AutoChina International Ltd (Form: F-1, Received: 05/29/2009 17:08:05)

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”) its legislative history, existing and proposed Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. In particular, this discussion considers only holders that own our ordinary shares as capital assets within the meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:

financial institutions or financial services entities;

broker-dealers;

taxpayers who have elected mark-to-market accounting;

tax-exempt entities;

governments or agencies or instrumentalities thereof;

insurance companies;

regulated investment companies;

real estate investment trusts;

certain expatriates or former long-term residents of the United States;

persons that actually or constructively own 5% or more of our voting shares;

persons that acquired our ordinary shares pursuant to an exercise of employee stock options, in connection with employee stock incentive plans or otherwise as compensation;

persons that hold our ordinary shares as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or

persons whose functional currency is not the U.S. dollar.

This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws. Additionally, the discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our ordinary shares through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our ordinary shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership.

We have not sought, and will not seek, a ruling from the Internal Revenue Service (“IRS”) or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.

BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR HOLDER OF OUR ORDINARY SHARES MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH HOLDER OF OUR ORDINARY SHARES IS URGED TO CONSULT WITH ITS TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION AND THE OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS.

Tax Consequences to U.S. Holders of Ordinary Shares of AutoChina

Taxation of Distributions Paid on Ordinary Shares

Subject to the passive foreign investment company, or “PFIC”, rules discussed below, a U.S. Holder will be required to include in gross income as ordinary income the amount of any dividend paid on our ordinary shares. A distribution on our ordinary shares will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. Distributions in excess of such earnings and profits will be applied against and reduce the U.S. Holder’s basis in its ordinary shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such ordinary shares.

With respect to non-corporate U.S. Holders for taxable years beginning before January 1, 2011, dividends may be taxed at the lower applicable long term capital gains rate (see “— Taxation on the Disposition of Ordinary Shares” below) provided that (1) our ordinary shares are readily tradable on an established securities market in the United States, (2) we are not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period requirements are met. Under recently published IRS authority, ordinary shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently do not include the OTC Bulletin Board. Because our ordinary shares are listed and traded only on the OTC Bulletin Board, any dividends paid on our ordinary shares currently are not expected to qualify for the lower rate. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any dividends paid with respect to our ordinary shares.

If PRC taxes apply to dividends paid to a U.S. Holder on our ordinary shares, such taxes may be treated as foreign taxes eligible for credit against such holder’s U.S. federal income tax liability (subject to certain limitations), and a U.S. Holder may be entitled to certain benefits under the income tax treaty between the United States and the PRC. U.S. Holders should consult their own tax advisors regarding the creditability of any such PRC tax and their eligibility for the benefits of the income tax treaty between the United States and the PRC.

Taxation on the Disposition of Ordinary Shares

Upon a sale or other taxable disposition of our ordinary shares, and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the ordinary shares.

Capital gains recognized by U.S. Holders generally are subject to U.S. federal income tax at the same rate as ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a maximum rate of 15% for taxable years beginning before January 1, 2011 (and 20% thereafter). Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s holding period for the ordinary shares exceeds one year. The deductibility of capital losses is subject to various limitations.

If PRC taxes apply to any gain from the disposition of our ordinary shares by a U.S. Holder, such taxes may be treated as foreign taxes eligible for credit against such holder’s U.S. federal income tax liability (subject to certain limitations), and a U.S. Holder may be entitled to certain benefits under the income tax treaty between the United States and the PRC. U.S. Holders should consult their own tax advisors regarding the creditability of any such PRC tax and their eligibility for the benefits of the income tax treaty between the United States and the PRC.

Passive Foreign Investment Company Rules

A foreign corporation will be a passive foreign investment company, or PFIC, if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any company in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any company in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

Based on the composition of our assets to date, which have largely consisted of cash and other investment assets, it is likely that we qualified as a PFIC in 2007 and 2008. Our actual PFIC status for any subsequent taxable year, however, will not be determinable until after the end of the taxable year, and accordingly there can be no assurance with respect to our status as a PFIC for the current taxable year or any future taxable year.

If we qualified as a PFIC for any taxable year during which a U.S. Holder held our ordinary shares and the U.S. Holder did not make either a timely qualified electing fund (“QEF”) election for the first taxable year of its holding period for our ordinary shares or a mark-to-market election, as described below, such holder will be subject to special rules with respect to:

any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares; and

any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years or, if shorter, such U.S. Holder’s holding period for the ordinary shares).

Under these rules,

the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares;

the amount allocated to the taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to any taxable year prior to the first taxable year in which we qualified as a PFIC, will be taxed as ordinary income;

the amount allocated to other taxable years will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.

In addition, if we are a PFIC, a U.S. Holder who acquires our ordinary shares from a deceased U.S. Holder who dies before January 1, 2010 and who had not made a timely QEF election for the ordinary shares generally will be denied the step-up of U.S. federal income tax basis in such shares to their fair market value at the date of the deceased holder’s death. Instead, such U.S. Holder would have a tax basis in such shares equal to the deceased holder’s tax basis, if lower.

In general, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares by making a timely QEF election to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.

The QEF election is made on a stockholder-by-stockholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS.

In order to comply with the requirements of a QEF election, a U.S. Holder must receive certain information from us. Upon request from a U.S. Holder, we will endeavor to provide to the U.S. Holder no later than 90 days after the request such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided.

If a U.S. Holder has elected the application of the QEF rules to our ordinary shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for the first tax year of the U.S. Holder’s holding period for our ordinary shares or a purge of the PFIC taint pursuant to a purging election, as described below), any gain recognized on the appreciation of our ordinary shares generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of its earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally will not be taxable as a dividend. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under the applicable attribution rules as owning shares in a QEF.

100

Although a determination as to our PFIC status will be made annually, an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held ordinary shares while we were a PFIC, whether or not we meet the test for PFIC status in those years. A U.S. Holder who makes the QEF election discussed above for our first tax year in which the U.S. Holder holds (or is deemed to hold) our ordinary shares and for which we are determined to be a PFIC, however, will not be subject to the PFIC tax and interest charge rules (or the denial of basis step-up at death) discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for the tax years in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our tax years in which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder makes a “purging election”. A purging election creates a deemed sale of such shares at their fair market value. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in its ordinary shares.

Alternatively, if a U.S. Holder owns ordinary shares in a PFIC that is treated as marketable stock, the U.S. Holder may make a mark-to-market election. If the U.S. Holder makes a valid mark-to-market election for the first tax year in which the U.S. Holder holds (or is deemed to hold) ordinary shares in AutoChina and for which it is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income.

The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Because our ordinary shares are listed and traded only on the OTC Bulletin Board, they may not currently qualify as marketable stock for purposes of this election. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances.

If we are a PFIC and, at any time, have a non-U.S. subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC. Upon request, we will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.

If a U.S. Holder owns (or is deemed to own) shares during any year in a PFIC, such holder may have to file an IRS Form 8621 (whether or not a QEF election or mark-to-market election is made).

The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our ordinary shares should consult their own tax advisors concerning the application of the PFIC rules to our ordinary shares under their particular circumstances.

101

Tax Consequences to Non-U.S. Holders of Ordinary Shares in AutoChina

Dividends paid to a Non-U.S. Holder in respect to its ordinary shares generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States).

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our ordinary shares unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from United States sources generally is subject to tax at a 30% rate or a lower applicable tax treaty rate).

Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to tax in the same manner as for a U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

Backup Withholding and Information Reporting

In general, information reporting for U.S. federal income tax purposes will apply to distributions made on our ordinary shares within the United States to a non-corporate U.S. Holder and to the proceeds from sales and other dispositions of our ordinary shares by a non-corporate U.S. Holder to or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.

In addition, backup withholding of United States federal income tax, currently at a rate of 28%, generally will apply to dividends paid on our ordinary shares to a non-corporate U.S. Holder and the proceeds from sales and other dispositions of shares by a non-corporate U.S. Holder, in each case who:

fails to provide an accurate taxpayer identification number;

is notified by the IRS that backup withholding is required; or

in certain circumstances, fails to comply with applicable certification requirements.

A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS.

LEGAL MATTERS

The validity of the securities offered in this prospectus is being passed upon for us by Harney Westwood & Riegels, Hong Kong.

102

EXPERTS

The consolidated balance sheets of ACG and its subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the years in the two year period ended December 31, 2007 appearing in this registration statement have been audited by Grobstein, Horwath & Company LLP, an independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere in this prospectus and in the registration statement. On December 8, 2008, Crowe Horwath LLP, an independent registered public accounting firm, acquired certain assets of Grobstein, Horwath & Company LLP and many of the partners of Grobstein, Horwath & Company LLP became partners of Crowe Horwath LLP. On December 22, 2008, ACG engaged Crowe Horwath LLP as its independent registered public accounting firm. Crowe Horwath LLP conducted the audit of ACG’s consolidated balance sheet as of December 31, 2008, and the related consolidated statements of income, stockholders' equity, and cash flows for the year ended December 31, 2008 appearing in this registration statement, to the extent and for the period set forth in their report appearing elsewhere in this prospectus and in the registration statement. The financial statements and the report of Crowe Horwath LLP are included in reliance upon their report given upon the authority of Crowe Horwath LLP as experts in auditing and accounting.

The balance sheet of AutoChina International Limited (f/k/a Spring Creek Acquisition Corp.) as of December 31, 2007, and the related statements of operations, changes in stockholders equity and cash flows for the period from October 16, 2007 (inception) to December 31, 2007 have been audited by UHY LLP, independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere in this prospectus and in the registration statement. The financial statements and the report of UHY LLP are included in reliance upon their report given upon the authority of UHY LLP as experts in auditing and accounting. On September 19, 2008, AutoChina terminated UHY LLP and appointed Grobstein, Horwath & Company LLP as its independent registered public accounting firm. On December 8, 2008, Crowe Horwath LLP acquired certain assets of Grobstein, Horwath & Company LLP and many of the partners of Grobstein, Horwath & Company LLP became partners of Crowe Horwath LLP. On January 12, 2009, AutoChina engaged Crowe Horwath LLP as its independent registered public accounting firm and Crowe Horwath LLP conducted the audit of AutoChina’s financial statemenets as of and for the year ended December 31, 2008. The financial statements and the report of Crowe Horwath LLP are included in reliance upon their report given upon the authority of Crowe Horwath LLP as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1, which includes exhibits, schedules and amendments, under the Securities Act, with respect to the shares to be sold in this offering. Although this prospectus, which forms a part of the registration statement, contains all material information included in the registration statement, parts of the registration statement have been omitted as permitted by rules and regulations of the SEC. We refer you to the registration statement and its exhibits for further information about us, our securities and this offering. The registration statement and its exhibits, as well as our other reports filed with the SEC, can be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549-1004. The public may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at http://www.sec.gov which contains the Form F-1 and other reports, proxy and information statements and information regarding issuers that file electronically with the SEC. We are subject to the information reporting requirements of the Securities Exchange Act of 1934, and we will file reports, proxy statements and other information with the SEC.

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INDEX TO FINANCIAL STATEMENTS

		Page

AUTOCHINA GROUP INC.		F-2

	REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS	F-3

	CONSOLIDATED BALANCE SHEETS	F-5

	CONSOLIDATED STATEMENTS OF INCOME	F-7

	CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME	F-9

	CONSOLIDATED STATEMENTS OF CASH FLOW	F-10

	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	F-12

AUTOCHINA INTERNATIONAL LIMITED		F-35

	REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS	F-36

	BALANCE SHEETS	F-38

	STATEMENTS OF OPERATIONS	F-39

	STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME	F-40

	STATEMENTS OF CASH FLOWS	F-41

	NOTES TO FINANCIAL STATEMENTS	F-42

F-1

AUTOCHINA GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

	Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS		F-3
CONSOLIDATED BALANCE SHEETS		F-5
CONSOLIDATED STATEMENTS OF INCOME		F-7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME		F-9
CONSOLIDATED STATEMENTS OF CASH FLOW		F-10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS		F-12

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

AutoChina Group Inc.

We have audited the accompanying consolidated balance sheet of AutoChina Group Inc. and Subsidiaries (the “Company”) as of December 31, 2008, and the related consolidated statements of income, shareholders equity and comprehensive income, and cash flows for the year 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 audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2008, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Crowe Horwath LLP

Sherman Oaks, California

May 7, 2009

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

AutoChina Group Inc.

We have audited the accompanying consolidated balance sheet of AutoChina Group Inc. and Subsidiaries (the “Company”) as of December 31, 2007, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the two year period ended December 31, 2007. 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 audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion. 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 consolidated financial position of AutoChina Group Inc, and Subsidiaries as of December 31, 2007, and the consolidated results of their operations and cash flows for each of the years in the two year period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grobstein, Horwath & Company LLP

Sherman Oaks, California

November 26, 2008

F-4

AUTOCHINA GROUP INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31,
	2008		2007
Assets:

Current assets:
Cash and cash equivalents	$	17,406	$	12,820
Restricted cash		40,824		24,734
Accounts receivable		4,272		2,104
Inventories		37,463		26,910
Deposits for inventories		21,621		21,524
Prepaid expenses and other current assets		5,474		9,396
Due from affiliates		-		5,487
Due from unconsolidated subsidiary		529		-
Current maturities of net investment in sales-type leases		14,867		-
Deferred income tax assets		1,020		177
Assets of discontinued operations		-		6,755
Total current assets		143,476		109,907

Investment in unconsolidated subsidiaries		229		770
Property, equipment and leasehold improvements, net		26,907		18,030
Net investment in sales-type leases, net of current maturities		8,492		-
Net non-current deferred income tax assets		-		6
Goodwill		941		170

Total assets	$	180,045	$	128,883

F-5

AUTOCHINA GROUP INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands, except share data)

	December 31,
	2008		2007
Current liabilities:
Floor plan notes payable - manufacturer affiliated	$	12,379	$	10,808
Floor plan notes payable - non - manufacturer affiliated		-		685
Notes payable		3,921		6,725
Trade notes payable		60,134		35,828
Notes payable, related parties		-		12,538
Accounts payables		19,637		1,324
Other payables and accrued liabilities		5,189		3,101
Due to affiliates		5,894		2,075
Customer deposits		3,224		5,527
Income tax payable		1,674		725
Liabilities of discontinued operations		-		5,281
Total current liabilities		112,052		84,617

Long term debt:
Net deferred income tax liabilities		405		-
Total liabilities		112,457		84,617
Minority interests		6,950		6,461

Shareholders’ equity:
Common stock - $0.001 par value, 50,000,000 shares authorized, 1,000 shares issued and outstanding		-		-
Additional paid-in capital		35,921		24,479
Statutory reserves		741		62
Accumulated other comprehensive income		6,185		2,837
Retained earnings		17,791		10,427
Total shareholders’ equity		60,638		37,805

Total liabilities and shareholders’ equity	$	180,045	$	128,883

F-6

AUTOCHINA GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)

	Years Ended December 31,
	2008			2007			2006

Net Sales:
New automobiles	$	365,916		$	270,508		$	145,960
Commercial vehicles		34,059			-			-
Parts and services		40,218			24,003			6,682
Insurance service, net		392			154			54

Total sales		440,585			294,665			152,696

Cost of sales:
New automobiles		351,037			258,610			139,437
Commercial vehicles		31,970			-			-
Parts and services		31,665			18,571			5,209

Total cost of sales		414,672			277,181			144,646

Gross profit		25,913			17,484			8,050

Operating expenses:
Selling and marketing		6,692			3,944			2,439
General and administrative		7,506			5,402			2,444
Other income, net		(836	)		(355	)		(97	)

Total operating expenses		13,362			8,991			4,786

Income from operations		12,551			8,493			3,264

Finance income (expenses) :
Floor plan interest expense		(1,020	)		(601	)		(255	)
Other interest expense		(1,785	)		(1,510	)		(468	)
Interest income		2,799			288			125

Total finance expenses, net	$	(6	)	$	(1,823	)	$	(598	)

F-7

AUTOCHINA GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

(In thousands, except share and per share data)

	Years Ended December 31,
	2008			2007			2006

Equity in (loss) earnings of unconsolidated subsidiaries	$	(40	)	$	139		$	417
Minority interests		(1,309	)		(1,260	)		(283	)

Income before income taxes		11,196			5,549			2,800

Income tax provision (benefit)		3,009			983			(29	)
Income from continuing operations		8,187			4,566			2,829
(Loss) income from discontinued operations, net of taxes		(144	)		209			(87	)

Net income	$	8,043		$	4,775		$	2,742

Earnings (Loss) Per share – basic and diluted
Continuing operations	$	8,187		$	4,566		$	2,829
Discontinued operations	$	(144	)	$	209		$	(87	)
Net income	$	8,043		$	4,775		$	2,742

Weighted average number of common shares – basic and diluted		1,000			1,000			1,000

F-8

AUTOCHINA GROUP INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND

COMPREHENSIVE INCOME

(In thousands, except share and per share data)

	Common Stock				Additional Paid-in		Statutory		Retained			Accumulated Other Compre- hensive		Total Share- holders’		Compre- hensive
	Shares		Amount		Capital		Reserves		Earnings			Income		Equity		Income
Balance as of January 1, 2006		1,000	$	-	$	6,095	$		$	2,972		$	78	$	9,145
Capital contributions		-		-		10,002		-		-			-		10,002		-
Net income		-		-		-		-		2,742			-		2,742	$	2,742
Other comprehensive income:
Foreign currency translation adjustments		-		-		-		-		-			646		646		646
Appropriations to statutory reserves		-		-		-		5		(5	)		-		-		-
Balance as of December 31, 2006		1,000		-		16,097		5		5,709			724		22,535	$	3,388
Capital contributions		-		-		8,382		-		-			-		8,382		-
Net income		-		-		-		-		4,775			-		4,775		4,775
Other comprehensive income:
Foreign currency translation adjustments		-		-		-		-		-			2,113		2,113		2,113
Appropriations to statutory reserves		-		-		-		57		(57	)		-		-		-
Balance as of December 31, 2007		1,000		-		24,479		62		10,427			2,837		37,805	$	6,888
Capital contributions		-		-		11,442		-		-			-		11,442		-
Net income		-		-		-		-		8,043			-		8,043		8,043
Other comprehensive income:
Foreign currency translation adjustments		-		-		-		-		-			3,348		3,348		3,348
Appropriations to statutory reserves		-		-		-		679		(679	)		-		-		-
Balance as of December 31, 2008		1,000	$	-	$	35,921	$	741	$	17,791		$	6,185	$	60,638	$	11,391

F-9

AUTOCHINA GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

	Years Ended December 31,
	2008			2007			2006
Cash flow from operating activities:
Net income	$	8,043		$	4,775		$	2,742

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		3,164			1,707			1,073
Gain on disposal of property, equipment and leasehold improvements		27			-			-
Deferred income taxes		(432	)		(129	)		(86	)
Equity in earnings of unconsolidated subsidiaries		(190	)		(139	)		(417	)
Minority interests		1,309			1,260			283
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable		(606	)		(234	)		(988	)
Net investment in sales-type leases		(23,712	)		-			-
Inventories		(6,615	)		(2,103	)		(10,576	)
Deposits for inventories		2,122			(9,016	)		5,260
Prepaid expense and other current assets		5,797			(1,310	)		(4,610	)
Floor plan notes payable - manufacturer affiliated		(3,813	)		3,569			2,388
Trade notes payable		22,786			3,510			12,083
Accounts payable		13,734			373			(4,812	)
Other payable and accrued liabilities		2,086			(3,350	)		328
Customers deposits		(3,133	)		179			654
Income tax payable		758			399			137
Net cash provided by (used in) discontinued operations		-			(223	)		39
Net cash provided by (used in) operating activities	$	21,325		$	(732	)	$	3,498

F-10

AUTOCHINA GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)

(In thousands)

	Years Ended December 31,
	2008			2007			2006
Cash flow from investing activities:
Business acquisitions, net of cash acquired	$	(3,638	)	$	(1,848	)	$	4,867
Investment in unconsolidated subsidiaries		-			(205	)		(487	)
Purchase of property, equipment, and leasehold improvements		(11,029	)		(3,766	)		(3,470	)
Proceeds from the sale of property, equipment and leasehold improvements		1,726			96			64
Cash received from sale of unconsolidated subsidiaries’ equity		432			924			-
Cash received from sales of discontinued subsidiaries’ equity		1,986			332			-
Cash relinquished upon sales of discontinued subsidiaries’ equity		(5,368	)		-			-
(Increase) decrease in restricted cash		(10,458	)		1,152			(17,399	)
Net cash used in investing activities		(26,349	)		(3,315	)		(16,425	)
Cash flow from financing activities:
Floor plan borrowings - non - manufacturer affiliated, net		(720	)		44			640
Proceeds from borrowings		21,710			2,937			1,563
Repayments of borrowings		(20,458	)		-			(9,067	)
Notes payable, related parties		-			(2,404	)		12,283
Capital contributions		11,442			8,382			10,002
Dividends paid to minority shareholders		(3,805	)		-			-
Others		-			809			711
Net cash provided by financing activities		8,169			9,768			16,132
Effect of foreign currency translation on cash		1,441			(350	)		(285	)
Net increase in cash and cash equivalents		4,586			5,371			2,920
Cash and cash equivalents, beginning of years		12,820			7,449			4,529
Cash and cash equivalents, end of years	$	17,406		$	12,820		$	7,449
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	406		$	1,890		$	873
Income taxes paid	$	2,856		$	873		$	37

F-11

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

(1) DESCRIPTION OF BUSINESS

AutoChina Group Inc. (“AutoChina” or the “Company”) which was formerly known as KYF Inc., is a holding company incorporated in the Cayman Islands on July 26, 2007. The Company and its subsidiaries and variable interest entities (“VIE”) (collectively referred to as the “Group”) are an integrated automotive dealership engaged in sales of automobiles and spare parts and after sales services consisting of 15 new automobile franchises in 25 auto dealerships, which are located primarily in Hebei Province of the People’s Republic of China (the “PRC” or “China”). The Group offers an extensive range of automotive products and services, including new automobiles, auto maintenance, replacement parts, collision repair services, financing, and insurance consulting and other aftermarket service contracts. In April 2008, the Company commenced the business of commercial vehicle sales and leasing, which provides leasing services for customers to acquire heavy trucks in China, which the leases generally expire over 2 years. On August 8, 2008, the Company changed its name from KYF Inc. to AutoChina Group Inc.

The Company’s business is mainly operated by four companies, Hebei Hua An Investment Co., Ltd, Hebei Huiyin Investment Co., Ltd, Hebei Shijie Kaiyuan Logistics Co., Ltd. and Hebei Shijie Kaiyuan Auto Trade Co., Ltd. (collectively referred to as the “Auto Kaiyuan Companies”) which are limited liability corporations established under the laws of the PRC. On November 26, 2008, through the Company’s wholly owned subsidiary, Hebei Chuanglian Trade Co., Ltd., the Company executed a series of contractual arrangements with the Auto Kaiyuan Companies and their shareholder (the “Enterprise Agreements”). Pursuant to the Enterprise Agreements, the Company has exclusive rights to obtain the economic benefits and assume the business risks of the Auto Kaiyuan Companies from their shareholders, and generally has control of the Auto Kaiyuan Companies. The Auto Kaiyuan Companies are considered VIEs and the Company is the primary beneficiary. The Company’s relationships with the Auto Kaiyuan Companies and their shareholder are governed by the Enterprise Agreements between Hebei Chuanglian Trade Co., Ltd. and each of the Auto Kaiyuan Companies, which are the operating companies of the Company in the PRC.

As a result, the Auto Kaiyuan Companies are deemed to be subsidiaries of the Company under FASB Interpretation - FIN 46(R): Consolidation of Variable Interest Entities (as amended) (“FIN 46 (R)”). Details of the Enterprise Agreements are as follows:

Assignment of Voting Rights

The shareholder of the Auto Kaiyuan Companies irrevocably agreed to assign all of its voting rights to the Company for all business resolutions. As a result, the Company has direct control of the Board of Directors and has authority to appoint the majority of the Board of Directors which makes it the primary controlling shareholder of the Auto Kaiyuan Companies.

Management and Operating Agreement

The Company is engaged to exclusively manage and operate the sales and service of the 25 automotive dealerships held by the Auto Kaiyuan Companies, including the development of sales and marketing strategy, management of customer services, daily operations, financial management, employment issues and all other related operating and consulting services. Furthermore, the Auto Kaiyuan Companies agree that without the prior consent of the Company, the Auto Kaiyuan Companies will not engage in any transactions that could materially affect their respective assets, liabilities, rights or operations, including, without limitation, incurrence or assumption of any indebtedness, sale or purchase of any assets or rights, incurrence of any encumbrance on any of their assets or intellectual property rights in favor of a third party or transfer of any agreements relating to their business operation to any third party. The management and operating agreement was entered on November 26, 2008, has a term of 10 years and will be extended for another 10 years automatically unless the Company files a written notice at least 3 months prior to the expiration of this agreement.

F-12

Equity Interest Transfer Agreement

The shareholder of the Auto Kaiyuan Companies agreed to transfer all of its assets to the Company and the Company has an exclusive, irrevocable and unconditional right to purchase, or cause the Company’s designated party to purchase, from such shareholder, at the Company’s sole discretion, part or all of the shareholders’ equity interests in the Auto Kaiyuan Companies when and, to the extent that, applicable PRC Laws permit the Company to own part or all of such equity interests in the Auto Kaiyuan Companies. According to the Exclusive Equity Interest Transfer Agreement, the purchase price to be paid by the Company to the shareholder of the Auto Kaiyuan Companies will be the minimum amount of consideration permitted by applicable PRC Law at the time when such share transfer occurs.

Equity Pledge Agreement

Pursuant to the Equity Pledge Agreement, the Auto Kaiyuan Companies and their shareholder agreed to pledge all of its equity interest and operating profits to guarantee the performance of the Auto Kaiyuan Companies in the obligation under the Equity Interest Transfer Agreement. In the event of the breach of any conditions of the Equity Interest Transfer Agreement, the Company is entitled to enforce its pledge rights over the equity interests of the Auto Kaiyuan Companies for any losses suffered from the breach.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accounts of the Auto Kaiyuan Companies are consolidated in the accompanying financial statements pursuant to FIN 46(R). As a VIE, the Auto Kaiyuan Companies’ sales are included in the Company's total sales, its income from operations is consolidated with the Company’s, the assets and liabilities of the Auto Kaiyuan Companies are consolidated with the Company’s, and the Company’s net income includes all of the Auto Kaiyuan Companies’ net income.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and reflect the consolidated accounts of the Company and its wholly owned subsidiaries and VIEs. All significant inter-company balances and transactions have been eliminated. Investments in non-consolidated subsidiaries, typically representing an ownership interest in the voting stock of the subsidiaries of between 20% and 50%, are stated at cost of acquisition plus the Company’s equity in undistributed net income or proportionate share of net losses since acquisition.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The most significant estimates and related assumptions include the assessment of the provision for doubtful accounts, the assessment of the impairment of tangible and intangible long-lived assets, the assessment of the valuation allowance on deferred tax assets, and the purchase price allocation on acquisitions. Actual results could differ from these estimates.

Consolidation of Affiliate

Pursuant to FIN 46 (R), a VIE is required to be consolidated if a party with an ownership, contractual or other financial interest in the VIE, is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns (if no party absorbs a majority of the VIE’s losses), or both. A variable interest holder that consolidates the VIEs is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and non-controlling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. FIN 46(R) provides a new framework for identifying VIEs and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements.

F-13

A VIE is a corporation, partnership, limited liability corporation, trust or any other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

The Company consolidated the Auto Kaiyuan Companies as the Auto Kaiyuan Companies were deemed to be the VIEs and the Company the primary beneficiary of the Auto Kaiyuan Companies as a result of the execution of a series of enterprise agreements.

Currency Reporting

The Company’s operations in China use the local currency - Renminbi (“RMB”) as its functional currency whereas amounts reported in the accompanying consolidated financial statements and disclosures are stated in U.S. dollars, the reporting currency of the Company, unless stated otherwise. As such, the consolidated balance sheets of the Company have been translated into U.S. dollars at the current rates as of December 31, 2008 and 2007 and the consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006 have been translated into U.S. dollars at the average rates during the periods the transactions were recognized. The resulting translation gain adjustments are recorded as other comprehensive income in the consolidated statements of shareholders’ equity and comprehensive income and as a separate component of shareholders’ equity.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. As of December 31, 2008 and 2007, the majority of cash, including restricted cash, was in RMB on deposit in PRC financial institutions under the Company’s PRC subsidiaries. Cash remittance in or out of the PRC are subject to the PRC foreign exchange control regulations pursuant to which PRC government approval is required for the Company to receive funds from or distribute to outside the PRC.

Cash and cash equivalents as of December 31, 2008 and 2007 are held by the Company’s VIEs. These cash balances cannot be transferred to the Company by dividend, loan or advance according to existing PRC laws and regulations. However, these cash balances can be utilized by the Group for its normal operations pursuant to the Enterprise Agreements.

Restricted Cash

As of December 31, 2008 and 2007, the Company was required to maintain a fixed deposit of $40,824 and $24,734, respectively as a condition to borrow under bank loan agreements.

Accounts Receivable

Accounts receivable, which are unsecured, are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company evaluates the collectability of its accounts receivable based on a combination of factors, including customer credit-worthiness and historical collection experience. Management reviews the receivable aging and adjusts the allowance based on historical experience, financial condition of the customer and other relevant current economic factors. As of December 31, 2008 and 2007, a majority of the trade receivable balances were due from governmental agencies which the Company believed are collectible in full and a majority of the accounts receivable related to warranty claims are primarily due from manufacturers. Therefore, the management determined no allowance for uncollectible amounts is required.

F-14

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable from sales of automobiles and investment in sales-type leases. Concentrations of credit risk with respect to accounts receivables are reduced because a large number of diverse customers make up the Company’s customer base, thus spreading the trade credit risk.

Inventories

Inventories are stated at the lower of cost or market. The Company uses the specific identification method to value automobile inventories and the first-in, first-out method (“FIFO”) to account for parts inventories. A reserve of specific inventory units and parts inventories is maintained where the cost exceeds the estimated fair value.

Deposits for Inventories

Deposits for inventories are cash advances made to automobile manufacturers for down payments for automobile purchases.

Investment in Unconsolidated Subsidiaries

Investment in unconsolidated subsidiaries is accounted for under the equity method, under which the amount of the investment is recorded at cost, with adjustments to recognize the Group’s share of the earnings or losses of the unconsolidated subsidiaries from the date of acquisition. The amount recorded in income is adjusted to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between the Group’s cost and the underlying equity in net assets of the affiliate at the date of investment. The investment amount is also adjusted to reflect the Group's share of changes in the unconsolidated subsidiaries' capital. Dividends received from the unconsolidated subsidiaries reduce the carrying amount of the investment.

Property, Equipment and Leasehold Improvements

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. All depreciation is included in operating expenses on the accompanying consolidated statements of operations. Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the useful life of the related asset.

The estimated service lives of property, equipment and leasehold improvements are as follows:

	Useful life
Land use rights	50 years
Buildings and leasehold improvements	20 years
Machinery and equipment	10 years
Furniture and fixtures	5-10 years
Company automobiles	3-5 years

Expenditures for major additions or improvements that extend the useful lives of assets are capitalized. Minor replacements, maintenance and repairs that do not improve or extend the lives of such assets are expensed as incurred. The Company determined that there was no impairment of property, equipment and improvements as of December 31, 2008, 2007 and 2006.

Goodwill

Goodwill is the excess of cost over the fair value of tangible and identified intangible assets acquired in business acquisitions.

F-15

The following is a summary of the changes in the carrying amount of goodwill during the years ended December 31, 2008, 2007 and 2006:

Balance — January 1, 2006	$	153
Additions		7
Foreign currency translation		5
Balance — December 31, 2006		165
Dispositions		(7	)
Foreign currency translation		12
Balance — December 31, 2007		170
Additions		780
Dispositions		(22	)
Foreign currency translation		13
Balance — December 31, 2008	$	941

In accordance with Statement on Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, goodwill should be tested for impairment annually or more frequently when events or circumstances indicate that impairment may have occurred. The Company completed impairment tests of goodwill as of December 31, 2008 and 2007. The goodwill test includes determining the fair value the reporting unit and comparing it to the carrying value of the net assets allocated to the reporting unit. The Company determined that there was no impairment of goodwill as of December 31, 2008 and 2007.

Vendor Program

Incentive arrangements such as volume incentive rebates or other vendor programs are accounted for in accordance with the Emerging Issues Task Force (“EITF”) Issue No. 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor and EITF Issue No. 03-10, Application of Issue No. 02-16 by Resellers to Sales Incentives Offered to Consumers by Manufacturers. Volume incentive rebates are consideration received from the automotive manufacturers when purchases or sell-through targets are attained or exceeded within a specific time period. The amount of rebates earned in any financial reporting period is recorded as an increase of deposits paid. This same amount is recorded as a reduction of inventory cost or a reduction of cost of sales for those items already sold. Volume rebates to date have been determined based on actual negotiated volume discounts. When there is uncertainty regarding the use of these rebates, the amounts are reserved accordingly. For the years ended December 31, 2008, 2007 and 2006, the incentive rebates totaled approximately $16,848, $10,031 and $5,429, respectively.

Fair Value of Financial Instruments

Financial instruments consist primarily of cash, accounts receivable, lease receivables, accounts payable, floor plans notes payable, notes payable and trade notes payable. The carrying amounts of these items at December 31, 2008 and 2007 approximate their fair values because of the short maturity of these instruments or existence of variable interest rates, which reflect current market rates.

Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For all periods presented, other comprehensive income consisted solely of foreign currency translation adjustments.

F-16

Commitments and Contingencies

Liabilities for loss contingencies arising from claim assessments and litigation and other sources are recorded when it is probable that a liability has been incurred and the amount of assessment can be determined. In the opinion of management, after consultation with legal counsel, there are no claims assessments or litigation against the Company.

Revenue Recognition

Revenues from sale of new automobiles and commercial vehicles are recognized upon delivery, passage of risk and benefit, and signing of the sales contract. Revenue from the sale of parts, service and collision repair is recognized upon delivery of parts to the customer or at the time automobile service or repair work is completed.

Revenue from financing service is recognized as interest income by using the interest method. Certain origination costs on receivables are deferred and amortized, using the interest method, over the term of the related receivable as a reduction in financing revenue. The interest on receivables is discontinued at the time a receivable is determined to be uncollectible.

The Company also receives commissions from insurance institutions for referring its customers to buy auto insurance. Commission income is recorded when the referral transactions are closed. Value Added Taxes represent amounts collected on behalf of specific regulatory agencies that require remittance by a specified date. These amounts are collected at the time of sales and are detailed on invoices provided to customers. In compliance with the Emerging Issues Task Force consensus on EITF Issue No. 06-03, the Company accounts for value added taxes on a net basis.

Cost of Sales

For new automobile and commercial vehicle sales, cost of sales consists primarily of the Company’s actual purchase price, less manufacturer’s incentives. For the sales of parts and accessories, cost of sales consists primarily of the actual purchase price. For service and body shop operations, technician labor cost is the primary component of cost of sales.

Advertising

The Company expenses advertising costs as incurred, net of certain advertising credits and other discounts. Advertising expenses from continuing operations totaled approximately $2,013, $2,090 and $988 for the years ended December 31, 2008, 2007 and 2006, respectively and are included in selling and marketing expense in the accompanying consolidated statements of operations.

Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 (“FIN 48”), on January 1, 2007. The Company did not have any material unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing FIN 48.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates in the applicable tax jurisdiction expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Realization of the deferred tax asset is dependent on generating sufficient taxable income in future years.

F-17

Segment Reporting

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, established standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assessing performance. The Company’s total assets and results of operations have been considered to be comprised of two reportable segments: automotive retailing and commercial vehicles sales/leasing. All of the Company’s sales are generated in the PRC and substantially all of the Company’s assets are located in the PRC.

Recent Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, which requires additional disclosures related to derivatives instruments and hedging activities. These enhanced disclosures will discuss (a) how and why a company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations and (c) how derivative instruments and related hedged items affect a company’s financial position, results of operations and cash flows. SFAS No. 161 is effective for fiscal years beginning on or after November 15, 2008, with earlier adoption allowed. The Company is currently evaluating the impact of adopting SFAS No. 161 and anticipates that this statement will not have a significant impact on the reporting of our results of operations.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No.141(R)”), which replaces SFAS No. 141, Business Combinations. SFAS No.141(R) retains the underlying concepts of SFAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but SFAS No.141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; non-controlling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS No.141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS No.141(R) amends SFAS No.109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS No.141(R) would also apply the provisions of SFAS No.141(R). Early adoption is not permitted.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS No.141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. The Company is currently evaluating the impact of this new statement on our financial condition and results of operations.

F-18

(3) INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

The Company’s investments in the following entities are accounted for on the equity method:

	Percentage owned at December 31,
	2008		2007

Hebei Junda Auto Sales & Service Co., Ltd	<C>			50%
Tian Mei Insurance Agency Co., Ltd	<A>			49%
Cangzhou Hengyuan Auto Sales & Service Co., Ltd		30%		30%
Baoding Tianfu Auto Sales & Service Co., Ltd	<B>		<B>
Shijiazhuang Yiyuan Sales & Service Co., Ltd	<B>		<B>
Baoding Tianhong Auto Sales & Service Co., Ltd	<B>		<B>

<A> During the periods presented, the Company acquired a majority equity interest in this entity and the incremental acquired ownership has been accounted for using the purchase method of accounting. A summary of acquisitions is listed in Note 4.

<B> The investments in the companies were disposed in November 2007 for an aggregate sales price of $887. Details of the gain (loss) on disposition of investments are disclosed in Note 16.

<C> The investment in the company was disposed in June 2008 for a sales price of $432. Details in gain on disposition of investment are disclosed in Note 16.

All of these operations, except Tian Mei Insurance Agency Co., Ltd, which is an insurance agency, are engaged in the sale and servicing of automobiles. The Company’s investment in unconsolidated subsidiaries accounted for under the equity method and cost method amounted to $229 and $770 as of December 31, 2008 and 2007, respectively.

The combined results of operations and financial position of the Company’s equity basis investments are summarized as follows:

	Years Ended December 31,
	2008			2007		2006
Revenues	$	7,468		$	24,957	$	98,166
Gross margin		223			1,050		4,754
Net (loss) income		(75	)		608		861
Equity in (loss) earnings of unconsolidated subsidiaries	$	(40	)	$	139	$	417

	December 31,
	2008		2007
Current assets	$	644	$	1,475
Non-current assets		446		469
Total assets		1,090		1,944
Current liabilities		327		371
Equity		763		1,573
Total liabilities and equity	$	1,090	$	1,944

F-19

(4) BUSINESS ACQUISITIONS

The Company acquired various automotive retail franchises and related assets during the years ended December 31, 2008, 2007 and 2006. The Company paid in cash approximately $2,992, $3,265 and $3,018 in 2008, 2007 and 2006, respectively for automotive retail acquisitions. The following is a summary of entities acquired and the respective equity interests acquired during the periods presented:

	Total %of Equity Interest		2008					2007					2006					Total % of Equity
	as of December 31, 2008		% of Equity Acquired			Acquisition Price		% of Equity Acquired			Acquisition Price		% of Equity Acquired			Acquisition Price		Interest Prior to 2006

Entities
Baoding Tianhua Auto Trade Co., Ltd		100%		-		$	-		30	%	$	82		-		$	-		70	%
Hebei Meifeng Auto Sales and Service Co., Ltd		100%		-			-		30	%		82		-			-		70	%
Hebei Shenkang Auto Trade Co., Ltd		100%		-			-		25	%		342		-			-		75	%
Yuhua Fengtian Auto Sales and Service Co., Ltd		100%		-			-		10	%		274		-			-		90	%
Hebei Shengmei Auto Trade Co., Ltd		96%		-			-		10	%		68		86	%		525		-
Hebei Shenwen Auto Trade Co., Ltd		95%		-			-		5	%		68		-			-		90	%
Guangdehang Auto Trade Co., Ltd	<A>			-			-		88	%		1,205		-			-		-
Hebei Liantuo Auto Trade Co., Ltd		90%		10	%		834		10	%		685		30	%		1,537		40	%
Xinghua Fengtian Auto Trade Co., Ltd	<B>			-			-		-			-		-			-		79	%
Cangzhou Yicang Auto Sales and Service Co., Ltd		55%		-			-		-			-		15	%		199		40	%
Hebei Junda Auto Trade Co., Ltd		50%		-			-		50	%		411					-		-
Tian Mei Insurance Agency Co., Ltd		100%		51	%		37		49	%		34					-		-
Hebei Yitong Auto Trade Co., Ltd		60%		55	%		1,975					-		5	%		98		-
Hebei Shengjie Auto Trade Co., Ltd	<C>			-			-		1	%		14		19	%		243		80	%
Baoding Tianhong Auto Sales & Service Co., Ltd	<D>			-			-		-			-		20	%		256		-
Shijiazhuang Yiyuan Sales & Service Co., Ltd	<D>			-			-		-			-		25	%		160		-
Baoding Tianfu Sales & Service Co., Ltd	<D>			-			-		-			-		-			-		35	%
Hebei Shengda Auto Trading Co., Ltd		80%		10	%		146		-		-			-		-			70	%
Total						$	2,992				$	3,265				$	3,018

F-20

<A> All of the acquired equity interest was disposed in March 2008 for an aggregate sales price of $1,267; and the transactions were classified as discontinued operations. (See Note 5)

<B> 12% of equity interest was disposed in 2007 for a total consideration of $140. (See Note 16)

<C> All of the acquired equity interest was disposed in November 2007 for an aggregate sales price of $1,314; and the transactions were classified as discontinued operations. (See Note 5)

<D> All of the acquired equity interest was disposed and the gain (loss) on disposal was recorded as other income (loss) in the consolidated statement of operations. (See Note 16)

The acquisitions were made to increase the asset portfolio to meet for the growing market demand. They were accounted for using the purchase method of accounting in the periods when the Company acquires a majority of the voting rights (i.e. over 50% of equity interest) of the entities whereby the total purchase price, including transaction expenses, was allocated to tangible and intangible assets acquired based on estimated fair market values, with the remainder classified as goodwill. Net tangible assets were valued at their respective fair values. Acquisitions of less than 50% and more than 20% equity interest are accounted for using the equity method (Note 3). The cost method is used for an equity interest of less than 20%.

Purchase price allocations for business combinations accounted for under the purchase method of accounting for the periods ended were as follows:

	December 31,
	2008		2007
Cash	$	731	$	3,145
Accounts receivable		24		562
Inventory		2,508		825
Prepayment		2,316		647
Prepaid expenses and current assets		404		145
Property, equipment and leasehold improvements		1,489		522
Goodwill		780		214
Total assets acquired		8,252		6,060

Floor plan notes payable		-		(3,701	)
Accounts payable and accrued liabilities		2,090		(1,019	)
Notes payable		3,080		-

Net assets acquired		3,082		1,340
Less cash acquired		731		(3,145	)
Assets acquired, net of cash	$	2,351	$	(1,805	)

F-21

The pro forma consolidated results of continuing operations assuming the 2008, 2007, and 2006 acquisitions had occurred at January 1, 2006, are as follows:

	Years Ended December 31,
	2008		2007		2006

Revenues	$	446,844	$	324,468	$	255,747
Gross profit		25,706		19,653		14,408
Operating profit		12,050		7,271		4,848
Net income	$	7,542	$	5,385	$	4,528

The pro forma information is presented for information purposes and may not necessarily reflect the future results of the Company or the results that would have occurred had the acquisitions occurred as of January 1, 2006.

(5) DISCONTINUED OPERATIONS

On November 7, 2007, the Company sold its 100% interest of an automotive dealer, Hebei Shengjie Auto Trade Co., Ltd, to an unrelated individual for an aggregate sales price of approximately $1,314. On March 27, 2008, an 88% interest of Guangdehang Auto Trade Co., Ltd was sold to an unrelated entity for an aggregate sales price of approximately $1,267. On December 10, 2008, a 100% interest of Tangshan Boan Auto Trade Co., Ltd. was sold to an unrelated entity for an aggregate sales price of approximately $720. Generally, the sale of an automobile dealership is completed within 60 to 90 days after the date of a sales agreement. The operation of the disposed automotive dealers has been segregated and reported as discontinued operations for all the periods presented in the Company’s consolidated statement of operation presented herein. The results of discontinued operation are as follows:

	Years Ended December 31,
	2008			2007			2006

Revenues	$	3,715		$	6,195		$	3,877
(Loss) income from discontinued operations (before income taxes)		(327	)		(98	)		(87	)
Gain on disposal of discontinued operations		183			307			-
(Loss) income from Discontinued operations, net of tax	$	(144	)	$	209		$	(87	)

F-22

The assets and liabilities of these businesses have been classified as from discontinued operations for the consolidated balance sheets presented herein. The assets and liabilities associated with discontinued operations as of December 31, 2008 and 2007 were as follows:

	December 31,
	2008		2007
Cash	$	-	$	3,519
Inventory		-		923
Accounts receivable		-		629
Other current assets		-		1,100
Property, equipment and leasehold improvements		-		584
Total assets		-		6,755
Floor plan notes payable		-		4,141
Other current liabilities		-		1,140
Total liabilities	$	-	$	5,281

(6) ACCOUNTS RECEIVABLE

A summary of accounts receivable is as follows:

	December 31,
	2008		2007
Trade accounts receivable from sales of automobiles	$	4,014	$	1,489
Contracts-in-transit		43		487
Warranty receivable		215		128
Total	$	4,272	$	2,104

Contracts-in-transit represent receivables from unrelated finance companies for the portion of the automobiles purchase price financed by customers. These contracts-in-transit are normally collected within the first week following the sale of the related automobiles but not usually longer than 30 days.

The Company performs warranty service work for automobiles sold under a limited warranty provided by manufacturers. The cost of warranty work is reimbursed by the applicable manufacturer at retail consumer rates.

F-23

(7) INVENTORIES

A summary of inventories is as follows:

	December 31,
	2008		2007
New automobiles	$	31,068	$	23,359
Commercial vehicles		1,232		-
Parts and accessories		4,839		3,440
Others		324		111
Total	$	37,463	$	26,910

(8) PREPAID EXPENSES AND OTHER CURRENT ASSETS

A summary of p repaid expenses and other current assets is as follows:

	December 31,
	2008		2007
Short term advances	$	525	$	7,998
Temporary advance to staff		126		401
Bid bonds and deposit for new dealership		1,259		273
Prepaid rental for land		387		249
Deposits for construction-in-progress		-		232
Prepaid other taxes		2,522		158
Others		655		85

Total	$	5,474	$	9,396

Short-term advances are advances made to third parties. They are interests-free, unsecured and repayable on demand.

F-24

(9) NET INVESTMENT IN SALES-TYPE LEASES

The following lists the components of the net investment in sales-type leases:

	December 31,
	2008			2007
Minimum lease payments receivable	$	26,409		$	-
Less: unearned income		(3,050	)		-
Net investment in sales-type leases		23,359			-
Less: Current maturities of net investment in sales-type leases		(14,867	)		-
Net investment in sales-type leases, net of current maturities	$	8,492		$	-

Net investment in sales-type leases arises from the sales of commercial vehicles, under which the Company has entered into monthly installment arrangements with the customers for 2 years. The legal titles of the commercial vehicles are not transferred to the customer until the outstanding lease payments are fully settled. Such business segment commenced in April 2008. At December 31, 2008, minimum lease payments for each of the two succeeding fiscal years are $14,867 in 2009 and $8,492 in $2010, respectively.

(10) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

A summary of property, equipment and leasehold improvements is as follows:

	December 31,
	2008		2007
Land use rights	$	2,554	$	264
Buildings and leasehold improvements		13,927		10,057
Furniture and fixtures		3,123		1,371
Machinery and equipment		4,448		3,060
Company automobiles		7,579		5,345
Construction-in-progress		16		301
Others		-		38
Total		31,647		20,436

Less: accumulated depreciation and amortization		4,740		2,406
Property, equipment and leasehold improvements, net	$	26,907	$	18,030

Depreciation and amortization expense was approximately $3,164, $1,707 and $1,073 for the years ended December 31, 2008, 2007 and 2006, respectively. Construction-in-progress represented the cost of construction work of automotive dealerships which had not yet been completed as of the last day of each reporting period. No depreciation expense is recorded for the construction-in-progress until the assets are placed in service.

F-25

(11) OTHER PAYABLES AND ACCRUED LIABILITES

Other payables and accrued liabilities consist of the following:

	December 31,
	2008		2007

Short-term advances	$	529	$	935
Deposits received		1,430		831
Amounts due to construction-in-progress contractors		368		327
Accrued expenses		186		138
Salary payable		311		123
Dividend payable		292		44
Other current liabilities		2,073		703

Total	$	5,189	$	3,101

Dividend payable represents the amount due to the minority shareholders of the Company’s VIEs, which is non-interest bearing, unsecured and will be paid in 2009. Deposits received represented security deposits received from staff, retention fee for constructors and customer deposits. Other current liabilities mainly include payables to office equipment suppliers.

(12) FLOOR PLAN NOTES PAYABLE

The Company entered into committed facility lines with several financial institutions affiliated with automobile manufacturers to finance substantially all new automobile inventory purchases. As of December 31, 2008 and 2007, the committed facility lines provided for a maximum borrowing capacity of up to approximately $23,630 and $18,769, respectively for purchases of new automobiles from the automobile manufacturers. These committed facility lines usually have a term of one year with options of extension.

The Company also had financing under floor plan arrangements for a term in a range of 180 days to one year with various lenders not affiliated with manufacturers.

Both of the committed facility lines and floor plan arrangements are collateralized by the inventory purchased and/or guaranteed by certain assets owned by affiliates and are required to be repaid upon the sale of the automobiles that have been financed when the sale proceeds are collected by the Company. Interest rates under the committed facility lines and the floor plan arrangements are charged at the bank’s prime rate and payable on a monthly basis. The floor plan borrowings bear interest at rates in the range of 6.64% to 9.36% as of December 31, 2008. However, certain floor plan notes payable-manufacturer affiliated were interest free in the event the note is repaid in 60-90 days.

The Company considered committed facility lines to a party that is affiliated with auto manufacturers from which the Company purchased new automobile inventory to be “Floor plan notes payable-manufacturer affiliated” and all other floor plan notes payable to be “Floor plan notes payable - non - manufacturer affiliated”.

(13) NOTES PAYABLE

Notes payable represent loans from financial institutions that were used for working capital and capital expenditures purposes. The notes bear interest at rates in the range of 6.24% to7.56% as of December 31, 2008 and have a term within one year.

F-26

	December 31,
	2008		2007
Note payable - bank	$	3,628	$	5,407
Note payable - manufacturer affiliated		293		1,318
Total	$	3,921	$	6,725

(14) NOTES PAYABLE, RELATED PARTIES

Historically, the Company has obtained funding from the Company’s executive management and employees to finance the existing operations, including acquisition of new automobiles. The note agreements are repayable on demand or have a term of one year, and bear an interest rate in a range of 5% to 6%. Since 2007, the Company has been gradually repaying the outstanding balances and it was fully repaid in 2008.

(15) TRADE NOTES PAYABLE

Trade notes payable are presented to certain automotive manufacturers of the Company as a payment against the outstanding trade payables. These notes payable are bank guarantee promissory notes which are non-interest bearing and generally mature within six months. The outstanding bank guarantee promissory notes are secured by restricted cash deposited in banks and automobile inventories.

(16) SALE OF INVESTMENT IN AUTOMOTIVE DEALERS

During the years presented, the Company sold investments in certain non-consolidated subsidiaries. The results of operations of the non-consolidated subsidiaries have been included in the consolidated financial statements through the date of disposal. The following table summarizes the investment in the non-consolidated subsidiaries as of the date of sale and the gain on disposal:

	Hebei Junda Auto Trading Co., Ltd			Xinghua Fengtian Auto Trading Co., Ltd			Baoding Tianfu Auto Sales & Service Co., Ltd			Baoding Tian -hong Auto Sales & Service Co., Ltd			Shijia- zhuang Yiyuan Sales & Service Co., Ltd

Disposal Date	Jun. 200 8			Dec. 2007			Nov. 2007			Nov. 2007			Nov. 2007
Current assets	$	1,615		$	4,636		$	3,237		$	5,138		$	2,403
Property, equipment and improvement, net		672			1,104			764			631			196
Total assets		2,287			5,740			4,001			5,769			2,599
Total liabilities		1,520			4,030			2,580			4,310			2,023
Net assets		767			1,710			1,421			1,459			576
% of equity interest disposed		50	%		12	%		35	%		20	%		25	%
Investment in entities		384			230			470			304			143
Consideration		432			140			460			263			164
Gain (loss) on sales (included in other income)	$	48		$	(90	)	$	(10	)	$	(41	)	$	21

F-27

(17) INCOME TAXES

Cayman Islands

Under the current tax laws of the Cayman Islands, the Company and its subsidiaries are not subject to tax on their income or capital gains.

Hong Kong

The Company’s subsidiary in Hong Kong did not have assessable profits that were derived from Hong Kong during the years ended December 31, 2008, 2007 and 2006. Therefore, no Hong Kong profit tax has been provided for in the years presented.

China

The regular federal income tax in China is 33%. Certain of the Company’s dealership subsidiaries were granted tax incentives in connection with the compliance with the Employment Promotion Law and the Regulation for the Employment of Disabled Persons whereby the qualified subsidiaries were exempted from paying any income taxes for a period of two to three years or enjoyed a 50% discounted income tax rate. Effective January 1, 2008, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies would be subject to enterprise income tax at a uniform rate of 25%.

The income tax provision (benefit) in the consolidated statements of income is as follows:

	Years Ended December 31,
	2008			2007			2006

Current	$	3,441		$	1,112		$	57
Deferred		(432	)		(129	)		(86	)

Total	$	3,009		$	983		$	(29	)

The tax effects of temporary differences representing deferred income tax assets (liabilities) result principally from the following:

	December 31,
	2008		2007
Current
Deferred income tax assets:

Accrued liabilities	$	-	$	57
Deferred expenses		86		-
Tax loss carry forward		934		120

Total deferred income tax assets - current	$	1,020	$	177

F-28

		December 31,
		2008			2007
Non-current
Deferred income tax assets
Depreciation	$	230		$	65
Appraisal of assets acquired		112			98
Total deferred income tax assets – non-current		342			163

Deferred income tax liabilities:
Appraisal of assets acquired		273			157
Deferred income		474			-
Total deferred income tax liabilities – non-current		747			157
Net deferred income tax (liabilities) assets – non-current	$	(405	)	$	6

At December 31, 2008, the Company had $3,298 of taxable loss carry forwards that expire through December 31, 2012.

The difference between the effective income tax rate and the expected statutory rate was as follows:

	Years Ended December 31,
	2008			2007			2006

Statutory rate		25.0	%		33.0	%		33.0	%
Non-taxable income		(2.0	)		(14.9	)		(38.5	)
Tax effect of tax losses recognized (utilized)		7.3			(0.2	)		2.7
Tax effect of unrecognized temporary differences		(3.4	)		(0.2	)		1.8

Effective tax rate		26.9	%		17.7	%		(1.0	)%

On January 1, 2007, the Company adopted the provisions of FIN 48. This interpretation requires companies to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements.

Management has performed an analysis of its tax positions, in accordance with FIN 48, and has determined that the Company has no material uncertain tax positions that are more-likely than-not of being sustained for the full amount claimed, or to be claimed, on its applicable tax returns for the year ended December 31, 2008.

(18) DIVIDEND PAYMENT RESTRICTIONS

Substantially all of the Company’s retained earnings as well as net assets are attributable to its VIEs. Pursuant to the relevant accounting principles and financial regulations applicable to companies established in the PRC, certain percentage of the after-tax net income is restricted and required to be allocated to a general statutory reserve until the balance of the fund has reached 50% of the Company’s registered capital. The statutory reserve fund can be used to increase the registered capital and eliminate future losses of the companies; it cannot be distributed to shareholders except in the event of a solvent liquidation of the companies.

F-29

(19) COMMITMENTS

Dealership Agreements

The Company operates dealerships under franchise agreements with a number of automotive manufacturers. These agreements are non-exclusive agreements that allow the Company to stock, sell and service cars, equipment and products of the automotive manufacturers in the Company’s defined market. The agreements allow the Company to use the Manufacturers’ names, trade symbols and intellectual property. The manufacturers have the right to approve the changes of ownership of the dealers and the agreements expire as follows:

Distributor	Expiration Date		Percentage of sales for the Years Ended December 31,
			2008		2007		2006

Audi		2008 - 2009		26%		29%		*
Toyota		2008 - 2009		17%		17%		25%
Beijing Hyundai	2009 - Indefinite			18%		16%		30%
Buick		2008 - 2010		10%		*		*
BMW	2009			*		11%		13%
Ford	2010 - Indefinite			*		*		15%
Chevrolet	2009			*		*		*
MAZDA	2009			-		*		-
ROEWE	2010			*		*		-
ISUZU	Indefinite			-		*		*
Cadillac	2009			*		*		-
Peugeot	2009			*		*		-

* represented less than 10% of sales generated for the periods.

Capital Commitments

From time to time, the Company engages in construction contracts to add new and expanded dealership capacity which typically involve a significant capital commitment. Future minimum payments under the construction contracts as of December 31, 2008 are $45.

Lease Commitments

The Company leases certain facilities under long-term, non-cancelable leases and month-to- month leases. These leases are accounted for as operating leases. Rent expense amounted to $1,348, $871 and $563 for the years ended 2008, 2007 and 2006, respectively.

F-30

Future minimum payments under long-term, non-cancelable leases as of December 31, 2008, are as follows:

Years Ending December 31,	Future minimum payments

2009	$	1,748
2010		1,659
2011		1,473
2012		1,299
2013		1,328
2014 and later		17,599
Total	$	25,106

(20) SEGMENT REPORTING

The Company measures segment profit (loss) as operating profit (loss) less depreciation and amortization. The reportable segments are components of the Company which offer different products or services and are separately managed, with separate financial information available that is separately evaluated regularly by the chief financial officer in determining the performance of the business. Prior to January 1, 2008, the Company had operated in a single operation and reporting segment of automotive retail sales and service. During 2008, the Company developed another business segment – commercial vehicles sales/leasing. Information regarding the two operating segments is presented in the following tables:

	Year ended December 31, 2008
	Automotive retailing		Commercial vehicles		Total

Revenue	$	406,526	$	34,059	$	440,585
Interest revenue		549		2,250		2,799
Interest expense		2,800		5		2,805
Depreciation and amortization		2,913		251		3,164
Total profit from reportable segments		11,175		1,370		12,545
Equity in loss of unconsolidated subsidiaries						(40	)
Minority interest						(1,309	)

Income before income taxes					$	11,196

(21) RELATED PARTY BALANCES AND TRANSACTIONS

During the years presented, the Company paid certain operating expenses on behalf of various companies affiliated with the Company’s Chairman and CEO, Mr. Yong Hui Li (“Mr. Li”), and companies which were formerly controlled by the Company. The Company has advanced these funds to each of these companies on a non-interest bearing and unsecured basis. Such advances are due on demand by the Company. The outstanding amounts due from related parties as of December 31, 2008 and 2007 were as follows:

F-31

			December 31,
	Notes		2008		2007

Due from affiliates:

Shijazhuang Zhicheng Property Management Co., Ltd.		(1)	$	-	$	2,634
Kinbow Capital & Holding Group Co., Ltd		(1)		-		1,615
Beijing Qianbo Auto Trading Co., Ltd		(1)		-		1,033
Beijing Tonghe Shenyuan Business & Trading Co., Ltd		(1)		-		205

Total			$	-	$	5,487

			December 31,
	Notes		2008		2007

Due from unconsolidated subsidiary:
Cangzhou Hengyuan Auto Trading Co., Ltd.		(2)	$	529	$	-

Notes:

(1) Companies controlled by the Company’s ultimate shareholder prior to Spring Creek Acquisition Corp.’s (“Spring Creek”) acquisition of the Company, Ms. Yan Wang.

(2) Companies that were formerly owned by the Company.

During the years presented, the Company has borrowed from various companies affiliated with Mr. Li, and companies which are formerly controlled by the Company. Each of these loans was entered into to satisfy the Company’s short-term capital needs and is non-interest bearing. In addition, the payable balances of each loan are unsecured and due on demand by the lender. The outstanding amounts due to related parties as of December 31, 2008 and 2007 were as follows:

			December 31,
	Notes		2008		2007

Due to affiliates:

Mr. Li		(3)	$	5,125	$	-
Hebei Kaiyuan Real Estate Co., Ltd		(1)		769		136
Hebei Shengrong Auto Parts Co., Ltd		(2)		-		1,895
Shijiazhuang Yiyuan Auto Trading Co., Ltd		(2)		-		41
Baoding Tianfu Auto Trading Co., Ltd			-		3
Total			$	5,894	$	2,075

F-32

Notes:

(1) Companies controlled by the Company’s ultimate shareholder prior to Spring Creek’s acquisition of the Company, Ms. Yan Wang.

(2) Companies that were formerly owned by the Company.

(3) The Company’s Chairman and CEO.

During the years presented, the Company sold and purchased automobiles and spare parts to and from affiliates. The details of the related party transactions were as follows:

				Years Ended December 31,
	Notes			2008		2007		2006

Related Parties Transactions

Hebei Kaiyuan Doors & Windows Manufacturing Co., Ltd		(1)	(a)	$	-	$	8,649	$	-
Shijiazhuang Zhicheng Property Management Co., Ltd		(1)	(b)		3,937		2,529		-
Shijiazhuang Zhicheng Property Management Co., Ltd		(1)	(a)		3,911		-		-
Hebei Beiguo Kaiyuan Shopping Mall Co., Ltd		(2)	(b)		-		2,058		10,577
Hebei Kaiyuan Real Estate Co., Ltd		(1)	(a)		39,553		1,958		-
Hebei Kaiyuan Real Estate Co., Ltd		(1)	(b)		2,770		-		3,853
Hebei Kaiyuan Real Estate Co., Ltd		(1)	(e)		757		-		1,129
Kinbow Capital & Holding Group Co., Ltd		(1)	(b)		374		973		1,054
Beijing Tonghe Shenyuan Business & Trading Co., Ltd		(1)	(a)		-		-		615
Beijing Tonghe Shenyuan Business & Trading Co., Ltd		(1)	(b)		360		460		-
Beijing Qianbo Auto Trading Co., Ltd		(1)	(b)		3,009		394		571
Beijing Qianbo Auto Trading Co., Ltd		(1)	(c)		81		183		35
Beijing Qianbo Auto Trading Co., Ltd		(1)	(d)		271		-		232
Beijing Qianbo Auto Trading Co., Ltd		(1)	(e)		-		-		176
Baoding Tianfu Auto Trading Co., Ltd		(2)	(b)		-		-		100
Baoding Tianfu Auto Trading Co., Ltd		(2)	(c)		-		84		58
Baoding Tianfu Auto Trading Co., Ltd		(2)	(d)		2		48		9
Shijiazhuang Yiyuan Auto Trading Co., Ltd		(2)	(a)		420		39		-
Shijiazhuang Yiyuan Auto Trading Co., Ltd		(2)	(b)		-		-		125
Beijing Kinbow Sunshine Auto Trading Co., Ltd		(1)	(a)		144		-		-
Beijing Kinbow Sunshine Auto Trading Co., Ltd		(1)	(d)		-		-		126
Hebei Xinchang Shengyuan Auto Sales Co., Ltd		(2)	(b)		576		-		-
Cangzhou Hengyuan Auto Trading Co., Ltd		(2)	(b)		648		-		-
Cangzhou Hengyuan Auto Trading Co., Ltd		(2)	(c)		1,831		-		-
Cangzhou Hengyuan Auto Trading Co., Ltd		(2)	(d)		1		-		-
Hebei Xuwei Trading Co., Ltd		(1)	(a)		2,476		-		-
Hebei Xuwei Trading Co., Ltd		(1)	(b)		2,476		-		-
Hebei Shengrong Auto parts Co., Ltd		(2)	(b)		12,369		-		-
Hebei Guangdehang Auto Trading Co., Ltd		(2)	(c)		2		-		-
Hebei Guangdehang Auto Trading Co., Ltd		(2)	(d)		4		-		-

F-33

Notes:

(1) Companies controlled by the Company’s ultimate shareholder prior Spring Creek’s acquisition of the Company, Ms. Yan Wang.

(2) Companies that were formerly owned by the Company.

Nature of transaction:

(a) Loan to the Company during the period. The amounts were interest-free, unsecured and repayable on demand.

(b) Short-term advance from the Company. The amounts were interest-free, unsecured and payable on demand.

(d) Purchase of automobiles from AutoChina during the year.

(e) Sales of investments in subsidiary / affiliates during the year.

Mr. Li, AutoChina’s Chairman and CEO, is the indirect beneficial owner of approximately 15.28% of Beiguo Commercial Building Limited. Commencing in September 2008, Beiguo began to provide short term financing for the Company’s commercial vehicle financing business. The Company pays a financing charge of approximately 4% per annum premium to Beiguo for the funds obtained due to this financing arrangement, in part, because the financing arrangement is guaranteed by Mr. Li, who has a long term business relationship with Beiguo, on behalf of the Company.

(22) SUBSEQUENT EVENTS

On February 4, 2009, the Company entered into a definitive share exchange agreement with Spring Creek Acquisition Corporation, a company quoted on OTC Bulletin Board (“Spring Creek”), whereby Spring Creek will issue 8,606,250 ordinary shares in exchange for 100% of the Company, subject to Spring Creek’s shareholder approval. After the closing, Spring Creek will have approximately 15.1 million basic and 17.7 million fully diluted ordinary shares outstanding. The Company’s current shareholders will then own approximately 48.7% of the total issued and outstanding shares in the pro-forma company on a fully diluted basis based on a share price of $8.00 each.

On April 9, 2009, the shareholders approved the merger, and the merger became effective.

F-34

AUTOCHINA INTERNATIONAL LIMITED

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

	Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS	F-36
BALANCE SHEETS	F-38
STATEMENTS OF OPERATIONS	F-39
STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM OCTOBER 16, 2007 (INCEPTION) TO DECEMBER 31, 2008	F-40
STATEMENTS OF CASH FLOWS	F-41
NOTES TO THE FINANCIAL STATEMENTS	F-42

F-35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

AutoChina International Limited

We have audited the accompanying balance sheet of AutoChina International Limited (formerly Spring Creek Acquisition Corp.) (a development stage company) as of December 31, 2008, and the related statements of operations, stockholders’ equity and cash flows for the periods from January 1, 2008 to December 31, 2008, and October 16, 2007 (date of inception) to December 31, 2008 (cumulative). 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. 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 AutoChina International Limited as of December 31, 2008, and the results of its operations and its cash flows for the periods from January 1, 2008 to December 31, 2008, and October 16, 2007 (date of inception) to December 31, 2008 (cumulative), in conformity with accounting principles generally accepted in the United States of America.

/s/ Crowe Horwath LLP

Sherman Oaks, California

May 27, 2009

F-36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

AutoChina International Limited

Formerly Spring Creek Acquisition Corp.

We have audited the accompanying balance sheet of AutoChina International Limited (formerly Spring Creek Acquisition Corp.) (a corporation in the development stage) as of December 31, 2007, and the related statements of operations, stockholders’ equity and cash flows for the period from October 16, 2007 (inception) to December 31, 2007. 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 audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 AutoChina International Limited (formerly Spring Creek Acquisition Corp.) as of December 31, 2007, and the results of its operations and its cash flows for the period from October 16, 2007 (inception) to December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ UHY LLP

New York, New York

March 5, 2008

F-37

AUTOCHINA INTERNATIONAL LIMITED

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

BALANCE SHEETS

	December 31,
	2008			2007

ASSETS
Current assets:
Cash	$	77,128		$	628
Money market funds - held in trust		40,855,363			—
Prepaid expenses		9,538			—
Deferred offering costs		—			199,957
Total assets (all current)	$	40,942,029		$	200,585

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	286,306		$	99,013
Deferred underwriting fees payable		1,449,000			—
Deferred interest on funds held in trust		58,996			—
Notes payable to stockholders		—			100,000
Total current liabilities		1,794,302			199,013

Ordinary shares subject to possible redemption – 2,069,999 shares at redemption value		16,270,192			—

Commitments and contingencies

Stockholders’ equity:
Preferred shares, $0.001 par value, authorized - 1,000,000 shares issued - none		—			—
Ordinary shares, $0.001 par value authorized - 50,000,000 shares issued and outstanding - 6,468,750 shares (inclusive of 2,069,999 shares subject to possible redemption) at December 31, 2008, and 1,293,750 shares at December 31, 2007		6,469			1,294
Additional paid-in capital		23,040,035			23,706
Deficit accumulated during the development stage		(168,969	)		(23,428	)
Total stockholders’ equity		22,877,535			1,572
Total liabilities and stockholders’ equity	$	40,942,029		$	200,585

The accompanying notes are an integral part of these financial statements.

F-38

AUTOCHINA INTERNATIONAL LIMITED

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

STATEMENTS OF OPERATIONS

	Year Ended December 31,			Period from October 16, 2007 (Inception) to December 31,			Period from October 16, 2007 (Inception) to December 31, 2008
	2008			2007			(Cumulative)

Revenues	$	—		$	—		$	—
Operating expenses		327,935			23,428			351,363
Operating loss		(327,935	)		(23,428	)		(351,363	)
Interest income		733,745			—			733,745
Acquisition costs		(492,355	)		—			(492,355	)
Loss before allocation of trust account interest		(86,545	)		(23,428	)		(109,973	)
Trust account interest allocable to shares subject to possible redemption		(58,996	)		—			(58,996	)
Net loss attributable to ordinary stockholders	$	(145,541	)	$	(23,428	)	$	(168,969	)

Net loss per ordinary share — Basic and diluted	$	(0.03	)	$	(0.02	)
Weighted average ordinary shares outstanding — Basic and diluted		5,635,143			1,293,750

The accompanying notes are an integral part of these financial statements.

F-39

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD FROM OCTOBER 16, 2007 (INCEPTION) TO DECEMBER 31, 2008

	Ordinary Shares				Additional Paid-in			Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount		Capital			Stage			Equity

Balance, October 16, 2007 (inception)		—	$	—	$	—		$	—		$	—
Sale of ordinary shares to initial stockholders for cash at $0.02 per share		1,293,750		1,294		23,706			—			25,000
Net loss for the period from October 16, 2007 (inception) to December 31, 2007		—		—		—			(23,428	)		(23,428	)
Balance, December 31, 2007		1,293,750		1,294		23,706			(23,428	)		1,572
Sale of shares and warrants in private placement and public offering, net of offering costs of $3,538,403		5,175,000		5,175		39,286,421			—			39,291,596
Sale of unit purchase option to underwriters		—		—		100			—			100
Shares reclassified to “Ordinary shares subject to possible redemption”		—		—		(16,270,192	)		—			(16,270,192	)
Net loss attributable to ordinary stockholders for the year ended December 31, 2008		—		—		—			(145,541	)		(145,541	)
Balance, December 31, 2008		6,468,750	$	6,469	$	23,040,035		$	(168,969	)	$	22,877,535

The accompanying notes are an integral part of these financial statements.

F-40

AUTOCHINA INTERNATIONAL LIMITED

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

STATEMENTS OF CASH FLOWS

	Year Ended December 31,			Period from October 16, 2007 (Inception) to December 31,			Period from October 16, 2007 (Inception) to December 31, 2008
	2008			2007			(Cumulative)

Cash flows from operating activities
Net loss attributable to ordinary stockholders	$	(145,541	)	$	(23,428	)	$	(168,969	)
Adjustments to reconcile net loss attributable to ordinary stockholders to net cash provided by operating activities:
Changes in operating assets and liabilities:
(Increase) decrease in -
Prepaid expenses		(9,538	)		—			(9,538	)
Increase (decrease) in -
Accounts payable and accrued expenses		187,293			99,013			286,306
Net cash provided by operating activities		32,214			75,585			107,799

Cash flows from investing activities
Funds placed in trust account from offerings		(40,671,000	)		—			(40,671,000	)
Increase in trust account from interest income earned, net of allocation to shares subject to possible redemption		(674,750	)		—			(674,750	)
Withdrawals from trust account		549,382			—			549,382
Net cash used in investing activities		(40,796,368	)		—			(40,796,368	)

Cash flows from financing activities
Proceeds from initial sale of ordinary shares		—			25,000			25,000
Gross proceeds from private placement		1,430,000			—			1,430,000
Gross proceeds from public offering		41,400,000			—			41,400,000
Payments of offering costs		(1,889,446	)		(199,957	)		(2,089,403	)
Proceeds from underwriter’s purchase option		100			—			100
Proceeds from stockholders loan		—			100,000			100,000
Repayment of stockholders loan		(100,000	)		—			(100,000	)
Net cash provided by (used in) financing activities		40,840,654			(74,957	)		40,765,697

Net increase in cash		76,500			628			77,128
Balance at beginning of period		628			—			—
Balance at end of period	$	77,128		$	628		$	77,128

Cash paid for:
Interest	$	—		$	—		$	—
Income taxes	$	—		$	—		$	—

Supplemental schedule of non-cash investing and financing activities:
Increase in deferred underwriting fees payable	$	1,449,000		$	—		$	1,449,000
Ordinary shares subject to possible redemption	$	16,270,192		$	—		$	16,270,192
Allocation of trust account interest relating to ordinary shares subject to possible redemption	$	58,996		$	—		$	58,996

The accompanying notes are an integral part of these financial statements.

F-41

AUTOCHINA INTERNATIONAL LIMITED

(FORMERLY SPRING CREEK ACQUISITION CORP.)

(a corporation in the development stage)

NOTES TO FINANCIAL STATEMENTS

Year Ended December 31, 2008, Period from October 16, 2007 (Inception) to December 31, 2007,

and Period from October 16, 2007 (Inception) to December 31, 2008 (Cumulative)

1. Organization and Proposed Business Operations

AutoChina International Limited (formerly Spring Creek Acquisition Corp.) (the “Company”) was incorporated in the Cayman Islands on October 16, 2007 as a “blank check” company formed for the purpose of acquiring, through a merger, stock exchange, asset acquisition or other similar business combination, or control through contractual arrangements, one or more operating business located in the Greater China region, which includes Hong Kong, Macau and Taiwan (“Greater China”).

At December 31, 2008, the Company had not yet commenced any business operations and is therefore considered a “corporation in the development stage.” All activity through December 31, 2008 has been related to the Company’s formation, capital raising efforts (as described below), and efforts to acquire a business. The Company is subject to the risks associated with development stage companies. The Company has selected December 31 as its fiscal year-end.

The Company’s ability to acquire an operating business was contingent upon obtaining adequate financial resources through a private placement in accordance with Regulation D under the Securities Act of 1933, as amended (the “Private Placement”), and an initial public offering (the “Public Offering”, and together with the Private Placement, the “Offerings”), which are discussed in Note 3. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offerings, although substantially all of the net proceeds of the Offerings are intended to be generally applied toward consummating a business combination with an operating company located in the Greater China region. As used herein, a “target business” shall include one or more operating business located in the Greater China region, and a “business combination” shall mean the acquisition by the Company of such a target business.

If the Company had been unable to complete a business combination by August 27, 2009, the Company's Amended and Restated Memorandum and Articles of Association provided for mandatory liquidation of the Company, without stockholder approval, unless the Company's existence was extended or made permanent by an amendment to the Articles of Association authorized by the vote of holders of a majority of all outstanding shares entitled to vote.

On February 4, 2009, the Company entered into a share exchange agreement with AutoChina Group Inc. (“AutoChina”) and the selling shareholders party thereto (“Sellers”), which owned 100% of the issued and outstanding equity securities of AutoChina. On April 9, 2009, the Company completed its definitive share exchange agreement. The acquisition was completed after the Company’s shareholders voted to approve the acquisition at its special meeting of stockholders on April 8, 2009. In conjunction with the acquisition, the Company subsequently changed its name to AutoChina International Limited. Additional information with regard to this transaction is provided at Note 10.

2. Summary of Significant Accounting Policies

Income Taxes

The Company accounts for income taxes pursuant to Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”), which establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes.

F-42

Effective October 16, 2007 (inception), the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN 48”). FIN 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The adoption of the provisions of FIN 48 did not have a material effect on the Company’s financial statements. As of December 31, 2008, no liability for unrecognized tax benefits was required to be recorded. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2008, the Company has no accrued interest or penalties related to uncertain tax positions.

Under current Cayman Island laws, the Company is not subject to income taxes in the Cayman Islands. In addition, the Company is not currently subject to income taxes in any other jurisdiction. Accordingly, no income tax expense (benefit) has been recognized with respect to the Company’s net income (loss) incurred from October 16, 2007 (Inception) through December 31, 2008.

Earnings Per Share

The Company computes earnings (loss) per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS No. 128”) and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income available to ordinary shareholders divided by the weighted average ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Loss per common share is computed by dividing net loss available to ordinary stockholders by the weighted average number of ordinary shares outstanding during the respective periods. Basic and diluted loss per common share are the same for all periods presented because all potentially dilutive securities are anti-dilutive.

At December 31, 2008, potentially dilutive securities consisted of outstanding warrants and options to acquire an aggregate of 7,505,000 ordinary shares, as follows:

Insider warrants			1,430,000
Public warrants			5,175,000
Underwriters’ unit purchase option			900,000
Total			7,505,000

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times exceed the Federal depository insurance coverage of $250,000 through December 31, 2008. The Company has not experienced losses on these accounts to date and management believes the Company is not exposed to significant risks on such accounts.

F-43

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of all of the Company’s financial instruments, including cash, prepaid expenses, accounts payable and accrued expenses, deferred underwriting fees payable, and deferred interest on funds held in trust approximate their respective fair values, due to the short-term nature of these items.

Share-Based Payments

The Company accounts for share-based payments pursuant to Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (“SFAS No. 123R”). SFAS No. 123R requires all share-based payments, including grants of employee stock options to employees, to be recognized in the financial statements based on their fair values. The Company adopted SFAS No. 123R on October 16, 2007 (inception). The Company expects that SFAS No. 123R could have a material impact on the Company’s financial statements to the extent that the Company grants stock-based compensation in future periods. As of December 31, 2008, the Company had not granted any stock options.

Acquisition Costs

Acquisition costs of $492,355 consist principally of legal fees, accounting fees, consulting and advisory fees, and other outside costs that were incurred by the Company during 2008 and are related to the business combination (see Note 10). As a result of the adoption of SFAS No. 141(R) effective January 1, 2009, as well as the completion of the reverse acquisition transaction completed on April 9, 2009, such costs were charged to operations as incurred during the year ended December 31, 2008.

Ordinary Shares Subject to Possible Redemption

Ordinary shares subject to possible redemption of $16,270,192 is presented outside of stockholders’ equity on the Company’s balance sheet at December 31, 2008, and represents 40% less one share sold in the Company’s initial public offering in February and March 2008 (equivalent to 2,069,999 shares) at $7.86 per share, which is the per share net offering proceeds received by the Company. This represents the maximum amount of shares that the company would have been required to redeem upon consummation of a business combination. The amount not so redeemed will be reclassified to equity.

Deferred Interest on Funds Held in Trust

Deferred interest on funds held in trust consists of the 40% less one share portion of the interest earned on the funds held in trust, reduced by certain permitted withdrawals, including income taxes and up to $1,050,000 of interest earned on the trust account that can be released to the Company to fund the working capital needs of the Company. This is the maximum amount that the Company would be obligated to pay to stockholders who elect to have their stock redeemed by the Company without resulting in a rejection of a business combination.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”), which establishes a framework for measuring fair value in accordance with generally accepted accounting principles, clarifies the definition of fair value within that framework and expands disclosures about fair value measurements. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, except for the measurement of share-based payments. The Company adopted SFAS No. 157 on January 1, 2008. Additional disclosure required as a result of the Company’s implementation of SFAS No. 157 in 2008 is presented at Note 4. However, since the issuance of SFAS No. 157, the FASB has issued several FASB Staff Positions (FSPs) to clarify the application of SFAS No. 157. FSPs apply to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with SFAS No. 157. In February 2008, the FASB released FSP No. 157-2, “Effective Date of FASB Statement No. 157”, which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”, which clarifies the application of SFAS No. 157 in a market that is not active and provides guidance in key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP No. 157-3 became effective immediately, and includes prior period financial statements that have not yet been issued. In April 2009, the FASB issued FSP No. 157-4, “Determining the Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, which provides additional guidance for estimating fair value in accordance with SFAS No. 157, when the volume and level of activity for the asset or liability have significantly decreased. FSP No. 157-4 also provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 is effective for interim and periods ending after June 15, 2009, and shall be applied prospectively. The adoption of SFAS No. 157 and the related FSP’s did not have any impact on the Company’s consolidated financial statements, except for additional disclosures as described at Note 4.

F-44

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”), which provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. Generally accepted accounting principles have required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings. SFAS No. 159 helps to mitigate this type of accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the Company’s choice to use fair value on its earnings. SFAS No. 159 also requires companies to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS No. 159 does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS No. 157 and SFAS No. 107. The Company adopted SFAS No. 159 on January 1, 2008, but did not elect the fair value option for any financial assets or liabilities. Accordingly, the adoption of SFAS No. 159 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“SFAS No. 141(R)”), which requires an acquirer to recognize in its financial statements as of the acquisition date (i) the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, measured at their fair values on the acquisition date, and (ii) goodwill as the excess of the consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. Acquisition-related costs, which are the costs an acquirer incurs to effect a business combination, will be accounted for as expenses in the periods in which the costs are incurred and the services are received, except that costs to issue debt or equity securities will be recognized in accordance with other applicable GAAP. SFAS No. 141(R) makes significant amendments to other Statement of Financial Accounting Standards and other authoritative guidance to provide additional guidance or to conform the guidance in that literature to that provided in SFAS No. 141(R). SFAS No. 141(R) also provides guidance as to what information is to be disclosed to enable users of financial statements to evaluate the nature and financial effects of a business combination. SFAS No. 141(R) is effective for financial statements issued for fiscal years beginning on or after December 15, 2008. The Company adopted SFAS No. 141(R) on January 1, 2009. The adoption of SFAS No. 141(R) affected how the Company accounted for the acquisition of AutoChina Group Inc., as described at Note 10. In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS No. 160”), which requires that ownership interests in subsidiaries held by parties other than the parent, and the amount of consolidated net income, be clearly identified, labeled and presented in the consolidated financial statements. SFAS No. 160 also requires that once a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. Sufficient disclosures are required to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 amends FASB No. 128 to provide that the calculation of earnings per share amounts in the consolidated financial statements will continue to be based on the amounts attributable to the parent. SFAS No. 160 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, and requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements are applied prospectively. The Company adopted SFAS No. 160 on January 1, 2009. The adoption of SFAS No. 160 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

F-45

Cayman Islands	5500	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Title of Each Class of Security Being Registered	Amount Being Registered (1)			Proposed Maximum Offering Price Per Security(2)			Proposed Maximum Aggregate Offering Price(2)		Amount of Registration Fee
Ordinary Shares, par value $0.001 (3)		8,606,250	Shares	$	7.39	(4)	$	63,600,187.50	$	3,548.89
Ordinary Shares, par value $0.001 (5)		1,030,314	Shares	$	7.39	(4)	$	7,614,020.46	$	424.86
Ordinary Shares underlying warrants, par value $0.001 (6)		1,430,000	Shares	$	7.39	(7)	$	10,567,700.00	$	589.68


Total							$	81,781,907.96	$	4,563.43

	Ordinary shares				Warrants				Units
	High		Low		High		Low		High		Low
Annual Highs and Lows
2008	$	7.30	$	6.50	$	0.75	$	0.13	$	8.15	$	6.75
2009		14.00		6.50		1.48		0.10		12.00		6.85

Quarterly Highs and Lows
2008
First Quarter	$	7.30	$	7.20	$	0.75	$	0.75	$	8.15	$	7.92
Second Quarter		7.30		7.15		0.75		0.60		7.99		7.76
Third Quarter		7.18		7.00		0.73		0.40		7.90		7.50
Fourth Quarter		7.15		6.50		0.40		0.13		7.35		6.75
2009
First Quarter	$	8.00	$	6.60	$	0.42	$	0.10	$	12.00	$	6.85
Second Quarter (through May 26)		14.00		6.50		1.48		0.35		7.95		7.95

Monthly Highs and Lows
November 2008	$	6.87	$	6.55	$	0.40	$	0.13	$	7.25	$	6.90
December 2008		6.60		6.50		0.14		0.13		7.00		6.75
January 2009		8.00		6.60		0.16		0.14		6.95		6.85
February 2009		7.80		7.00		0.15		0.10		12.00		6.95
March 2009		7.87		7.00		0.42		0.16		7.95		7.50
April 2009		14.00		6.50		1.01		0.35		7.95		7.95
May 2009 (through May 26)		7.39		7.00		1.48		0.70		7.95		7.95

SEC registration fee	$	4,563.43
Legal fees and expenses	$	35,000
Accounting fees and expenses	$	15,000
Miscellaneous	$	2,000
Total	$	56,563.43


Purchase of shares	$	24,217,506
Payment of deferred underwriting and advisory fees -
Cash		1,200,000
Short-term note payable		429,000
Short-term put and call agreements -
Fully funded		4,986,696
Partially funded		1,114,629
Unfunded		2,541,500
Redemption of shares		8,181,741
Repurchase of warrants		1,026,425
Legal fees and other		410,124
Total	$	44,107,621

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS	SUBJECT TO COMPLETION, DATED MAY 29, 2009

ENFORCEABILITY OF CIVIL LIABILITIES	1
PROSPECTUS SUMMARY	2
RISK FACTORS	4
THE OFFERING	26
PER SHARE MARKET INFORMATION	27
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	28
USE OF PROCEEDS	29
EXPENSES RELATED TO THIS OFFERING	29
CAPITALIZATION	30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS	44
BUSINESS	50
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	67
PRINCIPAL SHAREHOLDERS	79
SHARES ELIGIBLE FOR FUTURE SALE	81
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	83
DESCRIPTION OF SECURITIES	88
SELLING SHAREHOLDERS	93
PLAN OF DISTRIBUTION	95
TAXATION	96
LEGAL MATTERS	102
EXPERTS	103
WHERE YOU CAN FIND ADDITIONAL INFORMATION	103

	As of December 31, 2008 (in thousands)
	Actual			As Adjusted

Debt	$	–		$	–

Ordinary shares subject to possible redemption		16,270			–

Minority interests		–			6,950

Stockholders' equity:
Preferred shares, $0.001 par value; 1,000,000 shares authorized, none issued		–			–
Ordinary shares, $0.001 par value, authorized - 50,000,000 shares; issued and outstanding - 6,468,750 shares, inclusive of shares subject to possible redemption actual, and 10,716,720 shares, inclusive of shares subject to repurchase agreements, as adjusted		7			11
Additional paid-in capital		23,040			33,274
Statutory reserves		–			741
Retained earnings (deficit accumulated during the development stage)		(169	)		17,850
Accumulated other comprehensive income		–			6,185
Total stockholders' equity		22,878			58,061

Total capitalization	$	39,148		$	65,011

	Payments due by period
	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Trade notes payable	$	60,134	$	60,134	$	–	$	–	$	–
Operating leases		25,106		1,748		3,132		2,627		17,599
Floor plan notes payable manufacturer affiliated		12,379		12,379		–		–		–
Notes payable		3,921		3,921		–		–		–
Capital commitment		45		45		–		–		–
Total	$	101,585	$	78,227	$	3,132	$	2,627	$	17,599

													Pro Forma
													Combined
													Companies
	AutoChina			AutoChina			Pro Forma						(With Actual
	International			Group			Adjustments and Eliminations						Stock
	Limited			Inc.			Debit			Credit			Redemption)

Net sales	$	-		$	440,585								$	440,585

Cost of sales		-			414,672									414,672

Gross profit		-			25,913									25,913

Operating expenses
Selling and marketing		-			6,692									6,692
General and administrative		328			7,506			1,452	(2)		328	(1)		9,168
								210	(3)
Other income, net		-			(836	)								(836	)
Total operating expenses		328			13,362									15,024

Income (loss) from operations		(328	)		12,551									10,889

Other income (expense)
Interest income		734			2,799			734	(1)					2,799
Interest expense		-			(2,805	)								(2,805	)
Accretion of share repurchase obligations								664	(5)					(664	)
Equity in loss of unconsolidated subsidiaries		-			(40	)								(40	)
Acquisition-related costs		(492	)		-			898	(6)		1,390	(1)		-
Minority interests		-			(1,309	)								(1,309	)

Income (loss) before income taxes		(86	)		11,196									8,870

Income tax provision		-			3,009						447	(4)		2,562

Income (loss) from continuing operations		(86	)		8,187									6,308

Loss from discontinued operations, net of taxes		-			(144	)								(144	)

Income (loss) before allocation of trust account interest		(86	)		8,043									6,164

Allocation of trust account interest relating to ordinary shares subject to possible redemption		(59	)		-						59	(1)		-

Net income (loss) available to ordinary stockholders	$	(145	)	$	8,043								$	6,164

Net income per common share -
Basic													$	0.63
Diluted													$	0.53

Weighted average number of common shares outstanding (Note B) -
Basic														9,711,930
Diluted														11,565,253

Public company legal fees	$	250
Sarbanes-Oxley implementation, documentation and testing		200
Financial audit /review fees		220
Directors fees and expenses		250
Directors and officers liability insurance		100
Listing fees		27
Printing		30
Public and investor relations		150
Transfer agent fees		120
Travel		100
Other		5
Total estimated annual incremental public company expenses	$	1,452

	Pro Forma		Share
	Balance		with Actual
	Sheet		Stock
	Entry No.		Redemption
Actual number of common shares outstanding				6,468,750
Pro forma share adjustments
Shares issued to selling shareholders in share exchange transaction		(5)		8,606,250
Surrender and cancellation of founders shares		(12)		(263,436	)
Shares repurchased by AutoChina		(10)		(3,053,910	)
Shares subject to repurchase obligations		(14)		(1,004,790	)
Shares redeemed by public shareholders		(9)		(1,040,934	)
Pro forma weighted average number of common shares outstanding – Basic				9,711,930
Common stock equivalents:
Shares issuable from actual "in the money" warrants outstanding:
From Public Offering warrants, net of 1,522,892 warrants repurchased by AutoChina prior to the closing				3,652,108
From Private Placement warrants				1,430,000
Less number of shares available "on the market" pursuant to the treasury stock method				(3,228,785	)
Number of "new" shares to be issued pursuant to the treasury stock method				1,853,323
Pro forma weighted average number of common shares outstanding – Diluted				11,565,253

Purchase Price	$	68,850
Divided by Net Upfront Consideration Average Price	$	8.00
Total Net Upfront Consideration Shares and Holdback Consideration Shares (see notes (B) and (C))		8,606,250

Investment banking fees	$	180
Financial advisor fees		76
Legal fees		688
Fairness opinion fees		20
Accounting fees		165
Registration and listing costs		75
Printing costs		45
Roadshow, travel and other		84
Total estimated costs		1,333
Less costs incurred to-date		(492	)
Balance to accrue	$	841

Automotive Dealership		Franchise
Baoding Tianhua Auto Trading Co., Ltd.		Hyundai
Cangzhou Deyuan Auto Trading Co., Ltd.		Ford
Cangzhou Hengyuan Auto Sales & Service Co., Ltd.		Hyundai
Cangzhou Yichang Auto Sales & Service Co., Ltd.		Buick
Handan Aohua Auto Sales & Service Co., Ltd.		Audi
Handan Baohe Auto Sales & Service Co., Ltd.		BMW
Handan Defeng Auto Sales & Service Co., Ltd.		Peugeot
Handan Yacheng Auto Sales & Service Co., Ltd.		Ruida Kia
Hebei Anchang Auto Sales & Service Co., Ltd.		ROEWE
Hebei Liantuo Auto Trading Co., Ltd.		Audi

Automotive Dealership		Franchise
Hebei Meifeng Auto Sales & Service Co., Ltd.		Qingling
Hebei Shengda Auto Trading Co., Ltd.		Ford
Hebei Shengkang Auto Trading Co., Ltd.		Chevrolet
Hebei Shengmei Auto Trading Co., Ltd.		FAW
Hebei Shengwen Auto Trading Co., Ltd.		Hyundai
Hebei Yitong Auto Sales & Service Co., Ltd.		Buick
Hebei Yuanxinghang Auto Sales & Service Co., Ltd.		Cadillac
Hengshui Dechang Auto Trading Co., Ltd.		Hyundai
Hengshui Yuhua Toyota Auto Sales & Service Co., Ltd.		FAW Toyota
Qinhuangdao Jianda Auto Sales & Service Co., Ltd.		Ford
Shijiazhuang Baohe Auto Sales & Service Co., Ltd.		BMW
Shijiazhuang Xinhua Toyota Auto Sales & Service Co., Ltd.		FAW Toyota
Shijiazhuang Yuhua Toyota Auto Sales & Service Co., Ltd.		FAW Toyota
Tangshan Yachang Auto Sales & Service Co., Ltd.		Ruida Kia
Zhangjiakou Meihua Auto Trading Co., Ltd.		Hyundai
Hebei Tianmei Insurance Agents Co., Ltd.		Insurance Services

Chinese Province / Region		Number of Commercial Vehicle Financing Centers
Hebei:		12
Shanxi:		29
Tianjin:		1
Beijing:		1
Shandong:		24
Henan:		21
Inner Mongolia Autonomous Region:		17
Total:		105

	New Vehicle Revenues FY2008		New Vehicle Unit Sales FY 2008		Franchises Owned as of December 31, 2008
	(In thousands)
Audi	$	106,365		1,626		2
BMW		28,552		401		2
Buick		34,813		2,266		2
Cadillac		3,678		63		1
Chevrolet		13,234		1,120		1
FAW/Toyota (1)		61,716		3,380		4
Ford		32,682		1,882		3
Hyundai		69,593		5,729		5
Peugeot		1,792		148		1
Qingling		6,285		378		1
Ruida Kia(2)		-		-		2
ROEWE		7,206		320		1
	$	365,916		17,313		25

	New Vehicle Revenues		New Vehicle Unit Sales		Percentage of Total Units Sold
	(In thousands)
Import	$	29,129		345		2.1	%
Domestic		336,787		16,968		97.9	%
	$	365,916		17,313		100	%

Name	Age	Position
Yong Hui Li	47	Chairman, Chief Executive Officer and Director
Chen Lei	43	Senior Vice President
Johnson Lau	35	Chief Financial Officer
Wei Xing	48	Chief Operating Officer
Hui Kai Yan	44	Director and Secretary
James Cheng-Jee Sha	57	Director
Diana Chia-Huei Liu	43	Director
Thomas Luen-Hung Lau	55	Director

Name and Principal Position	Year	Salary ($)		Bonus ($)		All other Compensation ($)		Total Compensation ($)
Yong Hui Li, Chief Executive Officer	2008		1		0		0		1
	2007		1		0		0		1
	2006		1		0		0		1
Johnson Lau, Chief Financial Officer (1)	2008		15,250		0		0		15,250

Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership			Approximate Percentage of Outstanding Ordinary Shares (2)

Honest Best Int'l Ltd.		8,606,250			80.31	%

Yong Hui Li (3)		8,606,250	(3)		80.31	%

James Cheng-Jee Sha		1,295,157	(4)		11.27	%

Diana Chia-Huei Liu		918,126	(5)		8.19	%

Chen Lei		-			-

Johnson Lau		-			-

Wei Xing		-			-

Hui Kai Yan		-			-

Thomas Luen-Hung Lau		-			-

Victory Park Capital Advisors, LLC (6)		548,800			5.12	%

All directors and executive officers as a group (eight individuals)		10,819,533			90.19	%

Shareholder	Number of Shares
James Cheng-Jee Sha		646,875
Diana Chia-Huei Liu		258,750
William Tsu-Cheng Yu		258,750
Jimmy (Jim) Yee-Ming Wu		90,563
Gary Han Ming Chang		38,812

	Notes		December 31,
$ in thousands			2008		2007		2006

Due to affiliates:
Mr. Yong Hui Li		(3)	$	5,125		-	$	-
Hebei Shengrong Auto parts Co., Ltd.		(2)		-	$	1,895		919
Hebei Kaiyuan Real Estate Co., Ltd.		(1)		769		136		127
Shijiazhuang Yiyuan Auto Trading Co., Ltd.		(2)		-		41		-
Baoding Tianfu Auto Trading Co., Ltd.		(2)		-		3		-
Beijing Tonghe Shengyuan Trade Co., Ltd.		(1)		-		-		628
Total			$	5,894	$	2,075	$	1,674

	Ordinary Shares Beneficially Owned Before the Offering						Number of Shares to Be Sold			Ordinary Shares Beneficially Owned After the Offering

Name of Selling Shareholder (1)	Number			Percent (2)						Number		Percent (2)
Honest Best Int’l Ltd. (3)		8,606,250			80.31	%		8,606,250			0		0
James Cheng-Jee Sha (4)		1,295,157	(5)		11.27	%		1,295,157	(5)		0		0
Diana Chia-Huei Liu (6)		918,126	(7)		8.19	%		459,063	(8)		0		0
William Tsu-Cheng Yu (9)		918,126	(7)		8.19	%		459,063	(10)		0		0
Jimmy (Jim) Yee-Ming Wu (11)		167,922	(12)		1.55	%		167,922	(12)		0		0
Gary Han Ming Chang (13)		79,109	(14)		0.73	%		79,109	(14)		0		0

	Total		Level 1		Level 2		Level 3

Money Market Funds – Held In Trust	$	40,855,363	$	40,855,363	$	—	$	—
Total	$	40,855,363	$	40,855,363	$	—	$	—

Assets
Cash and cash equivalents	$	18,188,000
Restricted cash		40,824,000
Restricted cash held in escrow		4,987,000
Accounts receivable		4,272,000
Inventories and deposits for inventories		59,084,000
Other current assets		21,900,000
Investment in unconsolidated subsidiaries		229,000
Property, equipment and leasehold improvements, net		26,907,000
Net investment in sales-type leases, net of current maturities		8,492,000
Goodwill		941,000
Total Assets	$	185,824,000

Liabilities and Stockholders’ Equity
Liabilities
Floor plan notes payable - manufacturer affiliated	$	12,379,000
Trade notes payable		60,134,000
Other notes payable		4,350,000
Accounts payable and accrued liabilities		24,845,000
Share repurchase obligations		7,908,000
Due to affiliates		5,894,000
Other current liabilities		4,898,000
Net deferred income tax liabilities - non-current		405,000
Minority interests		6,950,000
Total Liabilities		127,763,000

Stockholders’ Equity
Ordinary shares		11,000
Additional paid-in capital		33,274,000
Statutory reserves		741,000
Retained earnings		17,850,000
Accumulated other comprehensive income		6,185,000
Total Stockholders’ Equity		58,061,000

Total Liabilities and Stockholders’ Equity	$	185,824,000

Net sales	$	440,585,000
Cost of sales		414,672,000
Gross profit		25,913,000
Selling and marketing		6,692,000
General and administrative		9,168,000
Other income, net		(836,000	)
Income from operations		10,889,000
Other expense, net		(2,019,000	)
Income before income taxes		8,870,000
Income tax provision		2,562,000
Income from continuing operations		6,308,000
Loss from discontinued operations, net of taxes		(144,000	)
Net Income	$	6,164,000

Net income per common share -
Basic	$	0.63
Diluted	$	0.53

Weighted average common shares outstanding -
Basic		9,711,930
Diluted		11,565,253

Exhibit No.		Description

3.1		Certificate of Incorporation*

3.2		Second Amended and Restated Memorandum and Articles of Association

4.1		Specimen Ordinary Share Certificate*

4.2		Specimen Unit Certificate*

4.3		Specimen Warrant Certificate*

5.1		Opinion of Harney Westwood & Riegels †

Exhibit No.		Description

10.1		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and James Cheng-Jee Sha*

10.2		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and William Tsu-Cheng Yu*

10.3		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Diana Chia-Huei Liu*

10.4		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Jimmy (Jim) Yee-Ming Wu*

10.5		Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Gary Han Ming Chang*

10.6		Form of Investment Management Trust Agreement between American Stock Transfer & Trust Company and the Registrant*

10.7		Form of Share Escrow Agreement between the Registrant, American Stock Transfer & Trust Company and the Founding Shareholders*

10.8		Form of Letter Agreement between Live ABC Interactive Co., Ltd. Beijing and Registrant regarding administrative support*

10.9		Form of Promissory Note, dated as of October 24, 2007, issued to James Sha*

10.10		Form of Promissory Note, dated as of October 24, 2007, issued to Diana Liu*

10.11		Form of Promissory Note, dated as of October 24, 2007, issued to William Yu*

10.12		Share Exchange Agreement**

10.13		Form of Indemnification Agreement**

10.14		Form of Registration Rights Agreement among the Registrant and the Founding Shareholders**

10.15		Guarantee Agreements**

10.16		Form of AutoChina International Limited 2009 Equity Incentive Plan***

10.17		Executive Employment Agreement between the Registrant and Yong Hui Li, dated April 9, 2009

10.18		Executive Employment Agreement between the Registrant and Johnson Lau, dated April 9, 2009

10.19		Executive Employment Agreement between the Registrant and Wei Xing, dated April 9, 2009

10.20		Executive Employment Agreement between the Registrant and Chen Lei, dated April 9, 2009

21.1		Subsidiaries of the Registrant**

Exhibit No.		Description

23.1		Consent of Harney Westwood & Riegels (included in Exhibit 5.1)

23.2		Consent of UHY LLP, independent registered public accounting firm

23.3		Consent of Grobstein, Horwath & Company LLP, independent registered public accounting firm

23.4		Consent of Crowe Horwath LLP, independent registered public accounting firm

23.5		Consent of Crowe Horwath LLP, independent registered public accounting firm for AutoChina Group Inc.

24.1		Power of Attorney (included on signature page)

AUTOCHINA INTERNATIONAL LIMITED

By:	/s/ Yong Hui Li
	Yong Hui Li
	Chief Executive Officer

Signature	Title	Date

/s/ Yong Hui Li	Chief Executive Officer, Chairman and Director (principal executive officer)	May 29, 2009
Yong Hui Li		May 29, 2009

/s/ Johnson Lau	Chief Financial Officer (principal accounting and financial officer)	May 29, 2009
Johnson Lau		May 29, 2009

/s/ Hui Kai Yan	Secretary and Director	May 29, 2009
Hui Kai Yan	Secretary and Director	May 29, 2009

/s/ James Cheng-Jee Sha	Director	May 29, 2009
James Cheng -Jee Sha	Director	May 29, 2009

/s/ Diana Chia-Huei Liu	Director	May 29, 2009
	Director	May 29, 2009
/s/ Thomas Luen-Hung Lau	Director	May 29, 2009
Thomas Luen-Hung Lau	Director	May 29, 2009

Authorized U.S. Representative

By:	/s/ Diana Chia-Huei Liu
Name: Diana Chia-Huei Liu

SUBJECT		Article No.

Table A		1
Interpretation		2
Share Capital		3
Alteration Of Capital		4-7
Share Rights		8-9
Variation Of Rights		10-11
Shares		12-15
Share Certificates		16-21
[Intentionally Omitted]		22-42
Register Of Members		43-44
Record Dates		45
[Intentionally Omitted]		46-51
Transmission Of Shares		52
[Intentionally Omitted]		53-54
Untraceable Members		55
General Meetings		56-58
Notice Of General Meetings		59-60
Proceedings At General Meetings		61-65
Voting		66, 68-69, 71-77
[Intentionally Omitted]		67-70
Proxies		78-83
Corporations Acting By Representatives		84
No Action By Written Resolutions Of Members		85
Board Of Directors		86
[Intentionally Omitted]		87-88
Disqualification Of Directors		89
Executive Directors		90-91
[Intentionally Omitted]		92-95
Directors Fees and Expenses		96-99
Directors Interests		100
[Intentionally Omitted]		101-103
General Powers Of The Directors		104-109
Borrowing Powers		110-113
Proceedings Of The Directors		114-125
[Intentionally Omitted]		126
Officers		127-130
Register of Directors and Officers		131
Minutes		132
Seal		133
Authentication Of Documents		134-135
Dividends and Other Payments		136-145
Reserves		146
Capitalization		147-148
Subscription Rights Reserve		149
Accounting Records		150-154
Audit		155-157, 159-160