8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K/A

CURRENT REPORT

(Amendment No. 1)

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): April 2, 2007

Wonder Auto Technology, Inc.

(Exact name of registrant as specified in its charter)

Nevada	0-50883	88-0495105
(State of Incorporation)	(Commission File No.)	(IRS Employer ID No.)

No. 56 Lingxi Street

Taihe District

Jinzhou City, Liaoning

People’s Republic of China, 121013

(Address of Principal Executive Offices)

(86) 0416-2661186

Registrant’s Telephone Number, Including Area Code:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On April 2, 2007, Wonder Auto Technology, Inc. (the “Company”) acquired an aggregate 79.592% ownership interest in Jinzhou Wanyou Mechanical Parts Co., Ltd. (“Jinzhou Wanyou”) in two separate and separately negotiated equity purchase transactions between the Company’s subsidiaries and two former equity owners of Jinzhou Wanyou. On April 4, 2007, the Company filed a Current Report on Form 8-K (the “Initial 8-K”) to report the acquisitions. The purpose of this Amendment No. 1 to the Initial 8-K is to file the financial statements and pro forma information required by Item 9.01 of Form 8-K.

The Company hereby amends and restates Item 9.01 of the Initial 8-K to read in its entirety as follows:

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Businesses Acquired.

Pursuant to paragraph (a)(4) of Item 9.01 of Form 8-K, the attached financial statements were omitted from the disclosure contained in the Initial 8-K. Attached hereto as Exhibits 99.1 and 99.2, and incorporated herein by reference, are the required financial statements of Jinzhou Wanyou Mechanical Parts Co., Ltd.

1. Unaudited condensed financial statements for the three months ended March 31, 2007.

2. Audited financial statements for the period from September 21, 2006 (date of incorporation) to December 31, 2006.

(b) Pro-forma Financial Information.

Pursuant to paragraph (b)(2) of Item 9.01 of Form 8-K, the attached pro forma financial information was omitted from the disclosure contained in the Initial 8-K. Attached hereto as Exhibit 99.3, and incorporated herein by reference, are the required unaudited pro forma consolidated financial statements of the Company. 

(d) Exhibits

Exhibit Number	Description of Exhibit
23.1	Consent of PKF.
99.1	Unaudited condensed financial statements of Jinzhou Wanyou for the three months ended March 31, 2007.
99.2	Audited financial statements of Jinzhou Wanyou for the period from September 21, 2006 (date of incorporation) to December 31, 2006.
99.3	Pro forma condensed combined financial statements of Wonder Auto Technology, Inc.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Wonder Auto Technology, Inc.

Date: June 14, 2007

/s/ Qingjie Zhao

Chief Executive Officer and President

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
23.1	Consent of PKF.
99.1	Unaudited condensed financial statements of Jinzhou Wanyou for the three months ended March 31, 2007.
99.2	Audited financial statements of Jinzhou Wanyou for the period from September 21, 2006 (date of incorporation) to December 31, 2006.
99.3	Pro forma condensed combined financial statements of Wonder Auto Technology, Inc.

EX-23.1

EX-99.1

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Condensed Financial Statements

For the three months ended March 31, 2007

(Stated in US dollars)

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Condensed Financial Statements

Three months ended March 31, 2007

Index to Condensed Financial Statements

	Pages
Condensed Statement of Operations and Comprehensive Income		1
Condensed Balance Sheets		2
Condensed Statement of Cash Flows		3
Notes to Condensed Financial Statements		4 - 12

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Condensed Statement of Operations and Comprehensive Income

For the three months ended March 31, 2007

(unaudited)

(Stated in US Dollars)

Net sales	$	921,368
Cost of sales		(742,104	)
Gross profit		179,264
Operating expenses
Administrative expenses		16,330
Selling expenses		147
Total operating expenses		16,477
Income from operations		162,787
Interest income		1,014
Other income		3,630
Finance costs		(126	)
Income before income taxes		167,305
Income taxes - Note 4		-
Net income		167,305
Other comprehensive income
Foreign currency translation adjustments		26,241
Total comprehensive income		193,546
Earnings per share: basic and diluted - Note 5
Weighted average number of shares outstanding :- Note 5
basic and diluted

See accompanying Notes to Condensed Financial Statements

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Condensed Balance Sheets

As of March 31, 2007 and December 31, 2006

(Stated in US Dollars)

	March 31,		December 31,
	2007		2006
	(Unaudited)		(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	273,515	$	663,701
Trade receivables		562,107		517
Bills receivable		64,592		-
Other receivables and prepayments		192,696		11,685
Inventories - Note 6		224,421		138,844
Amounts due from stockholders - Note 7		694,267		951,996
Total current assets		2,011,598		1,766,743
Property, plant and equipment, net - Note 8		1,069,720		952,581
Deposit for acquisition of property, plant and equipment		18,990		16,246
TOTAL ASSETS	$	3,100,308	$	2,735,570
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Trade payables	$	306,116	$	89,586
Other payables and accrued expenses		15,507		20,453
Income tax payable		-		40,392
TOTAL LIABILITIES		321,623		150,431
COMMITMENTS AND CONTINGENCIES
- Note 9
STOCKHOLDERS’ EQUITY
Registered and paid up capital - Note 10		2,450,000		2,450,000
Statutory reserve - Note 11		10,919		10,919
Accumulated other comprehensive income		53,034		26,793
Retained earnings		264,732		97,427
TOTAL STOCKHOLDERS’ EQUITY		2,778,685		2,585,139
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,100,308	$	2,735,570

See accompanying Notes to Condensed Financial Statements

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Condensed Statement of Cash Flows

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

Cash flows from operating activities
Net income	$	167,305
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation		22,954
Changes in operating assets and liabilities:
Trade receivables		(559,381	)
Bills receivable		(64,338	)
Other receivables and prepayments		(189,979	)
Inventories		(83,872	)
Amounts due from stockholders		266,101
Trade payables		224,591
Other payables and accrued expenses		(5,128	)
Income tax payable		(40,632	)
Net cash flows used in operating activities		(262,379	)
Cash flows from investing activities
Payments to acquire and deposit for acquisition of
property, plant and equipment		(132,818	)
Net cash flows used in investing activities		(132,818	)
Effect of foreign currency translation on cash
and cash equivalents		5,011
Net decrease in cash and cash equivalents		(390,186	)
Cash and cash equivalents - beginning of period		663,701
Cash and cash equivalents - end of period	$	273,515
Supplemental disclosures for cash flow information:
Cash paid for:
Interest	$	-
Income taxes	$	40,632

See accompanying Notes to Condensed Financial Statements

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

1.Description of business

Jinzhou Wanyou Mechanical Parts Co., Ltd. (the “Company”) was established in the People’s Republic of China (the “PRC”) on September 21, 2006. The Company is engaged in manufacturing of piston rods, vibration-dampers and rotary axes for motor vehicles.

2.Basis of presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulation and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the period from September 21, 2006 (date of incorporation) to December 31, 2006.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

3.Summary of significant accounting policies

Use of estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes, provision for warranty and the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

3.Summary of significant accounting policies (Cont’d)

Concentrations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and trade and bills receivables. As of March 31, 2007, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality. With respect to trade and bills receivables, the Company extends credit based on an evaluation of the customer’s financial condition. The Company generally does not require collateral for trade receivables and maintains an allowance for doubtful accounts of trade receivables.

Regarding bills receivable, they are undertaken by the banks to honor the payments at maturity and the customers are required to place deposits with the banks equivalent to certain percentage of the bills amount as collateral. These bills receivable can be sold to any third party at a discount before maturity. The Company does not maintain allowance for bills receivable in the absence of bad debt experience and the payments are undertaken by the banks.

During the reporting period, customers represented 10% or more of the Company’s sales are :-

	Three months
	ended March
	31, 2007
Jinzhou Wonder Auto Suspension System Co., Ltd	$	169,928
ArvinMeritor Light Vehicle Aftermarket
Gabriel Ride Control Products, Inc		571,470
	$	741,398

Cash and cash equivalents

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less to be cash equivalents. As of March 31, 2007 almost all the cash and cash equivalents were denominated in Renminbi (“RMB”) and were placed with banks in the PRC. They are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government. The remaining insignificant balance of cash and cash equivalents were denominated in US dollars.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

3.Summary of significant accounting policies (Cont’d)

Allowance of doubtful accounts

The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectibility of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. Among other things, the Company considers the historical level of credit losses and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.

Based on the above assessment, during the reporting periods, the management has established a general provisioning policy to make allowance equivalent to 100% of gross amount of trade receivables due over 1 year. Additional specific provision is made against trade receivables aged less than 1 year to the extent which they are considered to be doubtful.

Bad debts are written off when identified. The Company extends unsecured credit to customers ranging from one to three months in the normal course of business. The Company does not accrue interest on trade accounts receivable.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition. In assessing the ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase as our projected demand requirements; decrease due to market conditions, product life cycle changes. The Company estimates the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand.

In addition, the Company estimates net realizable value based on intended use, current market value and inventory ageing analyses. The Company writes down the inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventories and the estimated market value based upon assumptions about future demand and market conditions.

Based on the above assessment, the Company has established a general 50% provision for inventories aged over 1 year.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

3.Summary of significant accounting policies (Cont’d)

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.

Depreciation is provided on straight-line basis over their estimated useful lives. The principal depreciation rates are as follows :-

	Annual rate			Residual value
Plant and machinery		9	%		10	%
Furniture, fixtures and equipment		18	%		10	%
Motor vehicle		18	%		10	%
Leasehold improvements		20	%		Nil

Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.

Revenue recognition

Revenue from sales of the Company’s products is recognized when the significant risks and rewards of ownership have been transferred to the buyer at the time when the products are delivered to and accepted by its customers, the sales price is fixed or determinable and collection is reasonably assured.

Warranty

The Company maintains a policy of providing after sales support for products by way of a warranty programme. Those products are guaranteed for usage for a pre-agreed period of time.

Since such products were well developed and highly mature, the Company did not encounter any claims from customers based on past experience. Accordingly the Company did not maintain a warranty reserve during the reporting period. However, the Company will periodically assess the estimation of its warranty liability and recognize the reserve when necessary based on the actual experience.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

3.Summary of significant accounting policies (Cont’d)

Impairment of long-lived assets

Long-lived assets are tested for impairment in accordance with SFAS No. 144. The Company periodically evaluates potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cashflows attributable to such assets. During the reporting period, the Company has not identified any indicators that would require testing for impairment.

Recently issued accounting pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FIN 48 “Accounting for Uncertainty in Income Taxes”. This interpretation requires that the entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 is effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoption of this statement does not have any impact of the Company’s financial statements.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurement”. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This Statement shall be effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The provisions of this statement should be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except in some circumstances where the statement shall be applied retrospectively. The Company is currently evaluating the effect of SFAS 157 on its financial statements.

In September 2006, the FASB released SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106, and 132(R)” which requires an employer to recognize the over funded or under funded status of defined benefit and other postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through an adjustment to comprehensive income. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158’s requirement to recognize the funded status of a benefit plan and new disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The adoption of this statement does not have any impact of the Company’s financial statements.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

3.Summary of significant accounting policies (Cont’d)

Recently issued accounting pronouncements (cont’d)

In September 2006, the SEC issued SAB No. 108, which provides guidance on the process of quantifying financial statement misstatements. In SAB No. 108, the SEC staff establishes an approach that requires quantification of financial statement errors, under both the iron-curtain and the roll-over methods, based on the effects of the error on each of the Company’s financial statements and the related financial statement disclosures. SAB No. 108 is generally effective for annual financial statements in the first fiscal year ending after November 15, 2006. The adoption of this statement does not have any impact of the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with few exceptions. SFAS 159 also establishes presentation and disclosure requirements to facilitate comparisons between companies that choose different measurement attributes for similar assets and liabilities. The requirements of SFAS 159 are effective for our fiscal year beginning January 1, 2008. We are in the process of evaluating this standard and therefore have not yet determined the impact that SFAS 159 will have on our financial statements upon adoption.

4.Income taxes

PRC

Enterprises income tax (“EIT”) to the Company in the PRC is charged at 27%, of which 24% is for national tax and 3% for local tax, of the assessable profits. As approved by the relevant tax authority in the PRC, the Company was entitled to two years’ exemption, from the first profit making calendar year of operations after offset of accumulated taxable losses, followed by 50% tax reduction for the immediate next three calendar years (“tax holiday”). The Company has elected not to commence the entitlement of tax holiday in the first profit making fiscal financial year of 2006 and thus had current tax payable in the prior period. The tax holiday of the Company commenced in the fiscal year 2007. Accordingly, the company will be exempted from EIT for 2007 and 2008 and thereafter entitled to a 50% reduction on EIT tax rate at 13.5% for 2009, 2010 and 2011.

The Company, being Foreign Investment Enterprise, was entitled to another special tax concession. An amount equivalent to 40% qualifying domestic capital expenditure as defined and approved under the relevant PRC income tax rule can be used as an offset against the excess of the current year’s EIT over the prior year’s EIT. This tax concession, if untilized, can be carried forward for five years.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

5.Earnings per share

The basic and diluted earnings per share are not presented because the Company’s common stock represents the outstanding registered capital of the Company which are not divided into number of shares (note 10). Also, the Company had no dilutive instruments.

6.Inventories

	March 31,		December 31,
	2007		2006
	(Unaduited)		(Audited)
Raw materials	$	66,553	$	40,555
Work-in-progress		58,219		40,420
Finished goods		99,649		57,869
	$	224,421	$	138,844

7.Amounts due from stockholders

Included in the accounts is a loan of $391,928 interest-bearing at prevailing PRC bank loan interest rate, unsecured and has no fixed term of repayment. The remaining amounts are arising from trading transactions which are interest-free, unsecured and repayable on demand.

8.Property, plant and equipment, net

	March 31,			December 31,
	2007			2006
	(Unaduited)			(Audited)
Costs:
Plant and machinery	$	1,073,090		$	970,172
Furniture, fixtures and equipment		4,523			4,044
Motor vehicle		9,032			-
Leasehold improvements		27,968			-
		1,114,613			974,216
Accumulated depreciation		(44,893	)		(21,635	)
Net	$	1,069,720		$	952,581

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

9.Commitments and contingencies

a.Capital commitment

As of March 31, 2007, the Company had capital commitments amounting to $175,954 in respect of the acquisition of property, plant and equipment which were contracted for but not provided in the financial statements.

b.Operating lease arrangement

As of March 31, 2007, the Company had a non-cancelable operating lease for its factory and office premises and production line facilities. The leases will expire in 2007 and the remaining payment is $16,665.

The rental expenses relating to the operating leases were $10,037 for the three months ended March 31, 2007.

10.Registered capital

The Company is a non-joint capital stock corporation and therefore the capital stock, consistent with most of the PRC corporations, are not divided into a specific number of shares having a stated nominal amount.

11.Statutory reserve

In accordance with the relevant laws and regulations of the PRC and articles of association of the Company, it is required to appropriate 10% of its net income, after offsetting any prior years’ losses, to the statutory reserve. When the balance of such reserve reaches 50% of the registered capital, any further appropriation is optional. Upon approval from the board of directors of the Company, the statutory reserve can be used to offset accumulated losses or to increase registered capital.

12.Defined contribution plan

The Company has a defined contribution plan for all qualified employees in the PRC. The employer and its employees are each required to make contributions to the plan at the rates specified in the plan. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in the future years. The defined contribution plan contributions were charged to the statement of operations. The Company contributed $1,777 for the three months ended March 31, 2007.

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Condensed Financial Statements

For the three months ended March 31, 2007

(Unaudited)

(Stated in US Dollars)

13.Related party transactions

Apart from the transactions as disclosed in note 7 to the financial statements, during the three months ended March 31, 2007, the Company purchased raw materials of $184,690 from a stockholder Jinzhou Wonder Auto Suspension System Co., Ltd (“JWAS”). The Company also sold finished goods of $169,928 and $82,251 to two stockholders, JWAS and Jinzhou Halla Electrical Equipment Co., Ltd. respectively. All the purchase and sale transactions were conducted on an arm-length basis.

During the three months ended March 31, 2007, the Company occupied part of factory and office premises and used production line facilities owned by JWAS under operating lease arrangement. Details of such lease are set out in note 9b.

14.Segment information

The nature of the products, their production processes, the type of their customers and their distribution methods are substantially similar, they are considered as a single reportable segment under FAS 131, “Disclosures about Segments of an Enterprise and Related Information”.

All of the Company’s long-lived assets and revenues classified based on the customers are located in the PRC during the reporting period.

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EX-99.2

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Financial Statements

For the period from September 21, 2006

(Date of incorporation) to December 31, 2006

(Stated in US dollars)

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Financial Statements

Index to Financial Statements

	Pages
Report of Independent Registered Public Accounting Firm		1
Statement of Operations and Comprehensive Income		2
Balance Sheet		3
Statement of Cash Flows		4
Statement of Stockholders’ Equity		5
Notes to Financial Statements		6 - 15

Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders of

Jinzhou Wanyou Mechanical Parts Co., Ltd.

We have audited the accompanying balance sheet of Jinzhou Wanyou Mechanical Parts Co., Ltd. (the “Company”) as of December 31, 2006, and the related statements of operations and comprehensive income, stockholders’ equity and cash flows for the period from September 21, 2006 (date of incorporation) to December 31, 2006. 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 audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2006, and the results of their operations and their cash flows for the period from September 21, 2006 (date of incorporation) to December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

/s/ PKF

PKF

Certified Public Accountants

Hong Kong

May 28, 2007

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Jinzhou Wanyou Mechanical Parts Co., Ltd.

Statement of Operations and Comprehensive Income

For the period from September 21, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

Net sales	$	731,399
Cost of sales		(567,365	)
Gross profit		164,034
Operating expenses
Administrative expenses		16,593
Income from operations		147,441
Interest income		1,593
Finance costs		(610	)
Income before income taxes		148,424
Income taxes - Note 5		(40,078	)
Net income	$	108,346
Other comprehensive income
Foreign currency translation adjustments		26,793
Total comprehensive income	$	135,139
Earnings per share: basic and diluted - Note 6
Weighted average number of shares outstanding:
basic and diluted - Note 6

See accompanying Notes to Financial Statements

-2-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Balance Sheet

As of December 31, 2006

(Stated in US Dollars)

ASSETS
Current assets
Cash and cash equivalents	$	663,701
Trade receivables		517
Other receivables and prepayment		11,685
Inventories - Note 7		138,844
Amounts due from stockholders - Note 8		951,996
Total current assets		1,766,743
Property, plant and equipment, net - Note 9		952,581
Deposit for acquisition of property, plant and
equipment		16,246
TOTAL ASSETS	$	2,735,570
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Trade payables	$	89,586
Other payables and accrued expenses		20,453
Income tax payable		40,392
TOTAL LIABILITIES		150,431
COMMITMENTS AND CONTINGENCIES
- Note 10
STOCKHOLDERS’ EQUITY
Registered and paid up capital - Note 11		2,450,000
Statutory reserve - Note 12		10,919
Accumulated other comprehensive income		26,793
Retained earnings		97,427
TOTAL STOCKHOLDERS’ EQUITY		2,585,139
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,735,570

See accompanying Notes to Financial Statements

-3-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Statement of Cash Flows

For the period from September 21, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

Cash flows from operating activities
Net income	$	108,346
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation		21,466
Changes in operating assets and liabilities:
Trade receivables		(513	)
Other receivables and prepayments		(11,594	)
Inventories		(137,764	)
Amounts due from stockholders		(560,140	)
Trade payables		88,889
Other payables and accrued expenses		20,293
Income tax payable		40,078
Net cash flows used in operating activities		(430,939	)
Cash flows from investing activities
Payments to acquire and deposit for acquisition of
property, plant and equipment		(30,112	)
Loan to a stockholder		(384,449	)
Net cash flows used in investing activities		(414,561	)
Cash flows from financing activities
Cash contributions of registered capital by
stockholders		1,500,000
Net cash flows provided by financing activities		1,500,000
Effect of foreign currency translation on cash
and cash equivalents		9,201
Net increase in cash and cash equivalents		663,701
Cash and cash equivalents - beginning of period		-
Cash and cash equivalents - end of period	$	663,701
Non-cash financing activity:
Contributions of registered capital by injecting
property, plant and equipment	$	950,000

See accompanying Notes to Financial Statements

-4-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Statement of Stockholders’ Equity

As of December 31, 2006

(Stated in US Dollars)

					Accumulated
					other
	Registered		Statutory		comprehensive		Retained
	capital		reserve		income		earnings			Total
Capital contributions by
stockholders	$	2,450,000	$	-	$	-	$	-		$	2,450,000
Net income		-		-		-		108,346			108,346
Foreign currency translation
adjustments		-		-		26,793		-			26,793
Appropriation to reserve		-		10,919		-		(10,919	)		-
Balance, December 31, 2006	$	2,450,000	$	10,919	$	26,793	$	97,427		$	2,585,139

See accompanying Notes to Financial Statements

-5-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

1.Change of company name

Starting from April 2, 2007, the name of the company changed from “Jizhou Wonder Friends Mechanical Parts Co., Ltd” to “Jizhou Wanyou Mechanical Parts Co., Ltd.”.

2.Description of business

Jinzhou Wanyou Mechanical Parts Co., Ltd. (the “Company”) was established in the People’s Republic of China (the “PRC”) on September 21, 2006. The Company is engaged in manufacturing of piston rods, vibration-dampers and rotary axes for motor vehicles.

3.Basis of presentation

The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America.

4.Summary of significant accounting policies

Use of estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes, provision for warranty and the estimation on useful lives of property, plant and equipment. Actual results could differ from those estimates.

Concentrations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, trade receivables and amounts due from stockholders. As of December 31, 2006, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality. With respect to amounts due from stockholders that were substantially arising from sales transactions, the Company extends credit based on an evaluation of the customer’s financial condition. The Company generally does not require collateral for trade receivables and maintains an allowance for doubtful accounts of trade receivables.

During the period from September 21, 2006 (date of incorporation) to December 31, 2006, sales to the Company’s stockholder, Jinzhou Wonder Auto Suspension System Company Limited, represented approximately 96% of the Company’s sales. No other customers accounted for more than 10% of the Company’s sales during the reporting period.

-6-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Cash and cash equivalents

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less to be cash equivalents. As of December 31, 2006 almost all the cash and cash equivalents were denominated in Renminbi (“RMB”) and were placed with banks in the PRC. They are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government. The remaining insignificant balance of cash and cash equivalents were denominated in US dollars.

Allowance of doubtful accounts

The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectibility of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance. Among other things, the Company considers the historical level of credit losses and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.

Based on the above assessment, during the reporting periods, the management has established a general provisioning policy to make allowance equivalent to 100% of gross amount of trade receivables due over 1 year. Additional specific provision is made against trade receivables aged less than 1 year to the extent which they are considered to be doubtful.

Bad debts are written off when identified. The Company extends unsecured credit to customers ranging from one to three months in the normal course of business. The Company does not accrue interest on trade accounts receivable.

-7-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition. In assessing the ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase as our projected demand requirements; decrease due to market conditions, product life cycle changes. The Company estimates the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand.

In addition, the Company estimates net realizable value based on intended use, current market value and inventory ageing analyses. The Company writes down the inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventories and the estimated market value based upon assumptions about future demand and market conditions.

Based on the above assessment, the Company has established a general 50% provision for inventories aged over 1 year.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.

Depreciation is provided on straight-line basis over their estimated useful lives. The principal depreciation rates are as follows :-

	Annual rate			Residual value
Plant and machinery		9	%		10	%
Furniture, fixtures and equipment		18	%		10	%

Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.

-8-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Revenue recognition

Revenue from sales of the Company’s products is recognized when the significant risks and rewards of ownership have been transferred to the buyer at the time when the products are delivered to and accepted by its customers, the sales price is fixed or determinable and collection is reasonably assured.

Warranty

The Company maintains a policy of providing after sales support for products by way of a warranty programme. Those products are guaranteed for usage for a pre-agreed period of time.

Since such products were well developed and highly mature, the Company did not encounter any claims from customers based on past experience. Accordingly the Company did not maintain a warranty reserve during the reporting period. However, the Company will periodically assess the estimation of its warranty liability and recognize the reserve when necessary based on the actual experience.

Stock-based compensation

During the reporting periods, the Company did not make any stock-based compensation payments.

Income taxes

The Company uses the asset and liability method of accounting for income taxes pursuant to SFAS No. 109 “Accounting for Income Taxes”. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Off-balance sheet arrangements

The Company does not have any off-balance sheet arrangements.

Comprehensive income

The Company has adopted SFAS 130, “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income (loss) include net income and foreign currency translation adjustments.

-9-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Foreign currency translation

The functional currency of the Company is RMB and RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the period.

For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity. The exchange rate in effect at December 31, 2006 was RMB1 for $0.1279. The average exchange rate for the period from September 21, 2006 (date of incorporation) to December 31, 2006 was RMB1 for $0.1269. There is no significant fluctuation in exchange rate for the conversion of RMB to US dollars after the balance sheet date.

Fair value of financial instruments

The carrying values of the Company’s financial instruments, including cash and cash equivalents, trade and other receivables, trade and other payables approximate their fair values due to the short-term maturity of such instruments.

It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.

In respect of foreign currency risk, the Company is exposed to this risk arising from import purchase transactions and recognized trade payables as they will affect the future operating results of the Company. The Company did not have any hedging transactions during the reporting periods. As the functional currency of the Company is RMB, the exchange difference on translation to US dollars for reporting purpose is taken to other comprehensive income.

-10-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Impairment of long-lived assets

Long-lived assets are tested for impairment in accordance with SFAS No. 144. The Company periodically evaluates potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cashflows attributable to such assets. During the reporting period, the Company has not identified any indicators that would require testing for impairment.

Recently issued accounting pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FIN 48 “Accounting for Uncertainty in Income Taxes”. This interpretation requires that the entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 is effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the effect of adopting FIN 48 on its financial statement.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurement”. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This Statement shall be effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The provisions of this statement should be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except in some circumstances where the statement shall be applied retrospectively. The Company is currently evaluating the effect of SFAS 157 on its financial statements.

In September 2006, the FASB released SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106, and 132(R)” which requires an employer to recognize the over funded or under funded status of defined benefit and other postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through an adjustment to comprehensive income. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS 158’s requirement to recognize the funded status of a benefit plan and new disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The adoption of this statement does not have any impact of the Company’s financial statements.

-11-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

4.Summary of significant accounting policies (Cont’d)

Recently issued accounting pronouncements (cont’d)

In September 2006, the SEC issued SAB No. 108, which provides guidance on the process of quantifying financial statement misstatements. In SAB No. 108, the SEC staff establishes an approach that requires quantification of financial statement errors, under both the iron-curtain and the roll-over methods, based on the effects of the error on each of the Company’s financial statements and the related financial statement disclosures. SAB No. 108 is generally effective for annual financial statements in the first fiscal year ending after November 15, 2006. The adoption of this statement does not have any impact of the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with few exceptions. SFAS 159 also establishes presentation and disclosure requirements to facilitate comparisons between companies that choose different measurement attributes for similar assets and liabilities. The requirements of SFAS 159 are effective for our fiscal year beginning January 1, 2008. We are in the process of evaluating this standard and therefore have not yet determined the impact that SFAS 159 will have on our financial statements upon adoption.

5.Income taxes

PRC

Enterprises income tax (“EIT”) to the Company in the PRC is charged at 27%, of which 24% is for national tax and 3% for local tax, of the assessable profits. As approved by the relevant tax authority in the PRC, the Company was entitled to two years’ exemption, from the first profit making calendar year of operations after offset of accumulated taxable losses, followed by 50% tax reduction for the immediate next three calendar years (“tax holiday”). The Company has elected not to commence the entitlement of tax holiday in the first profit making fiscal financial year of 2006, and thus had current tax payable in respect of the reporting period.

The Company, being Foreign Investment Enterprise, was entitled to another special tax concession. An amount equivalent to 40% qualifying domestic capital expenditure as defined and approved under the relevant PRC income tax rule can be used as an offset against the excess of the current year’s EIT over the prior year’s EIT. This tax concession, if untilized, can be carried forward for five years.

-12-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

6.Earnings per share

The basic and diluted earnings per share are not presented because the Company’s common stock represents the outstanding registered capital of the Company which are not divided into number of shares (note 11). Also, the Company had no dilutive instruments.

7.Inventories

Raw materials	$	40,555
Work-in-progress		40,420
Finished goods		57,869
	$	138,844

8.Amounts due from stockholders

Included in the amounts is a loan of $387,464 which is interest-bearing at prevailing PRC bank loan interest rate, unsecured and has no fixed term of repayment. The remaining amounts are arising from trading transactions which are interest-free, unsecured and repayable on demand.

9.Property, plant and equipment, net

Costs:
Plant and machinery	$	970,172
Furniture, fixtures and equipment		4,044
		974,216
Accumulated depreciation		(21,635	)
Net	$	952,581
Depreciation	$	32

(i)During the reporting periods, depreciation is included in :-

Cost of sales and overheads of inventories	$	21,434
Other		32
	$	21,466

-13-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

10.Commitments and contingencies

Capital commitment

As of December 31, 2006, the Company had capital commitments amounting to $15,798 in respect of the acquisition of property, plant and equipment which were contracted for but not provided in the financial statements.

11.Registered capital

The Company is a non-joint capital stock corporation and therefore the capital stock, consistent with most of the PRC corporations, are not divided into a specific number of shares having a stated nominal amount.

12.Statutory reserve

In accordance with the relevant laws and regulations of the PRC and articles of association of the Company, it is required to appropriate 10% of its net income, after offsetting any prior years’ losses, to the statutory reserve. When the balance of such reserve reaches 50% of the registered capital, any further appropriation is optional. Upon approval from the board of directors of the Company, the statutory reserve can be used to offset accumulated losses or to increase registered capital.

13.Defined contribution plan

The Company has a defined contribution plan for all qualified employees in the PRC. The employer and its employees are each required to make contributions to the plan at the rates specified in the plan. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in the future years. The defined contribution plan contributions were charged to the statement of operations. The Company contributed $1,614 for the period from September 21, 2006 (date of incorporation) to December 31, 2006.

-14-

Jinzhou Wanyou Mechanical Parts Co., Ltd.

Notes to Financial Statements

For the period from September 31, 2006

(date of incorporation) to December 31, 2006

(Stated in US Dollars)

14.Related party transactions

Apart from the transactions as disclosed in note 8 to the financial statements, during the period ended December 31, 2006, the Company purchased raw materials of $213,982 from a stockholder Jinzhou Wonder Auto Suspension System Co., Ltd (“JWAS”). The Company also sold finished goods of $699,136 and $31,795 to two stockholders, JWAS and Jinzhou Halla Electrical Equipment Co., Ltd. respectively. All the purchase and sale transactions were conducted on an arm-length basis.

During the period, the Company occupied part of the factory and office premises of JWAS free of charge.

15.Segment information

The nature of the products, their production processes, the type of their customers and their distribution methods are substantially similar, they are considered as a single reportable segment under FAS 131, “Disclosures about Segments of an Enterprise and Related Information”.

All of the Company’s long-lived assets and revenues classified based on the customers are located in the PRC during the reporting period.

-15-

EX-99.3

Wonder Auto Technology, Inc.

Pro Forma Condensed

Combined Financial Statements

March 31, 2007 (unaudited)

(Stated in US dollars)

Wonder Auto Technology, Inc.

Pro Forma Condensed Combined Financial Statements

Index to Pro Forma Condensed Combined Financial Statements

	Pages
Introduction to Unaudited Pro Forma Condensed Combined Financial Statements		1
Unaudited Pro Forma Condensed Combined Balance Sheet		2 - 3
Unaudited Pro Forma Condensed Combined Statements of Operations		4 - 5
Notes to Unaudited Pro Forma Condensed Combined Financial Statements		6 - 7

Wonder Auto Technology, Inc.

March 31, 2007

Introduction to Unaudited Pro Forma Condensed Combined Financial Statements

The following unaudited pro forma condensed combined financial statements have been prepared to give effect to the combination of the Wonder Auto Technology, Inc. (the “Company”) and Jinzhou Wanyou Mechanical Parts Co., Ltd. (“Wanyou”). The unaudited pro forma condensed combined financial statements were prepared using the historical consolidated financial statements of the Company and historical financial statements of Wanyou. Please note that the unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of the Company and Wanyou, respectively. The Company’s financial information can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and quarterly report on Form 10-Q for the three months ended March 31, 2007. [The financial information of Wanyou are filed together with this Pro Forma Condensed Combined Financial Statements on 8-K.]

The unaudited pro forma condensed combined balance sheet as of March 31, 2007 combines the unaudited condensed consolidated balance sheet of the Company as of March 31, 2007 and the unaudited balance sheet of Wanyou as of March 31, 2007 and gives effect to the acquisition as if the acquisition occurred on March 31, 2007.

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2006 and for the three months ended March 31, 2007 give effect to the acquisition as if the acquisition occurred on January 1, 2006, the first day of the Company’s fiscal year. The unaduited pro forma condensed combined statement of operations for the year ended December 31, 2006 combines the audited consolidated statement of operations of the Company for the year ended December 31, 2006 with the audited statement of operations of Wanyou for the period from September 21, 2006 (date of incorporation) to December 31, 2006. The unaduited pro forma combined statement of operations for the three months ended March 31, 2007 combines the unaudited consolidated statement of operations of the Company for the three months ended March 31, 2007 with the unaudited statement of operations of Wanyou for the three months ended March 31, 2007.

The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances.

-1-

Wonder Auto Technology, Inc.

Pro Forma Condensed Combined Balance Sheet

As of March 31, 2007 (Unaudited)

(Stated in US Dollars)

	The Company		Wanyou
	March 31,		March 31,		Pro Forma			Pro Forma
	2007		2007		Adjustments			Combined
ASSETS
Current assets
Cash and cash equivalents	$	6,065,302	$	273,515	$	-		$	6,338,817
Restricted cash		3,919,971		-		-			3,919,971
Trade receivables, net		26,042,474		562,107		-			26,604,581
Bills receivable		8,100,371		64,592		-			8,164,963
Other receivables, prepayments and deposits		1,445,086		192,696		-			1,637,782
Inventories		15,535,997		224,421		-			15,760,418
Amounts due from shareholders		-		694,267		(100,136	)(a)		594,131
Amount due from a related company		70,249		-		-			70,249
Deferred taxes		217,693		-		-			217,693
Total current assets		61,397,143		2,011,598		(100,136	)		63,308,605
Intangible assets
Know-how		1,482,617		-		-			1,482,617
Trademarks and patents		11,182		-		-			11,182
Customer contracts		-		-		49,053	(d)		49,053
Property, plant and equipment, net		14,469,688		1,069,720		-			15,539,408
Land use right		1,202,302		-		-			1,202,302
Deposit for acquisition of property,
plant and equipment		2,864,978		18,990		-			2,883,968
Investment in an unconsolidated affiliate		567,130		-		(567,130	)(b)		-
Goodwill		3,115,227		-		4,949,392	(d)		8,064,619
Deferred tax		221,744		-		-			221,744
TOTAL ASSETS	$	85,332,011	$	3,100,308	$	4,331,179		$	92,763,498

-2-

Wonder Auto Technology, Inc.

Pro Forma Condensed Combined Balance Sheet

As of March 31, 2007 (Unaudited)

(Stated in US Dollars)

	The Company		Wanyou
	March 31,		March 31,		Pro Forma			Pro Forma
	2007		2007		Adjustments			Combined
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Trade payables	$	12,411,172	$	306,116	$	-		$	12,717,288
Bills payable		6,717,565		-		-			6,717,565
Other payables and accrued expenses		2,833,675		15,507		-			2,849,182
Provision for warranty		980,551		-		-			980,551
Income tax payable		446,084		-		-			446,084
Amount due to an unconsolidated affiliate		100,136		-		(100,136	)(a)		-
Dividend payable to minority stockholders		691,152		-		-			691,152
Dividend payable to Winning		343,934		-		-			343,934
Payable for acquisition of Wanyou		-		-		7,210,000	(d)		7,210,000
Secured short-term bank loans		6,459,198		-		-			6,459,198
Total current liabilities		30,983,467		321,623		7,109,864			38,414,954
Secured long-term bank loans		10,916,984		-		-			10,916,984
TOTAL LIABILITIES		41,900,451		321,623		7,109,864			49,331,938
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS		2,124,794		-					2,124,794
STOCKHOLDERS’ EQUITY
Preferred stock: par value $0.0001 per share;
Authorized 10,000,000 shares, none
issued and outstanding
Common stock: par value $0.0001 per share;
authorized 90,000,000 shares, issued and						(500,000	)(b)
outstanding 23,959,994 shares in 2007		2,396		2,450,000		(1,950,000	)(d)		2,396
Additional paid-in capital		22,140,143		-					22,140,143
Statutory and other reserves		3,148,265		10,919		(10,919	)(d)		3,148,265
						(10,811	)(b)
Accumulated other comprehensive income		1,819,467		53,034		(42,223	)(d)		1,819,467
						(56,319	)(b)
Retained earnings		14,196,495		264,732		(208,413	)(d)		14,196,495
TOTAL STOCKHOLDERS’ EQUITY		41,306,766		2,778,685		(2,778,685	)		41,306,766
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	85,332,011	$	3,100,308	$	4,331,179		$	92,763,498

-3-

Wonder Auto Technology, Inc.

Pro Forma Condensed Combined Statement of Operations

Year ended December 31, 2006 (Unaudited)

(Stated in US Dollars)

				Wanyou
				For the period
				from September
				21, 2006 (date of
	The Company			incorporation) to
	December 31,			December 31,			Pro Forma			Pro Forma
	2006			2006			Adjustments			Combined
Net sales	$	72,150,483		$	731,399		$	(31,795	)(c)	$	72,850,087
Cost of sales		(57,831,251	)		(567,365	)		31,795	(c)		(58,366,821	)
Gross profit		14,319,232			164,034			-			14,483,266
Operating expenses
Administrative expenses		1,907,816			16,593			-			1,924,409
Research and development costs		458,652			-			-			458,652
Selling expenses		2,147,854			-			-			2,147,854
		4,514,322			16,593			-			4,530,915
Income before the following items and taxes		9,804,910			147,441			-			9,952,351
Interest income		96,810			1,593			-			98,403
Other income		356,590			-			-			356,590
Finance costs		(1,033,551	)		(610	)		-			(1,034,161	)
Equity in net income of unconsolidated
affiliates		371,005			-			(22,172	)(b)		348,833
Income before income taxes		9,595,764			148,424			(22,172	)		9,722,016
Income taxes		(1,270,391	)		(40,078	)		-			(1,310,469	)
Minority interests		(101,827	)		-			-			(101,827	)
Net income	$	8,223,546		$	108,346		$	(22,172	)	$	8,309,720
Earnings per share: basic and diluted	$	0.40			-					$	0.40
Weighted average number of shares
outstanding:
basic and diluted		20,787,279			-						20,787,279

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Wonder Auto Technology, Inc.

Pro Forma Condensed Combined Statement of Operations

Three months ended March 31, 2007 (Unaudited)

(Stated in US Dollars)

	The Company			Wanyou
	Three months			Three months
	ended March 31,			ended March 31,			Pro Forma			Pro Forma
	2007			2007			Adjustments			Combined
Net sales	$	21,566,796		$	921,368		$	(85,251	)(c)	$	22,402,913
Cost of sales		(16,251,790	)		(742,104	)		85,251	(c)		(16,908,643	)
Gross profit		5,315,006			179,264			-			5,494,270
Operating expenses
Administrative expenses		666,566			16,330			-			682,896
Research and development costs		263,446			-			-			263,446
Selling expenses		651,616			147			-			651,763
Total operating expenses		1,581,628			16,477			-			1,598,105
Income from operations		3,733,378			162,787			-			3,896,165
Interest income		16,709			1,014			-			17,723
Other income		23,795			3,630			-			27,425
Finance costs		(419,392	)		(126	)		-			(419,518	)
Equity in net income of an unconsolidated
affiliate		34,147			-			(34,147	)(b)		-
Income before income taxes		3,388,637			167,305			(34,147	)		3,521,795
Income taxes		(466,814	)		-			-			(466,814	)
Minority interests		(209,371	)		-			-			(209,371	)
Net income	$	2,712,452		$	167,305		$	(34,147	)	$	2,845,610
Earnings per share: basic and diluted	$	0.11			-					$	0.12
Weighted average number of shares outstanding:
basic and diluted		23,959,994			-						23,959,994

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Wonder Auto Technology, Inc.

Notes to Pro Forma Condensed Combined Financial Statements

(Unaudited)

(Stated in US Dollars)

1.Basis of presentation

On April 2, 2007, the Company’s subsidiaries Wonder Auto Limited (“Wonder”) and Jinzhou Halla Electrical Equipment Co., Ltd (“Jinzhou Halla”), acquired an aggregate 79.59% equity interest in Wanyou at total consideration of $16.4s million including contingent consideration of $9.21 million through two separately negotiated equity purchase transactions with two former equity owner of Wanyou. The contingent consideration will be payable if Wanyou achieves certain minimum net income threshold in future. After completion of these two equity purchase transactions, Wanyou become a wholly-owned subsidiary of the Company.

The unaudited pro forma condensed combined balance sheet gives effect to the acquisition of Wanyou as if it had occurred on March 31, 2007. The Company’s condensed consolidated balance sheet information was derived from its three months ended March 31, 2007 condensed consolidated balance sheet included in its quarterly report on Form 10-Q for the three months ended March 31, 2007.

The unaudited pro forma condensed combined statements of operations give effect to the acquisition of Wanyou as if it had occurred on January 1, 2006, the first day of the Company’s fiscal year. The Company’s consolidated statement of operations and condensed consolidated statement of operations information was derived from its fiscal year ended December 31, 2006 consolidated statement of operations and for the three months ended March 31, 2007 condensed consolidated statement of operations included in its annual report on Form 10-K for the year ended December 31, 2006 and quarterly report on Form 10-Q for the three months ended March 31, 2007 respectively.

The acquisition was accounted for using the purchase method of accounting in accordance with Statement of Financial Accounting Standards No.141, Business Combinations. Under the purchase method of accounting, the total purchase price is allocated to the net tangible and intangible assets of the business acquired in connection with the Share Purchase Agreement, based on the estimated fair value as of the completion of acquisition. Management has estimated the fair value of assets acquired and liabilities assumed based on the fair value attributable to the actual net tangible and intangible assets and liabilities of Wanyou that existed as of the date of the completion of the acquisition.

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Wonder Auto Technology, Inc.

Notes to Pro Forma Condensed Combined Financial Statements

(Unaudited)

(Stated in US Dollars)

2.Purchase price allocation

Under the purchase method of accounting, the initial purchase price is allocated to the acquired net assets based on their estimated fair values as of the completion of the acquisition. Based on management estimates of the attributable share (i.e. 79.59%) of fair values of assets and liabilities of Wanyou, the initial purchase price allocation is as follows:

Assets acquired:
Current assets	$	1,601,031
Property, plant and equipment		851,390
Deposit for acquisition of property,
plant and equipment		15,114
Intangible assets
Customer contracts
(Estimated life : 1 year)		49,053
Liabilities assumed:
Current liabilities		(255,980	)
Net assets acquired		2,260,608
Goodwill		4,949,392
Initial purchase price of acquisition	$	7,210,000

The above initial purchase price for Wanyou does not include the $9.21 million of contingent consideration pursuant to the Share Purchase Agreement. The remaining consideration shall be payable upon Wanyou’s fulfillment of targeted net profit. The recognition and allocation of contingent consideration will be treated as additional purchase price and allocated to goodwill subsequently.

3.Unaudited pro forma adjustments

The pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:

(a) Represents adjustment to eliminate amounts due from/(to) shareholders

(b) Represents adjustment to eliminate equity-pickup of Wanyou.

(c) Represents adjustment to eliminate sales and purchases with Wanyou.

(d) Represents adjustment to record the estimated goodwill resulting from the allocation of the purchase price to the fair value of assets acquired and liabilities assumed.

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