Despite the general economic crisis, China’s auto industry is expected to continue its growth in 2009 at a projected rate of 10%, according to the China’s Passenger Car Association.

Our sales revenue increased $39.1 million, or 38.3%, to $141.2 million in 2008 from $102.1 million in 2007. In 2008, sales revenue from alternators and starters, rods and shafts, engine valves and tappets increased $20.6 million, $10.8 million and $7.7 million from 2007, respectively. The increase was mainly attributable to the increased market demand for our mid to small displacement alternator and starter products. We believe that our sales revenue increased in 2008 because of our ability to sell high quality products at competitive prices. Our export sales increased significantly to $22.9 million, accounting for 16.2% of our total sales revenue in 2008, as compared to 9.6% in 2007.? Furthermore, our sales revenue increased partly because of our acquisition of Jinan Worldwide, which contributed $7.7 million to our sales revenue in 2008.

Our gross profit increased $10.8 million to $36.4 million in 2008 from $25.6 million in 2007. Our gross profit as a percentage of sales revenue was 25.8% in 2008, as compared to 25.1% in 2007. This increased gross margin was mainly attributable to the decrease of per unit cost of products resulting from our ability to realize the benefits of economies of scale. We also benefited from more efficient cost control management and improved technology, which allowed us to reduce raw material and component consumption per unit of production.

Our administrative expenses increased $3.3 million, or 91.5%, to $6.8 million in 2008 from $3.6 million in 2007. As a percentage of sales revenue, administrative expenses increased to 4.8% in 2008 from 3.5% in 2007.? This dollar and percentage increase of administrative expenses was mainly due to the consolidation of the financial results of Jinzhou Hanhua, Jinzhou Karham, Fuxin Huirui and Jinan Worldwide, and third party professional fees associated with such acquisitions, as well as the audit and assessment costs in complying with the rules and regulations related to our status as a public reporting company in the United States.

We incurred non-cash employee compensation of $706,295 as a result of stock option grants to senior management and other staff made under our equity incentive plan adopted in April 2008.? Such stock option grants were terminated in December 2008 and no non-cash compensation expenses will be recognized in 2009 and 2010.

Our research and development costs increased $511,891, or 45.1%, to $1.6 million in 2008 from $1.1 million in 2007. As a percentage of sales revenue, research and development costs increased to 1.2% for 2008 from 1.1% in 2007. Such dollar and percentage increases were primarily attributable to increased expenses associated with development of new products.

Our selling expenses include sales commissions, advertising and promotional materials costs, salaries and fringe benefits of sales personnel, after-sale support services and other sales related costs. Our selling expenses increased to $4.1 million in 2008 from $3.3 million in 2007. The increased selling expenses were mainly attributable to increased sales commissions and salaries resulting from the growth of our sales revenue, and higher transportation costs during the Beijing Olympic Games. As a percentage of sales revenue, our selling expenses decreased to 2.9% in 2008 from 3.2% in 2007. This percentage decrease was primarily attributable to lower warranty costs resulting from improved product quality.

Wonder Auto’s mission is to provide products that are best described by our slogan: “Same Performance with Lower Price; Same Price with Better Performance”.? Our two-pronged R&D program has been key in accomplishing our mission and growth.? We have invested more in our R&D programs as joint development projects with our customers grew to 32 projects in 2008.? We also continue to develop products with higher output, smaller size and less weight, longer durability and higher endurance to harsh environments to meet evolving standards and enhance our competitiveness.? Most of our joint development projects led to new products and sales contract with our customers.? Our broad line of products allowed us to capture the shift in automobile preferences as Chinese consumers chose to purchase a greater number of mid-sized cars in 2008.? We also are focused on the two fastest-growing segments – the economy car with smaller 1.6-2.0 liter engines and the mid-sized car with slightly larger 2.0-2.5 liter engines.

During 2008, Wonder Auto gained greater attention from the investment community.? At present, we have six research analysts publishing research reports on Wonder Auto.? We also have received invitations to a growing number of broker-sponsored investor conferences to meet with institutional investors. Our professionals in charge of investor relations are frequently communicating with our stockholders to provide timely operating updates, and we will strive to further improve our investor relations during 2009.

With the recent financial crisis and economic downturn, the automotive industry in western countries has experienced a significant decline which is expected to continue into the near future. In contrast, we are starting to see a meaningful rebound in the automotive industry in China as well as in other emerging economies and we expect the growth rates to accelerate on a long term basis.
We believe that the global automotive industry is going through a structural change. We are well positioned to take advantage of this transformational change and have demonstrated solid performance in our 2008 results.
We believe and hope everyone attending this meeting recognizes the significance of this structural change in our industry. The rapidly changing competitive landscape calls for the application of new valuation approaches and investment strategies to achieve desirable returns.