ITEM 1. DESCRIPTION OF BUSINESS.

General

        Carroll Shelby's name is synonymous with performance. From the initial production of the first Shelby Cobra in the 1960s to the recent announcement of teaming with Ford to develop specialty vehicles, Carroll Shelby continues to participate in the development of high performance automobiles.

        Carroll Shelby International, Inc. ("CSI")has three wholly owned subsidiaries, Shelby Automobiles, Inc.("Autos") Carroll Shelby Licensing, Inc.("CSL") and Shelby Automotive South Africa (called the "Shelby Companies") Together, the Shelby Companies are engaged in the manufacturing and marketing of performance automobiles and related accessories as well as the licensing of the Shelby brand to third parties in connection with various products, including vehicles, memorabilia, video games, models, toys, branded apparel, styling and performance parts. Shelby Automobiles is currently producing authentic Shelby continuation Cobras, including the Cobra 427 S/C, the Cobra 289 FIA and the Cobra 289 S/C, and selling the same as component vehicles (i.e. without engines or drive trains)("Component Vehicles"). All Shelby Cobras are offered through a proprietary network of more than 20 dealers in North America and Europe. Shelby Automobiles also sells aftermarket styling and performance parts under the Carroll Shelby brand name.

        CSI was originally organized under the laws of the State of Nevada on December 4, 2000 (date of inception) as Ginseng Forest, Inc. ("GFI") GFI had no operations through June 23, 2003 and was considered a development stage company in accordance with Statement of Financial Accounting Standards No. 7. On June 23, 2003, GFI acquired all of the outstanding common stock of CSL and Autos, a recently formed entity, for 9,087,866 shares of GFI common stock and a $2,000,000 secured promissory note to Carroll Shelby.

        In the third quarter of 2003 Autos began the production of Cobra automobiles due to the financial failure of a licensee Shelby American Inc. ("SAI") who was engaged in manufacturing these component cars. Shelby American Inc. lost its license to produce Shelby licensed automobiles due to its failure to make its required royalty payments to CSL. Shelby Automobiles finished the production of the ordered Shelby Cobras in order to protect the Company's brand name and maintain its customer loyalty. The Company believes these properties are the foundation of its future development.

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        On December 30, 2003, the U.S. Bankruptcy court for the Eastern District of Michigan Southern Division approved the purchase and sale of assets by Shelby Automobiles, Inc., a wholly-owned subsidiary of Carroll Shelby International, Inc., from Venture Molds and Engineering Corporation ("Venture"). The Court had approved Venture's foreclosure under its security interest in all personal property owned by Shelby American, Inc. The purchase price of $1,200,000 is evidenced by a promissory note secured by the assets sold. Payment will be made in 40 monthly installments funded by CSI working capital and shareholder loans. The assets were sold free and clear of any other liens, claims, and encumbrances.

        The acquired assets include leasehold improvements, equipment and furniture used in the manufacture of Shelby Series I automobiles, several autos in various stages of completion and parts used in manufacturing.

        CSI plans to analyze the assets acquired to determine whether the highest value can be obtained by piecemeal sale, bulk liquidation or use in the production of vehicles.

        Carroll Shelby International, Inc. and Carroll Shelby Licensing Inc. are headquartered in Los Angeles, California. Shelby Automobiles Inc. is headquartered in Las Vegas, Nevada. The Shelby Companies in the aggregate, currently employ approximately 55 persons.

Our Products

Carroll Shelby Licensing Inc.

        Carroll Shelby Licensing Inc., founded in 1988, is the exclusive holder of Carroll Shelby's intellectual property rights, which include trademarks such as Shelby Cobra, the GT-350, GT-500, 427 S/C, 289 and 289 FIA and trade names and vehicle design rights. These trademarks and designs are intimately associated with some of the better known "muscle" cars and high-performance vehicles, including the one that brought home to the U.S. its first and only FIA World Manufacturers Championship in 1965, the Shelby Cobra Daytona Coupe. Carroll Shelby Licensing has over 80 licensees throughout Europe, Asia and the US. The licensed product lines include cars, car parts, component vehicles, aftermarket styling and performance parts, toys and hobby products, collectables and memorabilia, computer and electronic games, graphics and art, branded apparel, and accessories.

Shelby Automobiles Inc

         Cobra — The Company currently manufactures a complete line of Shelby Cobras component vehicles which include:

         CSX1000—CSX 7500 —Shelby/AC Cobra 427S/C & Shelby/AC Cobra 289 FIA—These very premium cars offers the first collaboration between Shelby and AC Cars in more than 40 years. The first handcrafted aluminum bodied Shelby AC Cobra rolling chassis, produced at AC's plant in Surrey, United Kingdom, are expected to be shipped to Shelby Automobiles in Las Vegas for final assembly, fit and finish by year end 2004.

        These Cobras are expected to be offered in two limited production models, the Shelby AC Cobra 427 S/C and the Shelby AC Cobra 289 FIA, and registered as the CSX 1000 and the CSX 7500 Series, respectively and will be limited in production. Both models are authentic recreations of the iconic sports car, which set records for muscle-power and customer appeal in the early 1960's.

        The reunited partnership between Shelby and AC provides a platform that allows the CSX 1000 and CSX 7500 distribution by more than 20 Shelby dealers across the United States and Europe.

         CSX3000— Shelby Cobra 427 S/C Continuation—Aluminum (Hand Rolled)—The CSX 3000 series represents one of the most exclusive of the Shelby product lines, and is sold as a component vehicle. This vehicle is hand crafted on original Shelby Cobra chassis along with its original CSX chassis

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number. This vintage series is currently under the most limited of production schedules and its originality demands the most premium price point within the Shelby Cobra line. This car is often featured in museums race tracks and collector shows throughout the world.

         CSX4000 —Shelby Cobra 427 S/C—Fiberglass & Aluminum (Stamped)—This series offers the high quality and performance found in a Shelby vehicle at a price point that competes directly with the imitation "knock-off" cobra (kit car) market. This handcrafted vehicle is offered in either composite fiberglass or stamped aluminum bodies with a variety of styling and performance upgrades available.

        This series has provided the Company with an incremental market reach by expanding the trial and exposure age from the mid $50,000's down to the mid $40,000's. This provides reach into the younger first time Cobra buying market while continuing to meet the needs of the high-end Cobra collector and enthusiast market.

         CSX7000 —Shelby Cobra 289 FIA—Fiberglass & Aluminum (Stamped)—This handcrafted vehicle traces its roots to the winning heritage of the 60's. Offered in either composite fiberglass or aluminum, this model appeals to collectors and enthusiasts. With all its lines and curves, the Shelby Cobra 289 FIA offers the aerodynamics and overall look of its ancestors of the Cobra racing past.

         CSX8000 —Shelby Cobra 289 Street Car—Fiberglass & Aluminum (Stamped)—Offering the craftsmanship and performance of its on track version, the Shelby Cobra 289 FIA, model features upgrades and accessories that allow its owner the luxury of an on and off track experience. Priced comparable to the track version, the Shelby Cobra 289 FIA Street Car reaches the collector and enthusiast, as well as the weekend pleasurist.

         Cobra Daytona Coupe —Under the direct supervision of Carroll Shelby, a vintage continuation version of the highly coveted Cobra Daytona Coupe is expected to be produced in limited quantities. This Cobra won the 24 hour Le Mans and subsequently captured the FIA World Manufacturer's Championship in 1965.

         Shelby GT500E "Eleanor" —The Shelby GT500E Mustang enthusiast with its custom styling and high octane performance. It reached its most notable exposure by being featured in one of Hollywood's most successful car movies. Built under license by Carroll Shelby Licensing Inc. the Shelby GT500E enjoys a long list a consumers awaiting the production and delivery of there car. Shelby Automobiles will offer to its customers and dealers this specially built Shelby GT500E in the second quarter of 2004.

         Secondary Manufacturing —Applying the Shelby brand to late model vehicles will provide automotive manufacturers with a performance and styling enhanced product, using their current new model year product offering as basis. A Shelby styled and tuned vehicle can be expected to draw a premium and bring an added level of style and performance to many product lines.

        The first in a series of these endeavors is expected to be a Shelby Ford Expedition. Shelby engineers have begun their performance and styling work which has resulted in exterior body styling enhancements, interior styling package, performance wheels and tires, a performance tuned suspension, as well as a variety of engine and drive train performance upgrades. This product is expected to be produced in limited quantities and sold through the Ford and Shelby dealer networks. An addition revenue channel will be the styling and performance parts kits made available to all existing Ford Expedition owners. These kits will represent each of the styling and performance upgrades engineered in the Shelby Ford Expedition and is expected to be made available through the Ford dealer parts network.

        Additional co-branded Shelby vehicles are currently under review and may include sports car, compact (tuner), pickup and exotic car products.

         Shelby Performance Products —This line of business is designed to reach Shelby and standard performance vehicle owners through the development and installation of performance drive train,

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suspension and styling vehicle upgrades. These products include aftermarket performance parts upgrades and installation for Cobra and Series 1 owners, late model car performance parts upgrades, as well as a line of Carroll Shelby Signature Series branded aftermarket parts for the do-it-yourselfer. The Company expects to grow this line of business with an increased distribution through performance parts catalogs and online sales.

Research and Development Activities

         Ford Shelby Cobra —The Company and its partner Ford Motor Company are currently evaluating the possible introduction of a Ford Shelby Cobra expected to be sold through the Ford Dealer Network. The prototype of this car received its first distinguished recognition Autoweek's Editor's Choice awards at this year's North American International Auto Show (NAIAS) where the Ford Shelby Cobra Concept Car unveiled in Detroit took top honors, being named "Best in Show." This Cobra is modern in its design philosophy with cues to past Shelby creations like the yawning, semicircular air dam, side vents and all the curvaceous sheet metal needed to accommodate the 19-inch tires in the rear. There's a 6.4-liter, aluminum-block V10 engine providing 605 hp and 501 lb-ft torque. The Ford Shelby Cobra concept car was developed in just five months by the Ford Advanced Product Creation team with a healthy dose of input from Shelby.

        In the 1960s Carroll Shelby and Ford worked together on both racing and production vehicle programs, from the original Ford-powered Shelby Cobra to the Le Mans-winning Ford GT40 racing cars and the Shelby GT350 and GT500 Mustangs that are widely recognized to have started the pony car craze. It was a decade of performance punctuated by Ford muscle and Shelby engineering. Ford and Shelby hope to rejuvenate this success during the first decade of the new millennium.

         Shelby Mustang —Design and development discussions are underway to once again produce a "Shelby Mustang". This new model year pony car would sport the styling and performance that made the original Shelby mustangs famous. The effects of the publicity and impact on sales for the Performance division could be significant.

         Shelby Hydrogen Cobra —The Company is currently in preliminary discussions to assist in the design and production of a line of Shelby Hydrogen Cobras with the Los Angeles, California based Hydrogen Car Company Inc. (HDC). This collaboration could provide incremental brand awareness for the Shelby brand as well as provide the Hydrogen Car Company with a "top of mind" brand appeal for their first alternative fuel (hydrogen) vehicle project.

        As of December 31`, 2003 the Company has incurred no direct expense as related to the Research and Development projects listed above.

Competition

        The component car industry generates approximately 1600 component cars (kit cars) annually with overall gross revenue of approximately $75,000,000. Of the numerous producers of these component (kit car) vehicles, 75% of all cars produced are generated by less than a dozen good size companies, such as Shelby Automobiles Inc., Superformance International Inc., Factory Five Inc., etc. From a small garage setup to an elaborate multi-million dollar facility, this industry experiences a wide range of suppliers and product in the market.

Regulatory Requirements

        The component car (kit car) industry is governed by very few regulatory requirements. By virtue of the "rolling chassis" component guidelines, the few Department of Transportation certifications required pertain to supplied parts such as lights, wheels, tires, windshields, etc.

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        Litigation is always subject to uncertainties. The outcome of individually litigated matters is not predictable with any high level of assurance. Various legal actions, governmental investigations, claims and proceedings are pending against the Company, including those arising out of governmental regulations relating to Environmental Protection Agency and National Highway Traffic & Safety Agency; licensee, dealer, supplier and other contractual relationships.

Sources of Income

        The Company realizes income streams through the following sources:

        Carroll Shelby Licensing Inc.—Through the licensing of the Carroll Shelby trademarks, signature, likeness, design and shape, CSL realizes a royalty of approximately 5% to 7% of each licensee's net licensed product revenue which is paid quarterly. In addition companies, who license Shelby intellectual properties for use in computer and electronic games, pay a one time fee per title which is also paid quarterly.

        Shelby Automobiles Inc.—expects to realize a larger source of income through this wholly owned subsidiary. Sales of the Company's Cobra CSX1000, CSX300, CSX4000, CSX7000, CSX7500, CSX8000 and Cobra Daytona Coupe component vehicles, and parts and service for such vehicles. Auto's secondary manufacturing division, and styling and performance parts kits business is expected to account for a significant contribution to revenue. The Shelby Performance Parts division will also provide an incremental source of income through the sales and installation of Carroll Shelby branded styling and performance parts. This division will also market and install a select number of "best in brand" performance parts and upgrades.

Sources and Availability of Materials and Names of Principal Suppliers

        The Company currently sources materials and supplies from various vendors throughout the world. The Company believes it has sufficient availability of materials through its primary and secondary vendors.

Trademarks and Patents

        CSL has been granted the exclusive rights to license all Carroll Shelby intellectual properties, including trademarks, names and designs. This grant is protected by a license agreement with Carroll Shelby and the Carroll Shelby Trust.

Employees

        The Company employs two executives within the Carroll Shelby International Inc. parent company, our Chief Executive Officer and our President and CFO. The company also employs a vice president within its wholly owned subsidiary, Shelby Automobile Inc., as well as approximately 52 leased staff employees. The Carroll Shelby International Inc. executives also act as CEO and president respectively of its wholly owned subsidiary, Carroll Shelby Licensing Inc. The Company is currently evaluating the need to hire additional employees to assist in the daily operations and market placement within each of the companies. The Company also engages consultants who receive fees for their services.

Other Agreements

        In November 2003 the Company commenced their first equity raise through the private placement of unregistered common shares. As of April 14, 2004, the Company had raised gross proceeds of approximately $3,600,000 through the sale of approximately 1,774,000 shares at $2.25 per share, net of commissions. As of the year ending December 31, 2003, the Company had received approximately $2,072,000 of funds, net of fees, resulting from the sale of 1,080,665 unregistered common shares.

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Risk Factors

        You should carefully consider the following risks and the other information contained in this Report and in our other filings with the Securities and Exchange Commission before you decide to invest in us or to maintain or increase your investment. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties may also adversely impact and impair our business. If any of the following risks actually occurs, our business, results of operations or financial condition would likely suffer. In such case, the trading price of our Common Stock could decline, and you may lose all or part of your investment.

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Our cash, cash equivalents reserves or income may not be adequate to cover our costs of operations. To date, we have covered our operating losses by privately placing securities and receiving funds from advances and notes payable from our majority shareholder. We expect to fund our general operations and marketing activities for 2004 with our current cash, cash equivalents reserves and general operating income. The company plans to continue our efforts to raise private placement equity.



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We may not be able to raise the capital we need. It is likely that we will need to raise additional capital at some point in the future. If additional funds are raised through the issuance of equity, our shareholders' ownership will be diluted. There can be no assurance that additional financing will be available on terms favorable to us or at all. If funds are not available or are not available on terms acceptable to us, we may not be able to continue the development of our product, respond to our competitors or continue our business.



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We have a history of losses. We have a history of operating losses and an accumulated deficit, as of December 31, 2003, of $1,931,218. Our ability to generate revenues and profits is subject to the risks and uncertainties encountered in the development or expenses of a business as well as by unforeseen economic conditions.



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Our Common Stock is not widely traded, which may result in illiquidity and increased volatility. Our Common Stock is not widely traded, and, as a result, the prices quoted for our stock may not reflect its fair market value. Because of the low volume of trading in our Common Stock, our shareholders may find it difficult to sell their shares.



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Our principal shareholders can exercise significant control over us and could limit the ability of our other shareholders to influence the outcome of transactions requiring a shareholder vote. As of December 31, 2003 approximately 66.5% of our outstanding Common Stock was owned by our executive officers, directors and principal shareholders. These shareholders have control over all matters requiring approval by our shareholders, including the election of directors and approval of significant corporate transactions.



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We have a negative net worth and a deficit in working capital. As of December 31, 2003 we had a negative net worth of $1,688,719 and a deficit in working capital of $1,164,486. Accordingly, it may be necessary for us to obtain additional long term debt or equity financing, in order to avoid restricting our future operations. There can be no assurance that any such financing will be available to us on terms satisfactory to us.



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All of our assets are collateral for a promissory note we issued to Mr. Shelby, which is due and payable on June 30, 2004. We borrowed an aggregate of $2,000,000 from Mr. Shelby, our Chief Executive Officer. The loan is evidenced by a promissory note secured by all of our assets and due June 30, 2004. In the event we are unable to pay the note by the due date or arrange for an extension of the note, Mr. Shelby would be in a position to foreclose on all of our assets and take over the operations of our business.