CHINA AUTOPARTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                                                                             2004           2003
                                                                         -----------    -----------
                                                                         (Unaudited)    (Unaudited)
                                                                         -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                          $ 2,656,073    $ 3,663,795
     Adjustments to reconcile net income to cash
        provided by (used in) operating activities:
          Foreign currency translation adjustments                             4,145           (515)
          Depreciation                                                       161,680        104,254
          Loss on disposal of equipment                                           --          3,557
          Amortization                                                        12,852          3,029
          Land use right                                                      24,260         24,260
        (Increase) decrease in assets:
          Change in restricted cash                                          301,237     (1,694,000)
          Accounts receivable - trade                                        397,489       (378,335)
          Accounts receivable - trade special                             (2,428,500)       (39,049)
          Other receivables                                                  116,264       (892,615)
          Other receivables - related party                                2,438,984     (2,022,855)
          Prepaid expenses                                                  (965,553)      (844,546)
          Prepaid expense-related party                                      (16,048)            --
          Inventories                                                        735,852       (510,980)
          Employee advances                                                  208,128       (226,220)
        Increase (decrease) in liabilities:
          Accounts payable                                                (1,057,459)     1,867,727
          Accounts payable - related party                                   (15,675)            --
          Advances from customers                                              3,482         28,034
          Wages and benefits payable                                        (384,666)      (258,147)
          Income and other taxes payable                                    (128,416)       499,545
          Accrued liabilities                                                140,789         41,948
          Income and other payables                                          893,171       (707,468)
          Other payables - related party                                    (242,000)      (544,500)
                                                                         -----------    -----------
             Net cash provided by (used in) operating activities           2,856,089     (1,883,081)
                                                                         -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of intangible asset - land use right                                --       (117,558)
     Purchase of fixed assets                                               (182,687)       (81,511)
     Sale of fixed assets                                                         --          3,630
     (Increase) in fixed assets from Donation                                (15,464)            --
     (Increase) in construction in progress                                  (81,694)    (1,534,506)
                                                                         -----------    -----------
             Net cash used in investing activities                          (279,845)    (1,729,945)
                                                                         -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings net of payments on short term notes payable               (2,420,000)     3,630,000
     Decrease in bank overdraft                                                   --        (16,974)
     Dividends paid                                                         (502,196)            --
                                                                         -----------    -----------
             Net cash provided by (used in) financing activities          (2,922,196)     3,613,026
                                                                         -----------    -----------

DECREASE IN CASH                                                            (345,952)            --

CASH, beginning of period                                                    488,001             --
                                                                         -----------    -----------

CASH, end of period                                                      $   142,049    $        --
                                                                         ===========    ===========