------
GROSS PROFIT                                     707,347              925,787

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES                       339,721              250,556
                                        -----------------    -----------------
INCOME FROM OPERATIONS                           367,626              675,231
                                        -----------------    -----------------
OTHER INCOME (EXPENSE):
    Interest expense                             (26,743)             (77,402)
    Interest income                               15,735                2,842
                                        -----------------    -----------------
OTHER EXPENSE, NET                               (11,008)             (74,560)
                                        -----------------    -----------------
INCOME BEFORE PROVISION
   FOR INCOME TAXES                              356,618              600,671

PROVISION FOR INCOME TAXES                        56,828                    -
                                        -----------------    -----------------
NET INCOME                                       299,790              600,671

OTHER COMPREHENSIVE INCOME:
    Foreign currency
      translation adjustment                        (732)                 248
                                        -----------------    -----------------
COMPREHENSIVE INCOME                     $       299,058      $       600,919
                                        =================    =================



         The accompanying notes are an integral part of this statement.

                                     - 3 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                          STATEMENTS OF OWNERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                 1999                   1998
                                        ------------------   ------------------

OWNERS' EQUITY
 Owners' Equity - beginning of year      $     3,196,858      $     2,877,826
      Distributions                             (249,398)            (135,604)
      Net Income                                 299,790              600,671
      Adjustment to Statutory Reserve           (281,968)            (146,035)
                                        ------------------   ------------------
 Owners' Equity - end of year            $     2,965,282      $     3,196,858
                                        ==================   ==================

      STATUTORY RESERVE
 Statutory Reserve - beginning
    of year                              $       146,035      $             -
      Adjustment to Statutory Reserve            281,968              146,035
                                        ------------------   ------------------
 Statutory Reserve - end of year         $       428,003      $       146,035
                                        ==================   ==================

      ACCUMULATED OTHER COMPREHENSIVE INCOME
 Balance - beginning of year             $           814      $           566
      Adjustment for Currency
         Translation                                (732)                 248
                                        ------------------   ------------------
 Balance - end of year                   $            82      $           814
                                        ==================   ==================


         The accompanying notes are an integral part of this statement.

                                     - 4 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                                1999                1998
                                                       ------------------   -----------------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                         $        299,790     $       600,671
     Adjustments to reconcile net income to net cash
        provided by operating activities:
          Depreciation                                            43,213              43,057
          Amortization                                            63,637              62,873
          Decrease (increase) in accounts receivable               8,351             (61,579)
          Decrease (increase) in accounts
             receivable-related party                             42,648             (37,632)
          Decrease (increase) in other receivable                 17,568              (5,679)
          Decrease (increase) in inventories                      (7,258)             58,280
          (Increase) decrease in prepaid expenses                 (1,115)             16,767
          Increase in deferred tax asset                         (13,331)                  -
          (Decrease) increase in accounts payable                 (3,455)             16,769
          Increase in accrued liabilities                          2,819               2,512
          Increase in wage and benefit payable                    14,306               6,672
          Increase in income taxes payable                        70,130                   -
          Increase in payable to related party                    60,384                   -
          Increase in payable to shareholder                      88,873                   -
          Increase in sales tax payable                           38,080              46,475
          Translation adjustment                                    (732)                248
                                                       ------------------   -----------------
             Net cash provided in operating activities           723,908             749,434
                                                       ------------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to buildings and improvements                     (24,016)                  -
                                                       ------------------   -----------------
             Net cash used in investing activities               (24,016)                  -
                                                       ------------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on note payable                         (697,986)           (767,997)
     Distributions to owners                                    (120,792)                  -
                                                       ------------------   -----------------
             Net cash used in financing activities              (818,778)           (767,997)
                                                       ------------------   -----------------

DECREASE IN CASH                                                (118,886)            (18,563)

CASH, beginning of year                                          164,978             183,541
                                                       ------------------   -----------------
CASH, end of year                                       $         46,092     $       164,978
                                                       ==================   =================


         The accompanying notes are an integral part of this statement.

                                     - 5 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

The reporting entity

The financial statements reflect the activities of Yi Wan Maple Leaf High
Technology Agriculture Developing Ltd. Co., also known as Yi Wan Farm (the
Farm).

The Farm is a sino-foreign joint venture with a twelve year term and with
registered capital of approximately $4,940,000, established under the laws of
the People's Republic of China on August 6, 1998. The expiration date of the
joint venture as stated in the joint venture agreement and business license is
August 5, 2008. The term can be extended or terminated prior to the date of
expiration if unanimously decided by the board of directors and approved by the
original examination and approval authority. The Farm's income sources include
income from the sales of seafood raised and produced in constructed ponds.

Foreign currency translation

The reporting currency of the Yi Wan Farm is US dollar. The Company uses its
local currency, Renminbi, as its functional currency. Results of operations and
cash flows are translated at average exchange rates during the period, and
assets and liabilities are translated at end of period exchange rates.
Translation adjustments resulting from this process are included in accumulated
other comprehensive (loss) income in the statement of shareholders' equity.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred. These amounts are not
material to the financial statements.

Buildings, equipment and automobiles

Buildings, equipment, and automobiles are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets. Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $43,213 and $43,057, respectively. Estimated useful lives of the
assets are as follows:

                                               Estimated Useful Lives

Buildings                                              20 years
Machinery and equipment                                10 years
Computer, office equipment and furniture                5 years
Automobiles                                             5 years



Maintenance, repairs and minor renewals are charged directly to expenses as
incurred. Major additions and betterment to property and equipment are
capitalized.

                                     - 6 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Buildings, equipment and automobiles, (continued)

Buildings, equipment and automobiles consisted of the following at December 31:


                                                 1999              1998
                                          ----------------   ---------------
Buildings and improvements                 $      759,197     $     735,167
Furniture and equipment                            67,897            67,908
Automobiles                                        14,975            14,978
                                          ----------------   ---------------
    Totals                                        842,069           818,053
Less accumulated depreciation                     129,320            86,107
                                          ----------------   ---------------
    Building, equipments and
        automobiles, net                   $      712,749     $     731,946
                                          ================   ===============



Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles of the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the combined
financial statements and accompanying notes. Management believes that the
estimates utilized in preparing its financial statements are reasonable and
prudent. Actual results could differ from these estimates.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in state
owned banks at December 31, 1999 and 1998 amounted to $43,483 and $154,456,
respectively, of which no deposits are covered by insurance. The Farm has not
experienced any losses in such accounts and believes it is not exposed to any
risks on its cash in bank accounts.

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out basis. The Farm's inventories consist of fish, shrimp, soft-shelled
turtles, crab, feed, seeds, and supplies. Included as part of the inventoried
costs on seafood are direct labor and applicable overhead incurred over time to
raise the seafood products until taken to market. The quantities of live fish,
shrimp, soft-shelled turtles and crab inventories are determined monthly based
upon estimated growth from purchased hatchlings and fries in each pond and are
reduced for the actual quantities sold and estimated mortality rates. Each pond
is closed periodically and the estimated pounds adjusted to the actual harvest.

                                      - 7 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies, (continued)

Intangible assets

All land in the People's Republic of China is owned by the government and can
not be sold to any individual or company. However, the government grants the
user a "land use right" (the Right) to use the land. The Farm has purchased the
Right to use the farmland for 50 years from the government for a fee in the
amount of approximately $3,149,000. The Farm's Right has been registered under a
related party's (through common ownership) name. The Farm is in the process of
applying for a name change which has not been finalized as of the date of the
report.

These Rights have been classified as an intangible asset on the accompanying
financial statements and are being amortized using the straight-line method over
the life of the Rights. Amortization expense for the years ended December 31,
1999 and 1998 amounted to $63,637 and $63,873, respectively. Accumulated
amortization for the years ended December 31, 1999, and 1998 amounted to
$189,374 and $126,270, respectively.

Taxes

Revenues of the Farm operation are subject to an 8% sales tax, and is shown as a
reduction of sales.

A partner of the Farm is a foreign company, which results in the Farm being
considered as foreign investment joint venture by the government, receiving
special income tax treatment. The Farm is subject to a central government income
tax at a rate of 30% and 3% provincial government income tax. However, the Farm
is exempt from central and provincial government income tax for two years,
starting with the first year of profitable operations (years ended December 31,
1997 and 1998), followed by a 50% reduction in central government income tax and
full exemption from provincial government income tax for the next three years
(years ended December 31, 1999, 2000 and 2001).

The provision for income taxes consisted of the following:

                                             1999
                                        -----------------
Provision for China Income Tax           $       70,159
Deferred taxes                                  (13,331)
                                        -----------------
Total tax provision                      $       56,828
                                        =================

The deferred taxes on the accompanying financial statements represents temporary
differences relating to the deduction of expenses deducted for financial
statement purposes and not for tax purposes.

New Authoritative Pronouncements

The Financial Accounting Standards Board (FASB) has issued SFAS No. 132,
"Employer's Disclosure about Pensions and Other Postretirement Benefits" and
SFAS No. 133, "Accounting for Derivative and Hedging Activities." These new
accounting standards do not have any impact on the Farm's financial statements
or financial reporting.

                                     - 8 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 2 - Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist of the following as of December 31:


                         1999                 1998
                    --------------    ----------------
Turtle              $      77,286      $       99,720
Shrimp                     69,611              53,019
Fish                       42,806              42,326
Crab                       38,199              19,477
Other                      38,018              44,120
                    --------------    ----------------
Total                $    265,920      $      258,662
                    ==============    ================


Note 3 - Year 2000 issue

The Year 2000 Issue results from the fact that certain computer programs have
been written using two digits rather than four digits to define the applicable
year. Computer programs that have sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.

As of December 31, 1999, the Farm had completed any required modifications to
its software to ensure that its software systems were Year 2000 compliant. The
cost of such modifications was not material. Since the date rollover on January
1, 2000, the Farm has not experienced any material adverse effect from the Year
2000 Issue. While the primary risk to the Farm with respect to the Year 2000
Issue continues to be the ability of third parties to provide goods and services
in a timely and accurate manner, the Farm has not experienced any such
disruption to date.

The costs of the Farm's Y2K compliance efforts are expensed as incurred and are
being funded with cash flows from operations. The Farm does not expect any
remaining risks with respect to the Year 2000 Issue to have a material adverse
effect on the Farm.

Note 4 - Note payable

The note payable consisted of the following at December 31:

                                             1999                1998
                                     ------------------   ------------------
Note payable, JiaoZuo local
    government, unsecured,
    variable amount payable
    monthly, balance due September
    1999, no stated interest          $            -       $      697,986
                                     ==================   ==================


                                    - 9 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS

Note 4 - Note payable, (continued)

The note payable bears no stated interest rate. In accordance with Accounting
Principal Board statement no. 21 "Interest on Receivables and Payables", the
note has been discounted to its present value using an interest rate of 7% per
annum, the prevailing rate applicable to similar notes. Total interest expense
for the years ended December 31, 1999 and 1998 amounted to $26,743 and $77,402,
respectively.

Note 5 - Supplemental disclosure of cash flow information

Interest paid for the years ended December 31, 1999 and 1998 amounted to $26,743
and $77,402, respectively. There are no cash paid for income taxes for the years
ended December 31, 1999 and 1998, respectively.

Note 6 - Accounts receivable, concentration of credit risk and customers and
suppliers concentration

The Farm's operations are conducted mainly in the People's Republic of China.
During the normal course of business, the Farm extends unsecured credit to its
customers located in the province of Henan. Management reviews its account
receivables on a regular basis to determine if the bad debt allowance is
adequate at each year-end. At December 31, 1999, and 1998, the Farm's allowance
for doubtful accounts amounted to $2,358 and $3,260, respectively. Approximately
18% and 97% of the Farm's sales and purchases are made to a small number of
customers and suppliers on an open account basis and generally no collateral is
required.

Note 7 - Fair value of financial instruments

The carrying amount of cash, trade accounts receivable, trade accounts payable
and accrued liabilities are reasonable estimates of their fair value because of
the short maturity of these items.

Note 8 - Pension contribution

Regulations in the People's Republic of China require the Farm to contribute to
a defined contribution retirement plan for all permanent employees. All
permanent employees are entitled to an annual pension equal to their basic
salary at retirement. There were no contributions for the Farm's employees due
to their non-permanent status.

Note 9 - Related party transactions

The Farm sells seafood to a related party (through common ownership).
Intercompany accounts receivable amounted to $10,635 and $53,283 at December 31,
1999 and 1998. Intercompany sales amounted to $60,769 and $56,203 for the years
ended December 31, 1999, and 1998, respectively.

                                    - 10 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 10 - Commitments and contingencies

On January 23, 1997, the Farm leased delivery automobiles and certain
refrigerators. The leases are classified as non-cancelable operating leases.
Future minimum rents are as follows:


     December 31,

         2000                 $       47,800
         2001                         47,800
         2002                         47,800
      Thereafter                           -


Rental expense for the years ended December 31, 1999 and 1998 amounted to $47,800
and $47,800, respectively.

Note 11 - Property insurance

There was no insurance coverage in 1999 and 1998 for the Farm's assets and
inventories which amounted to approximately $1,107,989 and $1,076,715 at
December 31, 1999 and 1998, respectively.

Note 12 - Distribution of income and statutory reserve

The laws and regulations of the People's Republic of China require that before a
Sino-foreign cooperative joint venture enterprise distributes profits to its
joint venture partners, it must first satisfy all tax liabilities, provide for
losses in previous years and make allocations, in proportions determined at the
discretion of the board of directors, after the statutory reserve. The Statutory
reserves included enterprise fund, employee benefits and general reserve. The
enterprise fund may be used to acquire fixed assets or to increase the working
capital in order to expend the production and operation of the joint venture;
employee benefit reserve is restricted to the payment of bonus and welfare for
employees and the general reserve may be used as a provisional financial cushion
against the possible losses of a joint venture. The minimum percentage to be
reserved for the general reserve is 10%. The board of directors decides upon the
percentage to be reserved for the employee benefit reserve. There is no minimum
provision required for enterprise fund. The combined statutory reserves at
December 31, 1999 and 1998 amounted to $428,003 and $146,035, respectively.
Distributions declared to the partners for the years ended December 31, 1999 and
1998 amounted to $249,398 and $135,604, respectively.


                                    - 11 -

                        YI WAN MAPLE LEAF HIGH TECHNOLOGY
                         AGRICULTURE DEVELOPING LTD. CO.

                        NOTES TO THE FINANCIAL STATEMENTS


Note 13 - Restatement of 1999 and 1998 financial statements

The Company has restated its 1999 and 1998 financial statements in accordance
with Accounting Principal Board statement no. 21 "Interest on Receivables and
Payables", to properly record the note payable and the related cost of the land
use right details are as follows:

                                                      1999            1998
                                               ---------------- ----------------
Net income for the years ended December 31,
   1999 and 1998, as previously reported        $      322,027   $      673,567
Imputed interest expense on note payable               (26,743)         (77,402)
Adjustment for amortization expense, in
   accordance with restated land use right               4,506            4,506
                                               ---------------- ----------------
Restated net income for the years ended
   December 31, 1999 and 1998                   $      299,790   $      600,671
                                               ================ ================


The balance of owners' equity at December 31, 1997 has been
restated by $116,518 to reflect the interest expense and restated land use right
for 1997.


                                     - 12 -


ITEM 14.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

    None

ITEM 15.  FINANCIAL STATEMENTS AND EXHIBITS

List separately all financial statements filed as part of the registration
statement.

Yi Wan Group, Inc. and subsidiaries consolidated financial statements that
present operations for the year ending December 31, 2000 and 1999


Yi Wan Group, Inc. and subsidiaries consolidated financial statements that
present operations for the year ending December 31, 2001 and 2000


Jiaozuo Yi Wan Hotel Co., LTD financial statements that presents operations from
January 1, 1998 through December 31, 1999

Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co. financial
statements that present operations from January 1, 1998 through December 31,
1999

Shun De Yi Wan Communication Equipment Plant Co., Ltd. financial statements that
present operations from January 1, 1998 through December 31, 1999. The
consolidated financials only cover the period January 1, 2000 through December
31, 2000. The statements presented for the prior two years are not
consolidated, since the respective interests of Yi Wan in these entities
commenced January 2000.

Exhibits

     3(i)    Articles of Incorporation of the Registrant*
     3(ii)   Bylaws of the Registrant*
             Organizational Documents of:
     3.1     Jiaozuo Yi Wan Hotel Co., Ltd. Articles of Association*
     3.2     Shunde Yi Wan Communication Equipment Plant Co., Ltd. Articles of
                Association*
     3.3     Yi Wan Maple Leaf High Technology Agriculture Developing Ltd. Co.
                Articles of Association*
     4      Form of common stock Certificate of the Registrant*


                                       75

     10.1   Form of Employment Agreement Yi Wan Maple Leaf High Technology
                Agriculture Developing Ltd. Co.*
     10.2   Form of Employment Agreement Jiaozuo Yi Wan Hotel Co., Ltd.*
     10.3   Form of Employment Agreement Shunde Yi Wan Communication Equipment
                Plant Co., Ltd.*
     10.4   Land Use Permits of Yi Wan Maple Leaf High Technology Agriculture
                Developing Ltd. Co.*
     10.5   Land Use Permits of Shunde Yi Wan Communication Equipment Plant Co.,
                Ltd.*
     10.6   Land Use Permits of Jiaozuo Yi Wan Hotel Co., Ltd.*
     10.7   Joint Venture Contract Yi Wan Maple Leaf High Technology Agriculture
                Developing Ltd. Co.*
     10.8   Joint Venture Contract Jiaozuo Yi Wan Hotel Co., Ltd.*
     10.9   Agreement of Shunde Yi Wan Communication Equipment Plant
                Co., Ltd.*


     10.10  Agreement of Jiaozuo Yi Wan Maple Leaf High Technology Agriculture
            Development Ltd., Co. on the Transfer of Equity Shares**
     10.11  Agreement of Jiaozuo Yi Wan Hotel Co., Ltd. on the Transfer of
            Equity Shares**


     21     List of Subsidiaries*
     23.1   Consent of MOORE STEPHENS FRAZER AND TORBET, LLP for Yi Wan Group,
                Inc. and Subsidiaries*

     23.2   Consent of MOORE STEPHENS FRAZER AND TORBET, LLP for Yi Wan Group,
                Inc. Audited Financial Statements December 31, 2001 and 2000

     23.3   Consent of MOORE STEPHENS FRAZER AND TORBET, LLP for Yi Wan Group,
                Inc. Audited Financial Statements December 31, 2000 and 1999

     23.4   Consent of MOORE STEPHENS FRAZER AND TORBET, LLP for Yi Wan Group,
                Inc. Audited Financial Statements December 31, 1999 and 1998


* Denotes previously filed exhibit, filed with Form 10-12G/A on 11/07/01, SEC
File No. 000-33119.


**Denotes previously filed exhibit, filed with Form 10-12G/A on 3/28/02, SEC
File No. 000-33119.


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                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.

Yi Wan Group, Inc.

Date:  May 20, 2002


By /s/ Cheng Wan Ming
 Cheng Wan Ming, President






Date Filed: May 20, 2002                              SEC File No. 000-33119








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