SB-2/A

Commission File No. 333-122092

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 1 TO

REGISTRATION STATEMENT

ON

FORM SB-2/A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

CHINA WORLD TRADE CORPORATION

(Name of small business issuer in our charter)

Nevada (State or other jurisdiction of incorporation or organization)
3751 (Primary standard industrial    classification code number)	87-0629754 (I.R.S. Employer     Identification No.)
3rd Floor, Goldlion Digital Network Center 138 Tiyu Road East, Tianhe Guangzhou, The PRC 011-8620-3878-0286 (Address and telephone number of principal executive offices)
Chi Hung Tsang Chairman and President China World Trade Corporation 138 Tiyu Road East, Tianhe Guangzhou, The PRC 011-8620-3878-0286 (Name, address and telephone of agent for service) Copies to:

Bernard Chan, CFO	Harold H. Martin, Esq.
China World Trade Corporation	17111 Kenton Drive
Room 1217, 12th Floor	Suite 100B
10 Metropolis Drive	Cornelius, North Carolina 28031
Hunghom, Hong Kong	(704) 894-9760 Office
(852) 2330-6622 Office	(704) 894-9759 Fax
(852) 2333-8844 Fax

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

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If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box: [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

Title of each class of securities to be registered	Amount to be Registered	Proposed maximum Offering price per Share (1)	Proposed maximum Aggregate offering Price(1)	Amount of Registration Fee (1)
Common Stock ($.001 par value)	16,981,717 (2)	$2.10	$35,661,605	$4,518.33
Totals			$35,661,605	$4,518.33

(1)   Estimated solely for purposes of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended (the “Securities Act”), based upon the average of the bid and asked price for the common stock of $2.10 as reported on the OTC Bulletin Board on January 12, 2005.

(2)   Pursuant to Rule 416(a) of the Securities Act this registration statement shall be deemed to cover additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

The information in this prospectus is not complete and may be changed. Our company and the selling stockholders 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 it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

We hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until we shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

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16,981,717

CHINA WORLD TRADE CORPORATION

COMMON STOCK

This prospectus relates to the offering for sale of up to 16,981,717 our common stock, par value $.001, by the selling stockholders identified in this prospectus. The common stock covered by this prospectus includes up to 14,285,714 shares of common stock issuable from time to time to Cornell Capital Partners, LP, which will become a shareholder pursuant to a Standby Equity Distribution Agreement, dated November 15, 2004 (hereinafter the “Standby Equity Distribution Agreement”). We are not selling any securities in this offering and therefore will not receive any of the proceeds from the sale of the shares. We will, however, receive proceeds from the sale of securities under the Standby Equity Distribution Agreement that we have entered into with Cornell Capital. In the aggregate, Cornell Capital has committed to provide us with up to $30.0 million in order to purchase our common stock, subject to the terms and conditions of the Standby Equity Distribution Agreement. All costs associated with the registration of all securities offered hereby will be borne by us.

The selling stockholders consist of (i) Bridges & PIPES, (ii) Cornell Capital, (iii) Duncan Capital, (iv) Stealth Capital, LLC, and (v) TCMP3 Partners. The selling stockholders will receive all of the amounts received upon any sale by them of the common stock, less any brokerage commissions or other expenses incurred by them.

Our common stock is quoted on the Over-The-Counter Bulletin Board under the symbol CWTD.OB. On December 30, 2004, the reported closing price of our stock on the OTC Bulletin Board was $2.10 per share.

Cornell Capital is an “underwriter” within the meaning of the Securities Act of 1933, as amended, in connection with the resale of common stock under the Standby Equity Distribution Agreement. We have engaged Duncan Capital, an unaffiliated registered broker-dealer, to advise us in connection with the Standby Equity Distribution Agreement.

Brokers or dealers effecting transactions in these shares should confirm that the shares are registered under the applicable state law or that an exemption from registration is available.

These securities are speculative and involve a high degree of risk. Please refer to “Risk Factors” beginning on page 16.

Our common stock is a “penny stock”, and compliance with requirements for dealing in penny stocks may make it difficult for holders of our common stock to resell their shares.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is May 16, 2005, subject to completion.

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TABLE OF CONTENTS

Part I

PROSPECTUS SUMMARY	5
THE OFFERING	7
RISK FACTORS	17
FORWARD LOOKING STATEMENTS	31
USE OF PROCEEDS	31
DILUTION	33
STANDBY EQUITY DISTRIBUTION AGREEMENT	34
PLAN OF DISTRIBUTION	37
LEGAL PROCEEDINGS	39
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS	39
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	43
DESCRIPTION OF SECURITIES	44
INTEREST OF EXPERTS AND COUNSEL	45
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.	45
DESCRIPTION OF BUSINESS	46
MANAGEMENT'S DISCUSSION AND ANALYSIS	81
DESCRIPTION OF PROPERTY	93
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	94
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	95
EXECUTIVE COMPENSATION	102
FINANCIAL STATEMENTS	103
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	187
HOW TO GET MORE INFORMATION	187
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION	189
RECENT SALES OF UNREGISTERED SECURITIES	189
INDEMNIFICATION OF DIRECTORS AND OFFICERS	194
EXHIBITS	195
UNDERTAKINGS	196
SIGNATURES	197

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PROSPECTUS SUMMARY

The following is a summary of the pertinent information regarding this offering. This summary is qualified in its entirety by the more detailed information and financial statements and related notes included in this Prospectus. The Prospectus should be read in its entirety, as this summary does not contain all facts necessary to make an investment decision.

CERTAIN DEFINITIONS AND SUPPLEMENTAL INFORMATION

All references to "China" or "PRC" in this prospectus are references to The Peoples’ Republic of China. Unless otherwise specified, all references in this prospectus to "U.S. dollars," "dollars," or "$" are to United States Dollars; all references to "Renminbi" or "RMB" are to Renminbi, which is the official currency of China. Unless otherwise specified, for the convenience of the reader, translation of amounts from Renminbi to U.S. dollars has been made.

CHINA WORLD TRADE CORPORATION

We were incorporated in the State of Nevada in 1998 under the name Weston International Development Corporation. On July 28, 1998, China World Trade changed its name to Txon International Development Corporation. On September 25, 2000 we changed our name from Txon International Development Corporation to China World Trade Corporation. We will refer to our company as “China World Trade” herein. Our executive office is located at 3rd Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC 510620.

OUR BUSINESS

Our business plan involves the pursuit of three distinct lines of business. These include (i) the business clubs located in major cities of China, including Guangzhou, the PRC and Beijing, the PRC, with plans to open clubs in Shanghai and Shenzhen, the PRC, each club in association with the World Trade Center Association, by which we have positioned ourselves as a platform to facilitate trade between China and the world market, (ii) the business travel services, in which our latest acquisition, the New Generation Group of companies, an indirect majority owned subsidiary, operates as a consolidator of airline tickets and hotel accommodations in China, and also as an agency for life and accidental insurance in the Guangdong Province, and (iii) the business value-added services, in which we will concentrate on trading operations and providing interactive marketing and incentive programs for merchants, financial institutions, telecom operators, and large corporations with significant client bases, as well as on consultancy services. The business clubs commenced operations in August 2002; the business travel services in August 2004; resulting from the acquisition of New Generation Commercial Management Limited; and a small part of the business value-added services commenced operations in the year 2002. Our growth in the industries of trade, travel and finance, should enable us to provide value added services and target many cross marketing opportunities.

No assurances can be given, however, that we will be successful in our endeavors.

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Our growth and development as a business enterprise has been marked by a number of significant corporate events. Pursuant to a Share Exchange Agreement, dated as of August 10, 2000, between Virtual Edge Limited (“VEL”) and Main Edge International Limited (“Main Edge”), Main Edge transferred all of the issued and outstanding shares of the capital stock of VEL to China World Trade in exchange for 1,961,175 shares of our pre-split common stock, representing approximately 75% of our outstanding shares of the common stock. According, we controlled the operations of VEL, and Main Edge became our majority stockholder. We then undertook an 8-for-1 forward split that was effective on 15^th day of September 2000, which resulted in Main Edge owing 15,689,400 shares of our common stock. Then, three major developments occurred. These were: (i) the consummation of two private placement financings by Powertronic Holdings Limited (“Powertronic”) in September 2002 and December 2002 in which it acquired shares of our common stock, (ii) an acquisition of all the issued and outstanding shares of General Business Network (Holdings) Ltd. in December 2002, and (iii) a 1-for-30 reverse stock split that was effective on September 1, 2002. As a result of these transactions, Mr. Chi Hung Tsang became the new major shareholder owning 4,000,000 shares of our common stock and Powertronic owning 2,000,000 shares. Mr. Chi Hung Tsang is currently Chairman of our Board of Directors. On May 7, 2004, our Company, through one of its wholly-owned subsidiaries, acquired 51% of the capital stock of CEO Clubs China Limited, a Hong Kong corporation (“CEO Clubs China”), for a total consideration of cash and shares of our common stock in the amount of US$480,000. CEO Clubs China is a separate entity with an authorized chapter to operate under the “CEO Clubs” trademarks in the Greater China Region, including the PRC, Hong Kong and Taiwan. Comprised of thirteen chapters in the U.S. and China, the CEO Clubs in the United States comprises a 25-year old not-for-profit association, organized on a by-membership-only basis. Members must be CEO’s of businesses, which have over $2.0 million in annual sales. The annual sales of our corporate club members average $20,000,000. In December of 2002, CEO Clubs China opened its first international chapter in China.

Finally, on August 2, 2004, a wholly-owned subsidiary of ours consummated an acquisition of 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized and existing under the laws of the PRC (“New Generation”), for an aggregate consideration of US$10,232,000, payable approximately US$2,741,000 in cash and approximately US$7,487,000 in market value of common stock of China World Trade. New Generation is in the travel agency business through operations of its ten subsidiaries in Southern China. It has a substantial market share in ticketing sales for international and domestic flights as well as inbound business travel. It aims to become one of the leading consolidators of airline tickets and hotel rooms in China. New Generation has already acquired the necessary licenses to operate as a ticketing and travel agent in the PRC, a highly regulated business. In addition, Guangdong Huahao Insurance Agency Limited, one of the New Generation Group of companies, is also a licensed insurance agent in China and provides, in particular, accidental and life insurances to individual policyholders in the Guangdong Province of China. While there can be no assurances of success, we believe that the New Generation Group of companies will contribute a significant revenue base to our company.

We currently have approximately 400 employees.

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THE OFFERING

This offering relates to the sale of common stock by certain persons who are the selling stockholders consisting of (i) Cornell Capital, who intends to sell up to 15,860,714 shares of common stock, 14,285,714 of which are under the Standby Equity Distribution Agreement (the “Standby Equity Distribution Agreement”), 900,000 of which are shares of our common stock which it owns, 450,000 of which are shares that it may sell underlying Series A Warrants to purchase our common stock, and 225,000 of which Cornell Capital received as compensation under the Standby Equity Distribution Agreement, (ii) Bridges & PIPES, who intends to sell 333,334 shares of our common stock which it owns, and may exercise and sell the shares of our common stock underlying Series A Warrants to purchase 250,001 of our shares, (iii) Duncan Capital, who intends to sell 150,000 shares of our common stock, which it received as compensation for agreeing to serve as Placement Agent under the Standby Equity Distribution Agreement, and may exercise and sell shares of our common stock underlying Placement Agent’s Warrants to purchase 112,667 of our shares, which it received for acting as placement agent under earlier financings with us, (iv) Stealth Capital, LLC, who intends to sell 66,667 shares of our common stock which it owns, and may exercise and sell the shares of our common stock underlying Series A Warrants to purchase 33,334 of our shares, and (v) TCMP3 Partners, who intends to sell 100,000 shares of our common stock which it owns, and may exercise and sell the shares of our common stock underlying Series A Warrants to purchase 75,000 of our shares. The Series A Warrants to purchase shares of our common stock are hereinafter referred to as the “Warrants”.

The commitment amount of the Standby Equity Distribution Agreement is $30.0 million. At an assumed price of $2.10 per share, we would only be able to receive net proceeds of $27.3 million using the 14,285,714 shares being registered in this registration statement under the Standby Equity Distribution Agreement. In the event that the market price of our common stock were to decline significantly as a result of sales of shares by Cornell Capital under the Standby Equity Distribution Agreement, we may need to register additional shares and to obtain shareholder approval to increase the authorized shares of common stock to access additional amounts under the Standby Equity Distribution Agreement.

Pursuant to the Standby Equity Distribution Agreement, we may, at our discretion, periodically issue and sell to Cornell Capital shares of common stock for a total purchase price of $30.0 million. The amount of each advance is subject to a maximum advance amount of $1.5 million, except for the first advance, which may be in the amount of $3.0 million. We may not submit any advance within seven trading days of a prior advance. Cornell Capital will pay us 99% of, or a 1% discount to, the lowest closing bid price of the common stock during the five consecutive trading day period immediately following the notice date (the “Pricing Period”). Of each advance made by us, Cornell Capital shall retain 4% of each advance. Accordingly, Cornell Capital will pay us a total of 95%, or a 5% discount to, the lowest closing bid price of the common stock during the Pricing Period. In addition, Cornell Capital received a one-time commitment fee in the form of 225,000 shares of our common stock on November 30, 2004. Cornell Capital intends to sell any shares purchased under the Standby Equity Distribution Agreement at the then prevailing market price.

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It is important to note that Cornell Capital is entitled to sell our shares during any applicable Pricing Period, which may tend to put downward pressure on the market for our shares. Such downward price pressure may reduce the amount that Cornell Capital would have to pay us for shares of common stock which we have issued for sale to them.

We have engaged Duncan Capital to act as Placement Agent with respect to the Standby Equity Distribution Agreement, pursuant to a Placement Agent Agreement, dated November 15, 2004 (the “Placement Agent Agreement”). Duncan Capital has received 150,000 shares of our common stock, and in addition will retain 4% of the gross proceeds of each advance held in escrow, as compensation for its services. The total amount of the discounts and retainage fees kept by Cornell Capital and Duncan Capital in this offering amount to 9% of the gross proceeds of each advance.

The Placement Agent Agreement provides that the services of the Placement Agent consist of reviewing the terms of the Standby Equity Distribution Agreement and advising us with respect to those terms. Duncan Capital is not participating as an underwriter in this offering.

The 225,000 shares of our common stock paid to Cornell Capital as compensation under the Standby Equity Distribution Agreement, as well as the 150,000 shares of our common stock paid to Duncan Capital under the Placement Agent Agreement, are subject to a lock-up arrangement which assures us that they will not be immediately sold on the market at a low price per share. This arrangement provides that, for a period of ninety days, Cornell Capital and Duncan Capital will not sell their shares of common stock if the volume weighted average price of our common stock, as quoted by Bloomberg, LP (the “VWAP”), is less than $1.50. Thereafter, they are entitled to sell their shares free of any limitation other than as hereinafter set forth. In addition, for a period of twelve months following the declaration of effectiveness of this registration statement, Cornell Capital and Duncan Capital will not sell more than 25% of their shares every thirty calendar days if the VWAP of our common stock is less than $2.50. If the VWAP of our common stock is higher than $2.50, Cornell Capital and Duncan Capital are entitled to sell their shares free of any limitation.

In addition, pursuant to a letter agreement dated November 19, 2004, we agreed with Bridges & PIPES and TCMP3 Partners that we would not submit our initial advance notice to Cornell Capital for the purchase of common stock under the Standby Equity Distribution Agreement for a period of thirty (30) days after the date of effectiveness of the registration statement of which this prospectus is a part. In return, Bridges & PIPES and TCMP3 Partners agreed to waive their demand rights under a Registration Rights Agreement that gave them the option to be the sole registrants, without Cornell Capital, on this registration statement. Bridges & PIPES received 83,334 Series A Warrants and TCMP3 Partners received 25,000 Series A Warrants, among other things, in consideration of their agreement. Finally, Cornell Capital agreed to a lockup and a “no trade” provision with respect to any shares of common stock that it owns until thirty (30) days after effectiveness of the registration statement of which this prospectus forms a part.

Among other things, this prospectus relates to shares of common stock to be issued under the Standby Equity Distribution Agreement. There are substantial risks to investors as a result of the issuance of shares of common stock under the Standby Equity Distribution Agreement. These risks include dilution of shareholders, significant decline in our stock price and our inability to draw sufficient funds when needed.

8

There is an inverse relationship between our stock price and the number of shares to be issued under the Standby Equity Distribution Agreement. That is, as our stock price declines, we would be required to issue a greater number of shares under the Standby Equity Distribution Agreement for a given advance. This inverse relationship is demonstrated by the following table, which shows the number of shares to be issued under the Standby Equity Distribution Agreement at a recent price of $2.10 per share and 25%, 50% and 75% discounts to the recent price.

	Recent	25%	50%	75%
Purchase Price:	$2.10	$1.58	$1.05	$0.53
No. of Shares (1):	14,285,714	18,987,341	28,571,428	56,603,774
Total Outstanding (2):	45,175,711	49,877,338	59,461,425	87,493,771
Percent Outstanding (3):	31.6%	38.1%	48.1%	64.7%

(1)Represents the number of shares of common stock to be issued to Cornell Capital under the Standby Equity Distribution Agreement at the prices set forth in the table, assuming sufficient authorized shares are available.

(2)Represents the total number of shares of common stock outstanding after the issuance of the shares to Cornell Capital under the Standby Equity Distribution Agreement.

(3)Represents the share of common stock to be issued as a percentage of the total number of shares outstanding.

We have incurred losses each year since inception. For the year ended September 30, 2001, our net loss was $1,455,610. For the year ended September 30, 2002, our net loss was $1,633,817. For the year ended September 30, 2003, our net loss was $2,205,536. Finally, for the year ended December 31, 2004, our net loss was $7,594,393. While we anticipate an improvement in the current year, there can be no assurances that we will not continue to have negative earnings results.

We have incurred an accumulated deficit since inception. For the year ended September 30, 2001, our accumulated deficit was $5,557,162. For the year ended September 30, 2002, our accumulated deficit was $7,190,979. For the year ended September 30, 2003, our accumulated deficit was $9,396,515. Finally, for the year ended December 31, 2004, our accumulated deficit was $17,964,755. While we anticipate a reduction in our accumulated deficit for the current year, there can be no assurances that such deficit will not continue to increase.

Our auditors have raised substantial doubt about our ability to continue as a going concern in their opinion, dated April 14, 2005. This is a serious qualification and we commend the opinion and our financial statements to you for review. Our plans with respect to addressing this qualification are described in Note 3(b) to the Financial Statements.

Our stock is considered to be “penny stock” within the meaning of the Securities Exchange Act of 1934, as amended. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on NASDAQ, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. Because our shares are subject to the penny stock rules, you may find it more difficult to sell your shares. These requirements may have the effect of reducing the level of trading activity in the secondary market for our stock.

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TERMS OF THE OFFERING

Common Stock Offered	16,981,717 shares by the Selling Stockholders
Offering Price	Market price
Common Stock Outstanding Before the Offering (1)	30,889,997
Use of Proceeds	We will not receive any proceeds from the sale of the common stock. However, we may receive proceeds upon the exercise of the Warrants owned by certain of the Selling Stockholders. In addition, we may receive proceeds from Cornell Capital under the Standby Equity Distribution Agreement. All proceeds that we receive will be used for general working capital purposes.
Risk Factors	The securities offered hereby are speculative and involve a high degree of risk, including the risk of substantial and immediate dilution. See “Risk Factors” at page 19 and “Dilution at page 36. In addition, there are substantial risks to investors in our common stock as a result of the issuance of shares of common stock under the Standby Equity Distribution Agreement. These risks include dilution of shareholders, significant decline in our stock price and our inability to draw sufficient funds when needed.

---------------------------

(1)   Excludes up to 14,285,714 shares of common stock to be issued under the Standby Equity Distribution Agreement, 4,952,500 options and warrants to purchase our common stock.

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Our Corporate Structure

We do business in China, through twenty-three, direct and indirect, majority and wholly-owned subsidiary companies. Seven of these companies are incorporated under the laws of the British Virgin Islands, five of these companies are incorporated under the laws of Hong Kong, and the remaining five are incorporated in the Peoples’ Republic of China. All of our business operations are located in China. Set forth below is an organizational chart depicting the relationships among our various companies and our percentage of ownership interest in each.

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We offer our customers services in three distinct lines of business. These include: (i) our business club operations; (ii) the business travel services, including insurance services (both a part of the New Generation Group of companies); and (iii) the business value-added services. Set forth below is a table which discloses the percentage of revenues which we receive from each of our lines of business.

China World Trade Corporation Group - Operating Revenue

	Jan to Dec 2004		Jan to Dec 2004			Jan to Dec 2003 (unaudited)		Jan to Dec 2003			Oct to Sep 2002		Oct to Sep 2002			Oct to Sep 2001		Oct to Sep 2001
	USD%					USD%					USD%					USD%
Business Clubs		551,497		17.8			1,485,440		45.5			193,024		100.0			N/A		0.0
Business Travel
Traveling Services		1,571,412		50.8			N/A		0.0			N/A		0.0			N/A		0.0
Insurance		100,193		3.2			N/A		0.0			N/A		0.0			N/A		0.0
Business Value Added		40,695		1.3			212,605		6.5			N/A		0.0			N/A		0.0
Others (1)		828,947		26.8			1,566,566		48.0			N/A		0.0			N/A		0.0
		3,092,744		100.0	%		3,264,611		100.0	%		193,024		100.0	%		N/A		N/A

(1) Other revenues in years 2003 and 2004 were mostly generated from trading business and rental of our properties.

We began our business club operations in August 2002, with the completion of our first business club in Guangzhou, China. Thereafter, we completed our second business club in Beijing, China, which opened for operations in August 2004. We are currently negotiating contracts for the build-out of our clubs in Shanghai and Shenzhen, China.

We began our travel services operations in July of 2004 with the acquisition of 51% of the capital stock of New Generation for an aggregate consideration of US$10,232,000. We believe that New Generation is a formidable competitor in ticketing sales through the operations of its ten subsidiaries in southern China. It is also a consolidator of airline tickets and hotel rooms in China. Finally, Guangdong Huahao Insurance Agency, one of the New Generation Group of companies, is a licensed insurance agent in China and provides accidental and life insurance to individual policy holders in the Guangdong Province.

We began our insurance services in July of 2004 with the acquisition of 51% of the capital stock of New Generation, which is the majority owner of Guangdong Huahao Insurance Agency. We believe that Guangdong Huahao Insurance Agency is a well-positioned competitor in insurance brokerage of personal lines in the Guangdong Province. In particular, it specializes in accidental and life insurance sales to individual policy holders.

We began a relatively small operation in our value added services in October 2002 with the establishment of Virtual Edge Limited. Through our value added services we currently concentrate on providing interactive marketing and incentive programs for a number of commercial customers, in addition to the provision of consultancy services.

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION

ASSETS	US$			US$
	Audited			Audited
	12/31/2004			9/30/2003
Current assets
Cash and cash equivalents		1,824,268			273,220
Trade and other receivables		2,743,798			240,293
Rental and other deposits		1,702,856			363,833
Prepayments		63,007			30,031
Inventories		171,020			325,494
Short-term investment		24,163			--
Total current assets		6,529,112			1,232,871
Intangible asset		1,410,000			--
Property use rights		1,576,639			--
Goodwill		11,279,314			251,448
Property, plant and equipment, net		3,310,791			2,881,585
Total assets		24,105,856			4,365,904
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade and other payables		6,425,786			1,809,380
Deferred income		26,723			39,991
Short-term bank loan		1,812,229			300,000
Long-term bank loan - current portion		--			42,994
Mortgage loan		448,418			--
Total current liabilities		8,713,156			2,192,365
Long-term bank loan - non-current portion		--			459,344
Due to a shareholder		320,536			--
Total liabilities		9,033,692			2,651,709
Minority interest		2,143,897			3,531
Commitments and contingencies		--			--
Stockholders' equity
Preferred stock, par value of US$0.001 each; 10,000,000 shares authorized, none issued or outstanding		--			--
Common stock, par value of US$0.001 each; 50,000,000 shares authorized, 30,889,997 shares issued at March 31, 2005		30,890			10,971
Additional paid-in capital		30,817,729			11,096,208
Accumulated deficit		(17,964,755	)		(9,396,515	)
Total stockholders' equity		12,928,267			1,710,664
Total liabilities and stockholders' equity		24,105,856			4,365,904

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	AUDITED YEAR ENDED DECEMBER 31, 2004			AUDITED YEAR ENDED SEPTEMBER 30, 2003
	US$			US$
Operating revenues		3,092,744			2,885,600
Operating costs and expenses		(729,803	)		(1,213,169	)
Selling, general and administrative expenses		(8,133,140	)		(3,767,788	)
Other expenses		(1,438,435	)		(186,278	)
Loss from operations		(7,208,634	)		(2,281,635	)
Non-operating income (expense)
Other income		140,014			2,490
Interest expenses		(65,909	)		(14,811	)
Equity in net loss of affiliate		--			(32,051	)
Loss before income taxes and minority interest		(7,134,529	)		(2,326,007	)
Income taxes expense		(46,553	)		--
Loss before minority interest		(7,181,082	)		(2,326,007	)
Minority interest		(413,311	)		120,471
Net loss		(7,594,393	)		(2,205,536	)

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China World Trade Corporation

Unaudited Pro Forma Condensed Consolidated State of Operations

For the Year Ended December 31, 2004

	GNGCM			The Company			Pro forma adjustments		Pro forma consolidated balance
	US$			US$			US$		US$
Operating revenues
Club and business centre		-			551,497				551,497
Business traveling services		4,989,881			-				4,989,881
Business value-added services		-			40,695				40,695
Rental		-			701,284				701,284
Trading and others		7,577			123,496				131,073
		4,997,458			1,416,972				6,414,430
Operating costs and expenses
Club and business centre		-			(91,415	)			(91,415	)
Business traveling services		(334,184	)		-				(334,184	)
Business value-added services		-			(1,841	)			(1,841	)
Rental		-			(403,735	)			(403,735	)
Trading and others		-			(120,224	)			(120,224	)
		(334,184	)		(617,215	)			(951,399	)
Other expenses
Depreciation		(97,967	)		(185,225	)			(283,192	)
Impairment losses on intangible assets		-			(222,676	)			(222,676	)
Impairment loss on goodwill		-			(388,118	)			(388,118	)
Impairment of property, plant and equipment		-			(594,343	)			(594,343	)
Selling, general and administrative expenses		(2,529,451	)		(7,290,150	)			(9,819,601	)
		(2,627,418	)		(8,680,512	)			(11,307,930	)
Profit (Loss) from operations		2,035,856			(7,880,755	)			(5,844,899	)
Non-operating income (expenses)
Other income		410,790			139,816				550,606
Interest expenses		(202,007	)		(32,965	)			(234,972	)
Profit (Loss) before income taxes and minority interests		2,244,639			(7,773,904	)			(5,529,265	)
Income before income taxes and minority interests
Income taxes expense		(136,366	)		-				(136,366	)
Profit (Loss) before minority interest		2,108,273			(7,773,904	)			(5,665,631	)
Minority interests		(93,183	)		628			(987,394) (a)	(1,079,949	)
Net loss		2,015,090			(7,773,276	)			(6,745,580	)
Loss per share of common stock
- Basic					(0.37	)			(0.32	)
Weighted average number of shares of common stock outstanding					21,102,405				21,102,405

15

Footnotes:

(1)For an explanation of note (a), refer to the pro forma adjustments set forth on page 190 of this prospectus.

(2)GNGCM is an abbreviation for Guangdong New Generation Commercial Management Limited, a corporation organized and existing under the laws of the Peoples’ Republic of China.

(3)   The Company refers to China World Trade Corporation.

16

RISK FACTORS

We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this prospectus before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Related To Our Business and Industry.

We Have Had Net Losses From Our Operations And Anticipate That Losses Will Continue. We May Not Be Able To Become Profitable In The Future.

We have had a history of losses from our operations. We had a net loss from operations for the year ended September 30, 2003 of $2,205,536. We also had a net loss from operations for the year ended December 31, 2004 of $7,594,393. The current year-end loss was primarily attributable to the non-cash accounting treatments in provision, impairment, and share issuance to employees resulting from them exercising their stock options and the issuance of shares to various third parties for their respective services rendered in areas of marketing; information technology; investor relations and research; and financing. We may not be profitable in the future.

If We Are Unable To Raise Additional Capital, We Will Likely Have To Curtail Our Operations.

We presently have limited operating capital. In addition, we have only a limited credit facility in the amount of $2.5 million and other committed sources of capital. We believe we need at least $2.5 million in additional capital in 2005 to maintain our current operations. The Standby Equity Distribution Agreement is intended to provide funds for general working capital to us, although there can be no assurances as to the amount of funds it will be able to make available. Current revenue from our operations is not sufficient to cover our costs, our current expansion or our plans for the future. We may be unable to expand credit arrangements on satisfactory terms, especially since for the fiscal year ended December 31, 2004, our independent auditors have raised substantial doubt about our ability to continue as a going concern. There is a risk that we will be unable to obtain additional capital when needed even if advances are made under the Standby Equity Distribution Agreement, which would require us to curtail our operations.

We Are A Holding Company That Depends On Our Foreign Subsidiaries For Distributions Of Funds To Meet Our Working Capital Needs And To Pay Dividends To Our Shareholders; Given Restrictions Under Chinese Law, Such Distributions May Never Be Made.

We are a holding company incorporated under the laws of Nevada. Our business activities are presently carried out through twenty-three majority and wholly-owned subsidiary companies. Seven of these companies are incorporated under the laws of the British Virgin Islands, five of these companies are incorporated under the laws of Hong Kong, and the remaining five are incorporated in the Peoples’ Republic of China. Accordingly, we must rely entirely upon distributions from the subsidiaries to generate funds for our working capital needs and to pay dividends to shareholders. In China, there are legal restrictions that may limit the ability of our company to pay dividends to a foreign holding company except out of accumulated profits, which are determined in accordance with Chinese accounting standards and regulations. Some of our Chinese subsidiaries do not currently have any accumulated profits. Hence, this limitation may restrict our ability to make distributions to meet our working capital needs and to make dividend payments.

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We Operate A Diverse Line Of Businesses And There Can Be No Assurances That We Have The Management Skills To Successfully Integrate Our Operations.

While all of our business activities are focused on the servicing, trade, travel and finance industries within China, we currently operate three divisions, one engaged in business clubs in China since August 2002, one engaged in providing business travel services principally in the airline ticketing and hotel room consolidation market and in providing insurance services, since August 2004, and one that provides business value-added services, such as credit card services and merchant related businesses, including consultancy services, since March 2003. All three divisions are currently operational and have facilities and employees. Some of our services face intense competition and they require management personnel with different and varying skill sets. There can be no assurances that we have the necessary management skills to successfully manage our diverse interests.

We May Not Be Able To Successfully Commercialize Our Business Club Operations, In Which Case We Would Have To Close Them At Great Expense To Our Company.

Our strategy for our business clubs is to grow through our subsidiaries by serving domestic companies attempting to enter into the international business community, as well as companies attempting to do business with China. Our success will depend on our ability to deliver quality support services to our customers. In addition, finding, training and retaining qualified bilingual persons with knowledge of the requirements, business practices and customs of both the United States and China is expensive, time consuming and difficult. If we cannot serve our target market or recruit talented employees, we may have to close our business clubs at a great expense to our company.

The Revenue Of Our Business Clubs Is Dependent Upon Harmonious Political Relations Between The United States And China, And Any Deterioration In Those Relations Would Negatively Impact The Revenue And Operating Profit Of Our Clubs.

Our business endeavors involving the China World Trade Association and our business clubs focus on fostering business relations with the Peoples’ Republic of China. Two of our subsidiaries operate business clubs in Guangzhou and Beijing, the PRC for foreign business interests. Our revenue is directly affected by political and economic conditions in China and would be adversely affected by disruptions in the diplomatic and political relationships between the U.S. and China. Further, public opinion of U.S. corporations conducting business with the Chinese may fluctuate and could impact the success of this aspect of our business plan.

The Markets In Which Our Business Clubs Operate And The Demand For Our Services Is Characterized By Rapidly Evolving Developments And Frequent Service Improvements By Competitors, All Of Which Could Render Our Existing Business Club Services Obsolete And Unmarketable.

Our plan for the business clubs is based on the need for foreign companies to have introduction and access to the economic opportunities of the Peoples’ Republic of China. We believe that there is a legitimate demand by foreign companies for our product. However, the market for these types of services is characterized by rapidly evolving developments and frequent improvements. There are a number of competitors including government and nonprofit associations that provide some or all of the same services as we provide. In such a competitive marketplace our business clubs may not continue to be accepted and services of another competitor may replace the services that we offer.

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Our Business Clubs Operations Are Subject To The Foreign Investment Climate And International Trade Operations In China Which Currently Enjoy Favorable Trade Policies With The West; If The Chinese Government Discontinues These Policies, Our Operations Could Be Severely Affected And We Could Be Forced To Close Our Business Clubs.

The Chinese government owns the majority of productive assets in China. The Chinese government has recently attempted economic reforms to decentralize some industries and encourage private economic development. Our business plan seeks to capitalize on these reforms. If the reforms are inconsistent or ineffectual, the Chinese government may discontinue or alter the policies. If that happened, we may be forced to close our business clubs.

We Are Subject To The Uncertainty Of The Chinese Legal System, And Such Uncertainty May Be Unfavorable To Many Aspects Of Our Operations And To Our Stock Price.

Our business plan depends on fostering business relationships pertaining to the Peoples’ Republic of China. Our business clubs and all of our other activities operate from facilities located in China. Accordingly, we must conform to the governmental regulations and rules of China. The Chinese legal infrastructure is distinctly different in operation from its United States counterpart. The PRC legal system is a system based on written statutes, and, since 1979, the PRC government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. These laws and regulations are relatively new, and because of the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve substantial uncertainties. Such uncertainties are unfavorable to many aspects of our operations and they may also negatively impact the market price of our common stock.

Our Limited Operating History May Not Serve As An Adequate Basis To Judge Our Future Prospects And Operating Results.

We have only a limited operating history from which you can evaluate our business and our prospects. Moreover, in August 2004, we acquired the New Generation Group of companies which increased our total assets six-fold and may or may not have a positive contribution to earnings in the future. As a result, you cannot judge our future prospects and operating results from our limited operating history.

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Declines Or Disruptions In The Travel Industry Generally Could Reduce The Revenues Of Our Business Travel Operations.

Since our indirect acquisition of 51% of the capital stock of the New Generation Group of companies, our business is greatly affected by the health of the travel industry in China. Because travel expenditures are highly sensitive to the general business climate and personal discretionary spending levels, economic downturns and catastrophic events tend to have an adverse impact on the travel industry. Adverse trends or events that tend to reduce travel and are likely to reduce our revenues include:

·   increases in prices in the airline, hotel or other travel-related sectors;

·   increases in the occurrence of travel-related accidents;

·   outbreak of war or conflict across the Taiwan Strait or elsewhere in the Asia-Pacific region.

·   increases in terrorism or the occurrence of a terrorist attack in the Asia-Pacific region or elsewhere;

·   poor weather conditions or changes in climate throughout a particular region; and

·   man-made or natural disasters that occur in any particular region.

As a result of any of these events, over which we have no control, our operating results and financial conditions could be materially and adversely affected.

We May Experience Difficulties Managing Our Rapid Growth Because Such Growth May Present Significant Challenges To Our Management And Administrative Systems And Resources.

We have experienced rapid growth primarily through the acquisition of control of the New Generation Group of companies during the previous fiscal year. On June 30, 2004, we had approximately 120 employees. After the New Generation acquisition on August 2, 2004, we had approximately 400 employees. Our integration of the New Generation employees and continued expansion may present significant challenges to our management and administrative systems and resources. If we are not able to successfully integrate the New Generation Group of companies into our management and administrative systems, our results of operations will be negatively affected.

If We Fail To Attract And Retain Customers In A Cost-Effective Manner, Our Ability To Grow And Maintain Profitability May Be Impaired.

Our business strategy is substantially dependent on our ability to increase the overall number of airline and hotel customer transactions with us in a cost-effective manner. In order to increase the number of transactions, we use a call center and website, in addition to general advertising and promotions at international airports. These efforts resulted in 995,000 air tickets sold and 473 hotel bookings in 2004. Although we have spent significant financial and other resources on sales and marketing and plan to continue to do so, we cannot assure you that these efforts will be cost-effective in attracting new customers or increasing transaction volume. If we do not achieve our marketing objectives, our ability to grow our revenues and maintain profitability may be impaired.

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Our Business May Be Harmed If We Fail To Strengthen Our Corporate Image Recognition Among Current And Potential Customers, Suppliers And Business Partners.

We believe that we must be successful in the promotion of our China World Trade’s corporate image in order to continue to grow our business and secure new business relationships. We must introduce new consumers to our China World Trade and New Generation names and ensure that the name is associated with quality and value. We cannot assure you that we will be successful in our efforts to introduce the names to a wider group of consumers or that we will be successful in establishing our brand image among consumers. If we fail to strengthen our name recognition among our current and potential customers, suppliers and business partners, our operating results and financial condition may be adversely affected.

Our Travel Business Depends On The Technology Infrastructure Of Third Parties. If The Software And Communication Support Systems Of Such Third Parties Were Interrupted, It Could Impair The Quality Of Our Service.

We rely on third-party computer systems and other service providers, including the computerized reservation systems of airlines and hotels to make reservations and confirmations. We rely on TravelSky’s Eterm system as the reservation system for our air ticketing operation. We also employ company systems developed by A Point Limited for hotel reservations. Other third parties provide, for instance, telecommunications access lines (China Telecom and China Netcom), significant computer systems and software licensing (Symantec Corporation), as well as company system support and maintenance service (A Point Information Technology). Any interruption in these or other third-party services or deterioration in their performance could impair the quality of our service.

Our Online Business Relies On The Existence Of An Adequate Telecommunications Infrastructure For Continued Growth Of China’s Internet Market. If China’s Infrastructure Does Not Continue To Grow, Our Travel Service Operations Could Be Impeded.

Although private sector Internet service providers currently exist in China, almost all access to the Internet is maintained through a network owned by China Netcom under the regulatory supervision of China’s Ministry of Information Industry. In addition, the national networks in China connect to the Internet through a government-controlled international gateway. This international gateway is the only channel through which a domestic Chinese user can connect to the international Internet network. We rely on this infrastructure and China Netcom to provide data communications capacity, primarily through local telecommunications lines. We cannot assure you that this infrastructure will be further developed. In addition, we will have no access to alternative networks and services, on a timely basis if at all, in the event of any infrastructure disruption or failure. The Internet infrastructure in China may not support the demands associated with continued growth in Internet usage.

The Content On Our Website May Subject Us To Litigation, Which May Be Time-Consuming And Costly To Defend.

The content on our website contains information about flights, hotels and popular vacation destinations, as well as customer feedback about certain travel-related services. Third parties could take legal action against us for any false or misleading information accessible on our websites. Any claims could be time consuming to defend, result in litigation and divert management’s attention and resources, any of which could have a material and adverse impact on our operating results and financial condition.

21

New Generation’s Insurance Operations Experienced Negative Growth in Revenues From $929,916 For The Twelve Months Ended December 31, 2003 to $100,193 For The Twelve Months Ended December 31, 2004, and it had Profit From Operations Of $653,566 For The Twelve Months Ended December 31, 2003, and Profit From Operations Of $39,747 For The Twelve Months Ended December 31, 2004. There Can Be No Assurances That This Trend In Revenue And Profitability Will Continue In The Future.

Due to a number of risk factors that are discussed below, the most important of which may be increasing competition in its markets with low barriers to entry for competitors, there can be no assurances that this trend in revenue or profitability will continue in the future.

We Cannot Accurately Forecast Our Commission Revenues Because Our Commissions Depend On Premium Rates Charged By Insurance Companies, Which Have Historically Varied. Therefore, It May Be Difficult For You To Predict The Future Performance Of Our Insurance Operations.

New Generation’s insurance operations are primarily engaged in insurance brokerage and agency activities, and derive revenues largely from commissions paid by insurance companies. For the year ended December 31, 2004, we derived $423,247 from brokerage activities and agency activities. We do not determine or set insurance premiums. Premium rates are determined by insurers based on a fluctuating market. Premium rates depend on, among other things, line of business, geographical region, insurance carrier and specific underwriting factors. Because we do not determine the timing and extent of premium pricing changes, we cannot accurately forecast our commission revenues, including whether they will significantly decline. As a result, our budgets for future acquisitions, capital expenditures, dividend payments and other expenditures may have to be adjusted to account for unexpected changes in revenues.

We Derive A Substantial Portion Of Our Commission Revenues From One Insurance Company, The Loss Of Which Could Result In Additional Expense And Loss Of Market Share.

Our life and accident insurance programs are primarily underwritten by HuaAn Assets Insurance Co. Ltd. For the twelve months ended December 31, 2003 and the year ended December 31, 2004 approximately $404,000, or 41%, and $196,000, or 44%, respectively, of our commissions and fees were generated from policies underwritten by HuaAn Assets Insurance Co. Ltd. Other than HuaAn, we also derive revenues from China Union Assets Co. Ltd., China Life Insurance Co. Ltd., Peoples’ Insurance Company of China (PICC), Pingan Insurance Company of China, and China Pacific Assets Insurance Co. Ltd., TianAn Assets Insurance Co. Ltd. and Tai Ping Insurance Co. Ltd. Commissions and fees generated from these companies is approximately 50% of our total revenue.

Because Our Insurance Business Is Highly Concentrated In The Guangdong Province, Adverse Conditions Or Regulatory Changes In This Province Could Adversely Affect Our Financial Condition.

For the twelve months ended December 31, 2003, our insurance operations derived $404,000, or 100% of its commissions and fees from the Guangdong Province. For the year ended December 31, 2004, our insurance operations derived $196,000, or 100% of its commissions and fees from the Guangdong Province. We believe that the regulatory environment for insurance agencies in Guangdong currently is no more restrictive than in other provinces of China. Because our business is concentrated in one province, we face greater exposure to unfavorable changes in regulatory conditions in Guangdong’s insurance agencies than an insurance agency whose operations are more diversified through a greater number of provinces. In addition, the occurrence of adverse economic conditions, natural or other disasters, or other circumstances specific to or otherwise significantly impacting Guangdong Province could adversely affect our financial condition and results of operations.

22

The Growth Strategy Of Our Insurance Business Depends In Part On The Acquisition Of Insurance Agencies, Which May Not Be Available On Acceptable Terms In The Future And Which, If Consummated, May Not Be Advantageous To Us.

Our growth strategy includes the acquisition of insurance agencies. Currently, we have branches in Foshan, Shunde, Dongguan, Zhongshan and Gaoming in Guangdong Province. We expand to other major cities in Guangdong through acquisitions to form a provincial network. Our ability to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired businesses into our operations, and expand into new markets, although we currently have no specific target markets selected, will require us to continue to implement and improve our operations, financial, and management information systems. Part of the time and expense related to newly acquired agencies includes the integration of an acquired agency's existing computer system into ours. Further, integrated, acquired entities may not achieve levels of revenue, profitability, or productivity comparable to our existing locations, or otherwise perform as expected. In addition, we compete for acquisition and expansion opportunities with entities that have substantially greater resources. Acquisitions also involve a number of special risks, such as: diversion of management's attention; difficulties in the integration of acquired operations and retention of personnel; entry into unfamiliar markets; unanticipated problems or legal liabilities; and tax and accounting issues, some or all of which could have a material adverse effect on the results of our operations and our financial condition.

The Current Market Share Of Our Business May Decrease As A Result Of Increased Competition From Insurance Companies And The Financial Services Industry.

The insurance agency business is highly competitive and we actively compete with numerous firms for clients and insurance carriers, many of which have relationships with insurance companies or have a significant presence in niche insurance markets that may give them an advantage over us. Because relationships between insurance agencies and insurance carriers or clients are often local or regional in nature, this potential competitive disadvantage is particularly pronounced outside of the Guangdong Province. In addition, a number of insurance companies are engaged in the direct sale of insurance, primarily to individuals, and do not pay commissions to agents and brokers.

In addition, because of legislation permitting banks, securities firms and insurance companies to affiliate, the financial services industry may experience further consolidation, and we therefore may experience increased competition from insurance companies and the financial services industry, as a growing number of larger financial institutions increasingly, and aggressively, offer a wider variety of financial services, including insurance, than we currently offer.

Our Operations Compete In Highly Regulated Industries, Which Results In Increased Expenses And Restrictions On Our Ability To Do Business.

We conduct business and are subject to comprehensive regulation and supervision by government agencies in Guangdong Province and in Beijing, China. For instance, our air-ticketing business is subject to the supervision of Civil Aviation Administration of China (GAAC) and its regional branch. The travel agency business is subject to the supervision of the China National Tourism Administration and local tourism bureaus. The insurance brokerage operations are under the supervision of the China Insurance Regulatory Commission. Our business conduct is also generally regulated by Chinese laws, central and local governmental regulations, as well as industry regulations. Such regulation results in increased legal expenses for our company and restricts our ability to conduct business without compliance with various laws and policies. These expenses and restrictions increase our cost of doing business and may reduce our overall profitability.

23

We Have Not Determined The Amount Of Resources And The Time That Will Be Necessary To Adequately Respond To Rapid Technological Change In Our Industry, Which May Adversely Affect Our Business And Operating Results.

Frequent technological changes, new products and services and evolving industry standards are all influencing the traveling and insurance businesses, and the Internet, for example, is increasingly used to transmit benefits and related information to clients and to facilitate business-to-business information exchange and transactions. We believe that the development and implementation of new technologies will require additional investment of our capital resources in the future. We anticipate an expenditure of approximately $1 million in fiscal 2005 to develop and implement these new technologies, which include the development of a travel networking system and the replacement of existing computer booking system. We have not determined, however, the amount of resources and the time that this development and implementation may require, which may result in short-term, unexpected interruptions to our business, or may result in a competitive disadvantage in price and/or efficiency, as we endeavor to develop or implement new technologies.

Quarterly And Annual Variations In Our Commissions That Result From The Timing Of Policy Renewals And The Net Effect Of New And Lost Business Production May Have Unexpected Effects On Our Results Of Operations.

Our commission income (including contingent commissions but excluding fees), which typically accounts for approximately 8% of our total annual revenues, can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production. The factors that cause these variations are not within our control. Specifically, consumer demand for insurance products can influence the timing of renewals, new business and lost business, which includes generally policies that are not renewed, and cancellations. In addition, as discussed, we rely on insurance companies for the payment of certain commissions. Because these payments are processed internally by these insurance companies, we may not receive a payment that is otherwise expected from a particular insurance company in one of our quarters or years until after the end of that period, which can adversely affect our ability to budget for significant future expenditures.

Quarterly and annual fluctuations in revenues based on increases and decreases associated with the timing of policy renewals have had an adverse effect on our financial condition in the past, and we may experience such effects in the future.

Our Business Value Added Services Represent An Unproven Business Model In China, And There Can Be No Assurances That Our Endeavors Will Be Successful.

The business model for our business value-added services is unproven in China, and there can be no assurances that our endeavors will be successful. Our business value-added services focus on interactive marketing and incentive programs for merchants, financial institutions, telecom operators, and large corporations with significant client bases. In some developed countries, these types of programs are well established and accepted by commercial enterprises. However, in China, our programs are considered innovative and there can be no assurances that they will be embraced by our target customers. A lack of customer acceptance would be very detrimental to our plan of operations.

We May Suffer Currency Exchange Losses If The Renminbi Depreciates Relative To The U.S. Dollar.

Our reporting currency is the U.S. dollar. However, a substantial portion of our assets and revenues are denominated in the Chinese currency, Renminbi, commonly referred to as RMB. Our assets and revenues expressed in our U.S. dollar financial statements will decline in value if the Renminbi depreciates relative to the U.S. dollar. Any such depreciation could adversely affect the market price of our common stock. Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations and we do not intend to engage in any such transactions. In addition, our currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into U.S. dollars.

24

We May Not Be Able To Freely Convert Renminbi Into Foreign Currency If The Chinese Government Reverses Its Current Policies, Which Would Impair Our Ability To Pay Dividends In A Foreign Currency.

A portion of our revenues and operating expenses will be denominated in Renminbi while a portion of our capital expenditures are denominated in U.S. dollars.

Under current Chinese regulations, the payment of dividends, trade and service-related foreign transactions to a foreign investor of a foreign-invested enterprise is treated as a “current account” payment for which the approval of the State Administration of Foreign Exchange is not required. However, in order to distribute dividends we may be required to file documentation to a designated foreign exchange bank. The Bank must certify that all requirements have been met, such as payment of taxes, directors’ approval and a capital verification report issued by an accounting firm. If a foreign-invested enterprise dissolves, a return of capital, which includes foreign direct investment, is treated as a “capital account” payment. This typically requires approval of the State Administration of Foreign Exchanges’ in addition to the filing of documentation.

China World Trade may currently convert Renminbi for transactions under the “current account” without the approval of the State Administration of Foreign Exchange for settlement of “current account” transactions, including payment of dividends, by providing commercial documents evidencing these transactions. They may also retain foreign exchange in their current accounts (subject to a ceiling approved by the State Administration of Foreign Exchange) to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese governmental authorities may limit or eliminate the ability to purchase and retain foreign currencies in the future. Such a change of policy would materially and adversely affect our business, financial condition and results of operations.

Our Shareholders May Not Be Able To Enforce U.S. Civil Liabilities Claims Arising Under The Securities Laws Of The United States Or Any State Thereof.

Our operations and assets are largely outside the United States and are held through wholly-owned subsidiaries largely incorporated under the laws of China and Hong Kong. Many of our directors and officers are nationals and/or residents of China. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of the China would recognize or enforce judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in these countries against us or such persons predicated upon the securities laws of the United States or any state thereof.

25

You Will Have Limited Participation In The Management Or Operations Of China World Trade.

Currently, our officers and directors beneficially own approximately 54.8% of our common stock. The Chairman of our Board, Mr. Chi Hung Tsang currently is the beneficial owner of 17,105,948 shares, which is approximately 48.3% of our outstanding shares. As a result, he will have significant influence over all matters requiring approval by our stockholders without the approval of minority stockholders. In addition, he may be able to elect all of the members of our Board of Directors, which will allow him to significantly control our affairs and management. He will also be able to affect most corporate matters requiring stockholder approval by written consent, without the need for a duly noticed and duly-held meeting of stockholders. Accordingly, you will be limited in your ability to influence change in how we conduct our business.

There Is Limited Liability Of Our Management Under Our Articles Of Incorporation And By-Laws And They Are Held Harmless For Certain Actions Under State Law. Such Provisions Substantially Limit Our Shareholders’ Ability To Hold Officers And Directors Liable For Breaches Of Fiduciary Duty.

China World Trade has adopted provisions to its Articles of Incorporation and Bylaws which limit the liability of its Officers and Directors, and provide for indemnification by China World Trade of its Officers and Directors to the full extent permitted by Nevada corporate law, which generally provides that its officers and directors shall have no personal liability to China World Trade or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit the shareholder's ability to hold officers and directors liable for breaches of fiduciary duty, and may require China World Trade to indemnify its officers and directors. This limits a shareholder's ability to hold officers and directors accountable in general, which renders their investment more risky.

Under Chinese Law, Limitations Exist On Foreign Ownership Of Certain Types of Businesses. Such Laws Have Changed Recently To Permit Our 51% Ownership Of The New Generation Group Of Companies And Our 60% Ownership Of WTC Link. Such Laws Could Change Or Be Reversed In The Future, Which Would Require Us To Create A Different Ownership Structure, And May Require Us To Sell Certain Assets, Which Would Have A Detrimental Impact On Our Operations.

Chinese law generally prohibits foreign ownership of corporations organized under the laws of the Peoples’ Republic of China that are engaged in certain types of businesses. In recent years, this ownership prohibition has been relaxed for certain industries and China World Trade has taken advantage of these changes in its acquisition of the New Generation Group of companies and WTC Link. Such changes in law could be reversed by the government in which case, we would be forced to find an alternative legal structure or dispose of our Chinese investments. Any such disposal could be at a significant loss.

26

Risk Related To This Offering

There Is Currently A Limited Market For Our Common Stock.

There is currently a limited trading market for our shares of Common Stock, and there can be no assurance that a more substantial market will ever develop or be maintained. Any market price for shares of our Common Stock is likely to be very volatile, and numerous factors beyond our control may have a significant adverse effect. In addition, the stock markets for small market capitalization stocks generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may also adversely affect the market price of our Common Stock. Further, there is no correlation between the present limited market price of our Common Stock and our revenues, book value, assets or other established criteria of value. The present limited quotations of our Common Stock should not be considered indicative of the actual value of China World Trade or our Common Stock

Future Sales Of Our Common Stock Could Put Downward Selling Pressure On Our Shares, And Adversely Affect The Stock Price. There Is A Risk That This Downward Pressure May Make It Impossible For An Investor To Sell His Shares At Any Reasonable Price.

Future sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could put downward selling pressure on our shares, and adversely affect the market price of our common stock. Such sales could be made pursuant to a registered offering such as the Standby Equity Distribution Agreement, or Rule 144 under the Securities Act of 1933, as amended, as shares become eligible for sale under the Rule.

The Market Price Of Our Shares Of Common Stock May Be Depressed By The Overhang Of Certain Outstanding Warrants Issued To Insiders.

In 2002, China World Trade issued warrants to Powertronic and Mr. Tsang. These warrants permit Powertronic to purchase up to four million shares and Mr. Tsang to purchase up to four million shares of common stock. The warrants may be exercised within two years of their issuance at an exercise price of US$0.575 per share and US$0.92 per share, respectively, which is considerably below the current market price of our common stock. On December 5, 2003, China World Trade entered into another warrant agreement with Mr. Tsang in exchange for Mr. Tsang’s surrender of certain rents for space occupied by our company. This agreement permits Mr. Tsang to purchase up to six million additional shares at an exercise price, which starts at $0.75 per share. Exercise of all or part of the remaining 4,500,000 warrants to purchase shares of our common stock, which have “cashless exercise” provisions, could depress the market price for the shares

We Have Never Paid Dividends On Our Common Stock And You May Never Receive Dividends. There Is A Risk That An Investor In Our Company Will Never See A Return On Investment And The Stock May Become Worthless.

We have never paid dividends on our common stock, although none of our outstanding loans or other financial documents contain provisions that limit our ability to pay dividends. We intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy will be at the discretion of the Board of Directors and will be contingent upon future earnings, if any, our financial condition, capital requirements, general business conditions and other factors. Future dividends may also be affected by covenants contained in loan or other financing documents, which may be executed by us in the future. Therefore, there can be no assurance that cash dividends of any kind will ever be paid. If you are counting on a return on your investment in the common stock, the shares are a risky investment.

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Because Our Common Stock Is Considered A Penny Stock, Any Investment In Our Common Stock Is Considered To Be A High-Risk Investment And Is Subject To Restrictions On Marketability.

Our Shares are "penny stocks" within the definition of that term under the Securities Exchange Act of 1934, which are generally equity securities with a price of less than $5.00. Our shares will be subject to rules that impose sales practice and disclosure requirements on certain broker-dealers who engage in certain transactions involving a penny stock. Broker-dealers may be discouraged from effecting transactions in our shares because they are subject to the penny stock rules. These rules impose restrictions on the marketability of the common stock and may affect its market value.

Existing Shareholders Will Experience Significant Dilution From Our Sale Of Shares Under The Standby Equity Distribution Agreement.

The sale of shares pursuant to the Standby Equity Distribution Agreement will have a dilutive impact on our stockholders. For example, if the offering occurred on June 1, 2005, at an assumed offering price of $2.10 per share, the new stockholders would experience an immediate dilution in the net tangible book value of negative $0.04 per share. Dilution per share at prices of $1.50, $1.00, and $0.50 per share would be -$0.64, -$1.14 and -$1.64, respectively.

As a result, our net income per share could decrease in future periods, and the market price of our common stock could decline. In addition, the lower our stock price, the more shares of common stock we will have to issue under the Standby Equity Distribution Agreement to draw down the full amount. If our stock price is lower, then our existing stockholders will experience greater dilution.

Under The Standby Equity Distribution Agreement Cornell Capital Will Pay Less Than The Then-Prevailing Market Price Of Our Common Stock, Which Will Create An Incentive For Sales Of The Discounted Stock And May Result In A Downward Spiral Of Our Stock Price.

The common stock to be issued under the Standby Equity Distribution Agreement will be issued at a 1% discount to the lowest closing bid price for the five days immediately following the notice date of an advance. In addition, Cornell Capital will retain 4% from each advance. Based on this discount, Cornell Capital will have an incentive to sell immediately to realize the gain on the 1% discount. These discounted sales could cause the price of our common stock to decline, based on increased selling of our common stock. As the price of our common stock declines, Cornell Capital will have an even greater incentive to increase the number of shares that it sells, which may have the effect of a downward spiral on our stock price.

The Selling Stockholders Intend To Sell Their Shares Of Common Stock In The Market, Which Sales May Cause Our Stock Price To Decline.

The selling stockholders intend to sell in the public market 16,981,717 shares of common stock being registered in this offering. That means that up to 16,981,717 shares may be sold pursuant to this registration statement. Such sales may cause our stock price to decline. The officers and directors of our company and those shareholders who are significant shareholders as defined by the Commission will continue to be subject to the provisions of various insider trading rules and Rule 144 regulations.

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The Sale Of Our Stock Under Our Standby Equity Distribution Agreement Could Encourage Short Sales By Third Parties, Which Could Contribute To The Future Decline Of Our Stock Price.

In many circumstances, the provisions of a Standby Equity Distribution Agreement for companies that are traded on the Over-The-Counter Bulletin Board have the potential to cause a significant downward pressure on the price of common stock. This is especially the case if the shares being placed into the market exceed the market’s ability to take up the increased stock or if we have not performed in such a manner to show that the equity funds raised will be used to grow our company. Such an event could place further downward pressure on the price of common stock. Under the terms of our Standby Equity Distribution Agreement, we may request numerous drawdowns pursuant to the terms of the Standby Equity Distribution Agreement. Even if we use the Standby Equity Distribution Agreement to grow our revenues and profits or invest in assets that are materially beneficial to us, the opportunity exists for short sellers and others to contribute to the future decline of our company’s stock price. If there are significant short sales of stock, the price decline that would result from this activity will cause the share price to decline more so which in turn may cause long holders of the stock to sell their shares thereby contributing to sales of stock in the market. If there is an imbalance on the sell side of the market for the stock, the price will decline.

In addition to the possibility of short selling described above, Cornell Capital may, itself, engage in naked short sales in the market, which would have the effect of driving down the price of our stock. Cornell Capital can do so, pursuant to the terms of the Standby Equity Distribution Agreement, as long as the short sales are not in excess of the amount of shares owned. Notwithstanding this ability, Cornell Capital has voluntarily agreed that it will not engage in short sale transactions in our common stock for the duration of the Standby Equity Distribution Agreement.

It is not possible to predict those circumstances whereby short sales could materialize or to what the share price could drop. In some companies that have been subjected to short sales the stock price has dropped to near zero. This could happen to our stock price.

The Price You Pay In This Offering Will Fluctuate And May Be Higher Or Lower Than The Prices Paid By Other People Participating In This Offering.

The price in this offering will fluctuate based on the prevailing market price of the common stock on the Over-The-Counter Bulletin Board. Accordingly, the price you pay in this offering may be higher or lower than prices paid by other people participating in this offering.

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We May Not Be Able To Access Sufficient Funds Under The Standby Equity Distribution Agreement When Needed.

We are dependent on external financing to fund our operations. Our financing needs are expected to be provided, for the most part, from the Standby Equity Distribution Agreement. No assurances can be given that such financing will be available in sufficient amounts or at all when needed, in part, because we are limited to a maximum draw down of $1.5 million (after the first draw down of $3.0 million) during any seven trading day period. In addition, the number of shares being registered may not be sufficient to draw all funds available to us under the Standby Equity Distribution Agreement. Based on the assumed offering price of $2.10 per share, and the 14,285,714 shares we are registering, we would not be able to draw the entire $30.0 million available under the Standby Equity Distribution Agreement. At this assumed price, we will be able to draw $27,300,000 with the 14,285,714 shares being registered. We would be required to register 1,285,714 additional shares at this assumed price to obtain the entire $30.0 million available under the Standby Equity Distribution Agreement. Based on the limited number of available authorized shares of common stock, in the event that the price of our common stock declines significantly, we would most likely need to obtain shareholder approval to increase the authorized shares of common stock to access additional amounts under the Standby Equity Distribution Agreement.

We May Not Be Able To Draw Down Under The Standby Equity Distribution Agreement If Cornell Capital Holds More Than 9.9% Of Our Common Stock.

In the event that Cornell Capital holds more than 9.9% of the then-outstanding shares of our common stock, we will then be unable to draw down on the Standby Equity Distribution Agreement. Currently, Cornell Capital has beneficial ownership of 3.6% of our common stock according to our shareholders’ list dated December 31, 2004, and therefore we would be able to draw down on the Standby Equity Distribution Agreement so long as Cornell Capital’s beneficial ownership remains below 9.9%. If Cornell Capital’s beneficial ownership increases to 9.9%, we would be unable to draw down on the Standby Equity Distribution Agreement.

We Have Issued Cornell Capital 225,000 Shares As A Commitment Fee Under The Standby Equity Distribution Agreement And Cornell Capital Has An Incentive To Sell Such Shares Immediately Before Any Decline In Our Stock Price, Which Selling Activity May Put Downward Pressure On Our Stock Price.

Pursuant to the Standby Equity Distribution Agreement, we issued 225,000 shares of common stock to Cornell Capital as a commitment fee for agreeing to purchase up to $30.0 million of common stock from us. We issued such shares at zero cost to Cornell Capital which has a dilutive effect on our shareholders. In addition, Cornell Capital has an incentive to immediately sell these 225,000 shares in the market since the Standby Equity Distribution Agreement tends to put downward pressure on the price of our stock. Such sales, in and of themselves, may depress our stock price.

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FORWARD LOOKING STATEMENTS

Included in this report are various forward-looking statements, which can be identified by the use of forward-looking terminology such as "may," "expect," "anticipate," "estimate," "continue," "believe" or other similar words. We have made forward-looking statements with respect to the following, among others: our goals and strategies; our ability to earn sufficient revenues; our ability to continue as a going concern; and our future revenue performance and our future results of operations. These statements are forward-looking and reflect our current expectations. These forward-looking statements are subject to a number of risks and uncertainties, some of which are beyond our control.

The factors described above and the risk factors referred to in "Risk Factors" could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. Therefore, you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which the forward-looking statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all such factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered and sold from time to time by certain selling stockholders. There will be no proceeds to us from the sale of shares of common stock in this offering, other than any proceeds that may result from the exercise by the Selling Stockholders of the Warrants. However, we will receive the proceeds from the sale of shares of common stock to Cornell Capital under the Standby Equity Distribution Agreement. The purchase price of the shares purchased under the Standby Equity Distribution Agreement will be equal to 99% of the lowest closing bid price of our common stock on the Over-the-Counter Bulletin Board for the five days immediately following the notice date. We will pay Cornell Capital 4% and Duncan Capital 4% of each advance as an additional fee.

Pursuant to the Standby Equity Distribution Agreement, we cannot draw more than $1.5 million every seven trading days, except for the first draw which can be up to $3.0 million, or more than $30.0 million over twenty-four months. Since we have agreed to pay Cornell Capital a 1% discount and 4% of each advance as a fee; and to pay Duncan Capital 4% of each advance, we expect to receive only $1,365,000 of each advance net of this discount and fee, and $2,730,000 of the initial advance net of this discount and fee.

We have set forth below our intended use of proceeds for the range of net proceeds indicated below to be received under the Standby Equity Distribution Agreement. The table assumes estimated offering expenses of $85,000, plus 4% retainage and 1% discount payable to Cornell Capital under the Standby Equity Distribution Agreement and 4% retainage payable to Duncan Capital under the Placement Agent Agreement. The figures below are estimates only, and may be changed due to various factors, including the timing of the receipt of the proceeds.

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	First Advance		Succeeding Advances
Gross Proceeds	$	3,000,000	$	1,500,000
Net Proceeds	$	2,645,000	$	1,280,000
Number of shares issued under the Standby Equity Distribution Agreement at an assumed price of $2.10 per share		1,428,571		714,286
INTENDED USE OF PROCEEDS		AMOUNT		AMOUNT
Acquisitions	$	1,000,000	$	600,000
Travel networking system	$	750,000	$	250,000
New World Trade Center Clubs	$	500,000	$	200,000
General Working Capital	$	395,000	$	230,000
TOTAL	$	2,645,000	$	1,280,000

The Standby Equity Distribution Agreement limits our use of proceeds to general working capital and prohibits the use of proceeds to pay any judgment or liability incurred by any officer, director or employee of our company, except under certain limited circumstances.

We have also set forth below a table that quantifies the total amount of proceeds which we expect to receive from the Standby Equity Distribution Agreement, which is based on the $2.10 current market price of our common stock, as well as on additional prices that may result from downward price pressure from the purchase and sale of shares under the Standby Equity Distribution Agreement. Under the Standby Equity Distribution Agreement with Cornell Capital the net proceeds are committed to our general working capital needs.

Assumed Per Share Offering Price	Number of Shares to be Issued	Gross Proceeds	Net Proceeds	General Working Capital
$0.25	120,000,000	30,000,000	27,215,000	4,445,117
$0.50	60,000,000	30,000,000	27,215,000	4,445,117
$0.75	40,000,000	30,000,000	27,215,000	4,445,117
$1.00	30,000,000	30,000,000	27,215,000	4,445,117
$1.25	24,000,000	30,000,000	27,215,000	4,445,117
$1.50	20,000,000	30,000,000	27,215,000	4,445,117
$1.75	17,142,857	30,000,000	27,215,000	4,445,117
$2.00	15,000,000	30,000,000	27,215,000	4,445,117
$2.10	14,285,714	30,000,000	27,215,000	4,445,117
$2.50	12,000,000	30,000,000	27,215,000	4,445,117

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Our Chairman has indicated that we intend to use the net proceeds of the initial two advances from the Standby Equity Distribution Agreement to acquire several smaller travel related, online booking and air ticketing companies in the Guangdong Province. An amount equal to approximately $1.6 million has been earmarked for such acquisitions, although no definitive agreements have been reached. In addition, he indicated that China World Trade will use approximately $1.0 million of the net proceeds from the Standby Equity Distribution Agreement to enhance our online and dial-up booking systems, as well as continuously develop the corporate image of our travel business group. Finally, approximately $700,000 of the net proceeds will be utilized to open new China World Trade Center Clubs in other major cities. The use of proceeds indicated by our Chairman, leaves $670,000 available for general working capital purposes.

DILUTION

The net tangible book value of our company as of December 31, 2004 was a deficit of $1,382,089 or $0.04 per share of common stock. Net tangible book value per share is determined by dividing the tangible book value of our company (total tangible assets less total liabilities) by the number of outstanding shares of our common stock. Since this offering is being made solely by the selling stockholders and none of the proceeds will be paid to our company, with the exception of the shares acquired upon the exercise of the Warrants, our net tangible book value will only be impacted in an insignificant way by this offering. Our net tangible book value and our net tangible book value per share, however, will be impacted by the common stock to be issued under the Standby Equity Distribution Agreement. The amount of dilution will depend on the offering price and the number of shares to be issued under the Standby Equity Distribution Agreement. The following example shows the dilution to new investors at an offering price of $2.10 per share, which is in the range of the recent share price.

If we assume that we had issued 14,285,714 shares of common stock under the Standby Equity Distribution Agreement at an assumed offering price of $2.10 per share (i.e., the number of shares registered in this offering under the Standby Equity Distribution Agreement), less retention fees of $240,000 and offering expenses of $85,000, our net tangible book value as of December 31, 2004 would have been $25,592,911 or $0.57 per share. Note that at an offering price of $2.10 per share, we would receive net proceeds of $27,300,000, or $2,700,000 less than the entire amount available under the Standby Equity Distribution Agreement. At an assumed offering price of $2.10, Cornell Capital would receive a discount of $300,000 on the purchase of 14,285,714 shares of common stock. Such an offering would represent an immediate increase in the net tangible book value to existing stockholders of $0.61 per share and an immediate dilution to new stockholders of $1.49 per share. The following table illustrates the per share dilution:

Assumed public offering price per share	$2.10
Net tangible book value per share before this offering	($0.04)
Increase attributable to new investors	$0.61
Net tangible book value per share after this offering	$0.57
Dilution per share to new stockholders	$1.49

The offering price of our common stock is based on the then-existing market price. In order to give prospective investors an idea of the dilution per share that they may experience, we have prepared the following table showing the dilution per share at various assumed offering prices:

ASSUMED OFFERING PRICE	NO. OF SHARES TO BE ISSUED	DILUTION PER SHARE TO NEW INVESTORS
$3.00	14,285,714	$2.39
$2.50	14,285,714	$1.89
$2.10	14,285,714 (1)	$1.49
$2.00	14,285,714	$1.39
$1.50	14,285,714	$0.89
$1.00	14,285,714	$0.39
$0.50	14,285,714	-$0.11

(1)   This represents the maximum number of shares of common stock that are being registered under the Standby Equity Distribution Agreement at this time.

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SELLING SECURITY HOLDERS

The Selling Security Holders named in the table set forth below are selling the securities covered by this prospectus. The Selling Security Holders named below are not registered securities broker-dealers or an affiliates of a broker-dealer.

The table indicates that all the securities will be available for resale after the offering. However, any or all of the securities listed below may be retained by the Selling Security Holders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the Selling Security Holders upon termination of this offering. We believe that the Selling Security Holders listed in the table have sole voting and investment powers with respect to the securities indicated.

SELLING SECURITY HOLDERS TABLE (1)

Name	Relationship With Issuer (2)		Amount Owned Prior to Offering		Amount To Be Registered		Amount Owned After Offering		Percent Owned Before/After Offering
Bridges & PIPES LLC.		Investor		583,335		583,335		0		1.2%/0	%
Cornell Capital Partners, LP		Investor		15,860,714		15,860,714		0		33.1%/0	%
Duncan Capital, LLC		Investor		262,667		262,667		0		0.5%/0	%
Stealth Capital, LLC		Investor		100,001		100,001		0		0.3%/0	%
TCMP3 Partners		Investor		175,000		175,000		0		0.4%/0	%
TOTALS				16,981,717		16,981,717		0		35.5%/0	%

_______________________

(1)This table assumes that all warrants owned by the selling security holders will be exercised and that Cornell Capital will purchase 14,285,714 shares of common stock from China World Trade and sell the same pursuant to this offering. We have also assumed, for purposes of calculating percentage ownership numbers, that all of the shares indicated as owned are outstanding, together with the 30,889,997 shares of China World Trade which are outstanding, for a total number of shares outstanding equal to 47,871,714.

(2)None of the selling security holders has had any position, office, or other material relationship with China World Trade, or any of its predecessors or affiliates, within the last three years.

STANDBY EQUITY DISTRIBUTION AGREEMENT

Summary

On November 15, 2004, we finalized a Standby Equity Distribution Agreement with Cornell Capital, pursuant to which we may, at our option, periodically sell to Cornell Capital shares of common stock for a total purchase price of up to $30.0 million. For each share of common stock purchased under the Standby Equity Distribution Agreement, Cornell Capital will pay 99% of, or a 1% discount to, the lowest closing bid price of our common stock on the Over-the-Counter Bulletin Board or other principal market on which our common stock is traded for the five days immediately following the notice date. The number of shares purchased by Cornell Capital for each advance is determined by dividing the amount of each advance by the purchase price for the shares of common stock. Further, Cornell Capital will retain 4% of each advance under the Standby Equity Distribution Agreement, and Duncan Capital will retain 4% of each advance under the Placement Agent Agreement. Cornell Capital is a private limited partnership whose business operations are conducted through its general partner, Yorkville Advisors, LLC. Duncan Capital, which is a registered broker-dealer, was engaged to advise us in connection the Standby Equity Distribution Agreement. For all of its services, we agreed to pay Cornell Capital the 1% discount, the 4% retainage, and 225,000 shares of our common stock, which shares are subject to a lock-up arrangement previously described that is intended to prevent their immediate sale at a low market price. For all of its services, we agreed to pay Duncan Capital the 4% retainage and 150,000 shares of our common stock, which is also subject to the same lock-up arrangement. The effectiveness of the sale of the shares under the Standby Equity Distribution Agreement is conditioned upon us registering the shares of common stock with the Securities and Exchange Commission and obtaining all necessary permits or qualifying for exemptions under applicable state law. The costs associated with this registration will be borne by us.

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The Standby Equity Distribution Agreement contains several conditions precedent to our right to deliver an advance notice and to the obligation of Cornell Capital to purchase shares of our common stock. These include: (i) China World Trade shall have filed with the Commission a registration statement with respect to the resale of the Registrable Securities and such registration statement shall have become effective; (ii) China World Trade shall have all requisite authority for the offer and sale of the shares of common stock; (iii) there shall not exist any fundamental changes to the information set forth in the registration statement which would require us to file a post-effective amendment to the registration statement; (iv) China World Trade shall have performed, satisfied and complied in all material respects with all of the covenants, agreements and conditions set forth in the Standby Equity Distribution Agreement and the Registration Rights Agreement; (v) there shall be no injunction or other statute, rule or regulation that prohibits or directly and adversely affects this offering or any proceeding relating thereto; (vi) our stock shall not have been suspended from trading or delisted; (vii) the amount of an advance requested by China World Trade shall not exceed the Maximum Advance Amount or cause Cornell Capital to own more than 9.9% of our then outstanding common stock; (viii) we shall have no knowledge of any event which would be more likely than not to cause the registration statement to be suspended or otherwise ineffective; and (ix) we shall have delivered to Cornell Capital a certificate to the effect that, among other things, we have performed all of our covenants and agreements under the Standby Equity Distribution Agreement.

An Analysis Of The Standby Equity Distribution Agreement

Pursuant to the Standby Equity Distribution Agreement, we may periodically sell shares of common stock to Cornell Capital to raise capital to fund our working capital needs. The periodic sale of shares is known as an advance. We may request an advance every seven trading days. A closing will be held six trading days after such written notice at which time we will deliver shares of common stock and Cornell Capital will pay the advance amount. The closing occurs subject to the terms of an escrow agreement between us, Cornell Capital and the Escrow Agent. In addition to the closing conditions set forth above, we must have filed our periodic and other reports with the Securities and Exchange Commission, delivered the stock for an advance, the trading of our common stock shall not have been suspended, and we shall have given written notice and associated correspondence to Cornell Capital. We are limited, however, on our ability to request advances under the Standby Equity Distribution Agreement based on the number of shares we have registered on this registration statement. For example, at an assumed offering price of $2.10, we would not be able to draw the entire gross proceeds of $30.0 million available under the Standby Equity Distribution Agreement with the 14,285,714 shares we are registering. We would be required to register 1,285,714 additional shares at this assumed price to obtain the entire $30.0 million available under the Standby Equity Distribution Agreement. Based on the limited number of available authorized shares of common stock, in the event of that the market price of our common stock declined significantly in the market, we may need to obtain shareholder approval to increase the authorized shares of common stock to access additional amounts under the Standby Equity Distribution Agreement. In order to access all funds available to us under the Standby Equity Distribution Agreement with the 14,285,714 shares being registered under the Standby Equity Distribution Agreement in this offering, the average price of shares issued under the Standby Equity Distribution Agreement would need to be $2.34.

We may request advances under the Standby Equity Distribution Agreement once the underlying shares are registered with the Securities and Exchange Commission. Thereafter, we may continue to request advances until Cornell Capital has advanced $30.0 million or 24 months after the effective date of this registration statement, whichever occurs first.

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The amount of each advance is subject to a maximum amount of $1.5 million, except for the first advance, which can be requested in an amount up to $3.0 million, and we may not submit an advance within seven trading days of a prior advance. The amount available under the Standby Equity Distribution Agreement is not dependent on the price or volume of our common stock. Our ability to request advances is conditioned upon us registering the shares of common stock with the SEC. In addition, we may not request advances if the shares to be issued in connection with such advances would result in Cornell Capital owning more than 9.9% of our outstanding common stock. Cornell Capital’s current beneficial ownership of our common stock is 3.6% and therefore we would be permitted to make draws on the Standby Equity Distribution Agreement so long as Cornell Capital’s beneficial ownership of our common stock remains lower than 9.9%.

We do not have any agreements with Cornell Capital regarding the distribution of such stock, although Cornell Capital has indicated that it intends to promptly sell any stock received under the Standby Equity Distribution Agreement.

We cannot predict the actual number of shares of common stock that will be issued pursuant to the Standby Equity Distribution Agreement, in part, because the purchase price of the shares will fluctuate based on prevailing market conditions and we have not determined the total amount of advances we intend to draw. Nonetheless, we can estimate the number of shares of our common stock that will be issued using certain assumptions. Assuming we issued the number of shares of common stock being registered in the accompanying registration statement at a recent price of $2.10 per share, we would issue 14,285,714 shares of common stock to Cornell Capital for net proceeds of $27,300,000. These shares would represent 29% of our outstanding common stock upon issuance. We will need to register additional shares of common stock in order to fully utilize the $30.0 million available under the Standby Equity Distribution Agreement if the average price at which we sell shares under the Standby Equity Distribution Agreement is equal to $2.10 per share.

There is an inverse relationship between our stock price and the number of shares to be issued under the Standby Equity Distribution Agreement. That is, as our stock price declines, we would be required to issue a greater number of shares under the Standby Equity Distribution Agreement for a given advance. This inverse relationship is demonstrated by the following table, which shows the number of shares to be issued under the Standby Equity Distribution Agreement at a recent price of $2.10 per share and 25%, 50% and 75% discounts to the recent price. This table assumes that if we issue more than 14,285,714 shares of common stock for sale pursuant to the Standby Equity Distribution Agreement because our stock price has fallen, we will file a new registration statement with the Commission to register such shares for sale.

	Recent			25%			50%			75%
Purchase Price:	$	2.10		$	1.58		$	1.05		$	0.53
Number of Shares (1):		14,285,714			18,987,341			28,571,428			56,603,774
Total Outstanding (2):		45,175,711			49,877,338			59,461,425			87,493,771
Percent Outstanding (3):		31.6	%		38.1	%		48.1	%		64.7	%

------------------------------------

(1)Represents the number of shares of common stock to be issued to Cornell Capital under the Standby Equity Distribution Agreement at the prices set forth in the table, assuming sufficient authorized shares are available.

(2)Represents the total number of shares of common stock outstanding after the issuance of the shares to Cornell Capital under the Standby Equity Distribution Agreement, not including shares issued under the Warrants.

(3)Represents the shares of common stock to be issued as a percentage of the total number of shares outstanding.

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Proceeds used under the Standby Equity Distribution Agreement will be used in the manner set forth in the “Use of Proceeds” section of this prospectus. We cannot predict the total amount of proceeds to be raised in this transaction because we have not determined the total amount of the advances we intend to draw. Cornell Capital has the ability to permanently terminate its obligation to purchase shares of common stock from us under the Standby Equity Distribution Agreement if there shall occur any stop order or suspension of the effectiveness of this registration statement for an aggregate of fifty (50) trading days other than due to acts by Cornell Capital or if we fail materially to comply with certain terms of the Standby Equity Distribution Agreement, which remain uncured for thirty (30) days after notice from Cornell Capital.

PLAN OF DISTRIBUTION

The selling stockholders have advised that the sale or distribution of our common stock owned by the selling stockholders may be effected directly to purchasers by the selling stockholders as principals or through one or more underwriters, brokers, dealers or agents from time to time in one or more transactions (which may involve crosses or block transactions) (i) on the Over-the-Counter market or in any other market on which the price of our shares of common stock are quoted or (ii) in transactions otherwise than on the Over-the-Counter market or in any other market on which the price of our shares of common stock are quoted. Any of such transactions may be effected at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at varying prices determined at the time of sale or at negotiated or fixed prices, in each case as determined by the selling stockholders or by agreement between the selling stockholders and underwriters, broker, dealers or agents, or purchasers. If the selling stockholders effect such transactions by selling their shares of common stock to or through underwriters, brokers, dealers or agents, such underwriters, brokers, dealers or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of common stock for whom they may act as agent (which discounts, concessions or commissions as to particular underwriters, brokers, dealers or agents may be in excess of those customary in the types of transactions involved). Notwithstanding the foregoing, this registration statement does not cover sales by donees, pledges, transferees, or other successors in interest of Cornell Capital.

Cornell Capital is an “underwriter” within the meaning of the Securities Act of 1933, as amended, in connection with the sale of common stock under the Standby Equity Distribution Agreement. Cornell Capital will pay us 99% of, or a 1% discount to, the lowest closing bid price of our common stock on the Over-the-Counter Bulletin Board or other principal trading market on which our common stock is traded for the five days immediately following the advance date. In addition, Cornell Capital will retain 4% of the proceeds received by us under the Standby Equity Distribution Agreement, and received 225,000 shares of our common stock on November 30, 2004. The 1% discount, the 4% retainage and the 225,000 shares of common stock are underwriting discounts. In addition, we engaged Duncan Capital, an unaffiliated broker-dealer, to advise us in connection with the Standby Equity Distribution Agreement. Duncan Capital has entered into the Placement Agent Agreement with us, pursuant to which Duncan Capital has reviewed the terms of the Standby Equity Distribution Agreement and has advised us concerning these terms. Duncan Capital, to our knowledge, will not be participating in the distribution of shares that may be issued under the Standby Equity Distribution Agreement. For its services in regard to the Standby Equity Distribution Agreement, Duncan Capital received 150,000 shares of our common stock and will retain an amount equal to 4% of each advance. Both Cornell Capital and Duncan Capital are subject to a lock-up arrangement with us, which generally prevents the immediate sale of their 225,000 and 150,000 shares, respectively, for a certain period of time at a low market price.

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Cornell Capital was formed in February 2000 as a Delaware limited partnership. Cornell Capital is a domestic hedge fund in the business of investing in and financing public companies. Cornell Capital does not intend to make a market in our stock or to otherwise engage in stabilizing or other transactions intended to help support the stock price. Prospective investors should take these factors into consideration before purchasing our common stock.

Duncan Capital was formed in 2004 as a New York limited liability company and licensed broker-dealer. From time to time, Duncan Capital is engaged in an advisory capacity to clients that are parties to financing arrangements such as the Standby Equity Distribution Agreement. As mentioned above, Duncan Capital has entered into a Placement Agent Agreement with us, pursuant to which it has agreed to review the terms of the Standby Equity Distribution Agreement and advise us with respect to those terms. Upon the execution of this agreement, we issued to Duncan Capital 150,000 shares of our common stock, and agreed to give Duncan Capital “piggy-back” registration rights which were triggered upon registration of any shares of our common stock by Cornell Capital. For a period of ninety (90) calendar days following the date of the Agreement, Duncan Capital agreed not to sell its shares of common stock if the market price is less than a certain amount. In addition, Duncan Capital is entitled to compensation in an amount equal to 4% of the amount of each advance under the Standby Equity Distribution Agreement. The obligations of Duncan Capital under the Placement Agent Agreement are subject to the satisfaction or waiver of certain customary conditions precedent. In addition, we have agreed to indemnify and hold Duncan Capital, its affiliates and certain control persons, harmless from any and all losses, claims, damages, liabilities, costs or expenses that may arise out of any material misstatement or omission in this prospectus or any breach by us of any representation, warranty, covenant or agreement made by us in the Placement Agent Agreement.

In connection with this offering, both Duncan Capital and Cornell Capital have agreed with us not to short sell shares of our common stock during the duration of the Standby Equity Distribution Agreement.

Under the securities laws of certain states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. The selling stockholders are advised to ensure that any underwriters, brokers, dealers or agents effecting transactions on behalf of the selling stockholders are registered to sell securities in all fifty states. In addition, in certain states the shares of common stock may not be sold unless the shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

We will pay the entire expenses incident to this registration, offering and sale of the shares of common stock to the public hereunder other than commissions, fees and discounts of underwriters, broker, dealers and agents. If any of these other expenses exists, we expect the selling stockholders to pay these expenses. We have agreed to indemnify Cornell Capital and its controlling persons against certain liabilities, including liabilities under the Securities Act. We estimate the expenses of the offering to be borne by us will be approximately $85,000. For its services, Duncan Capital received 150,000 shares of our common stock on December 6, 2004, and will retain an amount equal to 4% of each advance. The offering expenses consist of: an SEC registration fee of $4,518.33, legal fees of $50,000, state Blue Sky fees of $7,500 and miscellaneous expenses of $1,000. We will not receive any proceeds from the sale of any of the shares of common stock under the Standby Equity Distribution Agreement.

The selling stockholders should be aware that the anti-manipulation provisions of Regulation M under the Exchange Act will apply to purchases and sales of shares of common stock by the selling stockholders, and that there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, the selling stockholders or their agents may not bid for, purchase, or attempt to induce any person to bid for or purchase, shares of our common stock while such selling stockholders are distributing shares covered by this prospectus. Accordingly, except as noted below, the selling stockholders are not permitted to cover short sales by purchasing shares while the distribution is taking place. Cornell Capital can cover any short positions only with shares received from us under the Standby Equity Distribution Agreement. The selling stockholders are advised that if a particular offer of common stock is to be made on terms constituting a material change from the information set forth above with respect to the Plan of Distribution, then, to the extent required, a post-effective amendment to the accompanying registration must be filed with the Securities and Exchange Commission.

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LEGAL PROCEEDINGS

We are not aware of any pending or threatened legal proceedings, other than as set forth below, in which we are involved. In addition, we are not aware of any pending or threatened legal proceedings in which entities affiliated with our officers, directors or beneficial owners are involved.

On December 10, 2004, Kenneth P. Silverman, Esq., as Trustee for the Estate of Chief Executive Officers Clubs, Inc. (the “Trustee”), filed a Complaint against CEO Clubs China Limited, China World Trade Corporation, Simon Guo and J.P. Li (the “Complaint”), which commenced an Adversary Proceeding relating to a Chapter 7 bankruptcy case pending in the U.S. Bankruptcy Court for the Southern District of New York, captioned as In Re: Chief Executive Officers Clubs, Inc., Debtor. The Complaint alleges, among other things, that certain assets of the Chief Executive Officers Clubs, Inc. bankruptcy estate were transferred to our Company in violation of Section 549 of the Bankruptcy Code. It requests that the Bankruptcy Court order, among other things, a return of such assets by our Company and/or seeks a judgment against us in the amount of not less than $480,000.00.

As previously disclosed, on May 7, 2004, the Company acquired 51% of the outstanding capital stock of CEO Clubs China Limited, a Hong Kong corporation (“CEO Clubs China”), through one of its wholly-owned subsidiaries, for a total consideration of cash and shares of common stock amounting to US$480,000. CEO Clubs China is an authorized chapter to operate under the “CEO Clubs” trademarks in the Greater China region, including the Peoples’ Republic of China, Hong Kong and Taiwan.

We have engaged counsel and are vigorously defending the Adversary Proceeding. We filed a Motion To Dismiss which was heard on March 22, 2005, and the judge ruled in favor of the Trustee by refusing to dismiss the case at this preliminary stage of the proceedings. Notwithstanding that decision, our primary defense is that we purchased the stock of CEO Clubs China, and did not acquire any assets of the Chief Executive Officers Clubs, Inc. bankruptcy estate. We believe that this defense will be meritorious should the matter ever come to trial.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

Directors and Executive Officers

Our Bylaws provide that we shall have that number of directors determined by the majority vote of the board of directors. Currently we have five directors. Each director will serve until our next annual shareholder meeting. Directors are elected for one-year terms. Our Board of Directors elects our officers at the regular annual meeting of the Board of Directors following the annual meeting of shareholders. Vacancies may be filled by a majority vote of the remaining directors then in office. Our directors and executive officers are as follows:

Name	Age	Position
William Chi Hung Tsang	43	Chairman, Director and President
Zeliang Chen	39	Vice Chairman and Director
John H.W. Hui	46	Vice Chairman, Chief Executive Office and Director
Chi Ming Chan	43	General Manager and Director
Chao Ming Luo	54	Director
Bernard K. Chan	41	Chief Financial Officer
Ye Xin Long	59	Independent Director
Hamid R. Seyedin	53	Independent Director
Samuel Yung	46	Independent Director
Chi Kin Ho	35	Independent Director

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Backgrounds of Directors

Executive Directors

Mr. William Chi Hung Tsang, aged 43, is the President and Chairman of the Board of Directors of China World Trade Corporation. Mr. Tsang has more than 15 years of experience in leatherwear manufacturing and property investment. Prior to joining the Company, he was an executive director with a listed company for over 10 years. He is a member of the Beijing Municipal Committee of the Chinese People’s Political Consultative Conference; committee member of Chinese General Chamber of Commerce, Hong Kong; vice chairman of Hong Kong United Youth Association Limited; chief president of New Territories Commercial & Industrial General Association Ltd.; and vice chairman of both Hong Kong Chamber of Commerce in China - Guangdong and Guangzhou Federation of Industry & Commerce. He is also an honorary president of North-East Overseas Chinese Friendship Association U.S.A., and an honorable citizen of Guangzhou.

Mr. Zeliang Chen, aged 39, is the Vice Chairman and Director of the Company. Mr. Chen graduated with honors from Renmin University of China with a Bachelor of Law. He is the founder of Guangdong Hua Hao Group of Companies and is a committee member of the Private Enterprise Council of Guangdong Province. Mr. Chen now is a Chief Executive Officer and Chairman of Guangdong New Generation Travel Service Co., Ltd., Director of Guangdong Huahao Industries Group of Companies, Director and Vice Chairman of China World Trade Corporation.

Mr. John H.W. Hui, aged 46, is the Vice Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Hui has over 10 years experience in China trade and investment. He is responsible for the overall corporate development of the Company. Mr. Hui is also the President of Beijing World Trade Center Club and Guangzhou World Trade Center Club. He has excellent relationships with the China partners and the principals of the World Trade Center Association in New York and other WTCs around the world. Mr. Hui is a current member of the Canada Business Council Beijing, and American Chamber of Commerce, Guangdong.

Mr. Chi Ming Chan, aged 43, is a Director and General Manager of the Company. Mr. Chan is responsible for the strategic planning, corporate development and project implementation of the Company. Before joining us, Mr. Chan was a Corporate Development Strategist for Renren Holding Ltd., a publicly listed company on the Hong Kong Stock Exchange. Mr. Chan founded Asian Information Resources (Holding) Ltd. in 1995, which eventually listed on the Hong Kong Stock Exchange in 1999. A specialist in Chinese law and China affairs, Mr. Chan is an expert in networking, Internet technology, database technology and management of technical resources. He developed an electronic database system for the Law-on-Line project of the University of Hong Kong and has provided technical consultancy to this project since 1991. He has also developed the Dongguan Network, which has become a successful model for other cities in China. He was appointed by the Asian Development Bank (ADB) as a consultant for the TA Project No. 2702 - Study on PRC Legal Information System and the Electronic Data Expert for the TA project No. 3000. Mr. Chan holds a Master of Law degree from Lancaster University, the United Kingdom, a Master of Philosophy degree in Physics and Bachelor Degree in Physics both from the Chinese University of Hong Kong.

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Mr. Chao Ming Luo, aged 54, is a Director of the Company. Mr. Luo has long-term collaborative relations with Hong Kong business circles and associations. He was employed at the Xinhua News Agency Hong Kong from 1983 to 1996; he then joined the Xinhua News Agency Hong Kong Branch Guangzhou Representative Office in 1996 before joining the Company. He is the Chief Council Member of Guangdong Overseas Friendship Association, and Council Member of Guangzhou Overseas Friendship Association. Mr. Luo worked as the Electric Design Technician in Guangzhou Design Institute and the Assistant of Electric Technology Specialty, Electric Engineering Department in Guangdong University of Technology.

Independent Directors and Members of Audit Committee

Mr. Ye Xin Long, aged 59, is an Independent Director of the Company. Mr. Ye has over 35 years of experience doing business in China and investing in Chinese enterprises. He has an excellent relationship with the Beijing Municipal Government and the Guangzhou Municipal Government.

Mr. Hamid R. Seyedin, aged 53, is an Independent Director and a member of the audit committee of the Company. Mr. Seyedin is the CEO of First Washington Group and President of the American Chamber of Commerce in Guangdong. Under his leadership since 2003, the American Chamber of Commerce in Guangdong has grown by more than 83% in membership and 300% in revenues. In 1991, former U.S. President George Bush recognized him in writing for his involvement with the passage of the Fast Track Procedures for the North American Free Trade Agreement (NAFTA). Appointed by three governors of the State of Maryland to four terms of office, he served as the Chairman of Montgomery College and State Chairman of the Maryland Association of Community Colleges representing all seventeen colleges in the State. He served on the Board of Directors of the Kennedy Institute, by appointment of Cardinal James A. Hickey (then Archbishop of Washington). He was a recipient of an award in business from the U.S. Department of Commerce. He received recognition from the U.S. Senate Sergeant At Arms for his service to the U.S. Senate Deliberations. Finally, he served two terms on the Maryland Advisory Committee of the U.S. Civil Rights Commission.

Mr. Samuel Yung, aged 46, is an Independent Director and a member of the audit committee of China World Trade Corporation. Mr. Yung is a Senior District Director of American International Assurance Co. (Bermuda) Ltd., a member company of American International Group, Inc. He was the President of The Life Underwriters Association of Hong Kong in 1991, President of the General Agents and Managers Association of Hong Kong in 1996, and Advisory Board Chairman of the General Agents & Managers Association International between 1997 and 1999. Mr. Yung has also participated in numerous community services and served as council member for a number of government committees. In addition, he also serves as advisor to many educational associations. Mr. Yung is a Certified Financial Planner^CM, a Chartered Insurance Agency Manager, a Registered Financial Consultant, a Certified Manager of Financial Advisor, and a Chartered Financial Practitioner.

Mr. Chi Kin Ho, aged 35, is an Independent Director and a member of the audit committee of the Company. Mr. Ho is a principal of CCP C.P.A. Limited of Hong Kong, an accounting firm focusing on providing statutory audit service. Mr. Ho is a U.S. Certified Public Accountant, a member of AICPA, and associate member of Hong Kong Accounting Association. He has over ten years of experience in both U.S. and China in the area of financial accounting, U.S. taxation and reporting, as well as management advisory. Mr. Ho earned his Bachelor of Business Administration Degree from Hawaii Pacific University.

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Officers

Mr. Bernard K. Chan, aged 41, is the Chief Financial Officer of the Company. He oversees M&A and financial projects of China World Trade Corporation. Mr. Chan has over 15 years of experience in the areas of financial advisory, direct private investments and corporate finance. He was a Managing Partner of a local corporate finance firm concentrating on providing advisory of U.S. listing and capital raising. Prior to that, Mr. Chan was a member of senior management for several listed companies in Hong Kong and the largest private landowner in Hawaii, focusing on direct investments and assets management. He is also a Registered Investment Advisor. Mr. Chan earned his Master of Business Administration Degree in International Management and Investment Finance, Master of Science Degree in Applied Econometrics, and Bachelor of Business Administration Degree in Investment Finance, all from the University of Hawaii.

There are no familial relationships between our officers and directors.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by Commission regulations to furnish us with copies of all Section 16(a) reports they file. To the best of our knowledge (based solely upon a review of the Form 3, 4 and 5 filed), we believe that as of the end of this fiscal year, no officer, director or 10% beneficial shareholder failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number of shares of common stock beneficially owned as of December 31, 2004 by (i) those persons or groups known to us who will beneficially own more than 5% of our common stock; (ii) each Director and director nominee; (iii) each executive officer whose compensation exceeded $100,000 in the fiscal year ended December 31, 2004; and, (iv) all directors and executive officers as a group. The information is determined in accordance with Rule 13d-3 promulgated under the Exchange Act based upon information furnished by persons listed or contained in filings made by them with the Securities and Exchange Commission and upon information provided by such persons directly to us. Except as indicated below, the stockholders listed possess sole voting and investment power with respect to their shares.

Name/Address	Number of Shares	Percentage Ownership(1)
William Chi Hung Tsang Room 1217, The Metropolis Tower, 10 Metropolis Drive, Hunghom, Hong Kong	17,105,948	48.3%
Powertronic Holdings Limited 9 Des Voeus Road West, 12th Floor, Hong Kong	5,574,074	15.8%
Grand Perfection Limited 15th Floor, Rihang Hotel, 198 Linhe Road West, Guangzhou, PRC	2,040,619	5.8%
Bernard Chan 65 Cadogan Street, 2nd Floor, Kennedy Town, Hong Kong	104,752	**
Chi Ming Chan 138 Tiyu Road East, 3rd Floor, Goldlion Digital Network Center, Guangzhou, PRC	53,272	**
Chao Ming Luo 138 Tiyu Road East, 3rd Floor, Goldlion Digital Network Center, Guangzhou, PRC	26,636	**
John Hui 7040 Granville Avenue, Suite 403, Richmond B.C. Canada	55,321	**
All Officers and Directors as a Group (6 persons)	19,386,548	54.8%

** Less than 1%

(1)Based on 35,389,997 shares outstanding as of March 31, 2005 (including 4,500,000 shares of common stock issuable on the exercise of outstanding warrants).

Inasmuch as we do not have cumulative voting for the election of directors, and this offering of 16,981,717 shares of common stock would represent only 35.5% of the issued and outstanding shares of common stock if all such shares were sold, the issuance of shares of common stock under this offering would not result in a change of control of China World Trade.

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DESCRIPTION OF SECURITIES

The following statements constitute summaries of the material provisions of China World Trade Corporation's Certificate of Incorporation and Bylaws, as amended. Such summaries do not purport to be complete and are qualified in their entirety by reference to the full text of the Certificate of Incorporation and Bylaws, which are contained in the Exhibits to this registration statement.

Our Articles of Incorporation authorize the issuance of up to 50,000,000 Common Shares, $.001 par value per common share and 10,000,000 shares of preferred stock, $0.001 par value per share. As of December 31, 2004, we have issued 30,889,997 shares of common stock. No preferred shares are issued and outstanding:

Common Stock - General Provisions. Each share of Common Stock is equal to every other share of Common Stock. Each share of Common Stock shall entitle the holder thereof to one vote upon all matters upon which stockholders have the right to vote. There are no preemptive rights. Our Common Shares have a par value of $.001 per share, and have the following rights.

Liquidation Rights. In the event of any voluntary or involuntary liquidation, distribution or winding up of the Corporation, after distribution in full to the holders of shares of preferred stock, the Common Stock shareholders shall be entitled to receive all of the remaining assets of the Corporation legally available for distribution. The distribution to the stockholders will occur ratably in proportion to the number of shares of Common Stock held by them.

Dividend Rights. Subject to the rights of any outstanding preferred stock, (if issued) the holders of shares of Common Stock shall be entitled to receive dividends declared by the Board of Directors. Dividends may be payable in cash, stock or otherwise. China World Trade Corporation has not paid dividends to date and it is not anticipated that any dividends will be paid in the foreseeable future. Our policy has been to retaining earning, if any, to finance our future growth. Accordingly, future dividends, if any, will depend upon, among other considerations, on our need for working capital and other financial conditions.

Voting Rights. Holders of Common Shares of China World Trade Corporation are entitled to cast one vote for each share held at all shareholders meetings for all purposes. The holders of shares of Common Stock vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

Other Rights. Common Shares are not redeemable, have no conversion rights and carry no preemptive or other rights to subscribe to or purchase additional Common Shares in the event of a subsequent offering.

Options, Rights or Warrants. The Corporation has and may continue to make offerings of options, rights or warrants to subscribe for shares of capital stock.

Preferred Stock. The Preferred Stock may be issued from time to time in one or more series. The preferred stock shall have voting rights of 100 to 1 per share over the voting rights of common stock. The Board of Directors hereby may issue preferred shares in one or more classes or series and with respect to each such class or series to fix and determine the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

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INTEREST OF EXPERTS AND COUNSEL

Our audit reports for the periods ended December 31, 2004 and September 30, 2003, the audit report for Guangdong New Generation Commercial Management Ltd. for the periods ended March 31, 2004, December 31, 2003 and December 31, 2002, and the audit report for Gunagdong Huahao Insurance Agency, Ltd. for the periods ended March 31, 2004, December 31, 2003 and December 31, 2002 have been included in this prospectus in reliance upon Moores Rowland Mazars, independent Certified Public Accountants, as experts in accounting and auditing.

The Law Offices of Harold H. Martin, P.A. has rendered an opinion on the validity of our common stock being registered. Mr. Martin is not an affiliate of China World Trade.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.

China World Trade will indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Nevada, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, partner, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise. The indemnification covers expenses (including attorneys' fees), judgments, fines and amounts paid in settlement. It also covers costs. Advancements towards these expenses may be made by China World Trade.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by our directors, officers or controlling persons in the successful defense of any action, suit or proceedings, is asserted by such director, officer, or controlling person in connection with any securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issues.

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DESCRIPTION OF BUSINESS

Company History

China World Trade Corporation, ("China World Trade”) was incorporated in the State of Nevada on January 29, 1998 under the name Txon International Development Corporation to conduct any lawful business, to exercise any lawful purpose and power, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Laws of Nevada

On August 14, 2000, pursuant to a share exchange agreement dated August 10, 2000, by and among Main Edge International Limited, a British Virgin Islands corporation ("Main Edge"), Virtual Edge Limited, a British Virgin Islands corporation and a wholly-owned subsidiary of Main Edge ("Virtual Edge"), Richard Ford, Jeanie Hildebrand and Gary Lewis, we acquired from Main Edge all of the shares of Virtual Edge (the "Acquisition") in exchange for an aggregate of one million nine hundred sixty one thousand, one hundred and seventy five (1,961,175) shares of our common stock, which shares equaled 75.16% of Txon International’s issued and outstanding shares after giving effect to the Acquisition. Both Main Edge and Virtual Edge were investment holding companies organized to own the stock of businesses which they acquired. On September 15, 2000, Txon International Development Corporation changed its name to China World Trade Corporation and effectuated an 8 for 1 forward stock split. As a result of the forward stock split, Main Edge held 15,689,400 shares of our common stock, which shares equaled 75.16% of our issued and outstanding shares.

In September 2002, China World Trade underwent a debt for equity capital restructuring whereby certain creditors of China World Trade converted an aggregate of $2,731,677 into an aggregate of 4,000,000 shares of common stock.

Powertronic Holdings Limited ("Powertronic"), a British Virgin Islands company, entered into a share purchase agreement dated September 3, 2002 (the "First Share Purchase Agreement") with China World Trade, to purchase 1,000,000 Shares and warrants (the "First Warrants") to purchase up to 2,000,000 Shares, for the total purchase price of US$500,000.00. Powertronic was an investment holding company. Additionally, Powertronic entered into a second share purchase agreement dated December 17, 2002 (the "Second Share Purchase Agreement") with China World Trade, to purchase an additional 1,000,000 Shares and warrants (the "Second Warrants") to purchase up to an additional 2,000,000 Shares, for the total purchase price of US$500,000.00. The First Warrants and the Second Warrants may be exercised within two years of their issue at an exercise price of US$0.575 per share. On September 12, 2002, 1,000,000 shares and the first warrants were issued pursuant to the First Share Purchase Agreement. The Second Share Purchase Agreement and the Share Exchange Agreement were each completed on January 24, 2003 and on that date one million (1,000,000) Shares, and the Second Warrants were issued to Powertronic.

China World Trade entered into a share exchange agreement (the "Share Exchange Agreement") dated as of December 17, 2002, with Mr. William Chi Hung Tsang ("Mr. Tsang"), the sole beneficial owner of the share capital in General Business Network (Holdings) Ltd. ("GBN"), a Hong Kong company. Pursuant to the Share Exchange Agreement, China World Trade acquired from Mr. Tsang all of the issued and outstanding shares of GBN in exchange for four million (4,000,000) Shares and warrants (the "Tsang Warrants") to purchase an additional four million (4,000,000) Shares. As of the date of acquisition, GBN owned two rental properties located at 20/F, Goldlion Digital Network Center, Unit 01-10, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC and Flat B, 12/F., Champion Center, 301-309 Nathan Road, Hong Kong, collectively valued in excess of US$ 4,000,000. The Tsang Warrants may be exercised within two years of their issue at an exercise price of US$0.92 per Share. On January 24, 2003, four million (4,000,000) Shares and the Tsang Warrants were issued to Mr. Tsang.

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On May 7, 2004, China World Trade, through one of its wholly-owned subsidiaries, acquired 51% of the capital stock of CEO Clubs China Limited (“CEO Clubs China”) for a total consideration in cash and shares of the common stock of China World Trade in the amount of US$480,000. CEO Clubs China is a Hong Kong corporation with authorized chapters to operate under the “CEO Clubs” trademarks in the Greater China Region, including the PRC, Hong Kong and Taiwan. Comprised of thirteen chapters in the U.S. and China, the CEO Clubs are a by-invitation-only membership association. Members must be CEOs of businesses that have above $2,000,000 in annual sales. Our average club member has $20,000,000 in annual sales. In fiscal year 2002, CEO Clubs opened its first international chapter in China.

On August 2, 2004, we consummated an acquisition of 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized and existing under the laws of the PRC (“New Generation”), for an aggregate consideration of US$10,232,000, payable approximately US$2,741,000 in cash and approximately US$7,487,000 in market value of common stock of China World Trade. New Generation is a formidable competitor in the travel agency business through operations of its ten subsidiaries in Southern China. It is a significant competitor in ticketing sales for international and domestic flights as well as inbound business travel. In addition, its goal is to become one of the major consolidators of hotel rooms and airline tickets in China. New Generation has already acquired the necessary licenses to operate as a ticketing and travel agent in the PRC, a highly regulated business. In addition, New Generation is also a licensed insurance agent in China to provide, in particular, accidental and life insurances. While there can be no assurances of success, China World Trade expects that New Generation will contribute a significant revenue base to our company.

Overview

Our business plan involves the pursuit of three distinct lines of business. These include (i) the business clubs located in major cities of China, including Guangzhou, the PRC and Beijing, the PRC, with plans to open clubs in Shanghai and Shenzhen, the PRC, each club in association with the World Trade Center Association, by which we have positioned ourselves as a platform to facilitate trade between China and the world market, (ii) the business travel and related services, in which our latest acquisition, the New Generation Group of companies, a majority indirectly owned subsidiary, will continue as a consolidator of airline tickets and hotel accommodations in China, and as an agent for the provision of life and accident insurance in the Guangdong Province of China, and (iii) the business value-added services, in which we will concentrate on planning and operating interactive marketing and incentive programs for merchants, financial institutions, telecom operators, and large corporations with significant client bases, as well as consultancy services. The business clubs commenced operations in August 2002; the business travel services commenced operations in August 2004, resulting from the acquisition of the New Generation Group of companies; and the business value-added services commenced operations in year 2002, with a small contribution to earnings. Our growth in the industries of trade, travel and finance, should enable us to provide value added services and target many cross marketing opportunities. No assurances can be given, however, that we will be successful in our endeavors.

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Our executive office is located at 3rd Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC 510620.

We currently operate the Guangzhou World Trade Center Club, which is located at 3^rd Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou PRC, and the Beijing World Trade Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing, the PRC. We expect to open World Trade Center Clubs in Shanghai and Shenzhen in 2005. As part of our Business Clubs, we plan to create a Chinese/English internet portal to serve foreign and Chinese small to medium sized businesses.

We are also, through our indirect acquisition of a majority of the capital stock of the New Generation Group of companies, a business travel service provider in China. In addition, through another New Generation company, we are actively running a life and accident insurance agency business in the Guangdong Province. Finally, through our business value-added services division, we provide business services in the areas of interactive marketing and incentive programs in China, as well as consultancy services.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this Prospectus, unless otherwise specified, all dollar amounts are expressed in United States Dollars.

China World Trade Corporation

Segment Revenues

Year ended December 31

	2004				2003 (unaudited)
	US$%				US$%
Business Club		551,497	17.8	%		1,485,440	45.5	%
Business Travel
Traveling Services		1,571,412	50.8	%		-	0.0	%
Insurance		100,193	3.3	%		-	0.0	%
Business Value-added		40,695	1.3	%		212,605	6.5	%
Others		828,947	26.8	%		1,566,566	48.0	%
TOTAL		3,092,744	100.0	%		3,264,611	100.0	%

(1) Other revenues in year 2003 and year 2004 were mostly generated from trading business and rental of our properties.

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History of Virtual Edge

Virtual Edge was incorporated in the British Virgin Islands on February 18, 1999 as an investment holding company. We currently own 100% of the capital stock of Virtual Edge, through which we operate our Beijing World Trade Center Club and Guangzhou World Trade Center Club, in addition to the businesses of Infotech Enterprises Limited.

On October 5, 1999, pursuant to a share exchange, Virtual Edge acquired a majority interest in Infotech Enterprises Limited ("Infotech"). Infotech was incorporated on July 2, 1999 and is engaged in building a bilingual (Chinese and English) Business-to-Business internet portal.

On October 10, 1999, Virtual Edge signed an agreement with Belford Enterprises Limited ("Belford") pursuant to which Belford agreed to transfer its 75% interest in Beijing World Trade Center Club ("BWTCC") to Virtual Edge. BWTCC is engaged in the establishment of a club located in Beijing, the PRC, and provides recreation, business center services, communication and information services, products exhibitions services, commercial and trading brokerage services to its members.

On October 18, 2000, pursuant to a Share Exchange Agreement with Vast Opportunity Limited, we acquired the remaining interest in Infotech.

On November 10, 2001, Virtual Edge Limited signed an agreement with Guangzhou City International Exhibition Co., Ltd. pursuant to which a co-operative joint venture company, Guangzhou World Trade Center Club ("GWTCC") was formed to operate a business club in Guangzhou, the PRC to provide services including food and beverages, recreation, business center, communication and information, products exhibitions, as well as commercial and trading brokerage services to its members. Virtual Edge shares 75% of the profits from the operation of GWTCC. Located at Goldlion Digital Network Center in Guangzhou, GWTCC had its grand opening on January 28, 2002.

Our Corporate Structure

We are a holding company for twenty-three, direct and indirect, majority and wholly-owned subsidiaries that operate businesses in China. Seven of these companies are incorporated under the laws of the British Virgin Islands, five of these companies are incorporated under the laws of Hong Kong, and the remaining eleven are incorporated in the People’s Republic of China. All of our business operations are located in China. Set forth below is an organizational chart depicting the relationships among our various companies.

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OUR BUSINESS PLAN IN EACH AREA OF OPERATIONS

We are a holding company with twenty-three majority and wholly-owned subsidiaries incorporated under the laws of the British Virgin Islands, Hong Kong and the Peoples’ Republic of China. We do not have any operations of our own, but rather hold equity positions in our operating companies. Our business operations are organized along the following lines: Business Clubs, Travel and Related Businesses (Including Insurance Services), Value Added businesses and Other Operations. In fiscal 2004, we derived approximately $551,000 in revenues, representing 17.8% of total revenues from our Business Clubs operations; approximately $1,672,000 in revenues, representing 54.1% of total revenues from our Travel and Related businesses; approximately $41,000 in revenues, representing 1.3% of total revenues from our Value Added businesses; and approximately $829,000, representing 26.8% of total revenues from Other Operations, including operations in rental and trading businesses.

Business Plan For Our Business Clubs

The Opportunity in China

China has been considered one of the fastest growing economies in the world. The accession into the World Trade Organization (the “WTO”) will offer new opportunities for foreign companies to invest and do business in China. WTO membership for China will change the methods of market entry for overseas companies. Foreign companies will need to have well-tailored plans to cope with China's target audience, services, marketing, finance, and human resources for the effective entry into the China market. The unique business culture and legal system in China will cause the local business information and services in China to become a key component to commerce.

As a whole, the consequential lower barriers to entry into the China market, and a more attractive investment environment, will provide small and medium sized foreign enterprises with investment opportunities for the first time.

China's accession into the WTO also provides significant business opportunities to the small to medium size private companies in China. The increase in involvement from foreign companies and investors in the China market means more opportunities to do business with foreign companies. Under the trend of globalization, the Chinese market will evolve from many segmented and monopolized markets to an integrated national market that is open to the world economy. The small and medium sized companies in China will enjoy much lower cost to enter into the worldwide market but will also confront intensified competition, lowered profit margins, and new rules of the game. These Chinese companies will need up-to-date business intelligence, professional strategic planning and the access to the worldwide business network to ensure the success in the new environment. And with its imminent accession into WTO, there will be unique opportunities for foreign investment and international trade.

The World Trade Centers Association (“WTCA”) is a not-for-profit corporation that focuses on promoting and assisting world trade activities. Its mission is to encourage world trade by fostering and supporting the development and operation of World Trade Centers in every region of the world. WTCA was established in 1970 and has memberships from more than 330 cities in about 100 countries with global members of over 750,000 enterprises.

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The World Trade Centers (“WTC”) are individually separate entities supported by the WTCA that generate revenues and profits from operating businesses with access to a diverse array of state-of-the-art international trade services and facilities, which enables them to increase their international trade. In the WTCA, every local member of a WTC in a city is automatically a member of all WTCs worldwide. This helps the WTCs to market their local membership, and also vastly increases the amount of services that a WTC can offer to its local members. Therefore, the WTCs worldwide form a reciprocal business network for businesses to access the international trade resources that may be expensive and even inaccessible in a domestic environment.

Our plan is to open and operate World Trade Center Clubs (the "Business Clubs"), which will be indirectly associated with the World Trade Center Association, in major cities in China, where Business Club members can relax, entertain, network and meet potential business partners in person, or via the Video Conferencing facilities of the WTCA worldwide network.

The World Trade Center Association has granted various licenses to the regional branches of China Commission for the Promotion of International Trade (“CCPIT”). China World Trade Corporation formed co-operative joint ventures with the business subsidiaries of CCPIT and acquired the operation rights of regular full membership of WTCA. The co-operative joint venture of our Beijing World Trade Center Club was formed on May 9, 1997 and our Guangzhou World Trade Centre Club was formed on November 10, 2001.

The facilities of the Business Clubs will likely include restaurants, a bar, a fitness center, saunas and spas, conference rooms, video conferencing facilities, smart offices and a library. The services to be offered by the Business Clubs may include the provision of trade agency and trade information, business services including smart offices, secretarial and translation services, conference room and video conferencing services. The Business Clubs may also operate a Business Consultation and Fulfillment and Logistics Counseling Service via a 24/7 call center manned by business professionals experienced in the China trade. Members of the Business Club will be entitled to WTCA membership and be entitled to the services and benefits of over 300 WTCs worldwide.

Facilities of the Business Clubs

China World Trade Corporation, through its wholly-owned subsidiary, Virtual Edge Limited, formed cooperative joint venture companies with the provincial branches of the China Commission for the Promotion of International Trade to operate the Guangzhou World Trade Center Club and Beijing World Trade Center Club with regular full membership status granted and authorized by WTCA. In order to generate revenues and profits, Guangzhou World Trade Center Club and Beijing World Trade Center Club provide a full range of top quality commercial and recreational services to our members. The clubhouses are luxuriously decorated and provide an elegant environment under which members can enjoy our facilities that include:

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·   Chinese and western fine dining,

·   Seminar and conference rooms,

·   Library,

·   Executive Suites,

·   Office and meeting room packages,

·   Videoconferencing facilities,

·   Exhibition rooms, and

·   Cigar and wine corner.

In terms of business services, they offer their members:

·   Liaison work with potential trading partners,

·   International economic and trade exhibitions and seminars,

·   Interpreters and secretarial services,

·   Organized trips to participate in World Trade Center Association sponsored activities,

·   Reception of visiting delegations of foreign World Trade Center Association member units,

·   Arrange meetings with Chinese government bodies, business corporations, and

·   Legal consultancy and travel management services.

Events Management Services

China World Trade is planning to assist foreign companies to organize and participate in conferences and exhibitions in China and assist Chinese companies to organize and participate in conferences and exhibitions overseas. This is a service for fee business.

Virtual Office

Virtual office services help foreign companies to establish a presence in China at minimum cost. Each client will be assigned a dedicated phone number, fax number and mail address. The phone number can be forwarded to a number assigned by the client, or be answered by a well trained secretary who takes care of the communication for the client. Foreign companies can also manage their communication with their China partners over the Internet. These services started in 2004 and a monthly fixed fee is charged for each account.

Marketing Strategy

We plan to market Business Club memberships mainly to international companies and businessmen doing business in China and local Chinese companies and businessmen seeking business opportunities within and outside China. We will utilize the good reputation and recognition of WTCA and the recreational and business facilities which will be offered at each Business Club to establish the Guangzhou Club, Beijing Club and other potential Business Clubs in various cities in the PRC as the premier business clubs of their kind. We also hope to make the ChinaWTC.com website into a distinctive Chinese/English language Internet portal. We will achieve our goals by placing advertisements with traditional media, such as newspapers, television, radio, magazines etc.; placing banners on high traffic web sites; sending e-mails to potential users; participating in trade shows; employing the services of external public relations and marketing firms; television "infomercials" and talk shows; outdoor advertising signs and attending / holding press conferences.

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We will form strategic alliances with companies that can contribute services and local expertise in various market sectors. These alliances will increase our content and navigation services, support our advertising services and expand our distribution networks. We will form vertical alliances, such as exhibition management companies and travel agents, which will either allow us to integrate their products to our services offerings or to access their distribution networks. We will also form horizontal alliances, such as golf clubs and other business clubs, to increase our client base.

An integral part of our success is dependent on the development and enhancement of our products and services. We will incorporate new technologies from third parties, expand products and services internally and conduct market research to remain aware and informed of the evolving user tastes and latest technologies. The New Generation acquisition has demonstrated the success of our strategies to grow the revenues of China World Trade through vertical consolidation. By acquiring New Generation, we have integrated the services offered by New Generation into the services offered by the Business Clubs. The Business Clubs services have also created value to New Generation by allowing New Generation to offer premium services to a selected group of important clients.

On the other hand, the acquisition of the CEO Clubs China is an example of our strategies to horizontally consolidate other business clubs so as to increase our client base.

Sources of Income

China World Trade will generate income from its Business Club activities in several ways. CWTC’s goal is to be the operator of World Trade Centers in major Chinese cities. While the worldwide business network from WTCA together with the reciprocal services will be the core attraction to businesspersons in China, the business community maintained by CWTC covering major cities in China will be an even more valuable asset in the long term. Through its presence in major cities in China, CWTC will develop a community of active businesspersons from small and medium sized enterprises with a common interest in world trade.

The Business Club is a core component of China World Trade. The target market for the Business Club will be the owners and senior managements of the small and medium sized enterprises in China. The Business Club will provide to members a full range of top quality commercial and recreational services, education programs and the business networking programs, and Business Club facilities together with an elegant environment.

Our Business Club will also help members to liaise with potential trading partners from overseas, to join international economic and trade exhibitions and seminars, and to organize international business trips.

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As part of the reciprocal arrangement under the WTCA, the Business Clubs will also provide services to visiting delegations from foreign WTC members. The CWTC Business Club will help foreign companies or businesspersons to minimize the barrier of doing business in China. Services provided to foreign companies and businessperson may include organizing meetings with Chinese government bodies, business corporations and potential partners.

The revenue of the Business Club business will come from membership fees, fees collected from training and events such as seminars.

At each Business Club will be a Business Center, which is operated for the benefit of the members and others. While the Business Center’s services are not confined to member of the Business Club, members of the Club will enjoy special discounts for the Business Center services and more dedicated support from the staffs under the Business Club. The Business Center will provide:

·   Temporary offices

·   Seminar and Conference rooms

·   Video conferencing facility

·   Exhibition rooms

·   Interpreters and secretarial services

·   Business consultation services

The revenue from a Business Center is derived from rental fees of facilities and service fees.

The clients of China World Trade’s Guangzhou World Trade Center Club in year 2004 included Fuji Xerox (China) Ltd., UT Starcom Telecom Co. Ltd. Guangzhou Branch, Air France, American International Assurance Co. Ltd., Guangzhou Branch, Hang Seng Bank Limited, Netbig Education Holdings Ltd., KPMG Huazhen Certified Public Accountants, China, and Sun Yaat-sen University.

The clients of China World Trade’s Beijing World Trade Center Club in year 2004 included Daimler Chrysler (China) Limited, VIZRT Media International, Schneider Electric (China) Investment Co. Ltd, International SOS, and other international companies.

Finally, China World Trade intends to negotiate and acquire the necessary approval from WTCA to license the China World Trade Center intellectual property rights including the logo and trademark to third parties. The licensees may use the logo and trademark of CWTC to quickly establish a brand for their products such as office accessories, or to attract a group of clients for certain services such as credit cards offered by the Business Value-Added division. Revenue will be generated from royalty fees, which may be paid in cash, stock or other property.

Competition

There are a number of organizations utilizing the word of “Club” in China. With respect to the Guangzhou Club, the Beijing Club and the other Business Clubs to be established in China, we believe that our Business Clubs are a unique facility, associated with a recognized and respected international organization, whose mission is the enhancement of international trade, and which offers prestigious business and recreational facilities to its member. As a result, we do not foresee any other competitor operating with a business model that is similar to ours. There are other country clubs in China, such as the Beijing American Club, which offer more in terms of recreational facilities and services, however, none of them offer the business services, network of international companies and online trade information in combination with a first class club environment. Additionally, there are organizations, like the American Chamber of Commerce, which provide limited trade and business information and networking capabilities, but they do not offer a prestigious club setting, recreational facilities or the amount of business services that are available to Club members.

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Employees

We have 78 employees in our Business Clubs as of December 31, 2004. None of them are parties to any union or collective bargaining agreement.

Governmental Regulation of Our Business Club Operations in China

The operation of our Business Clubs must conform to the governmental regulations and rules of the Peoples’ Republic of China.

The Chinese Legal System

The practical effect of the People’s Republic of China legal system on our business operations in China can be viewed from two separate but intertwined considerations. First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate Articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are not qualitatively different from the General Corporation Laws of the several states. Similarly, the People's Republic of China accounting laws mandate accounting practices, which are not consistent with US Generally Accepted Accounting Principles. The China accounting laws require that an annual "statutory audit" be performed in accordance with People's Republic of China accounting standards and that the books of account of Foreign Invested Enterprises are maintained in accordance with Chinese accounting laws. Article 14 of the People's Republic of China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal reports and statements to designate financial and tax authorities, at the risk of business license revocation.

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

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China's Accession into the WTO

On November 11, 2001, China signed an agreement to become a member of the World Trade Organization sometimes referred to as the WTO, the international body that sets most trade rules, further integrating China into the global economy and significantly reducing the barriers to international commerce. China's membership in the WTO was effective on December 11, 2001. China has agreed upon its accession to the WTO to reduce tariffs and non-tariff barriers, remove investment restrictions, provide trading and distribution rights for foreign firms, and open various service sectors to foreign competition. China's accession to the WTO may favorably affect our business in that reduced market barriers and a more transparent investment environment will facilitate increased investment opportunities in China, while tariff rate reductions and other enhancements will enable us to develop better investment strategies and attract investment capital. In addition, the WTO's dispute settlement mechanism provides a credible and effective tool to enforce members' commercial rights. Also, with China's entry to the WTO, it is believed that the relevant laws on foreign investment in China will be amplified and will follow common practices.

Business Plan For Our Air-Ticketing and Hotel Booking Businesses

China World Trade engages in the air-ticketing, hotel room booking and travel agency businesses through its indirect 51% ownership of the New Generation Group of companies. New Generation has ten operating subsidiaries in Southern China through which it operates these businesses. We believe that there are significant opportunities in the travel and tourism industry in China, which are set forth below, although there can be no assurances that we will be able to capitalize on them.

Summary Of New Generation’s Business Travel Services

We seek to serve China’s emerging class of frequent independent travelers, or FITs, who engage in business and leisure travel on their own instead of traveling in groups. Through our professional team of staff, our nationwide 24-hour toll-free call center, our user-friendly Chinese and English language website and our extensive reseller network, we provide our customers with consolidated travel information and the ability to book airline tickets at discounted rates nationwide within China. We also provide our customers with the ability to book hotel rooms at discounted rates in over 200 cities in China. The majority of our hotel suppliers are three-, four- or five-star hotels, as rated by the China National Tourism Bureau, catering to higher-end travelers. We also offer other travel related services, such as vacation packages and corporate travel services, at competitive prices.

According to the Yearbook of China Tourism Statistics 2003, China’s domestic tourism spending totaled approximately RMB388 in 2002 and RMB344 billion in 2003. We note that there was a decrease of 11% in 2003 due to the outbreak of SARs. In the same period, CTRIP, one of the best known operators serving FITs in China, derived RMB105 million in 2002 and 183 million in 2003 from this market, increased 127% and 73% from the previous year, respectively. This fact to a certain extent reflects that FITs will be a fast-growing, yet relatively underserved segment in the travel business.

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New Generation believes that it is a major provider of air ticketing services in China. Historically, the air ticketing business in China has been limited to a fragmented presence due to the licensing requirements and significant capital requirements. CTRIP and E-Long are among the best known participants in this business and their brand name recognition and volume of transactions is notable. CTRIP derived US$2.4 million from air ticketing in 2003. In comparison, New Generation reported US$1.98 million in 2003, and US$4.29 million as of the twelve months ended December 31, 2004.

Since its inception in 1998, New Generation has built a substantial air-ticketing distribution network in China. It offers customers a wide selection of flights in all major cities in China, usually at significant discounts to published rates. Our airline ticketing volume has increased from over 440,000 tickets for the six months ended June 30, 2004 to approximately 995,000 tickets for the year ended the December 31, 2004. This approximates US$43 million in value of transactions for the six months ended June 30, 2004 and US$115 million for the twelve months ended December 31, 2004. We issue and deliver air tickets using a network of local agents throughout major cities in China. New Generation started its hotel booking business in April 2004 and revenue generated from this division is insignificant to date. At this stage in its development, management is concentrating on establishing a nationwide network through forging business partnerships and improving its information technology infrastructure. Up to December 2004, it had contractual arrangements with 300 hotels, and there are also more than 2,000 hotels in over 200 cities that can be accessed through subcontracts with other hotel booking agents. In addition, our hotel booking operations successfully entered a three-party agreement with China Southern Airlines (CZ), the largest airline group in China, and InterContinental Hotels Group, a leading global hospitality group. Under this agreement, New Generation can provide customers with access to any of InterContinental’s 38 hotels in China and any of China Southern Airlines’ tickets departing from Guangzhou (via e-ticketing) at special package prices.

To facilitate rapid growth in hotel booking business, New Generation has created a comprehensive IT platform to facilitate its operation. A call center and website approach are believed to be essential to overcome the requirement of having many geographic locations in order to conduct business. Through telephones and the website, New Generation’s hotel booking business is not limited to the established air ticketing network. Instead, New Generation is able to form a more extensive hotel booking network quickly, that will also benefit our air ticketing business. For these reasons, although at present the hotel booking volume appears small, with only 62 room-nights booked for the nine months ended September 30, 2004, and 473 room-nights booked as of December 31, 2004, we believe that this business has significant growth potential.

New Generation has experienced significant growth since commencing in 2002. For the year ended December 31, 2004, it generated revenues, including revenues generated from the insurance business, of US$5.2 million, an increase of 78% over US$2.9 million generated in the twelve months ended December 31, 2003. This US$2.9 million revenue generated for the year ended December 31, 2003 was a 52.9% increase from the same period in 2002. It recorded a net income of US$2.0 million for the twelve months ended December 31, 2004, and a net income of US$0.5 million for the twelve months ended December 31, 2003, an increase of 284.6%.

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The Travel And Tourism Industry In China

The facts and statistics used in this report relating to the travel industry and economy in China are derived from various government and institute research publications. While we have taken reasonable care to ensure that these facts and statistics presented are accurately reproduced from such sources, we have not independently verified them. These facts and statistics may not be comparable to similar facts and statistics collected for the industry or economy in the United States and other countries.

In terms of domestic tourism spending in 2002, the approximately RMB388 billion (US$46.9 billion) travel industry in China is large and growing rapidly. We expect the industry to continue to experience rapid growth as China’s economy continues to develop. Travel and tourism in China is characterized by a highly fragmented and inefficient travel service sector due to many factors, including the lack of consolidated hotel ownership, the lack of a centralized hotel reservation system, the localized nature of travel agencies and a dual regulatory regime. We believe that the fragmented nature of the travel market in China will create increasing demand for central reservation platforms such as our own capable of consolidating a wide range of travel information and negotiating favorable terms with travel suppliers on the basis of scale from our aggregated demand.

According to the China National Tourism Administration, as of the end of 2002, China had more than 11,500 travel agencies, with the top 100 domestic travel agencies having an aggregate market share of less than 2%. As the requirements of travelers become more complex, we believe that these local agencies, which had been accustomed to providing services using state-owned travel suppliers, have been increasingly unable to respond to the changing needs of business and leisure travelers in China. In addition, the development of China’s tourism infrastructure has resulted in an increasing number of travelers who choose to engage in leisure travel without the constraints inherent in packaged group tours. These frequent independent travelers, or FITs, represent a key segment of the growing travel industry in China that we seek to serve.

The increasing accessibility of the Internet in China creates a foundation for new markets and opportunities, providing the ability to bring together a large number of segmented suppliers and customers in a highly fragmented travel industry. We believe that we are well positioned to benefit from these trends in China’s travel industry.

According to market data from CEIC Data Company Ltd., the frequent independent traveler, or FIT, segment of travelers grew at an approximately 18% compound annual growth rate from 1999 to 2002 and is the largest growing group of travelers in China. FITs are defined as travelers who do not travel with tour groups and who require flexibility in the selection of accommodations and transportation. FITs are typically more sophisticated urban dwellers who value customized experiences. We expect that as Chinese travelers become wealthier and more experienced with leisure travel, the appeal of traditional tours will become less important than the ability to arrange one’s own schedule.

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Traditionally, most companies in China have relied on either local travel agencies or their internal resources for business travel planning. Companies in China have begun to recognize the importance of focusing on their core competency by outsourcing non-critical functions. A growing number of medium and large-sized companies are beginning to centralize their corporate travel management by outsourcing to professional travel service providers.

Inefficiencies and Fragmentation in the Travel Market in China

The travel market in China is highly fragmented with an underdeveloped booking, reservation and fulfillment infrastructure, and with no dominant nationwide travel agencies. As a result of market reforms, a gradual shift from state-owned to privately-owned travel agencies and changing travel patterns, the travel market in China is undergoing a period of change. While competition among the older state-owned travel agencies and the privately owned travel agencies has significantly promoted the development of China’s travel service, the industry remains inefficient and is likely to remain so in the foreseeable future.

Inefficiencies in the air-ticketing system. Currently, TravelSky Technology Limited, or TravelSky, operates the only nationwide system for air-ticket reservations in China. Consumers in China do not have access to direct bookings on TravelSky unless it is done through individual travel agencies. Moreover, the delivery of air tickets remains inefficient. The majority of consumers in China receive their air tickets through physical delivery and payment to the travel agency is made upon delivery. The process of physical delivery means that consumers in China do not have a reliable or timely delivery process that can respond to last minute travel needs. For example, business travelers who change their flight destinations at the last minute often have to wait for the delivery of a physical ticket before they can initiate their travel. While some airlines in China have recently begun to offer electronic ticketing, there is currently no universal electronic ticketing system available. The International Air Transport Association (IATA) recently announced that all members should adopt electronic tickets in 2007. As the employment of e-ticketing requires more capital investment on IT and relevant facilities, as well as more investment on staff training, smaller players will most likely be shaken out of the market during the process. On the other hand, this trend implies that business opportunities for larger agencies with relatively mature business models and operating at a large scale, such as New Generation, would survive.

Inefficiencies in the hotel reservation system. According to the Year Book of China Tourism Statistics 2003, as of December 31, 2002, China had 3,656 three-, four- or five-star hotels. Hotels in China are generally run independently and are not part of large chains. The largest hotel chains in China are small relative to the larger hotel chains in the United States. There is no industry wide electronic reservation infrastructure similar to that available in the United States and parts of Europe.

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There is no national distribution system for hotel rooms in China. Travel agents generally have to negotiate room availability and rates with the hotel each time they make a booking. Hotel suppliers in China are not able to benefit from an efficient distribution system that is managed by a centralized process. Until recently, travelers in China did not have access to comprehensive hotel information or a central location for bookings. Instead, travelers in China are still mainly interacting through walk-in room reservations, direct call-in reservations, business conventions and traditional travel agency bookings. There are some business operators, such as CTRIP and E-Long, developing centralized hotel booking platforms in China by utilizing scalable information technology platforms. At present, 70% transactions of CTRIP have been done through telephone and the rest 30% mainly fulfilled online.

In the on-line travel business, packaging air tickets with hotel room is increasingly popular for it reduces customers’ sensitivity on prices and the profit margin appears higher than traditional method providing ticketing and hotel booking separately. For Chinese companies conducting this business model, like CTRIP and E-Long, hotel booking is the dominated source for revenues. In 2003, CTRIP derived US$18.5 million from hotel booking business, 84% of its total revenues. Air ticketing contributed 11% (US$2.4 million) in the same year. (Source: CTRIP Annual Report 2003). While in other countries where the “ticket + hotel room” model is more mature, air ticketing usually contributes to a larger portion of total revenues. Unlike either case, New Generation has been largely relying on air ticketing since its inception. As of nine months ended September 30, 2004, the revenue from air ticketing was about US$3.27 million, representing 90.2% of its total revenues.

Inefficiencies in traditional travel agencies. Travel agencies in China tend to be unaffiliated, small office operations. Due to local licensing requirements, even the four travel agencies that operate on a nationwide basis are mostly structured such that each office operates independently from the others. Consumers in China have generally not been able to enjoy the benefits that can be offered by a nationwide, integrated travel agency.

Inefficiencies created by separate regulatory regimes. Under current regulations, two distinct regulatory bodies regulate the travel industry in China. In order to sell air tickets, travel agencies must obtain a permit from the Civil Aviation Administration of China. If a travel agency intends to conduct the air-ticketing business in more than one city, an air-ticketing permit is required for every city, as there is currently no national air-ticketing license. In addition, in order to conduct other travel-related business such as hotel reservations, the travel agency must obtain a separate license from the China National Tourism Administration. Consumers who wish to purchase both air tickets and make hotel reservations through a single agency must use a travel agency that performs both functions. Many traditional travel agencies are unable to perform both functions given the limited number of licenses that can be issued and the costs associated with obtaining each license. As a result, consumers are often forced to arrange travel plans with multiple travel agencies.

The Opportunity for the New Generation Group

We expect the travel and tourism industry in China to continue to grow rapidly as China’s economy continues to expand. China’s travel service industry is fragmented and inefficient. This fragmentation creates a market opportunity for our centralized reservation system for air-ticketing and hotel reservations, which offers comprehensive information and favorable terms negotiated with travel service suppliers across China who are offered economies of scale from our aggregated demand.

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Our Strengths

We have capitalized on the following competitive strengths in building our travel service business:

Established large scale ticketing business. New Generation has achieved a large scale of transactions in the flight ticketing services. The number of companies providing air ticketing services is much less than those providing services for room reservations in China. And few players engage in both businesses. On the supply side, there are thousands of suppliers for room reservation services, while there is a very limited number of airlines in China. As a result, hotel operators are confronting more fierce competition than airlines are. A small company can easily establish contacts with hotels and be their agents since the capital required is small and the relationship with suppliers is easy to manage. In contrast, to be an air ticketing agent, companies have to overcome high capital barriers first and then work hard to maintain good relationships with the airlines. Both are normally very scarce and critical resources in this business. Since New Generation has achieved large scale in its operations, it has formed mutually dependant relationships with its upstream suppliers and has thereby achieved a strong bargaining position with its suppliers. And the capital requirement is not a barrier to entry or growth for New Generation since its systems are already in place. New Generation has achieved the scale necessary to deal with its upstream suppliers, which include the airlines, as well as its downstream customers. Potential entrants into the industry face these capital and scale barriers to entry.

Extensive resources in the airport. New Generation is the first travel agent in China who provides customers with seamless pre-boarding services in the terminal. In 1998, it established “Red Carpet Service Zone” in the old Guangzhou Baiyun International Airport, the third largest airport in China, to provide customers with extensive services ranging from air-ticketing, check-in services to airport pick-up. After that, Huahao Group, New Generation’s former parent company, and one of our shareholders, entered into a 10-year joint venture agreement with a subsidiary of Baiyun Airport Company Ltd. to provide easy boarding services. The joint venture was reported as the first example in China of cooperation between a private company and the highly regulated airport industry. It is indicative of our extensive resources and those of our affiliates employed at the airport.

Brand leadership. As one of the early movers in the industry to adopt modern communications and Internet technologies, we believe that we have established one of the best-known brands for travel services in Southern China. We believe our customers associate the New Generation brand with value, convenience and confidence.

Nationwide reach for nationwide travel destinations. Our customers can book domestic and international air tickets and make reservations for accommodations at over 2,300 hotels in more than 200 cities across China, vacation packages and rental cars by calling our centralized 24-hour call center from anywhere in China or by logging onto our website. New Generation is ranked one of the top air-ticketing companies in China, in terms of volume of tickets sold and value of transactions. We issue and deliver air tickets using a network of local agents in major cities in China, covering all of the 961 domestic routes.

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Total customer focus. We provide our customers with comprehensive travel information, allowing them to conveniently compare prices, browse availability and amenity options, and select the price and supplier that best meet their individual travel needs. Our user-friendly websites, well trained call center representatives and continuous service development efforts reflect our focus on providing superior customer service.

Strong supplier value. We offer our travel suppliers access to aggregated consumer demand and the ability to promote their services to a large and growing base of frequent independent travelers seeking higher-end travel services. In addition, our call center and web-based transaction and service platform, with its easy-to-use supplier interface, allows our suppliers to promote their services at low incremental cost and with minimal changes to their existing systems.

In addition, New Generation has also established a strong business partnership with the leading Chinese airline groups, including China Southern Airlines and Air China. By the end of November 2004, New Generation had set up three direct air ticket sales centers under the name of the Guangzhou Branch of Air China, in selected strategic locations in Guangzhou. It also entered into a co-operation agreement with the Guangzhou branch of China Southern Airlines Company Limited to provide commuters with downtown check-in and connections services for flights of the China Southern Airline in the new Guangzhou Baiyun International Airport. The close business partnership not only allows New Generation to benefit from more favorable sales related promotional and marketing policies, but also, enables it to get involved in the air carriers’ operational activities as a value-added services provider.

Streamlined business operations through tailored information management systems. We have drawn on our in-depth knowledge of the business practices unique to China’s travel service industry to develop proprietary processes and technology-based systems for use in our business. These processes and systems incorporate customer relationship management, order processing, financial reporting and performance management and enable us to coordinate effectively the activities of our staff, agents, suppliers and resellers. This results in streamlined operations, a higher degree of operating flexibility and stronger customer relationships through enhanced customer service.

Scalable and cost-efficient services. Our services and transaction processing, enabled by our centralized call-center and web-based distribution technologies, provides superior scalability and significant cost advantages over traditional methods of travel service distribution. We can expand our range of services and extend our geographical reach without making major changes to our existing infrastructure or incurring significant capital costs.

Experienced management. We believe that our management team, which includes Mr. William Chi Hung Tsang, and a seasoned team of senior managers at the operations level with significant experience in the areas of travel service operations, marketing, technology and finance, is well qualified and experienced to handle the challenges of the travel service industry in China.

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Our Strategy

Our goal is to become the leading provider of travel services in China. We seek to achieve revenue and earnings growth by pursuing the following key business strategies:

Strengthen brand awareness and marketing. We seek to strengthen consumer awareness of our brand by pursuing an aggressive marketing strategy based on online and traditional media advertising.

We seek to encourage consumer conversion and the use of our services through segment-based marketing, targeted promotions and focused telemarketing efforts.

We also seek to promote the awareness of our brand and increase our penetration among our target customers by leveraging the customer bases of other leading businesses and customer service companies. :

·   increasing advertising using publications such as company brochures and magazines.

·   cooperating with commercial banks for them to offer co-branded credit cards; and

·   entering into arrangements with major airlines in China, such as China Southern Airlines, under which travel booking inquiries are directed from their service hotlines to us.

Expand our range of travel services. We intend to capitalize on our leadership in air-ticketing utilizing a centralized modern call center and web-based distribution technologies and leverage the reach and efficiency of our distribution of services by growing our hotel reservations and other travel related services, such as vacation packages, car rentals and corporate travel services. We seek to expand the selection of our destination services, such as restaurant and entertainment bookings, and offer our customers greater flexibility in choosing the desired combination of travel services.

The agreement with InterContinental and China Southern Airlines has forged a strong business partnership among the three parties. It is anticipated that an effective way to differentiate us from other competitors in the domestic market is through the provision for an “air ticket and hotel” package. We believe that the extensive network resources based on air-ticketing, IT platform and strategic alliances with other product and service providers will be converted to our advantage, and that competitors will find difficult to imitate.

Enhance customer experience. We seek to enhance our customer’s experience by providing more personalized care, and by strengthening and expanding travel supplier relationships to offer our customers a wider range of travel services. We seek to deliver consistently high-quality customer service through continuous improvements in the information technology systems utilized in our call center, and in the content, features and functions of our websites.

We seek to retain our most loyal customers and generate repeat ticketing by offering loyalty rewards and additional specialized services, including dedicated VIP lounges at airports and a VIP call service with reduced waiting time. Our VIP call service, staffed by a dedicated team of specially trained representatives, provides VIP customers personalized travel advice and services. A Customer Relationship Management (CRM) system will be deployed in the first quarter of 2005. This CRM system will integrate the call center, and websites together with other resources to offer comprehensive incentive programs and personalized services in a proactive approach. Interactive information delivered through the mobile telephone network will also be employed.

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Enhance efficiency and profitability. We have built our operating infrastructure to take advantage of the inherent cost advantages of our centralized call center and web-based distribution technologies. We also seek to increase the efficiency of our marketing programs by tracking the effectiveness of our expenditures on various marketing activities.

We continue to capitalize on improvements in electronic commerce infrastructure, such as the introduction of electronic ticketing. By using exclusive online promotional offers, we believe we will be able to benefit from the increasing adoption of online commerce among consumers by attracting additional customers and moving existing customers to our websites, thereby lowering our operating costs.

Enhance our technology infrastructure. We design and maintain our systems with a view to enhancing consumer-friendliness and providing adaptive solutions for our airline and other travel service suppliers. We seek to streamline our transaction processes through ongoing technology upgrades to our transaction and services level.

Selectively pursue complementary acquisitions. We seek to supplement the organic growth of our business by pursuing acquisitions which would enable us to expand our service offerings, our customer base and our distribution network. We seek to capitalize on the opportunities for consolidation in China’s fragmented and inefficient travel service industry by selectively exploring opportunities to acquire other travel service businesses such as air-ticketing agencies, hotel-room consolidators, tour-package agencies and corporate travel providers.

Develop travel solutions for corporate clients. We will enhance our travel services by providing corporate travel solution services that cover more international corporations and large national corporations in the region. The corporate market is a fast growing market a with high profit margin. With our comprehensive resources in ticketing, hotel reservations, business club facilities and airport services, we are confident that we can be one of the leading services providers in the region. At the moment, we have over 30 corporate clients including large scale joint ventures such as Guangzhou Honda and Panasonic Wan Bao. We successfully entered into a service consignment agreement with the Purchasing Office of the Guangzhou City Government. This agreement will extend for two years from January 1, 2005 to December 31, 2006. Under this agreement, China World Trade will provide international business travel packages and related services to key personnel of the Guangzhou City Government at premium package prices.

Business Travel Services - Operating Revenues on a Pro-Forma Basis

We offer our customers a wide selection of travel services. The following table sets forth the pro-forma amount of our revenues and profit (loss) from operations represented by each travel-related service for the periods indicated on a dollar and percentage basis:

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Operating Revenue on a Pro-Forma Basis

	Jan to Dec 2004		Jan to Dec 2004			Jan to Dec 2003		Jan to Dec 2003			Jan to Dec 2002		Jan to Dec 2002
	USD%					USD%					USD%
Business Travel services
Air-ticketing		4,747,447		91.68	%		1,975,098		67.99	%		1,652,756		86.63	%
Insurance		423,247		8.23	%		929,916		32.01	%		255,052		13.37	%
Other		7,577		0.09	%		0		0.00	%		0		0.00	%
Pro-Forma Operating Revenue		5,178,271		100.00	%		2,905,014		100.00	%		1,907,808		100.00	%

Profit (loss) from Operations on a Pro-Forma Basis

	Jan to Dec 2004			Jan to Dec 2004			Jan to Dec 2003		Jan to Dec 2003			Jan to Dec 2002			Jan to Dec 2002
	USD%						USD%					USD%
Business Travel services
Air-ticketing		2,044,606			90.31	%		502,717		42.53	%		106,012			105.51	%
Insurance		229,996			10.16	%		679,446		57.47	%		(5,536	)		(5.51	%)
Other		(10,547	)		(0.47	%)		0		0.00	%		0			0.00	%
Pro-Forma Profit (loss) from Operations		2,264,055			100.00	%		1,182,163		100.00	%		100,476			100.00	%
Pro-Forma Net Income (loss)		2,018,044						524,703					(331,323	)

Air-ticketing. We provide a 24-hour air-ticketing service through our toll-free call center and websites. We act as agents for all major airlines in China and international airlines that operate flights that originate from selected cities in China. We make flight reservations through TravelSky, which is the operator of the only nationwide system for air-ticket reservations in China, and currently issue and deliver air tickets using a network of local agents throughout major cities in China. Under current regulations, travel agents, including us, have no discretion to offer discounts on airline tickets. However, we have successfully negotiated escalating commissions with many airlines based on the number of air tickets we sell.

Our air-ticketing process begins when a customer initiates an inquiry through our toll-free call center or our websites. The customer is informed of the available flights based on their schedule and desired air carrier and we then confirm a booking for a seat on the selected flight through our call center. Booking information is sent to one of our local agents in the city where the customer wants the ticket to be issued and delivered. We have relationships with a network of local ticketing agents throughout major cities in China. We use these local agents and other third party delivery companies to deliver the tickets to our customers and collect payments for the tickets. We then collect the airfare from the delivery company, pay the agent’s commission and the cost of the tickets, and retain the balance ourselves. We currently do not pre-purchase air tickets for resale.

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We believe that air-ticketing sales will continue their rapid pace of growth. In the year ended December 31, 2004, we sold approximately 995,000 air tickets, compared to approximately 440,000 air tickets sold in the six months ended June 30, 2004. We anticipate that the expected adoption of e-tickets in China will allow consumers to better use our call center and websites to book air tickets and will benefit our air-ticketing business by allowing us to reach a broader customer base without materially increasing our operating costs.

Hotel reservations. We currently have room supplier relationships with more than 2,300 hotels in over 200 cities throughout China. We seek to offer a range of hotel options at a variety of prices, with the majority of our hotel suppliers being three-, four- or five-star hotels, catering to higher-end customers. For the year ended December 31, 2004, we derived only a very minimal of our total revenues from our hotel bookings.

We act primarily as an agent in our hotel-related transactions. When a customer makes an initial inquiry through either our call center or our websites, we match the customer’s request with our allotment of rooms and make a reservation for the customer with the appropriate hotel supplier. The hotel supplier returns a confirmation that is passed along to the customer by phone, fax or email. When the customer checks into the hotel on the designated date, the hotel informs us of the customer’s check in. The customer usually settles his hotel bill directly with the hotel, and we are entitled to a fraction of the room rate as a commission. Upon the completion of a customer’s stay, we verify with the hotel the length of the stay and calculate our commissions, ranging from 10% to 20% of the hotel room rate, which the hotels pay us on a monthly basis. We pay no penalty to the hotel for “no shows” on confirmed bookings, although we are not paid any commission in respect of “no show” bookings. We do not currently pre-purchase hotel rooms until the customer has paid us, and consequently do not carry significant inventory risk.

Depending on our agreement with the individual hotel supplier, we either receive a guaranteed allotment of hotel room-nights per month or operate on an “as-requested” basis. Our agreements with hotels typically contain some or all of the following provisions:

·   Room pricing. The hotel guarantees negotiated room rates that are lower than published rates. In addition, the customer is also able to enjoy promotional rates if such rates are in effect.

·   Room supply. The hotel must notify us of any shortages of hotel rooms so that we can make alternative accommodations for our customers.

·   Customer accommodation. The hotel must upgrade the customer to a higher level of accommodation if, due to the fault of the hotel, a customer’s reserved room is not available upon check in.

·   Confirmation of the customer’s stay. The hotel must inform us of the length of the customer’s stay. We confirm a customer’s length of stay by contacting the hotel to verify the customer’s check-in and check-out dates and contact customers to crosscheck the information reported by the hotel. We continuously rate our hotel on the basis of the accuracy and timeliness of the reported information.

·   Extended stay. The hotel must immediately inform us if the customer extends their stay beyond the original booking. We then book the extended stay and calculate the additional commission.

·   Commission payments. The hotel pays us either a flat, pre-negotiated or an escalating commission based on the number of hotel room nights we book.

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Our agreements with our hotel room suppliers are in writing for the most part. We enter into agreements with companies that own hotels. Due to the fragmented nature of the hotel industry in China where hotels are generally owned separately, we generally enter into agreements with hotel companies on an individual hotel basis.

Since our hotel booking business is at the initial stage, the volume of room-nights is still too small to help obtain any guarantee on room allotments. To grow its operations as quickly as possible, New Generation has successfully entered into a business partnership agreement with InterContinental Hotels Group and China Southern Airlines. An agreement concerning the purchase of one of the largest hotel booking service providers in China is also under negotiation. If the negotiations are successful and an acquisition is consummated, we believe that the hotel booking business will soon become a significant component of the business of China World Trade as a whole.

Vacation packages. We offer third-party vacation packages that include air transportation, hotel accommodation and other travel related services to many popular destinations in China. A vacation package transaction begins in the same way as the majority of our other transactions, with the customer initiating an inquiry either through our toll-free call center or our websites. The customer selects the desired vacation package and places an order with us. After confirming both the hotel reservation and transportation arrangements with the appropriate travel supplier, we send our customer a confirmation and arrange for ticket delivery, if needed, through a local travel agency. The customer pays for the vacation upon delivery of the appropriate confirmation or air ticket, and we deduct our commission. In general, our customers only pay a penalty if they cancel their reservations at a late stage.

We select vacation packages to serve the unique needs of FITs. Many of our vacation packages are designed as self-guided tours that permit FITs to travel to desired locations without adhering to the rigid schedules that are typical of tour group packages.

Corporate travel service. We have recently begun to provide companies in China a corporate travel service providing travel planning, hotel reservations, air-ticketing and rental car bookings. By centralizing their travel management functions, our corporate clients can reduce their travel costs and the associated administrative burden. We also assist companies in planning, executing and streamlining their travel budgets.

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Marketing

We market our services through a combination of direct marketing, online marketing, traditional media advertising and co-marketing with established brands. We seek to build our New Generation brand identity which consumers will associate with choice, convenience and value.

Direct marketing. We conduct direct marketing activities principally at major airports and transportation hubs in China. Our promotional efforts at these locations include the distribution of complimentary membership cards.

Online marketing. These portals feature hyperlinks to our websites for air-ticket and hotel service recommendations to their web visitors. In some cases we operate on a co-branded basis, where we provide our services and our brand is featured on these portals. In other cases, we operate on a private label basis, where we deliver our services using the brand name of the originating website. In both cases, we pay commissions based on the bookings generated through our co-marketers. We feel that our online marketing effort is an important part of our marketing strategy and serves as a cost-effective marketing tool. In addition, our online presence serves as an additional channel to capture targeted customers through association with established Internet brands in China. We believe that the Internet will continue to experience growth in China, and our relationships with top Internet portals in China will position us well to exploit its potential.

Traditional marketing. Our traditional media advertising efforts include newspaper and broadcast advertising. The focus of our media advertising efforts is to promote awareness of the New Generation brand among our potential customers.

Co-marketing relationships. We seek to expand our market reach by entering into co-marketing agreements with companies that have a large customer base and strong brand recognition. We believe that we are able to reach more customers and capitalize on their brand recognition in promoting our services and in enhancing our credibility. We have developed co-marketing agreements with some of the largest companies in China with a view to establishing our brand.

Distribution

We are currently a major air ticketing provider in China. Our growth was achieved through locating our subsidies in the major cities in China. We also package hotel room booking services and tour packaging services with air tickets to better meet our customers’ needs. Our business goal is to become a leading integrator of air ticketing, hotel booking and tour packages. This requires utilization of our comprehensive distribution system that is comprised of:

·   our twenty-four hours per day, seven days per week, toll-free call center,

·   our popular Internet website, and

·   our extensive nationwide network of resellers.

Call center. We operate a 24-hour call center staffed by more than 32 customer service representatives (CSRs). The number of CSRs will increase to 104 by the end of 2005 to meet the requirement of our business development. The call center is accessible nationwide on a toll free basis for fixed line telephone calls in China and by calling 4008-168-168 in China. Our call center typically handles more than 150 calls per day. Although, it currently contributes little to the total air-ticketing reservations and hotel bookings, we are fully confident that with our market expansion, 20% of our total transactions will be generated from on-line transactions. We believe that our call center constitutes a cost-efficient distribution channel because of the available pool of low-cost labor in China. We expect our call center will become one of our principal distribution channel going forward, due to China’s large and growing mobile and fixed-line phone subscribers and consumer preference for the personalized service we are able to provide through our call center.

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Website. We offer our travel services through our user-friendly website www.4008168168.com. The website allows us to expand our customer base and improve customer service with minimum transaction costs. Customers can browse travel service options, compare prices, book and confirm orders through our website. Our website is designed to provide customers with a quick, efficient and flexible service that facilitates comparison among our large number of travel suppliers. To support the internationalization of our business, we are undertaking a program to construct an English website and synchronize it with the Chinese one. Customers will be able to easily access both websites by logging onto www.4008168168.com.

Reseller network. We have developed an extensive nationwide network of over 60 non-exclusive resellers, consisting of smaller travel and air-ticketing agencies that utilize our call center and websites to distribute travel services. We pay our resellers a portion of our commission, subject to an escalating scale, based on the number of hotel reservations and air-ticket bookings they generate for us. Our air-ticketing network generates revenues from resellers’ monthly administration fees, ticketing system rentals and Physical Identity Devices maintenance fees. The volume of tickets sold and value of transactions completed are incorporated into our total volume and total transaction values for New Generation.

Technology

We believe that we have a strong technology team in the travel service industry in China. Our goal is to develop a high-performance, reliable, scalable and secure system in-house to support our business demands for new features and functionalities.

We have built a sophisticated, proprietary back office system encompassing order processing, customer relationship management, inventory control, business intelligence and staff performance management functions that coordinates the activities of our internal departments, clients, agents and partners within a single cohesive platform. We have also invested in an advanced, in-bound call center for phone based bookings and a scalable network infrastructure system utilizing hardware and software from top-tier vendors. Our system connects us with our suppliers, clients and agents.

Our infrastructure security system is designed to ensure that our users can only access and use our system according to their assigned authorization levels. Our system also includes VPN and encryption technologies to allow for secure Intranet access, as well as an intrusion detection system, which is designed to detect security breaches. Our infrastructure security system, however, may not be adequate at all times and we may experience occasional security breaches.

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Competition

The travel service industry in China is extremely large, highly fragmented and intensely competitive. We compete with eLong, Inc., Ctrip.com International, Ltd, traditional travel agencies such as CTS, CITS and CYTS, and hotel suppliers that sell their room inventory directly to consumers. The major markets in which we currently compete include the relatively affluent coastal areas of China. As China’s market continues to grow, we may face further competition from other new domestic hotel room consolidators or international players such as expedia.com or priceline.com that may seek to expand into China. We may also face increasing competition from hotels and airlines should they further expand into the direct selling market or engage in alliances with other travel service providers besides us. We compete on the basis of brand recognition, selection, price, ease of use, accessibility of information, breadth of services offered, convenience, and customer service and satisfaction.

We cannot assure you that we will compete successfully with any of our current or future competitors.

Employees

We have 404 employees in the New Generation Group of companies that are in the following job categories: Management and Administration (152), Customer Service (158), Sales and Marketing (41), Supplier Management (35), and Technical Services (18).

We participate in government-mandated multi-employer defined contribution plans under which certain pensions, medical and other welfare benefits are provided to employees. We make monthly payments to these plans based on the employee’s compensation.

We have not entered into any collective bargaining agreements. We consider our relations with our employees to be good.

Facilities

Our headquarters in Guangzhou Rihang Hotel are located in an adjoining property of approximately 1,740 square meters. Our call center is located in a leased space of approximately 600 square meters. We lease the premises for our call center under a two-year term lease, expiring in 2006. We also maintain branch and sales offices in major cities in Guangdong Province including Foshan, Shunde, Dongguan Zhongshan and Gaoming. We believe that adequate facilities are available to accommodate our future expansion plans.

Legal Proceedings

We are currently not involved in any material litigation, arbitration or administrative proceedings in the New Generation Group of companies that could have a material adverse effect on our financial condition or results of operations. From time to time, we may be involved in disputes with individual employees. So far as we are aware, no material litigation, arbitration or administrative proceedings are pending.

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Regulation

The travel industry in China is subject to substantial regulation by the Chinese government. This section sets forth a summary of certain significant Chinese regulations that affect our business and our industry.

Scope of Regulation

Current PRC laws and regulations impose substantial restrictions on foreign ownership in air-ticketing, advertising and Internet businesses in China.

Restrictions on Foreign Ownership

Air-ticketing. The principal regulation governing foreign ownership in air-ticketing business in China is The Foreign Investment Industrial Guidance Catalogue (2004 revision). Under this regulation, a foreign investor is allowed to own 100% of any wholesale and commission-based agency in China after December 11, 2004. As inferred from the law, air-ticketing does not fall into the statutory prohibited industries like the wholesale of newspaper and magazine, drugs, agricultural chemicals and membrane, chemical fertilizer, refined oil and crude oil, so it is our understanding that beginning on December 11, 2004 foreign investors were permitted to own 100% of an air-ticket agency.

Travel agency. The principal regulation governing foreign ownership in travel agencies in China is the Establishment of Foreign Controlled and Wholly Foreign Owned Travel Agencies Tentative Provisions (2003). Recently, foreign investors that

·   primarily engage in travel agency business;

·   have annual revenue from travel services exceeding US$40 million (in the case of foreign-controlled travel agencies) or US$500 million (in the case of wholly foreign owned travel agencies;

·   are members of travel industrial associations in their home countries or regions

have been permitted to establish or own travel agencies in Beijing, Shanghai, Guangzhou, Shenzhen, Xian or other approved national tourism areas, upon the approval of the PRC government, subject to substantial restrictions on the scope of their business. For example, foreign invested travel agencies are prohibited from engaging in the business of overseas travel by PRC citizens or travel by persons from the other regions of the PRC to Hong Kong, Macau or Taiwan. In addition, other than its head office, foreign-invested travel agencies are not allowed to open branch offices.

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Our 51% ownership of the New Generation Group of companies involves the foreign control of a travel agency doing business in the Peoples’ Republic of China. The control of a Chinese travel agency is permissible under the Establishment of Foreign Controlled and Wholly Foreign Owned Travel Agencies Tentative Provisions (2003), subject to compliance with the restrictions on the scope of business for passenger air ticket sales agents, commercial agency, tourist information services and marketing research planning. All such businesses are not categorized as "restricted" or "prohibited" by The Foreign Investment Industrial Guidance Catalogue (2004 revision). We believe the competitive advantage of the travel agency business of New Generation is not limited by the scope of business restrictions referred to in the preceding sentence, and, therefore, our operations are not impacted by laws regulating travel agencies.

Advertising Agencies. The principal regulations governing foreign ownership in advertising agencies in China include.

·   The Foreign Investment Industrial Guidance Catalogue (2002); and

·   The Administrative Regulations Concerning Foreign Invested Advertising Enterprises (2004)

Under these regulations, foreign investors can currently own up to 70% of the equity interest in an advertising agency in China. Beginning on December 10, 2005, foreign investors will be permitted to own 100% of an advertising agency.

Internet content provision. The principal regulations governing foreign ownership in the Internet content provision business in China include:

·   The Administrative Rules for Foreign Investments in Telecommunications Enterprises (2001); and

·   The Foreign Investment Industrial Guidance Catalogue (2002)

Under these regulations, a foreign entity is prohibited from owning more than 50% of a Chinese entity that provides value-added telecommunications services, including Internet content provision.

General Regulation of Businesses

Air-ticketing. The air-ticketing business is subject to the supervision of the Civil Aviation Administration of China, or CAAC, and its regional branches. The principal regulation governing air-ticketing business in China is the Administration on Civil Aviation Transporting Marketing Agency Business Regulations (1993).

Under this regulation, an air-ticketing agency must obtain a permit from CAAC or its regional branch in every city in which the agency proposes to conduct business. The two types of air-ticketing permits in China are permits for selling tickets for international flights and flights to Hong Kong, Macau and Taiwan and permits for selling tickets for domestic flights in China except flights to Hong Kong, Macau and Taiwan.

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Travel agency. The travel agency industry is subject to the supervision of the China National Tourism Administration and local tourism administrations. The principal regulations governing travel agencies in China include:

·   The Administration of Travel Agencies Regulations (1996), as amended, and

·   The Rules of Implementation of the Administration of Travel Agencies Regulations (2001)

Under these regulations, a travel agency must obtain a license from the China National Tourism Administration in order to conduct cross-border travel business, and a license from the provincial-level tourism administration in order to conduct a domestic travel agency business.

Advertising. The State Administration of Industry and Commerce is responsible for regulating advertising activities in China. The principal regulations governing advertising, including online advertising in China include:

·   The Advertising Law (1994); and

·   The Administration of Advertising Regulations (1987)

Under these regulations, any entity conducting advertising activities must obtain an advertising permit from the local Administration of Industry and Commerce.

Internet content provision service and online commerce. The provision of travel-related content on the websites is subject to Chinese laws and regulations relating to thetelecommunications industry and the Internet, and regulated by various government authorities, including the Ministry of Information Industry and the State Administration of Industry and Commerce. The principal regulations governing the telecommunications industry and the Internet include:

·   The Telecommunications Regulations (2000)

·   The Administrative Measures for Telecommunications Business Operating Licenses (2001); and

·   The Internet Information Services Administrative Measures (2000)

Under these regulations, Internet content provision services are classified as value-added telecommunications businesses, and a commercial operator of such services must obtain an Internet content provision license from the appropriate telecommunications authority in order to carry out any commercial Internet content provision operations in China.

With respect to online commerce, there are no specific Chinese laws at the national level governing or defining online commerce activities, and no government authority has been designated to regulate these activities. There are existing regulations governing retail business that require companies to obtain licenses in order to engage in the business. However, it is unclear whether these existing regulations will be applied to online commerce.

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Regulation of Foreign Currency Exchange and Dividend Distribution

Foreign currency exchange. The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended. Under these rules, the Renminbi is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loans or investments in securities outside China without the prior approval of the State Administration of Foreign Exchange of the People’s Republic of China, or SAFE.

Pursuant to the Foreign Currency Administration Rules, foreign-invested enterprises in China may purchase foreign exchange without the approval of SAFE for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange, subject to a cap approved by SAFE, to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese government authorities may limit or eliminate the ability of foreign-invested enterprises to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside China are still subject to limitations and require approvals from SAFE.

Dividend distribution. The principal regulations governing distribution of dividends by foreign-invested companies include:

·   The Sino-foreign Equity Joint Venture Law (1979), as amended;

·   The Regulations of Implementation of the Sino-foreign Equity Joint Venture Law (1983), as amended;

·   The Foreign Investment Enterprise Law (1986), as amended; and

·   The Regulations of Implementation of the Foreign Investment Enterprise Law (1990), as amended.

Under these regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, wholly foreign owned enterprises in China are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends.

In addition, our wholly-owned subsidiaries are required to allocate portions of their respective after-tax profits to their enterprise expansion funds and staff welfare and bonus funds at the discretion of their boards of directors. Our affiliated Chinese entities are required to allocate at least 5% of their respective after-tax profits to their respective statutory welfare funds. Allocations to these statutory reserves and funds can only be used for specific purposes and are not transferable to us in the forms of loans, advances, or cash dividends.

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Business Plan For Our Life And Accident Insurance Agency Business

China World Trade is engaged in the accident and life insurance business through its 51% indirect ownership interest in Huahao Insurance Agency Ltd., a limited liability company organized and existing under the laws of the Peoples’ Republic of China (“Huahao Insurance”). Huahao Insurance was formed in 2002 and is engaged in the life and accident insurance agency business in the Guangdong Province of China.

Huahao Insurance places insurance for and services personal accounts throughout the Guangdong Province of China. Huahao Insurance acts as an agent in soliciting, negotiating and effecting contracts of insurance through insurance companies which are located across China, and also acts as a broker in procuring contracts of insurance on behalf of insured’s. Huahao Insurance specializes in a popular market niche known as life and accident insurance.

The Industry

Insurance brokerage companies principally serve businesses, public institutions and individual clients, which we refer to as “insured’s,” by placing general and specialty insurance coverage on their behalf with insurance carriers, which we refer to as “insurers,” and providing risk management consulting services. Through their knowledge of the insurance market and preferred relationships with insurers, insurance brokers are able to assist their clients by negotiating competitive rates and policy terms. Insurance brokers also serve as a distribution channel for insurers and perform much of the administrative and customer service functions insurers would have to otherwise perform were they to sell insurance coverage directly. Insurance brokers are typically compensated by commissions paid by insurers on the premium volume placed. These services, whether to individuals or institutions, are generally referred to as retail brokering.

Our Business

A substantial portion of the commission and fee business of Huahao Insurance is derived from placing insurance for individuals. It services its clients through its network of four offices in the Guangdong Province. No material part of Huahao Insurance's business is dependent upon a single customer or on a few customers, the loss of any one or more of which would have a materially adverse effect on Huahao Insurance. We placed insurance for a total of 88,473 customers in 2003 and 21,976 customers in 2004.

Competition

The insurance brokerage and service business is highly competitive and there are many insurance brokerage and service organizations as well as individuals throughout the world who actively compete with Huahao Insurance in every area of its business. There are firms in a particular locality which are as large as or larger than particular local office of our company which is located there. We believe that the primary factors determining its competitive position with other organizations in its industry are the overall cost and the quality of services rendered.

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Huahao Insurance is also in competition with certain insurance companies which write insurance directly for their customers. Certain government benefits relating to life, health, disability, and accident are also alternatives to private insurance and hence indirectly compete with our business. To date, such direct writing and government benefits have had, in the opinion of the management of Huahao Insurance, relatively little effect on its business and operations, but we can make no prediction as to their effect in the future.

Commissions And Fees

The two major sources of operating revenues are commissions from brokerage and risk management operations and service fees from risk management operations. Information with respect to these two major sources as well as investment income and other revenue, including non-recurring gains, are as follows:

Pro-Forma Data	12/31/2001 USD		12/31/2002 USD		12/31/2003 USD		12/31/2004 USD
Commission income				255,052		929,916		423.247
Fee income		<Note 1>		-		-		-
Investment income & others				409		99		166
Non-recurring income				-		-		-

Note 1: China World Trade incorporated on January 15, 2002, so no data is available on the above column.

The primary source of Huahao’s compensation for its brokerage services is commissions paid by insurance companies which are usually based on a percentage of the premium paid by the insured. Commission rates are dependent on a number of factors including the type of insurance, the particular insurance company and the capacity in which our company acts. In some cases we are compensated for brokerage or advisory services directly by a fee from a client, particularly when insurers do not pay commissions. We also receive contingent commissions which are generally based on the profit the insurance company makes on the overall volume of business placed by the company in a given period of time. Occasionally, we share commissions with other brokers who have participated with us in placing insurance or servicing insureds. We also receive service fees from providing risk management operations.

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Our Strengths

·   Our comprehensive distribution network enables us to have easy access to individual consumers. Moreover, the size and scale of our air ticketing operations in the Guangdong Province enable us to distribute life and accidental insurance in an efficient manner to all of our clients.

·   Our agency agreements with leading insurance companies enable us to deliver efficient service after policy sales are made. We entered into agency agreements with leading insurance companies, including the People’s Insurance Company of China (PICC), Pingan Insurance Company of China and the China Pacific Insurance Company, in January 2002. Since 2003, we have been granted “green channel” privileges by the above mentioned companies as a result of success in turnover, credibility, service level and industrial reputation. The lead time required for underwriting and settling claims has been shortened to a maximum of 7 working days by virtue of our “green channel” status, instead of the regular 15 working days for these matters. We believe that this arrangement will differentiate us from our competitors and will provide us with better opportunities to generate incremental revenues.

·   Experienced and motivated management team. Our top executive officers have over 35 years of combined experience in the insurance brokerage and financial services industries and are supported by a group of highly motivated professionals throughout our operations. The Chief Executive Officer of the New Generation Group, Zeliang Chen, has been with us since 2002. During his 10 years in the industry, he has gained substantial experience in insurance and financial services, the development of cross selling strategies, and operational integration. Due to his track record in the industry, he was appointed as the Representative Committee Member of China Insurance Brokerage Association in 2003, for a three-year term.

·   Cross-selling potential with the air ticketing services. Our strength in the air-ticketing business, which results from a large number of individual consumers, should benefit our insurance brokerage business. Given the similarities in selling procedures, we believe there is a great potential for joint marketing opportunities. In fact, life and accidental insurances can be incorporated with air-ticketing and hotel booking services into a package and sold as a value-added product to our customers.

Business Strategy

Our objective is to continue our revenue growth while sustaining our profitability, and, to achieve this, we will focus on capitalizing on our competitive strengths and implementing the business strategy outlined below:

·   Increase Operating Efficiencies. We expect to realize continued improvement in our profit margin by consolidating the back-office operations of our brokerage business, completing strategic acquisitions and increasing the productivity of our sales professionals. Our management is incentivized to improve our profit margins by a variety of equity incentives and performance bonuses.

·   Pursue fold-in and strategic acquisitions. We believe in growth through acquisitions. We intend to make selective acquisitions of businesses currently operating in our geographic footprint and consolidating the operations into our existing infrastructure. Our acquisition criteria include strong financial performance, talented management, specialized area of expertise, critical geographical presence and excellent client and insurance carrier relationships.

·   Enhance competitive advantage. Since air-ticketing and hotel booking operations are both time consuming and require a long-term investment horizon, the majority of the market players are concentrating in either the air-ticketing business or hotel booking services. Few players compete in both markets. For this reason, we believe that with the combination of our strengths in the air ticketing and hotel booking business, we are able to enhance our competitive advantage by providing packaged services to meet various customer needs. Better integration in business travel related products and services can build up business resource barriers to entry, which are hard to overcome.

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Sales

Our sales strategy is to be a single distribution point to the individual consumer market, serving their life and accident insurance and other risk management needs. Consequently, our sales strategy emphasizes:

·   Using consultative needs assessment to identify our clients’ insurance priorities;

·   Promoting teamwork between sales professional and product specialists on a local and regional basis.

·   Maintaining an on-going consultative and trusted advisor relationship with out clients to increase client retention.

We have 16 sales professionals, who we evaluate by measuring the revenues they generate from new business and cross-selling and the revenues they are able to retain from existing clients.

We originate sales opportunities through a number of channels. We focus primarily on selling products and services to new and existing clients on a direct basis. In addition, we sell through approximately 50 professional associations and affinity groups. Professional associations such as those in the entertainment and construction industries, generates sales opportunities by virtue of the recognition we develop in those industries. Finally, a fast-growing component of our sales strategy is to distribute supplementary voluntary insurance products to employees of our business clients through worksite marketing arrangements. We believe that this sales channel can ultimately be used to distribute non-insurance-related financial products and services as well.

We utilize sales force automation software to manage and track the progression and status of sales prospects. Through regular updates to the system by our sales professionals, we are able to monitor sales opportunities as they evolve from the initial prospect phase through ultimate acceptance or refusal by the client. Detailed information on each sales prospect, including client information, size of revenue opportunity and type of product being sold, is recorded. As a result, sales force automation is able to serve as both a contact management application for our sales professionals and a business management tool for our regional and corporate sales management executives.

Business Plan For Our Business Value-Added Services

We provide business value-added services to a variety of customers. These services concentrate on business consultancy services, interactive marketing and incentive programs management for merchant chains and large corporations with significant user bases.

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Business Consultancy Services

China World Trade’s business consultancy services are focused two areas. (1) China World Trade provides consultancy services in the financial advisory sector including mergers and acquisitions advisory services, corporate restructuring advisory services and corporate finance advisory services. A specialty niche has been to consult with and advise local PRC companies in seeking foreign capital for their expansion programs. (2) China World Trade assists Chinese companies in developing the international trade dimension of their own businesses and assists foreign companies to establish their businesses in China. China World Trade helps Chinese companies in business development, marketing, sourcing and public relationship management in the international business environment. These services are fee based, and payment to China World Trade is structured either on a flat fee basis or on a success fee basis. The consultancy services operation of China World Trade started in the last quarter of 2004.

Interactive Marketing and Customer Relationship Management Services

This operation started at the beginning of 2004 when China World Trade jointly issued credit cards with the Agricultural Bank of China through a co-branding arrangement. Guangdong World Trade Link Information Services Limited (“WTC Link”), a subsidiary of China World Trade formed in 2004 to implement the partnership with the Agricultural Bank of China and to manage the Bank’s co-brand credit card project. WTC Link is an active provider of interactive marketing and customer royalty solution and services in China. It provides services to China Telecom to develop and manage the merchants’ privilege VIP member services. WTC Link also formed a partnership with China Unionpay to develop the royalty systems for bankcard holders in the Guangdong Province. The fees for these services are determined on a negotiated basis. WTC Link has launched a royalty program with over 300 merchants in Guangzhou. This program allows merchants to provide discounts to clients who apply the discount by Short Message Services through mobile telephone networks and receive the authorization instantly. This program enables WTC Link to capture the mobile phone number and provide customer relationship management solutions to merchants based on the analysis of the client’s consumption behavior such as frequency, timing and spending patterns. An interactive Short Message Services gateway backed by China Mobil and China Unicom has been established for this project. The income of Short Message Service can be generated by charging a service fee per message, or by charging a monthly fixed fee as a service package. It is expected that many merchants will join this network in fiscal 2005.

China World Trade establishes individual operations and separate management teams for each value-added service. The revenue of value-added business division will be the services fees derived from various services rendered.

Competition

The definition of value-added services varies from company to company and it is not meaningful to compare our market position with other potential competitors. We provide value-added services on a customized basis, and we are not aware of any other company that offers the services that we do.

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Strategic Investments

We expand our business activities through strategic investments. Strategic ventures which have no synergy with our business or have a negative impact on our cash flow will not be initially considered. A group of business entities or an entity with synergies that will enable us to experience intrinsic growth will be considered, especially if they will enable us to evolve into a conglomerate in the Chinese business environment. The New Generation acquisition is an example of a major strategic investment by us. By acquiring New Generation, China World Trade can incorporate New Generation’s services to enhance the business club services, and at the same time can access New Generation’s huge client base of business travelers to recruit members for our Business Clubs.

Employees

We currently have 32 employees in our Value Added Services division. We believe our future success will depend in large part upon the continued service of our technical and senior management personnel and our ability to attract and retain technical and managerial personnel. There can be no assurance that we will retain our key technical and managerial employees or that we can attract, assimilate or retain other highly qualified technical and managerial personnel in the future. None of our employees are subject to any collective bargaining agreements.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

We were incorporated in the State of Nevada in 1998 to engage in any lawful corporate undertaking. Initially, our business objective was to open and operate business clubs in the major cities of China in association with the World Trade Center Association in order to position ourselves as the platform to facilitate trade between China and the world market. We currently operate two clubs, one in Guangzhou and the other in Beijing, PRC. Additionally, we expect to open clubs in Shanghai and Shenzhen, PRC in 2005. We have grown through acquisitions and internal growth and our business objectives have expanded as set forth in the following paragraphs.

Our growth and development as a business enterprise has been marked by a number of significant corporate events. Pursuant to a Share Exchange Agreement, dated as of August 10, 2000, between Virtual Edge Limited ("Virtual Edge") and Main Edge International Limited ("Main Edge"), Main Edge transferred all of the issued and outstanding shares of the capital stock of Virtual Edge to China World Trade in exchange for 1,961,175 shares of our pre-split common stock, representing approximately 75% of our outstanding shares of the common stock. According, we controlled the operations of Virtual Edge, and Main Edge became our majority stockholder. We then undertook an 8-for-1 forward split that was effective on 15th day of September 2000, which resulted in Main Edge owning 15,689,400 shares of our common stock. Then, five major developments occurred. These were: (i) the consummation of two private placement financings by Powertronic Holdings Limited ("Powertronic") in September 2002 and December 2002 in which it acquired shares of our common stock, (ii) an acquisition of all the issued and outstanding shares of General Business Network (Holdings) Ltd. in December 2002, (iii) a 1-for-30 reverse stock split that was effective on September 1, 2002, (iv) the assignment of the rights of the after tax rental income of certain premises from Mr. Tsang for a five year period in December 2003, and (v) the exercise of warrants for the shares of our common stock by Mr. Tsang and Powertronic in March 2004 and in July 2004, and the further exercise additional warrants in December 2004. As a result of these transactions, Mr. Chi Hung Tsang became the new major shareholder and owns over 12,600,000 shares of our common stock and Powertronic owns over 5,500,000 shares. Mr. Chi Hung Tsang is currently President and Chairman of our Board of Directors.

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China World Trade has recently established its businesses into three distinct divisions, namely the club and business center; the business travel services; and the business value-added services. The Club and Business Center division is devoted to the building of the World Trade brand in China. Its objective is to open and operate business clubs in the major cities of China in association with the World Trade Center Association, in order to position the company as the platform to facilitate trade between China and the world market. China World Trade currently operates the Guangzhou World Trade Center Club, consisting of over 4,000 square meters, and The Beijing World Trade Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing PRC, and consisting of 730 square meters. In addition, since the acquisition of CEO Clubs China Limited ("CEO Clubs") in May 2004, CEO Clubs will complement China World Trade's offerings by targeting higher profile leadership from larger companies than those normally associated with China World Trade. The CEO Clubs family, of which each family member operates independently of each other, has thirteen chapters in the US and China. It focuses on recruiting CEO's of companies with annual sales exceeding $2 million as members. The average member of our affiliated CEO Clubs family has $20 million in annual sales.

Since the completion of the acquisition of a majority stake in the New Generation Group of companies in August 2004, the Business Travel Services division will provide the necessary platform for China World Trade Corporation to focus on the high growth, travel related businesses. New Generation aims to be a pioneer and a significant competitor in the travel agency business through the operations of its ten subsidiaries in Southern China in ticketing sales for international and domestic flights as well as inbound business travel. Being a consolidator of hotel accommodations and airline tickets in China, New Generation has already acquired the necessary licenses to operate as a ticketing and travel agent in the PRC. These licenses include 26 licenses as a ticketing agent for international and domestic flights for both cargo and passengers issued by the Civil Aviation Administration of China and the International Air Transport Association and three licenses as a domestic and international travel agent issued by the Administrative Bureau of Tourism of China. In addition, New Generation is also an authorized/licensed insurance agent in China to provide, in particular, accidental and life insurances. New Generation also provides premium "red carpet" airport based services to prestigious clients and participates in the opening and continued development of the new Guangzhou Baiyun International Airport. New Generation is believed to contribute a solid revenue base to China World Trade.

The Business Value-Added Services division concentrates on value-added services of credit cards and merchant related businesses as well as on consultancy services. Guangdong World Trade Link Information Service Limited ("WTC Link"), a subsidiary of China World Trade, formed a partnership with the Agricultural Bank of China to manage China World Trade's co-brand credit card project. WTC Link is an active provider of customer relationship management solution and services in China. It helps China Telecom to develop and manage the merchants' privilege VIP member services. WTC Link also established a business partnership with China Unionpay to develop the royalty systems for bank card holders in Guangdong Province, China. In addition, this division also provides consultancy services to China World Trade's members and clients in the financial services areas including mergers and acquisitions, corporate restructuring and financing.

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RESULTS OF OPERATIONS

Effective for fiscal year 2004, we changed our fiscal year-end to December 31 from September 30. As a result of this change, the Statements of Consolidated Income (Loss), Statements of Consolidated Cash Flows and Statements of Consolidated Shareholders’ Equity presented in this Form 10KSB reflect the Fiscal Years Ended December 31, 2004 and September 30, 2003.

As a result of the change of fiscal year-end, for the purpose of Management’s Discussion and Analysis of Financial Condition and Results of Operations, the following periods of operations are presented and discussed:

·   Fiscal Year Ended December 31, 2004 compared to the unaudited Twelve Months Ended December 31,2003;

·   Fiscal Year Ended September 30, 2003 compared to Fiscal Year Ended September 30, 2002.

The discussion of results for the Fiscal Year Ended December 31, 2004 to the unaudited Twelve Months Ended December 31, 2003 is presented for comparative purposes only. Management considers this to be a meaningful presentation of year-to-year results.

The following table shows the selected audited condensed consolidation income statement data of China World Trade and its subsidiaries for the year ended December 31, 2004, September 30, 2003 and September 30, 2002, and the unaudited condensed consolidation income statement data for the twelve-month period ended December 31, 2003. The data should be read in conjunction with the audited Consolidated Financial Statements of China World Trade for the years ended December 31, 2004 and September 30, 2003 and related notes thereto.

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							Twelve
	Year ended						Months Ended						Year ended						Year ended
	Dec 31,			% of			Dec 31,			% of			Sep 30,			% of			Sep 30,			% of
	2004			Revenues			2003			Revenues			2003			Revenues			2002			Revenues
(In US$ thousands except per share data)							(unaudited)
Operating revenues
Club and business center		551			17.8			1,485			45.5			1,719			59.6			193			100
Business travel services		1,672			54.1			-			-			-			-			-			-
Business value-added services		41			1.3			213			6.5			289			10.0			-			-
Others		829			26.8			1,567			48.0			878			30.4			-			-
Total Operating Revenues		3,093			100.0			3,265			100.0			2,886			100.0			193			100
Gross Profit
Club and business center		460			83.4			1,121			75.5			1,269			73.8			109			56.6
Business travel services		1,559			93.3			-			-			-			-			-			-
Business value-added services		39			95.1			211			99.1			289			100.0			-			-
Others		305			36.8			168			10.7			114			13.0			-			-
Total Gross Profit		2,363			76.4			1,500			45.9			1,672			57.9			109			56.6
Selling, general and administrative expenses		(8,133	)		(263.0	)		(4,187	)		(128.2	)		(3,768	)		(130.6	)		(1,828	)		(947.0	)
Impairment loss and depreciation		(1,438	)		(46.5	)		(206	)		(6.3	)		(186	)		(6.4	)		-			-
Loss from operations		(7,208	)		(360.3	)		(2,893	)		(88.6	)		(2,282	)		(79.1	)		(1,719	)		(890.4	)
Non-operating income (expenses)
Other income		140			4.5			3			0.1			2			0.1			-			-
Interest expense		(66	)		(2.1	)		(14	)		(0.5	)		(15	)		(0.5	)		(8	)		(0.3	)
Equity in net loss of affiliate		-			-			(32	)		(1.0	)		-			-			-			-
Gain on disposal of interest in a subsidiary		-			-			62			2.0			-			-			-			-
Equity in net loss of affiliate		-			-			-			-			(32	)		(1.0	)		-			-
Loss before income taxes and minority interest		(7,134	)		(230.7	)		(2,874	)		(88.0	)		(2,326	)		(80.6	)		(1,727	)		(894.6	)
Income taxes		(47	)		(1.5	)		-			-			-			-			-			-
Loss before minority interest		(7,181	)		(232.2	)		(2,874	)		(88.0	)		(2,326	)		(80.6	)		(1,727	)		(894.6	)
Minority interest		(413	)		(13.4	)		41			1.2			120			4.2			93			48.2
Net loss		(7,594	)		(245.6	)		(2,834	)		(86.8	)		(2,206	)		(76.4	)		(1,634	)		(1,495.0	)
Loss per share of common stock
- Basic	$	(0.32	)				$	(0.29	)				$	(0.23	)				$	(0.23	)

FISCAL YEAR ENDED DECEMBER 31, 2004 COMPARED TO UNAUDITED 12-MONTH PERIOD ENDED DECEMBER 31, 2003.

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OPERATING REVENUE

China World Trade has started to recruit members, and to provide club and business center services through its subsidiary Guangzhou World Trade Center Club located in Guangdong Province, the PRC since June 2002, business value-added services and others business (trading) through a subsidiary of General Business Network (Holdings) Limited since March 2003. We have commenced our operation in the business travel business since our acquisition of New Generation in August 2004. Trading and rental incomes are grouped under others operating revenues and others gross profit. Consolidated operating revenue for the twelve-month period ended December 31, 2004 was $3,093,000, compared to $3,265,000 for the same corresponding period in year 2003, a decrease of $172,000 or 5.3%. The decrease was mainly the result of the decrease in revenue generated from club related businesses and others (trading) business, which were partially offset by an increase in rental income and travel businesses related businesses. The reason for the decrease in club related businesses was due to the discontinuation of the Chinese restaurant to further trim costs of the club facilities in Guangzhou. The other (trading) business of China World Trade is under restructuring and expects to formally resume business in the first quarter of 2005.

We do not foresee the decrease in operating revenue will continue. However, our segmental mix of the operating revenues will continue to shift since our acquisition of the travel business and further development of our business value-added services. We will continue to utilize the World Trade Center Clubs in various major cities in China to provide the necessary platform for the growth of our businesses.

Of the $3,093,000 revenue in the twelve-month period ended December 31, 2004, approximately $551,000 (17.8%) was generated from providing club related services by Guangzhou World Trade Center Club and Beijing World Trade Center Club, $1,672,000 (54.1%) from business travel services resulting from the acquisition of the New Generation Group, $41,000 (1.3%) from business value-added services, and the remaining $829,000 (or 26.8%) from other (rental and trading) businesses. The acquisition of New Generation will contribute positively to our operating revenue. In addition, our cost of sales is generally positively related to our operating revenue, i.e., the higher the operating revenue, the higher the cost of sales and vice versa.

For the year ended December 31, 2004, New Generation sold a total of over 995,000 tickets on a pro-forma basis, which translates to a total value of air-ticket fare of approximately $115.2 million. As compared to the same corresponding period in year 2003, ticket sold of New Generation increased by 509,000 tickets (or 104.7%) from approximately 486,000 tickets with value of air-ticket fare increased by $52.9 million (or 84.9%) from $62.3 million. China World Trade’s consolidated portion of the total value of air-ticket fare for the 5 months since the acquisition of New Generation in August 2004 was approximately $54.9 million

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Consolidated gross profit increased $863,000 or 57.5% for the twelve-month period ended December 31, 2004 over the same corresponding period in year 2003. The increase was predominantly driven by our business travel services resulting from the acquisition of the New Generation in August 2004. Such an increase was partially offset by the decrease in the club and business center area. As a percentage of total operating revenues, consolidated gross profit margins of 76.4% in 2004 increased from 45.9% in 2003. The higher profit margin as a percent of operating revenues was driven by a mix shift from lower margin trading business to higher margin business travel services.

Of the $2,363,000 total gross profit for the year ended December 31, 2004, approximately $460,000 (or 19.5%) was generated from providing club and business center services, approximately $1,559,000 (or 66.0%) from business travel services, approximately $39,000 (or 1.7%) from providing business value-added services, and the remaining approximately $305,000 (or 12.8%) from other (rental and trading) businesses. As compared to the same corresponding period in year 2003, the club and business center services represented a 75.5% (or $1,121,000) of the total gross profit; none was generated from the business travel business; 14.1% (or $211,000) from providing business value-added services; and the remaining 10.4% (or $168,000) from other (rental and trading) businesses. The shift in segmental distribution was primarily due to the increase in gross profit in the business travel services, resulting from the acquisition of the New Generation Group. We foresee that this segment mix will continue to change and balance out in year 2005 upon further development in the business value-added services and the expected opening of World Trade Center Club Shanghai in the second half of year 2005.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased by approximately $3,946,000 or 94.2% to $8,133,000 for the year ended December 31, 2004 from $4,187,000 for the same corresponding period in 2003. The increase was mainly a combination of the increase in professional fee resulting from a share placement financing in the amount of approximately $1.1 million, the increase in other professional fees in investors relation and researches, marketing and information and technology in the total amount of approximately $1.2 million, and the employees’ compensation resulting from exercising their stock options in the amount of approximately $645,000.

Of the $8,133,000 selling, general and administrative expenses incurred for the year ended December 31, 2004, the majority of it was approximately $900,000 in staff related costs; approximately $740,000 in building management and rental expenses which were necessary for the operations of our world trade center clubs in Guangzhou and Beijing; and approximately $3.7 million in expenses of non-cash accounting items. Again, the $3.7 million includes shares of the common stock of China World Trade issued for professional services and employees’ stock options. The share price of these shares was determined by reference of the market price on contract dates. We recorded the issuance of shares of our common stock resulting from exercising of the employees’ stock options as compensation expenses in accordance with the variable price accounting under FIN144. The professional services acquired were in the areas of marketing, information technology, investor relations and researches, and financing. The management does not foresee this increasing trend will continue and they will continue to impose respective measures for trimming costs.

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IMPAIRMENT LOSS AND DEPRECIATION

Total impairment loss and depreciation were approximately $1,438,000 for the year ended December 31, 2004, as compared to the same corresponding period in year 2003, an increase of $1,232,000 or 598.1% from $206,000. The increase was mainly due to the increase in the impairment losses of intangible assets (18.1%); goodwill (31.4%); and property, plant and equipment (39.6%); and the remaining increase in depreciation (10.9%). The management believes that it is necessary to record the current values of our intangible assets, goodwill, and other fixed assets so as to reflect their respective abilities of deriving revenues. Under normal circumstances, we will review the impairment of our assets at the year end or at the anniversary of such assets.

Financial Income/(Expenses), Net

Interest expenses were approximately $66,000 for the year ended December 31, 2004, as compared to the same corresponding period in year 2003 in the amount of $15,000, an increase of $41,000 or 273.3%. The majority of the increase was the result of consolidating the interest expenses incurred by the New Generation in relation to a bank loan in the amount of RMB10,000,000 (approximately equals US$1.2 million)

Income Taxes

The Group is subject to income taxes on an equity basis on income arising in or derived from the tax jurisdiction in which it is domiciled and operates.

The Hong Kong subsidiaries incurred losses for taxation purposes for the period and thus Hong Kong Profits Tax has not been provided.

Several of our PRC subsidiaries are subject to PRC Enterprise Income Taxes (“EIT”) on an entity basis on income arising in and derived from the PRC. The applicable EIT rate is 33%.

Income taxes were $47,000 for the year end December 31, 2004, as compared to none for the same corresponding period in year 2003. The increase of income taxes was the result of consolidating the operation of New Generation since the acquisition of its business in August 2004.

NET LOSS

Net loss was approximately $7.6 million for the year ended December 31, 2004, as compared to the same corresponding period in year 2003, an increase of $4.8 million or 168.0% from $2.8 million. The increase in net loss was mainly due to $1.2 million in additional impairment loss; and the remaining in shares of our common stock issued to employees resulting from them exercising their stock options and to various parties for their respective services rendered in areas of marketing; information and technology, investor relations and researches; and financing.

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The majority of the net loss was contributed from non-cash accounting treatments in provision, impairment, and shares issuance. We do not believe that this will be a continuous trend, and we further believe that the loss will not have any adverse effect on our operations.

Year Ended september 30, 2003 Compared to year Ended september 30, 2002.

OPERATING REVENUE

Consolidated operating revenue for the year ended September 30, 2003 was $2,886,000, compared to $193,000 for the year 2002, a significant increase. Of the $2,886,000 revenue in year 2003, approximately $1,719,000 (59.6%) was generated from providing club and business center related services by Guangzhou World Trade Center Club, $289,000 (10.0%) from providing business value-added services, and the remaining operating revenue of $878,000 (30.4%) from other operations in rental and trading businesses. Only US$193,000 was generated from providing club and business center related services by Guangzhou World Trade Center Club for the year ended September 30, 2003.

Consolidated gross profit increased $1,563,000, 1433.9% for the year ended September 30, 2003 over the same corresponding period in year 2002. The increase was predominantly driven by our club and business center related services. As a percentage of total operating revenues, consolidated gross profit margins of 57.9% in 2003 increased slightly from 56.6% in 2002. Of the $1,672,000 total gross profit for the year ended September 30, 2003, approximately $1,269,000 (or 75.9%)was generated from providing club and business center services, none from business travel services, approximately $289,000 (or 17.3%) from providing business value-added services, and the remaining approximately $114,000 (or 6.8%) from other operations in rental and trading businesses. As compared to the same corresponding period in year 2002, the club and business center services represented a 100% (or $109,000) of the total gross profit; none was generated from the business travel business, the business value-added services; and other operations.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the year ended September 30, 2003 was $3,768,000, as compared to $1,828,000 for the same corresponding period in year 2002, an increase of $1,941,000 or 106.2%. The increase was mainly due to:

i)   Staff Salaries, Benefit and Allowances: Staff salaries, benefit and allowances increased by $597,000 for the year ended September 30, 2003. The increase was primarily due to the salaries, benefit and allowances paid for staff in the operations of Guangzhou World Trade Center Club. As of September 2003, China World Trade had approximately 80 full-time employees, down from 110 employees six months ago.

ii)   Rental, Rates, and Related Expenses: Rental, rates and related expenses increased by $615,000 for the year ended September 30, 2003. The increase was primarily due to the occupancy of the physical venue for the operation of Guangzhou World Trade Center Club.

iii)   Utilities Expenses: Utilities expenses for the year ended September 30, 2003 was $196,000, as compared with $36,000 for the year 2002, an increase of $160,000. The increase was primarily due to the operation of Guangzhou World Trade Center Club.

iv)   Commission Expenses: Commission expenses for the year ended September 30, 2003 was $146,000, as compared with only a very minimal amount for the year 2002. The increase was primarily the commission paid to third party for assisting in recruiting World Trade memberships.

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IMPAIRMENT LOSS AND DEPRECIATION

Total impairment loss and depreciation were approximately $186,000 for the year ended September 30, 2003, as compared to an insignificant amount for the same corresponding period in year 2002. The increase was mainly due to the increase in the impairment losses of property, plant and equipment (57.8%) and the remaining increase in depreciation (42.2%). The management believes that it is necessary to record the current values of our intangible assets, goodwill, and other fixed assets so as to reflect their respective abilities of deriving revenues from. Under normal circumstances, we will review the impairment of our assets at the year end or at the anniversary of such assets.

Financial Income/(Expenses), Net

There was approximately $15,000 in interest expenses incurred and accrued from an outstanding loan for the twelve-month period ended September 30, 2003. This loan was made with a third party in February 2001. All interest expenses in relation to this loan were waived by the third party and the loan was subsequently repaid by China World Trade in December 2003.

Income Taxes

The Group is subject to income taxes on an equity basis on income arising in or derived from the tax jurisdiction in which it is domiciled and operates.

The Hong Kong subsidiaries incurred losses for taxation purposes for the period and thus Hong Kong Profits Tax has not been provided.

Since the PRC subsidiaries had sustained losses during the years ended September 30, 2003 and 2002, for the PRC income tax purposes, China World Trade had not recorded any PRC income tax expense. PRC income tax in the future will be calculated at the applicable rates relevant to the PRC subsidiaries.

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NET LOSS

Net loss was approximately $2.2 million for the year ended September 30, 2003, as compared to the same corresponding period in year 2002, an increase of $572,000 or 35.0% from $1.6 million. The increase in net loss was mainly due to the above mentioned increase in selling, general and administrative expenses in the amount of $1.9 million and impairment loss of $186,000. This increase was partially offset by the increase in gross profit in the amount of $1.5 million, resulting in net loss increase of approximately $572,000.

LIQUIDITY AND CAPITAL RESOURCES

We have banking facilities granted in the total amount of approximately $2.5 million, of which approximately $1.2 million has been utilized as of December 31, 2004. These facilities include $640,000 in revolving loan; $510,000 in mortgage loan; and the remaining $1.35 million in trust receipt and export letters of credit. The weighted average interest rate for these facilities is charged on the London Interbank Offer Rate plus 3.0% per annum.

As of December 31, 2004, cash and cash equivalents totaled $1.8 million. This cash position was the result of a combination of net cash provided by financing activities in the amount of $4,705,276 and by net cash provided by operating activities of $2,370,946, offsetting by net cash used in investing activities of $5,566,725. The increase in net cash provided by financing activities was mainly due to a private placement financing of $2.1 million and warrants exercised by Mr. Tsang and Powertronic in the total amount of $3.7 million. The net cash used in investing activities was resulted from by the acquisition of New Generation and its related assets in the total amount of approximately $5.0 million. Net cash provided by operating activities could be explained by the change in net working capital without considering the addition of accounting adjustments of non cash items. This change in net working capital was due to the decrease in prepayments of $515,000, the decrease in trade and other receivables of $4,361,173 and the increase in rental and other deposits of $330,000. The decrease in trade and other receivables were incurred resulting from the consolidation of New Generation.

During the reporting period of year ended December 31, 2004, a total of 14,908,396 shares of the common stock of China World Trade Corporation were issued, of which 4,081,238 shares were paid as part of the total consideration for the acquisition of New Generation Group in August 2004; 8,222,222 shares were issued to Mr. Chi Hung Tsang and Powertronic for their respective exercise of warrants; 1,775,001 shares were issued in relation to a private placement financing and its related fees; 429,408 shares were issued to employees for exercising their respective options; and the remaining were paid and issued to the Research Works Inc, NewsUSA and CEOCast for their respective professional services rendered, and the acquisition of 51% equity stake of CEO Clubs China Limited.

We believe that the level of financial resources is a significant factor for our future development and accordingly may choose at any time to raise capital through private debt or equity financing to strengthen its financial position, facilitate growth and provide us with additional flexibility to take advantage of business opportunities. However, other than the committed Standby Equity financing provided by Cornell Capital Partners, LC, we do not have immediate plan to have a public offering of our common stock.

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OTHER SIGNIFICANT EVENTS

China World Trade entered into an Equity Transfer Agreement dated April 20, 2004 and a Supplementary Agreement dated June 1, 2004 to acquire 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized under the laws of the Peoples’ Republic of China (“New Generation”) from Guangdong Huahao Industries Group Co., Ltd. New Generation is engaged in flight ticketing, insurance and travel agents services. The total consideration of this acquisition was approximately US$10,232,000, of which approximately US$1.2 million in cash was paid on closing and the rest of the cash portion was paid subsequently, and the remaining approximately US$7.5 million was paid by issuing a total of 4,081,238 restricted shares of the common stock of China World Trade. This acquisition was closed on August 2, 2004.

On July 20, 2004, the major controlling shareholder and Chairman of China World Trade Corporation, Mr. Chi Hung Tsang and a second major shareholder, Powertronic Holdings Limited exercised warrants to purchase additional 3.5 million shares of the common stock of China World Trade. As a result, China World Trade received total net proceeds of approximately US$2.5 million, which was used to complete the acquisition of New Generation and to provide additional working capital to further advance the development of the China World Trade Corporation.

On August 26, 2004, we completed the first closing of a private placement financing from two private accredited investors to raise a total of US$650,000. In connection with this closing, new shares were issued to the two investors on October 29, 2004.

On December 3, 2004, we completed the second closing of a private placement financing from two private accredited investors to raise a total of US$1,450,000. In connection with this closing, new shares were issued to the two investors on December 8, 2004.

On November 22, 2004, we entered a Standby Equity Distribution Agreement (“Standby Equity”) with Cornell Capital Partners, LP to provide up to a total of $30 million funding to China World Trade over a 24-month period, to be drawn down at our discretion by issuing of our common stock. The amount of each draw is subject to a maximum advance amount of $1.5 million, except for the first draw, which may be in the amount of $3.0 million. China World Trade intends to use the proceeds from the first two draws to acquire smaller travel related businesses; to enhance our travel networking system; and to build and open additional world trade center clubs in other major cities in China.

We do not intend to utilize the proceeds from this Standby Equity financing to pay down or retire any loans. In addition, we do not have any material commitments for capital expenditures although we have plans for the use of proceeds for the first two draws of the Standby Equity financing.

On December 30, 2004, General Business Network (Holdings) Limited entered into a sale and purchase agreement with Guangzhou Goldlion Environmental Technology Company Limited for the sale of our property holding located in Guangzhou, the PRC for a consideration of approximately $2.5 million. This transaction is expected to complete on or before May 31, 2005.

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GOING CONCERN COMMENT

Our audited financial statement as of December 31, 2004 was issued a going concern comment based on us having suffered losses from operations and experienced a negative working capital. As we mentioned above in the Net Loss section that our losses were a combination of the $1.2 million in additional impairment loss; and the remaining in shares of our common stock issued to employees resulting from them exercising their stock options and to various parties for their respective services rendered in areas of marketing; information and technology, investor relations and researches; and financing. On the other hand, the negative working capital was contributed by the deduction of account receivables from the current assets for the provision for the $4.0 million bad debt that was accounted for the addition of goodwill in accordance with the treatment of pre-acquisition contingencies under SFAS 141; and the increase in current liabilities of tax payable and surcharge primarily resulted from the pre-acquisition accounts of New Generation.

The majority of the net loss and negative working capital resulted from non-cash accounting treatments in provision, impairment, and shares issuance. We do not believe that the loss will be a continuous trend, and we further believe that the loss and the negative working capital will not have any adverse effect on our operations. In addition, China World Trade entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP to provide up to US$30 million financing and we are in the process of seeking approval from the SEC of our registration statement for this financing. Upon the effectiveness of the registration statement, we will be able to make draw downs under the $30 million commitment in an amount equal to $1.5 million per draw (other than the first draw, which can be up to $3.0 million) for such financing.

CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavourable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

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Valuation of long-lived assets

We review our long-lived assets for impairment, including property, plant and equipment, and identifiable intangibles with definite lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of our long-lived assets, we evaluate the probability that future undiscounted net cash flows will be greater than the carrying amount of our assets. Impairment is measured based on the difference between the carrying amount of our assets and their estimated fair value.

Allowance for Doubtful Accounts

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience credit loss rates similar to those we have experienced in the past. Measurement of such losses requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and financial health of specific customers.

Goodwill on consolidation

Our long-lived assets include goodwill. SFAS No. 142 "Goodwill and Other Intangible Assets" requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests in certain circumstances. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit.

DESCRIPTION OF PROPERTY

Our main office and the Guangzhou World Trade Center Club facilities are located at 3rd Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou, and the PRC 510620. Such office and club facilities are held pursuant to a lease from Guangzhou Silver Disk Property Management Co. Ltd., which provides for an aggregate monthly rental of approximately US$42,285 (RMB$350,000) and expires on July 31, 2007.

Our Beijing World Trade Center Club facilities are located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing, the PRC. The five-year lease for the location of the BWTCC club facilities, which runs from February 1, 2004 to January 31, 2009, was executed by Beijing Landmark Towers Co Ltd. and BWTCC. The terms of the lease provide for an aggregate monthly rental amount and management fees of approximately US$14,640 (RMB$121,180) and contains a rent free period from February 1, 2004 to January 31, 2006.

Pursuant to the Share Exchange Agreement dated December 17, 2002, entered into by the Company and Mr. William Chi Hung Tsang, China World Trade acquired the entire issued share capital of GBN, which owns two commercial properties, one located at 20/F, Goldlion Digital Network Center, Unit 01-10, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC (the "PRC Property") and the other at Flat B, 12/F, Champion Center, 301-309 Nathan Road, Hong Kong (the "Hong Kong Property"). The Company occupies most of the rental area of the PRC property and rents out the Hong Kong Property at an annual rental income of US$13,077 (HK$102,000).

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

China World Trade entered into a acquisition agreement (the "Acquisition Agreement") dated November 19, 2003, with Mr. William Chi Hung Tsang ("Mr. Tsang"), the owner of the 21st to 23rd Floor of Goldlion Digital Network Center, 138 Tiyu Road, Tianhe, Guangzhou 510620, the PRC (the "Premises"). Mr. Tsang assigned to China World Trade rents and other consideration valued at $1,800,000. Mr. Tsang was issued 3,000,000 common shares and warrants to purchase an additional 6,000,000 common shares (the “Warrants") for US$1,800,000 (US$0.60 per common share). The Warrants may be exercised between December 5, 2003 and December 1, 2005 at an exercise price of US$0.75 per common share.

By a Settlement Agreement dated December 5, 2003, China World Trade converted US$456,661.73 that was previously advanced by Mr. Tsang into 761,103 common shares of China World Trade. In the quarter ended December 31, 2003, a personal guarantee was granted from Mr. Tsang in the amount of $19,231. As a result of these transactions, Mr. Tsang will beneficially own 71.82% of the common shares of China World Trade, assuming exercise of all of his warrants.

China World Trade entered into several consulting agreements. On December 9, 2003, China World Trade issued 100,000 and 50,000 shares to Greentree Financial Group, Inc. and RR Inv Holding Inc., respectively. On December 11, 2003, China World Trade issued 500,000 shares each to TMT Consultant and Mr. Andy Lau for consultancy services provided. On December 16, 2003, China World Trade issued 100,000 shares to Wall Street Strategies, Inc. for consultancy services provided.

China World Trade entered into a relationship with respect to rent and related expenses with Guangzhou Goldlion City Properties Co., Ltd. and Guangzhou Cyber Strategy Limited in the approximate amount of $96,154, and Dimension Marketing Limited in the amount of $80,645. These amounts have been classified as current liabilities. The amounts due to related parties represent unsecured advances which are interest-free and repayable on demand.

On December 30, 2004, General Business Network (Holdings) Limited, a wholly-owned subsidiary of China World Trade (“GBN”), and Guangzhou Goldlion Environmental Technology Company Ltd., an affiliate of William Chi Hung Tsang (“GGETC”), Chairman of China World Trade, entered into an Agreement for Purchase and Sale of the premises known as the 20^th Floor of the Goldlion Digital Network Centre, Nos. 136 and 138 Ti Yu Dong Road, Tianhe District, Guangzhou PRC, pursuant to which GGETC agreed to purchase the premises from GBN for US$2,456,521.70.in cash. The closing, which is subject to several customary conditions precedent, is scheduled for May 31, 2005.

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock began quotation on the Over-the-Counter Bulletin Board ("OTCBB") on June 28, 2000 and was initially quoted under the symbol TXON before the symbol was changed to CHWT. On June 26, 2002, our common stock was delisted from trading on OTCBB because it was not deemed to be a current reporting company under the Securities and Exchange Act of 1934. Our common stock was then quoted under the symbol CWTD on the Pink Sheets from September 2002 to November 2003. As of November 26, 2003, our common stock was again quoted on the OTCBB, under the symbol CWTD.

The following table sets forth the range of bid prices of our common stock as quoted on the OTCBB and Pink Sheets LLP, respectively, during the periods indicated. The prices reported represent prices between dealers, do not include markups, markdowns or commissions and do not necessarily represent actual transactions.

		High (1)	Low
2004	First Quarter	$9.20	$1.00
	Second Quarter	$5.00	$1.07
	Third Quarter	$9.95	$1.80
	Fourth Quarter	$4.50	$1.85
2003	First Quarter	$0.0001	(2)
	Second Quarter	$0.0001	(2)
	Third Quarter	$0.0001	(2)
	Fourth Quarter	$0.0001	(2)
2002	First Quarter	$0.001	(2)
	Second Quarter	$0.001	(2)
	Third Quarter	$0.001	(2)
	Fourth Quarter	$0.001	(2)

(1)We declared a 1 for 30 reverse stock split effective September 1, 2002. All reported historical information has been adjusted accordingly to reflect the impact of the reverse stock split.

(2)Information not available.

Our common shares are issued in registered form. Interwest Transfer Company in Salt Lake City, Utah, is the registrar and transfer agent for our common stock.

Effective September 1, 2002, we executed a 1 for 30 reverse stock split of the outstanding shares of common stock.

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In September, 2002, we underwent a debt-for-equity capital restructuring and issued shares to eleven creditors for the settlement of debts and fees pursuant to settlement agreements, as follows:

Name of Creditor	Date (2002)		Cancellation of Indebtedness		No. of Shares
Mr. James Mak		September 8	$	87,500		87,500
Mr. James Mak		September 8	$	44,301		35,000
Mr. Roy Wu		September 9	$	91,667		87,500
Mr. Alfred Or		September 10	$	156,645		156,645
Mr. Andersen Chan		September 10	$	60,000		60,000
Mr. Bernard Chan		September 8	$	15,000		73,355
Superwear Limited		September 9	$	220,000		500,000
Simple Fortune Inc.		September 9	$	230,000		490,000
Sinogolf Limited		September 9	$	245,977		510,000
Top-Trained Securities Limited		September 11	$	944,628		1,000,000
Splendid Partner Holdings Limited		September 12	$	317,980		500,000
I & V Ltd.		September 12	$	317,979		500,000
TOTAL			$	2,731,677		4,000,000

The shares of common stock delivered as consideration pursuant to the debt for equity restructuring were issued on January 22, 2003.

As a result of two share purchase agreements dated September 3, 2002 and December 17, 2002, respectively, and entered into between China World Trade and Powertronic Holdings Limited, on January 24, 2003 we issued a total of 2,000,000 shares of common stock and warrants to purchase up to 4,000,000 shares of common stock for a total purchase price of $1,000,000 to Powertronic Holdings Limited.

As a result of a share exchange agreement dated December 17, 2002 entered into between China World Trade and Mr. William Chi Hung Tsang, on January 24, 2003, we issued 4,000,000 shares of common stock and warrants to purchase up to 4,000,000 shares of common stock in exchange of 100% of the share capital of General Business Network (Holdings) Ltd.

As of December 31, 2004, there were 103 holders of record of 30,889,997 outstanding shares of common stock of China World Trade, not including approximately 1,500 holders of our shares in street name.

Dividends

We have not previously paid any cash dividends on its common stock and do not anticipate paying dividends on its common stock in the foreseeable future. It is the present intention of management to retain any earnings to provide funds for the operation and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our results of operation, financial condition, contractual and legal restrictions and other factors the board of directors deem relevant.

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Penny Stock Characterization

Our Shares are "penny stocks" within the definition of that term as contained in the Securities Exchange Act of 1934, which are generally equity securities with a price of less than $5.00. Our shares will then be subject to rules that impose sales practice and disclosure requirements on certain broker-dealers who engage in certain transactions involving a penny stock. These will impose restrictions on the marketability of the common stock.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $5,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, unless the broker-dealer or the transaction is otherwise exempt, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the Registered Representative and current bid and offer quotations for the securities. In addition a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account, the account’s value and information regarding the limited market in penny stocks. As a result of these regulations, the ability of broker-dealers to sell our stock may affect the Selling Stockholders or other or other holders seeking to sell their shares in the secondary market. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. These additional sales practice and disclosure requirements could impede the sale of our securities. In addition, the liquidity for our securities may be adversely affected, with concomitant adverse affects on the price of our securities.

There are 452,500 outstanding options to purchase shares of our common stock pursuant to the 2003 Non-Qualified Employee Stock Plan.

Agreements to Register

On December 5, 2003, a Registration Rights Agreement was executed by China World Trade conferring upon Chi Hung Tsang demand registration rights for (i) 3,000,000 shares of the company's common stock ("Company Shares"), each with par value US$0.001 per share (the "Common Stock"); and (ii) a two year warrant to purchase up to 6,000,000 shares of the Common Stock at an exercise price of US$0.75 per share. Upon written demand, China World Trade shall register the shares, the warrants and the shares issuable upon exercise of the warrants as soon as practicable and in no event later than 90 days from the notice. In addition, China World Trade must maintain the registration statement until all of the securities are sold or otherwise become freely tradable.

We have a Registration Rights Agreement, dated August 26, 2004, with the Purchasers under a Securities Purchase Agreement that was also executed on August 26, 2004, covering an aggregate of 2,321,003 shares of common stock issued to the Purchasers, and shares of common stock issuable to the Purchasers upon the exercise of warrants. In addition, we have a Registration Rights Agreement with Cornell Capital Partners, LP, dated November 15, 2004, covering the 14,285,714 shares of our common stock that may be registered for sale pursuant to the Standby Equity Distribution Agreement, in addition to 375,000 shares of common stock issued to Cornell Capital and Duncan Capital as compensation under the Standby Equity Distribution Agreement.

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Shares Eligible for Future Sale

Upon effectiveness of this registration statement, the 16,981,717 shares of common stock sold in this offering will be freely tradable without restrictions under the Securities Act of 1933, except for any shares held by our "affiliates", which will be restricted by the resale limitations of Rule 144 under the Securities Act of 1933.

In general, under Rule 144 as currently in effect, any of our affiliates and any person or persons whose sales are aggregated who has beneficially owned his or her restricted shares for at least one year, may be entitled to sell in the open market within any three-month period a number of shares of common stock that does not exceed the greater of (i) 1% of the then outstanding shares of our common stock, or (ii) the average weekly trading volume in the common stock during the four calendar weeks preceding such sale. Sales under Rule 144 are also affected by limitations on manner of sale, notice requirements, and availability of current public information about us. Non-affiliates who have held their restricted shares for two years may be entitled to sell their shares under Rule 144 without regard to any of the above limitations, provided they have not been affiliates for the three months preceding such sale.

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

Currently, approximately 7,100,000 shares of our common stock are available for sale in accordance with the provisions of Rule 144. Additionally, future sales of stock owned by our affiliates may be permitted according to Rule 144. The availability for sale of substantial amounts of common stock under Rule 144 could adversely affect prevailing market prices for our securities.

Unregistered Sales of Equity Securities During Period Covered By Report

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A.Share Issuance - Acquisition of CEO Clubs China Limited.

On April 7, 2004, China World Trade acquired 51% of the capital stock of CEO Clubs China Limited, a company organized and existing under the laws of China (“CEO Clubs”), pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) with Centerstage Investments Limited, Mrs. Yuhuan Wang, Mr. Wencheng Cui, and New Earth Limited (collectively, the “Sellers”). Under the terms of the Share Exchange Agreement, China World Trade issued 80,000 shares of restricted common stock and 82,000 shares of free trading common stock, and paid $240,000 in cash, in exchange for 51% of the common stock of CEO Clubs, from the Sellers on a pro rata basis.

In this exchange offer, we relied on the exemption from registration of Section 4(2) under the Securities Act, based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there were only four offerees, (3) the offerees have agreed to the imposition of a restrictive legend on the face of the stock certificate representing the restricted shares, to the effect that they will not resell the stock unless their shares are registered or an exemption from registration is available; (4) the offerees were sophisticated investors; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the acquisition of CEO Clubs China and the issuance of the restricted stock pursuant thereto took place directly between the offerees and our management.

B. Share Issuance - Acquisition of New Generation

On August 2, 2004, General Business Network (GZ) Co. Limited, a wholly-owned subsidiary of ours, acquired 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized and existing under the laws of China (“New Generation”), from Guangdong Huahao Industries Group Co. Ltd., a limited liability company organized under the laws of China (“Guangdong Industries”), Huang Zehua, a citizen and resident of China (“Zehua”) and Suo Hongxia, a citizen and resident of China (“Hongxia”)(Guangdong Industries, Zehua and Hongxia are collectively referred herein as the “Sellers”), for an aggregate consideration of US$10,232,000, payable approximately US$2,741,000 in cash and approximately US$7,487,000 in market value of our common stock. We issued 4,081,238 shares of our restricted common stock pro rata to the Sellers at closing.

In this offering, we relied on the exemption from registration of Section 4(2) under the Securities Act, based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there were only three offerees, (3) the offerees have agreed to the imposition of a restrictive legend on the face of the stock certificate representing their shares, to the effect that they will not resell the stock unless their shares are registered or an exemption from registration is available; (4) the offerees were sophisticated investors; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the acquisition of New Generation and the issuance of the stock pursuant thereto took place directly between the offerees and our management.

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C. TCMP3 Partners and Bridges & Pipes LLC Investors

On August 26, 2004, we entered into a Securities Purchase Agreement with the TCMP3 Partners and Bridges & PIPES LLC (together being the “Purchasers”), providing for the issuance by us of (i) 333,334 shares of common stock at a price of $1.50 per share and 166,667 Series A five year Warrants to purchase shares of our common stock at $2.50 per share to Bridges & PIPES LLC, and (ii) 100,000 shares of common stock at a price of $1.50 per share and 50,000 Series A five year Warrants to purchase shares of our common stock at $2.50 per share to TCMP3 Partners, for an aggregate purchase price of $650,000. In addition, we granted each Purchaser an option (the “Option”) to purchase that number of shares equal to the number of shares initially purchased by the Purchaser on the Closing Date (the “Firm Shares”). Upon exercise of the Option at a purchase price of $3.00 per share of common stock, the Purchaser would also receive, without additional consideration, five-year Series B Warrants to purchase 50% of the Firm Shares at an exercise price equal to $4.00 per share. To date, neither of the Purchasers has exercised the Option.

In connection with this offering, we retained the services of Duncan Capital LLC to act as Placement Agent, and for its services Duncan Capital LLC was entitled to receive compensation equal to (i) a cash fee of ten percent of the aggregate purchase price of the shares of common stock and warrants sold, (ii) the issuance of a five-year non-cashless exercised provisioned warrant to purchase such number of shares of common stock as shall equal ten percent of the aggregated number of shares sold in the offering and shares exercised upon exercised upon exercise of the Series A Warrants and Series B Warrants at an exercise price of $2.50 per share, and (iii) a cash fee of ten percent upon our receipt of proceeds, if any, upon the exercise of the Series A Warrants and Series B Warrants by the Purchasers. Duncan Capital LLC was issued a Placement Agent’s warrant to purchase 43,000 of our common shares at an exercise price equal to $2.50 per share, which is being registered pursuant to this prospectus, in connection with this offering.

In this offering, we relied on the exemption from registration of Section 4(2) under the Securities Act and Regulation D promulgated pursuant thereto.

D. Cornell Capital Partners, LP and Stealth Capital, LLC

On December 3, 2004, we had a second closing under the Securities Purchase Agreement with two new Purchasers, Cornell Capital Partners, LLC and Stealth Capital, LLC, who together purchased an aggregate of $1,450,000 of our shares of common stock and Series A Warrants. Cornell Capital purchased 900,000 shares of common stock at $1.50 per share, and received 450,000 Series A Warrants, for a total consideration of $1,350,000. Stealth Capital purchased 66,667 shares of common stock at $1.50 per share, and received 33,334 Series A Warrants, for a total consideration of $100,000. For its services as Placement Agent, Duncan Capital, LLC received an additional 69,667 Placement Agent Warrants, which are exercisable at $2.50 per share. In addition, Bridges & PIPES, LLC was issued 83,334 Series A Warrants and TCMP3 Partners was issued 25,000 Series A Warrants for their agreement to waive their rights under the Registration Rights Agreement to be the sole registrants, together with Cornell Capital and Stealth Capital, in a demand registration made on our Company. They were issued the warrants pursuant to a Letter Agreement that, among other things, permitted our Company to enter into a Equity Line of Credit with Cornell Capital Partners, LP and register the shares to be issued pursuant to the Equity Line of Credit together with the shares and warrants owned by Bridges & PIPES, LLC and TCMP3 Partners on one registration statement and to be offered for sale pursuant to one prospectus.

In connection with the issuance of securities at this second closing, we relied on the exemption from registration of Section 4(2) under the Securities Act and Regulation D promulgated pursuant thereto.

100

E. Conversion of Warrants by Chi Hung Tsang and Powertronic Holdings Limited (“Powertronic”)

On July 20, 2004, Powertronic exercised a two-year warrant. Powertronic purchased 2,000,000 shares of the common stock of China World Trade at a price of US$0.575 per share. On December 15, 2004, Powertronic elected to take a cashless exercise of warrants to purchase 1,574,074 shares of the common stock of China World Trade. A total of 3,574,074 shares of common stock of China World Trade were issued in connection with the exercise of both warrants. As of December 31, 2004, Powertronic did not hold any warrants.

In this issuance of shares upon the exercise of warrants, we relied on the exemption from registration of Section 4(2) under the Securities Act, based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only one offeree, (3) the offeree has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offeree was a sophisticated investor; (5) there were no subsequent or contemporaneous public offerings of the stock; and (6) the stock was not broken down into smaller denominations.

On March 22, 2004 and July 20, 2004, Mr. William Tsang exercised two 1,500,000 warrants to purchase 3,000,000 shares of the common stock of China World Trade at a price of US$0.75 and US$0.92 per share respectively. On December 15, 2004, Mr. Tsang elected to take the cashless exercise of warrant to purchase 1,648,148 shares of the common stock of China World Trade. A total of 4,648,148 shares of common stock of China World Trade were issued accordingly. As of December 31, 2004, Mr. Tsang held two-year warrants to purchase 4,500,000 shares of the common stock of China World Trade at a price of US$0.75.

In this issuance of shares upon the exercise of warrants, we relied on the exemption from registration of Section 4(2) under the Securities Act, based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only one offeree, (3) the offeree has agreed to the imposition of a restrictive legend on the face of the stock certificate representing his shares, to the effect that he will not resell the stock unless his shares are registered or an exemption from registration is available; (4) the offeree was a sophisticated investor; (5) there were no subsequent or contemporaneous public offerings of the stock; and (6) the stock was not broken down into smaller denominations.

101

EXECUTIVE COMPENSATION

No compensation in excess of $100,000 was awarded to, earned by, or paid to any executive officer of China World Trade during the years 2004, 2003 and 2002, except as described below. The following table and the accompanying notes provide summary information for each of the last three fiscal years concerning cash and non-cash compensation paid or accrued by our chief executive officer and other executive officers earning in excess of $100,000 for the past three years.

SUMMARY COMPENSATION TABLE

Name of officer	Year		Salary		Bonus		Other Annual Compen-sation		Restricted Stock Award(s)		Securities Underlying Options SARs(#)		LTIP payouts		All Other Compen- Sation
John Hui, CEO		2004		57,692		-		-		206,347		-		-		-
John Hui, CEO		2003		147,436		-		-		-		-		-		-
John Hui, CEO		2002		140,321		-		-		-		-		-		-
William Chi Hung Tsang, Chairman & Director		2004		57,692						733,680
William Chi Hung Tsang, Chairman & Director		2003		141,026		-		-		-		-		-		-
C. M. Chan, Director		2004		-		-		-		198,705		-		-		-
C.M. Chan, Director		2003		30,769		-		-		-		-		-		-
Luo Chaoming, Director		2004		17,396		-		-		99,362		-		-		-
Bernard Chan, CFO		2004		-		-		-		218,399		-		-		-

Compensation of Directors

In 2001, China World Trade committed itself to compensate each of its Board of Directors with 2,000 shares of its common stock per annum. Board members typically meet on a bi-monthly basis.

2003 Non-Qualified Stock Compensation Plan

The following table sets forth information about our 2003 Non-Qualified Stock Compensation Plan adopted by our Board of Directors and filed with the Commission as Exhibit 10.1 to our Registration Statement on Form S-8 on October 28, 2003.

Shares remaining available for future issuance	Shares issuable upon exercise of options to be granted in the future	Weighted average exercise price of outstanding options
638,184	452,500	$0.673

Pursuant to the 2003 plan, we registered 2,000,000 shares of common stock and 1,000,000 options to purchase shares of common stock at $0.673 per share, for a total registration for issuance of 3,000,000 shares of common stock. The Compensation Committee of the Board of Directors will issue common stock and award options to employees, directors, officers, consultants, advisors and other persons associated with our company. The 2003 plan is intended to provide a method whereby our company may be stimulated by the personal involvement of our employees, directors, officers, consultants, advisors and other persons in our business and reward such involvement, thereby advancing the interests of our company and all of its shareholders.

As of the date of this report, a total of 1,503,000 shares of common stock were issued to consultants and 985,000 options were issued to our management pursuant to our 2003 Non-Qualified Stock Compensation Plan.

102

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

China World Trade Corporation

We have audited the accompanying consolidated balance sheet of China World Trade Corporation (a Nevada corporation) and its subsidiaries as of December 31, 2004 and the related consolidated statements of operations, shareholders' equity and cash flows for the years ended December 31, 2004 and September 30, 2003. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China World Trade Corporation and its subsidiaries as of December 31, 2004 and the consolidated results of their operations and their cash flows for the years ended December 31, 2004 and September 30, 2003 in conformity with generally accepted accounting principles in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3(b) to the financial statements, the Company has suffered losses from operations during the year and has a negative working capital that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3(b). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MOORES ROWLAND MAZARS

Chartered Accountants

Certified Public Accountants

Hong Kong

Date: April 14, 2005

103

China World Trade Corporation

Consolidated Statements of Operations

				Year ended December 31,			Year ended September 30,
				2004			2003
	Note			US$			US$
Operating revenues		3(e	)
Club and business centre					551,497			1,718,854
Business traveling services					1,671,605			-
Business value-added services					40,695			288,462
Rental					701,284			47,189
Trading and others					127,663			831,095
					3,092,744			2,885,600
Operating costs and expenses
Club and business centre					(91,415	)		(450,002	)
Business traveling services					(112,588	)		-
Business value-added services					(1,841	)		-
Rental					(403,735	)		-
Trading and others					(120,224	)		(763,167	)
					(729,803	)		(1,213,169	)
Other expenses
Depreciation					(233,298	)		(79,303	)
Impairment losses on intangible assets		10			(222,676	)		-
Impairment loss on goodwill		12			(388,118	)		-
Impairment of property, plant and equipment		13			(594,343	)		(106,975	)
Selling, general and administrative expenses					(8,133,140	)		(3,767,788	)
					(9,571,575	)		(3,954,066	)
Loss from operations					(7,208,634	)		(2,281,635	)
Non-operating income (expense)
Other income					140,014			2,490
Interest expense					(65,909	)		(14,811	)
Equity in net loss of affiliate					-			(32,051	)
Loss before income taxes and minority interests					(7,134,529	)		(2,326,007	)
Income taxes expense		5			(46,553	)		-
Loss before minority interests					(7,181,082	)		(2,326,007	)
Minority interests					(413,311	)		120,471
Net loss					(7,594,393	)		(2,205,536	)
Loss per share - Basic and diluted		3(s	)		(0.36	)		(0.23	)
Weighted average number of shares used in calculating basic loss per share					21,102,405			9,699,264
The accompanying notes are an integral part of these financial statements.

104

China World Trade Corporation

Consolidated Statements of Operations

				As of December 31, 2004
ASSETS	Note			US$
Current assets
Cash and cash equivalents					1,824,268
Trade and other receivables		6			2,743,798
Rental and other deposits		7			1,702,856
Prepayments					63,007
Inventories		8			171,020
Short-term investments		9			24,163
Total current assets					6,529,112
Intangible asset		10			1,410,000
Property use rights		11			1,576,639
Goodwill		12			11,279,314
Property, plant and equipment, net		13			3,310,791
Total assets					24,105,856
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables		14			6,425,786
Deferred income					26,723
Short-term bank loan		15			1,812,229
Mortgage loan		16			448,418
Total current liabilities					8,713,156
Due to a shareholder		19(e	)		320,536
Total liabilities					9,033,692
Minority interest					2,143,897
Commitments and contingencies		20			-
Shareholders' equity
Preferred stock, par value of US$0.001 each; 10,000,000 shares authorized, none issued or outstanding					-
Common stock, par value of US$0.001 each; 50,000,000 shares authorized, 30,889,997 shares issued and outstanding as of December 31, 2004		22			30,890
Additional paid-in capital					30,817,729
Statutory reserves		25			44,403
Accumulated deficit					(17,964,755	)
Total shareholders’ equity					12,928,267
Total liabilities and shareholders’ equity					24,105,856
The accompanying notes are an integral part of these financial statements.

105

China World Trade Corporation

Consolidated Statements of Shareholders’ Equity

	Common stock
	No. of shares			Amount issued		Amount to be issued			Additional paid in capital			Statutory reserves		Accumulated deficit
				US$		US$			US$			US$		US$
Balance as of October 1, 2002		6,970,497			971		6,000			6,810,207			-		(7,190,979	)
Cancellation of stock issued for services on October 1, 2002		(1,000,000	)		-		(1,000	)		(8,999	)		-		-
Issuance of common stock to be issued on January 22, 2003		-			5,000		(5,000	)		300,000			-		-
Common stock issued for acquisition of a subsidiary on January 24, 2003		4,000,000			4,000		-			3,196,000			-		-
Issuance of common stock for cash and services on January 24, 2003		1,000,000			1,000		-			799,000			-		-
Net loss		-			-		-			-			-		(2,205,536	)
Balance as of September 30, 2003		10,970,497			10,971		-			11,096,208			-		(9,396,515	)
The accompanying notes are an integral part of these financial statements.

106

China World Trade Corporation

Consolidated Statements of Shareholders’ Equity

				Common stock
				No. of shares		Amount issued		Additional paid in capital			Statutory reserves		Accumulated deficit
	Note					US$		US$			US$		US$
Balance as of January 1, 2004					15,981,601		15,982		14,347,859			-		(10,325,959	)
Common stock issued in exchange for services in February 2004		22I-(e	)		244,000		244		374,956			-		-
Exercise of warrants on March 22, 2004		22(b	)		1,500,000		1,500		1,123,500			-		-
Option issued in exchange for services on February 27, 2004		23(b	)		-		-		311,200			-		-
Common stock issued in exchange for services on May 7, 2004		22(f	)		24,027		24		99,976			-		-
Common stock issued as consideration for acquisition of a subsidiary on May 7, 2004		22(g	)		80,000		80		239,920			-		-
Common stock issue in exchange for service on July 12, 2004		22(h	)		50,500		51		160,149			-		-
Exercise of warrants on July 20, 2004		22(a	)		2,000,000		2,000		1,148,000			-		-
Exercise of warrants on July 20, 2004		22(b	)		1,500,000		1,500		1,378,500			-		-
Common stock issued as consideration for acquisition of a subsidiary on July 30, 2004		22(i	)		4,081,238		4,081		7,459,687			-		-
Common stock issued as a compensation for termination of a contract		22(j	)		2,000		2		4,998			-		-
Common stock issued upon 1st private placement		23			433,333		433		649,567			-		-
Modification of The 2003 Plan		3(g	)		-		-		645,718			-		-
Exercise of options of The 2003 Plan		22(k	)		370,857		371		-			-		-
Exercise of options for services		23(b	)		58,552		58		-			-		-
Common stock issued in exchange for placement agent services		23			375,000		375		862,125			-		-
Warrant issued in exchange for placement agent services		23			-		-		288,427			-		-
Common stock issued upon 2nd private placement		23			966,667		967		1,449,034			-		-
Warrant issued for waiver of sole registrants		23			-		-		277,335			-		-
Exercise of warrants on December 15, 2004		22(a	)		1,574,074		1,574		(1,574	)		-		-
Exercise of warrants on December 15, 2004		22(b	)		1,648,148		1,648		(1,648	)		-		-
Net loss					-		-		-			-		(7,594,393	)
Transfer to statutory reserves		25			-		-		-			44,403		(44,403	)
Balance as of December 31, 2004					30,889,997		30,890		30,817,729			44,403		(17,964,755	)
The accompanying notes are an integral part of these financial statements.

107

China World Trade Corporation

Consolidated Statements of Cash Flows

		Year  ended December 31,			Year ended September 30,
		2004			2003
	Note	US$			US$
Cash flows from operating activities:
Net loss			(7,594,393	)		(2,205,536	)
Adjustments to reconcile net loss to net cash used in operating activities:
Minority interest			413,311			(120,471	)
Amortization on intangible asset			360,000			-
Equity in net loss of affiliate			-			32,051
Depreciation			233,298			79,303
Impairment loss on property, plant and equipment			594,343			106,975
Impairment loss on goodwill			388,118			-
Impairment loss on intangible assets			222,676			-
Increase in deferred income			3,546			31,877
Provision for bad debts due from related companies			236,247			-
Stock, options and warrants issued for services			2,379,862			600,000
Cashless exercise of option			429			-
Staff compensation cost			645,718			-
Changes in working capital:
Trade and other receivables			4,361,173			(89,875	)
Rental and other deposits			(329,535	)		(11,484	)
Prepayments			515,499			(23,299	)
Inventories			(97,637	)		(289,564	)
Income taxes payable			37,400			-
Trade and other payables			891			1,222,960
Net cash provided from (used in) operating activities			2,370,946			(667,063	)
Cash flows from investing activities:
Acquisition of a subsidiary			(3,301,464	)		123,707
Acquisition of an affiliate			-			(32,051	)
Acquisition of property, plant and equipment			(688,622	)		(92,824	)
Acquisition of intangible assets			(1,576,639	)		-
Net cash used in investing activities			(5,566,725	)		(1,168	)
Cash flows from financing activities:
Capital contribution from minority shareholder of a subsidiary			-			106,225
Proceeds from issuance of shares upon exercise of warrants			3,655,000			-
Proceeds from issuance of shares upon private placements			2,100,001			-
Advance from a shareholder			320,536			-
Proceeds from new bank loan			604,076			812,820
Repayment of amount borrowed			(1,974,337	)		(10,482	)
Net cash provided by financing activities			4,705,276			908,563
Net increase in cash and cash equivalents			1,509,497			240,332
Cash and cash equivalents at beginning of year			314,771			32,888
Cash and cash equivalents at end of year			1,824,268			273,220
Analysis of balances of cash and cash equivalents
Cash and bank balances			1,824,268			273,220
Supplemental disclosure information:
Interest paid			61,157			14,811
Income taxes paid			9,153			-
Non-cash investing and financing activities
Stocks, options and warrants issued for services			3,025,580			600,000
Purchase of subsidiaries by:
- issuance of common stock			7,706,383			3,200,000
- purchase consideration in arrear			120,000			-
The accompanying notes are an integral part of these financial statements.

108

China World Trade Corporation

Notes to Financial Statements

1.ORGANIZATION AND NATURE OF BUSINESS

China World Trade Corporation (“CWTC”) was incorporated under the laws of the State of Nevada on January 29, 1998 as Weston International Development Corporation. On July 28, 1998, the name was changed to Txon International Development Corporation. On September 15, 2000 CWTC changed to its existing name. CWTC acts as an investment holding company.

Details of the major subsidiaries and their principal activities as of the date of this report are summarized below:

Name of company	Date of acquisition/ formation	Place of incorporation	Equity interest owned by the Company	Principal activities
Virtual Edge Limited	August 14, 2001	BVI	100%	Investment holding
General Business Network (Holdings) Limited	January 24, 2003	Hong Kong	100%	Investment holding and properties investment
Guangzhou World Trade Centre Club	December 29, 2001	PRC	75%	Club services
Polysend Trading Limited	March 6, 2003	Hong Kong	100%	Leather trading
Beijing World Trade Centre Club	April 1, 1999	PRC	75%	Club services
Sino Platform Limited	January 4, 2004	BVI	100%	Investment holding
WTC Link International Limited	February 4, 2004	Hong Kong	60%	Investment holding
China Chance Enterprises Limited	January 26, 2004	BVI	100%	Investment holding
CEO Clubs China Limited	May 7, 2004	Hong Kong	51%	Licensing
Guangdong New Generation Commercial Management Limited	August 2, 2004	PRC	51%	Travel ticketing agency and investment holding

109

China World Trade Corporation

Notes to Financial Statements

1.ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)

Name of company	Date of acquisition/ formation	Place of incorporation	Equity interest owned by the Company	Principal activities
General Business Network (Guangzhou) Company Limited	December 25, 2002	PRC	100%	Investment holding and property holding
Guangdong WTC Link Limited	June 21, 2004	PRC	60%	Customer relationship management
Guangzhou Airport Tour Service Limited	August 2, 2004	PRC	25.6%	Travel ticketing agency
Guangdong New Generation Commercial Tour Service Limited	July 29, 2004	PRC	25.6%	Room booking services and travel ticketing agency
Guangzhou Xinyou Foreign Enterprise Services Limited	May 18, 2004	PRC	30.6%	Garment trading
Guangzhou Hongyan Travel Services Limited	July 17, 2004	PRC	30.6%	Travel ticketing agency
Guangdong Huahao Insurance Agency Limited	January 15, 2002	PRC	31.6%	Insurance agency

2.CHANGE IN FINANCIAL YEAR

Effective for financial year 2004, the Company changed its financial year end from September 30 to December 31 of each year. As a result of this change, the consolidated statements of operations, consolidated statements of cash flows and consolidated statements of shareholders’ equity are presented for the financial year ended December 31, 2004 and September 30, 2003. In addition, the consolidated balance sheet as of December 31, 2004 is presented.

110

China World Trade Corporation

Notes to Financial Statements

2.CHANGE IN FINANCIAL YEAR (CONTINUED)

For comparative purposes only, the following table presents the condensed results of operations for the three-month periods ended December 31, 2003 and 2002:

	Three-month period ended December 31, 2003			Three-month period ended December 31, 2002
	(Audited)			(Unaudited)
	US$			US$
Operating revenues
Club and business centre		178,048			413,405
Business value-added services		707,028			96,154
		885,076			509,559
Operating costs and expenses
Club and business centre		(23,507	)		(108,702	)
Business value-added services		(655,933	)		-
		(679,440	)		(108,702	)
Other expenses
Depreciation		(15,132	)		(1,681	)
Amortization of intangible assets		(30,000	)		-
Selling, general and administrative expenses		(1,148,005	)		(780,576	)
		(1,193,137	)		(782,257	)
Loss from operations		(987,501	)		(381,400	)
Non-operating income (expense)
Other income		62,557			40
Interest expense		(4,500	)		-
Loss before income taxes and minority interests		(929,444	)		(381,360	)
Income taxes expense		-			-
Loss before minority interests		(929,444	)		(381,360	)
Minority interests		-			79,949
Net loss		(929,444	)		(301,411	)
Loss per share - Basic		(0.07	)		(0.05	)
Weighted average number of shares used in calculating basic loss per share		12,640,865			5,970,497

111

China World Trade Corporation

Notes to Financial Statements

3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)   Basis of accounting

The financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“USGAAP”). The measurement basis used in the preparation of the financial statements is historical cost.

(b)   Preparation of financial statements

The Company has a negative working capital of US$2,184,044 as of December 31, 2004. In addition, the Company had net loss of US$7,594,393 and US$2,205,536 for the years ended December 31, 2004 and September 30, 2003 respectively.

Continuation of the Company as a going concern is dependent upon obtaining additional working capital through additional equity funding and attaining profitable operations in the future. Management has developed a strategy, which it believes can be accomplished and will enable the Company to operate in the future. However, there can be no assurance that the Company will be successful with its efforts to attain profitable operations. Moreover the Company entered into agreements relating to private placements to obtain additional financing (see note 23). The inability of the Company to secure additional financing and attain profitable operations in the near term could adversely impact the Company’s business, financial position and prospects.

(c)   Principles of consolidation

The consolidated financial statements include the financial information of the Company and its subsidiaries. The results of subsidiaries acquired or disposed of during the year are consolidated from or up to the date of their effective dates of acquisition or disposal respectively.

All material intercompany balances and transactions have been eliminated on consolidation.

(d)   Goodwill on consolidation

Goodwill represents the excess of the purchase consideration payable in acquisitions of subsidiaries over the fair value of the net assets acquired at the time of acquisition. Goodwill on consolidation is stated at cost when it arises. As part of an ongoing review of the valuation of goodwill, management assesses the carrying value of the goodwill to determine if changes in facts and circumstances suggest that it may be impaired. If this review indicates that the goodwill is not recoverable, the carrying value of the goodwill would be reduced to its estimated fair market value.

On disposal of a subsidiary, any attributable amount of purchased goodwill is included in the calculation of the gain or loss on disposal.

112

China World Trade Corporation

Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e)   Revenue recognition

(i)Club and business centre

Business club membership

The Company, through its Business Club, provides members a commercial and recreational service, education programs and business networking programs. The Company generally records membership revenue as deferred income on its consolidated balance sheets and recognizes it over the membership period. Revenues generated from memberships that are subject to a pro rata refund are recognized ratably over the membership period.

(ii)Business traveling services

Travel distribution services

The Company engages in the air-ticketing, hotel room booking and travel agency businesses and receives commissions from travel suppliers for air travel, hotel rooms, vacation packages and cruises booked through its toll-free call center, websites and reseller network. Commissions from travel providers are recognized upon delivery of the appropriate confirmation or air ticket to the customers. Commissions from hotel room booking are recognized upon the confirmation of a customer’s stay with the hotel. The Company is not the primary obligor of the arrangement of these services and revenue is reported net in accordance with EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.”

For information purposes, the commission income of the Company was derived from air-ticketing services with total values as follows:

	Year ended	Year ended
	December 31, 2004	September 30, 2003
	US$	US$
Value of air-ticket fare	54,890,272	-

Life and accident insurance agency business

The Company engages in the life and accident insurance agency business in PRC. Commission revenues from the carriers for life and accident insurance are received and recognized during the underlying policy period.

For information purposes, the commission income of the Company was derived from insurance policies with total premium income as follows:

	Year ended	Year ended
	December 31, 2004	September 30, 2003
	US$	US$
Premium income of insurance policies	2,489,675	-

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Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e)   Revenue recognition (continued)

(iii)Business value-added services

Revenues from various business consultancy services contracts are recognized as services are provided. There are two basic types of services contracts: (1) fixed price (or flat fee basis) services contracts and (2) services contracts which may or may not be signed in advance for similar service on a success basis (success fee basis). Fixed price services contracts are generally performed evenly over the contract period, and, accordingly, revenue is recognized on a pro-rata basis over the life of the contract. Revenues derived from other services contracts are recognized when the services are performed in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition, revised and updated." Expenses related to all services contracts are recognized as incurred.

(iv)Rental

Leased business facilities

The Company also leases business facilities to members of the Club. The lease revenues are recognized based on the lease term of the facilities.

(v)Trading and others

Sales of goods

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", when the title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collectibility is reasonably assured.

(f)   Deferred income

Deferred income represents unamortized non-refundable admission fees membership fees and licensing fee received but the related services, or portion of the services, have not yet been rendered.

(g)Stock-based compensation

The Company records compensation expense for stock-based employee compensation plans using the intrinsic value method in which compensation expense, if any, is measured as the excess of the market price of the stock over the exercise price of the award on the measurement date.

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Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g)Stock-based compensation (continued)

On December 31, 2003, the Board of Directors adopted a stock option plan (The 2003 Plan). The 2003 Plan allows the Board of Directors to grant stock options to various employees of the Company. 1,000,000 stock options were granted in accordance with the terms of the 2003 Plan on December 31, 2003 to certain officers and directors at an exercise price of US$0.673 per share. The stock options will vest and become exercisable according to the following schedule:

On April 30, 2004:25%

On December 30, 2004:25%

Each quarter thereafter:6.25% (until fully vested)

By an ordinary resolution passed at a directors’ meeting held on October 31, 2004, the option holders of The 2003 Plan were allowed to begin exercising 50% of the total entitlements as of November 1, 2004 (ahead of the original entitlement on December 30, 2004) and on a cashless basis. The terms and conditions of the remaining 50% of their entitlements under The 2003 Plan shall stay the same.

As the exercise price of the Company’s incentive stock options is higher than the market price of the underlying stock on the date of grant, pursuant to APB Opinion No. 25, no compensation expense has been recognized for stock options granted to employees at the date of grant.

Following modification the options granted under The 2003 Plan, the modified award (i.e. 50% of the total entitlements) was fully vested at October 31, 2004. The new measurement of stock-based compensation was required and based on the intrinsic value of the Company’s common stock at the date immediately prior to the modification (i.e. October 31, 2004). The compensation cost was recognized in the consolidated statement of operations and the same amount was credited to the Company’s additional paid-in capital.

115

China World Trade Corporation

Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g)Stock-based compensation (continued)

Had compensation expense for the same stock options been determined based on their fair values at the dates of grant and been amortized over the period from the date of grant to the date that the award is vested, as consistent with the provisions of SFAS No. 123, the Company's net loss and loss per share would have been reported as follows:

	Year ended			Year ended
	December 31, 2004			September 30, 2003
	US$			US$
Net loss, as reported		(7,594,393	)		(2,205,536	)
Total stock-based employee compensation expense determined under intrinsic value based on method for all awards, net of tax		645,718
Total stock-based employee compensation expense determined under fair value based on method for all awards, net of tax		(891,425	)		-
Pro forma		(7,840,100	)		(2,205,536	)
Loss per share - Basic and diluted
As reported		(0.36	)		(0.23	)
Pro forma		(0.37	)		(0.23	)

The fair value of the options granted is estimated on the date of grant and date of modification using a Black-Scholes option pricing model with the following weighted average assumptions used:

	Date of grant			Date of modification
Expected dividend yield		None			None
Risk-free interest rate		2.1	%		2.6	%
Expected stock price volatility		224	%		210	%
Expected life of options		3 years			2.2 years

The weighted average fair value per option granted at the date of grant and date of modification was US$0.62 and US$1.97 respectively. For purposes of pro forma disclosure, the estimated fair value of the options is amortized on a straight line basis to expense over the options’ vesting periods, i.e., 3 years as prescribed under The 2003 Plan.

116

China World Trade Corporation

Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h)Statement of cash flows

Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent only when it has a maturity of three months or less from its acquisition date.

(i)Translation of foreign currency

The subsidiaries maintain their accounting books and records in United States Dollars ("US$"), Hong Kong Dollars ("HK$") and Renminbi ("RMB"). Foreign currency transactions during the year are translated to functional currencies of the respective subsidiaries at the approximate rates of exchange on the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at year end are translated at the approximate rates of exchange ruling at the balance sheet date. Non-monetary assets and liabilities are translated at the rates of exchange prevailing at the time the asset or liability was acquired. Exchange gains or losses are recorded in the statements of operations.

On consolidation, the financial statements of the subsidiaries whose accounting books and records are denominated in currencies other than US$ are translated into US$ using the closing rate method, whereby the balance sheet items are translated into US$ using the exchange rates at the respective balance sheet dates. The share capital and retained earnings are translated at exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the year.

All exchange differences arising on consolidation are recorded within equity. Historically, foreign exchange transactions have not been material to the financial statements.

(j) Concentration of credit risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.

117

China World Trade Corporation

Notes to Financial Statements

3          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k)Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss.

The cost of an item of property, plant and equipment comprises its purchase price andany directly attributable costs of bringing the asset to its working condition and location for its intended use. Major costs incurred in restoring assets to their normal working conditions are charged to the income statement. Improvements are capitalised and depreciated over their expected useful lives.

The gain or loss arising from the retirement or disposal of property, plant and equipment is determined as the difference between the estimated net sales proceeds and the carrying amount of the assets and is recognized as income or expense in the income statement.

Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives from the date on which they become fully operational and after taking into account of their estimated residual values, using the straight-line method, at the following rates per annum:

Leasehold land and buildings50 years

Leasehold improvements2 - 3 years

Furniture and fixtures5 - 10 years

Office and computer equipment3 - 5 years

Motor vehicles6 years

(l)   Impairment of long-lived assets

Long-lived assets are reviewed at least annually for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, impairment is measured as the difference between the carrying amount and fair value of the asset. Goodwill will not be allocated to long-lived assets when tested for impairment.

(m)Property-use rights

Property-use rights are stated at cost less accumulated amortization and impairment losses. Costs of the property-use rights are amortized over the term of the relevant rights on a straight line basis.

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Notes to Financial Statements

3.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(n)Intangible asset

The intangible asset represents the rental income stream acquired capitalized and is amortized on a straight-line basis over five years.

(o)Inventories

Inventories are stated at the lower of cost or market. Cost, which comprises all costs of purchase and, where applicable, other costs that has been incurred in bringing the inventories to their present location and condition, is calculated using the first-in, first-out method. Estimated losses on inventories represent reserves for obsolescence, excess quantities, irregular and slow moving inventory. The Company estimates the loss / write-down on the basis of its assessment of the inventory’s net realizable value based upon current market conditions and historical experience.

(p)Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable and receivable under operating leases are recognized as expense and revenue on the straight-line basis over the lease terms.

The Company leases certain premises under non-cancellable operating leases. Rental expenses under operating leases were US$564,198 and US$698,694 for the years ended December 31, 2004 and September 30, 2003 respectively.

(q)Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

(r)Use of estimates

The preparation of the financial statements in conformity with USGAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reported periods. Actual amounts could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation, taxes and contingencies.

119

China World Trade Corporation

Notes to Financial Statements

3.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(s)Loss per share

Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common stocks outstanding during the years.

At the end of each year, the Company had outstanding stock warrants and options whose exercise or conversion could, under certain circumstances, further dilute loss per share. The following shares of potentially issuable common stock were not included in the above weighted average shares outstanding because to do so would have had an anti-dilutive effect on loss per share for the years presented.

	As of December 31, 2004	As of September 30, 2003
Warrants	5,421,002	8,000,000
Options	1,852,500	-
	7,273,502	8,000,000

(t)Segment reporting

The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information". Segment information is disclosed in Note 26 to the financial statements.

(u)Allowance for doubtful accounts

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Trade and other receivables are presented net of an allowance for doubtful accounts of US$4,171,634 as of December 31, 2004.

(v)   New accounting pronouncements

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 151 “Inventory Costs, an Amendment of ARB No. 43, Chapter 4”. This statement amends ARB No. 43, Chapter 4 to clarify that abnormal amounts of idle facility expense, freight, handling costs, and spoilage should be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” and that fixed production overheads should be allocated to inventory based on the normal capacity of the production facilities. The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005; however, earlier application is permitted for inventory costs incurred during fiscal year beginning after November 23, 2004. The provisions of SFAS No. 151 should be applied prospectively. The Company believes that SFAS No. 151 will not have a significant impact on its financial statements when it is adopted.

120

China World Trade Corporation

Notes to Financial Statements

3.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(v)   New accounting pronouncements (continued)

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment”. This statement provides investors and other users of financial statement with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123(R) covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS 123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, “Accounting for Stock issued to Employees”. Public entities that file as small business issuers will be required to apply this statement as of the first interim or annual reporting period that begins after December 15, 2005. The adoption of this pronouncement may impact the Company’s results of operations or financial position and the management is conducting a detailed assessment.

4.ACQUISITIONS

(a) On May 7, 2004, the Company acquired 51% interests of CEO Clubs China Limited (“CEO”). CEO was incorporated in Hong Kong and holds an exclusive right for licensing the brand name “CEO Club” in the PRC. The exclusive right acquired is separately allocated as an intangible asset.

Details of the identifiable assets acquired at the date of acquisition are as follows:

	US$
Assets acquired
Trade and other receivable		1,282
Intangible asset		222,676
Goodwill		136,670
Net assets acquired		360,628
Shared by minority interest		(628	)
		360,000
Satisfied by:
Issuance of common stock		240,000
Purchase consideration in arrear		120,000
Consideration		360,000

In addition to the above consideration of US$360,000, the Company has committed to inject cash of US$120,000 to the newly acquired subsidiary as operating funds.

121

China World Trade Corporation

Notes to Financial Statements

4.        ACQUISITIONS (CONTINUED)

(b) Pursuant to an amendment to the Articles of General (Guangzhou) Business Network Limited (“GBN(GZ)”) dated May 26, 2004, the registered capital was increased from US$64,102 to US$1,983,974 which was wholly contributed by the Company. Before the increase in registered capital, the Company had 50% interest in GBN(GZ) and recognized it as an associate. The Company acquired the remaining capital of GBN(GZ) on July 26, 2004.

Details of the identifiable assets acquired and liabilities assumed at the date of acquisition are as follows:

	US$
Assets acquired
Property, plant and equipment		1,047
Cash and cash equivalents		76,881
Trade and other receivables		1,484,040
Prepayments		4,078
Goodwill		176,299
		1,742,345
Liabilities assumed
Trade and other payables		(47,239	)
Short-term bank loans		(1,631,006	)
		(1,678,245	)
Net assets acquired		64,100
Equity in net loss of GBN(GZ) in previous years		(32,051	)
Consideration - cash		32,049

(c) On April 20, 2004, a wholly-owned subsidiary of the Company (the “Transferee”) entered into an Equity Transfer Agreement (the “Agreement”) with the major shareholders of Guangdong New Generation Commercial Management Limited (“GNGCM”) and Guangdong Huahao Insurance Agency Limited (“GHIAL”) the (“Transferors”), pursuant to which the Transferee would acquire from the Transferors 51% interest in GNGCM (the “Acquisition’) for an aggregate consideration of approximately US$11,127,000 of which US$3,640,000 was to be paid in the form of cash and US$7,487,000 was to be paid in the form of restricted shares issued by the Company. The Agreement also contemplated a loan agreement in the amount of US$3,640,000 pursuant to which one of the Transferors would loan the said amount to GNGCM as part of the transaction. On June 1, 2004, a supplementary agreement to the Agreement was entered into by making several changes to the Agreement, amongst which the aggregate consideration was reduced to US$10,198,041, of which US$2,731,658 was to be paid in the form of cash and US$7,466,383 was to be paid in the form of restricted shares of the Company.

122

China World Trade Corporation

Notes to Financial Statements

4.ACQUISITIONS (CONTINUED)

Completion of the acquisition of GNGCM Group enables the Company to expand its business to the high growth, travel-related businesses. The acquisition has been accounted for under the purchase method of accounting. The purchase price of US$10,198,041 was allocated to the assets and liabilities acquired based on their estimated fair value at the date of acquisition. This allocation has resulted in acquired goodwill of US$8,652,530 in a condition that a preacquisition contingency relating to the collectibility of an other receivable amount was not determined. The determination of the latest fair value of the acquired GNGCM’s assets resulted in an increase of goodwill by US$2,450,485 principally due to the changes from initially determined values of that receivable amount. The results of GNGCM Group have been included in the consolidated financial statements since the acquisition date.

Details of the identifiable assets acquired and liabilities assumed at the date of acquisition are as follows:

	US$
Assets acquired
Property, plant and equipment		2,166,618
Cash and cash equivalents		567,546
Trade and other receivables		3,285,584
Rental and other deposits		1,116,152
Prepayments		17,833
Short-term investments		24,163
Goodwill		11,103,015
		18,280,911
Liabilities assumed
Trade and other payables		(6,874,717	)
Short-term bank loans		(1,208,153	)
		(8,082,870	)
Net assets acquired		10,198,041
US$
Satisfied by:
Issuance of common stock		7,466,383
Cash		2,731,658
Consideration		10,198,041

123

China World Trade Corporation

Notes to Financial Statements

4.ACQUISITIONS (CONTINUED)

(d) The Company’s consolidated results of operations have incorporated CEO and GNGCM on a consolidated basis from the date of acquisition. The following unaudited pro forma information presents a summary of the consolidated results of operations as if the acquisitions had been taken place on January 1, 2004.

	Year ended December 31, 2004
	US$
Operating revenues		6,414,430
Net loss		(6,745,580	)
Loss per share - Basic		(0.32	)

5.         INCOME TAXES

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which it is domiciled and operated.

The Hong Kong subsidiaries incurred losses for taxation purposes for the year and thus Hong Kong Profits Tax has not been provided.

Several PRC subsidiaries are subject to PRC Enterprise Income Taxes (“EIT”) on an entity basis on income arising in or derived from the PRC. Income tax expense comprises of the following:

	Year ended December 31,			Year ended September 30,
	2004			2003
	US$			US$
Current taxes arising in foreign subsidiaries for the year		(46,553	)		-

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China World Trade Corporation

Notes to Financial Statements

5.         INCOME TAXES (CONTINUED)

Reconciliation to the expected statutory tax rate in the PRC of 33% (2003: 33%) is as follows:

	Year ended December 31,			Year ended September 30,
	2004			2003
	%			%
Statutory rate		33.0		33.0
Non-deductible expenses		(9.9	)	(15.8	)
Tax effect of net operating losses		(23.6	)	(12.5	)
Unrecognised temporary differences		0.2		(2.6	)
Subsidiary not subject to tax		(1.3	)	3.1
Tax rate differential between subsidiaries		(1.3	)	(5.2	)
Over provision in prior years related to a newly-acquired subsidiary		2.0		-
Others		0.2		-
		(0.7	)	-

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	As of December 31, 2004
	US$
Deferred tax assets
Net operating loss		9,055,752
Depreciation		101,462
Deferred expenditure		3,745,025
		12,902,239
Valuation allowance		(12,902,239	)
Total deferred tax assets		-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

125

China World Trade Corporation

Notes to Financial Statements

6.           TRADE AND OTHER RECEIVABLES

				As of December 31, 2004
	Note			US$
Trade receivables					1,467,618
Due from related parties		19(c	)		1,253,479
Other receivables					22,701
					2,743,798

7. RENTAL AND OTHER DEPOSITS

Included in rental and other deposits are deposits paid to Guangzhou Goldlion City Properties Co., Ltd. of US$209,735 as of December 31, 2004. For relationship with the Company, please refer to note 19(a) to these financial statements.

8.         INVENTORIES

	As of December 31, 2004
	US$
Trading goods		152,892
Food and beverage		18,128
		171,020

Inventories are presented net of an allowance for valuation allowance for inventory losses of US$16,204 as of December 31, 2004.

9.         SHORT-TERM INVESTMENTS

The balance represents “available-for-sale” mutual funds made up of debt and equity securities. As at the balance sheet date, as the cost approximated to the fair value, no gain or loss was recognized.

126

China World Trade Corporation

Notes to Financial Statements

10.       INTANGIBLE ASSET

Pursuant to an agreement entered between the Company and Mr. William Tsang dated November 19, 2003, the Company acquired the after-tax rental income of a property located in Guangzhou , the PRC for a five-year period commencing from December 1, 2003. The Company acquired the after-tax rental income at a consideration of the issuance of 3,000,000 newly issued shares of the Company and a two-year warrant to purchase up to 6,000,000 shares of the common stock of the Company. The rental income stream acquired has been capitalized as an intangible asset and is amortized on a straight-line basis over five years.

	As of December 31, 2004
	US$
Carrying value, beginning of year		1,770,000
Amortization		(360,000	)
Carrying value, end of year		1,410,000

An intangible asset of US$222,676 arising from the acquisition of CEO, as mentioned in note 4 above, was impaired during the year.

11.       PROPERTY USE RIGHTS

Pursuant to agreements entered into between a subsidiary of the Company, GNGMC, and Guangdong Huahao Industries Group Co. Limited and Chen Zeliang dated December 28, 2004, GNGMC acquired the property use rights of their office premises located in Guangzhou for a 41-year period and 42-year period commencing from the date of agreements to October 30, 2045 and March 30, 2046 respectively. The total consideration of these transactions were US$1,576,639. The property use rights acquired have been capitalized and are being amortized on a straight-line basis over their lease terms.

127

China World Trade Corporation

Notes to Financial Statements

12.       GOODWILL

	As of December 31, 2004
	US$
Carrying value, beginning of year		251,448
Goodwill acquired		11,415,984
Impairment loss		(388,118	)
Carrying value, end of year		11,279,314

Details of the goodwill acquired during the year are summarized in note 4 above.

During the year, management reviewed the carrying value of goodwill. In view of the fact that two of the subsidiaries have sustained losses, full provision for impairment loss on the carrying value of the goodwill of US$388,118 was made and is included in the consolidated statement of operations for the year ended December 31, 2004.

13.        PROPERTY, PLANT AND EQUIPMENT, NET

	As of December 31, 2004
	US$
Leasehold land and buildings		3,292,952
Leasehold improvements		595,599
Furniture and fixtures		42,163
Office and computer equipment		368,586
Motor vehicles		219,969
		4,519,269
Less: Accumulated depreciation and impairment loss		(1,208,478	)
Net book value		3,310,791

In view of the operating loss experienced by the club operations of the Company, management considers that impairment losses of US$368,509, US$9,306 and US$21,798 should be recognized on the leasehold improvements, office equipment and furniture and fixtures respectively carried on the balance sheet. These losses have been recognized as expenses and included in the consolidated statement of operations.

128

China World Trade Corporation

Notes to Financial Statements

13.       PROPERTY, PLANT AND EQUIPMENT, NET (CONTINUED)

A subsidiary of the Company entered into a sale and purchase agreement with, Guangzhou Goldlion Environmental Technology Company Limited, a related party, on December 30, 2004. Pursuant to the agreement, the subsidiary would dispose of the leasehold land and buildings located in the PRC at a consideration of US$2,456,522. The completion date of the transaction is expected on or before May 31, 2005. The management considered that the selling price is lower than the carrying amount and employed a surveyor to assess the market price of the leasehold land and buildings at of December 31, 2004 by using an investment approach. As a result, an impairment of US$194,730 should be recognised on the leasehold land and buildings carried on the balance sheet. This loss has also been recognized as an expense and included in the consolidated statement of operations and the leasehold land and buildings are included in the segment of “Rental”.

14.       TRADE AND OTHER PAYABLES

				As of December 31, 2004
	Note			US$
Trade payables					2,367,127
Bills payable					168,525
Tax payable					1,191,020
Tax payable - surcharge					1,004,377
Accrued charges					385,105
Other payables					528,199
Due to related parties		19(d	)		112,047
Deposits received					669,386
					6,425,786

15.       SHORT-TERM BANK LOAN

Guangdong Huahao Industries Holdings Limited, Guangzhou XZR International Travel Services Limited, Chen Ze Liang and a third party, Guangzhou Yinda Guarantee Service Company Limited provided corporate and personal guarantee to the bank against the bank loans granted to the Company. Please refer to note 19 to these financial statements for details of relationship of these guarantors with the Company.

16.       MORTGAGE LOAN

The Company obtained a bank loan from a commercial bank in Hong Kong to finance its operations. The loan is collateralized by the Company's properties located in the PRC. As management has decided to repay early the mortgage loan in 2005, the outstanding loan balance is classified as current liabilities as of December 31, 2004.

129

China World Trade Corporation

Notes to Financial Statements

17.       BANKING FACILITIES

The Company had various lines of credit under banking facilities as follows:

	As of December 31, 2004
	US$
Facilities granted
Committed credit lines		2,455,231
Utilized
Committed credit lines		1,220,989
Unutilized facilities
Committed credit line		1,234,242

Details of guarantees and related parties transactions in relation to these banking facilities are disclosed in notes 18 and 19(b) respectively.

18. PLEDGE OF ASSETS

The Company has pledged land and buildings with a net book value of US$2,454,567to secure general banking facilities granted to the Company.

19.       RELATED PARTY TRANSACTIONS

(a)Names and relationship of related parties

	Existing relationships with the Company
Beijing Wanlong Economic Consultancy Corporation Ltd.	PRC partner of a subsidiary
Bernard Chan	An officer and a shareholder of the Company
Bobby Yu	A former director of a subsidiary
Chan Chi Ming	A director of the Company
Chen De Xiong	A shareholder of a subsidiary
Chen Zeliang	A shareholder and director of the Company
Dimension Marketing Limited	A shareholder of a former subsidiary
Guangzhou City International Exhibition Co.	PRC partner of a subsidiary

130

China World Trade Corporation

Notes to Financial Statements

19.       RELATED PARTY TRANSACTIONS (CONTINUED)

(a)Names and relationship of related parties (Continued)

	Existing relationships with the Company
Guangzhou Cyber Strategy Limited	A company in which a director of the Company has beneficial interest
Guangzhou Goldlion City Properties Co., Ltd.	A company controlled by close family members of a director
Guangzhou Goldlion Commercial Co., Ltd.	A company controlled by close family members of a director
Guangzhou Sanranxin Travel Ltd	A company in which a director of the Company has beneficial interest
Guangzhou XZR International Travel Services Limited	A company in which a shareholder of the Company has beneficial interest
Health & Wealth Inc.	A company in which a director of the Company has beneficial interest
Ho Chi Kin	An independent director of the Company
Huahao Industries Group Co. Ltd.	A shareholder of a subsidiary
Huang Ze Hua	A shareholder of a subsidiary
James Mak	A shareholder of the Company
John Hui	A director of the Company
Li Jingping	A director of a subsidiary
Cui Wencheng	A shareholder of the Company
Luo Chao Ming	A director of the Company
Ringo Leung	A former director of the Company
Simon Guo	A director of a subsidiary
Suo Hong Xia	A shareholder of a subsidiary
Top Link Ventures Limited	A company in which a director of the Company has beneficial interest
Union East Consultants Limited	A company in which a former director of the Company has beneficial interest
William Tsang	A shareholder and director of the Company
Xelex Inc.	A company in which an officer and a shareholder of the Company is a director
Yang Xiu	A shareholder of the Company
Zhao Lin	A shareholder of the Company

131

China World Trade Corporation

Notes to Financial Statements

19.          RELATED PARTY TRANSACTIONS (CONTINUED)

(b)   Summary of related party transactions

	Year ended December 31,		Year ended September 30,
	2004		2003
	US$		US$
Assets purchased from
Dimension Marketing Limited		-		691
Huahao Industries Group Co. Ltd.		1,576,639		-
Suo Hong Xia		235,590
Chen Zeliang		125,285		-

As of December 31, 2004, the titles of leasehold land and buildings of US$206,232 and US$89,162 purchased from Suo Hong Xia and Chen Zeliang have not been transferred to the Company and the procedures are still in progress.

	Year ended December 31,		Year ended September 30,
	2004		2003
	US$		US$
Allowance for doubtful accounts to
Guangzhou Cyber Strategy Limited		236,247		-
Consultancy fee expenses to
Beijing Wanlong Economic Consultancy Corporation Ltd.		18,122		18,122
Bernard Chan		2,564		17,948
Bobby Yu		-		8,462
Chan Chi Ming		-		30,769
Guangzhou City International Exhibition Co.		18,122		18,122
Guangzhou Cyber Strategy Limited		1,938		-
Health & Wealth Inc.		-		15,024
Ho Chi Kin		3,000		-
John Hui		57,692		146,436
Luo Chao Ming		17,397		-
Ringo Leung		5,128		-
Top Link Ventures Limited		61,538		-
William Tsang		57,692		141,026
Xelex Inc.		56,410		-
Rent and related expenses to
Dimension Marketing Limited		-		2,692
Guangzhou Goldlion City Properties Co., Ltd. and Guangzhou Goldlion Commercial Co., Ltd.		455,744		713,044
Huahao Industries Group Co. Ltd.		46,103		-

132

China World Trade Corporation

Notes to Financial Statements

19.       RELATED PARTY TRANSACTIONS (CONTINUED)

(b)Summary of related party transactions (Continued)

	Year ended December 31,		Year ended September 30,
	2004		2003
	US$		US$
Consultancy fee income from
Guangzhou Cyber Strategy Limited		-		288,462
Membership fee income from
Guangzhou Cyber Strategy Limited		-		48,024
Union East Consultants Limited		16,008		32,016
Personal guarantee granted from
Mr. William Tsang		19,231		19,231
Traveling expenses to
Guangzhou Sanranxin Travel Ltd.		4,139		-

(c)   Due from related parties

	As of December 31, 2004
	US$
Huahao Industries Group Co. Ltd.		350,989
Huang Ze Hua		360,029
Chen De Xiong		542,461
Classified as current assets		1,253,479

The amounts due from related parties as of December 31, 2004 represented unsecured advances which were interest-free and repayable on demand. During the fourth quarter of 2004, the Company determined that receivables in the amount of US$236,247 were uncollectible and provision for doubtful debts has been made accordingly.

133

China World Trade Corporation

Notes to Financial Statements

19.            RELATED PARTY TRANSACTIONS (CONTINUED)

(d)   Due to related parties

	As of December 31, 2004
	US$
Suo Hong Xia		24,163
Mr. Ringo Leung		1,094
Mr. John Hui		3,625
Guangzhou Goldlion City Properties Co., Ltd.		3,784
Guangzhon Sanranxin Travel Ltd.		4,178
Beijing Wanlong Economic Consultancy Corporation Ltd.		18,122
Cui Wencheng		5,808
Yang Xiu		3,744
Simon Guo		14,471
Li Jingping		30,249
Zhao Lin		2,809
Classified as current liabilities		112,047

The amounts due to related parties as of December 31, 2004 represented unsecured advances which were interest-free and repayable on demand.

(e)Due to a shareholder

The amount due to Mr. William Tsang represented unsecured advances which were interest-free and not repayable within one year.

20. OPERATING LEASE COMMITMENT

(a)Operating lease payables

As of December 31, 2004, the Company has total outstanding commitments not provided for under non-cancelable operating leases, which are payable as follows:

	As of December 31, 2004
	US$
2005		673,445
2006		690,087
2007		451,525
2008		157,572
2009		31,688
		2,004,317

134

China World Trade Corporation

Notes to Financial Statements

20. OPERATING LEASE COMMITMENT (CONTINUED)

(a)Operating lease payables (Continued)

In addition, the Company has committed to pay contingent rent at 2% to 10% on the monthly turnover of a subsidiary when the subsidiary's monthly turnover exceeds RMB500,000 (US$60,408) during the lease period ending in July 2007.

The Company has also committed to pay contingent rental at the higher of the agreed rent and the following portion of the membership fee income of a subsidiary:

·   15% on the membership fee income of the subsidiary for the period from February 1, 2004 to January 31, 2006

·   7.5% on the membership fee income of the subsidiary for the period of February 1, 2006 to January 31, 2009

(b)Operating lease receivables

The total outstanding commitments under non-cancelable operating leases, which are receivable as follows:

	As of December 31 2004
	US$
	257,821
2005		145,464
2006		25,731
2007
		429,016

As of December 31, 2004, property, plant and equipment held for use under operating leases include gross amounts of US$2,997,558 and accumulated depreciation. Depreciation of property, plant and equipment in respect of assets held for use under operating leases are US$37,804 and US$52,342 for the year ended December 31, 2004 and September 30, 2003.

135

China World Trade Corporation

Notes to Financial Statements

21.      RETIREMENT PLAN

The Company operates a Mandatory Provident Fund (“MPF”) plan for its Hong Kong employees. The pension expenses charged to the consolidated statement of operations amounted to US$6,150 and US$720 for the year ended December 31, 2004 and September 30, 2003 respectively.

As stipulated by the PRC regulations, all retired employees of the Company who are residents of the PRC are entitled to an annual pension equal to their basic annual salary upon retirement. The Company contributed to a state-sponsored retirement plan at a certain percentage of the gross salary of its employees and has no further obligations for the actual pension payments or post-retirement benefits beyond the annual contributions. The state-sponsored retirement plan is responsible for the entire pension obligations payable to all employees. The pension expense for the year ended December 31, 2004 and September 30, 2003 was US$58,591 and US$36,329 respectively.

22. COMMON STOCK

a)On July 20, 2004, Powertronic exercised a two-year warrant to purchase 2,000,000 shares of the common stock of the Company at a price of US$0.575 per share. On December 15, 2004, Powertronic was allowed to take the cashless exercise of warrants for 2,000,000 shares to purchase 1,574,074 shares of the common stock of the Company. A total of 3,574,074 shares of common stock of the Company were issued accordingly.

b)On March 22, 2004 and July 20, 2004, Mr. William Tsang exercised two 1,500,000 warrants to purchase 3,000,000 shares of the common stock of the Company at a price of US$0.75 and US$0.92 per share respectively. On December 15, 2004, Mr. Tsang exercised warrant on a cashless basis for 2,500,000 shares at a price of US$0.92 per share to acquire 1,648,148 shares of the common stock of the Company. As a result the exercise of these warrants, a total of 4,648,148 shares of common stock of the Company were issued accordingly.

c)   On February 6 and 26, 2004, the Company issued 75,000 and 50,000 shares respectively to Wall Street Strategies, Inc. for consulting services provided.

d)   On February 13, 2004, the Company issued 69,000 shares to Greentree Financial Group, Inc. for consulting services provided.

e)   On February 23, 2004, the Company issued 50,000 shares to Mr. Richard Romanelli for advisory services provided.

136

China World Trade Corporation

Notes to Financial Statements

22. COMMON STOCK (CONTINUED)

f)   On May 7, 2004, the Company issued 24,027 shares to The Research Works, Inc. for consulting services provided.

g)   On May 7, 2004, the Company issued 80,000 shares to the shareholders of CEO Clubs China Limited as part of the total consideration for 5,100 shares of CEO Clubs China Limited.

h)   On July 12, 2004, the Company issued 50,500 shares to CEOcast Inc. for consulting services provided.

i)   On July 30, 2004, the Company issued 4,081,238 shares to the shareholders of Guangdong New Generation Commercial Management Limited (“GNGCM”) and Guangdong Huahao Insurance Agency Limited (“GHIAL”) as part of the total consideration for the acquisition of 51% interest of GNGCM.

j)   On August 31, 2004, the Company issued 2,000 shares to The Equitis Group as a compensation for termination of a contract.

k)   On November 9, 2004, 452,500 options under The 2003 Plan were exercised. As mentioned in note 3(g) above, the option holders were allowed to take the cashless exercise of 370,857 shares, a total of 370,857 common stock of the Company were issued accordingly.

23. OPTIONS AND WARRANTS

(a)(i)On December 31, 2003, the Company adopted The 2003 Plan which was approved by the shareholders on the same date. The 2003 Plan allows the Board of Directors, or a committee thereof at the Board’s discretion, to provide for a total 1,000,000 stock options to officers, directors and key employees of the Company. All the stock options provided, were issued in accordance with the terms of The 2003 Plan on the same day to certain officers, directors and key employees of the Company at an exercise price of US$0.673 per share and are exercisable during the period from April 30, 2004 to December 30, 2006.

(a) (ii) On February 20, 2004, the Company cancelled 65,000 options and 30,000 options for the reason of resignation and job reposting respectively.

(b) On February 27, 2004, the Company entered into an agreement with Xelex Inc. for consulting services provided. Apart from the consultancy fee expenses disclosed in note 19(b) to financial statements, an option to acquire 80,000 shares at an exercise price of US$1 per share was issued to Xelex Inc.. The stock option was fully vested and became exercisable on September 1, 2004. On November 9, 2004, the option was fully exercised on a cashless basis. A total of 58,552 common stocks of the Company were issued.

137

China World Trade Corporation

Notes to Financial Statements

23. OPTIONS AND WARRANTS (CONTINUED)

The fair value of this option, which is estimated by the Black-Scholes option pricing model, was US$3.89. The additional expense was recognized in the consolidated statement of operations and the same amount was credited to the Company’s additional paid-in capital. The following weighted-average assumptions have been adopted in applying the Black-Scholes option pricing model:

Expected dividend yieldNone

Risk-free interest rate2.1%

Expected volatility367%

Contractual life2 years

(c)The stock options activities and related information are summarized as follows:

	Year ended December 31, 2004					Year ended September 30, 2003
	Number of Options			Weighted average exercise price		Number of Options		Weighted average exercise price
				US$				US$
Outstanding, beginning of year		1,000,000			0.673		-		-
Granted (note 23(b))		80,000			1.000		-		-
Granted (note 24(a))		1,400,000			2.500		-		-
Exercised
- The 2003 Plan (note 22(k))		(452,500	)		0.673		-		-
- Xelex Inc. (note 23(b)		(80,000	)		1.000		-		-
Cancelled (note 23 (a)(ii))		(95,000	)		0.673		-		-
Outstanding, end of year		1,852,500			2.432		-		-
Exercise price is less than market price on date of grant		1,480,000			2.892		-		-
Exercisable, end of year		1,400,000			3.000		-		-

	As of December 31, 2004
Weighted average remaining contractual life		4.267 years
Range of exercise price
US$0.673		452,500
US$3.000		1,400,000

138

China World Trade Corporation

Notes to Financial Statements

23. OPTIONS AND WARRANTS (CONTINUED)

(d)The warrant activities and related information are summarized as follows:

	Year ended December 31, 2004						Year ended September 30, 2003
	Number of Warrants			Weighted average exercise price			Number of Warrants		Weighted average exercise price
				US$					US$
Outstanding, beginning of year		14,000,000			0.749			2,000,000		0.575
Granted (note 24(a) & (c))		921,002			2.500			6,000,000		0.805
Exercised (note 22(a) & (b))		(9,500,000	)		(0.748	)		-		-
Outstanding, end of year		5,421,002			1.047			8,000,000		0.748
Exercise price is less than market price on date of grant		4,500,000			0.750			-		-
Exercise price exceeds market price on date of grant		921,002			2.500			-		-
Exercisable, end of year		5,421,002			1.047			-		-

	As of December 31, 2004
Weighted average remaining contractual life		1.590 years
Range of exercise price
US$0.750		4,500,000
US$2.500		921,002

139

China World Trade Corporation

Notes to Financial Statements

24. PRIVATE PLACEMENTS OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON STOCK

(a) On August 26, 2004, the Company entered into a Securities Purchase Agreement with Bridges & PIPES, LLC, TCMP3 Partners, Connell Capital Partners, LP and Stealth Capital, LLC (the “Purchasers”), providing for the issuance by the Company to the Purchasers, of the (i) number of shares of Common Stock, and (ii) Series A Warrants, subject to an option in favor of the Purchasers to purchase additional shares of common stock and receive additional warrants.

On August 26, 2004 and December 3, 2004 under the Securities Purchase Agreement, the Purchasers acquired in the aggregate 433,333 and 966,667 shares of common stock respectively, at a price of US$1.5 per share, for an aggregate purchase price of US$2,100,000. Upon purchase, the Purchasers were also issued 700,001 five-year Series A Warrants to purchase that number of warrant shares at an exercise price equal to US$2.5 per share, without any additional consideration. In addition, the Company granted each Purchaser an option (the "Option") to purchase that number of shares of common stock equal to 1,400,001 shares (the "Firm Shares"). Upon exercise of the Option at a purchase price of US$3 per share of common stock, the Purchaser would also receive, without additional consideration, five-year Series B Warrants to purchase 50% of the Firm Shares at an exercise price equal to US$4 per share.

The fair values of attached Series A Warrants, Options and Series B Warrants were recorded in the Company’s additional paid-in capital.

In addition, the Company has issued 112,667 Placement Agent's Warrants to Duncan Capital, LLC, who acted as Placement Agent to the Company in connection with the offering. Such warrants are five-year non-cashless exercise, provisioned warrants to purchase shares of common stock at US$2.5 per share. The costs associated with these transactions are also accounted for based on the fair value of these warrants at the date of issue.

On August 26, 2004, the Company also entered into a Registration Rights Agreement with the investors signatories thereto, which provides that on or prior to 45 days after the Escrow Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities (defined as the Firm Shares, Option Shares, shares issuable upon exercise of the Agent's Warrants and shares issuable upon exercise of the Series A Warrants and the Series B Warrants) for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act. In addition, the Registration Rights Agreement also contains certain piggy-back registration rights in favor of the holders of Registrable Securities. All fees and expenses incident to the performance of or compliance with the Registration Rights Agreement are to be borne by the Company.

140

China World Trade Corporation

Notes to Financial Statements

24. PRIVATE PLACEMENTS OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON STOCK (CONTINUED)

(b) On November 22, 2004, the Company entered into a Standby Equity Distribution Agreement (a "SEDA") and a Registration Rights Agreement, with US-based investment fund, Cornell Capital Partners, LP ("Cornell Capital") for US$30,000,000. Under the SEDA, Cornell has committed to provide up to US$30,000,000 of funding to the Company over a 24-month period, to be drawn down at the Company's discretion by the purchase of the Company's common stock. The purchase price of the shares purchased under the SEDA with respect to any advance will equal 99% of, or a 1% discount to, the lowest closing bid price of the common stock during the five consecutive trading day period immediately following the notice date. The amount of each advance is subject to a maximum advance amount of $1,500,000, except for the first advance, which may be in the amount of $3,000,000. Cornell Capital intends to sell any shares purchased under the SEDA at the then prevailing market price. Duncan Capital, LLC has been engaged by the Company to act as Placement Agent with respect to the SEDA.

(c) In connection with the SEDA, the Company has entered into a Letter Agreement, dated as of November 19, 2004 (the "Letter Agreement"), pursuant to which it agreed to (a) not make any draw-downs under the SEDA for a period of thirty days from the date of effectiveness of the soon-to-be-filed registration statement, and (b) issue to Bridges & PIPES, LLC and TCMP3 Partners, the two Purchasers at the first closing referred to above, 83,334 Series A Warrants and 25,000 Series A Warrants, respectively, in order to induce such Purchasers to waive their rights to be the sole registrants on the registration statement. The costs associated with these compensations are also accounted for based on the fair value of these warrants at the date of issue.

Using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected dividend yieldNone

Risk-free interest rate3.61%

Expected volatility211%

Contractual life5 years

The fair value of these warrants was estimated as US$2.56 for the year ended December 31, 2004. The additional expenses for placement services provided and compensation of were recognized in the consolidated statement of operations and the same amounts were credited to the Company’s additional paid-in capital.

141

China World Trade Corporation

Notes to Financial Statements

25. STATUTORY RESERVES

Statutory reserves of the Company’s PRC subsidiaries include the statutory common reserve fund and the statutory common welfare fund. Pursuant to regulations in the PRC, the subsidiaries set aside 10% of their profits after tax for the statutory common reserve fund (except when the fund has reached 50% of the Company’s registered capital) and 5% of their profits after tax for the statutory common welfare fund. The statutory common reserve fund can be used for the following purposes:

·   to make good losses in previous years; or

·   to convert into capital, provided such conversion is approved by a resolution at a owners’ general meeting and the balance of the statutory common reserve fund does not fall below 25% of the registered capital.

The statutory common welfare fund, which is to be used for the welfare of the staff and workers of the subsidiaries, is of a capital nature.

26.BUSINESS SEGMENT INFORMATION

	Year ended December 31,		Year ended September 30,
	2004		2003
	US$		US$
Operating revenues
Club and business centre		551,497		1,718,854
Business traveling services		1,671,605		-
Business value-added services		40,695		288,462
Rental		701,284		47,189
Trading and others		127,663		831,095
		3,092,744		2,885,600

142

China World Trade Corporation

Notes to Financial Statements

26.BUSINESS SEGMENT INFORMATION (CONTINUED)

	Year ended December 31,			Year ended September 30,
	2004			2003
	US$			US$
Profit (Loss) from operations
Club and business centre		(1,705,288	)		(910,942	)
Business traveling services		904,951			-
Business value-added services		(113,569	)		-
Rental		(347,069	)		(511,352	)
Trading and others		(54,096	)		(62,429	)
		(1,315,071	)		(1,463,607	)
Corporate expenses		(5,893,563	)		(818,028	)
Consolidated operating loss		(7,208,634	)		(2,281,635	)
Other income		140,014			2,490
Interest expense		(65,909	)		(14,811	)
Equity in net loss of affiliate		-			(32,051	)
Net loss before income taxes		(7,134,529	)		(2,326,007	)

	As of December 31, 2004
	US$
Total assets
Club and business centre		327,008
Business traveling services		15,600,135
Business value-added services		-
Rental		5,163,770
Trading and others		564,458
		21,655,371

143

China World Trade Corporation

Notes to Financial Statements

27.CONTINGENCIES

Prior to the completion of acquisition by the Company, GNGCM had been paying Mainland China income tax at a basis of calculation which was not in accordance with the standard basis of calculation as stipulated by the Mainland China tax law. The shortfall of the underpaid tax liabilities, related surcharges and penalty up to the date of acquisition by the Company has already been fully provided in the consolidated financial statements. However, GNGCM would potentially be liable to further surcharge for late payment and penalty, additional to the amount being provided, for the period since the date of acquisition by the Company and up to the balance sheet date. A shareholder of GNGCM has undertaken to indemnify the Company against such shortfall and additional tax-related liabilities. As of December 31, 2004, the estimated further surcharges and penalties which GNGCM was potentially liable amounted to US$126,873 and US$6,468,044 respectively. The estimated further penalties were based on the highest charge rate of the range from 50% to 500%.

144

China World Trade Corporation

Notes to Financial Statements

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Owners of

GUANGDONG NEW GENERATION COMMERCIAL MANAGEMENT LIMITED

We have audited the accompanying balance sheets of Guangdong New Generation Commercial Management Limited as of March 31, 2004, December 31, 2003 and December 31, 2002 and the related statements of operations, owners' equity and cash flows for the three-month period ended March 31, 2004 and for each of the years of the two-year period ended December 31, 2003. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guangdong New Generation Commercial Management Limited as of March 31, 2004, December 31, 2003 and December 31, 2002 and the results of its operations and cash flows for the three-month period ended March 31, 2004 and for each of the years in the two-year period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States.

/s/ Moores Rowland Mazars

Chartered Accountants

Certified Public Accountants

Hong Kong

Date: August 12, 2004

145

Guangdong New Generation Commercial Management Limited

Audited Financial Statements

GUANGDONG NEW GENERATION COMMERCIAL MANAGEMENT LIMITED
BALANCE SHEETS
				AS OF			As of			As of
				MARCH 31,			December 31,			December 31,
				2004			2003			2002
	NOTE			US$			US$			US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents					2,312,366			216,151			994,312
Trade and other receivables		6			1,829,302			963,540			297,799
Other investments		7			12,067			12,067			14,480
TOTAL CURRENT ASSETS					4,153,735			1,191,758			1,306,591
Property, plant and equipment, net		8			119,429			99,883			136,741
TOTAL ASSETS					4,273,164			1,291,641			1,443,332
LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES
Trade and other payables		9			6,003,374			3,255,508			3,105,387
Tax payables					1,123,445			1,081,082			507,732
Short-term bank loans		10			1,206,695			1,206,695			724,017
TOTAL LIABILITIES					8,333,514			5,543,285			4,337,136
COMMITMENTS AND CONTINGENCIES		12&17
OWNERS' DEFICIT
Paid-in capital		14			603,347			603,347			603,347
Due from a related party		11(b	)		(4,785,937	)		(4,425,262	)		(3,196,285	)
Statutory reserves		15			301,674			301,674			231,674
Accumulated deficit					(179,434	)		(731,403	)		(532,540	)
TOTAL OWNERS' DEFICIT					(4,060,350	)		(4,251,644	)		(2,893,804	)
TOTAL LIABILITIES AND OWNERS' DEFICIT					4,273,164			1,291,641			1,443,332
The financial statements should be read in conjunction with the accompanying notes.

146

Guangdong New Generation Commercial Management Limited

Audited Financial Statements

GUANGDONG NEW GENERATION COMMERCIAL MANAGEMENT LIMITED
STATEMENTS OF OPERATIONS
			THREE-MONTH
			PERIOD ENDED			Year ended December 31,
			MARCH 31, 2004			2003			2002
	NOTE		US$			US$			US$
OPERATING REVENUES				1,702,463			1,975,098			1,652,756
Operating costs and expenses				(956,869	)		(899,503	)		(1,140,012	)
Selling, general and administrative expenses				(134,490	)		(572,878	)		(406,732	)
PROFIT FROM OPERATIONS				611,104			502,717			106,012
NON-OPERATING INCOME (EXPENSES)
Other income				1,958			17,119			12,664
				(18,647	)		(75,251	)		(79,270	)
PROFIT BEFORE INCOME TAXES				594,415			444,585			39,406
Provision for income taxes		5		(42,446	)		(573,448	)		(351,792	)
NET PROFIT (LOSS)				551,969			(128,863	)		(312,386	)
The financial statements should be read in conjunction with the accompanying notes.

147

Guangdong New Generation Commercial Management Limited

Audited Financial Statements

GUANGDONG NEW GENERATION COMMERCIAL MANAGEMENT LIMITED
STATEMENTS OF CASH FLOWS
	THREE-MONTH
	PERIOD ENDED			Year ended December 31,
	MARCH 31, 2004			2003			2002
	US$			US$			US$
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)		551,969			(128,863	)		(312,386	)
Adjustments to reconcile net profit to net
cash provided by (used in) operating activities:
Provision for income taxes		42,446			573,448			351,792
Depreciation		9,759			38,137			37,386
Changes in working capital:
Trade and other receivables		(880,350	)		(668,304	)		72,402
Trade and other payables		2,747,866			150,121			1,567,010
Income taxes paid		(83	)		(98	)		(6,060	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,471,607			(35,559	)		1,710,144
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to related parties		(346,087	)		(1,226,414	)		(911,146	)
Acquisition of property, plant and equipment		-			(1,279	)		-
Acquisition of other investments		(29,305	)		(12,067	)		(10,359	)
Disposal of other investments		-			14,480			(14,480	)
NET CASH USED IN INVESTING ACTIVITIES		(375,392	)		(1,225,280	)		(935,985	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Inception of bank loan		-			1,206,695			1,206,695
Repayment of bank loan		-			(724,017	)		(1,086,025	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		-			482,678			120,670
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS		2,096,215			(778,161	)		894,829
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD/YEAR		216,151			994,312			99,483
CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR		2,312,366			216,151			994,312
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances		2,312,366			216,151			994,312
The financial statements should be read in conjunction with the accompanying notes.

148

Guangdong New Generation Commercial Management Limited

Audited Financial Statements

GUANGDONG NEW GENERATION COMMERCIAL MANAGEMENT LIMITED
STATEMENTS OF OWNERS' EQUITY
	PAID IN		Due from a			STATUTORY		ACCUMULATED
	CAPITAL		related party			RESERVES		SURPLUS (DEFICIT)
	US$		US$			US$		US$
Balance as of December 31, 2001		603,347		(2,448,021	)		73,223		(61,703	)
Net loss		-		-			-		(312,386	)
Net advances to a related party		-		(748,264	)		-		-
Transfer to statutory reserves		-		-			158,451		(158,451	)
Balance as of December 31, 2002		603,347		(3,196,285	)		231,674		(532,540	)
Net loss		-		-			-		(128,863	)
Net advances to a related party		-		(1,228,977	)		-		-
Transfer to statutory reserves		-		-			70,000		(70,000	)
Balance as of December 31, 2003		603,347		(4,425,262	)		301,674		(731,403	)
Net profit		-		-			-		551,969
Net advances to a related party		-		(360,675	)		-		-
Transfer to statutory reserves		-		-			-		-
BALANCE AS OF MARCH 31, 2004		603,347		(4,785,937	)		301,674		(179,434	)
The financial statements should be read in conjunction with the accompanying notes.

149

Guangdong New Generation Commercial Management Limited

Audited Financial Statements

1. ORGANIZATION AND NATURE OF BUSINESS

The Company was incorporated under the laws of the People's Republic of China ("PRC") on April 3, 1998 as Guangdong New Generation Commercial Management Limited with an operating period from April 3, 1998 to April 28, 2006. Since incorporation, the Company has been engaged in providing air-ticketing agency services in the Guangdong Province in the PRC.

Although the Company has net profit of US$551,969 for the three-month period ended March 31, 2004, it experienced net loss of US$128,863 and US$312,386 for the year ended December 31, 2003 and 2002 respectively. Besides, it has an owners' deficit of US$4,060,350, US$4,251,644 and US$2,893,804 as of March 31, 2004, December 31, 2003 and December 31, 2002.

In consideration of the owners' deficit as of March 31, 2004 in the amount of US$4,060,350, according to the Equity Transfer Agreement entered into between Guangdong Huahao Industries Holdings Limited and China World Trade Corporation in April 2004, the shareholders and management of the Company are obligated and committed to inject additional assets into the Company. In addition, the Company expects to generate over US$2 million net profit for the year ended December 31, 2004. Management believes that the above measures will alleviate the amount of owners' deficit significantly by the end of year 2004. However, there can be no assurance that the Company will be successful with its efforts to attain the plans as mentioned above and its inability to do so could adversely impact the Company's business, financial position and prospects.

2. BASIS OF PRESENTATION

The financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("USGAAP").

3. RECENTLY ISSUED ACCOUNTING STANDARDS

There are no new accounting pronouncements for which adoption is expected to have a material effect on the Company's financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting. The financial statements are prepared in accordance with generally accepted accounting principles in the United States. The measurement basis used in the preparation of the financial statements is historical cost. Cost in relation to assets represents the cash paid or the fair value of the assets, as appropriate.

150

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Revenue recognition. The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.: 101, "Revenue Recognition in Financial Statements" and Emerging Issues Task Force 99-19: "Reporting Revenue Gross as a principal versus Net as an Agent", when the title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collectibility is reasonably assured.

The Company receives commissions from travel suppliers for air-ticketing services through the Company's transaction and service platform under various services agreements with related and unrelated parties. Commissions from air-ticketing services rendered are recognized after air tickets are issued and delivered to customers. Contracts with certain travel suppliers contain incentive commissions typically subject to achieving specific performance targets and such incentive commissions are recognized when they are reasonably assured that the Company is entitled to such incentive commissions. The Company presents revenues from such transactions on a net basis in the statements of operations as the Company does not assume any inventory risks and generally has no obligations for cancelled airline ticket reservations.

For information purposes, the commission income of the Company was derived from air-ticketing services with total value as follows:

	THREE-MONTH
	PERIOD ENDED		Year ended December 31,
	MARCH 31, 2004		2003		2002
	US$		US$		US$
VALUE OF AIR-TICKET FARE		23,345,480		62,324,122		44,300,137

(c) Statement of cash flows. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent only when it has a maturity of three months or less from its acquisition date.

(d) Translation of foreign currency. The Company considers Renminbi as its functional currency as the Company's business activities are based in Renminbi. However, the Company has chosen the United States dollar as its reporting currency.

Transactions in currencies other than functional currency during the year are translated into the functional currency at the applicable rates of exchange prevailing at the time of the transactions. Monetary assets and liabilities denominated in currencies other than functional currency are translated into functional currency at the applicable rates of exchange in effect at the balance sheet date. Exchange gains and losses are dealt with in the statement of operation.

151

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For translation of financial statements into the reporting currency, assets and liabilities are translated at the exchange rate at the balance sheet date, equity accounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated at the weighted average rates of exchange prevailing during the period. Translation adjustments resulting from this process are recorded in accumulated other comprehensive income (loss) within stockholders' equity.

(e) Concentration of credit risk. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.

(f) Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss.

The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Major costs incurred in restoring assets to their normal working conditions are charged to the income statement. Improvements are capitalized and depreciated over their expected useful lives.

The gain or loss arising from the retirement or disposal of property, plant and equipment is determined as the difference between the estimated net sales proceeds and the carrying amount of the assets and is recognized as income or expense in the statements of operations.

Depreciation is provided to write off the cost of property, plant and equipment, over their estimated useful lives from the date on which they become fully operational and after taking into account of their estimated residual values, using the straight-line method, at 14% to 50% per annum.

The Company recognizes an impairment loss on property, plant and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.

(g) Operating leases. Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable under operating leases are recognized as expense on the straight-line basis over the lease terms.

The Company leases certain premises under non-cancelable operating leases. Rental expenses under operating leases were US$21,138, US$61,854 and US$137,937 for the three-month period ended March 31, 2004 and each of the years of the two-year period ended December 31, 2003.

152

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Related parties. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

(i) Use of estimates. The preparation of the financial statements in conformity with USGAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reported periods. Actual amounts could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation, taxes and contingencies.

(j) Allowance for doubtful accounts. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Throughout the periods presented, no provision for doubtful accounts has been made by the Company as the Company has not experienced any collectibility problem over its trade accounts receivable.

5. INCOME TAXES

The Company is subject to PRC Enterprise Income Taxes ("EIT") on an entity basis on income arising in or derived from the PRC. The applicable EIT rate is 3% on the net revenues generated during the three-month period ended March 31, 2004. During the years ended December 31, 2003 and 2002, the applicable EIT rate was 33% of net income during the year.

6. TRADE AND OTHER RECEIVABLES

				AS OF		As of		As of
				MARCH 31,		December 31,		December 31,
				2004		2003		2002
	NOTE			US$		US$		US$
Trade receivables					1,144,170		442,955		-
Deposits and other receivables					664,406		485,271		259,922
Due from related parties		11(b	)		20,726		35,314		37,877
					1,829,302		963,540		297,799

7. OTHER INVESTMENTS

The balance represents "available-for-sale" mutual funds made up of debt and equity securities. As at the balance sheet date, as the cost approximated to the fair value, no gain or loss was recognized.

153

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

8. PROPERTY, PLANT AND EQUIPMENT, NET

	AS OF			As of			As of
	MARCH 31,			December 31,			December 31,
	2004			2003			2002
	US$			US$			US$
Motor vehicles		63,316			63,316			63,316
Furniture, fixtures and equipment		201,361			172,056			170,777
Less: Accumulated depreciation		(145,248	)		(135,489	)		(97,352	)
Net book value		119,429			99,883			136,741

9. TRADE AND OTHER PAYABLES

				AS OF		As of		As of
				MARCH 31,		December 31,		December 31,
				2004		2003		2002
	NOTE			US$		US$		US$
Trade payables					4,052,587		1,519,648		1,714,901
Accrued charges and other payables					1,370,414		1,054,552		605,032
Due to related parties		11(c	)		580,373		681,308		785,454
					6,003,374		3,255,508		3,105,387

10. SHORT-TERM BANK LOANS

Guangdong Huahao Industries Holdings Limited, Guangzhou XZR International Travel Services Limited, Chen Ze Liang and a third party, Guangzhou Yinda Guarantee Service Company Limited provided corporate and personal guarantee to the bank against the bank loans granted to the Company. Please refer to Note 11 to these financial statements for details of relationship of these guarantors with the Company.

154

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

11. RELATED PARTY TRANSACTIONS

(a) Names and relationship of related parties

	Existing relationships with the Company
Guangdong Huahao Insurance Agency Limited	A company in which a director of
	the Company has a beneficial
	interest
Guangdong Huahao Industries
Holdings Limited	A company in which a director of
	the Company has a beneficial
	interest
Guangzhou XZR International
Travel Serivces Limited	A company in which a director of
	the Company has a beneficial
	interest
Guangzhou Easy Boarding Business
Services Limited	A company in which a director of
	the Company has a beneficial
	interest
Guangzhou SRX Travel Service Limited	A company in which a director of
	the Company has a beneficial
	interest
Guangzhou Xinledai Travel Agency	A company in which a director of
Services Company Limited	the Company has a beneficial
	interest
Chen Ze Liang	A shareholder and a director of the
	Company

(b) Due from related parties

	AS OF		As of		As of
	MARCH 31,		December 31,		December 31,
	2004		2003		2002
	US$		US$		US$
Guangdong Huahao Industries Holdings Limited		4,785,937		4,425,262		3,196,285
Guangzhou XZR International Travel Services Limited		-		11,761		37,877
Guangdong Easy Boarding Business Services Limited		18,221		-		-
Guangzhou SRX Travel Service Limited		2,505		23,553		-
		20,726		35,314		37,877

The amounts due from related parties represent unsecured advances which are interest-free and repayable on demand.

155

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

11. RELATED PARTY TRANSACTIONS (CONTINUED)

(c) Due to related parties

	AS OF		As of		As of
	MARCH 31,		December 31,		December 31,
	2004		2003		2002
	US$		US$		US$
Guandong Xinledai Travel Agency Services Company Limited		-		-		615,673
Guangdong Easy Boarding Business Services Limited		-		80,759		120,669
Guangdong Huahao Insurance Agency Limited		580,373		600,549		49,112
		580,373		681,308		785,454

The amounts due to related parties represent unsecured advances which are interest-free and repayable on demand.

12. OPERATING LEASE COMMITMENTS

The Company has total outstanding commitments not provided for under non-cancellable operating leases, which are payables as follows:

	AS OF
	MARCH 31,
	2004
Year ending	US$
December 31
2004		42,142
2005		46,914
2006		3,185
		92,241

13. RETIREMENT PLAN

As stipulated by PRC regulations, the Company maintains a defined contribution retirement plan for all of its employees who are residents of PRC. All retired employees of the Company are entitled to an annual pension equal to their basic annual salary upon retirement. The Company contributed to a state sponsored retirement plan at a certain percentage of the gross salary of its employees and has no further obligations for the actual pension payments or post-retirement benefits beyond the annual contributions. The state sponsored retirement plan is responsible for the entire pension obligations payable to all employees. The pension expense for the three-month period ended March 31, 2004 and each of the two years ended December 31, 2003 was US$1,747, US$6,607 and US$6,442 respectively.

156

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

14. PAID-IN CAPITAL

On April 3, 1998, the Company was incorporated in the PRC with registered capital of RMB500,000, which is approximately equivalent to US$60,335. The said amount was fully paid up upon its incorporation.

On February 10, 1999 and May 6, 1999, the registered capital was increased to RMB1,500,000 and RMB5,000,000, which is approximately equivalent to US$181,004 and US$603,347 respectively, by additional cash contributed by the owner.

15. STATUTORY RESERVES

Statutory reserves of the Company include the statutory common reserve fund and the statutory common welfare fund. Pursuant to regulations in the PRC, the Company sets aside 10% of its profit after tax for the statutory common reserve fund (except when the fund has reached 50% of the Company's registered capital) and 5% of its profit after tax for the statutory common welfare fund. The statutory common reserve fund can be used for the following purposes:

- to make good losses in previous years; or

- to convert into capital, provided such conversion is approved by a resolution at an owners' general meeting and the balance of the statutory common reserve fund does not fall below 25% of the registered capital.

The statutory common welfare fund, which is to be used for the welfare of the staff and workers of the Company, is of a capital nature.

16. POST BALANCE SHEET EVENT

On April 1, 2004, the registered capital of the Company has been increased by RMB10,000,000 to RMB15,000,000, which is approximately equivalent to US$1,810,042. The said amount had been satisfied by cash contributed by the owners.

Pursuant to an agreement entered into between the owners of the Company and a subsidiary of China World Trade Corporation in April 2004, all of their interests in the Company are to be transferred to a subsidiary of China World Trade Corporation. China World Trade Corporation is a public company listed on the National Association of Securities Dealers Automated Quotations Over-the -Counter Bulletin Board.

157

Guangdong New Generation Commercial Management Limited

Notes to Audited Financial Statements

17. CONTINGENCIES

The Company has made full tax provision in accordance with relevant laws and regulations in the PRC. However, for PRC tax reporting purpose, the Company only recognizes revenue on a business tax invoices basis instead of when services are provided. Accordingly, the company faces surcharge and penalty, additional to the original amount of taxes payable, ranging from 50% to 500% of the original amount of taxes payable. The Company has already provided for the surcharge and penalty of 50% of the taxes payable in the financial statements. Although the exact amount of penalty cannot be estimated with any reasonable degree of certainty, the board of directors considers it is unlikely that any tax penalty in excess of the amounts provided will be imposed.

158

Guangdong New Generation Commercial Management Limited

Unaudited Six-Month Financial Statements

Condensed Consolidated Balance Sheet

				As of June 30, 2004
				Unaudited
ASSETS	Note			US$
Current assets
Cash and cash equivalents					1,859,179
Trade and other receivables		3			1,776,346
Due from related parties		7(b	)		2,506
Total current assets					3,638,031
Property, plant and equipment, net					127,898
Total assets					3,765,929
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Trade and other payables		4			5,309,241
Tax payable					1,621,817
Short-term bank loan		5			1,206,695
Total liabilities					8,137,753
Commitments and contingencies		11
Minority interests					728,602
Owners' equity
Paid-in capital		6			1,810,042
Statutory reserve					516,946
Due from a shareholder		7(c	)		(7,670,605	)
Accumulated deficit					243,191
Total owners' equity					(5,100,426	)
Total liabilities and owners' equity					3,765,929
The financial statements should be read in conjunction with the accompanying notes.

159

Guangdong New Generation Commercial Management Limited

Unaudited Six-Month Financial Statements

Condensed Consolidated Statements of Operations

	Six-month period ended June 30,
	2004			2003
	US$			US$
	Unaudited			Unaudited
Operating revenues		2,651,854			915,138
Operating costs and expenses		(1,031,235	)		(575,264	)
Selling, general and administrative expenses		(327,948	)		(263,512	)
Profit from operations		1,292,671			76,362
Non-operating income (expenses)
Other income		467,071			7,951
Interest expense		(38,945	)		(37,939	)
Profit before income taxes and minority interest		1,720,797			46,374
Provision for income taxes		(531,414	)		(59,264	)
Profit (Loss) before minority interest		1,189,383			(12,890	)
Minority interest		(483	)		-
Net profit (loss)		1,188,900			(12,890	)
The financial statements should be read in conjunction with the accompanying notes.

160

Guangdong New Generation Commercial Management Limited

Unaudited Six-Month Financial Statements

Condensed Consolidated Statements of Cash Flows

	Six-month period ended June 30,
	2004			2003
	Unaudited			Unaudited
	US$			US$
Cash flows from operating activities:
Net profit (loss)		1,188,615			(12,890	)
Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities:
Minority interest		728,602			-
Depreciation		48,828			19,338
Changes in working capital:
Trade and other receivables		(848,119	)		(1,022,793	)
Trade and other payables		3,275,774			827,183
Net cash provided by (used in) operating activities		4,393,700			(189,162	)
Cash flows from investing activities:
Repayment from related parties		(648,499	)		(149,533	)
Proceeds from disposal of investment		13,318			-
Acquisition of property, plant and equipment		(76,843	)		(141	)
Net cash used in investing activities		(712,024	)		(149,674	)
Cash flows from financing activities:
Inception of bank loan		1,206,695			1,206,695
Advance to a shareholder		(3,245,343	)		(360,376	)
Repayment of amount borrowed		(1,206,695	)		(724,017	)
Increase in registered capital		1,206,695			-
Net cash (used in) provided by financing activities		(2,038,648	)		122,302
Net increase (decrease) in cash and cash equivalents		1,643,028			(216,534	)
Cash and cash equivalents at beginning of year		216,151			994,312
Cash and cash equivalents at end of year		1,861,425			777,778
Analysis of balances of cash and cash equivalents
Cash and bank balances		1,861,425			777,778
Supplemental disclosure information:
Income taxes paid		9,866			32
Interest paid		38,938			37,939
The financial statements should be read in conjunction with the accompanying notes.

161

Guangdong New Generation Commercial Management Limited

Notes to Unaudited Six-Month Financial Statements

1.         BASIS OF PRESENTATION

The accompanying financial data as of June 30, 2004 and for the six-month period ended June 30, 2004 and 2003, have been prepared by the Company, without audit.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s audited financial statements for the period ended March 31, 2004, and for each of the years of the two-year period ended December 31, 2003.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

In the opinion of the management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of June 30, 2004 and for the six-month period ended June 30, 2004 and 2003, have been made. The results of operations for the six-month period ended June 30, 2004 and 2003 are not necessarily indicative of the operating results for the full year.

2.         REORGANIZATION

Pursuant to an amended agreement, Guangdong Huahao Industries Holdings Limited and / or its affiliates agreed to transfer certain interests in several companies to the Company. The transfer of interests in Guangzhou Huahao Insurance Agency Limited and Guangzhou Xinyou Foreign Enterprise Services Company Limited were completed before June 30, 2004.

3.         TRADE AND OTHER RECEIVABLES

	As of June 30, 2004
	US$
Trade receivables		1,044,352
Deposits and other receivables		731,994
		1,776,346

162

Guangdong New Generation Commercial Management Limited

Notes to Unaudited Six-Month Financial Statements

4.TRADE AND OTHER PAYABLES

				As of June 30, 2004
	Note			US$
Trade payables					3,707,934
Tax payable - surcharge					925,604
Accrued charges					57,015
Other payables					594,554
Due to related parties		7(d	)		24,134
					5,309,241

5.         SHORT-TERM BANK LOAN

Guangdong Huahao Industries Holdings Limited, Guangzhou XZR International Travel Services Limited, Chen Ze Liang and a third party, Guangzhou Yinda Guarantee Service Company Limited provided corporate and personal guarantees to the bank as collateral for bank loans granted to the Company. Please refer to note 7(c) to these financial statements for details of relationship of these guarantors with the Company.

6.         ISSUANCE OF SHARES

On April 1, 2004, the registered capital of the Company has been increased by RMB5,000,000 to RMB15,000,000, which is approximately equivalent to US$1,810,042. The said amount had been satisfied by cash contributed by the owners.

7.         RELATED PARTY TRANSACTIONS

(a)Names and relationship of related parties

	Existing relationships with the Company
Guangdong Huahao Industries Holdings Limited	A shareholder of the Company
Guangzhou XZR International Travel Services Limited	A company in which a director of the Company has a beneficiary interest
Guangzhou SRX Travel Service Limited	A company in which a director of the Company has a beneficiary interest
Mr. Chen Ze Liang	A shareholder and a director of the Company
Ms. Suo Hong Xia	A shareholder and a director of the Company

163

Guangdong New Generation Commercial Management Limited

Notes to Unaudited Six-Month Financial Statements

7.RELATED PARTY TRANSACTIONS (CONTINUED)

(b)Due from related parties

	As of June 30, 2004
	US$
Guangzhou SRX Travel Service Limited		2,506

The amount due from related party represents unsecured advance which is interest-free and repayable on demand.

(c)Due from a shareholder

	As of June 30, 2004
	US$
Guangdong Huahao Industries Holdings Limited		7,670,605

The amount due from a shareholder represents unsecured advance which is interest-free and repayable on demand.

(d)Due to a related party

	As of June 30, 2004
	US$
Suo Hong Xia		24,134

The amount due from a related party represents an unsecured advance which is interest-free and repayable on demand.

164

Guangdong New Generation Commercial Management Limited

Notes to Unaudited Six-Month Financial Statements

8.         OPERATING LEASE COMMITMENTS

The Company has total outstanding commitments not provided for under non-cancellable operating leases, which are payable as follows:

	US$
Year ending June 30,
2005		55,604
2006		14,456
2007		1,593
		71,653

The Company leases certain premises under non-cancellable operating leases. Rental expenses under operating leases were US$12,378 and US$21,675 for the six-month periods ended June 30, 2004 and 2003 respectively.

9.         POST BALANCE SHEET EVENT

Pursuant to an agreement entered into between the owners of the Company and a subsidiary of China World Trade Corporation in April 2004, all of their interests in the Company are to be transferred to a subsidiary of China World Trade Corporation. China World Trade Corporation is a public company listed on the National Association of Securities Dealers Automated Quotations Over-the Counter Bulletin Board.

10.       CONTINGENCIES

The Company has made full tax provision in accordance with relevant laws and regulations in the PRC. However, for PRC tax reporting purpose, the Company only recognizes revenue on a business tax invoices basis instead of when services are provided. Accordingly, the Company faces surcharge and penalty, additional to the original amount of taxes payable, ranging from 50% to 500% of the original amount of taxes payable. The Company has already provided for the surcharge and penalty of 50% of the taxes payable in the financial statements. Although the exact amount of penalty cannot be estimated with any reasonable degree of certainty, the board of directors considers it is unlikely that any tax penalty in excess of the amounts provided will be imposed.

165

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Owners of

GUANGDONG HUAHAO INSURANCE AGENCY LIMITED

We have audited the accompanying balance sheets of Guangdong Huahao Insurance Agency Limited as of March 31, 2004, December 31, 2003 and December 31, 2002 and the related statements of operations, owners' equity and cash flows for the three-month period ended March 31, 2004 and for each of the periods/years in the two-year period ended December 31, 2003. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guangdong Huahao Insurance Agency Limited as of March 31, 2004, December 31, 2003 and December 31, 2002 and the results of its operations and cash flows for the three-month period ended March 31, 2004 and for each of the period/year in the two years period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States.

By:	/s/ Moores Rowland Mazars
	Chartered Accountants Certified Public Accountants Hong Kong Date: August 12, 2004

166

Guangdong Huahao Insurance Agency Limited

Audited Financial Statements

BALANCE SHEETS

				AS OF			As of			As of
				MARCH 31,			December 31,			December 31,
				2004			2003			2002
	NOTE			US$			US$			US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents					21,406			25,736			38,982
Other receivables		6			581,878			604,166			49,876
Prepayments					845			-			3,620
TOTAL CURRENT ASSETS					604,129			629,902			92,478
Property, plant and equipment, net		7			8,766			8,148			8,932
TOTAL ASSETS					612,895			638,050			101,410
LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES
Trade and other payables		8			31,962			27,808			143,225
Tax payables					4,573			4,988			368
TOTAL LIABILITIES					36,535			32,796			143,593
COMMITMENTS AND CONTINGENCIES		10
OWNERS' EQUITY
Paid-in capital		12			1,206,695			1,206,695			1,206,695
Due from a related party		9(c	)		(1,362,989	)		(1,245,070	)		(1,238,941	)
Statutory reserves		13			110,872			97,601			-
Accumulated surplus (deficit)					621,782			546,028			(9,937	)
TOTAL OWNERS' EQUITY					576,360			605,254			(42,183	)
TOTAL LIABILITIES AND OWNERS' EQUITY					612,895			638,050			101,410
The financial statements should be read in conjunction with the accompanying notes.

167

Guangdong Huahao Insurance Agency Limited

Audited Financial Statements

GUANGDONG HUAHAO INSURANCE AGENCY LIMITED
STATEMENTS OF OPERATIONS
									Period from
									January 15, 2002
			THREE-MONTH						(date of
			PERIOD ENDED			Year ended			incorporation) to
			MARCH 31,			December 31,			December 31,
			2004			2003			2002
	NOTE		US$			US$			US$
OPERATING REVENUES				163,543			929,916			255,052
Operating costs and expenses				(9,724	)		(61,364	)		(53,716	)
Selling, general and administrative expenses				(60,282	)		(189,106	)		(206,872	)
PROFIT (LOSS) FROM OPERATIONS				93,537			679,446			(5,536	)
NON-OPERATING INCOME
Other income				61			99			409
PROFIT (LOSS) BEFORE INCOME TAXES				93,598			679,545			(5,127	)
Provision for income taxes		5		(4,573	)		(25,979	)		(4,810	)
NET PROFIT (LOSS)				89,025			653,566			(9,937	)
The financial statements should be read in conjunction with the accompanying notes.

168

Guangdong Huahao Insurance Agency Limited

Audited Financial Statements

GUANGDONG HUAHAO INSURANCE AGENCY LIMITED
STATEMENTS OF CASH FLOWS
							Period from
							January 15, 2002
	THREE-MONTH						(date of
	PERIOD ENDED			Year ended			incorporation)t o
	MARCH 31,			December 31,			December 31,
	2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss)		89,025			653,566			(9,937	)
Adjustments to reconcile net profit (loss) to net
cash used in operating activities:
Provision for income taxes		4,573			25,979			4,810
Depreciation		1,059			2,378			933
Changes in working capital:
Other receivables		2,112			(2,853	)		(764	)
Prepayments		(845	)		3,620			(3,620	)
Trade and other payables		4,154			(115,417	)		143,225
Income taxes paid		(4,988	)		(21,359	)		(4,442	)
NET CASH PROVIDED BY
OPERATING ACTIVITIES		95,090			545,914			130,205
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to related parties		(97,743	)		(557,566	)		(1,288,053	)
Acquisition of property, plant and equipment		(1,677	)		(1,594	)		(9,865	)
NET CASH USED IN INVESTING ACTIVITIES		(99,420	)		(559,160	)		(1,297,918	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from owners		-			-			1,206,695
NET CASH PROVIDED BY FINANCING ACTIVITIES		-			-			1,206,695
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS		(4,330	)		(13,246	)		38,982
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD/YEAR		25,736			38,982			-
CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR		21,406			25,736			38,982
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances		21,406			25,736			38,982
The financial statements should be read in conjunction with the accompanying notes.

169

Guangdong Huahao Insurance Agency Limited

Audited Financial Statements

GUANGDONG HUAHAO INSURANCE AGENCY LIMITED
STATEMENTS OF OWNERS' EQUITY
	PAID IN		Due from a			STATUTORY		ACCUMULATED
	CAPITAL		related party			RESERVES		SURPLUS (DEFICIT)
	US$		US$			US$		US$
Capital paid in upon incorporation
on January 15, 2002		1,206,695		-			-		-
Net advances to a related party		-		(1,238,941	)		-		-
Net loss		-		-			-		(9,937	)
Balance as of December 31, 2002		1,206,695		(1,238,941	)		-		(9,937	)
Net profit		-		-			-		653,566
Net advances to a related party		-		(6,129	)		-		-
Transfer to statutory reserves		-		-			97,601		(97,601	)
Balance as of December 31, 2003		1,206,695		(1,245,070	)		97,601		546,028
Net profit		-		-			-		89,025
Net advances to a related party		-		(117,919	)		-		-
Transfer to statutory reserves		-		-			13,271		(13,271	)
BALANCE AS OF MARCH 31, 2004		1,206,695		(1,362,989	)		110,872		621,782
The financial statements should be read in conjunction with the accompanying notes.

170

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

1. ORGANIZATION AND NATURE OF BUSINESS

The Company was incorporated under the laws of the People's Republic of China ("PRC") on January 15, 2002 with an operating period from January 15, 2002 to January 15, 2005. Pursuant to the regulation of insurance agency business in the PRC, renewal of business license shall be applied for prior to sixty days of the expiry date of the business license. Management shall arrange for renewal of its business license in accordance with the regulation. Since incorporation, the Company has been engaged in providing insurance agency services in the Guangdong Province in the PRC.

2. BASIS OF PRESENTATION

The financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("USGAAP").

3. RECENTLY ISSUED ACCOUNTING STANDARDS

There are no new accounting pronouncements for which adoption is expected to have a material effect on the Company's financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting. The financial statements are prepared in accordance with generally accepted accounting principles in the United States. The measurement basis used in the preparation of the financial statements is historical cost. Cost in relation to assets represents the cash paid or the fair value of the assets, as appropriate.

(b) Revenue recognition. The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No.: 101, "Revenue Recognition in Financial Statements" and Emerging Issues Task Force 99-19: "Reporting Revenue Gross as a principal versus Net as an Agent", when the title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collectibility is reasonably assured.

The Company receives commissions from insurance companies for insurance agency services provided. Commissions from insurance agency services rendered are recognized upon provision of such services. The Company presents revenues from such transactions on a net basis in the statements of operations and comprehensive income (loss) as the Company does not assume any inventory risks and generally has no obligations for cancelled insurance policies.

171

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For information purposes, the commission income of the Company was derived from insurance policies with total premium income as follows:

	Three-Month Period Ended March 31, 2004		Year ended December 31, 2003		Period from January 15, 2002 (date of incorporation) to December 31, 2002
	US$		US$		US$
PREMIUM INCOME OF INSURANCE POLICIES		1,345,381		36,725,635		2,119,703

(c) Statement of cash flows. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent only when it has a maturity of three months or less from its acquisition date.

(d) Translation of foreign currency. The Company considers Renminbi as its functional currency as the Company's business activities are based in Renminbi. However, the Company has chosen the United States dollar as its reporting currency.

Transactions in currencies other than functional currency during the year are translated into the functional currency at the applicable rates of exchange prevailing at the time of the transactions. Monetary assets and liabilities denominated in currencies other than functional currency are translated into functional currency at the applicable rates of exchange in effect at the balance sheet date. Exchange gains and losses are dealt with in the statement of operation.

For translation of financial statements into the reporting currency, assets and liabilities are translated at the exchange rate at the balance sheet date, equity accounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated at the weighted average rates of exchange prevailing during the period. Translation adjustments resulting from this process are recorded in accumulated other comprehensive income (loss) within stockholders' equity.

(e) Concentration of credit risk. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The business activities and accounts receivable are principally with insurance companies in the PRC. Management believes that no significant credit risk exists as credit losses, when realized, have been within the range of management's expectations.

(f) Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation.

172

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Major costs incurred in restoring assets to their normal working conditions are charged to the income statement. Improvements are capitalized and depreciated over their expected useful lives.

The gain or loss arising from the retirement or disposal of property, plant and equipment is determined as the difference between the estimated net sales proceeds and the carrying amount of the assets and is recognized as income or expense in the statements of operations.

Depreciation is provided to write off the cost of property, plant and equipment, over their estimated useful lives from the date on which they become fully operational and after taking into account of their estimated residual values, using the straight-line method, at 20% per annum.

The Company recognizes an impairment loss on property, plant and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.

(g) Operating leases. Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable under operating leases are recognized as expense on the straight-line basis over the lease terms.

The Company leases certain premises under non-cancellable operating leases. Rental expenses under operating leases were US$18,100, US$72,402 and US$60,335 for the three-month period ended March 31, 2004 and each of the period/year ended December 31, 2003.

(h) Related parties. Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

(i) Use of estimates. The preparation of the financial statements in conformity with USGAAP requires the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reported periods. Actual amounts could differ from those estimates. Estimates are used for, but not limited to, the accounting for certain items such as allowance for doubtful accounts, depreciation, taxes and contingencies.

173

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Allowance for doubtful accounts. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful account will change. Accounts receivable are presented net of allowances for doubtful accounts of US$-, US$- and US$109,018 for the three-month period ended March 31, 2004 and each of the years of the two year period ended December 31, 2003 respectively.

5. INCOME TAXES

The Company is subject to PRC Enterprise Income Tax ("EIT") on an entity basis on income arising in or derived from the PRC. The applicable EIT tax rate is 8% on the net revenues generated during the year.

6. OTHER RECEIVABLES

				AS OF		As of		As of
				MARCH 31,		December 31,		December 31,
				2004		2003		2002
	NOTE			US$		US$		US$
Other receivables					1,505		3,617		764
Due from related parties		9(c	)		580,373		600,549		49,112
					581,878		604,166		49,876

7. PROPERTY, PLANT AND EQUIPMENT, NET

	AS OF			As of			As of
	MARCH 31,			December 31,			December 31,
	2004			2003			2002
	US$			US$			US$
Furniture, fixtures and equipment		13,136			11,459			9,865
Less: Accumulated depreciation		(4,370	)		(3,311	)		(933	)
Net book value		8,766			8,148			8,932

174

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

8. TRADE AND OTHER PAYABLES

	AS OF		As of		As of
	MARCH 31,		December 31,		December 31,
	2004		2003		2002
	US$		US$		US$
Accrued charges		19,772		13,218		55,164
Other payables		12,190		14,590		88,061
		31,962		27,808		143,225

9. RELATED PARTY TRANSACTIONS

(a) Names and relationship of related parties

	Existing relationships with the Company
Guangdong New Generation Commercial
Management Limited	A company in which a director of  the Company has a beneficial interest
Guangdong Huahao Industries
Holdings Limited	A company in which a director of  the Company has a beneficial interest

(b) Summary of related party transactions

					Period from
					January 15, 2002
	THREE-MONTH				(date of
	PERIOD ENDED		Year ended		incorporation) to
	MARCH 31,		December 31,		December 31,
	2004		2003		2002
	US$		US$		US$
Rent expenses to
Guangdong Huahao Industries Holdings Limited		18,100		72,402		60,335

175

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

9. RELATED PARTY TRANSACTIONS (CONTINUED)

(c) Due from related parties

	AS OF		As of		As of
	MARCH 31,		December 31,		December 31,
	2004		2003		2002
	US$		US$		US$
Guangdong New Generation Commercial Management Limited		580,373		600,549		49,112
Guangdong Huahao Industries Holdings Limited		1,362,989		1,245,070		1,238,941

The amounts due from related parties represent unsecured advances which are interest-free and repayable on demand.

10. OPERATING LEASE COMMITMENTS

The Company has total outstanding commitments not provided for under non-cancelable operating leases, which are payables as follows:

	AS OF
	MARCH 31,
	2004
	US$
Year ending December 31
2004		54,303
2005		72,402
		90,503

11. RETIREMENT PLAN

As stipulated by PRC regulations, the Company maintains a defined contribution retirement plan for all of its employees who are residents of PRC. All retired employees of the Company are entitled to an annual pension equal to their basic annual salary upon retirement. The Company contributed to a state sponsored retirement plan at a certain percentage of the gross salary of its employees and has no further obligations for the actual pension payments or post-retirement benefits beyond the annual contributions. The state sponsored retirement plan is responsible for the entire pension obligations payable to all employees. The pension expense for the three-month period ended March 31, 2004 and each of the period/year ended December 31, 2003 was US$598, US$3,092 and US$1,650 respectively.

176

Guangdong Huahao Insurance Agency Limited

Notes to Audited Financial Statements

12. PAID-IN CAPITAL

On January 15, 2002, the Company was incorporated in the PRC with registered capital of RMB10,000,000, which is approximately equivalent to US$1,206,695. The said amount has been fully paid up upon its incorporation.

13. STATUTORY RESERVES

Statutory reserves of the Company include the statutory common reserve fund and the statutory common welfare fund. Pursuant to regulations in the PRC, the Company sets aside 10% of its profit after tax for the statutory common reserve fund (except when the fund has reached 50% of the Company's registered capital) and 5% of its profit after tax for the statutory common welfare fund. The statutory common reserve fund can be used for the following purposes:

- to make good losses in previous years; or

- to convert into capital, provided such conversion is approved by a resolution at a owners' general meeting and the balance of the statutory common reserve fund does not fall below 25% of the registered capital.

The statutory common welfare fund, which is to be used for the welfare of the staff and workers of the Company, is of a capital nature.

177

Guangdong Huahao Insurance Agency Limited

Unaudited Six-Month Financial Statements

Condensed Balance Sheet

			As of June 30, 2004
			Unaudited
ASSETS	Note		US$
Current assets
Cash and cash equivalents				12,495
Other receivables		3		697,720
Total current assets				710,215
Property, plant and equipment, net				19,648
Total assets				729,863
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Other payables				31,036
Tax payable				54,855
Total liabilities				85,891
Commitments and contingencies
Owners’ equity
Paid-in capital				1,206,695
Statutory reserves				113,592
Due to a shareholder				(1,312,959	)
Accumulated surplus				636,644
Total stockholders' equity				643,972
Total liabilities and owners' equity				729,863
The financial statements should be read in conjunction with the accompanying notes.

178

Guangdong Huahao Insurance Agency Limited

Unaudited Six-Month Financial Statements

Condensed Statements of Operations

	Six-month period ended June 30,
	2004			2003
	US$			US$
	Unaudited			Unaudited
Operating revenues		289,469			428,953
Operating costs and expenses		(19,916	)		(53,780	)
Selling, general and administrative expenses		(103,606	)		(108,794	)
Profit from operations		165,947			266,379
Non-operating income (expenses)
Other income		96			39
Interest expense		(8	)		-
Profit before income taxes		166,035			266,418
Provision for income taxes		(59,528	)		(77,593	)
Net profit		106,507			188,825
The financial statements should be read in conjunction with the accompanying notes.

179

Guangdong Huahao Insurance Agency Limited

Unaudited Six-Month Financial Statements

Condensed Statements of Cash Flows

	Six-month period ended June 30,
	2004			2004
	Unaudited			Unaudited
	US$			US$
Cash flows from operating activities:
Net profit		106,608			188,825
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,864			466
Changes in working capital:
Trade and other receivables		(161,443	)		381,609
Trade and other payables		53,095			(603,497	)
Net cash provided by (used in) operating activities		124			(32,597	)
Cash flows from investing activities:
Acquisition of property, plant and equipment		(13,364	)		-
Net cash used in investing activities		(13,364	)		-
Net decrease in cash and cash equivalents		(13,240	)		(32,597	)
Cash and cash equivalents at beginning of year		25,736			38,982
Cash and cash equivalents at end of year		12,496			6,385
Analysis of balances of cash and cash equivalents
Cash and bank balances		12,496			6,385
Supplemental disclosure information:
Income taxes paid		(9,124	)		(65	)
The financial statements should be read in conjunction with the accompanying notes.

180

Guangdong Huahao Insurance Agency Limited

Notes to Unaudited Six-Month Financial Statements

1.         BASIS OF PRESENTATION

The accompanying financial data as of June 30, 2004 and for the six-month period ended June 30, 2004 and 2004, have been prepared by the Company, without audit.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s audited financial statements for the period ended March 31,2004, and for each of the year/period in the two years period ended December 31, 2003.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

In the opinion of the management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of June 30, 2004 and for the six-month period ended June 30, 2004 and 2003, have been made. The results of operations for the six-month period ended June 30, 2004 and 2003 are not necessarily indicative of the operating results for the full year.

2.        TRADE AND OTHER RECEIVABLES

				As of June 30, 2004
	Note			US$
Other receivables					1,505
Due from holding company		4(b	)		696,215
					697,720

181

Guangdong Huahao Insurance Agency Limited

Notes to Unaudited Six-Month Financial Statements

3.         OPERATING LEASE COMMITMENTS

The Company has total outstanding commitments not provided for under non-cancellable operating leases, which are payable as follows:

	US$
Year ending June 30,
2005		72,402
2006		36,201
		108,603

4.         RELATED PARTY TRANSACTIONS

(a)Names and relationship of related parties

	Existing relationships with the Company
Guangdong New Generation Commercial Management Limited	A holding company of the Company
Guangdong Hauhao Industries Holdings Limited	A shareholder of the Company has a beneficiary interest

(b)   Due from holding company / a shareholder

	As of June 30, 2004
	US$
Guangdong New Generation Commercial Management Limited		696,215

The amounts due from related parties represent unsecured advances which are interest-free and repayable on demand.

182

China World Trade Corporation

Introduction to Pro Forma Financial Statements

The following unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2004 are based on the historical financial statements of China World Trade Corporation (the "Company") and Guangdong New Generation Commercial Management Limited ("GNGCM") after giving effect to the acquisition of GNGCM by the Company (“Acquisition”) using the purchase method of accounting and the assumptions and adjustments described in the accounting notes to the unaudited pro forma condensed consolidated statement of operations. The Acquisition was completed on August 2, 2004.

The unaudited pro forma condensed consolidated statement of operations of the Company and GNGCM for the year ended December 31, 2004 are presented to give effect to the Acquisition as if it had occurred on January 1, 2004.

The unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the Company’s Form 10-KSB for the year ended December 31, 2004 filed on 15 April, 2005. The unaudited pro forma condensed consolidated statement of operations are not intended to be representative or indicative of the consolidated results of operations of the Company that would have been reported had the Acquisition been completed as of January 1, 2004, and should not be taken as representative of the future consolidated results of operations of the Company.

183

China World Trade Corporation

Pro Forma Financial Statements

	GNGCM			The Company			Pro forma adjustments					Pro forma consolidated balance
	US$			US$			US$					US$
Operating revenues
Club and business centre		-			551,497								551,497
Business traveling services		4,989,881			-								4,989,881
Business value-added services		-			40,695								40,695
Rental		-			701,284								701,284
Trading and others		7,577			123,496								131,073
		4,997,458			1,416,972								6,414,430
Operating costs and expenses
Club and business centre		-			(91,415	)							(91,415	)
Business traveling services		(334,184	)		-								(334,184	)
Business value-added services		-			(1,841	)							(1,841	)
Rental		-			(403,735	)							(403,735	)
Trading and others		-			(120,224	)							(120,224	)
		(334,184	)		(617,215	)							(951,399	)
Other expenses
Depreciation		(97,967	)		(185,225	)							(283,192	)
Impairment losses on intangible assets		-			(222,676	)							(222,676	)
Impairment loss on goodwill		-			(388,118	)							(388,118	)
Impairment of property, plant and equipment		-			(594,343	)							(594,343	)
Selling, general and administrative expenses		(2,529,451	)		(7,290,150	)							(9,819,601	)
		(2,627,418	)		(8,680,512	)							(11,307,930	)
Profit (Loss) from operations		2,035,856			(7,880,755	)							(5,844,899	)
Non-operating income (expenses)
Other income		410,790			139,816								550,606
Interest expenses		(202,007	)		(32,965	)							(234,972	)
Profit (Loss) before income taxes and minority interests		2,244,639			(7,773,904	)							(5,529,265	)
Income before income taxes and minority interests
Income taxes expense		(136,366	)		-								(136,366	)
Profit (Loss) before minority interest		2,108,273			(7,773,904	)							(5,665,631	)
Minority interests		(93,183	)		628			(987,394	)	(a	)		(1,079,949	)
Net loss		2,015,090			(7,773,276	)							(6,745,580	)
Loss per share of common stock
- Basic					(0.37	)							(0.32	)
Weighted average number of shares of common stock outstanding					21,102,405								21,102,405

184

China World Trade Corporation

Notes to Pro Forma Financial Statements

1.BASIS OF PRO FORMA PRESENTATION

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the Company’s Form 10-KSB for the year ended December 31, 2004 filed on 15 April, 2005.

On April 20, 2004, a wholly-owned subsidiary of the Company (the "Transferee") entered into an Equity Transfer Agreement (the "Agreement") with the major shareholders of GNGCM (the "Transferors"), pursuant to which the Transferee would acquire from the Transferors 51% interest in GNGCM for an aggregate consideration of approximately US$11,127,000 of which US$3,640,000 was to be paid in the form of cash and US$7,487,000 was to be paid in the form of restricted shares issued by the Company. The Agreement also contemplated a loan agreement in the amount of US$3,640,000 pursuant to which one of the Transferors would loan the said amount to GNGCM as part of the transaction. Completion of the Agreement was subject to a group reorganisation to be completed by GNGCM. Upon completion of the reorganisation, GNGCM shall hold 7 subsidiaries. On June 1, 2004, a supplementary agreement to the Agreement was entered into by making several changes to the Agreement, amongst which the aggregate consideration was reduced to US$10,232,000, of which US$2,745,000 was to be paid in the form of cash and US$7,487,000 was to be paid in the form of restricted shares of the Company.

The Acquisition, which was mainly carried out for the Company's expansion purposes, was completed on August 2, 2004 and the Company has issued 4,081,238 shares of US$0.001 to satisfy the consideration which was to be paid in the form of shares of the Company.

2.PRO FORMA ADJUSTMENTS

Pro forma adjustments are necessary to reflect the adjustments necessary to give full effect to the acquisition as if it had been occurred on January 1, 2004. These pro forma adjustments include the adjustments for the difference between the considerations paid for the assets acquired and the estimated fair value of such assets and to eliminate minority interests. As there were no inter-company transactions or balances, no pro forma adjustments for elimination in this respect is necessary. Certain reclassifications have been made to conform GNGCM’s historical amounts to the Company’s presentation.

The pro forma consolidated provision for income taxes does not reflect the amounts that would have resulted had the Company and GNGCM filed consolidated income tax returns during the periods presented.

The pro forma adjustment included in the unaudited pro forma condensed consolidated financial statements is as follows:

Adjustment to reflect the minority interest's share of results of GNGCM for the year ended December 31, 2004

185

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The accounting firm of Moores Rowland Mazars audited our financial statements. We have had no changes in or disagreements with our accountant

HOW TO GET MORE INFORMATION

We have filed with the Securities and Exchange Commission in Washington, DC, a registration statement on Form SB-2 under the Securities Act of 1933, as amended, with respect to the shares we are offering and we have amended the same with this registration statement on Forms SB-2. We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and are required to file reports pursuant to its provisions. This prospectus does not contain all of the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. Reference is hereby made to the registration statement and shares to which this prospectus relates. Copies of the registration statement and other information filed by us with the Commission can be inspected and copied at the public reference facilities maintained by the Commission in Washington, DC at 450 Fifth Street, NW, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330 (1-800-732-0330). In addition, the Commission maintains a World Wide Web site that contains reports, proxy statements and other information regarding registrants, such as China World Trade, which are filed electronically with the Commission at the following Internet address: (http:www.sec.gov).

186

  Until _____________, 2005 (40 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. -------------------------------- TABLE OF CONTENTS -------------------------------- Prospectus Summary The Offering Risk Factors Forward Looking Statements Use of Proceeds Dilution Standby Equity Distribution Agreement Agreement Plan of Distribution Legal Proceedings Directors & Executive Officers Security Ownership Description of Securities Interests of Named Experts SEC’s Position on Indemnification Description of Business Management’s Discussion & Analysis Description of Property Certain Relationships and Related Transactions Market for Common Stock Executive Compensation Financial Statements   No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by China World Trade. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to whom it is unlawful to make such offer in any jurisdiction. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that information contained herein is correct as of any time subsequent to the date hereof or that there has been no change in the affairs of the China World Trade since such date.                     China World Trade Corporation         Up To 16,981,717 Shares Common Stock $.001 Par Value             --------------------- PROSPECTUS ---------------------                                     May 16, 2005      

187

PART II

INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table is an itemization of all expenses, without consideration to future contingencies, incurred or expected to be incurred by China World Trade Corporation in connection with the issuance and distribution of the securities being offered by this prospectus. Items marked with an asterisk (*) represent estimated expenses. We have agreed to pay all the costs and expenses of this offering. Selling security holders will pay no offering expenses.

ItemExpense

SEC Registration Fee                         $ 4,518.33

Legal Fees and Expenses*                 $50,000

State Blue Sky Fees*                         $ 7,500

Miscellaneous*                                  $ 1,000

=============================================

Total*                                               $62,118.33

* Estimated Figure

RECENT SALES OF UNREGISTERED SECURITIES

A.MR. WILLIAM CHI HUNG TSANG

Pursuant to an agreement entered between China World Trade and Mr. William Chi Hung Tsang dated November 19, 2003, China World Trade acquired the after-tax rental income of a property located in Guangzhou, China for a five-year period commencing from December 1, 2003 to November 30, 2008 in exchange for 3,000,000 newly issued shares of China World Trade and a two-year warrant to purchase up to 6,000,000 shares of China World Trade at an agreed upon price. The 3,000,000 shares were issued on December 5, 2003. Fair value of the issued shares is US$0.60 each, representing the closing bid price of China World Trade’s shares on November 19, 2003. The present value of the after-tax rental stream acquired by China World Trade was estimated to be in excess of $1,800,000. Such rental stream has been capitalized as an intangible asset and is amortized on a straight-line basis over five years.

On December 5, 2003, China World Trade issued 761,103 shares to Mr. William Chi Hung Tsang for partial settlement of amounts due to him. The shares were recorded at their fair values, which were equal to their closing bid price on December 5, 2003 of $1.20. The amounts were recognized as expenses in the three-month period ended December 31, 2003.

We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended. We made this offering based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only one offeree, (3) the offered has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offered was a sophisticated investor; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the sale of the stock took place directly between the offered and our management.

188

B.GREENTREE FINANCIAL GROUP, INC. and RR INV HOLDING INC.

On December 9, 2003, we issued 400,000 shares of our common stock to Greentree Financial Group, Inc. for professional services, including:

·   Assistance in preparation of private offering documents

·   Compliance with state Blue Sky regulations

·   Compliance with the Securities and Exchange Commission's periodic reporting requirements

·   Tax and accounting services

·   EDGAR services

·   Preparation of interim financial information

·   Locating product vendors

·   Other consulting services

We also issued 50,000 shares to RR INV Holding INC for consultancy services provided.

The shares were recorded at fair values of the shares issued. The amounts were recognized as expenses in the three-month period ended December 31, 2003.

We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended. We made this offering based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only two offered, (3) the offered has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offered was a sophisticated investor ; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the sale of the stock took place directly between the offered and our management.

C.TMT CONSULTANT AND MR. ANDY LAU

On December 11, 2003, China World Trade issued 500,000 shares each to Mr. Andy Lau and TMT Consultant for consultancy services provided. Mr. Lau’s services included:

·   Developing information technology strategy and project implementation of IT-enabled business centers operated throughout China.

·   Formulation the network topology and the IT applications plan of the business centers in Guangzhou.

·   Assisting and facilitating the establishment of the IT network of the business centers, and supervising the project progress implemented by outsourced project team.

·   Facilitating the cooperation between CWTD and any third party into-tech service providers under the consent of CWTD to enhance the value added service delivered through the info-tech network.

189

TMT Consultant’s services included:

·   Developing sales and marketing strategies and implementing CWTD’s co-brand VISA credit card in associate with the Agricultural Bank of China.

·   Formulating the visual identity of all the marketing material of the co-brand credit card.

·   Assisting and facilitating the discussion and cooperation between CWTD and China advertising companies in creating publicity in China.

·   Facilitating the cooperation of CWTD and predefined third party service provider to enhance the value added service of the co-branded credit card.

We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended. We made this offering based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only two offered, (3) the offered has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offered was a sophisticated investor ; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the sale of the stock took place directly between the offered and our management.

D.WALL STREET STRATEGIES, INC.

On December 16, 2003, China World Trade issued 100,000 shares to Wall Street Strategies, Inc. for consultancy services provided. The shares were recorded at fair values of the shares issued. The amounts were recognized as expenses in the three-month period ended December 31, 2003.

E.DEBT RESTRUCTURING; SHARE ISSUANCES TO POWERTRONIC AND TSANG

Effective September 1, 2002, we consummated a 1 for 30 reverse stock split of the outstanding shares of common stock.

In September, 2002, we completed a debt-for-equity capital restructuring and issued shares to certain creditors for the settlement of debts and fees pursuant to settlement agreements, as follows:

Name of Creditor	Date (2002)		Cancellation of Indebtedness		No. of Shares
Mr. James Mak		September 8	$	87,500		87,500
Mr. James Mak		September 8	$	44,301		35,000
Mr. Roy Wu		September 9	$	91,667		87,500
Mr. Alfred Or		September 10	$	156,645		156,645
Mr. Andersen Chan		September 10	$	60,000		60,000
Mr. Bernard Chan		September 8	$	15,000		73,355
Superwear Limited		September 9	$	220,000		500,000
Simple Fortune Inc.		September 9	$	230,000		490,000
Sinogolf Limited		September 9	$	245,977		510,000
Top-Trained Securities Limited		September 11	$	944,628		1,000,000
Splendid Partner Holdings Limited		September 12	$	317,980		500,000
I & V Ltd.		September 12	$	317,979		500,000
TOTAL			$	2,731,677		4,000,000

190

The shares of common stock delivered as consideration in the debt for equity restructuring were issued on January 22, 2003.

We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended, for this debt for equity restructuring. We made this offering based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there were less than 35 offerees, (3) each offeree has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offeree was a sophisticated investor; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the exchange of the stock for debt took place directly between the offeree and our management.

As a result of two share purchase agreements dated September 3, 2002 and December 17, 2002, respectively, and entered into between China World Trade and Powertronic Holdings Limited, on January 24, 2003 we issued a total of 2,000,000 shares of common stock and warrants to purchase up to 4,000,000 shares of common stock for a total purchase price of $1,000,000 to Powertronic Holdings Limited.

As a result of a share exchange agreement dated December 17, 2002 entered into between China World Trade and Mr. William Chi Hung Tsang, on January 24, 2003, we issued 4,000,000 shares of common stock and warrants to purchase up to 4,000,000 shares of stock in exchange for 100% of the share capital of General Business Network (Holdings) Ltd.

We relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended, for the share issuances set forth in the preceding two paragraphs. We made this offering based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there was only one offered, (3) the offeree has agreed to the imposition of a restrictive legend on the face of the stock certificate representing its shares, to the effect that it will not resell the stock unless its shares are registered or an exemption from registration is available; (4) the offeree was a sophisticated investor; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the sale of the stock took place directly between the offeree and our management.

F. SHARE ISSUANCE - ACQUISITION OF NEW GENERATION

On August 2, 2004, General Business Network (GZ) Co. Limited, a wholly-owned subsidiary of ours, acquired 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized and existing under the laws of China (“New Generation”), from Guangdong Huahao Industries Group Co. Ltd., a limited liability company organized under the laws of China (“Guangdong Industries”), Huang Zehua, a citizen and resident of China (“Zehua”) and Suo Hongxia, a citizen and resident of China (“Hongxia”)(Guangdong Industries, Zehua and Hongxia are collectively referred herein as the “Sellers”), for an aggregate consideration of US$10,232,000, payable approximately US$2,741,000 in cash and approximately US$7,487,000 in market value of our common stock. We issued 4,081,238 shares of our restricted common stock pro rata to the Sellers at closing.

In this offering, we relied on the exemption from registration of Section 4(2) under the Securities Act, based on the following facts: (1) the issuance was an isolated private transaction which did not involve a public offering; (2) there were only three offerees, (3) the offerees have agreed to the imposition of a restrictive legend on the face of the stock certificate representing their shares, to the effect that they will not resell the stock unless their shares are registered or an exemption from registration is available; (4) the offerees were sophisticated investors; (5) there were no subsequent or contemporaneous public offerings of the stock; (6) the stock was not broken down into smaller denominations; and (7) the negotiations for the acquisition of New Generation and the issuance of the stock pursuant thereto took place directly between the offerees and our management.

191

G.TCMP3 PARTNERS AND BRIDGES & PIPES LLC INVESTORS

On August 26, 2004, we entered into a Securities Purchase Agreement with the TCMP3 Partners and Bridges & PIPES LLC (together being the “Purchasers”), providing for the issuance by us of (i) 333,334 shares of common stock at a price of $1.50 per share and 166,667 Series A five year Warrants to purchase shares of our common stock at $2.50 per share to Bridges & PIPES LLC, and (ii) 100,000 shares of common stock at a price of $1.50 per share and 50,000 Series A five year Warrants to purchase shares of our common stock at $2.50 per share to TCMP3 Partners, for an aggregate purchase price of $650,000. In addition, we granted each Purchaser an option (the “Option”) to purchase that number of shares equal to the number of shares initially purchased by the Purchaser on the Closing Date (the “Firm Shares”). Upon exercise of the Option at a purchase price of $3.00 per share of common stock, the Purchaser would also receive, without additional consideration, five-year Series B Warrants to purchase 50% of the Firm Shares at an exercise price equal to $4.00 per share. To date, neither of the Purchasers has exercised the Option.

In connection with this offering, we retained the services of Duncan Capital LLC to act as Placement Agent, and for its services Duncan Capital LLC was entitled to receive compensation equal to (i) a cash fee of ten percent of the aggregate purchase price of the shares of common stock and warrants sold, (ii) the issuance of a five-year non-cashless exercised provisioned warrant to purchase such number of shares of common stock as shall equal ten percent of the aggregated number of shares sold in the offering and shares exercised upon exercised upon exercise of the Series A Warrants and Series B Warrants at an exercise price of $2.50 per share, and (iii) a cash fee of ten percent upon our receipt of proceeds, if any, upon the exercise of the Series A Warrants and Series B Warrants by the Purchasers. Duncan Capital LLC was issued a Placement Agent’s warrant to purchase 43,000 of our common shares at an exercise price equal to $2.50 per share, which is being registered pursuant to this prospectus, in connection with this offering.

In this offering, we relied on the exemption from registration of Section 4(2) under the Securities Act and Regulation D promulgated pursuant thereto.

H.CORNELL CAPITAL PARTNERS, LP AND STEALTH CAPITAL, LLC

On December 3, 2004, we had a second closing under the Securities Purchase Agreement with two new Purchasers, Cornell Capital Partners, LLC and Stealth Capital, LLC, who together purchased an aggregate of $1,450,000 of our shares of common stock and Series A Warrants. Cornell Capital purchased 900,000 shares of common stock at $1.50 per share, and received 450,000 Series A Warrants, for a total consideration of $1,350,000. Stealth Capital purchased 66,667 shares of common stock at $1.50 per share, and received 33,334 Series A Warrants, for a total consideration of $100,000. For its services as Placement Agent, Duncan Capital, LLC received an additional 69,667 Placement Agent Warrants, which are exercisable at $2.50 per share. In addition, Bridges & PIPES, LLC was issued 83,334 Series A Warrants and TCMP3 Partners was issued 25,000 Series A Warrants for their agreement to waive their rights under the Registration Rights Agreement to be the sole registrants, together with Cornell Capital and Stealth Capital, in a demand registration made on our Company. They were issued the warrants pursuant to a Letter Agreement that, among other things, permitted our Company to enter into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP and register the shares to be issued pursuant to the Standby Equity Distribution Agreement together with the shares and warrants owned by Bridges & PIPES, LLC and TCMP3 Partners on one registration statement and to be offered for sale pursuant to one prospectus.

In connection with the issuance of securities at this second closing, we relied on the exemption from registration of Section 4(2) under the Securities Act and Regulation D promulgated pursuant thereto.

192

INDEMNIFICATION OF DIRECTORS AND OFFICERS

China World Trade shall indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Nevada, any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, including an action involving liability under the Securities Act of 1933, as amended, by reason of the fact that he is or was a director or officer of China World Trade Corporation, or served any other enterprise as director, officer or employee at the request of China World Trade. The Board of Directors, in its discretion, shall have the power on behalf of China World Trade to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he/she is or was an employee of China World Trade.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling an issuer pursuant to the foregoing provisions, the opinion of the Commission is that such indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.

193

EXHIBITS

Exhibit Number	Exhibit Description
3.1	Articles of Incorporation*
3.2	Amendment to Articles of Incorporation*
3.3	Amendment to Articles of Incorporation (Name Change) (2)
3.4	Bylaws*
4	Form of Stock Certificate*
5	Legal Opinion (3)
10.1	Standby Equity Distribution Agreement-Executed (2)
10.2	Registration Rights Agreement-Executed (2)
10.3	Placement Agent Agreement-Executed (2)
10.4	Securities Purchase Agreement-Executed (2)
10.5	Registration Rights Agreement-Executed (2)
10.6	Bridges & PIPES LLC Series A Warrant Agreements-Executed (2)
10.7	TCMP3 Partners Series A Warrant Agreements-Executed (2)
10.8	Cornell Capital Partners, LP Series A Warrant Agreement-Executed (2)
10.9	Stealth Capital, LLC Series A Warrant Agreement-Executed (2)
10.10	Placement Agent’s Warrant Agreements-Executed (2)
10.11	Employment Agreement, as amended, with John H. W. Hui*
10.12	Employment Agreement, as amended, with Keith Yat Chor Wong*
10.13	Consulting Agreement with Greentree Financial Group, Inc.
10.14	Facilities Lease Agreement*
10.15	2003 Non-Qualified Stock Compensation Plan (1)
21	List of Subsidiaries (2)
23.1	Consent of Harold H. Martin, Esq. (Included in exhibit 5) (3)
23.2	Consent of Moores Rowland Mazars (2)

* Incorporated by reference from Registrant’s registration statement on Form 10-SB, filed with the Commission on September 9, 1999, SEC File No. 333-87992.

(1)   Incorporated by reference from Form S-8 filed on December 22, 2003.

(2)   Filed herewith.

(3)   Previously filed.

194

UNDERTAKINGS

The undersigned Registrant hereby undertakes:

1. To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

·   Include any prospectus required by Section 10(a)(3) of the securities Act of 1933.

·   Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

·   Include any additional or changed material information on the plan of distribution.

2. That, for determining liability under the Securities Act of 1933, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

3. To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

4. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

5. In the event that a claim for indemnification against such liabilities, other than the payment by the Registrant of expenses incurred and paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

195

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements of filing of Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the Guangzhou, The PRC on May 16, 2005.

China World Trade Corporation

                                                            /s/ John H. W. Hui                     

By:John H. W. Hui

Title:Vice Chairman & CEO, Director

/s/ Bernard Chan                         

By: Bernard Chan

Title:Chief Financial Officer

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the date stated.

/s/ John H. W. Hui                      

By:John H. W. Hui

Title:Vice Chairman and CEO, Director

Date:May 16, 2005

                                                            /s/ Chi Ming Chan                      

By: Chi Ming Chan

Title:General Manager, Director

Date:May 16, 2005

/s/ William Chi Hung Tsang      

By:William Chi Hung Tsang

Title:Chairman and President

                                                            Date:May 16, 2005

/s/ Chao Ming Luo                      

By:Chao Ming Luo

Title:Director

Date:May 16, 2005

/s/ Zeliang Chen                          

By:Zeliang Chen

Title: Vice Chairman and Director

Date:May 16, 2005

196

EX-3.3

EXHIBIT 3.3

CERTIFICATE OF AMENDMENT

OF

ARTICLES OF INCORPORATION

OF

TXON INTERNATIONAL DEVELOPMENT CORPORATION

a Nevada corporation

The undersigned certify that:

1.   They are the president and the secretary, respectively, of Txon International Development Corporation.

2.   Article I of the Articles of Incorporation of this corporation is amended to read as follow:

“The name of this corporation shall be: China World Trade Corporation.”

3.   The foregoing amendment of Articles of Incorporation has been duly

approved by the board of directors and a majority of the stockholders of this

corporation.

We further declare under penalty of perjury under the laws of the State of Nevada that the matters set forth in this certificate are true and correct of our own knowledge.

Date: September 15, 2000

/s/ John H.W. Hui

John H.W. Hui, President

/s/ John H.W. Hui

John H.W. Hui, President

EX-10.1

EXHIBIT 10.1

STANDBY EQUITY DISTRIBUTION AGREEMENT

THIS AGREEMENT dated as of the 15th day of November, 2004 (the “Agreement”) between CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the “Investor”), and CHINA WORLD TRADE CORPORATION, a corporation organized and existing under the laws of the State of Nevada (the “Company”).

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Investor, from time to time as provided herein, and the Investor shall purchase from the Company up to Thirty Million U.S. Dollars ($30,000,000) of the Company’s common stock, par value $0.001 per share (the “Common Stock”); and

WHEREAS, such investments will be made in reliance upon the provisions of Regulation D (“Regulation D”) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder (the “Securities Act”), and or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the investments to be made hereunder.

WHEREAS, the Company has engaged Duncan Capital Group (the “Placement Agent”), to act as the Company’s placement agent in connection with the sale of the Company’s Common Stock to the Investor hereunder pursuant to the Placement Agent Agreement dated the date hereof by and among the Company, the Placement Agent and the Investor (the “Placement Agent Agreement”).

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I.

Certain Definitions

Section 1.1.“Advance” shall mean the portion of the Commitment Amount requested by the Company in the Advance Notice.

Section 1.2.“Advance Date” shall mean the date Butler Gonzalez LLP Escrow Account is in receipt of the funds from the Investor and Butler Gonzalez LLP, as the Investor’s Counsel, is in possession of free trading shares from the Company and therefore an Advance by the Investor to the Company can be made and Butler Gonzalez LLP can release the free trading shares to the Investor. The Advance Date shall be the first (1^st) Trading Day after expiration of the applicable Pricing Period for each Advance.

Section 1.3.“Advance Notice” shall mean a written notice to the Investor setting forth the Advance amount that the Company requests from the Investor and the Advance Date.

Section 1.4.“Advance Notice Date” shall mean each date the Company delivers to the Investor an Advance Notice requiring the Investor to advance funds to the Company, subject to the terms of this Agreement. No Advance Notice Date shall be less than seven (7) Trading Days after the prior Advance Notice Date.

1

Section 1.5.“Bid Price” shall mean, on any date, the closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the Principal Market or if the Common Stock is not traded on a Principal Market, the highest reported bid price for the Common Stock, as furnished by the National Association of Securities Dealers, Inc.

Section 1.6.“Closing” shall mean one of the closings of a purchase and sale of Common Stock pursuant to Section 2.3.

Section 1.7.“Commitment Amount” shall mean the aggregate amount of up to Thirty Million U.S. Dollars ($30,000,000) which the Investor has agreed to provide to the Company in order to purchase the Company’s Common Stock pursuant to the terms and conditions of this Agreement.

Section 1.8.“Commitment Period” shall mean the period commencing on the earlier to occur of (i) the Effective Date, or (ii) such earlier date as the Company and the Investor may mutually agree in writing, and expiring on the earliest to occur of (x) the date on which the Investor shall have made payment of Advances pursuant to this Agreement in the aggregate amount of Thirty Million U.S. Dollars ($30,000,000), (y) the date this Agreement is terminated pursuant to Section 2.5, or (z) the date occurring twenty-four (24) months after the Effective Date.

Section 1.9.“Common Stock” shall mean the Company’s common stock, par value $0.001 per share.

Section 1.10.“Condition Satisfaction Date” shall have the meaning set forth in Section 7.2.

Section 1.11.“Damages” shall mean any loss, claim, damage, liability, costs and expenses (including, without limitation, reasonable attorney’s fees and disbursements and costs and expenses of expert witnesses and investigation).

Section 1.12.“Effective Date” shall mean the date on which the SEC first declares effective a Registration Statement registering the resale of the Registrable Securities as set forth in Section 7.2(a).

Section 1.13.“Escrow Agreement” shall mean the escrow agreement among the Company, the Investor, and David Gonzalez, Esq., dated the date hereof.

Section 1.14.“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Section 1.15.“Material Adverse Effect” shall mean any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement or the Registration Rights Agreement in any material respect.

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Section 1.16.“Market Price” shall mean the lowest VWAP of the Common Stock during the Pricing Period.

Section 1.17.“Maximum Advance Amount” shall be up to Three Million U.S. Dollars (US$3,000,000) on the initial Advance Notice hereunder , and up to One Million Five Hundred Thousand Dollars ($1,500,000) per Advance Notice there after.

Section 1.18.“NASD” shall mean the National Association of Securities Dealers, Inc.

Section 1.19.“Person” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

Section 1.20.“Placement Agent” shall mean Duncan Capital Group, a registered broker-dealer.

Section 1.21.“Pricing Period” shall mean the five (5) consecutive Trading Days after the Advance Notice Date.

Section 1.22.“Principal Market” shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange, the OTC Bulletin Board or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.

Section 1.23.“Purchase Price” shall be set at ninety nine percent (99%) of the Market Price during the Pricing Period.

Section 1.24.“Registrable Securities” shall mean the shares of Common Stock to be issued hereunder(i) in respect of which the Registration Statement has not been declared effective by the SEC, (ii) which have not been sold under circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then in force) under the Securities Act (“Rule 144”) or (iii) which have not been otherwise transferred to a holder who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend.

Section 1.25.“Registration Rights Agreement” shall mean the Registration Rights Agreement dated the date hereof, regarding the filing of the Registration Statement for the resale of the Registrable Securities, entered into between the Company and the Investor.

Section 1.26.“Registration Statement” shall mean a registration statement on Form S-1 or SB-2 (if use of such form is then available to the Company pursuant to the rules of the SEC and, if not, on such other form promulgated by the SEC for which the Company then qualifies and which counsel for the Company shall deem appropriate, and which form shall be available for the resale of the Registrable Securities to be registered thereunder in accordance with the provisions of this Agreement and the Registration Rights Agreement, and in accordance with the intended method of distribution of such securities), for the registration of the resale by the Investor of the Registrable Securities under the Securities Act.

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Section 1.27.“Regulation D” shall have the meaning set forth in the recitals of this Agreement.

Section 1.28.“SEC” shall mean the Securities and Exchange Commission.

Section 1.29.“Securities Act” shall have the meaning set forth in the recitals of this Agreement.

Section 1.30.“SEC Documents” shall mean Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K and Proxy Statements of the Company as supplemented to the date hereof, filed by the Company for a period of at least twelve (12) months immediately preceding the date hereof or the Advance Date, as the case may be, until such time as the Company no longer has an obligation to maintain the effectiveness of a Registration Statement as set forth in the Registration Rights Agreement.

Section 1.31.“Trading Day” shall mean any day during which the New York Stock Exchange shall be open for business.

Section 1.32.“VWAP” shall mean the volume weighted average price of the Company’s Common Stock as quoted by Bloomberg, LP.

ARTICLE II.

Advances

Section 2.1.Investments.

(a)Advances. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII hereof), on any Advance Notice Date the Company may request an Advance by the Investor by the delivery of an Advance Notice. The number of shares of Common Stock that the Investor shall receive for each Advance shall be determined by dividing the amount of the Advance by the Purchase Price. No fractional shares shall be issued. Fractional shares shall be rounded to the next higher whole number of shares. The aggregate maximum amount of all Advances that the Investor shall be obligated to provide under this Agreement shall not exceed the Commitment Amount.

Section 2.2.Mechanics.

(a)Advance Notice. At any time during the Commitment Period, the Company may deliver an Advance Notice to the Investor, subject to the conditions set forth in Section 7.2; provided, however, the amount for each Advance as designated by the Company in the applicable Advance Notice, shall not be more than the Maximum Advance Amount. The aggregate amount of the Advances pursuant to this Agreement shall not exceed the Commitment Amount. The Company acknowledges that the Investor may sell shares of the Company’s Common Stock corresponding with a particular Advance Notice on the day the Advance Notice is received by the Investor. Without limiting the foregoing, the Investor agrees not to engage in any naked short transactions in excess of the amount of shares owned (or an offsetting long position) during the Commitment Period. There shall be a minimum of seven (7) Trading Days between each Advance Notice Date.

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(b)Date of Delivery of Advance Notice. An Advance Notice shall be deemed delivered on (i) the Trading Day it is received by facsimile or otherwise by the Investor if such notice is received prior to 12:00 noon Eastern Time, or (ii) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 12:00 noon Eastern Time on a Trading Day or at any time on a day which is not a Trading Day. No Advance Notice may be deemed delivered on a day that is not a Trading Day.

(c)Pre-Closing Share Credit. Within two (2) business days after the Advance Notice Date, the Company shall credit shares of the Company’s Common Stock to the Investor’s counsel’s balance account with The Depository Trust Company through its Deposit Withdrawal At Custodian system, in an amount equal to the amount of the requested Advance divided by the closing Bid Price of the Company’s Common Stock as of the Advance Notice Date multiplied by one point one (1.1). Any adjustments to the number of shares to be delivered to the Investor at the Closing as a result of fluctuations in the closing Bid Price of the Company’s Common Stock shall be made as of the date of the Closing. Any excess shares shall be credited to the next Advance. In no event shall the number of shares issuable to the Investor pursuant to an Advance cause the Investor to own in excess of nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the Company.

(d)Hardship. In the event the Investor sells the Company’s Common Stock pursuant to subsection (c) above and the Company fails to perform its obligations as mandated in Section 2.5 and 2.2 (c), and specifically fails to provide the Investor with the shares of Common Stock for the applicable Advance, the Company acknowledges that the Investor shall suffer financial hardship and therefore shall be liable for any and all losses, commissions, fees, or financial hardship caused to the Investor.

(e)Insufficient Shares.In the event the Company provides an Advance Notice to the Investor and it is mutually determined by the Company and the Investor that there are insufficient shares of the Company’s Common Stock registered pursuant to the Registration Rights Agreement dated the date hereof the Company shall amend the Advance Notice to an amount to correspond to the number shares of the Company’s Common Stock registered pursuant to the Registration Rights Agreement.

Section 2.3.Closings. On each Advance Date, which shall be the first (1^st) Trading Day after expiration of the applicable Pricing Period for each Advance, (i) the Company shall deliver to the Investor’s Counsel, as defined pursuant to the Escrow Agreement, shares of the Company’s Common Stock, representing the amount of the Advance by the Investor pursuant to Section 2.1 herein, registered in the name of the Investor which shall be delivered to the Investor, or otherwise in accordance with the Escrow Agreement and (ii) the Investor shall deliver to David Gonzalez, Esq. (the “Escrow Agent”) the amount of the Advance specified in the Advance Notice by wire transfer of immediately available funds which shall be delivered to the Company, or otherwise in accordance with the Escrow Agreement. In addition, on or prior to the Advance Date, each of the Company and the Investor shall deliver to the other through the David Gonzalez, Esq, all documents, instruments and writings required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. Payment of funds to the Company and delivery of the Company’s Common Stock to the Investor shall occur in accordance with the conditions set forth above and those contained in the Escrow Agreement; provided, however, that to the extent the Company has not paid the fees, expenses, and disbursements of the Investor in accordance with Section 12.4, the amount of such fees, expenses, and disbursements may be deducted by the Investor (and shall be paid to the relevant party) from the amount of the Advance with no reduction in the amount of shares of the Company’s Common Stock to be delivered on such Advance Date.

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Section 2.4.Termination of Investment. The obligation of the Investor to make an Advance to the Company pursuant to this Agreement shall terminate permanently (including with respect to an Advance Date that has not yet occurred) in the event that (i) there shall occur any stop order or suspension of the effectiveness of the Registration Statement for an aggregate of fifty (50) Trading Days, other than due to the acts of the Investor, during the Commitment Period, and (ii) the Company shall at any time fail materially to comply with the requirements of Article VI and such failure is not cured within thirty (30) days after receipt of written notice from the Investor, provided, however, that this termination provision shall not apply to any period commencing upon the filing of a post-effective amendment to such Registration Statement and ending upon the date on which such post effective amendment is declared effective by the SEC.

Section 2.5.Agreement to Advance Funds.

(a)The Investor agrees to advance the amount specified in the Advance Notice to the Company after the completion of each of the following conditions and the other conditions set forth in this Agreement:

(i)the execution and delivery by the Company, and the Investor, of this Agreement and the Exhibits hereto;

(ii)Investor’s Counsel shall have received the shares of Common Stock applicable to the Advance in accordance with Section 2.2(c) hereof;

(iii)the Company’s Registration Statement with respect to the resale of the Registrable Securities in accordance with the terms of the Registration Rights Agreement shall have been declared effective by or with no comment from the SEC;

(iv)the Company shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the Registrable Securities, or shall have the availability of exemptions therefrom. The sale and issuance of the Registrable Securities shall be legally permitted by all laws and regulations to which the Company is subject;

(v)the Company shall have filed with the Commission in a timely manner all reports, notices and other documents required of a “reporting company” under the Exchange Act and applicable Commission regulations;

(vi)the fees as set forth in Section 12.4 below shall have been paid or can be withheld as provided in Section 2.3; and

(vii)the conditions set forth in Section 7.2 shall have been satisfied.

(viii)the Company shall have provided to the Investor an acknowledgement, from Moorse Rowland Mazars as to its ability to provide all consents required in order to file a registration statement in connection with this transaction;

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Section 2.6.Lock Up Period.

During the Commitment Period, the Company shall not issue or sell, without fifteen (15) calendar days prior written notice to the Investor (i) any Common Stock or Preferred Stock without consideration or for a consideration per share less than the Bid Price on the date of issuance or (ii) issue or sell any warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration per share less than the Bid Price on the date of issuance.

ARTICLE III.

Representations and Warranties of Investor

Investor hereby represents and warrants to, and agrees with, the Company that the following are true and as of the date hereof and as of each Advance Date:

Section 3.1.Organization and Authorization. The Investor is duly incorporated or organized and validly existing in the jurisdiction of its incorporation or organization and has all requisite power and authority to purchase and hold the securities issuable hereunder. The decision to invest and the execution and delivery of this Agreement by such Investor, the performance by such Investor of its obligations hereunder and the consummation by such Investor of the transactions contemplated hereby have been duly authorized and requires no other proceedings on the part of the Investor. The undersigned has the right, power and authority to execute and deliver this Agreement and all other instruments (including, without limitations, the Registration Rights Agreement), on behalf of the Investor. This Agreement has been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms.

Section 3.2.Evaluation of Risks. The Investor has such knowledge and experience in financial tax and business matters as to be capable of evaluating the merits and risks of, and bearing the economic risks entailed by, an investment in the Company and of protecting its interests in connection with this transaction. It recognizes that its investment in the Company involves a high degree of risk.

Section 3.3.No Legal Advice From the Company. The Investor acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

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Section 3.4.Investment Purpose. The securities are being purchased by the Investor for its own account, for investment and without any view to the distribution, assignment or resale to others or fractionalization in whole or in part. The Investor agrees not to assign or in any way transfer the Investor’s rights to the securities or any interest therein and acknowledges that the Company will not recognize any purported assignment or transfer except in accordance with applicable Federal and state securities laws. No other person has or will have a direct or indirect beneficial interest in the securities. The Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s securities unless the securities are registered under Federal and applicable state securities laws or unless, in the opinion of counsel satisfactory to the Company, an exemption from such laws is available.

Section 3.5.Accredited Investor. The Investor is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.

Section 3.6.Information. The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and operations of the Company and information it deemed material to making an informed investment decision. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor understands that its investment involves a high degree of risk. The Investor is in a position regarding the Company, which, based upon employment, family relationship or economic bargaining power, enabled and enables such Investor to obtain information from the Company in order to evaluate the merits and risks of this investment. The Investor has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to this transaction.

Section 3.7.Receipt of Documents. The Investor and its counsel have received and read in their entirety: (i) this Agreement and the Exhibits annexed hereto; (ii) all due diligence and other information necessary to verify the accuracy and completeness of such representations, warranties and covenants; (iii) the Company’s Form 10-KSB for the year ended September 30, 2004 and Form 10-QSB for the period ended June 30, 2004; and (iv) answers to all questions the Investor submitted to the Company regarding an investment in the Company; and the Investor has relied on the information contained therein and has not been furnished any other documents, literature, memorandum or prospectus.

Section 3.8.Registration Rights Agreement and Escrow Agreement. The parties have entered into the Registration Rights Agreement and the Escrow Agreement, each dated the date hereof.

Section 3.9.No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the shares of Common Stock offered hereby.

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Section 3.10.Not an Affiliate. The Investor is not an officer, director or a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the Company or any “Affiliate” of the Company (as that term is defined in Rule 405 of the Securities Act). Neither the Investor nor its Affiliates has an open short position in the Common Stock of the Company, and the Investor agrees that it will not, and that it will cause its Affiliates not to, engage in any short sales of or hedging transactions with respect to the Common Stock, provided that the Company acknowledges and agrees that upon receipt of an Advance Notice the Investor will sell the Shares to be issued to the Investor pursuant to the Advance Notice, even if the Shares have not been delivered to the Investor.

Section 3.11.Trading Activities. The Investor’s trading activities with respect to the Company’s Common Stock shall be in compliance with all applicable federal and state securities laws, rules and regulations and the rules and regulations of the Principal Market on which the Company’s Common Stock is listed or traded. Neither the Investor nor its affiliates has an open short position in the Common Stock of the Company in any and all events and, except as set forth below, the Investor shall not and will cause its affiliates not to engage in any short sale as defined in any applicable SEC or National Association of Securities Dealers rules on any hedging transactions with respect to the Common Stock. The Investor shall be entitled to sell Common Stock during the applicable Pricing Period.

Section 3.12Sufficient Funds.The investor shall have sufficient money at any time and in any and all events to provide any Advance the Company requests by submitting the Advance Notice.

ARTICLE IV.

Representations and Warranties of the Company

Except as stated below, on the disclosure schedules attached hereto or in the SEC Documents (as defined herein), the Company hereby represents and warrants to, and covenants with, the Investor that the following are true and correct as of the date hereof:

Section 4.1.Organization and Qualification. The Company is duly incorporated or organized and validly existing in the jurisdiction of its incorporation or organization and has all requisite power and authority corporate power to own its properties and to carry on its business as now being conducted. Each of the Company and its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect on the Company and its subsidiaries taken as a whole.

Section 4.2.Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement, the Escrow Agreement, the Placement Agent Agreement and any related agreements, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Registration Rights Agreement, the Escrow Agreement, the Placement Agent Agreement and any related agreements by the Company and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) this Agreement, the Registration Rights Agreement, the Escrow Agreement, the Placement Agent Agreement and any related agreements have been duly executed and delivered by the Company, (iv) this Agreement, the Registration Rights Agreement, the Escrow Agreement, the Placement Agent Agreement and assuming the execution and delivery thereof and acceptance by the Investor and any related agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.

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Section 4.3.Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, par value $0.001 per share and 10,000,000 shares of Preferred Stock of which 25,463,366 shares of Common Stock and no shares of Preferred Stock were issued and outstanding. All of such outstanding shares have been validly issued and are fully paid and nonassessable. Except as disclosed in the SEC Documents, no shares of Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as disclosed in the SEC Documents, as of the date hereof, (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, (ii) there are no outstanding debt securities (iii) there are no outstanding registration statements other than on Form S-8 and (iv) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to the Registration Rights Agreement). There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein. The Company has furnished to the Investor true and correct copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto.

Section 4.4.No Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Certificate of Incorporation, any certificate of designations of any outstanding series of preferred stock of the Company or By-laws or (ii) conflict with or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market on which the Common Stock is quoted) applicable to the Company or any of its subsidiaries or by which any material property or asset of the Company or any of its subsidiaries is bound or affected and which would cause a Material Adverse Effect. Except as disclosed in the SEC Documents, neither the Company nor its subsidiaries is in violation of any term of or in default under its Articles of Incorporation or By-laws or their organizational charter or by-laws, respectively, or any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its subsidiaries. The business of the Company and its subsidiaries is not being conducted in violation of any material law, ordinance, regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the Registration Rights Agreement in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company and its subsidiaries are unaware of any fact or circumstance which might give rise to any of the foregoing.

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Section 4.5.SEC Documents; Financial Statements. Since 2003, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC under of the Exchange Act. The Company has delivered to the Investor or its representatives, or made available through the SEC’s website at http://www.sec.gov, true and complete copies of the SEC Documents. As of their respective dates, the financial statements of the Company disclosed in the SEC Documents (the “Financial Statements”) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and, fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Investor which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 4.6.10b-5. The SEC Documents do not include any untrue statements of material fact, nor do they omit to state any material fact required to be stated therein necessary to make the statements made, in light of the circumstances under which they were made, not misleading.

Section 4.7.No Default. Except as disclosed in the SEC Documents, the Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it is or its property is bound and neither the execution, nor the delivery by the Company, nor the performance by the Company of its obligations under this Agreement or any of the exhibits or attachments hereto will conflict with or result in the breach or violation of any of the terms or provisions of, or constitute a default or result in the creation or imposition of any lien or charge on any assets or properties of the Company under its Certificate of Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other material agreement applicable to the Company or instrument to which the Company is a party or by which it is bound, or any statute, or any decree, judgment, order, rules or regulation of any court or governmental agency or body having jurisdiction over the Company or its properties, in each case which default, lien or charge is likely to cause a Material Adverse Effect on the Company’s business or financial condition.

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Section 4.8.Absence of Events of Default. Except for matters described in the SEC Documents and/or this Agreement, no Event of Default, as defined in the respective agreement to which the Company is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (as so defined), has occurred and is continuing, which would have a Material Adverse Effect on the Company’s business, properties, prospects, financial condition or results of operations.

Section 4.9.Intellectual Property Rights. The Company and its subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. The Company and its subsidiaries do not have any knowledge of any infringement by the Company or its subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, and, to the knowledge of the Company, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened against, the Company or its subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

Section 4.10.Employee Relations. Neither the Company nor any of its subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or any of its subsidiaries, is any such dispute threatened. None of the Company’s or its subsidiaries’ employees is a member of a union and the Company and its subsidiaries believe that their relations with their employees are good.

Section 4.11.Environmental Laws. The Company and its subsidiaries are (i) in compliance with any and all applicable material foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval.

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Section 4.12.Title. Except as set forth in the SEC Documents, the Company has good and marketable title to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest other than such as are not material to the business of the Company. Any real property and facilities held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries.

Section 4.13.Insurance. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its subsidiaries are engaged. Neither the Company nor any such subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its subsidiaries, taken as a whole.

Section 4.14.Regulatory Permits. The Company and its subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit.

Section 4.15.Internal Accounting Controls. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

Section 4.16.No Material Adverse Breaches, etc. Except as set forth in the SEC Documents, neither the Company nor any of its subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries. Except as set forth in the SEC Documents, neither the Company nor any of its subsidiaries is in breach of any contract or agreement which breach, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect on the business, properties, operations, financial condition, results of operations or prospects of the Company or its subsidiaries.

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Section 4.17.Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common Stock or any of the Company’s subsidiaries, wherein an unfavorable decision, ruling or finding would (i) have a Material Adverse Effect on the transactions contemplated hereby (ii) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the documents contemplated herein, or (iii) except as expressly disclosed in the SEC Documents, have a Material Adverse Effect on the business, operations, properties, financial condition or results of operation of the Company and its subsidiaries taken as a whole.

Section 4.18.Subsidiaries. Except as disclosed in the SEC Documents, the Company does not presently own or control, directly or indirectly, any interest in any other corporation, partnership, association or other business entity.

Section 4.19.Tax Status. Except as disclosed in the SEC Documents, the Company and each of its subsidiaries has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company and each of its subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

Section 4.20.Certain Transactions. Except as set forth in the SEC Documents none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

Section 4.21.Fees and Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties and Duncan Capital Group.

Section 4.22.Use of Proceeds. The Company represents that the net proceeds from this offering will be used for general corporate purposes. However, in no event shall the net proceeds from this offering be used by the Company for the payment (or loaned to any such person for the payment) of any judgment, or other liability, incurred by any executive officer, officer, director or employee of the Company, except for any liability owed to such person for services rendered, or if any judgment or other liability is incurred by such person originating from services rendered to the Company, or the Company has indemnified such person from liability.

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Section 4.23.Further Representation and Warranties of the Company. For so long as any securities issuable hereunder held by the Investor remain outstanding, the Company acknowledges, represents, warrants and agrees that it will maintain the listing of its Common Stock on the Principal Market.

Section 4.24.Opinion of Counsel. Investor shall receive an opinion letter from Harold H. Martin, P.A., counsel to the Company, on the date hereof.

Section 4.25.Opinion of Counsel. The Company will obtain for the Investor, at the Company’s expense, any and all opinions of counsel which may be reasonably required in order to sell the securities issuable hereunder without restriction.

Section 4.26.Dilution. The Company is aware and acknowledges that issuance of shares of the Company’s Common Stock could cause dilution to existing shareholders and could significantly increase the outstanding number of shares of Common Stock.

ARTICLE V.

Indemnification

The Investor and the Company represent to the other the following with respect to itself:

Section 5.1.Indemnification.

(a)In consideration of the Investor’s execution and delivery of this Agreement, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Investor, and all of its officers, directors, partners, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Investor Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Investor Indemnitee not arising out of any action or inaction of an Investor Indemnitee, and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto by any of the Investor Indemnitees. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law.

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(b)In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers, directors, shareholders, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Investor in this Agreement, the Registration Rights Agreement, or any instrument or document contemplated hereby or thereby executed by the Investor, (b) any breach of any covenant, agreement or obligation of the Investor(s) contained in this Agreement, the Registration Rights Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor, or (c) any cause of action, suit or claim brought or made against such Company Indemnitee based on misrepresentations or due to a breach by the Investor and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other instrument, document or agreement executed pursuant hereto by any of the Company Indemnitees. To the extent that the foregoing undertaking by the Investor may be unenforceable for any reason, the Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law.

(c)The obligations of the parties to indemnify or make contribution under this Section 5.1 shall survive termination.

ARTICLE VI.

Covenants of the Company

Section 6.1.Registration Rights. The Company shall cause the Registration Rights Agreement to remain in full force and effect and the Company shall comply in all material respects with the terms thereof.

Section 6.2.Listing of Common Stock. The Company shall maintain the Common Stock’s authorization for quotation on the National Association of Securities Dealers Inc.’s Over the Counter Bulletin Board or listing on any other Principal Market.

Section 6.3.Exchange Act Registration. The Company will cause its Common Stock to continue to be registered under Section 12(g) of the Exchange Act, will file in a timely manner all reports and other documents required of it as a reporting company under the Exchange Act and will not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said Exchange Act.

Section 6.4.Transfer Agent Instructions. Not later than two (2) business days after each Advance Notice Date and prior to each Closing and the effectiveness of the Registration Statement and resale of the Common Stock by the Investor, the Company will deliver instructions to its transfer agent to issue shares of Common Stock free of restrictive legends.

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Section 6.5.Corporate Existence. The Company will take all steps necessary to preserve and continue the corporate existence of the Company.

Section 6.6.Notice of Certain Events Affecting Registration; Suspension of Right to Make an Advance. The Company will immediately notify the Investor upon its becoming aware of the occurrence of any of the following events in respect of a registration statement or related prospectus relating to an offering of Registrable Securities: (i) receipt of any request for additional information by the SEC or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the registration statement or related prospectus; (ii) the issuance by the SEC or any other Federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in the Registration Statement or related prospectus of any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s reasonable determination that a post-effective amendment to the Registration Statement would be appropriate; and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to the Investor any Advance Notice during the continuation of any of the foregoing events.

Section 6.7.Expectations Regarding Advance Notices. Within ten (10) days after the commencement of each calendar quarter occurring subsequent to the commencement of the Commitment Period, the Company must notify the Investor, in writing, as to its reasonable expectations as to the dollar amount it intends to raise during such calendar quarter, if any, through the issuance of Advance Notices. Such notification shall constitute only the Company’s good faith estimate and shall in no way obligate the Company to raise such amount, or any amount, or otherwise limit its ability to deliver Advance Notices. The failure by the Company to comply with this provision can be cured by the Company’s notifying the Investor, in writing, at any time as to its reasonable expectations with respect to the current calendar quarter.

Section 6.8.Restriction on Sale of Capital Stock. During the Commitment Period, the Company shall not issue or sell, with out fifteen (15) calendar days prior written notice to the Investor, (i) any Common Stock or Preferred Stock without consideration or for a consideration per share less than the bid price of the Common Stock determined immediately prior to its issuance, (ii) issue or sell any PreferredStock warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration per share less than such Common Stock’s Bid Price determined immediately prior to its issuance, or (iii) file any registration statement on Form S-8 or form bona fide employee stock option plan.

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Section 6.9.Consolidation; Merger. The Company shall not, at any time after the date hereof, effect any merger or consolidation of the Company with or into, or a transfer of all or substantially all the assets of the Company to another entity (a “Consolidation Event”) unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Investor such shares of stock and/or securities as the Investor is entitled to receive pursuant to this Agreement.

Section 6.10.Issuance of the Company’s Common Stock. The sale of the shares of Common Stock shall be made in accordance with the provisions and requirements of Regulation D and any applicable state securities law.

ARTICLE VII.

Conditions for Advance and Conditions to Closing

Section 7.1.Conditions Precedent to the Obligations of the Company. The obligation hereunder of the Company to issue and sell the shares of Common Stock to the Investor incident to each Closing is subject to the satisfaction, or waiver by the Company, at or before each such Closing, of each of the conditions set forth below.

(a)Accuracy of the Investor’s Representations and Warranties. The representations and warranties of the Investor shall be true and correct in all material respects.

(b)Performance by the Investor. The Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing.

Section 7.2.Conditions Precedent to the Right of the Company to Deliver an Advance Notice and the Obligation of the Investor to Purchase Shares of Common Stock. The right of the Company to deliver an Advance Notice and the obligation of the Investor hereunder to acquire and pay for shares of the Company’s Common Stock incident to a Closing is subject to the fulfillment by the Company, on (i) the date of delivery of such Advance Notice and (ii) the applicable Advance Date (each a “Condition Satisfaction Date”), of each of the following conditions:

(a)Registration of the Common Stock with the SEC. The Company shall have filed with the SEC a Registration Statement with respect to the resale of the Registrable Securities in accordance with the terms of the Registration Rights Agreement. As set forth in the Registration Rights Agreement, the Registration Statement shall have previously become effective and shall remain effective on each Condition Satisfaction Date and (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC’s concerns have been addressed and the Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action), and (ii) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist. The Registration Statement must have been declared effective by the SEC prior to the first Advance Notice Date.

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(b)Authority. The Company shall have obtained all permits and qualifications required by any applicable state in accordance with the Registration Rights Agreement for the offer and sale of the shares of Common Stock, or shall have the availability of exemptions therefrom. The sale and issuance of the shares of Common Stock shall be legally permitted by all laws and regulations to which the Company is subject.

(c)Fundamental Changes. There shall not exist any fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post-effective amendment to the Registration Statement.

(d)Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement (including, without limitation, the conditions specified in Section 2.5 hereof) and the Registration Rights Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date.

(e)No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement.

(f)No Suspension of Trading in or Delisting of Common Stock. The trading of the Common Stock is not suspended by the SEC or the Principal Market (if the Common Stock is traded on a Principal Market). The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder approval requirements of the Principal Market (if the Common Stock is traded on a Principal Market). The Company shall not have received any notice threatening the continued listing of the Common Stock on the Principal Market (if the Common Stock is traded on a Principal Market).

(g)Maximum Advance Amount. The amount of an Advance requested by the Company shall not exceed the Maximum Advance Amount. In addition, in no event shall the number of shares issuable to the Investor pursuant to an Advance cause the Investor to own in excess of nine and 9/10 percent (9.9%) of the then outstanding Common Stock of the Company.

(h)No Knowledge. The Company has no knowledge of any event which would be more likely than not to have the effect of causing such Registration Statement to be suspended or otherwise ineffective.

(i)Other. On each Condition Satisfaction Date, the Investor shall have received the certificate executed by an officer of the Company in the form of Exhibit A attached hereto.

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ARTICLE VIII.

Due Diligence Review; Non-Disclosure of Non-Public Information

Section 8.1.Due Diligence Review. Prior to the filing of the Registration Statement the Company shall make available for inspection and review by the Investor, its advisors and representatives, and any underwriter participating in any disposition of the Registrable Securities on behalf of the Investor pursuant to the Registration Statement, any such registration statement or amendment or supplement thereto or any blue sky, NASD or other filing, all financial and other records, all SEC Documents and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees to supply all such information reasonably requested by the Investor or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of the Registration Statement.

Section 8.2.Non-Disclosure of Non-Public Information.

(a)The Company shall not disclose non-public information to the Investor, its advisors, or its representatives, unless prior to disclosure of such information the Company identifies such information as being non-public information and provides the Investor, such advisors and representatives with the opportunity to accept or refuse to accept such non-public information for review. The Company may, as a condition to disclosing any non-public information hereunder, require the Investor’s advisors and representatives to enter into a confidentiality agreement in form reasonably satisfactory to the Company and the Investor.

(b)Nothing herein shall require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 8.2 shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

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ARTICLE IX.

Choice of Law/Jurisdiction

Section 9.1.Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Hudson County, New Jersey, and expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County, New Jersey and the United States District Court of New Jersey, sitting in Newark, New Jersey, for the adjudication of any civil action asserted pursuant to this paragraph.

ARTICLE X.

Assignment; Termination

Section 10.1.Assignment. Neither this Agreement nor any rights of the Company hereunder may be assigned to any other Person.

Section 10.2.Termination. The obligations of the Investor to make Advances under Article II hereof shall terminate twenty-four (24) months after the Effective Date.

ARTICLE XI.

Notices

Section 11.1.Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days after being sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

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If to the Company, to:	China World Trade Corporation
	Room 1217, 12th Floor, The Metropolis Tower
	10 Metropolis Drive
	Hunghom, Hong Kong China
	Attention: Bernard Chan, Chief Financial Officer
	Telephone: (852) 2330-6622
	Facsimile: (852) 2333-8844
With a copy to:	Harold H. Martin, P.A.
	17111 Kenton Drive - Suite 204B
	Conrelius, NC 28031
	Telephone: (704) 894-9760
	Facsimile: (704) 894-9759
If to the Investor(s):	Cornell Capital Partners, LP
	101 Hudson Street -Suite 3700
	Jersey City, NJ 07302
	Attention:Mark Angelo
	Portfolio Manager
	Telephone:(201) 985-8300
	Facsimile:(201) 985-8266
With a Copy to:	David Gonzalez, Esq.
	101 Hudson Street - Suite 3700
	Jersey City, NJ 07302
	Telephone:(201) 985-8300
	Facsimile:(201) 985-8266

Each party shall provide five (5) days’ prior written notice to the other party of any change in address or facsimile number.

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ARTICLE XII.

Miscellaneous

Section 12.1.Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event any signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof, though failure to deliver such copies shall not affect the validity of this Agreement.

Section 12.2.Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

Section 12.3.Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity.

Section 12.4.Fees and Expenses. The Company hereby agrees to pay the following fees:

(a)Structuring Fees. Each of the parties shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby, except that upon the execution of this Agreement the Company will pay a structuring fee of Fifteen Thousand Dollars ($15,000) to Yorkville Advisors Management, LLC. Subsequently on each advance date, the Company will pay to Yorkville Advisors Management, LLC a structuring fee of of Five Hundred Dollars ($500) directly out the proceeds of any Advances hereunder.

(b)Commitment Fees.

(i)On each Advance Date the Company shall pay to the Investor, directly from the gross proceeds held in escrow, an amount equal to four percent (4%) of the amount of each Advance. The Company hereby agrees that if such payment, as is described above, is not made by the Company on the Advance Date, such payment will be made at the direction of the Investor as outlined and mandated by Section 2.3 of this Agreement.

(ii)Upon the execution of this Agreement the Company shall issue to the Investor Two Hundred Twenty Thousand (225,000) shares of the Company’s Common Stock (the “Investor’s Shares”).

(iii)Fully Earned. The Investor’s Shares shall be deemed fully earned as of the date hereof.

(iv)Registration Rights. The Investor’s Shares will have “piggy-back” registration rights.

(v)Restrictions. For a period of ninety (90) calendar days from the Effective Date, as this term is identified in the Registration Rights Agreement dated the date hereof, , the Investor shall not sell the Investor’s Shares if the volume weighted average price of the Company’s Common Stock, as quoted by Bloomberg, LP, is less than One Dollar and Fifty Cents ($1.50). Thereafter the Investor shall be entitled to sell the Investor’s Shares free of any limitation other than as outlined herein. Notwithstanding the foregoing if the Company does not obtain the effectiveness of the Registration Statement the Investor shall be entitled to convert and sell pursuant to Rule 144 and the restrictions contained below. In addition, for a period of twelve (12) months following the declaration of effectiveness of the Registration Statement by the United States Securities and Exchange Commission, the Investor shall not sell more than twenty five percent (25%) of the Investor’s shares every thirty (30) calendar days if the VWAP of the Company’s Common Stock is less than Two Dollars and Fifty Cents ($2.50). If the VWAP of the Company’s Common Stock is higher than Two Dollars and Fifty Cents ($2.50) the Investor shall be entitled to sell the Investor’s Shares free of any limitation.

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Section 12.5.Brokerage. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions or finder’s fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby.

Section 12.6.Confidentiality. If for any reason the transactions contemplated by this Agreement are not consummated, each of the parties hereto shall keep confidential any information obtained from any other party (except information publicly available or in such party’s domain prior to the date hereof, and except as required by court order) and shall promptly return to the other parties all schedules, documents, instruments, work papers or other written information without retaining copies thereof, previously furnished by it as a result of this Agreement or in connection herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Standby Equity Distribution Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above.

COMPANY:

CHINA WORLD TRADE CORPORATION

By: /s/ John Hui

Name:John Hui

Title:CEO & Vice Chairman

INVESTOR:

CORNELL CAPITAL PARTNERS, LP

By:Yorkville Advisors, LLC

Its:General Partner

By: /s/ Mark Angelo

Name:Mark Angelo

Title:Portfolio Manager

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EXHIBIT A

ADVANCE NOTICE/COMPLIANCE CERTIFICATE

CHINA WORLD TRADE CORPORATION

The undersigned, __________ hereby certifies, with respect to the sale of shares of Common Stock of CHINA WORLD TRADE CORPORATION (the “Company”), issuable in connection with this Advance Notice and Compliance Certificate dated ___________________ (the “Notice”), delivered pursuant to the Standby Equity Distribution Agreement (the “Agreement”), as follows:

1.The undersigned is the duly elected ___________ of the Company.

2.There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a post effective amendment to the Registration Statement.

3. The Company has performed in all material respects all covenants and agreements to be performed by the Company on or prior to the Advance Date related to the Notice and has complied in all material respects with all obligations and conditions contained in the Agreement.

4.The undersigned hereby represents, warrants and covenants that it has made all filings (“SEC Filings”) required to be made by it pursuant to applicable securities laws (including, without limitation, all filings required under the Securities Exchange Act of 1934, which include Forms 10-Q, 10-K, 8-K, etc. All SEC Filings and other public disclosures made by the Company, including, without limitation, all press releases, analysts meetings and calls, etc. (collectively, the “Public Disclosures”), have been reviewed and approved for release by the Company’s attorneys and, if containing financial information, the Company’s independent certified public accountants. None of the Company’s Public Disclosures contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

5.The Advance requested is _____________________.

The undersigned has executed this Certificate this ____ day of _________________.

CHINA WORLD TRADE CORPORATION

By:

Name:

Title:

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EX-10.2

EXHIBIT 10.2

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 15, 2004, by and between CHINA WORLD TRADE CORPORATION, a Nevada corporation, with its principal office located at Room 1217, 12^th Floor, The Metropolitan Tower 10 Metropolis Drive Hunghom, Hong Kong China (the “Company”), and CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the “Investor”).

WHEREAS:

A.In connection with the Standby Equity Distribution Agreement by and between the parties hereto of even date herewith (the “Standby Equity Distribution Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Standby Equity Distribution Agreement, to issue and sell to the Investor that number of shares of the Company’s common stock, par value US$0.001 per share (the “Common Stock”), which can be purchased pursuant to the terms of the Standby Equity Distribution Agreement for an aggregate purchase price of up to Thirty Million U.S. Dollars ($30,000,000). Capitalized terms not defined herein shall have the meaning ascribed to them in the Standby Equity Distribution Agreement.

B.To induce the Investor to execute and deliver the Standby Equity Distribution Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

1.DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

a.“Person” means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

a“Register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements (as defined below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous or delayed basis (“Rule 415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by the United States Securities and Exchange Commission (the “SEC”).

a“Registrable Securities” means the Investor’s Shares, as defined in the Standby Equity Distribution Agreement and shares of Common Stock issuable to Investors pursuant to the Standby Equity Distribution Agreement.

b“Registration Statement” means a registration statement under the 1933 Act which covers the Registrable Securities.

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2.REGISTRATION.

aMandatory Registration. The Company shall prepare and file with the SEC a Registration Statement on Form S-1, SB-2 or on such other form as is applicable. The Company shall cause such Registration Statement to be declared effective by the SEC prior to the first sale to the Investor of the Company’s Common Stock pursuant to the Standby Equity Distribution Agreement.

bSufficient Number of Shares Registered. In the event the number of shares available under a Registration Statement filed pursuant to Section 2(a) is insufficient to cover all of the Registrable Securities which the Investor has purchased pursuant to the Standby Equity Distribution Agreement, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefore, if applicable), or both, so as to cover all of such Registrable Securities which the Investor has purchased pursuant to the Standby Equity Distribution Agreement as soon as practicable, but in any event not later than fifteen (15) days after the necessity therefore arises. The Company shall use it best efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at any time the number of Registrable Securities issuable on an Advance Notice Date is greater than the number of shares available for resale under such Registration Statement.

3.RELATED OBLIGATIONS.

aThe Company shall keep the Registration Statement effective pursuant to Rule 415 at all times until the date on which the Investor shall have sold all the Registrable Securities covered by such Registration Statement (the “Registration Period”), which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

bThe Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep such Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall have incorporated such report by reference into the Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for the Company to amend or supplement the Registration Statement.

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cThe Company shall furnish to the Investor, if such information is unavaiable on the official website of the SEC, without charge, (i) at least one copy of such Registration Statement as declared effective by the SEC and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus, (ii) ten (10) copies of the final prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents as such Investor may reasonably request from time to time, and do not in any event violate any rule under the 1933 Act, in order to facilitate the disposition of the Registrable Securities owned by such Investor.

dThe Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (w) make any change to its certificate of incorporation or by-laws, (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify the Investor of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

eAs promptly as practicable after becoming aware of such event or development, the Company shall notify the Investor in writing of the happening of any event as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material, nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver ten (10) copies of such supplement or amendment to each Investor, if such information is unavailable on the official website of the SEC. The Company shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by facsimile on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate.

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fThe Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the United States of America and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

gAt the reasonable request of the Investor, and not violating any rule under the 1933 Act and Reg M, the Company shall furnish to the Investor, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as the Investor may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investor.

hThe Company shall make available for inspection by at the sole costs of the Investor, (i) the Investor and (ii) one firm of accountants or other agents retained by the Investor (collectively, the “Inspectors”) all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree, and the Investor hereby agrees, to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement of which the Inspector and the Investor has knowledge. The Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential.

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iThe Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

jThe Company shall use its best efforts either to cause all the Registrable Securities covered by a Registration Statement (i) to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or to secure the inclusion for quotation on the National Association of Securities Dealers, Inc. OTC Bulletin Board for such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(j).

kThe Company shall cooperate with the Investor, upon serving an Advance Notice to the Investor, to the extent applicable, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may reasonably request and registered in such names as the Investor may request.

lThe Company shall use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

mThe Company shall make generally available to its security holders as soon as practical, but not later than one hundred five (105) days after the close of the period covered thereby, an earnings statement if such information is unavailable on the official website of the SEC (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of the Registration Statement.

nThe Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

oWithin two (2) business days after a Registration Statement which covers Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.

pThe Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to a Registration Statement.

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4.OBLIGATIONS OF THE INVESTOR.

The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(e) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary and not violating any rule under the 1933 Act, the Company shall cause its transfer agent to deliver unlegended certificates for shares of Common Stock to a transferee of the Investor in accordance with the terms of the Standby Equity Distribution Agreement in connection with any sale of Registrable Securities with respect to which the Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e) and for which the Investor has not yet settled.

5EXPENSES OF REGISTRATION.

All expenses incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers, legal and accounting fees shall be paid by the Company.

6.INDEMNIFICATION.

With respect to Registrable Securities which are included in a Registration Statement under this Agreement:

aTo the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, the directors, officers, partners, employees, agents, representatives of, and each Person, if any, who controls the Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading; or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation there under relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). The Company shall reimburse the Investor and each such controlling person promptly as such expenses are incurred and are due and payable, for any legal fees or disbursements or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(e); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person.

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bIn connection with a Registration Statement, the Investor agrees to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act (each an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or is based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by the Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(d), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the prospectus was corrected and such new prospectus was delivered to the Investor prior to the Investor’s use of the prospectus to which the Claim relates.

cPromptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

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dThe indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

eThe indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7.CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

8.REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the 1933 Act or any similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration (“Rule 144”) the Company agrees to:

a.make and keep public information available, as those terms are understood and defined in Rule 144;

b.file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company’s obligations under Section 6.3 of the Standby Equity Distribution Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

c.furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company if such information is unavailable on the official website of the SEC, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

9.AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only by a written agreement between the Company and the Investor. Any amendment or waiver effected in accordance with this Section 9 shall be binding upon the Investor and the Company. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

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10.MISCELLANEOUS.

a.A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

b.Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company, to:	China World Trade Corporation
	Room 1217, 12th Floor, The Metropolis Tower
	10 Metropolis Drive
	Hunghom, Hong Kong China
	Attention: Bernard Chan, Chief Financial Officer
	Telephone: (852) 2330-6622
	Facsimile: (852) 2333-8844
With a copy to:	Harold H. Martin, P.A.
	17111 Kenton Drive - Suite 204B
	Conrelius, NC 28031
	Telephone: (704) 894-9760
	Facsimile: (704) 894-9759
If to the Investor, to:	Cornell Capital Partners, LP
	101 Hudson Street - Suite 3700
	Jersey City, New Jersey 07302
	Attention:Mark Angelo
	Portfolio Manager
	Telephone:(201) 985-8300
	Facsimile:(201) 985-8266
With a copy to:	David Gonzalez, Esq.
	101 Hudson Street - Suite 3700
	Jersey City, NJ 07302
	Telephone:(201) 985-8300
	Facsimile:(201) 985-8266

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Any party may change its address by providing written notice to the other parties hereto at least five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

c.Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d.The corporate laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and the Investor. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the Superior Courts of the State of New Jersey, sitting in Hudson County, New Jersey and the Federal District Court for the District of New Jersey sitting in Newark, New Jersey, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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e.This Agreement, the Standby Equity Distribution Agreement, the Escrow Agreement, and the Placement Agent Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, the Standby Equity Distribution Agreement, the Escrow Agreement, and the Placement Agent Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

fThis Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

gThe headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

hThis Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

iEach party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

jThe language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

kThis Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

COMPANY:

CHINA WORLD TRADE CORPORATION

By: /s/ John Hui

Name:John Hui

Title:CEO & Vice Chairman

INVESTOR:

CORNELL CAPITAL PARTNERS, LP

By:Yorkville Advisors, LLC

Its:General Partner

By: /s/ Mark Angelo

Name:Mark Angelo

Title:Portfolio Manager

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

Attention:

Re:CHINA WORLD TRADE CORPORATION

Ladies and Gentlemen:

We are counsel to China World Trade Corporation, a Nevada corporation (the “Company”), and have represented the Company in connection with that certain Standby Equity Distribution Agreement (the “Standby Equity Distribution Agreement”) entered into by and between the Company and Cornell Capital Partners, LP (the “Investor”) pursuant to which the Company issued to the Investor shares of its Common Stock, par value US$0.001 per share (the “Common Stock”). Pursuant to the Standby Equity Distribution Agreement, the Company also has entered into a Registration Rights Agreement with the Investor (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on ____________ ____, the Company filed a Registration Statement on Form ________ (File No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names the Investor as a selling stockholder thereunder.

In connection with the foregoing, we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.

Very truly yours,

By:

cc:Cornell Capital Partners, LP

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EX-10.3

EXHIBIT 10.3

CHINA WORLD TRADE CORPORATION

PLACEMENT AGENT AGREEMENT

Dated as of: November 15, 2004

Duncan Capital Group

Ladies and Gentlemen:

The undersigned, China World Trade Corporation, a Nevada corporation (the “Company”), hereby agrees with Duncan Capital Group (the “Placement Agent”) and Cornell Capital Partners, LP, a Delaware Limited Partnership (the “Investor”), as follows:

1  Offering. The Company hereby engages the Placement Agent to act as its exclusive placement agent in connection with the Standby Equity Distribution Agreement dated the date hereof (the “Standby Equity Distribution Agreement”), pursuant to which the Company shall issue and sell to the Investor, from time to time, and the Investor shall purchase from the Company (the “Offering”) up to Thirty Million U.S. Dollars ($30,000,000) of the Company’s common stock (the “Commitment Amount”), par value US$0.001 per share (the “Common Stock”), at price per share equal to the Purchase Price, as that term is defined in the Standby Equity Distribution Agreement. The Placement Agentservices shall consist of reviewing the terms of the Standby Equity Distribution Agreement and advising the Company with respect to those terms.

All capitalized terms used herein and not otherwise defined herein shall have the same meaning ascribed to them as in the Standby Equity Distribution Agreement. The Investor will be granted certain registration rights with respect to the Common Stock as more fully set forth in the Registration Rights Agreement between the Company and the Investor dated the date hereof (the “Registration Rights Agreement”). The documents to be executed and delivered in connection with the Offering, including, but not limited, to the Company’s latest Quarterly Report on Form 10-QSB as filed with the United States Securities and Exchange Commission, this Agreement, the Standby Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow Agreement dated the date hereof (the “Escrow Agreement”), are referred to sometimes hereinafter collectively as the “Offering Materials.” The Company’s Common Stock purchased by the Investor hereunder or to be issued in connection with the conversion of any debentures are sometimes referred to hereinafter as the “Securities.” The Placement Agent shall not be obligated to sell any Securities.

 2 Compensation.

Upon the execution of this Agreement, the Company shall issue to the Placement Agent or its designee One Hundred Fifty Thousand (150,000) shares of the Company’s Common Stock (the “Placement Agent’s Shares”). The Placement Agent shall be entitled to “piggy-back” registration rights, which shall be triggered upon registration of any shares of Common Stock by the Investor with respect to the Placement Agent’s Shares pursuant to the Registration Rights Agreement dated the date hereof. For a period of ninety (90) calendar days following the Effective Date, as this term is defined in the Registration Rights Agreement dated the date hereof, the Placement Agent shall not sell the Placement Agent Shares if the volume weighted average price of the Company’s Common Stock as quoted Bloomberg, LP (the “VWAP”) is less than One Dollar and Fifty Cents ($1.50). Thereafter the Placement Agent shall be entitled to sell the Placement Agent Shares free of any limitation other than as outlined herein. Notwithstanding the foregoing if the Company does not obtain the effectiveness of the Registration Statement the Placement Agent shall be entitled to convert and sell pursuant to Rule 144 and the restrictions contained below. In addition, for a period of twelve (12) months following the declaration of effectiveness of the Registration Statement by the United States Securities and Exchange Commission, the Placement Agent shall not sell more than twenty five percent (25%) of the Placement Agent Shares every thirty (30) calendar days if the VWAP of the Company’s Common Stock is less than Two Dollars and Fifty Cents ($2.50). If the VWAP of the Company’s Common Stock is higher than Two Dollars and Fifty Cents ($2.50) the Placement Agent shall be entitled to sell the Placement Agent Shares free of any limitation.

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On each Advance Date pursuant to the Standby Equity Distribution Agreement the Company shall pay to the Placement Agent, directly from the gross proceeds held in escrow, an amount equal to four percent (4%) of the amount of each Advance.

 3   Representations, Warranties and Covenants of the Placement Agent.

A.  The Placement Agent represents, warrants and covenants as follows:

(i)The Placement Agent has the necessary power to enter into this Agreement and to consummate the transactions contemplated hereby.

(ii)The execution and delivery by the Placement Agent of this Agreement and the consummation of the transactions contemplated herein will not result in any violation of, or be in conflict with, or constitute a default under, any agreement or instrument to which the Placement Agent is a party or by which the Placement Agent or its properties are bound, or any judgment, decree, order or, to the Placement Agent’s knowledge, any statute, rule or regulation applicable to the Placement Agent. This Agreement when executed and delivered by the Placement Agent, will constitute the legal, valid and binding obligations of the Placement Agent, enforceable in accordance with their respective terms, except to the extent that (a) the enforceability hereof or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, (b) the enforceability hereof or thereof is subject to general principles of equity, or (c) the indemnification provisions hereof or thereof may be held to be in violation of public policy.

(iii)Upon receipt and execution of this Agreement, the Placement Agent will promptly forward copies of this Agreement to the Company or its counsel and the Investor or its counsel.

(iv)The Placement Agent will not intentionally take any action that it reasonably believes would cause the Offering to violate the provisions of the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934 (the “1934 Act”), the respective rules and regulations promulgated thereunder (the “Rules and Regulations”) or applicable “Blue Sky” laws of any state or jurisdiction.

(v)The Placement Agent is a member of the National Association of Securities Dealers, Inc., and is a broker-dealer registered as such under the 1934 Act and under the securities laws of the states in which the Securities will be offered or sold by the Placement Agent unless an exemption for such state registration is available to the Placement Agent. The Placement Agent is in material compliance with the rules and regulations applicable to the Placement Agent generally and applicable to the Placement Agent’s participation in the Offering.

 4  Representations and Warranties of the Company.

A  The Company represents and warrants as follows:

(i)The execution, delivery and performance of each of this Agreement, the Standby Equity Distribution Agreement, the Escrow Agreement, and the Registration Rights Agreement has been or will be duly and validly authorized by the Company and is, or with respect to this Agreement, the Standby Equity Distribution Agreement, the Escrow Agreement, and the Registration Rights Agreement, will be a valid and binding agreement of the Company, enforceable in accordance with its respective terms, except to the extent that (a) the enforceability hereof or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, (b) the enforceability hereof or thereof is subject to general principles of equity or (c) the indemnification provisions hereof or thereof may be held to be in violation of public policy. The Securities to be issued pursuant to the transactions contemplated by this Agreement and the Standby Equity Distribution Agreement have been duly authorized and, when issued and paid for in accordance with this Agreement, the Standby Equity Distribution Agreement and the certificates/instruments representing such Securities, will be valid and binding obligations of the Company, enforceable in accordance with their respective terms, except to the extent that (1) the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, and (2) the enforceability thereof is subject to general principles of equity. All corporate action required to be taken for the authorization, issuance and sale of the Securities has been duly and validly taken by the Company.

(ii)The Company has a duly authorized, issued and outstanding capitalization as set forth herein and in the Standby Equity Distribution Agreement. The Company is not a party to or bound by any instrument, agreement or other arrangement providing for it to issue any capital stock, rights, warrants, options or other securities, except for this Agreement, the agreements described herein and as described in the Standby Equity Distribution Agreement, dated the date hereof and the agreements described therein. All issued and outstanding securities of the Company, have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission or preemptive rights with respect thereto and are not subject to personal liability solely by reason of being security holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company.

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(iii)The Common Stock to be issued in accordance with this Agreement and the Standby Equity Distribution Agreement has been duly authorized and, when issued and paid for in accordance with this Agreement, the Standby Equity Distribution Agreement and the certificates/instruments representing such Common Stock will be validly issued, fully-paid and non-assessable; the holders thereof will not be subject to personal liability solely by reason of being such holders; such Securities are not and will not be subject to the preemptive rights of any holder of any security of the Company.

(iv)The Company has good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property necessary to conduct its business (including, without limitation, any real or personal property stated in the Offering Materials to be owned or leased by the Company), free and clear of all liens, encumbrances, claims, security interests and defects of any material nature whatsoever, other than those set forth in the Offering Materials and liens for taxes not yet due and payable.

(v)There is no litigation or governmental proceeding pending or, to the best of the Company’s knowledge, threatened against, or involving the properties or business of the Company, except as set forth in the Offering Materials.

(vi)The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Nevada. Except as set forth in the Offering Materials, the Company does not own or control, directly or indirectly, an interest in any other corporation, partnership, trust, joint venture or other business entity. The Company is duly qualified or licensed and in good standing as a foreign corporation in each jurisdiction in which the character of its operations requires such qualification or licensing and where failure to so qualify would have a material adverse effect on the Company. The Company has all requisite corporate power and authority, and all material and necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies (domestic and foreign) to conduct its businesses (and proposed business) as described in the Offering Materials. Any disclosures in the Offering Materials concerning the effects of foreign, federal, state and local regulation on the Company’s businesses as currently conducted and as contemplated are correct in all material respects and do not omit to state a material fact. The Company has all corporate power and authority to enter into this Agreement, the Standby Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow Agreement, to carry out the provisions and conditions hereof and thereof, and all consents, authorizations, approvals and orders required in connection herewith and therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency or other body is required by the Company for the issuance of the Securities or execution and delivery of the Offering Materials except for applicable federal and state securities laws. The Company, since its inception, has not incurred any liability arising under or as a result of the application of any of the provisions of the 1933 Act, the 1934 Act or the Rules and Regulations.

(vii)There has been no material adverse change in the condition or prospects of the Company, financial or otherwise, from the latest dates as of which such condition or prospects, respectively, are set forth in the Offering Materials, and the outstanding debt, the property and the business of the Company conform in all material respects to the descriptions thereof contained in the Offering Materials.

(viii)Except as set forth in the Offering Materials, the Company is not in breach of, or in default under, any term or provision of any material indenture, mortgage, deed of trust, lease, note, loan or Standby Equity Distribution Agreement or any other material agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which it is a party or by which it or any of its properties may be bound or affected. The Company is not in violation of any provision of its charter or by-laws or in violation of any franchise, license, permit, judgment, decree or order, or in violation of any material statute, rule or regulation. Neither the execution and delivery of the Offering Materials nor the issuance and sale or delivery of the Securities, nor the consummation of any of the transactions contemplated in the Offering Materials nor the compliance by the Company with the terms and provisions hereof or thereof, has conflicted with or will conflict with, or has resulted in or will result in a breach of, any of the terms and provisions of, or has constituted or will constitute a default under, or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or pursuant to the terms of any indenture, mortgage, deed of trust, note, loan or any other agreement or instrument evidencing an obligation for borrowed money, or any other agreement or instrument to which the Company may be bound or to which any of the property or assets of the Company is subject except (a) where such default, lien, charge or encumbrance would not have a material adverse effect on the Company and (b) as described in the Offering Materials; nor will such action result in any violation of the provisions of the charter or the by-laws of the Company or, assuming the due performance by the Placement Agent of its obligations hereunder, any material statute or any material order, rule or regulation applicable to the Company of any court or of any foreign, federal, state or other regulatory authority or other government body having jurisdiction over the Company.

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(ix)Subsequent to the dates as of which information is given in the Offering Materials, and except as may otherwise be indicated or contemplated herein or therein and the securities offered pursuant to the Securities Purchase Agreement dated the date hereof, the Company has not (a) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, or (b) entered into any transaction other than in the ordinary course of business, or (c) declared or paid any dividend or made any other distribution on or in respect of its capital stock. Except as described in the Offering Materials, the Company has no outstanding obligations to any officer or director of the Company.

(x)The Company owns or possesses, free and clear of all liens or encumbrances and rights thereto or therein by third parties, the requisite licenses or other rights to use all trademarks, service marks, copyrights, service names, trade names, patents, patent applications and licenses necessary to conduct its business (including, without limitation, any such licenses or rights described in the Offering Materials as being owned or possessed by the Company) and, except as set forth in the Offering Materials, there is no claim or action by any person pertaining to, or proceeding, pending or threatened, which challenges the exclusive rights of the Company with respect to any trademarks, service marks, copyrights, service names, trade names, patents, patent applications and licenses used in the conduct of the Company’s businesses (including, without limitation, any such licenses or rights described in the Offering Materials as being owned or possessed by the Company) except any claim or action that would not have a material adverse effect on the Company; the Company’s current products, services or processes do not infringe or will not infringe on the patents currently held by any third party.

(xi)Except as described in the Offering Materials and the fees to World Trade Center Association, the Company is not under any obligation to pay royalties or fees of any kind whatsoever to any third party with respect to any trademarks, service marks, copyrights, service names, trade names, patents, patent applications, licenses or technology it has developed, uses, employs or intends to use or employ, other than to their respective licensors.

(xii)Subject to the performance by the Placement Agent of its obligations hereunder the offer and sale of the Securities complies, and will continue to comply, in all material respects with the requirements of Rule 506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and any other applicable federal and state laws, rules, regulations and executive orders. Neither the Offering Materials nor any amendment or supplement thereto nor any documents prepared by the Company in connection with the Offering will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All statements of material facts in the Offering Materials are true and correct as of the date of the Offering Materials.

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(xiii)All material taxes which are due and payable from the Company have been paid in full or adequate provision has been made for such taxes on the books of the Company, except for those taxes disputed in good faith by the Company.

(xiv)None of the Company nor any of its officers, directors, employees or agents, nor any other person acting on behalf of the Company, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who is or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) which (A) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (B) if not given in the past, might have had a materially adverse effect on the assets, business or operations of the Company as reflected in any of the financial statements contained in the Offering Materials, or (C) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company in the future.

5  Representations, Warranties and Covenants of the Investor.

  A The Investor represents, warrants and covenants as follows:

(i)The Investor has the necessary power to enter into this Agreement and to consummate the transactions contemplated hereby.

(ii)The execution and delivery by the Investor of this Agreement and the consummation of the transactions contemplated herein will not result in any violation of, or be in conflict with, or constitute a default under, any agreement or instrument to which the Investor is a party or by which the Investor or its properties are bound, or any judgment, decree, order or, to the Investor’s knowledge, any statute, rule or regulation applicable to the Investor. This Agreement when executed and delivered by the Investor, will constitute the legal, valid and binding obligations of the Investor, enforceable in accordance with their respective terms, except to the extent that (a) the enforceability hereof or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect and affecting the rights of creditors generally, (b) the enforceability hereof or thereof is subject to general principles of equity, or (c) the indemnification provisions hereof or thereof may be held to be in violation of public policy.

(iii)The Investor will promptly forward copies of any and all due diligence questionnaires compiled by the Investor to the Placement Agent.

(iv)The Investor is an Accredited Investor (as defined under the 1933 Act).

(v)The Investor is acquiring the Securities for the Inventor’s own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other person has a direct or indirect beneficial interest in such Securities. Further, the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.

(vi)The Investor acknowledges the Investor’s understanding that the offering and sale of the Securities is intended to be exempt from registration under the 1933 Act by virtue of Section 3(b) of the 1933 Act and the provisions of Regulation D promulgated thereunder (“Regulation D”). In furtherance thereof, the Investor represents and warrants as follows:

(a)   The Investor has the financial ability to bear the economic risk of the Investor’s investment, has adequate means for providing for the Inventor’s current needs and personal contingencies and has no need for liquidity with respect to the Investor’s investment in the Company; and

(b)   The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment. The Inventor also represents it has not been organized for the purpose of acquiring the Securities.

(vii)The Investor has been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, the Company or its representatives concerning the terms and conditions of the Offering, and other matters pertaining to this investment, and has been given the opportunity for a reasonable time prior to the date hereof to obtain such additional information in connection with the Company in order for the Investor to evaluate the merits and risks of purchase of the Securities, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense. The Investor is not relying on the Placement Agent or any of its affiliates with respect to the accuracy or completeness of the Offering Materials or for any economic considerations involved in this investment.

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   6.     Certain Covenants and Agreements of the Company.

The Company covenants and agrees at its expense and without any expense to the Placement Agent as follows:

A.             To advise the Placement Agent and the Investor of any material adverse change in the Company’s financial condition, prospects or business or of any development materially affecting the Company or rendering untrue or misleading any material statement in the Offering Materials occurring at any time as soon as the Company is either informed or becomes aware thereof.

B.              To use its commercially reasonable efforts to cause the Common Stock issuable in connection with the Standby Equity Distribution Agreement to be qualified or registered for sale on terms consistent with those stated in the Registration Rights Agreement and under the securities laws of such jurisdictions as the Placement Agent and the Investor shall reasonably request. Qualification, registration and exemption charges and fees shall be at the sole cost and expense of the Company.

C.             Upon written request, to provide and continue to provide the Placement Agent and the Investor copies of all quarterly financial statements and audited annual financial statements prepared by or on behalf of the Company, other reports prepared by or on behalf of the Company for public disclosure and all documents delivered to the Company’s stockholders.

D.              To deliver, during the registration period of the Standby Equity Distribution Agreement, to the Investor upon the Investor’s request, within fifty (50) days, a statement of its income for each such quarterly period, and its balance sheet and a statement of changes in stockholders’ equity as of the end of such quarterly period, all in reasonable detail, certified by its principal financial or accounting officer; (ii) within one hundred five (105) days after the close of each fiscal year, its balance sheet as of the close of such fiscal year, together with a statement of income, a statement of changes in stockholders’ equity and a statement of cash flow for such fiscal year, such balance sheet, statement of income, statement of changes in stockholders’ equity and statement of cash flow to be in reasonable detail and accompanied by a copy of the certificate or report thereon of independent auditors if audited financial statements are prepared; and (iii) a copy of all documents, reports and information furnished to its stockholders at the time that such documents, reports and information are furnished to its stockholders, if such information is unavaiable on the official website of the SEC.

E.                To comply with the terms of the Offering Materials.

F.                To ensure that any transactions between or among the Company, or any of its officers, directors and affiliates be on terms and conditions that are no less favorable to the Company, than the terms and conditions that would be available in an “arm’s length” transaction with an independent third party.

7.     Indemnification and Limitation of Liability.

The Company hereby agrees that it will indemnify and hold the Placement Agent and each officer, director, shareholder, employee or representative of the Placement Agent and each person controlling, controlled by or under common control with the Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the SEC’s Rules and Regulations promulgated thereunder (the “Rules and Regulations”), harmless from and against any and all loss, claim, damage, liability, cost or expense whatsoever (including, but not limited to, any and all reasonable legal fees and other expenses and disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever or in appearing or preparing for appearance as a witness in any action, suit or proceeding, including any inquiry, investigation or pretrial proceeding such as a deposition) to which the Placement Agent or such indemnified person of the Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any other federal or state law or regulation, common law or otherwise, arising out of or based upon (i) any untrue statement or alleged untrue statement of a material fact contained in (a) Section 4 of this Agreement, (b) the Offering Materials (except those written statements relating to the Placement Agent given by the Placement Agent for inclusion therein), (c) any application or other document or written communication executed by the Company or based upon written information furnished by the Company filed in any jurisdiction in order to qualify the Common Stock under the securities laws thereof, or any state securities commission or agency; (ii) the omission or alleged omission from documents described in clauses (a), (b) or (c) above of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (iii) the breach of any representation, warranty, covenant or agreement made by the Company in this Agreement. The Company further agrees that upon demand by an indemnified person, at any time or from time to time, it will promptly reimburse such indemnified person for any loss, claim, damage, liability, cost or expense actually and reasonably paid by the indemnified person as to which the Company has indemnified such person pursuant hereto. Notwithstanding the foregoing provisions of this Paragraph 7(A), any such payment or reimbursement by the Company of fees, expenses or disbursements incurred by an indemnified person in any proceeding in which a final judgment by a court of competent jurisdiction (after all appeals or the expiration of time to appeal) is entered against the Placement Agent or such indemnified person based upon specific finding of fact that the Placement Agent or such indemnified person’s gross negligence or willful misfeasance will be promptly repaid to the Company.

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 B.            The Placement Agent hereby agrees that it will indemnify and hold the Company and each officer, director, shareholder, employee or representative of the Company, and each person controlling, controlled by or under common control with the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless from and against any and all loss, claim, damage, liability, cost or expense whatsoever (including, but not limited to, any and all reasonable legal fees and other expenses and disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever or in appearing or preparing for appearance as a witness in any action, suit or proceeding, including any inquiry, investigation or pretrial proceeding such as a deposition) to which the Company or such indemnified person of the Company may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any other federal or state law or regulation, common law or otherwise, arising out of or based upon (i) the material breach of any representation, warranty, covenant or agreement made by the Placement Agent in this Agreement, or (ii) any false or misleading information provided to the Company in writing by one of the Placement Agent’s indemnified persons specifically for inclusion in the Offering Materials.

 C.            The Investor hereby agrees that it will indemnify and hold the Placement Agent and each officer, director, shareholder, employee or representative of the Placement Agent, and each person controlling, controlled by or under common control with the Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless from and against any and all loss, claim, damage, liability, cost or expense whatsoever (including, but not limited to, any and all reasonable legal fees and other expenses and disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever or in appearing or preparing for appearance as a witness in any action, suit or proceeding, including any inquiry, investigation or pretrial proceeding such as a deposition) to which the Placement Agent or such indemnified person of the Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any other federal or state law or regulation, common law or otherwise, arising out of or based upon (i) the conduct of the Investor or its officers, employees or representatives in its acting as the Investor for the Offering, (ii) the material breach of any representation, warranty, covenant or agreement made by the Investor in the Offering Materials, or (iii) any false or misleading information provided to the Placement Agent by one of the Investor’s indemnified persons.

 D.            The Placement Agent hereby agrees that it will indemnify and hold the Investor and each officer, director, shareholder, employee or representative of the Investor, and each person controlling, controlled by or under common control with the Investor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless from and against any and all loss, claim, damage, liability, cost or expense whatsoever (including, but not limited to, any and all reasonable legal fees and other expenses and disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever or in appearing or preparing for appearance as a witness in any action, suit or proceeding, including any inquiry, investigation or pretrial proceeding such as a deposition) to which the Investor or such indemnified person of the Investor may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any other federal or state law or regulation, common law or otherwise, arising out of or based upon the material breach of any representation, warranty, covenant or agreement made by the Placement Agent in this Agreement.

 E.            Promptly after receipt by an indemnified party of notice of commencement of any action covered by Section 7(A), (B), (C) or (D), the party to be indemnified shall, within five (5) business days, notify the indemnifying party of the commencement thereof; the omission by one (1) indemnified party to so notify the indemnifying party shall not relieve the indemnifying party of its obligation to indemnify any other indemnified party that has given such notice and shall not relieve the indemnifying party of any liability outside of this indemnification if not materially prejudiced thereby. In the event that any action is brought against the indemnified party, the indemnifying party will be entitled to participate therein and, to the extent it may desire, to assume and control the defense thereof with counsel chosen by it which is reasonably acceptable to the indemnified party. After notice from the indemnifying party to such indemnified party of its election to so assume the defense thereof, the indemnifying party will not be liable to such indemnified party under such Section 7(A), (B), (C), or (D) for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, but the indemnified party may, at its own expense, participate in such defense by counsel chosen by it, without, however, impairing the indemnifying party’s control of the defense. Subject to the proviso of this sentence and notwithstanding any other statement to the contrary contained herein, the indemnified party or parties shall have the right to choose its or their own counsel and control the defense of any action, all at the expense of the indemnifying party if (i) the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action at the expense of the indemnifying party, or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to such indemnified party to have charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of one additional counsel shall be borne by the indemnifying party; provided, however, that the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstance, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No settlement of any action or proceeding against an indemnified party shall be made without the consent of the indemnifying party.

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 F.           In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 7(A) or 7(B) is due in accordance with its terms but is for any reason held by a court to be unavailable on grounds of policy or otherwise, the Company and the Placement Agent shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with the investigation or defense of same) which the other may incur in such proportion so that the Placement Agent shall be responsible for such percent of the aggregate of such losses, claims, damages and liabilities as shall equal the percentage of the gross proceeds paid to the Placement Agent and the Company shall be responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7(F), any person controlling, controlled by or under common control with the Placement Agent, or any partner, director, officer, employee, representative or any agent of any thereof, shall have the same rights to contribution as the Placement Agent and each person controlling, controlled by or under common control with the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each officer of the Company and each director of the Company shall have the same rights to contribution as the Company. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against the other party under this Section 7(D), notify such party from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any obligation they may have hereunder or otherwise if the party from whom contribution may be sought is not materially prejudiced thereby.

 G.          The indemnity and contribution agreements contained in this Section 7 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified person or any termination of this Agreement.

 H.          The Company hereby waives, to the fullest extent permitted by law, any right to or claim of any punitive, exemplary, incidental, indirect, special, consequential or other damages (including, without limitation, loss of profits) against the Placement Agent and each officer, director, shareholder, employee or representative of the placement agent and each person controlling, controlled by or under common control with the Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations arising out of any cause whatsoever (whether such cause be based in contract, negligence, strict liability, other tort or otherwise). Notwithstanding anything to the contrary contained herein, the aggregate liability of the Placement Agent and each officer, director, shareholder, employee or representative of the Placement Agent and each person controlling, controlled by or under common control with the Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations shall not exceed the compensation received by the Placement Agent pursuant to Section 2 hereof. This limitation of liability shall apply regardless of the cause of action, whether contract, tort (including, without limitation, negligence) or breach of statute or any other legal or equitable obligation.

    8. Payment of Expenses.

The Company hereby agrees to bear all of the expenses in connection with the Offering, including, but not limited to the following: filing fees, printing and duplicating costs, advertisements, postage and mailing expenses with respect to the transmission of Offering Materials, registrar and transfer agent fees, escrow agent fees and expenses, fees of the Company’s counsel and accountants, issue and transfer taxes, if any.

9. Conditions of Closing.

The Closing shall be held at the offices of the Investor or its counsel. The obligations of the Placement Agent hereunder shall be subject to the continuing accuracy of the representations and warranties of the Company and the Investor herein as of the date hereof and as of the Date of Closing (the “Closing Date”) with respect to the Company or the Investor, as the case may be, as if it had been made on and as of such Closing Date; the accuracy on and as of the Closing Date of the statements of the officers of the Company made pursuant to the provisions hereof; and the performance by the Company and the Investor on and as of the Closing Date of its covenants and obligations hereunder and to the following further conditions:

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 A. Upon the effectiveness of a registration statement covering the Standby Equity Distribution Agreement, the Investor and the Placement Agent shall receive the opinion of Counsel to the Company, dated as of the date thereof, which opinion shall be in form and substance reasonably satisfactory to the Investor, their counsel and the Placement Agent.

 B. At or prior to the Closing, the Investor and the Placement Agent shall have been furnished such documents, certificates and opinions as it may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Agreement and the Offering Materials, or in order to evidence the accuracy, completeness or satisfaction of any of the representations, warranties or conditions herein contained.

 C. At and prior to the Closing, (i) there shall have been no material adverse change nor development involving a prospective change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Offering Materials; (ii) there shall have been no transaction, not in the ordinary course of business except the transactions pursuant to the Securities Purchase Agreement entered into by the Company on the date hereof which has not been disclosed in the Offering Materials or to the Placement Agent in writing; (iii) except as set forth in the Offering Materials, the Company shall not be in default under any provision of any instrument relating to any outstanding indebtedness for which a waiver or extension has not been otherwise received; (iv) except as set forth in the Offering Materials, the Company shall not have issued any securities (other than those to be issued as provided in the Offering Materials) or declared or paid any dividend or made any distribution of its capital stock of any class and there shall not have been any change in the indebtedness (long or short term) or liabilities or obligations of the Company (contingent or otherwise) and trade payable debt; (v) no material amount of the assets of the Company shall have been pledged or mortgaged, except as indicated in the Offering Materials; and (v) no action, suit or proceeding, at law or in equity, against the Company or affecting any of its properties or businesses shall be pending or threatened before or by any court or federal or state commission, board or other administrative agency, domestic or foreign, wherein an unfavorable decision, ruling or finding could materially adversely affect the businesses, prospects or financial condition or income of the Company, except as set forth in the Offering Materials.

 D. If requested at Closing the Investor and the Placement Agent shall receive a certificate of the Company signed by an executive officer and chief financial officer, dated as of the applicable Closing, to the effect that the conditions set forth in subparagraph (C) above have been satisfied and that, as of the applicable closing, the representations and warranties of the Company set forth herein are true and correct.

 E. The Placement Agent shall have no obligation to insure that (x) any check, note, draft or other means of payment for the Common Stock will be honored, paid or enforceable against the Investor in accordance with its terms, or (y) subject to the performance of the Placement Agent’s obligations and the accuracy of the Placement Agent’s representations and warranties hereunder, (1) the Offering is exempt from the registration requirements of the 1933 Act or any applicable state “Blue Sky” law or (2) the Investor is an Accredited Investor.

   10. Termination.

This Agreement shall be co-terminus with, and terminate upon the same terms and conditions as those set forth in, the Standby Equity Distribution Agreement. The rights of the Investor and the obligations of the Company under the Registration Rights Agreement, and the rights of the Placement Agent and the obligations of the Company shall survive the termination of this Agreement unabridged.

11.   Miscellaneous.

  A. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all which shall be deemed to be one and the same instrument.

B. Any notice required or permitted to be given hereunder shall be given in writing and shall be deemed effective when deposited in the United States mail, postage prepaid, or when received if personally delivered or faxed (upon confirmation of receipt received by the sending party), addressed as follows to such other address of which written notice is given to the others):

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If to Placement Agent, to:	Duncan Capital Group
	830 3rd Avenue
	New York, NY
	Attention:
	Telephone:(212) 581-5150
	Facsimile:
If to the Company, to:	China World Trade Corporation
	Room 1217, 12th Floor, The Metropolis Tower
	10 Metropolis Drive
	Hunghom, Hong Kong China
	Attention: Bernard Chan, Chief Financial Officer
	Telephone: (852) 2330-6622
	Facsimile: (852) 2333-8844
With a copy to:	Harold H. Martin, P.A.
	17111 Kenton Drive - Suite 204B
	Conrelius, NC 28031
	Telephone: (704) 894-9760
	Facsimile: (704) 894-9759
If to the Investor:	Cornell Capital Partners, LP
	101 Hudson Street - Suite 3700
	Jersey City, New Jersey 07302
	Attention:Mark A. Angelo
	Portfolio Manager
	Telephone:(201) 985-8300
	Facsimile:(201) 985-8266
With copies to:	David Gonzalez, Esq.
	101 Hudson Street - Suite 3700
	Jersey City, NJ 07302
	Facsimile:(201) 985-8266

 C. This Agreement shall be governed by and construed in all respects under the laws of the State of Nevada , without reference to its conflict of laws rules or principles. Any suit, action, proceeding or litigation arising out of or relating to this Agreement shall be brought and prosecuted in such federal or state court or courts located within the State of New York as provided by law. The parties hereby irrevocably and unconditionally consent to the jurisdiction of each such court or courts located within the State of New York and to service of process by registered or certified mail, return receipt requested, or by any other manner provided by applicable law, and hereby irrevocably and unconditionally waive any right to claim that any suit, action, proceeding or litigation so commenced has been commenced in an inconvenient forum.

 D. This Agreement and the other agreements referenced herein contain the entire understanding between the parties hereto and may not be modified or amended except by a writing duly signed by the party against whom enforcement of the modification or amendment is sought.

 E. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

COMPANY:

CHINA WORLD TRADE CORPORATION

By: /s/ John Hui

Name:John Hui

Title:CEO & Vice Chairman

PLACEMENT AGENT:

DUNCAN CAPITAL, LLC

By: /s/ David Fuchs

Name:David Fuchs

Title:Managing Member

INVESTOR:

CORNELL CAPITAL PARTNERS, LP

By:Yorkville Advisors, LLC

Its:General Partner

By: /s/ Mark A. Angelo

Name:Mark A. Angelo

Title:Portfolio Manager

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EX-10.4

EXHIBIT 10.4

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of August 26, 2004, by and among China World Trade Corporation (the “Company”), and the purchasers listed on Schedule 1 hereto (each a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company the (i) number of shares of Common Stock, and (ii) Series A Warrants set forth opposite each Purchaser’s name on Schedule 1 hereto (collectively, the "Series A") subject to an option in favor of the Purchasers to purchase additional shares and receive additional warrants.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows:

ARTICLE I.

DEFINITIONS

1.1Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Agent Shares” shall have the meaning ascribed to such term in Section 2.6 of this Agreement.

“Agent Warrant Agreement” shall mean the Placement Agent’s Warrant Agreement dated as of the Closing Date.

“Agent Warrants” shall have the meaning ascribed to such term in Section 2.6 of this Agreement.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

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“Closing” means the closing of the purchase and sale of the Firm Shares and the Series A Warrants pursuant to Section 2.1 on August __, 2004, or such other date as agreed to by the parties.

“Closing Date” means the date of the Closing.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Common stock of the Company, par value $.001 per share, and any securities into which such Common stock may hereafter be reclassified.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Company Counsel” means The Law Offices of Harold Martin, P.A.

“Disclosure Schedules” means the Disclosure Schedules attached hereto.

“Effective Date” means the date that the Registration Statement is first declared effective by the Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Firm Shares” means the Shares issued pursuant to Section 2.1.

“Indemnified Party” shall have the meaning ascribed to such term Section 5.16(b).

“Indemnifying Party” shall have the meaning ascribed to such term in Section 5.16(b).

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

"Investor Securities" means the Shares, the Warrants and the Warrant Shares.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal or other restriction.

“Material Adverse Effect” shall have the meaning ascribed to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“Option” shall have the meaning ascribed to such term in Section 2.8.

“Option Closing Date” means the date of the closing of the purchase and sale of the Option Shares and the Series B Warrants.

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“Option Per Share Purchase Price” means $3.00, subject to adjustment for reverse or forward stock splits, stock dividends, stock combinations and other similar transactions relating to the common stock that occur after the date of this Agreement and before the Option Closing Date.

“Option Shares” means the Shares issued pursuant to Section 2.8.

“Per Share Purchase Price” means $1.50, subject to adjustment for reverse or forward stock splits, stock dividends, stock combinations and other similar transactions relating to the Common Stock that occur after the date of this Agreement and before the Closing.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Placement Agent” means Duncan Capital LLC.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares and by the Placement Agent of the Agent Shares.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and each Purchaser, in the form of EXHIBIT A hereto.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities Act” means the Securities Act of 1933, as amended.

“Series A Warrants” means the common stock purchase warrants in the form of EXHIBIT B-1 hereto issuable to each Purchaser at Closing; such Series A Warrants are exercisable to purchase up to the number of shares of Common Stock equal to 50% of the aggregate number of Shares to be issued to such Purchaser at the Closing, which shall have an exercise price equal to $2.50 per share and be exercisable for a period of five years.

“Series A Warrant Shares” means the shares of Common Stock issuable upon the exercise of the Series A Warrants.

“Series B Warrants” means the common stock purchase warrants in the form of EXHIBIT B-2 hereto issuable to each Purchaser at the Option Closing Date; such Series B Warrants are exercisable to purchase up to the number of shares of Common Stock equal to 50% of the aggregate number of Shares to be issued to such Purchaser at the Option Closing Date which shall have an exercise price equal to $4.00 per share (subject to adjustment for reverse or forward splits, stock dividends, stock combinations and similar transactions relating to the common stock ussuable upon exercise of the Series B Warrants) and be exercisable for a period of five years commencing on the Option Closing Date.

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“Series B Warrant Shares” means the shares of Common Stock issuable upon the exercise of the Series B Warrants.

“Shares” means the shares of Common Stock purchased by the Purchasers pursuant to this Agreement consisting of the Firm Shares and, if applicable, the Option Shares.

“Subscription Amount” means as to each Purchaser, the amount set forth below such Purchaser’s signature block on the Signature Page of this Agreement in United States Dollars and in immediately available funds.

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting price); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), and (ii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.

“Transaction Documents” means this Agreement, the Registration Rights Agreement, the Warrants, the Placement Agent Warrant Agreement, the Agent Warrant(s) and any and all other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transaction Securities” means the Shares, the Warrants, the Warrant Shares, the Agent Warrants and the Agent Shares.

“Warrants” means collectively the Series A Warrants and Series B Warrants issuable to each Purchaser at Closing.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Series A Warrants and, if applicable, the Series B Warrants collectively.

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ARTICLE II.

PURCHASE AND SALE

2.1Closing. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company shall sell and issue to each Purchaser and each Purchaser shall purchase from the Company subject to Section 2.3, (i) the number of Firm Shares set forth opposite such Purchaser’s name on Schedule I hereto, and (ii) a Series A Warrant for the corresponding number of Series A Warrant Shares. Each Purchaser shall purchase from the Company, and the Company shall issue and sell to each Purchaser, a number of Firm Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price. The Series A Warrants shall be issued, without additional consideration, on the basis of one Series A Warrant for each two Shares purchased. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of Placement Agent, located at 830 Third Avenue, 14^th Floor, New York, New York 10022, or such other location as the parties shall mutually agree.

2.2Closing Conditions.

(a)At the Closing, as a condition to the Purchaser’s obligations hereunder, the Company shall deliver or cause to be delivered to:

(i)each Purchaser, an irrevocable instruction letter to the Company’s transfer agent authorizing the issuance of a restricted stock certificate for such number of Firm Shares set forth next to such Purchaser’s name on Schedule 1 hereto purchased by each Purchaser;

(ii)subject to Section 2.3, each Purchaser, a Series A Warrant, registered in the name of such Purchaser, as duly executed by the Company, entitling such Purchaser to purchase such amount of Warrant Shares as are set forth next to such Purchaser’s name on Schedule 1 hereto;

(iii)each Purchaser, the Registration Rights Agreement duly executed by the Company;

(iv)each Purchaser, this Agreement duly executed by the Company;

(v)each Purchaser and the Placement Agent, a legal opinion from Company Counsel in form and substance reasonably satisfactory to the Purchasers and Placement Agent;

(vi)the Placement Agent, a certificate of the Chief Executive Officer of the Company stating, among other things, that (i) all the conditions set forth in Section 2.2 of this Agreement have been satisfied in all, (ii) except as set forth in any Schedule to this Agreement, since December 31, 2003, there has been no event, condition or circumstance that has had or could reasonably be expected to have a Material Adverse Effect, and (iii) the Company has complied in all material respects with all its covenants and agreements set forth in the Transaction Documents;

(vii)the Placement Agent, a certificate of the Secretary of the Company containing, among other items true and complete copies of the resolutions of the Board of Directors of the Company approving Transaction Documents, Placement Agent compensation, the Offering and all documents and matters relating thereto; and

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(viii)evidence satisfactory to the Placement Agent that the Company has completed the acquisition of 51% of the equity of Guangdong New Generation Commercial Management Co. Ltd.

(b)at the Closing, as a condition to the Company’s obligations hereunder, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i)this Agreement duly executed by such Purchaser;

(ii)such Purchaser’s payment for the Firm Shares and Series A Warrants being purchased from the escrow account by wire transfer; and

(iii)the Registration Rights Agreement duly executed by such Purchaser.

(c)at the Closing, as a condition to each party’s obligations hereunder, all representations and warranties of each of the parties herein shall remain true and correct in all material respects as of the Closing Date.

(d)as of the Closing Date, as a condition to the Purchasers’ obligations hereunder, there shall have been no Material Adverse Effect with respect to the Company since the date hereof.

(e)from the date hereof to the Closing Date, and as a condition to the Purchaser’s obligations, (i) trading in the Common Stock shall not have been suspended by the Commission (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to Closing); (ii) trading in securities generally shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market; and (iii) no banking moratorium shall have been declared either by the United States or New York State authorities.

2.3Escrow Provisions. Pending the sale of the Firm Shares and the Series A Warrants, all funds paid hereunder shall be deposited by the Company in escrow with Continental Stock Transfer & Trust Company (the “Escrow Agent”) pursuant to an escrow agreement by and among the Escrow Agent, the Company, and the Placement Agent (the “Escrow Agreement”). On the Closing Date, the Escrow Agent shall deliver to the Purchasers the Firm Shares, Series A Warrants and the net Purchase Price proceeds to the Company. The Escrow Agent shall also act as the escrow agent in connection with the closing, if any, of the Option.

2.4Certificates. Subject to Section 2.3 each Purchaser hereby authorizes and directs the Company, upon the Closing, to deliver certificates representing the Firm Shares and Series A Warrants to be issued to such Purchaser pursuant to this Agreement to each Purchaser’s address indicated in this Agreement.

2.5Return of Funds. Each Purchaser hereby authorizes and directs the Company and the Placement Agent to return any funds for purchases not accepted by the Company to the same account from which the funds were drawn.

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2.6Expenses; Fees. Simultaneously with payment for and delivery of the Shares and Warrants, at the Closing and the Option Closing Date, as the case may be, the Company shall: (i) pay to the Placement Agent a cash fee equal to ten (10%) percent of the aggregate purchase price of the Shares and Warrants as and when delivered by the Escrow Agent to the Purchasers (the “Cash Fee”); (ii) reimburse the Placement Agent for its actual out-of-pocket expenses incurred in connection with the Offering, including, without limitation, the reasonable fees and expenses of its legal counsel, not to exceed legal fees of $20,000; (iii) pay all expenses in connection with the qualification of the Transaction Securities under the blue sky laws of the states which the Placement Agent shall designate, including filing fees and disbursements in connection with such blue sky matters; (iv) pay certain fees to the Escrow Agent for acting as escrow agent; and (v) issue to the Placement Agent five year non-cashless exercised provisioned warrants (the “Agent Warrants”) to purchase such number of shares of Common Stock (the “Agent Shares”) as shall equal ten (10%) percent of the aggregate number of (a) Shares sold in the Offering, and (b) Warrant Shares issuable upon exercise of the Warrants as of the Closing, at a per share exercise price equal to $2.50. The Company also agrees to pay the Placement Agent a Cash Fee upon its receipt of proceeds, if any, upon the exercise of the Series A Warrants and Series B Warrants by Purchasers.

2.7Placement Agent. The Investor Securities are being offered on a “best-effort” basis by the Placement Agent. The Placement Agreement reserves the right, but is under no obligation, to sell to its affiliates Shares and Warrants on the terms provided herein.

2.8 Option. (a) The Company hereby grants each Purchaser an option (the “Option”) to purchase that number of Option Shares equal to the number of Firm Shares received by such Purchaser on the Closing Date. Upon exercise of the Option, the Purchaser shall receive without additional consideration, Series B Warrants to purchase 50% of the Firm Shares. The Option may be exercised during the period commencing on the date when the Registration Statement has been declared effective or such condition has been waived, as the case may be, and expiring 180 calendar days thereafter.

The Option may be exercised, from time to time, by sending the Notice of Option Exercise attached hereto as Exhibit B-3 to the Company and the deposit with the Escrow Agent of an amount equal to the Option Per Share Purchase Price multiplied by the number of Option Shares being purchased.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1Representations and Warranties of the Company. Except as set forth under the corresponding section of the Disclosure Schedules delivered concurrently herewith, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to each Purchaser:

(a)Subsidiaries. Other than as disclosed in the SEC Reports, the Company has no direct or indirect operating subsidiaries (a “Subsidiary” and collectively, the “Subsidiaries”). The Company owns, directly or indirectly, all or the majority of the capital stock of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

(b)Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary (as applicable), except where the failure to be so qualified or in good standing (as applicable), as the case may be, would not result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”).

(c)Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further corporate action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (iii) with respect to the indemnification provisions set forth in the Registration Rights Agreement, as limited by public policy.

(d)No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby, do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, certificates of designation (or similar document related to preferred stock), bylaws and/or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise), or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected, except in the case of each of clauses (ii) and (iii), such as would not result in a Material Adverse Effect.

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(e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing with the Commission of the Registration Statement, the application(s) and approvals to each Trading Market for the listing of the Shares, Warrant Shares and the Agent Shares for trading thereon in the time and manner required thereby, applicable Blue Sky filings, and the filing of a current report on Form 8-K under the Exchange Act.

(f)Issuance of the Securities. All of the Transaction Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly authorized capital stock such number of shares of Common Stock so as to permit the issuance of the Shares, the Warrant Shares and the Agent Shares.

(g)Capitalization. Except as set forth in the SEC Reports, the capitalization of the Company is as described in the Company’s most recent periodic report filed with the Commission. Except as set forth in the SEC Reports, the Company has not issued any capital stock since such filing other than pursuant to the exercise of employee stock options under the Company’s stock option plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding on the date hereof. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, for employee stock options under the Company’s stock option plans, or otherwise as reflected in the SEC Reports, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(h)SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or Section 15(d) of the Exchange Act, for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports” and, together with the Disclosure Schedules to this Agreement, the “Disclosure Materials”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

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(i)Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its holders of Common Stock or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to the usual and ordinary course of business and the existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.

(j)Litigation. Except as disclosed in the SEC Reports or on Schedule 3.1(j) hereto, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency and/or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents and/or the Transaction Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any director or officer thereof, except as disclosed in the SEC Reports, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty could result in a Material Adverse Effect. Except as disclosed in the SEC Reports, to the knowledge of the Company, there is not pending or contemplated any investigation by the Commission and/or other entity involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k)Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.

(l)Compliance. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in the case of clauses (i), (ii) and (iii) as would not result in a Material Adverse Effect.

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(m)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

(n)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries, taken as a whole, and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, taken as a whole, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in material compliance.

(o)Patents and Trademarks. To the knowledge of the Company and each Subsidiary, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have would result in a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable.

(p)Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers, directors and/or employees of the Company and the Subsidiaries are, to the knowledge of the Company, a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $60,000 other than (a) for payment of salary or consulting fees for services rendered, (b) reimbursement for expenses incurred on behalf of the Company and (c) for other employee benefits, including stock option agreements under any stock option plan of the Company.

(q)Internal Accounting Controls. The Company and each of its subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company's Form 10-K or 10-Q, as the case may be, is being prepared.

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(r)Certain Fees. Except for payments payable to the Placement Agent by the Company and a 3% finder’s fee payable to V3 Consulting, Inc., the Company has not entered into an agreement to pay any brokerage or finder’s fees or commissions to any person including, but not limited to, any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement, except to the extent a Purchaser made an agreement to make any such payment.

(s)Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Investor Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Transaction Securities hereunder does not contravene the rules and regulations of the Trading Market.

(t)Investment Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(u)Listing and Maintenance Requirements. The Company has applied for listing of its Common Stock, including all of the Transaction Securities on the American Stock Exchange and has received no notice from the American Stock Exchange that such Exchange does not intend to list such securities. The Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market, other than a letter from the Trading Market on which the Common Stock is or has been listed or quoted notifying the Company that its securities would be delisted if the trading price did not increase above One Dollar ($1.00) per share. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements, other than potential trading price issues concerning such Trading Market’s rules and regulations.

(v)Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any is available, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the Company's issuance of the Transaction Securities and the Purchasers’ ownership of the Investor Securities.

(w)No General Solicitation. Neither the Company, its Subsidiaries, any of their affiliates nor any person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Transaction Securities.

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(x)No Integrated Offering. Neither the Company, its Subsidiaries, any of their affiliates nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Transaction Securities under the Securities Act or cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their affiliates and any person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Transaction Securities under the Securities Act or cause the Offering to be integrated with other offerings.

(y)Registration Rights. Except with respect to Purchasers and the Placement Agent and except as provided on Schedule 3.1(y) hereto, no person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(z)Right of First Refusal. Except with regard to the Placement Agreement, no person, firm or other business entity is a party to any agreement, contract or understanding, written or oral entitling such party to a right of first refusal with respect to offerings of securities by the Company.

(aa)Disclosure. The Company confirms that, neither the Company nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(bb)Insurance. Each of the Company and its Subsidiaries maintain insurance of the types and in the amounts deemed adequate for its business, including, but not limited to, product liability insurance, insurance covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all of which insurance is in full force and effect.

(cc)Conduct of Business. Since December 31, 2003 and except as otherwise stated in the SEC Reports,the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except current liabilities incurred in the usual and ordinary course of business, having a Material Adverse Effect, (b) made or suffered any changes in its contingent obligations by way of guaranty, endorsement (other than the endorsement of checks for deposit in the usual and ordinary course of business), indemnity, warranty or otherwise, (c) discharged or satisfied any liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the balance sheet dated as at December 31, 2003 and forming part of the SEC Reports, and current liabilities incurred since December 31, 2003, in each case in the usual and ordinary course of business, (d) mortgaged, pledged or subjected to lien any of its assets, tangible or intangible, (e) sold, transferred or leased any of its assets except in the usual and ordinary course of business, (f) cancelled or compromised any debt or claim, or waived or released any right, of material value, (g) suffered any physical damage, destruction or loss (whether or not covered by insurance) adversely affecting the properties or business of the Company, (h) entered into any transaction other than in the usual and ordinary course of business except for this Agreement and the related agreements referred to herein, (i) encountered any labor difficulties or labor union organizing activities, (j) made or granted any wage or salary increase or entered into any employment agreement, (k) issued or sold any shares of capital stock or other securities or granted any options with respect thereto, or modified any equity security of the Company, (l) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding equity securities, (m) suffered or experienced any change in, or condition affecting, its condition (financial or otherwise), properties, assets, liabilities, business operations or results of operations other than changes, events or conditions in the usual and ordinary course of its business, having (either by itself or in conjunction with all such other changes, events and conditions) a Material Adverse Effect, (n) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, or (o) entered into any agreement or otherwise obligated itself, to do any of the foregoing.

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3.2Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company, acknowledging that the Company is relying upon the accuracy and completeness of the representations and warranties set forth herein to, among other things, ensure that registration under Section 5 of the Securities Act is not required in connection with the sale of the Securities hereby, as follows:

(a)Organization; Authority. Such Purchaser, if not a natural person, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms.

(b)Investment Intent. Such Purchaser understands that the Investor Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Investor Securities as principal for its own account for investment purposes.

(c)Purchaser Status. At the time such Purchaser was offered the Shares and Warrants, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Purchaser is not, and is not required to be, registered as a broker-dealer under Section 15 of the Exchange Act. In making an investment decision as to whether to purchase the Shares and Warrants offered hereby, each Purchaser has relied solely upon the SEC Reports and the representation and warranties of the Company contained herein. Each Purchaser has had the opportunity to ask questions of, and receive answers from, representatives of the Company concerning the Company and the officers and all such questions have been asked and answered by the Company to the satisfaction of the Purchaser.

(d)Experience of Such Purchaser. Each Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Investor Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Investor Securities and, at the present time, is able to afford a complete loss of such investment.

(e)General Solicitation. Such Purchaser is not purchasing the Shares and Warrants as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f)Compliance with the Securities Laws. Such Purchaser agrees to comply with the requirements of Regulation M, if applicable, with respect to the resale of the Shares by the Purchaser. Such Purchaser hereby confirms its understanding that it may not cover short sales made prior to the Effective Date with shares of Common Stock registered for resale on the Registration Statement.

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(g)No Conflicts. Neither the execution and delivery of this Agreement and/or any Transaction Document, nor the consummation of the Transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of its organizational documents or other similar governing instruments.

(h)No Advice. Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and sale of the Investor Securities constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Investor Securities.

(i)No Litigation, Etc. There is no action, suit, proceeding, judgment, claim or investigation pending or, to the knowledge of the Purchaser, threatened against the Purchaser which could reasonably be expected in any manner to challenge or seek to prevent, enjoin, alter or materially delay any of the transactions contemplated by the Transaction Documents.

(j)Approvals. The execution, delivery and performance by the Purchaser of this Agreement and the Transaction Documents to which it is a party, and the consummation of the transactions set forth herein require no material action by or in respect of, or material filing with, any governmental body, agency, official or authority, by the Purchaser other than (i) any filings, authorizations, consents and approvals as may be required under the Hart-Scott-Rodino Improvements Act of 1976, as amended; (ii) the filing by the Purchaser with the Commission of such reports under the Exchange Act as may be required in connection with this Agreement, the Transaction Documents and the transactions contemplated hereby, and (iii) any filings required by the securities or blue sky laws of the various states.

(k)Placement Agent. Each Purchaser agrees that neither the Placement Agent nor any of its respective directors, officers, affiliates, employees or agents shall be liable to the Purchaser for any action taken or omitted to be taken by it in connection therewith, except for willful misconduct or gross negligence.

The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2 and Section 4.1.

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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1Transfer Restrictions.

(a)The Investor Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Investor Securities other than pursuant to an effective registration statement, pursuant to Rule 144(k), pursuant to Rule 144 (if customary documentation is provided satisfactory to legal counsel to the Company), or in connection with a pledge as contemplated in Section 4.1(b) hereof, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Investor Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement.

(b)The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of a legend on any of the Investor Securities in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Investor Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Investor Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection with the grant of the pledge. Further, no notice shall be required of grant of the pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Transaction Securities may reasonably request in connection with a pledge or transfer of the Investor Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. Notwithstanding anything to the contrary, any such pledgee shall not be entitled to any rights under any of the Transaction Documents unless and until such pledgee executes a written agreement to be bound by Purchasers’ obligations under the Transaction Documents.

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(c)Subject to compliance with all laws, rules and regulations including, but not limited to, the Securities Act and the Exchange Act, certificates evidencing the Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b)), (i) following any sale of the Shares or Warrant Shares pursuant to a registration statement (including the Registration Statement) covering the resale of such security, or (ii) following any sale of the Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k) and appropriate documentation is provided satisfactory to legal counsel to the Company, or (iv) if such legend is not required under applicable regulation of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). Subject to compliance with all laws, rules and regulations including, but not limited to, the Securities Act and the Exchange Act, the Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the Effective Date if required by the Company’s transfer agent to effect the removal of the legend hereunder. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares, such Warrant Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under and pursuant to this Section 4.1(c), it will, upon written request from the Purchaser and following the submission to the Company counsel of such materials as shall be reasonably requested by such counsel therefore, no later than four (4) Trading Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of a certificate representing Shares and/or Warrant Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to such Purchaser (i) a certificate representing such securities that is free from all restrictive and other legends, or (ii) in lieu of delivering physical certificates representing the Shares and/or Warrant Shares, and provided that the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (or FAST) program, upon request of the Purchaser, the Company shall use its reasonable commercial efforts to cause its transfer agent to electronically transmit the Shares and/or Warrant Shares by crediting the account of the Purchaser’s prime broker with DTC through its Deposit Withdrawal Agent Commission (or DWAC) system. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

(d)Each Purchaser severally and not jointly agrees that the removal of the restrictive legend from certificates representing the Shares and the Warrant Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Investor Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

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4.2Furnishing of Information. Until the date no Purchaser owns any Investor Securities, the Company covenants and agrees to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any such holder of Investor Securities, the Company shall deliver to such holder a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. Until the date no Purchaser owns any Investor Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell any Shares and Warrant Shares under Rule 144. The Company further covenants and agrees that it will take such further action as any holder of Investor Securities may reasonably request, all to the extent required from time to time to enable such person to sell any Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

4.3Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of any of the Transaction Securities in a manner that would require the registration under the Securities Act of the sale of the Investor Securities to the Purchasers or that would be integrated with the offer or sale of the Investor Securities for purposes of the rules and regulations of any Trading Market.

4.4Securities Laws Disclosure; Publicity. The Company shall use its best efforts to by 9:00 a.m., Eastern Daylight Time, on the first Business following this Agreement issue a press release (which shall be followed by a Form 8-K filing within one (1) Business Day of the Closing) and, in any event, by the end of business on the Business Day following the Closing issue a press release (which shall be followed by a Form 8-K filing within two (2) Business Days thereafter), in either case disclosing the transactions contemplated hereby and make such other filings and notices in the manner and time required by the Commission. The Company and the Placement Agent shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor the Placement Agentshall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Placement Agent, or without the prior consent of the Placement Agent, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the registration statement contemplated by the Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under subclause (i) or (ii).

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4.5Shareholders Rights Plan. No claim will be made or enforced by the Company or any other Person that any Purchaser is an “Acquiring Person” under any shareholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Investor Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

4.6Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

4.7Use of Proceeds. The Company covenants and agrees that all of the net proceeds that it receives from the sale of the Shares and Warrants pursuant to this Agreement, although distributed, allocated and expended by the Company in its sole discretion, shall be used for general working capital and corporate purposes.

4.8Reimbursement. If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company (except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder), solely as a result of such Purchaser's acquisition of the Securities under this Agreement, and provided any such person has complied with all laws, rules and regulations and is not in breach of any of its representations, warranties, or agreements made in any of the Transaction Documents, the Company will reimburse such Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners, directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates, partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement, provided such person has complied with all laws, rules and regulations and is not in breach of any of its representations, warranties and agreements made in any of the Transaction Documents.

4.9Form D and Blue Sky. The Company shall file a Form D with respect to the Transaction Securities as required under Regulation D under the Securities Act and, upon written request, provide a copy thereof to the Placement Agent for distribution to the Purchasers promptly after such filing. The Company shall, on or before the Closing, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify any Transaction Securities for sale to the Purchasers and/or the Placement Agent pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of any such action so taken to the Purchasers on or prior to the Closing by providing copies of such filings to the Placement Agent. The Company shall make all filings and reports relating to the offer and sale of the Transaction Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing.

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4.10Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Shares, the Warrant Shares and the Agent Shares.

4.11Listing of Common Stock. The Company hereby agrees to use its best efforts to maintain the listing of the Common Stock on its current Trading Market, and promptly file with the Trading Market to list the applicable Shares, Warrant Shares and Agent Shares on the Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application the Shares, Warrant Shares and Agent Shares and will take such other action as is necessary or desirable in the opinion of the Purchasers to cause the Shares, Warrant Shares and Agent Shares to be listed on such other Trading Market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on its current Trading Market and will use its best efforts to comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

4.12Indemnification by the Purchasers. Each of the Purchasers severally and not jointly agrees to indemnify and hold harmless the Company and its officers, directors, agents, representatives, shareholders and employees and each of their respective affiliates, from and against any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such party may suffer or incur which are caused by or arise out of (i) any material misrepresentation or material breach or default in the performance by it of any covenant or agreement made by it in this Agreement or in any of the Transaction Documents; (ii) any material misrepresentation or material breach of warranty or representation made by it in this Agreement or in any of the Transaction Documents or, (iii) any cause of action, suit or claim brought or made against such Indemnified Party and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents executed pursuant hereto by any of the Indemnified Parties. Notwithstanding anything to the contrary provided herein or elsewhere, the liability of each Purchaser under this Section 4.10 shall be limited to the amount paid by the Purchaser pursuant hereto to purchase the Investor Securities, and the procedures and timing for indemnification by the Purchasers under this Section 4.10 shall follow the procedures and provisions of Sections 5.16(b) and (c), mutatismutandis, with respect to indemnification by the Company of the Purchasers.

4.13Reporting Obligations. So long as any Purchaser beneficially owns any Investor Securities, the Company shall continue to file or furnish pursuant to the Exchange Act or the Securities Act, and the Company shall use commercially reasonable best efforts to maintain its status as an issuer required to file such reports under the Exchange Act. In addition, during such same period if the Company’s Common Stock is traded on the American Stock Exchange or any other national exchange, the Company shall take all actions necessary to continue to meet the "registrant eligibility" requirements set forth in the general instructions to Form S-3 or any successor form thereto, to continue to be eligible to register the resale of the Shares, the Warrant Shares and the Agent Shares under the Securities Act on such Form.

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4.14Purchase Price Adjustment.

(a)Firm Shares. Other than the Excepted Issuances, defined below, if at any time from the Closing Date until the first anniversary thereof, the Company shall offer, issue or agree to issue any shares of common stock to any person or entity at a price per share which shall be less than the Per Share Purchase Price, without the consent of each Purchaser holding Shares, the Company shall issue, for each such occasion, additional shares of Common Stock to each Purchaser so that the average Per Share Purchase Price of the shares of Common Stock issued to the Purchaser (only if the Common Stock is still owned by the Purchaser) is equal to such other lower price per share.

(b)Option Shares. If a Purchaser has exercised the Option, then at any time after from Closing Date Closing Date until the first anniversary thereof, the Company shall offer, issue or agree to issue any shares of common stock, other than Excepted Issuances, to any person or entity at a price per share which is greater than the Per Share Purchase Price but less than the Option Per Share Purchase Price, without the consent of each Option Purchaser holding Option Shares, the Company shall issue, for each such occasion, additional shares of Common Stock to each Purchaser so that the average Option Per Share Purchase Price of the shares of Common Stock issued to the Option Purchaser (only if the Common Stock is still owned by the Purchaser) is equal to such other lower price per share.

If the Company shall offer, issue or agree to issue any shares of common stock, other than Excepted Issuances, to any person or entity at a price per share which is less than the Per Share Purchase Price, without the consent of each Option Purchaser holding Option Shares, the Company shall issue, for each such occasion, additional shares of Common Stock to each Purchaser so that the average Option Per Share Purchase Price of the shares of Common Stock issued to the Option Purchaser (only if the Common Stock is still owned by the Purchaser) is equal to the percentage reduction between the Per Share Purchase Price and such other lower price per share. For example, if the Company issued shares at $.75, the percentage reduction between the Per Share Purchase Price ($1.50) and the new lower price would be 50%. Accordingly, the Option Purchaser would receive that number of additional shares of Common Stock so that the average Option Per Share Purchase Price of the shares of Common Stock issued to the Option Purchaser would equal $2.00 per share from the initial per share price of $4.00.

(c)Option Price Adjustment. If a Purchaser has not exercised the Option, then at any time after from Closing Date until the first anniversary thereof, the Company shall offer, issue or agree to issue any shares of common stock, other than Excepted Issuances, to any person or entity at a price per share which is greater than the Per Share Purchase Price but less than the Option Per Share Purchase Price, without the consent of each Purchaser, the Option Per Share Purchase Price shall be adjusted to equal to such other lower price per share.

If the Company shall offer, issue or agree to issue any shares of common stock, other than Excepted Issuances, to any person or entity at a price per share which is less than the Per Share Purchase Price, without the consent of each Purchaser, the Company shall issue, the Option Per Share Purchase Price shall be adjusted to equal to the percentage reduction between the Per Share Purchase Price and such other lower price per share.

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(d)Maximum Exercise of Rights. In the event the exercise of the rights described in this Section 14.4 would result in the issuance to the Purchaser of an amount of common stock of the Company that would cause the Purchaser’s beneficially ownership in the Company to exceed 4.99% after giving effect to such issuance, the issuance of such additional shares of common stock of the Company to such Purchaser shall be, at each such Purchaser’s discretion, deferred in whole or in part until such time as such Purchaser is able to beneficially own such shares of common stock without exceeding 4.99% of the then issued and outstanding common stock of the Company from the initially set $4.00 per share.

(e)Registration Rights. All shares issued pursuant to this Section 4.14 which are issued prior to the effective date of the Registration Statement shall have the mandatory registration rights set forth in Section 2 the Registration Rights Agreement. All shares issued pursuant to this Section 4.14 which are issued after the effective date of the Registration Statement shall have the piggyback registration rights set forth in Section 6(e) of the Registration Rights Agreement.

For purposes of this Section 14.4 “Excepted Issuances” shall mean the sale or issuance of common stock except in connection with (i) the granting of options to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (ii) the exercise of any security issued by the Company in connection with the offer and sale of the Company’s securities pursuant to the Purchase Agreement (including any securities issued as compensation in connection therewith), or (iii) the exercise of or conversion of any convertible securities, options or warrants issued and outstanding on the date hereof, provided such securities have not been amended since the date hereof, or (iv) the issuance of securities in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

The delivery to the Purchaser of the additional shares of Common Stock shall be not later than the closing date of the transaction giving rise to the requirement to issue additional shares of Common Stock.

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ARTICLE V.

MISCELLANEOUS

5.1Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement; provided, however, that the Company shall pay a maximum of $20,000 for the aggregate fees and expenses of counsel to the Placement Agent. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Securities.

5.2Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.3Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on (a) the next Business Day, if sent by U.S. nationally recognized overnight courier service for next day priority delivery, or (b) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications to the Company shall be as set forth below and for each Purchaser shall be as set forth on the signature pages attached hereto.

If to the Company:

China World Trade Corporation

4^th Floor, Goldilcon Digital Network Center

138 Tiyu Road East,

Tianhe Guanzhou 510620

People’s Republic of China

Facsimile: 8620-3878-1515

Attn: John Hui

With a copy to:

Bernard Chan

Rm 1217 12^th Floor

The Metropolis Tower

10 Metropolis Drive

Hong Kong

Facsimile: 852-2333-8844

5.4Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

5.5Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

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5.6Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser. Any Purchaser, however, may assign any or all of its Investor Securities and/or rights under this Agreement to any Person, provided such transferee agrees in writing to be bound, with respect to the transferred Investor Securities and otherwise, by the provisions hereof that apply to the “Purchasers.”

5.7No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.8Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements.

5.9Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and delivery of the Shares and Warrants for a period of twelve (12) months.

5.10Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

5.11Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

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5.12Replacement of Investor Securities. If any certificate or instrument evidencing any Investor Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Investor Securities.

5.13Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.14Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall, to the extent permissible under applicable law, be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.15Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser represents that it has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.

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5.16Indemnification by the Company.

(a)The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, the officers, directors, agents and employees of each of them, each Person who controls any such Purchaser (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (including the cost (including without limitation, reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s (as defined below) actions to enforce the provisions of this Section 5.16) (collectively, “Losses”), as incurred, to the extent arising out of or relating to (i) any material misrepresentation or material breach of any representation or warranty made by the Company in the Transaction Documents, or, (ii) any material breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents, or (iii) any cause of action, suit or claim brought or made against such Indemnified Party and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents executed pursuant hereto by any of the Indemnified Parties. If the indemnification provided for in this Section 5.16 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party (as defined below), in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the actions or omissions that resulted in such Losses as well as any other relevant equitable considerations. The Company shall notify the Purchasers promptly of the institution, threat or assertion of any proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b)Conduct of Indemnification Proceedings. If any proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Company (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, however, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally judicially determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel for all Indemnified Parties in any matters related on a factual basis shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding.

(c)Timing of Payments. All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 5.16 shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, however, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.

(Remainder of Page Intentionally Left Blank)

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

John H.W. Hui

Chief Executive Officer and Vice Chairman

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PURCHASERS SIGNATURE PAGE

By:

Name:

Title:

Address

Facsimile Number

Tax Id #:

Subscription Amount:$

By:

Name:

Title:

Address

Facsimile Number

Tax Id #:

Subscription Amount:$

By:

Name:

Title:

Address

Facsimile Number

Tax Id #:

Subscription Amount:$

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INDEX OF EXHIBITS AND SCHEDULES

                                                 EXHIBITS

Exhibit A                        Form of Registration Rights Agreement

Exhibit B-1Form of Series A Warrant

Exhibit B-2Form of Series B Warrant

Exhibit B-3Notice of Option Exercise

                                             SCHEDULES

Schedule 1                    List of Purchasers and Amounts

Schedule 3.1(j)              Litigation

Schedule 3.1(y)             Form SB-2 Selling Stockholders

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EXHIBIT A

FORM OF REGISTRATION RIGHTS AGREEMENT

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EXHIBIT B-1

FORM OF SERIES A WARRANT

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EXHIBIT B-2

FORM OF SERIES B WARRANT

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EXHIBIT B-3

NOTICE OF OPTION EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to exercise the Option to purchase ________ additional Firm Shares of China World Trade Corporation pursuant to the terms of the Securities Purchase Agreement, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of (check applicable box) in lawful money of the United States; or

The Firm Shares and the Series B Warrant shall be delivered to the following:

3.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:

Name:

Title:

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SCHEDULE 1

LIST OF PURCHASERS AND AMOUNTS

Name of PurchaserAmount of Shares and Warrant Shares Purchased

1._____ Shares______ Series A Warrant Shares

                                                                           ______

2._____ Shares______Series A Warrant Shares

                                                                           ______

3._____ Shares______Series A Warrant Shares

                                                                           ______

4._____ Shares Series A Warrant Shares

                                                                           ______

5._____ Shares Series A Warrant Shares

                                                                           ______

6._____ Shares Series A Warrant Shares

                                                                           ______

7._____ Shares Series A Warrant Shares

                                                                           ______

8._____ Shares Series A Warrant Shares

                                                                           ______

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SCHEDULE 3.1 (y)

Form SB-2 Selling Stockholders

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SCHEDULE 3.1 (j)

Litigation

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EX-10.5

EXHIBIT 10.5

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of August 26, 2004, by and among China World Trade Corporation (the “Company”), and the investors signatory hereto (each a “Purchaser” and collectively, the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers (the “Purchase Agreement”).

The Company and the Purchasers hereby agree as follows:

1.Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Escrow Date” means the date that funds are released by the Escrow Agent to the Company.

“Filing Date” means, with respect to the Registration Statement required to be filed hereunder, forty five (45) days following the Escrow Date.

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities (including any permitted assignee).

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Losses” shall have the meaning set forth in Section 5(a).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

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“Registrable Securities” means the Firm Shares, Option Shares, Agent Shares and the Warrant Shares together with any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing or in connection with any anti-dilution provisions in the applicable Warrant.

“Registration Statement” means the registration statements required to be filed hereunder, including (in each case) the Prospectus, amendments and supplements to the registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in the registration statement.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

Warrants” means the Common Stock purchase warrants issued to the Purchasers and the Agent pursuant to the Purchase Agreement.

“Securities Act” means the Securities Act of 1933, as amended.

2.Mandatory Registration.

(a)On or prior to the Filing Date, the Company shall prepare and file with the Commission the Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder shall be on Form SB-2 (except if the Company is not then eligible to register for resale the Registrable Securities on Form SB-2, in which case the Registration shall be on another appropriate form in accordance herewith). The Registration Statement required hereunder shall contain (except if otherwise directed by the Holders) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause the Registration Statement to become effective and remain effective as provided herein. The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the date when all Registrable Securities covered by the Registration Statement (a) have been sold pursuant to the Registration Statement or an exemption from the registration requirements of the Securities Act or (b) may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”).

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(b)If a Registration Statement is not filed on or prior to sixty (60) days from the Escrow Date, then in addition to any other rights the Holders may have hereunder or under applicable law, the Company shall pay to each Holder an amount in cash until the date a Registration Statement is filed, as liquidated damages and not as a penalty, equal to (i) one (1%) percent of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for the first thirty (30) days or any part thereof, and each thirty (30) day period subsequent thereto, such payment(s) to be made within seven (7) days after the initial date of each such failure to file.

(c)If (1) a Registration Statement is not declared effective on or prior to one hundred twenty (120) days from the Escrow Date, or (2) a Registration Statement has been declared effective and subsequent thereto is not effective (or does not permit the resale of the Registrable Securities thereby) for a period of more than thirty (30) days consecutively until the Shares may be sold pursuant to Rule 144(k) (an “Effectiveness Default”), then in addition to any other rights the Holders may have hereunder or under applicable law, the Company shall pay to each Holder an amount in cash until the date a Registration Statement is declared effective and/or the Registrable Securities may be sold pursuant to Rule 144(k) pursuant to subprovision (1) above, or if previously declared effective then in the situation covered by subprovision (2) above until the date the Registration Statement becomes effective again or otherwise permits the resale of the Registrable Securities covered thereby, as liquidated damages and not as a penalty, equal to one (1%) percent of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for the first thirty (30) days or any part thereof, and for each thirty (30) day period subsequent thereto, such payment(s) to be made within seven (7) days after the date of each such Effectiveness Default.

3.Registration Procedures. In connection with the Company's registration obligations hereunder, the Company shall:

(a)Not less than three (3) Trading Days, which shall not be included in the calculation of time period for the purposes of the Company’s obligations under this Agreement or under the Purchase Agreement, prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall, (i) furnish to the Holders copies of all such documents proposed to be filed (including documents incorporated or deemed incorporated by reference to the extent requested by such Person) which documents will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act.

(b)Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible, upon request, provide the Holders true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

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(c)Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible (and, in the case of (i)(A) below, not less than two (2) Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing promptly following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of the Registration Statement and whenever the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d)Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(e)Furnish to each Holder, without charge, at least one conformed copy of the Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission.

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(f)Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c).

(g)Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(h)If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

(i)Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(j)Comply with all applicable rules and regulations of the Commission.

(k)The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the person thereof that has voting and dispositive control over the shares. Each Holder agrees to reasonably cooperate with the Company in the preparation of the Registration Statement and response by the Company to any comments by the Commission.

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4.Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

5.Indemnification

(a)Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (including the cost (including without limitation, reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s actions to enforce the provisions of this Section 5) (collectively, “Losses”), as incurred, to the extent arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by or on behalf of such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

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(b)Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by or on behalf of such Holder to the Company specifically for inclusion in the Registration Statement or such Prospectus or (ii) to the extent that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by or on behalf of such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the gross proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c)Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially prejudiced the Indemnifying Party.

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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel for all Indemnified Parties in any matters related on a factual basis shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding affected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.

(d)Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

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(e)The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6.Miscellaneous.

(a)Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

(b)No Piggyback on Registrations. Except as set forth on Schedule 6(b)(i), neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement filed pursuant to Section 2 hereof other than the Registrable Securities. Except as set forth on Schedule 6(b)(ii) or as set forth in the SEC Reports, no Person has any right to cause the Company to effect a registration under the Securities Act of any securities of the Company. Other than a Registration Statement on Form S-8, the Company shall not and will not file any other registration statement until after the Effective Date.

(c)Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(d)Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

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(e)Piggyback Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen (15) days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of “piggyback” registration rights; provided, however, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company may, at its election, given written notice of such determination to the Holders and, thereupon, will be relieved of its obligation to register any Registrable Securities in connection with such registration, and (ii) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of Registrable Securities for the same period as the delay in registering such other securities. Notwithstanding the foregoing, nothing in this paragraph (e) shall permit the Company to file a registration statement in contravention of the restrictions in Section 6(b)

(f)Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of the then outstanding Registrable Securities.

(g)Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number provided for below prior to 5:00 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number provided for below later than 5:00 p.m. (New York City time) on any date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be delivered and addressed as set forth in the Purchase Agreement

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(h)Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

(i)Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

(j)Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(k)Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(l)Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(m)Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(n)Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser hereunder is several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

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(o)Obligation of Holders to Furnish Information. The Company’s obligation to cause any Registration Statement to be filed and/or become effective in connection with distribution of any Registrable Securities pursuant to this Agreement is contingent upon each Holder, with reasonable promptness, furnishing to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities, as is required pursuant to Regulation S-K or S-B, as the case may be, promulgated under the Securities Act, to effect the registration of the Registrable Securities. Each Holder agrees, by acquisition of the Registration Securities, that it shall not be entitled to sell any of such Registrable Securities pursuant to the Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with all information required to be disclosed in order to make any information regarding such Holder previously furnished to the Company by such Holder, and any other information regarding such Holder and the distribution of such Holder’s Registrable Securities as the Company may from time to time reasonably request, not misleading in a material respect. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or relating to its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or relating to its plan of distribution necessary to make the statements in such Prospectus, in light of the circumstances under which they were made, not misleading.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

John H.W. Hui

Chief Executive Officer and Vice Chairman

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(PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)

[         ]

By:

Name:

Title:

[         ]

By:

Name:

Title:

[         ]

By:

Name:

Title:

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ANNEX A

Plan of Distribution

The Selling Stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

· ordinary brokerage transactions and transactions in which the broker/dealer solicits purchasers;

· block trades in which the broker/dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

· purchases by a broker/dealer as principal and resale by the broker/dealer for its account;

· an exchange distribution in accordance with the Rules of the applicable exchange;

· privately negotiated transactions;

· settlement of short sales;

· broker/dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

· a combination of any such methods of sale; and

· any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker/dealers engaged by the Selling Stockholders may arrange for other brokers/dealers to participate in sales. Broker/dealers may receive commissions from the Selling Stockholders (or, if any broker/dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus.

The Selling Stockholders and any broker/dealers or agents that are involved in selling the shares are deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker/dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions under the Securities Act. The Selling Stockholders have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.

The Company is required to pay all fees and expenses incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

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Schedule 6(b)(ii)

Name   Shares  

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EX-10.6

EXHIBIT 10.6

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 166,667 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after August 26, 2009)

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, Bridges & PIPES, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) or prior to the close of business on August 26, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 166,667 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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1.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

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(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

12.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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13.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.Notice of Corporate Action. If at any time:

(a)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

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16.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

17.Miscellaneous.

(a)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

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(b)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: August 26, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and

                                                                                    Vice Chairman

HOLDER

Bridges & PIPES, LLC

By: /s/ David Fuchs

Name: David Fuchs

Title: Managing Member

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NOTICE OF EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of in lawful money of the United States; or

3.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

4.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:

Name:           

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 83,334 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after December 3, 2009)

PPW - -      

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, Bridges & PIPES, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)or prior to the close of business on December 3, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 83,334 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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12.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

13.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

14.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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15.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

16.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

17.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

18.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

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(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

19.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

20.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

21.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

22.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

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(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

17.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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18.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

19.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

20.Notice of Corporate Action. If at any time:

(d)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(e)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(f)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

21.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(c)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(d)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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18.Miscellaneous.

(k)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(l)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(m)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(n)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(o)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(p)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(q)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(r)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(s)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(t)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: December 3, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and

Vice Chairman

HOLDER

Bridges & PIPES, LLC

By: /s/ David Fuchs

Name: David Fuchs

Title: Managing Member

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NOTICE OF EXERCISE

To:China World Trade Corporation

5.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

6.Payment shall take the form of in lawful money of the United States; or

7.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

8.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:                                                      

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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EX-10.7

EXHIBIT 10.7

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 50,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after August 26, 2009)

PPW - -      

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, TCMP3 Partners (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)or prior to the close of business on August 26, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 50,000 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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1.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

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(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

12.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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13.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.Notice of Corporate Action. If at any time:

(a)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

16.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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17.Miscellaneous.

(a)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(b)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: August 26, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and Vice Chairman

HOLDER

TCMP3 Partners

By: /s/ Steve Slawson

Name: Steve Slawson

Title: Managing Partner

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NOTICE OF EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of in lawful money of the United States; or

3.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

4.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 25,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after December 3, 2009)

PPW - -      

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, TCMP3 Partners (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”)or prior to the close of business on December 3, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 25,000 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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12.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

13.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

14.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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15.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

16.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

17.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

18.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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19.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

20.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

21.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

22.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

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(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

17.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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18.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

19.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

20.Notice of Corporate Action. If at any time:

(d)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(e)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(f)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

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21.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(c)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(d)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

18.Miscellaneous.

(k)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

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(l)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(m)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(n)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(o)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(p)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(q)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(r)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(s)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(t)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: December 3, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and Vice Chairman

HOLDER

TCMP3 Partners

By: /s/ Steve Slawson

Name: Steve Slawson

Title: Managing Partner

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NOTICE OF EXERCISE

To:China World Trade Corporation

5.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

6.Payment shall take the form of in lawful money of the United States; or

7.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

8.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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EX-10.8

EXHIBIT 10.8

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 450,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after December 3, 2009)

PPW - -      

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, CORNELL CAPITAL PARTNERS, LP (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) or prior to the close of business on December 3, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation., a Nevada corporation (the “Company”), up to 450,000 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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1.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

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(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

12.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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13.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.Notice of Corporate Action. If at any time:

(a)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

16.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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17.Miscellaneous.

(a)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(b)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: December 3, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and Vice Chairman

HOLDER

Cornell Capital Partners, LP

By: /s/ Mark A. Angelo

Name: Mark A. Angelo

Title: Portfolio Manager

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NOTICE OF EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of in lawful money of the United States; or

3.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

4.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:                                                      

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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EX-10.9

EXHIBIT 10.9

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

SERIES A WARRANT TO PURCHASE 33,334 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after December 3, 2009)

PPW - -      

THIS SERIES A COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, STEALTH CAPITAL, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) or prior to the close of business on December 3, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation., a Nevada corporation (the “Company”), up to 33,334 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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1.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

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(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

12.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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13.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.Notice of Corporate Action. If at any time:

(a)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

16.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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17.Miscellaneous.

(a)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(b)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: December 3, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John H.W. Hui

Name: John H.W. Hui

Title: Chief Executive Officer and

Vice Chairman

HOLDER

Stealth Capital, LLC

By: /s/ David Kopp

Name: David Kopp

Title: Managing Member

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NOTICE OF EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to purchase ________ Series A Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Series A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of in lawful money of the United States; or

3.Please issue a certificate or certificates representing said Series A Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Series A Warrant Shares shall be delivered to the following:

4.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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EX-10.10

EXHIBIT 10.10

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

PLACEMENT AGENT’S WARRANT TO PURCHASE 43,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after August 26, 2009 )

PPW - -      

THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, DUNCAN CAPITAL, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after on or prior to the close of business on August 26, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 43,000 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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1.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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4.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

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(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

12.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

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13.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.Notice of Corporate Action. If at any time:

(a)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

16.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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17.Miscellaneous.

(a)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(b)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: August 26, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John Hui

Name: John Hui

Title: Chief Executive Officer and Vice Chairman

DUNCAN CAPITAL, LLC

By: /s/ David Fuchs

Name: David Fuchs

Title: Managing Member

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NOTICE OF EXERCISE

To:China World Trade Corporation

1.The undersigned hereby elects to purchase ________ Placement Agent’s Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Placement Agent’s Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

2.Payment shall take the form of in lawful money of the United States; or

3.Please issue a certificate or certificates representing said Placement Agent’s Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Placement Agent’s Warrant Shares shall be delivered to the following:

4.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:                                            

Name:

Title:

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

CHINA WORLD TRADE CORPORATION

PLACEMENT AGENT’S WARRANT TO PURCHASE 69,667 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after December 3, 2009 )

PPW - -      

THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, DUNCAN CAPITAL, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after on or prior to the close of business on December 3, 2009 (the “Termination Date”) but not thereafter, to subscribe for and purchase from China World Trade Corporation, a Nevada corporation (the “Company”), up to 69,667 shares (the “Warrant Shares”) of Common Stock, $.001 par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $2.50, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated as of August 26, 2004, between the Company and the purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

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12.Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

13.Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

14.Exercise of Warrant.

(a)Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or internationally recognized bank, the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within seven (7) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the close of business on the 7th Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to a proper exercise, and all conditions being met by the Holder, by the close of business on the 10th Trading Day after the date of exercise, and if after such 10th Trading Day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in immediately available funds to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Warrant Shares so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $100 to cover a Buy-In with respect to an attempted exercise of Warrant Shares with an aggregate sale price giving rise to such purchase obligation of $80, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $20. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof.

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(b)If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)The Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after giving effect to such issuance after exercise, the Holder (together with the Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.9% of the number of shares of the Common Stock issued and outstanding immediately after giving effect to such issuance. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of this Section 3(c), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of the Holder, the Company shall within four Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Company Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 3(c) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 3(c) shall continue to apply until such 61^st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The Holder is solely responsible for all calculations required in this Section 3(c). The Company shall have no liability for any issuances of Warrant Shares that exceed the 5% amount and the Company is entitled to rely on all calculations by the Holder and/or its agents. The Holder’s exercise notice shall be deemed a representation of the Holder that the number of Warrant Shares to be acquired pursuant to such exercise notice shall be in compliance with the provisions of this Section 3(c).

(d)If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =the Closing Price on the Trading Day preceding the date of such election;

(B) =the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

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15.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

16.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

17.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

18.Transfer, Division and Combination.

(a)Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d)The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e)If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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19.No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

20.Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

21.Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

22.Adjustments to Exercise Price and Number of Warrant Shares.

For purposes of this Section 11, references to Common Stock shall include shares of Common Stock, par value $.0001 of the Company (and any other classes of common stock issued by the Company).

(a)Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b)Anti-Dilution Provisions. From the Initial Exercise Date until one year following the Closing Date, the Exercise Price and the number of Warrant Shares issuable hereunder and for which this Warrant is then exercisable pursuant to Section 1 hereof shall be subject to adjustment from time to time as provided in this Section 11(b). In the event that any adjustment of the Exercise Price as required herein results in a fraction of a cent, such Exercise Price shall be rounded up or down to the nearest cent.

(i)Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 11(b) hereof, the following will be applicable:

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(A)If at any time from Closing Date until the first anniversary thereof, the Company shall grant any warrants to any person or entity with an exercise price which shall be less than the Exercise Price, without the consent of each Holder, the Exercise Price (of the Warrants which have not been exercised) shall be adjusted to equal to such lower exercise price

(B)Exceptions to Adjustment of Exercise Price. Notwithstanding anything to the contrary herein, this Section 11(b) shall not apply to the following (1) the granting of warrants to employees, officers, directors or consultants of the Company pursuant to any stock option plan or other written compensatory agreement, or (2) the issuance of warrants in connection with acquisitions, joint ventures, arrangements related to the Company’s operations and strategic relationships, or other strategic investments, the primary purpose of which is not to raise capital.

(ii)Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

17.Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 11), consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

18.Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

19.Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

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20.Notice of Corporate Action. If at any time:

(d)the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(e)there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(f)there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

21.Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(c)Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefore upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(d)Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

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18.Miscellaneous.

(k)Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements in an amount judicially determined.

(l)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered for resale under the Securities Act, will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(m)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(n)Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(o)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(p)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(q)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(r)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(s)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(t)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[Remainder of page intentionally left blank]

19

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: December 3, 2004

CHINA WORLD TRADE CORPORATION

By: /s/ John Hui

Name: John Hui

Title: Chief Executive Officer and Vice Chairman

DUNCAN CAPITAL, LLC

By: /s/ David Fuchs

Name: David Fuchs

Title: Managing Member

20

NOTICE OF EXERCISE

To:China World Trade Corporation

5.The undersigned hereby elects to purchase ________ Placement Agent’s Warrant Shares of China World Trade Corporation pursuant to the terms of the attached Placement Agent’s Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

6.Payment shall take the form of in lawful money of the United States; or

7.Please issue a certificate or certificates representing said Placement Agent’s Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Placement Agent’s Warrant Shares shall be delivered to the following:

8.Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[PURCHASER]

By:                                                   

Name:

Title:

21

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Series A Warrant and all rights evidenced thereby are hereby assigned to

                                                                                     , whose address is:

Dated:                                , 200_

Holder’s Signature:                                                    

Holder’s Address:                                                     

Signature Guaranteed:                                                    

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Warrant.

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EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES

CHINA WORLD TRADE CORPORATION, incorporated in Nevada, USA

      Virtual Edge Limited, incorporated in the British Virgin Islands:

No d/b/a. It is an investment holding company.

Topstar International Limited, incorporated in the British Virgin Islands:

No d/b/a. It is a dormant company.

Beijing World Trade Center Club, incorporated in the Peoples’ Republic of China:

d/b/a Beijing World Trade Center and China World Trade Center.

Infotech Enterprises Limited, incorporated in the British Virgin Islands:

No d/b/a. It is a dormant company.

Guangzhou World Trade Center Club Limited, incorporated in the Peoples’ Republic of China: d/b/a Guangzhou World Trade Center and China World Trade Center

CEO Clubs China Limited, incorporated in Hong Kong, SAR:

d/b/a CEO Clubs

China Chance Enterprises Limited, incorporated in the British Virgin Islands:

      d/b/a China World Trade Corporation

      Creative Idea Group Limited, incorporated in the British Virgin Islands:

      d/b/a China World Trade Corporation

      Sino Platform Limited, incorporated in the British Virgin Islands:

      No d/b/a. It is an investment holding company

WTC Link International Limited, incorporated in Hong Kong, SAR:

d/b/a WTC Link

Guangdong WTC Link Information Service Limited, incorporated in the Peoples’

            Republic of China: d/b/a WTC Link

      China World Trade Corporation, incorporated in the British Virgin Islands:

      d/b/a China World Trade Corporation

1

General Business Network (Holdings) Limited, incorporated in Hong Kong, SAR:

d/b/a GBN Hong Kong.

   General Business Network (GZ) Co. Limited, incorporated in the Peoples’ Republic of China: d/b/a GBN GuangzhouGuangdong New Generation

   Commercial Management Limited, incorporated in the

      Peoples’ Republic of China: d/b/a New Generation; ”i-tour”; “ZheFuTianXia” (meaning

      discount services)

Guangdong Huahao Insurance Agency Limited, incorporated in the Peoples’ Republic of

     China: d/b/a Huahao Insurance

Guangzhou Xinyou Foreign Enterprise Services Limited, incorporated in the Peoples’

    Republic of China: d/b/a Xinyou

Guangzhou Hongyan Travel Services Limited, incorporated in the Peoples’ Republic of

    China: d/b/a Hongyan

Guangdong New Generation Commercial Tour Service Limited, incorporated in the

    Peoples’ Republic of China: d/b/a Commercial Tour

Guangdong New Generation Air Tour Service Limited, incorporated in the Peoples’

   Republic of China: No d/b/a.

Guangdong Airport Tour Service Limited, incorporated in the Peoples’ Republic of

   China: d/b/a Airport Tour

   GBN Wealth Management Limited, incorporated in Hong Kong, SAR:

    No d/b/a. It is a dormant company.

    Polysend Trading Limited, incorporated in Hong Kong, SAR:

    d/b/a Polysend

2

EX-23.2

EXHIBIT 23.2

Consent of Moores Rowland Mazars, Certified Public Accountants

May 16, 2005

The Board of Directors

China World Trade Corporation

3^rd Floor, Goldlion Digital Network Center

138 Tiyu Road East, Tianhe.

Guangzhou, People's Republic of China

Re: China World Trade Corporation - Form SB-2/A

Dear Sir/Madam:

As independent chartered accountants, we hereby consent to the incorporation by reference in China World Trade Corporation’s Registration Statement on Form SB-2/A of our (i) report dated April 14, 2005 on China World Trade Corporation’s audited financial statements for the year ended December 31, 2004, (ii) report dated August 12, 2004 on Guangdong New Generation Commercial Management Limited’s audited financial statements for the periods/years ended March 31, 2004, December 31, 2003 and December 31, 2002, and (iii) report dated August 12, 2004 on Guangdong Huahao Insurance Agency Limited’s audited financial statements for the periods/years ended March 31, 2004, December 31, 2003 and December 31, 2002, and to all references to our firm included in this Registration Statement.

Sincerely,

/s/ Moores Rowland Mazars

Moores Rowland Mazars

Chartered Accountants

Certified Public Accountants

Hong Kong