Rub A Dub Soap, Inc.: Form 8-K/A

8-K/A 1 rubadub042808form8ka.htm FORM 8-K/A Rub A Dub Soap, Inc.: Form 8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): April 29, 2008 (February 5, 2008)

RUB A DUB SOAP, INC.

(Exact name of registrant as specified in its charter)

Nevada	0-52142	84-1609495
(State of Incorporation)	(Commission File No.)	(IRS Employer ID No.)

No. 177 Chengyang Section

308 National Highway

Danshan Industrial Area

Qingdao, China, 266109

(Address of Principal Executive Offices)

86-532-8779-8766

(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):

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

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

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

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

EXPLANATORY NOTE

Rub A Dub Soap, Inc. is filing this Amendment No.1 Current Report on Form 8-K/A to amend the Current Report on Form 8-K initially filed with the Securities Exchange Commission on February 5, 2008 to (i) include the audited financial statements of the Company’s wholly-owned subsidiary, Zhongsen International Company Group Limited, a Hong Kong company, and its subsidiaries, as of December 31, 2007, (ii) update the management discussion and analysis with updated financial information as of December 31, 2007, and (iii) update any other information contained therein to reflect information as of December 31, 2007.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements, which reflect our views with respect to future events and financial performance. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from such statements. These forward-looking statements are identified by, among other things, the words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets,” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that may cause actual results to differ from those projected include the risk factors specified below.

ITEM 1.01

ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Except as otherwise indicated by the context, references in this report to:

•

“We,” “us,” or “our,” and the “Company” are references to the combined business of Rub a Dub Soap, Inc., a Nevada corporation, and its wholly-owned subsidiary, Zhongsen International Company Group Limited, a corporation formed under the laws of the Special Administrative Region of Hong Kong, or Zhongshen, along with Zhongshen’s wholly-owned subsidiaries: Qingdao (FTZ) Sentaida International Trading Co. Ltd., or FTZ Sentaida; Zhongshen Holdings Ltd., or Zhongshen Holdings; and Qingdao Sentaida Tires Co., Ltd,, or Sentaida Tire;

•

“China” and “PRC” are references to the People’s Republic of China and references to “Hong Kong” are to the Hong Kong Special Administrative Region of China;

•

“RMB” are to Renminbi, the legal currency of China;

•

“U.S. dollar,” “$” and “US$” are to the legal currency of the United States; and

•

“Securities Act” are references to the Securities Act of 1933, as amended and references to “Exchange Act” are references to the Securities Exchange Act of 1934, as amended.

Except where specifically indicated, all share numbers contained in this report are adjusted to reflect the 1-for-10 reverse split of our common stock that occurred on April 17, 2006.

On October 26, 2007, we entered into a Stock Purchase Agreement with Zhongsen International Company Group Limited, a corporation formed under the laws of Hong Kong ("Zhongsen"), and each of Zhongsen's shareholders (the "Purchase Agreement"). Pursuant to the Agreement, at the closing on February 5, 2008, we acquired all of the issued and outstanding capital stock of Zhongsen from the Zhongsen shareholders in exchange for 25,090,000 shares of our common stock.

The Stock Purchase Agreement is qualified in its entirety by reference to the provisions of the Stock Purchase Agreement which is included as Exhibit 2.1 of the Current Report on Form 8-K filed on October 29, 2007 and is incorporated by reference herein.

ITEM 2.01

COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On February 5, 2008, we completed an acquisition of Zhongsen pursuant to the Stock Purchase Agreement. The acquisition has been accounted for as a recapitalization effected by a share exchange, wherein Zhongsen is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

FORM 10 DISCLOSURE

As disclosed elsewhere in this report, on February 5, 2008, we acquired Zhongsen in a reverse acquisition transaction. Item 2.01(f) of Form 8-K states that if the registrant was a shell company like we were immediately before the transaction disclosed under Item 2.01 (i.e., the reverse acquisition), then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10.

Accordingly, we are providing below the information that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the combined Company after the acquisition of Zhongsen, except that information relating to periods prior to the date of the reverse acquisition only relate to Rub A Dub Soap, Inc. unless otherwise specifically indicated.

DESCRIPTION OF BUSINESS

Our History

We are a Nevada corporation that was originally incorporated on September 28, 2001 in Colorado and we are headquartered in Shandong Province, China. From our inception in 2001 until February 21, 2006, we were an online retailer of handmade, natural, vegetable-based soaps and gift baskets in the development stage, and we had generated only minimal revenues and a substantial net loss from sales of soaps and gift baskets.

On February 21, 2006, Lisa Powell, the controlling shareholder of the Company, sold 2,800,000 of her restricted shares to Halter Capital Corporation of Frisco, Texas, representing 74.6% of all of the outstanding shares of the Company. With the change in control, the Company ceased its soap business and began efforts to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering.

On March 6, 2006, the stockholders approved the re-incorporation of the Company in Nevada and in connection therewith a one-for-ten reverse split of the common stock, both of which became effective on April 17, 2006. All share numbers contained herein are expressed in post-reverse-split amounts.

From the time when we began efforts to locate a new business in the first quarter of 2006 until February 5, 2008 when we completed the acquisition transaction with Zhongsen, we had limited operations and did not engage in active business operations other than our search for, and evaluation of, potential business opportunities for acquisition or participation.

Acquisition of Zhongsen

Zhongsen's business began in January 2000 under the name of Qingdao Free-Trading Zone Sentaida International Trade Co., Ltd., or FTZ Sentaida, which involved in the rubber import and domestic distribution as well as tires export businesses. In December 2004, Qingdao Sentaida Tires Co., Ltd., or Sentaida Tires, was established and expanded the company's business to tires distribution in China's domestic market. In January 2005, Zhongsen Trading Co., Ltd. was created and incorporated in the British Virgin Islands to handle some of the Company’s tire export business. Zhongsen Trading changed its name into Zhongsen Holdings Co., Ltd., or Zhongsen Holdings, in August 2007. In July 2007, Zhongsen reached an agreement with the shareholders of both FTZ Sentaida and Sentaida Tires to acquire 100% of the equity interest through a cash purchase. In August 2007, such acquisitions were approved by the appropriate Chinese authorities. Consequently, both of the companies changed their status from China domestic companies to wholly owned foreign invested enterprises. In October 2007, Zhongsen International Co. Group Ltd. acquired 100% of the equity interest of Zhongsen Holdings Co. Ltd. A full schematic of the Company's current corporate structure is available later in this report. For accounting purposes, FTZ Sentaida, Sentaida Tires, and Zhongsen Holdings Co. are under common control because they all have the same key management members, including our CEO, Qin Long, and our CFO, Liang Junbao.

Zhongsen was incorporated under the laws of Hong Kong on July 19, 2007 and is headquartered in Qingdao, China in Shandong Province. Zhongsen primarily engages in the global marketing and distribution of tires and rubber without any tire manufacturing operations.

For accounting purposes, the share exchange transaction is treated as a reverse acquisition with Zhongsen as the acquirer and Rub A Dub Soap, Inc. as the acquired party. When we refer in this Current Report on Form 8-K/A to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Zhongsen on a consolidated basis unless the context suggests otherwise.

Business Overview

We are a holding company that only operates through our Chinese subsidiaries. We primarily engages in the global marketing and distribution of tires and rubber without any tire manufacturing operations. We are one of the largest integrated tire and rubber marketers and distributors in China. Our business scope can be generally divided into three (3) main business segments: rubber import and distribution, tire export, and tire domestic wholesale and retail, which generated approximately 56%, 27% and 17% of its consolidated net sales respectively in 2007. We position ourselves as an intermediary between international rubber producers and Chinese tire manufacturers and as an active marketer of tires for the tire manufacturers in the very fragmented replacement tire market. We aim at becoming a major player in the world tire and rubber market through steady organic growth, expansion into new markets, entry into the retail service market and an aggressive acquisition strategy.

Our Business Segments

The Company’s Rubber Import/Distribution Segment, operating under FTZ Sentaida, enjoys an excellent reputation in both domestic and overseas markets. Its rubber products cover a wide range of natural rubbers and synthetic rubbers. The natural rubber includes No. 20 standard rubber, No. 3 smoke sheet and latex, 3L standard rubber, 5L standard rubber and CV rubber. Synthetic rubber includes butadiene styrene rubber, butadiene rubber, butyl rubber, chlorinated butyl rubber and brominates butyl rubber. As one of the largest rubber importers and distributors in China, the Company’s annual rubber import and sale volume exceeded 120,000 tons, which accounted for 3.92% of the overall national rubber import volume of 3.06 million tons in 2007. The sales of the Rubber Import/ Distribution segment generated over US$ 185.5 million of revenue, which represented 56% of the Company’s 2007 consolidated net sales and represented a 15% decrease over year 2006 sales mainly due to the change of the Company’s sales of styrene-butadiene rubber (SBR rubber) (see detailed analysis in management analysis and discussion section). Sales of the top four (4) types of rubber (SIR 20, SMR 20, RSS3 and C.R.SMR20) generated over 59% of the revenue for this particular segment.

The Rubber Import/Distribution segment's supply network covers all main natural rubber production regions. The Company maintains a steady relationship and long-term business cooperation with many large suppliers from Thailand, Malaysia, Indonesia, Philippines and Vietnam. Backed by the world’s top natural rubber suppliers in that region, the Company’s Rubber Import/Distribution segment’s client base includes the majority of the top Chinese and foreign-invested tire manufacturers in China, including Shanghai Tire, Xiamen Cheng Hin, Giti Tire, Hangzhou Zhongce, Aeolus Tyre, South China Tire, Zhujiang Tire, Guizhou Tire and Linglong Tyre. The Company also operates in the synthetic rubber business with Glenmore Chemicals Limited of Russia, as its sole agent in Shandong province. In 2006, the Company set up a branch in Shanghai to meet the increasing demand in the Yangzi Delta region.

The Company’s Tires Export Segment, operating under both FTZ Sentaida and Zhongsen Holding, contributed 27% of the Company’s consolidated net sales by exporting over one million units of tires and generating US$ 89.5 million of sales revenue in 2007. The Company exports tires on a worldwide basis and conducts business in over 40 countries across North America, Europe, South Asia and Africa. Its product range is inclusive of nearly all types of rubber tires including TBR, OTR LTR, UHP, PCR, bias tires and radial heavy duty tires.

The Tire Export segment has established a long-term export agent relationship with all the major Chinese tire manufacturers and carries those brands to markets overseas. Those brand tires include Wanli^®, Linglong^®, Doublestar^®, Yellowsea^®, Chenshan^®, Doublecoin^®, Triangle^®, Jinglun^®, Doublehappiness^®, Tianli^®, Goldway^®, Roadone^®, Goodrich^®, Boto^® and Jinyu,^® to name a few. Sales of the top ten (10) brands accounted for approximately 65% of the Company's export sales. In addition, the Company has worked with its strategic manufacturing partners to jointly develop its own proprietary brand tire series: Sentaida^® and Delinte^®, sales of which accounted for roughly 20% of the Company’s total exports in 2007.

The Company’s Domestic Sales and Distribution Segment, operating under Sentaida Tires, provides a critical link between major tire manufacturers and the highly fragmented replacement tire market in China. The division markets on a wholesale basis to regional tire distributors and independent tire dealers throughout the Shandong and Jiangsu provinces. In 2007, it generated RMB418.6 million (equivalent to US $54.9 million) of revenue (including trial operations of Energy Station^®). This business segment represented 17% of the Company’s consolidated net sales and over 28% of annual growth against the segment’s annual sales in 2006. In 2007, the Company distributed over 358000 units of tires, which accounted for approximately 12% of the overall market share in Shandong Province.

As one of the largest tire wholesalers in the nation, the Company’s offering includes the flagship brands of the top international tire makers, as well as budget brands and private label tires. It serves as the exclusive distributor for some of the world's largest tire manufacturers including Michelin^®, Yokohama^® and Continental^® in the Shandong Province. It also carries the top ten leading Chinese tire brands such as Linglong^®, Westlake^®, Warrior^®, Advanced^®, Doublecoin^®, Wanli^®, BF^®, Goodrich^® and Jinglun^® as well as a number of high quality private label product lines. In terms of product types, we carry passenger car series, truck series and industrial/engineering tire series, as well as agricultural tire and other specialty tires. In 2007, 42.6% of total sales were attributable to the passenger car series of tires with the remaining 57.4% being sales of truck series and other series. The top seven (7) selling brands were Michelin^®, Linglong^®, Weishi®, Doublecoin®, Wanli^®, Qianjin®, Yokohama^®. Collectively they contributed 90% of the segment’s total sales in 2007. The Company believes that it has the most comprehensive product offering in the replacement tire market and that its broad array of product has been a significant factor in attracting and retaining many of its customers. Currently, its Tire Domestic Sales/Distribution segment operates three (3) regional distribution centers in Qingdao, Jinan, Linyi and sells to approximately one thousand (1,000) independent tire dealers, retailers and corporate clients.

As a part of the Tire Domestic Sales/Distribution segment, the Company has also entered into aftermarket retail services by establishing and operating seven (7) retail and service centers, under the trademark Energy Station^®. As the number of cars on the road continues to increase in China, the market demand for all-inclusive aftermarket service and technical support continues to develop in all the major cities in China. Energy Station^® is aimed at targeting those customers seeking this service offering, thereby complementing millions of China’s car owners who are looking for both quality and convenience. Each Energy Station^® offers a variety of automotive aftermarket services such as tire replacement, wheel alignment, oil change and car maintenance, car cleaning, brake and exhaust system repairing, as well as the sale of replacement parts and automobile accessories. Each Energy Stations is branded with the same logo and unified red-yellow signage. In addition, all the employees are formally trained before coming onboard. Through the first year’s trial operation, we have not only built up our service center management team, but also acquired some needed middle management “know-how” in service quality control, personnel training, marketing and sales development. In the absence of a national or regional franchise in China’s automotive aftermarket services, our Energy Station^® is the only service chain in the Qingdao area. In 2007, we have generated total US$2.3 million of revenue with US$ 0.9 million of gross profit from the seven (7) Energy Station^® service centers. Our trial operation of Energy Station^® proves that the retail and service business represents a growth area for the Company, primarily because it can generate higher operating margins than our wholesale and distribution business.

Organization Structure

The Company has the following operational structure following the reverse acquisition transaction on February 5, 2008.

Our Industry

Global Rubber & Tires Market Overview

As an integrated marketer in the worldwide rubber and tire industries, we operate within the scope of the global market, which represents a market with more than US$ 100 billion of annual turnover in 2007.

On the raw material supply side, rubber, which accounts for around 52% of the raw material value/cost of the tire, has been a strategic material since the late nineteenth century. Currently the annual production and consumption of natural rubber in the world is close to 10 million tons per annum. Driven by solid growth in motor vehicle production and a stronger global economy, the world's rubber production and consumption has grown at an average rate of 3.8% annually over the last five (5) years, while the total world rubber consumption is forecasted to increase at an average of 4.7% during 2007-2009. China is the leading natural rubber consumption country, importing and consuming over 20% of the global natural rubber production in the last five (5) years, mainly for tires in support of their booming auto trade. In 2007, China imported 1.65 million tons of natural rubber, while producing 0.6 million tons of natural rubber which represents a 7% increase respectively on a year-to-year basis. According to the projection of the China Rubber Industrial Association, China will import 1.9 million tons of natural rubber in 2008, which represents a 9% increase from 2007. China's market demand for natural rubber is expected to increase at around 10% annually over the next three (3) years.

Global Tire Market

The world tire market is dominated by the large tire manufacturers. On the production side, the top 75 world tire producers generate over USD$ 100 billion of revenues annually. Among them, Michelin, Bridgestone and Goodyear represent over half of the world's tire production. With steady rising demand in both the OEM and replacement markets, annual demand in the world tire market will exceed 1.44 billion units by 2010.

China's Emerging Role in the World Rubber and Tire Market.

According to the World Bank, China's nominal gross domestic product, or GDP, grew from RMB 9.9 trillion (USD1.3 trillion) in 2000 to RMB 18.3 trillion (USD2.3 trillion) in 2005, the fourth largest in the world, Moreover, the Chinese economy grew at a compound annual growth rate of 13.0% over that period, nearly double the world average of 6.9%. This rapid economic growth in China has increased the global demand for all the major commodities, including natural and synthetic rubber.

China has become the second largest auto market.

The rapid growth of the Chinese economy and export market has caused the auto industry to develop dramatically as China now produces more vehicles than Japan. According to the Chinese Automobile Association, motor vehicle sales in China increased by 21.84% to 8.79 million in 2007, while production rose by 22.02% to 8.88 million units of vehicles. In addition, according to the government's Development Plan for Road, Automotive and Transportation, it is estimated that by 2010, the length of highways will reach 55,000 km, the annual output of cars will exceed 10 million units per annum and the total number of motor vehicles in use will increase to 62 million.

China has become a major rubber consumption and tire production country.

The remarkable progress of China's automotive industry has culminated in significant development of the tire industry and boosted the overall prosperity of the tire industry. In 2007, China imported 1.65 million tons of natural rubber. Along with domestic production, China consumes over 20% of the world's rubber output. Data from the China National Bureau of Statistics reveals that the year 2005 witnessed a sustainable and steady growth in the domestic tire industry with output reaching 283 million units, up 18.7% over 2004; sales revenue also achieved more than RMB 80 billion (equivalent to USD10.6 billion ).

Data released on China Tire Business Network also showed that China's tire industry has achieved 25% annual growth in 2007 and been expected to keep the same growth pace in 2008.

China has become a major tire exporting country.

Low labor costs, sound manufacturing processes and overall capacity have made China one of the largest tire manufacturing and exporting countries in the world. According to the statistics provided by the China Rubber Industry Association, China's tire exports have been increasing at over 25% average annual growth rate in the last 6 years. In 2007, China exported over US$39.6 billion worth of tires, which account for 36.2% of the country's annual tire sales. Over 90% of tires exported from China are in the semi-steel radial and all-steel radial category. In terms of the quality and price, China-made tires also range from the low to high-end products. High quality China-made tires have been widely accepted in the world market. Besides truck and special industrial tires, China's brand tires for passenger and light truck vehicles have also entered the major replacement tire market. The top Chinese brands, such as, Triangle, Wanli, Zhongce, Linglong, have all developed their own PCR, LTR and UHP line.

Competition Perspective

Although the tire market is fiercely competitive, it is a relatively concentrated industry. According to tirebusiness.com , the three global tire maker giants Michelin, Goodyear and Bridgestone, account for 61% of worldwide sales. The next four midsized players including Sumitomo, Yokohama, Continental and Pirelle account for 16% while all other local and niche players accounting for the remaining 23% in the market. In the replacement tire market, the big manufacturer's brands also represent larger market share in each segment of the replacement tire market. For example, in the US replacement tire market, the big manufacturer brands represent 63% market share in both passenger car and light truck tire replacement market; and 83.8% of middle truck tire replacement market, while associate brands and private label brands take the rest of the market share.

Fragmented retail market:

Unlike the situation on the production side or OEM market, tire sales and distribution in almost all the countries in the world is fragmented. As seen in the US tire distribution market in 2005, over 69% of replacement P-series tires (passenger car tire) were sold by thousands of independent tire dealers, while 17% were sold through mass merchants and only 10% were sold through tire-maker owned shops. In China, there is currently no manufacturer or mass merchant owned or backed by any of the major tire distributors. The replacement tire market is dominated by thousands of independent tire dealers. Most of them are small and locally based, and only a few have annual sales exceeding RMB 200 million.

Growth Opportunities:

Growing demand of rubber in China's market.

Growing manufacturing and industrial production, inclusive of tire output, has stimulated the strong demand for raw materials in China, especially rubber. As China continues to expand its tire production capacity in order to meet the surging domestic demand, China's consumption of rubber will outpace the world market growth average. According to data released by China Custom, in 2006, China imported 1.61 million tons of natural rubber and 1.30 million ton of synthetic rubber, which represents an annual growth of 14.6% and 19.2% over that in 2005 respectively. As the world largest rubber consumption country, the China rubber market's reliance on imports has been kept at a 70% level consecutively for 5 years. We expect this pattern will stay, given the strong market demand and limited natural resources in China.

Increasing International Demand.

According to the research conducted by LMC International UK , an international research institution, the average growth rate of the global tire market will be around 3.6% through 2008. In the new global competitive landscape, Chinese tire makers will demonstrate their competitive advantages in cost and quality control, and will seek to win market shares in the global arena. In recent years, the rapid increase of China-made tires in the international market has shown that Chinese tire makers, with well-trained workers and advanced equipment, could make high-quality tires at the lowest cost. Therefore, we expect the demand for China-made tires will increase at a higher rate than the global market average.

Increasing Domestic Demand in Replacement Tires Market.

In the next five years, both production and demand will continue to grow for replacement tires. Moreover, rough road conditions and overloading is a common practice in China, shortening tire replacement cycles significantly, indicating that China's replacement tire market will outpace other major markets in the world.

Our Operation Divisions

The company's Rubber Import and Distribution Division, operating under FTZ Sentaida has imported and sold over 120,000 tons of rubber, accounted for 3.9% of China’s overall rubber import volume in 2007. The sales have generated over $185.5 million of revenue, which represented 56% of the Company's total net sales and decreased by15% from Year 2006. The decrease was mainly due to the change of the Company’s sales of styrene-butadiene rubber (see detailed analysis in management analysis and discussion section). Backed by the world top natural rubber suppliers in Southeast Asia, our Rubber Import and Distribution Division's client base has covered majority of the top Chinese and foreign-invested tire manufacturers in China.

Our Company's Tires Export Division, operating under FTZ Sentaida, contributed 27% of the company's total net sales by exporting $ 89.5 million worth tires in 2007. It has made the Company as one of the top independent tires exporters in China. The Tire Export Division has established a long-term export agent relationship with all major Chinese tire manufacturers and carrying selected Chinese brand tires in overseas market. Those brand tires include Wanli(R), Linglong(R), Doublestar(R), Yellowsea(R) and Triangle(R) etc. In addition, the company has also worked with its strategic manufacturing partners and jointly developed its proprietary brand tire series: Sentaida(R) and Delinte(R), the sales of which accounted for roughly 20% of the company's total export in 2007.

The Company's Domestic Sales and Distribution division, operating under Sentaida Tires, provides a critical link between major tire manufactures and the highly fragmented replacement tire market in China. In 2007, it has generated approximately $54.9 million of revenue, which represented 17% of the Company's totaled net sales and over 28% of annual growth against the division's annual sales in 2006. We serve as the exclusive distributor for the world largest tire manufacturers: Michelin(R) and Yokohama(R) in Shandong Province in China. We also carry the top ten leading Chinese brand tires as well as a number of high quality private labeled product lines. We believe that we have the most complete lines in the replacement tire market and our broad product offering has been a significant factor in attracting and retaining many of our customers. Now, our Domestic Sales and Distribution Division operate three (3) regional distribution centers and sells to over one thousand of tire dealers, retailers and institutional clients.

Our Customers

In China, we provide a critical link between major tire manufactures and the highly fragmented replacement tire market in China. We serve as the exclusive distributor for the world largest tire manufacturers: Michelin(R) and Yokohama(R) in Shandong Province in China. We also carry the top ten leading Chinese brand tires as well as a number of high quality private labeled product lines. Now, our Domestic Sales and Distribution Division operate three (3) regional distribution centers and sells to over one thousand of tire dealers, retailers and institutional clients.

Internationally, we sell directly to America, Canada, Mexico, UK, Russia, Australia, etc.

Our top five customers contributed 93% of the total tire export business revenue in 2007. The following table names our largest customers and provides the dollar value of sales to these customers and the percentage contribution to revenues made by these customers.

2007 Top 5 Customers
Customers	Value	Contribution
ZISSER TIRE & AUTO	$ 46,000,000	51%
COMERCIALIZADORA INTERNACIONAL DE LLANTAS S.A.	$ 18,600,000	21%
EURL ELAMANE PNEUS (Algeria)	$ 9,200,000	10%
TREADSETTER（UK)	$ 5,410,000	6%
AMERICAN OMNI TRADING COMPANY	$ 4,170,000	5%

Our Sales and Marketing Efforts

By operating in the global rubber and tire market as an integrated marketer, we believe that our business growth depends on our ability to build up our distribution network and brand recognition for both product and services.

Distribution Network:

The tire industry, especially the replacement tire market in which the Company operates, is highly competitive and fragmented. The profitability of a marketer like us is largely related to the quantity and quality of the products we can deliver. An extensive distribution network will not only give us the ability to reach more end-users, both rubber buyers and tire buyers, but also help us to lower our purchasing cost and operating fixed costs, thus improving our operating efficiency. So far, the Company has established a business distribution network that directly links rubber suppliers in Southeast Asia to Chinese tire manufacturers, and it connects brand tire makers or their central warehouse to hundreds of our sales agents and dealers. Those relationships and associated distribution agreements extend the Company a great power in price and payment term negotiation.

Brand Recognition:

Brand recognition is also crucial to a Company's success in the tire market, as the global tire market is essentially driven by a few well-established tire giants such as Michelin and Goodyear. In such an industry, brand represents the quality of a Company's products and services. The Company has not only affiliated its name with the world's top tire brands; such as, Michelin and Yokohoma through General Agent Agreements in the assigned territory, but also developed its own brands with support from its strategic partners. So far, the Company has jointly developed its proprietary brand tire series: Sentaida(R), Delinte(R), Gold Stone(R) and Landsail(R). The sales of tires under those private-label brands accounted for roughly 20% of the Company's total exports in 2006, while helping to improve market recognition and foster customer loyalty to the Company's products. Shandong Linglong Rubber Co., Ltd. and Shandong Yongtai Chemical Group Co., Ltd. are our main suppliers in private-label brands business.

Furthermore, the Company is also working to build its service brand in the tire replacement and automotive aftermarket service industry. Since 2006, the Company has started to promote and develop its "Energy Station(R)" franchise with the aim of becoming the most valuable aftermarket auto service brand in the region. Our first year's successful trial operation has proven that the retail and service chain under the Energy Station(R) brand could effectively bind our products to the end users and increase sales and gross margins. The further expansion and promotion of this service brand will pave the way for the Company to become a front runner in China's automotive aftermarket industry, which represents a multi-billion dollar market, as in other developed countries.

Suppliers

In the field of Rubber Business, the Company's rubber supplier network covers all main natural rubber producing regions, including Thailand, Malaysia, Indonesia, Philippines and Vietnam. The Company maintains steady and long-term business cooperation with many the world's top rubber suppliers in these regions. Its strategic partners include Glenmore Chemical Ltd (Russia), PT.Sampit JL.Ketapang Hilir Sampit (Indonesia), Binh Phuoc General Import Export Co (Vietnam), Von Bundit Co. Ltd, Thai Hua Rubber Public Co. Ltd (Thailand), Fusheng Rubber Pte Ltd, Regional Rubber Trading Co. Pte Ltd, and Eastland Produce Pte Ltd (Singapore), and Chip Lam Seng Berhad (Malaysia), among others. All of these companies are regional leading companies in rubber production. For instance, Thai Hua Rubber Public Co. Ltd is one of the largest rubber producers and exporters in Thailand, with a total export volume of about 250,000 tons per annum, and sales revenue of approximately USD160 million.

The strategic relationships with those major rubber suppliers provides the Company with a steady supply and competitive price for its rubber import and also allows the Company to closely cooperate with the tire manufactures to ensure them a steady and consistent supply of raw materials, affording the Company the position of the "supplier of choice". The Company believes that this not only enables efficient distribution of its imported rubber, but also nurtures its tire business alliance with major tire manufacturers.

The top 10 suppliers accounted for 67.47% of the total procurement in 2007 in value terms. The following table lists the name of our top ten suppliers, the dollar value of the raw materials supplied.

Top 10 Suppliers (2007)
Supplier	Supply Value $	Percentage of Total Purchase
REGIONAL RUBBER TRADING CO.PTE LTD.	$ 37,412,817	20.17%
CHIP LAM SENG BERHAD	$ 23,332,820	12.58%
VON BUNDIT CO.,LTD	$ 13,699,696	7.39%
PT.SAMPIT JL.KETAPANG HILIR SAMPIT 74325 CENTRAL KALIMANTAN INDONESIA	$ 12,710,376	6.85%
CHEMTEX LTD	$ 6,885,194.4	3.71%
PT.BINTANG GASING PERSADA	$ 8,724,643	4.70%
THAI HUA RUBBER PUBLIC COMPANY LIMITED	$ 8,388,021	4.52%
BRONCOS LIMITED	$ 4,643,081	2.50%
R1 INTERNATIONAL MALAYSIA SDN BHD	$ 5,220,276	2.81%
EASTLAND PRODUCE PTE LTD	$ 4,143,787	2.23%

In the field of tire export business, the Company has reached long-term export agent agreements with almost all the top Chinese tire manufacturers, such as Wanli Tire, Triangle Tire and Linglong Tyre. The Company is the exclusive agent for the two famous brands, Wanli(R) UHP and Linglong(R) UHP in the U.S. market. Wanli Tire (South China Tire Rubber Co. Ltd), the largest radial truck tire manufacturer in southeast China, produces quality performance tires widely accepted in the U.S. market. Triangle Tire is the most well known trademark in China's tire industry. Linglong Tyre, the 12th largest tire manufacturer in the world, has authorized us to sell its Linglong(R) and other associate brands, such as, Sanling(R) and LiAo(R), in the overseas markets. The Company has also established distribution contracts with other major Chinese brand tires, such as Hangzhou Zhongce, Doublestar, Taishan, Chengshan (Cooper), Double Happiness, Yongtai, and Xiongying to name a few. The strategic alliance with those Chinese tire manufacturers and close affiliation with those quality brands has enabled us to take advantage of the growth opportunities in the international tire market and achieve rapid sales growth.

In the Domestic Tire Distribution Market, the Company is the general distribution agent for several of the world's most famous brands in the tire industry such as Michelin(R) and Yokohama(R), for whom the Company is the exclusive distribution partner in Shandong Province, one of the most developed provinces in China. We are also a general distributor for most of the most well-known Chinese brands such as Linglong(R), Wanli(R), Weishi(R), Qianjin(R) and Jinglun(R) in Shandong and Jiangsu Province. Furthermore, Michelin(R), the world's largest tire manufacturer, has maintained an ongoing and mutually beneficial relationship with the Company for six (6) years and has publicly recognized the Company as its largest distribution agent in China. Yokohama Rubber Co. Ltd., the seventh largest tire manufacturer in the world, with several subsidiaries in Jiangsu and Zhejiang Provinces, signed sales and agent distribution agreements with us in 2007. By strengthening cooperation with Yokohama, the Company will further enhance it product offering and sales capabilities.

With the understanding that it takes a long time to develop and nurture a good business relationship, the Company has cultivated such relationships by prioritizing quality, efficiency and accountability over a long period of time. In addition, the Company is negotiating with several other major global players to form business alliances to distribute their products in the Chinese domestic market through the Company's existing distribution channels.

In September 2007, the Company signed an exclusive agent distribution agreement with Continental Corp, one of the world leading tire manufacturers in Germany, to distribute the Company's products in Shandong Province and Jiangsu Province through our distribution network. This agreement gives us an opportunity to generate at least RMB 42 million of additional revenue in 2008 and RMB 85 million in 2009. The gross profit margin is expected to exceed 6.0% from this line of products.

Intellectual Property

The Company currently has no registered intellectual property.

Research and Development

Zhongsen has not had any material research and development expenses over the past two years. Due to the characteristic of the housing and land development industry, "R&D" consists of marketing research. The funding of all marketing research is expected to come from operating cash flow.

Employees

As of December 31, 2007, Zhongsen employed a total of 118 employees in the following capacities:

Department	Number of Employees
Management	19
Administrative	4
Operational	36
Buyer	7
Sales	31
Planning	6
Finance	15

Zhongsen believes that it has a good working relationship with its employees. The Company is not a party to any collective bargaining agreements. At present, no significant change in the Company's staffing is expected over the next 12 months. All employees are eligible for incentive-based compensation.

Benefits: The Company provides full-time employees with salary, expense allowance, and bonus. The Company does not supply insurance for its employees. Employees are entitled to time off for all national holidays.

Incentives: Each salesperson receives a base salary plus a commission which increases if actual sales exceed sales objectives. Once a salesperson generates US $25,000 in prepaid sales, the Company provides an automobile to facilitate their sales activity. Once established sales targets are met, the auto is given to the employee as a bonus at the end of the fiscal year.

No employees are represented by a labor union. We believe we have good relations with our employees.

Governmental and Environmental Regulation

To date, Zhongsen has been compliant with all registrations and requirements for the issuance and maintenance of all licenses required by the applicable governing authorities in China. These include an Approval Certificate of Foreign Investment Corporation issued by Qingdao Foreign Trade and Economic Cooperation Bureau, Business License issued by Commercial and Industrial Bureau.

Competition

The market and all its segments in which the Company operates are highly competitive. As the nation's leading integrated marketer and distributor in the tire and rubber business, we do not have competitors with the same integrated business model or scale as us in all the three market segments. However, in each individual business segment, we face many strong competitors and different kinds of challenges.

In the field of Rubber Import/Distribution Business, some of the Company's competitors have greater financial resources than the Company. For example, Sinochem International Corporation, a publicly listed company on the Shanghai Stock Exchange, has mainly engaged in the business of rubber, plastics, and chemical products & logistics operations. It is the major competitor of the Company in the field of rubber trading. Sinochem Int'l imported and sold roughly 60,000 tons of natural rubber in 2007 in addition to its own production of synthetic rubber. Sinochem has customers in over 100 countries and regions in the world, and its overall sales revenue from a variety of business lines has reached US$ 2.7 billion in 2007. Our Company differentiates from Sinochem with our business focus and concentration on tire and rubber distribution.

In the tire export business field, the Company also faces many competitors that are large international trading companies either affiliated with or in alliance with one or two Chinese tire manufacturers, and sell China-made tires in overseas markets. Major competitors in this category include Fullrun Tire Corp. Ltd, Best Choice Int'l Trade Co. Ltd, Karo Int'l Trade Co. Ltd, Toptip Industrial Co.,Ltd, and Tianjin Free Trade Zone Angel Int'l Trade Co.,Ltd., among others. To the Company's knowledge, there are no comprehensive statistics or research information papers about those Chinese tire exporters. We differentiate ourselves from them by our complete product selection and integrated business operation model, which consists of rubber supply, tire import and export, domestic distribution of tires and aftermarket automotive services.

Some Chinese tire manufacturers, including our suppliers, also export their own products directly to foreign buyers. In that case, they are also competing against the Company in the international market. They have the experience and capacity to export their products, but they may not have as large of a selection of products as an integrated marketer like the Company. To avoid potential overlapping and conflict of interest, the Company usually requests specific terms in its selling agreements with tire manufacturers. Such terms will give the Company protection in certain lines of products or in certain market territories. The Company's competitors in this category include Shandong Linglong Tyre Co. Ltd., Shandong Taishan Tire Co. Ltd., Hangzhou Zhongce Rubber Co. Ltd, Qingdao Doublestar Tire Co. Ltd. and others. So far, the working relationship we have forged with the manufacturers has created a win-win situation for both parties because it allows both parties the ability to leverage each other's strength and resources to increase sales.

A major competitor in this category is Shanghai Tire & Rubber Co. Ltd. This company has established its exporting subsidiary in the United States by the name of China Manufacturers Alliance (CMA). This company is a large state-owned tire and rubber company with almost 70 years of history. Shanghai Tire & Rubber has two well-known brands DoubleCoin(R) and Warrior(R), which enjoy great popularity. The company is specialized in light truck and medium truck tire series, such as, all-steel radial heavy duty truck tires, radial light truck tires, bias light truck tires, bias truck tires, agricultural tires.

In China's domestic tire market, the Company faces competition from other brand tire distributors and dealers, such as the dealers for Goodyear(R), Hankook(R), and Bridgestone(R) among others. Unlike the situation in other countries, China's domestic tire market is dominated by thousands of independent tire dealers, most of them being small and locally based operations. Since the large tire-makers do not have their own sales outlets in China, and they only grant their general sales agent or dealership to Chinese local dealers or agents on a provincial basis and renew it annually, there are no cross-region dealers or marketers in China. In such a fragmented marketplace, the Company, with its integrated business models as both rubber import to supply the manufacturers and tire import/export, has become the top distributor in its assigned territories and is ready to expand its business to other provinces or territory through aggressive acquisition.

Comparative Advantage of the Company

Integrated Business Model and Leading Market Position. In light of the prevailing domestic and international market situation, the Company has established itself as a market leader in distributing tires in both China and overseas replacement tire market. In its home province, the Company's market share exceeds 10%. The Company believes that the key benefits of its scale include: the ability to efficiently carry an extensive inventory; the ability to invest in sales and technology support; and operating efficiencies from its scalable infrastructure. The Company believes its leading market position, combined with its new retail/service franchise enhances its ability to increase sales to existing customers, attract new customers and enter into new markets.

Advanced Technology Support.

The Company has deployed the most advanced ERP management system to its business operation, which enables the informed management of the Company's daily operations and ensures the Company will be able to execute all the business transactions accurately and efficiently. By utilizing this system, the order entry, invoicing, inventory control, accounts receivable and warehouse management and all other related transactions can be entered into the system and managed more effectively. The business process is much more straightforward, with information regarding inventory and orders being shared by multiple users within the Company, enabling a more efficient and effective business operations process. Currently, we believe the Company is one of the few Chinese general distributors who are able to get the right tires delivered to the right dealer or customer within the required time frame.

Extensive Distribution Network: Through years of development and expansion, the Company has not only established a stable supply of rubber from the world's top rubber suppliers in Southeast Asia, but also secured its distribution relationship with the world's top tire companies, such as Michelin, Continental and Yokohama, as well as with all the top tire manufacturers in China. Currently, the Company has three (3) distribution centers with warehousing capacity and web-based information management systems. By utilizing its sophisticated inventory management and logistics technology, the Company is able to deliver 95.0% of its orders from the manufacturers or the warehouse directly to the local Chinese customer on an either same or next day basis. As a result, this helped the Company build an excellent reputation in the market with prompt delivery capacity.

Oversea Sales Agent: The Company has established a good relationship with its sales agent, Sentaida International (USA) Inc, in the U.S., which is one of the Company's major tire export target markets. The establishment of an overseas sales agent has turned out to be very successful as it significantly contributed to the Company's fast expansion in the U.S market. The Company is expecting to double its sales in North America this year and continue penetrating the US domestic wholesale market by distributing both brand tires and China-made tires to the local American end users.

Strong Financial Profile and Excellent Credit Record.

The Company has bank credit facilities with four (4) top Chinese Banks, which allows the Company to effectively use the financial leverage in conducting its business. The Company has received "Triple Star," highest credit rating by banks recognition from its top lender, China Agricultural Bank continuously in the last three years, which means the Company has excellent credit record in the bank.

Experienced Management Team.

The Company's executive team led by our Chief Executive Officer, Mr. Qin Long, combines substantial managerial, industrial and marketing experience with extensive government and business contacts in China.

Broad Product Offering.

The Company offers a comprehensive selection of tires in its market areas. In the China domestic market, we carry the most famous international brand series, such as, Michelin(R), Yokohama(R), and well-known Chinese brands, such as, Wanli, Linglong, Triangle, to name a few. In the overseas market, the Company offers most of the high quality China-made tires, plus its own private label lines, including "Sentaida(R)", "Delinte(R)". In terms of tire type, the Company's product range covers almost all types of tires including TBR, OTR LTR, UHP, PCR, bias tires, and radial heavy duty tires. Due to our breadth and depth of product offering, the Company believes that it is well positioned to benefit from any increased demand in any particular tire type as well as offering a diversified strategy to offset any reduction in demand for a particular type of tire. The broad product offering has been a significant factor in attracting and retaining many of the Company's customers.

Diversified Customer Base.

The Company sells its products to a diversified and wide range of customers, including both national and regional tire dealer chains, car dealerships and other independent tire outlets. In addition to the Company's extensive inventory and same or next day distribution capabilities, it also provides its customers with sales and product support services, including logistics support and tire demonstration training to maximize their ability to sell tires. These valuable services, as well as the deep level of commitment the Company has to the business operations of its customers have resulted in a strong and stable position for the Company within the industry.

Compelling Growth Strategy.

The Company anticipates continued growth through: (1) building on the expanding global demand for rubber and tires through capacity expansion in target markets; (2) enhancing its horizontal integration through the expansion of its wholesale distribution network to neighbor provinces; (3) penetrating into automotive aftermarket service business by promoting and developing its retail/service franchise "Energy Station(R)" in the emerging and fragmented domestic market; (4) increasing operation leverage by acquiring the majority equity interest in a productive tire manufacturer in the near future.

Market Position of the Company.

The Company has positioned itself as a leading integrated rubber and tire marketer and distributor in China. With years of development, it has effectively captured the growth opportunities in all the three market segments, rubber import and distribution, tire import/export and domestic tire distribution. It has established itself as a market leader in distributing tires in both the Chinese and overseas replacement tire market by providing a critical link between tire manufacturers and the highly fragmented retail tire market.

As a leading rubber and tire marketer, the Company will further demonstrate its competitive advantages to gain more shares in our target market, including the North American replacement tire market and China tire market.

In China's domestic tire market, our marketing strategy is to let our wholesale expansion lead our retail/service penetration. By following this strategy, we will first expand our wholesale business coverage, then to build Energy Station(R) in selected cities within our wholesale covered area. We intend to position ourselves as the first and largest cross-region tire distributor and aftermarket service provider in China.

RISK FACTORS

RISKS RELATED TO OUR BUSINESS

Our sales and operating revenues could decline due to macro-economic and other factors outside of its control, such as changes in consumer confidence and declines in employment levels.

Changes in national and regional economic conditions, as well as local economic conditions where the Company conducts its operations, may result in more caution on the part of customers and consequently fewer sales of our products. These economic uncertainties involve, among other things, conditions of supply and demand in local markets and changes in consumer confidence and income, employment levels, and government regulations. These risks and uncertainties could periodically have an adverse effect on customer demand for and the pricing of our products, which could cause its operating revenues to decline. In addition, we are subject to various risks, many of them outside of our control, including availability and cost of materials and labor, changes in government regulations, and increases in taxes and other local government fees. A reduction in its revenues could in turn negatively affect the market price of its securities.

We are subject to extensive government regulation which could cause us to incur significant liabilities or restrict our business activities.

Regulatory requirements could cause us to incur significant liabilities and operating expenses and could restrict our business activities. We are subject to statutes and rules regulating distribution, sales, safety matters, products and others. Our operating expenses may be increased by governmental regulations and other fees and taxes, which may be imposed. Any delay or refusal from government agencies to grant us necessary licenses, permits and approvals could have an adverse effect on our operations.

We may require additional capital in the future, which may not be available on favorable terms or at all.

Our future capital requirements will depend on many factors, including industry and market conditions, our ability to successfully implement our branding and marketing initiative and expansion of our business. We anticipate that we may need to raise additional funds in order to grow our business and implement our business strategy. We anticipate that any such additional funds would be raised through equity or debt financings. In addition, we may enter into a revolving credit facility or a term loan facility with one or more syndicates of lenders. Any equity or debt financing, if available at all, may be on terms that are not favorable to us. Even if we are able to raise capital through equity or debt financings, as to which there can be no assurance, the interest of existing shareholders in our company may be diluted, and the securities we issue may have rights, preferences and privileges that are senior to those of our common stock or may otherwise materially and adversely effect the holdings or rights of our existing shareholders. If we cannot obtain adequate capital, we may not be able to fully implement our business strategy, and our business, results of operations and financial condition would be adversely affected. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." In addition, we have and will continue to raise additional capital through private placements or registered offerings, in which broker-dealers will be engaged. The activities of such broker-dealers are highly regulated and we cannot assure that the activities of such broker-dealers will not violate relevant regulations and generate liabilities despite our expectation otherwise.

We depend on the availability of additional human resources for future growth.

We are currently experiencing a period of significant growth in our sales volume. We believe that continued expansion is essential for us to remain competitive and to capitalize on the growth potential of our business. Such expansion may place a significant strain on our management and operations and financial resources. As our operations continue to grow, we will have to continually improve our management, operational and financial systems, procedures and controls, and other resources infrastructure, and expand our workforce. There can be no assurance that our existing or future management, operating and financial systems, procedures and controls will be adequate to support our operations, or that we will be able to recruit, retain and motivate our personnel. Further, there can be no assurance that we will be able to establish, develop or maintain the business relationships beneficial to our operations, or to do so or to implement any of the above activities in a timely manner. Failure to manage our growth effectively could have a material adverse effect on our business and the results of our operations and financial condition.

We may be adversely affected by the fluctuation in raw material prices and selling prices of our products.

The raw materials and the products we trade and distribute have experienced significant price fluctuations in the past. There is no assurance that they will not be subject to future price fluctuations or pricing control. These price changes may ultimately result in increases in the selling prices of our products, in turn, adversely affect our sales volume, revenue and operating profit.

We could be adversely affected by the occurrence of natural disasters. From time to time, our developed sites may experience strong winds, storms, flooding and earth quakes. Natural disasters could impede operations, damage infrastructure necessary to our constructions and operations. The occurrence of natural disasters could adversely affect our business, the results of our operations, prospects and financial condition, even though we currently have insurance against damages caused by natural disasters, including typhoons, accidents or similar events.

Intense competition from existing and new entities may adversely affect our revenues and profitability.

In general, the tire distribution industry is intensely competitive and highly fragmented. We compete with various companies. Many of our competitors are more established than we are and have significantly greater financial, technical, marketing and other resources than we presently possess. Some of our competitors have greater name recognition and a larger customer base. These competitors may be able to respond more quickly to new or changing opportunities and customer requirements and may be able to undertake more extensive promotional activities, offer more attractive terms to customers, and adopt more aggressive pricing policies. We intend to create greater awareness for our brands so that we can successfully compete with our competitors. We cannot assure you that we will be able to compete effectively or successfully with current or future competitors or that the competitive pressures we face will not harm our business.

Our operating subsidiary must comply with environmental protection laws that could adversely affect our profitability.

We are generally required to comply with the environmental protection laws and regulations promulgated by the national and local governments of the PRC. Some of these regulations govern the level of fees payable to government entities providing environmental protection services. If we fail to comply with any of these environmental laws and regulations in the PRC, depending on the types and seriousness of the violation, we may be subject to, among other things, warning from relevant authorities, imposition of fines, specific performance and/or criminal liability, forfeiture of profits made, being ordered to close down our business operations and suspension of relevant permits.

There may be a conflict of interest which may hurt our shareholders' interest due to related parties transactions.

Currently, we use and share resources of our affiliated and related parties, including office space and warehouse space. There are risks involved in such an arrangement in which the Company's interest may be harmed due to such related party transactions.

Our success depends on our management team and other key personnel, the loss of any of whom could disrupt its business operations.

Our future success will depend in substantial part on the continued service of our senior management. The loss of the services of one or more of our key personnel could impede implementation of our business plan and result in reduced profitability. We do not carry life or other insurance covering officers or key personnel. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified technical sales and marketing customer support. Because of the rapid growth of the economy in the People's Republic of China, competition for qualified personnel is intense. We cannot guarantee that we will be able to retain our key personnel or that we will be able to attract, assimilate or retain qualified personnel in the future.

We may be subject to product liabilities.

Although we distribute and export products made by others, we may be still subject to potential product related liabilities. We may not have sufficient insurance coverage for such claims if we fail to defend against them.

RISKS RELATED TO THE PEOPLE'S REPUBLIC OF CHINA

Changes in China’s political or economic situation could harm us and our operational results.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:

	·	Level of government involvement in the economy;
	·	Control of foreign exchange;

	·	Methods of allocating resources;
	·	Balance of payments position;

	·	International trade restrictions; and
	·	International conflict.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in many ways. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to those of the OECD member countries.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Future inflation in China may inhibit our ability to conduct business profitably in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could harm our operations.

A renewed outbreak of SARS or another widespread public health problem in China and or in those south east Asian countries, where our operations are conducted, or are our sources of raw materials could have a negative effect on our operations.

Our operations may be impacted by a number of health-related factors, including the following:

quarantines or closures of some of our offices which would severely disrupt our operations,

the sickness or death of our key officers and employees, and

a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public health problems could damage our operations.

Capital outflow policies in the People's Republic of China may hamper our ability to remit income to the United States.

The People's Republic of China has adopted currency and capital transfer regulations. These regulations may require us to comply with complex regulations for the movement of capital. Although our directors believe that it is currently in compliance with these regulations, should these regulations or the interpretation of them by courts or regulatory agencies change; we may not be able to remit all income earned and proceeds received in connection with our operations or from the sale of our operating subsidiary to our stockholders.

It may be difficult to effect service of process and enforcement of legal judgments upon our company and our officers and directors because some of them reside outside the United States.

As our operations are presently based in China and some of our key directors and officers reside outside the United States, service of process on our key directors and officers may be difficult to effect within the United States. Also, substantially all of our assets are located outside the United States and any judgment obtained in the United States against us may not be enforceable outside the United States.

If relations between the United States and China worsen, our stock price may decrease and we may have difficulty accessing the U.S. capital markets.

At various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China could adversely affect the market price of our common stock and our ability to access U.S. capital markets.

We may have difficulty establishing adequate management, legal and financial controls in the People's Republic of China.

The People's Republic of China historically has not adopted a Western style of management and financial reporting concepts and practices, modern banking, computer or other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the People's Republic of China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.

It will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets based in the People's Republic of China.

Because the Company's executive officers and directors, including, the chairman of its board of directors, are Chinese citizens, it may be difficult, if not impossible, to acquire jurisdiction over these persons in the event a lawsuit is initiated against us and/or its officers and directors by a stockholder or group of stockholders in the United States. Also, because the majority of our assets are located in the People's Republic of China it would also be extremely difficult to access those assets to satisfy an award entered against it in a United States court.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

The majority of our revenue will be settled in RMB and U.S. Dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents at those banks in China authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations which became effective on September 8, 2006.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, which became effective on September 8, 2006. This new regulation, among other things, governs the approval process by which a PRC company may participate in an acquisition of assets or equity interests. Depending on the structure of the transaction, the new regulation will require the PRC parties to make a series of applications and supplemental applications to the government agencies. In some instances, the application process may require the presentation of economic data concerning a transaction, including appraisals of the target business and evaluations of the acquirer, which are designed to allow the government to assess the transaction. Government approvals will have expiration dates by which a transaction must be completed and reported to the government agencies. Compliance with the new regulations is likely to be more time consuming and expensive than in the past and the government can now exert more control over the combination of two businesses. Accordingly, due to the new regulation, our ability to engage in business combination transactions has become significantly more complicated, time consuming and expensive, and we may not be able to negotiate a transaction that is acceptable to our stockholders or sufficiently protect their interests in a transaction.

The new regulation allows PRC government agencies to assess the economic terms of a business combination transaction. Parties to a business combination transaction may have to submit to the Ministry of Commerce and other relevant government agencies an appraisal report, an evaluation report and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The regulations also prohibit a transaction at an acquisition price obviously lower than the appraised value of the PRC business or assets and in certain transaction structures, require that consideration must be paid within defined periods, generally not in excess of a year. The regulation also limits our ability to negotiate various terms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions relating to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar entities are prohibited. Therefore, such regulation may impede our ability to negotiate and complete a business combination transaction on financial terms that satisfy our investors and protect our stockholders’ economic interests.

The value of our securities will be affected by the foreign exchange rate between U.S. dollars and RMB.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB, and between those currencies and other currencies in which our sales may be denominated. Currently, RMB has risen against U.S. Dollars. For example, to the extent that we need to convert U.S. dollars into RMB for our operational needs and should RMB appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our common stock may be harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against RMB, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

We are subject to the risks related to the evolving legal systems in China.

China's legal system is still evolving with many uncertainties, particularly in the promulgation and implementation and interpretation of rules and laws that are changing, being adopted and being interpreted and applied on an uneven basis, sometimes arbitrarily. Our Company, its structure and organization are subject to those risks. If such laws and rules are applied or interpreted against the Company in an unfavorable way, we may be subject to penalties or even lose our business license and you may lose your investment in us.

RISKS RELATED TO OUR SHARES

Our common stock is quoted on the OTC Bulletin Board which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTC Bulletin Board. The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a “penny stock”, we may become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

Our principal stockholders, current executive officers and directors own a significant percentage of our company and will be able to exercise significant influence over our company.

Our executive officers and directors and principal stockholders together will beneficially own a majority of the total voting power of our outstanding voting capital stock. These stockholders will be able to determine the composition of our Board of Directors, will retain the voting power to approve all matters requiring stockholder approval and will continue to have significant influence over our affairs. This concentration of ownership could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material and adverse effect on the market price of the common stock or prevent our stockholders from realizing a premium over the market prices for their shares of common stock. See "Principal Stockholders" for information about the ownership of common by our executive officers, directors and principal stockholders.

We do not anticipate paying dividends on the Common Stock.

We have never paid dividends on our common stock and do not anticipate paying dividends in the foreseeable future. Our directors intend to follow a policy of retaining all of our earnings, if any, to finance the development and expansion of our business.

Broker-dealer requirements may affect trading and liquidity.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account.

Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of our restricted stock in the public marketplace could reduce the price of our common stock.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act ("Rule 144"), subject to certain limitations. Under Rule 144, a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted ordinary shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell their ordinary shares without complying with the manner of sale and volume limitation or notice provisions of Rule 144. We must be current in our public reporting if the non-affiliate is seeking to sell under Rule 144 after holding his ordinary shares between six months and one year. After one year, non-affiliates do not have to comply with any other Rule 144 requirements. Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on the market price of our securities.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

Zhongsen International Company Group Ltd. (Zhongsen Interntional) holds 100% of equity interest of Qingdao Free-TradingZone Sentaida International Trade Co., Ltd. (“F.T.Z. Sentaida”), Qindao Sentaida Tires Co., Ltd. (“Sentaida Tires”) and Zhongsen Holdings Co., Ltd. (“Zhongsen Holdings”). In the section below they are collectively referred to as “the Company”. The following discussion and analysis of our consolidated results of operations, financial condition and liquidity should be read in conjunction with our Annual Report for the fiscal year ended December 31, 2007 and the accounting notes for consolidated statements for the year ended December 31, 2007.

Overview

We are a holding company that only operates through our Chinese subsidiaries, China.F.T.Z. Sentaida, Sentaida Tires, and Zhongsen Holdings. We primarily engage in the global marketing and distribution of tires and rubber without any tire manufacturing operations. We are one of the largest integrated tire and rubber marketers and distributors. We have three major business divisions: rubber import and distribution, tire export, and tire domestic wholesale and retail. We position ourselves as an intermediary between international rubber producers and Chinese tire manufacturers and as an active marketer for the tire manufacturers in the very fragmented tire replacement market. We aim at becoming a major player in the world tire and rubber market.

Our Rubber Import/Distribution Division, operating under F.T.Z.Sentaida and Zhongsen Holdings, generated about $185.5 million of sales revenue, which accounted for 56% of our consolidated net sales for the year as of December 31, 2007. It decreased by 15% comparing with the division’s revenue in 2006 (see details in operation analysis section).

Our Tire Export Division, operating under F.T.Z.Sentaida and Zhongsen Holdings, achieved about $89.5 million of revenue, which represented 27% of our total consolidated net sales for the year ended December 31, 2007. It was up approximately 25% in comparison with the corresponding figure in 2006.

Our Tire Domestic Sales Division, operating under Sentaida Tires, generated about $54.9 million net sales, accounted for about 17% of our consolidated net sales. It increased by 28% comparing with the amount for the division’s revenue in 2006.

The replacement tire markets, both in the United States of America and in China, have experienced stable historic growth. Several positive industry trends such as an increase in the number of vehicles on the road, an increase in the number of licensed drivers, an increase in the number of vehicles on the road, an increase in the number of miles driven, and an increase in the average age of vehicles have contributed the overall growth in the industry. Our strong revenue growth from replacement tire markets resulted, in part, from the overall growth in the industry; in addition, from the actions taken by us. We pay attention to maintain good business relationships with our suppliers and customers. Meanwhile, we expanded breadth and depth of product offering.

Results of Operations

Results of operations for the year ended December 31, 2007 compared to results of operations for the same period ended December 31, 2006. The following table sets forth the period change for each category of the statement of operations, as well as each category as a percentage of net sales.

	Dec. 31, 2007 US$	% of revenues	Dec. 31, 2006 US$	% of revenues	% of change based on Dec. 31, 2006
Sales	329,922,722	99.3%	332,535,270	99.9%	-0.8%
Commissions and other	2,331,556	0.7%	433,807	0.1%	4.4 times
Total revenues	332,254,278	100%	332,969,077	100%	-0.2%
COSTS AND EXPENSES
Cost of sales	311,152,343	93.6%	315,093,435	94.6%	-1.3%
Freight charges	6,588,423	2.0%	5,847,439	1.8%	12.7%
Commissions and rebates	59,961	0.0%	145,621	0.0%	-58.8%
Insurance	328,465	0.1%	270,079.	0.1%	21.6%
Selling expenses	2,717,207	0.8%	2,319,384	0.7%	17.2%
General & Administrative expenses	1,054,595	0.3%	482,299	0.1%	1.2 times
Total costs and expenses	321,900,994	96.9%	324,158,257	97.4%	-0.7%
Income/loss from operations	10,353,284	3.1%	8,810,820	2.6%	17.5%
Other income and expenses
Miscellaneous income (expense)	106,002	0.0%	(168,272)	0.1%	1.6 times
Interest expenses	(3,822,435)	1.2%	(3,474,729)	1.0%	10.0%
Other net	(3,716,433)	1.1%	(3,643,001)	1.1%	2.0%
Income/loss from operation before income tax	6,636,851	2.0%	5,167,819	1.6%	28.4%

Provision (benefit) for income taxes	472,964	0.1%	572,682	0.2%	-17.4%

Net income/ loss	6,163,887	1.9%	4,595,137	1.4%	34.1%
Foreign currency translation gain(loss)	(173,468)	0.1%	96,322	0.0%	-2.8 times
Comprehensive Income	5,990,419	1.8%	4,691,459	1.4%	27.7%

Net Sales

The net sales for the year ended December 31, 2007, which were approximately $329.9 million, decreased by approximately $2.6 million, 0.8% lower than the net sales for the same period in 2006. The Company’s tire export and domestic tire distribution both showed strong growth with the increase of 25% and 28%, respectively. In the domestic tire market, the Company sold two new high quality Chinese tire brands brought in early 2007, which diversify the Company’s product offering and bring in more revenue. The Company has been focusing on developing a distribution network and on enhancing the ability to expand its customer base both in domestic and overseas markets. Therefore, not only the existing customers purchased more tires than before, but also the Company developed a larger customer base. All these factors contributed to the increase in revenue.

In 2007 there was a 15% decrease in revenue from the rubber import and distribution business, which offset the strong revenue growth in tire export and domestic distribution. The decrease was mainly due to changes in the business of styrene-butadiene rubber (SBR rubber). In the previous fiscal years, the Company’s SBR rubber business was conducted with both purchasing contracts and sale contracts. The Company had the right to determine the sales price of SBR rubber offered to customers and bear all the risk relating to inventory, therefore, sales of SBR rubber were recognized as revenue. According to the new sales agent agreement with SBR rubber suppliers, the Company now serves as a sales agent for SBR rubber starting in the last quarter of 2006 and receives a commission for the sales of SBR rubber. The commission is recorded as commission income and is included in commissions and other in the statements of operations. In addition, a similar situation also occurs with synthetic rubber sales. The Company received approximately $1.4 million in commission income in the year ended December 31, 2007.

Commissions and other

Commissions and other increased by approximately $1.9 million to about $2.3 million in 2007 from about $0.4 million in 2006. Line items of commission and other were as follows: approximately $1.4 million of rubber agent sales income and commissions, $0.2 million of service income for declaring customs on behalf of customers, $0.1 million of rental income, $0.5 million of car service income from chain stores and $0.1 million of warranty service income. Agent sales contract for SBR rubber and synthetic rubber started in the last quarter of 2006, which contributed to the increase in commission income in 2007. In addition, most of the Company’s chain stores were new in 2006 and generated more revenue in 2007.

Costs and operating expenses:

Due to favorable purchase and sales prices, the Company could get the overall cost of good sold as a percentage of total revenues reduced by 1% from 2006 levels.

Overall operating expenses increased by approximate $1.7 million to about $10.7 million in fiscal 2007 from approximate $9.0 million in fiscal 2006. However, most of them do not have a significant increase as a percentage of total revenues when compared with the corresponding figures in 2006.

Freight charges contributed approximately $0.74 million of the increase in operational expenses. The increase in freight charges mainly resulted from the increased sales in the tires export business. The Company believes this increase was reasonable when considering the mix of the CIF and FOB sales terms to different customers.

Selling expenses increased by approximate $0.4 million, or 17% in absolute amount, to about $2.7 million in fiscal 2007 from about $2.3 million in fiscal 2006. As a percentage of total revenues, it accounted for about 0.8% and 0.7% in 2007 and 2006, respectively. Increase in selling expenses primarily resulted from higher salary and commission to sales representatives. There was also an increase in depreciation expense because of the effect of the Company’s warehousing infrastructure and building of the chain stores.

General and administrative expenses increased by $0.5 million to approximately $1.0 million in 2007 from approximately $0.5 million in 2006. It accounted for 0.3% as a percentage of total revenues in 2007, while it was 0.1% in 2006. Staff salary increased by about $0.16 million. The Company started listing process in 2007, placement agent fee, lawyer fee, consulting firm fee, and audit fee in total increased about $0.26 million. The increase in travel expenses, local tax for road and river maintenance and stamp tax also contributed to the increase in general and administrative expenses.

The increase in operating expenses was offset by the decrease in costs of sales. Therefore, the income from operations increased by approximately $1.5 million, up by 17.5%, compared with the corresponding figure in 2006.

Interest Expense

The Company experienced an increase in interest expense and miscellaneous financial charges of approximately $0.76 million to approximately $4.35 million, which was offset by interest income of approximate $0.55 million in fiscal 2007. Interest expense for discounting notes, short term debt for working capital turnover, trading finance, and miscellaneous financial charges, such as fee for issuing letters of credit and bank charges etc, are all included in interest expense. The increase in interest expense was primarily due to the rise in the bank interest rate. The average annual interest rate in 2006 was about 6%, while it was about 6.5% in 2007. In addition, the balances for total short-term borrowing in 2007 were about $16.9 million higher than that in 2006, which also contributed to the increase in interest expense.

Net Income

The Company achieved about $6.2 million of net income in 2007, which increased by about $1.6 million (approximately 34.8%) compared with about $4.6 million in 2006. It was mainly attributed to the significant increase in commission and other and decrease in cost of sales.

Liquidity and Capital Resources

The following table summarizes the cash flows for the years ended as of December 31, 2007 and 2006.

	Years ended December 31,
	2007	2006
	US$	US$
Cash used in operating activities	(14,950,126)	(8,720,250)
Cash used in investing activities	(1,875,504)	(4,421,209)
Cash provided by financing activities	13830,341	13,240,320
Effect of exchange rate change on cash	792,532	51,192
Net increase in cash and cash equivalents	(2,202,757)	150,052
Cash and cash equivalents beginning of the year	4,311,388	4,161,335
Cash and cash equivalents ending of the year	2,108,631	4,311,388
Cash payments for interest	4,044,917	3,474,729
Cash payment (receipts) for taxes	118,654	226,875

Operating activities

Total net cash used in operating activities in 2007 was increased by $6.2 million to approximately $14.9 million from approximately $8.7 million in 2006. The increase in related party receivable (approximately $32 million) and other receivables and prepayment of approximately $7.2 million were significantly higher than the corresponding figures in 2006. In addition, about $1.6 million increase in inventory also contributed to the cash used in operating activities. Net working capital as of December 31, 2007 totaled about $-15.5 million compared to $10.3 million as of December 31, 2006, a significant decrease of approximately $25.8 million. The decrease in working capital mainly attributed to $28,967,410 of related party receivable that was reclassified as non current.

Investing activities

Net cash used in investing activities decreased by approximately $2.5 million to about $1.9 million in 2007 from about $4.4 million in 2006. The decrease was due primarily to a reduction in capital expenditures. In 2006, there was an increase in investment on newly-established full function aftermarket service centers in Qingdao, which resulted in corresponding increase in fixed assets such as buildings and equipment etc. This investment did not repeat in 2007.

Financing activities

Increase in short term borrowings of approximately $16.9 million is approximately $1.1 million higher than the corresponding figure (about $15.8) in 2006. The increase in short term borrowing was mainly resulted from the increase of amount used in trade financing. Export bill purchase, import bill advance, documents against payment and documents against acceptance constituted most of the Company’s short term borrowings. Due to the business expansion and cash used in operating activities increased significantly, the Company needed to bear more short term borrowing for normal working capital turnover.

Revolving credit facility

The Company has increased credit facilities to support business expansion. The total amount of credit facilities in 2007 was approximately $115.3 million. The outstanding import bill advance, export bill purchase, documents against payment, documents against acceptance and short term debt for working capital turnover were approximately $55.5 million in total as of December 31, 2007. Corresponding finance charges are based on the interest rate defined in each individual contract between the Company and the banks. In general, the interest rate for import bill advances and export bill purchases is based on the average of three months LIBOR plus 0.8%. The finance charge for opening a letter of credit is approximately 0.1%; finance charges for documents against payment and documents against acceptance are at a rate fluctuating around 0.1%. The letters of credit negotiation service charge is 0.125%. In total, the interest expense and miscellaneous financial charges incurred in 2007 was about $4.35 million.

The obligations of credit are guaranteed by Sentaida Group Ltd, Sentaida Rubber Co. Ltd, and Kaiyang Import and Export Company Limited who is one of the Company’s strategic business partners. Some of the obligations also bear the personal guarantee of stockholders of Sentaida Group, Qin Long (president of the Company) and Xiuqin Li (Mr. Qin Long’s wife, who has been Technical Inspection & Purchasing Director in Sentaida Group from September 1991 to September 2007). The contractual agreements with banks contain covenants which restrict the Company’s ability to incur additional debt, enter into guarantees, make loans and investments, and modify certain material agreements, and other customary covenants. The Company is in compliance with all the covenants.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require more significant judgments and estimates in the preparation of financial statements, including the following:

•

Allowance for doubtful accounts.

The Company would provide an allowance for doubtful accounts to ensure that accounts receivable and other receivables are not overstated due to any uncollectible accounts. Based on management’s evaluation of the customers’ ability to make payment, the probability of inability to pay is low; therefore, the Company did not make any allowance for doubtful accounts.

•

Inventories.

For Sentaida Tires, inventories are valued at the lower of cost (computed in accordance with the weighted average method) or market. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable merchandise. Based on management’s experience and assessments, the level of obsolete and slow-moving merchandise was very low and we believe there is no need to have an allowance for obsolescence. Terms with a majority of the Company’s tires vendors allow return of tires products, within limitations, specified in their supply agreements.

For Zhongsen Holdings and F.T.Z Sentaida, the inventories for rubber and tires are stated at the lower of cost (computed in accordance with the first-in-first-out method) or market. There was no inventory kept in Zhongsen Holdings, where F.T.Z. Sentaida maintains inventory at minimum level. Management adjusts the inventory level based on the fluctuation of the demand for rubber. The Company’s management believes that there is no need to make an allowance for FTZ Sentaida’s inventory.

•

Property, plant and equipment.

Our 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 a straight-line basis over the estimated useful life of an asset. The principal depreciation rates are as follows:

Buildings	20 years
Machinery and equipment	5 years
Office equipment	5 years
Vehicles and other	5-8 years

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 excluding proceeds from disposal is charged or credited to income.

•

Revenue recognition.

SAB 104 outlines four criteria that all publicly held companies have to follow to recognize revenue: 1. Persuasive evidence of an arrangement exists. 2. Delivery has occurred or services have been rendered. 3. The seller's price to the buyer is fixed or determinable. 4. Collectibility is reasonably assured. The Company recognizes revenue when title and risk of loss pass to the customer and the above criteria have been met. Besides the above criteria, for F.T.Z Sentaida and Zhongsen Holdings, they also recognize the revenue upon shipment of products, provided the above mentioned criteria have been met.

•

Warranty.

The tires that FTZ Sentaida and Sentaida Tires sell are guaranteed directly by the manufacturers, FTZ Sentaida and Sentaida Tires are not accountable to customers. In respect of rubber imported, the FTZ Sentaida has insurance coverage for the quality. Therefore, the Company does not make provisions for warranty.

For Sentaida Tires, although it has no responsibility for defects in quality or workmanship of the tires, it serves as agent for making damage claims on behalf of its customers from manufacturers. Sentaida Tires may compensate customers first, either by replacing the tires or by a cash refund, and then get reimbursement from manufacturers or suppliers in the form of tires or cash.

Recently issued accounting pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). This interpretation requires that we recognize in our 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 are effective as of the beginning of our 2007 fiscal year. The adoption of FIN 48 has no material effect on our financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157 Fair Value Measurement (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 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 SFAS 157 is initially applied, except in some circumstances where the statement shall be applied retrospectively. We are currently evaluating the effect, if any, of SFAS 157 on our 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 the 2008 fiscal year. We are in the process of evaluating this guidance and therefore have not yet determined the impact that SFAS 159 will have on our financial statements upon adoption.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51”. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective for the fiscal year beginning after December 15, 2008. The management is in the process of evaluating the impact that SFAS 160 will have on the Company’s financial statements upon adoption.

In December 2007, the FASB issued SFAS No. 141 (Revised) “Business Combinations”. SFAS 141 (Revised) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective for the fiscal year beginning after December 15, 2008. The management is in the process of evaluating the impact that SFAS 141 (Revised) will have on the Company’s financial statements upon adoption.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

We are exposed to interest rate risk primarily with respect to our short-term bank loans. Although the interest rates are fixed for the terms of the loans, the terms are typically 12 months and interest rates are subject to change upon renewal. Since September 16, 2007 China People’s Bank has increased the interest rate of RMB bank loans with a term of 6 months or less by 0.27%, and loans with a term of 6 to 12 months by 0.27%. The new interest rates are 6.48% and 7.29% for RMB bank loans with a term of 6 months or less and loans with a term of 6-12 months, respectively. The change in interest rates has no impact on our bank loans that were made before September 15, 2007. There was an increase of interest expense of approximate $10,587 from the loan we contracted after September 15, 2007. Management monitors the banks’ interest rates in conjunction with our cash requirements to determine the appropriate level of debt balances compared to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate risk.

Foreign Exchange Risk

While our reporting currency is the U.S. Dollar, all of our consolidated revenues and consolidated costs and expenses are denominated in Renminbi. All of our assets are denominated in RMB except for cash. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between U.S. Dollars and RMB. If the RMB depreciates against the U.S. Dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. Dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

Inflation

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues, if the selling prices of our products do not increase with these increased costs.

PROPERTIES

All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of up to 50 years. This period may be renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

The Company currently does not own any real estate. So far, it uses about 16,000 square meters of office space and about 17,800 square meters of warehouse for free. These office space and warehouse are owned by Sentaida Rubber Co., Ltd, which is a subsidiary of Sentaida Group Ltd. , an affiliate of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our common stock as of April 25, 2008 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group.

Unless otherwise specified, the address of each of the persons set forth below is in care of Rub a Dub Soap, Inc. No. 177 Chengyang Section, 308 National Highway, Danshan Industrial Area, Qingdao, China, 266109.

Title of Class	Name & Address of Beneficial Owner	Office, If Any	Amount & Nature of Beneficial Ownership¹	Percent of Class²
Common Stock	Qin Long	Chairman of the Board of Directors and CEO³	11,310,000	43.5
Common Stock	Kai Chen	Vice President and Director	11,700,000	45.0
Common Stock	Liang Junfeng	Vice President and Director	0	*
Common Stock	Ji Gongsheng	Vice President and Director	0	*
Common Stock	Liang Junbao	Chief Financial Officer and Director	0	*
Common Stock	All offices and directors as a group (5 persons named above)		23,010,000	88.5

^1.Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of the Common Stock.

^2.A total of 26,000,000 shares of the Common Stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner above, any options exercisable within 60 days have been included in the denominator.

DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following sets forth the name and position of each of our current executive officers and directors.


Name	Age	Position
Long Qin	43	Chief Executive Officer, and Chairman of the Board
Kai Chen	47	Director and President
Gongsheng Ji	43	Director and Vice President and General Manager of Qingdao Free-Trading Zone Sentaida International Trade Co., Ltd.
Junfeng Liang	48	Director and Vice President and General Manager of Qingdao Sentaida Tire. Co., Ltd.
Junbao Liang	45	Director and Chief Financial Officer

Mr. Long Qin, Chairman & CEO of the Company, age 43, worked as general manager in Tizong Rubber Company in Qingdao from 1990 to 1998. He joined the Company as a founder and chairman of board in 2000. In the last 7 years, Mr. Qin has led the Company and built it from a start-up. Under his leadership, the Company has grown from one single line of business in natural rubber trading to today's world-wide marketing and distribution of both rubber and tires. The Company's annual sales have increased from a few million dollars in 2000 to $327 million in 2006.

Mr. Kai Chen, Board Director and President of Zhongsen Holdings Co., Ltd., age 47, graduated from Beijing Foreign Studies University in 1983 with a major in International Trade. Before joining Company in 2006, he served as President of Aeon Holdings Co. in Hong Kong for four (4 ) years. Prior to that, he held several senior managerial positions in different international companies, which include SinoChem, where he had served as General Manager for Eastern China Region for 12 years and led the region to generate RMB 3 billion of annual sales in 2000.

Mr. Gongsheng Ji, Vice President of the Company and General Manager of Qingdao (F.T.Z) Sentaida Int'l Trade Co., Ltd., age 43, graduated from Fudan University with a major in Economics. Before he joined the Company in 2004, he had worked as General Manager of the Rubber Division of SinoChem International Trading Group for nine (9) years. Prior to that, he worked as Division Manager at Qingdao Light & Chemical Industrial Company from 1984 to 1995. Mr. Ji is a well-known trader in the China rubber industry.

Mr. Junfeng Liang, Vice President of the Company and General Manager of Qingdao Sentaida Tire Co., Ltd., age 48. He joined Qingdao F.T.Z. Sentaida International Trading Co. in 2002 and founded Qingdao Sentaida Tire Co., with Mr. Qin Long. In the last three years, he has led the Company's Domestic Tire business division and generated over RMB 1.3 billion of aggregate sales. Before he joined the Company, he worked as Sales Manager in Weihai Triangle Tire Co, one of the largest tire-makers in China, for 9 years. From 1980 to 1993, he served as Sales Manager at Tai'an City Merchant Supply Company.

Mr. Junbao Liang, Chief Financial Officer, age 45, Certified Senior Accountant, graduated from Tianjin University with an MBA degree in 1996. Mr. Liang has served in this capacity since he joined the Company in December 2002. Prior to that, he had worked as Chief Accountant and CFO at Weihai Triangle Tire Co. for eight (8) years. From 1988 to 1994, Mr. Liang was a manager in the Finance Department of Ningyang Fertilizer Factory in Ningyang County, Shandong Province.

There are no agreements or understandings for any of our executive officers or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.

Directors are elected until their successors are duly elected and qualified.

Board Composition and Committees

The board of directors is currently composed of 5 persons, Mr.Long Qin, Mr. Kai Chen, Mr. Gongsheng Ji, Mr. Junfeng Liang, Mr. Junbao Liang.

We currently do not have standing audit, nominating or compensation committees, although we may form such committees in the future as the membership of the board of directors increases. Since we do not currently have an audit committee, we do not have an audit committee financial expert. Our board of directors handles the functions that would otherwise be handled by an audit committee. Upon the establishment of an audit committee, the board of directors will determine whether any of the directors qualify as an audit committee financial expert.

We have not implemented a process for stockholders to send communications to the board of directors because we have not had significant operations until recently. We intend to establish a reporting mechanism as soon as practicable.

Director Compensation

Historically, we have not paid our directors fees for attending scheduled and special meetings of our board of directors. In the future, we may adopt a policy of paying independent directors a fee for their attendance at board and committee meetings. We do reimburse our directors for reasonable travel expenses related to attendance at board of director meetings.

Family Relationships

Our Director and Vice President and General Manager of Qingdao Sentaida Tire. Co., Ltd., Mr. Junfeng Liang and our Director and Chief Financial Officer Mr. Junbao Liang are bothers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. None of the directors, director designees or executive officers to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five fiscal years.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act required our executive officers and directors, and person who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on its review of the copies of such forms received by us all such filing requirements applicable to its officers and directors were complied with during the fiscal year ended December 31, 2007.

Code of Ethics

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.

Shareholder Communications

The Company has a process for shareholders who wish to communicate with the Board of Directors. Shareholders who wish to communicate with the Board may write to it at the Company’s address given above. These communications will be reviewed by one or more employees of the Company designated by the Board, who will determine whether they should be presented to the Board. The purpose of this screening is to allow the Board to avoid having to consider irrelevant or inappropriate communications.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the following persons for services rendered in all capacities during the noted periods: Mr. Qin Long, our Chief Executive Officer, Mr. Kai Chen, our President, Mr. Junbao Liang, our Chief Financial Officer, Mr. Gongshen Ji, our Vice President, and Mr. Junfeng Liang, our Vice President. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards (No. of shares)	Non-Equity Incentive Plan Compensation Earnings ($)	Non-qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Long Qin, Chairman and CEO⁽¹⁾	2006	0	0	0	0	0	0	0	0
Long Qin, Chairman and CEO⁽¹⁾	2007	25714	0	0	0	0	0	0	25714
Kai Chen, Director and President⁽²⁾	2006	0	0	0	0	0	0	0	0
Kai Chen, Director and President⁽²⁾	2007	25714	0	0	0	0	0	0	25714
Junbao Liang, Chief Financial Officer ⁽³⁾	2006	0	0	0	0	0	0	0	0
Junbao Liang, Chief Financial Officer ⁽³⁾	2007	17142	0	0	0	0	0	0	17142
Gongsheng Ji, Director and Vice President ⁽⁴⁾	2006	0	0	0	0	0	0	0	0
Gongsheng Ji, Director and Vice President ⁽⁴⁾	2007	25714	0	0	0	0	0	0	25714
Junfeng Liang, Director and Vice President ⁽⁵⁾	2006	0	0	0	0	0	0	0	0
Junfeng Liang, Director and Vice President ⁽⁵⁾	2007	24714	0	0	0	0	0	0	24714

Narrative to Summary Compensation Table

⁽¹⁾Mr. Long Qin has not signed long term employee agreement with the Company and his salary is paid by F.T.Z Sentaida on behalf of the Company. Mr. Long Qin’s annual salary is $25,714. He does not receive any Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation Earnings, Non-qualified Deferred Compensation Earnings and All Other Compensation.

⁽²⁾Mr. Kai Chen has not signed long term employee agreement with the Company and his salary is paid by F.T.Z Sentaida on behalf of the Company. Mr. Kai Chen’s annual salary is $25,714. He does not receive any Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation Earnings, Non-qualified Deferred Compensation Earnings and All Other Compensation.

⁽³⁾Mr. Junbao Liang has not signed long term employee agreement with the Company and his salary is paid by F.T.Z Sentaida on behalf of the Company. Mr. Junbao Liang’s annual salary is $17,142. He does not receive Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation Earnings, Non-qualified Deferred Compensation Earnings and All Other Compensation.

⁽⁴⁾Mr. Gongsheng Ji has signed long term employee agreement with F.T.Z Sentaida and his salary is paid by F.T.Z Sentaida on behalf of the Company. Mr. Gongsheng Ji’s annual salary is $25,714. He does not receive any Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation Earnings, Non-qualified Deferred Compensation Earnings and All Other Compensation.

⁽⁵⁾Mr. Junfeng Liang has signed long term employee agreement with Sentaida Tire and his salary is paid by Sentaida Tire on behalf of the Company. Mr. Junfeng Liang’s annual salary is $25,714. He does not receive any Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation Earnings, Non-qualified Deferred Compensation Earnings and All Other Compensation.

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards, including, options, restricted stock or other equity incentives, during the fiscal year ended December 31, 2007.

Additional Narrative Disclosure

All our employees, have executed our form employment agreement and non-disclosure agreement. Mr. Qin earns RMB 15,000 per month (approximately $2142) for his services as our Chief Executive Officer, Mr. Chen earns RMB 15,000 per month (approximately $2142) for his services as our President and Mr. Liang earns RMB 10,000 per month (approximately $1428) for his services as our Chief Financial Officer. No other benefits have been granted by us to officers at this time.

Compensation of Directors

Except the compensations reported in the Summary Compensation Table above, all the directors do not receive any additional compensation for their service as directors.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The following discloses transactions with related persons entered into over the past two years.

LQJ Global Tire (“LQJ”) is another related party, which now is a wholly owned subsidiary by Sentaida Group. In November 2007, LQJ’s business operation was integrated into Sentaida International Inc., which is also a wholly owned subsidiary of Sentaida Group. Sentaida International Inc. has assumed all the LQJ’s liabilities. LQJ accounted for nearly 88.2% of the related party sales, and about 47.4% of the related party receivables. The sales to LQJ are normal business transactions and the documents are released against acceptance with a maturity of 90 days (D/A 90 days), which is 30 days longer than before.

The Company accrued about $0.4 million interest income for the receivables from Sentaida International Inc. The interest charge was based on the average receivables from Sentaida Rubber for the last three months in 2007 and at an annual average interest rate of 6.8%.

Nanjing Sentaida Tire Company Limited (“Nanjing Sentaida”) is a related party with Sentaida Tires through one top management member in Nanjing Sentaida’s management team. It accounted for 8.6% of the related party sales, which were all normal business transactions. Related party receivable from Nanjing Sentaida is approximately $0.2 million at December 31, 2007.

The Company uses office building and warehouse space free of rent from Sentaida Rubber Co., Ltd., a related party.

There were approximately $5.1 million related party payables on December 31, 2007. About $1.6 million of short term borrowing that the Company borrowed for working capital turnover owed to the wife of the Company’s CEO, Xiuqin Li. About $3.0 million owed to Dongsen Tires Company Limited (“Dongsen”), who is related with the Company through one management member, Mr. Junfeng Liang, our vice president and director, who involves in decision-making of Dongsen’s operation. The nature of the payables is short term borrowing by the Company without interest bearing. Another approximately $ 0.4 million owed to Delinte Logistic Company Limited (“Delinte”), one of subsidiaries of Sentaida Group. Sentaida Group owns 51% of Delinte’s equity interest. These were some expenses paid by Delinte on behalf of the Company and should be reimbursed from the Company.

Director Independence Standards

The Company's Board of Directors has determined that no member of the Board of Directors qualifies as an "independent director" in accordance with the listing requirements of NASDAQ.

LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. The Company is currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse affect on business, financial condition or operating results.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for our Common Stock

Our common stock is quoted on the Over-The-Counter Bulletin Board under the symbol “RUBD”, but has not been traded in the Over-The-Counter market except on a limited and sporadic basis. The CUSIP number is 781082201. The following table sets forth, for the periods indicated, the high and low bid prices of our common stock. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

	Bid Prices ^{(1) *}
	High	Low
*TYD Through March 31, 2008*	4.57	1.80
*Fiscal Year Ended December 31, 2007*
1^st Fiscal Quarter (1/1/07-3/31/07)	5.475	5.125
2^nd Fiscal Quarter (4/1/07-06/30/07)	6.00	3.00
3^rd Fiscal Quarter (7/1/07-9/30/07)	5.00	1.75
4^th Fiscal Quarter (10/1/07-12/31/07)	7.25	0.55

*Fiscal Year Ended December 31, 2006*
1^st Fiscal Quarter (1/1/06-3/31/06)	0.092	0.015
2^nd Fiscal Quarter (4/1/06-6/30/06)	0.022	0.017
3^rd Fiscal Quarter (7/1/06-9/30/06)	0.333	0.283
4^th Fiscal Quarter (10/1/06-12/31/06)	6.95	0.623

*Year Ended December 31, 2005*
1^st Fiscal Quarter (1/1/05-3/31/05)	N/A	N/A
2^nd Fiscal Quarter (4/1/05-6/30/05)	N/A	N/A
3^rd Fiscal Quarter (7/1/05-9/30/05)	0.092	0.05
4^th Fiscal Quarter (10/1/05-12/31/05)	0.125	0.042

________________________

(1)

The above tables set forth the range of high and low bid prices per share of our common stock as reported by www.quotemedia.com for the periods indicated.

*All prices reflected herein have been adjusted for the one-for-ten reverse split which occurred on April 17, 2007.

Reports to Stockholders

We plan to furnish our stockholders with an annual report for each fiscal year ending December 31 containing financial statements audited by our independent certified public accountants. Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our stockholders when we deem appropriate. We intend to maintain compliance with the periodic reporting requirements of the Exchange Act.

Approximate Number of Holders of Our Common Stock

On December 31, 2007, there were approximately 46 stockholders of record of our common stock.

Dividend Policy

The Company has never declared or paid any cash dividends on its common stock. The Company currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, the Company does not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance under Equity Compensation Plans

None.

RECENT SALES OF UNREGISTERED SECURITIES

Reference is made to the disclosure set forth under Item 3.02 of this report, which disclosure is incorporated herein by reference.

DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

The following summary is qualified in its entirety by reference to the Company's Articles of Incorporation ("Articles") and its Bylaws. The Company's authorized capital stock consists of 100,000,000 shares of common stock, $.001 par value per share, and 10,000,000 shares of preferred stock, $.001 par value per share.

Common Stock

As of February 5, 2008, (post closing) 26,000,000 common shares of the Company's common stock are held of record by approximately 32 holders and an unknown number of beneficial holders. Each share of common stock entitles the holder of record thereof to cast one vote on all matters acted upon at the Company's stockholder meetings. Directors are elected by a plurality vote. Because holders of common stock do not have cumulative voting rights, holders or a single holder of more than 50% of the outstanding shares of common stock present and voting at an annual meeting at which a quorum is present can elect all of the Company's directors. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities. All of the outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued in connection with the exercise of options under the Option Plan will be fully paid and non-assessable when issued.

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors in its sole discretion from funds legally available there for. In the event the Company is liquidated, dissolved or wound up, holders of common stock are entitled to share ratably in the assets remaining after liabilities and all accrued and unpaid cash dividends are paid.

Preferred Stock

The Board of Directors of the Company has the authority to divide the authorized preferred stock into series, the shares of each series to have such relative rights and preferences as shall be fixed and determined by the Board of Directors. The provisions of a particular series of authorized preferred stock, as designated by the Board of Directors, may include restrictions on the payment of dividends on common stock. Such provisions may also include restrictions on the ability of the Company to purchase shares of common stock or to purchase or redeem shares of a particular series of authorized preferred stock.

Depending upon the voting rights granted to any series of authorized preferred stock, issuance thereof could result in a reduction in the voting power of the holders of common stock. In the event of any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary, the holders of the preferred stock will receive, in priority over the holders of common stock, a liquidation preference established by the Board of Directors, together with accumulated and unpaid dividends. Depending upon the consideration paid for authorized preferred stock, the liquidation preference of authorized preferred stock and their matters, the issuance of authorized preferred stock could result in a reduction in the assets available for distribution to the holders of common stock in the event of the liquidation of the Company.

There are no shares of preferred stock designated or issued as of the date hereof.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's directors and executive officers are indemnified as provided by the Nevada Revised Statutes and the Company's Bylaws. These provisions state that the Company's directors may cause the Company to indemnify a director or former director against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him as a result of him acting as a director. The indemnification of costs can include an amount paid to settle an action or satisfy a judgment. Such indemnification is at the discretion of the Company's board of directors and is subject to the Securities and Exchange Commission's policy regarding indemnification.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, the Company 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.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The full text of our audited consolidated financial statements as of December 31, 2007 begins on page F-1 of this Current Report on Form 8-K/A.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

Reference is made to the disclosure set forth under Item 4.01 of this report, which disclosure is incorporated herein by reference.

ITEM 3.02

UNREGISTERED SALES OF EQUITY SECURITIES

On February 5, 2008, we issued 25,090,000 shares of our common stock to stockholders of Zhongsen. The issuance of our shares to these individuals was made in reliance on the exemption provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering and regulation D promulgated thereunder.

In instances described above where we issued securities in reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the Securities Act. These stockholders who received the securities in such instances made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Management made the determination that the investors in instances where we relied on Regulation D are Accredited Investors (as defined in Regulation D) based upon management’s inquiry into their sophistication and net worth. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.

In instances described above where we indicate that we relied upon Section 4(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us.

ITEM 4.01

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

On February 5, 2008, in connection with the acquisition of Zhongsen, we terminated the services of Sherb & Co., LLP, as the Company's independent auditor. Sherb & Co., LLP performed the audits for the year ended May 31, 2007, which report did not contain any adverse opinion or a disclaimer of opinion, nor was it qualified as to audit scope or accounting principles but did carry a modification as to going concern. During Our most recent fiscal year and during any subsequent interim period prior to the February 5 termination as Our independent auditors, there were no disagreements which Sherb & Co., LLP, with respect to accounting or auditing issues of the type discussed in Item 304(a)(iv) of Regulation S-B.

On February 5, 2008, we provided Sherb & Co., LLP with a copy of this disclosure and requested that it furnish a letter to us, addressed to the SEC, stating that it agreed with the statements made herein or the reasons why it disagreed. A copy of the letter was filed by us as Exhibit 16.1 to our current report on Form 8-K, filed on February 05, 2008.

On February 5, 2008, our board of directors approved the engagement of the firm of Bernstein & Pinchuk LLP as our independent auditors. During our two most recent fiscal years or any subsequent interim period prior to engaging Bernstein & Pinchuk LLP, RDS had not consulted Bernstein & Pinchuk LLP regarding any of the accounting or auditing concerns stated in Item 304(a)(2) of Regulation S-B.

ITEM 5.01

CHANGES IN CONTROL OF REGISTRANT

Reference is made to the disclosure set forth under Item 2.01 of this report, which disclosure is incorporated herein by reference.

As a result of the closing of the reverse acquisition with Zhongsen, the former stockholders of Zhongsen (prior to the private placement transaction as described under Item 2.01) own 96.5% of the total outstanding shares of our capital stock and 96.5% total voting power of all our outstanding voting securities.

ITEM 5.02

DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

Upon the closing of the reverse acquisition, as of February 5, 2008, Kevin B. Halter Jr. and Pam Halter submitted their resignation letters pursuant to which they resigned from their positions as our directors effective immediately. The resignations of Mr. Halter and Ms. Halter are not in connection with any known disagreement with us on any matter. Qin Long, Liang Junfeng, Kai Chen, Gongsheng Ji, and Junbao Liang were appointed to the board of directors at the effective time of the resignation of Mr. Halter and Ms. Halter.

For certain biographical and other information regarding the newly appointed director, see the disclosure under Item 2.01 of this report, which disclosure is incorporated herein by reference.

ITEM 5.06

CHANGE IN SHELL COMPANY STATUS

Reference is made to the disclosure set forth under Item 2.01 and 5.01 of this report, which disclosure is incorporated herein by reference.

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(a)

Financial Statements of the Company and wholly-owned subsidiaries of Zhongsen.

(b)

Pro Forma Financial Information

(c)

Exhibits


Exhibit No.	Description
3.1	Certificate of Incorporation of the Company [Incorporated by reference to Exhibit 3.1 of the Form 10-KSB filed on August 15, 2006 in Commission file number 0-52142]
3.2	Bylaws of the Company [Incorporated by reference to Exhibit 3.2 of the Form 10-KSB filed on August 15, 2006 in Commission file number 0-52142]
10.1	Share Purchase Agreement, between the Company and Zhongsen, dated October 26, 2007 [Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on October 29, 2007 in Commission file number 0-52142]
10.2*	Employment Agreement, dated November 29, 2007, between Gongsheng Ji and the Company
10.3*	Employment Agreement, dated November 20, 2007, between Junfeng Liang and the Company
16.1	Letter from Sherb & Co., LLP regarding the change in certifying accountants [incorporated by reference to Exhibit 16.1 of current report on Form 8-K, filed on February 05, 2008]
21*	A description of the subsidiaries of the registrant

*filed herewith

SIGNATURES

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

RUB A DUB SOAP, INC.

Date: April 29, 2008

/s/ Qin Long

Chief Executive Officer

FINANCIAL STATEMENTS

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED

DECEMBER 31, 2007 AND 2006

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED BALANCE SHEETS	F-3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME	F-4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-7 - F-19

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Zhongsen International Company Group Limited

We have audited the accompanying consolidated balance sheets of Zhongsen International Company Group Limited ("the Company") as of December 31, 2007 and 2006, and the related statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years ended December 31, 2007, 2006 and 2005. The Company’s management is responsible for these financial statements. 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. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years ended December 31, 2007, 2006 and 2005, in conformity with accounting principles generally accepted in the United States of America.

/s/Bernstein & Pinchuk LLP

April 24, 2008

F-2

ZhongSen International Company Group Limited
Consolidated Balance Sheets

	December 31,
	2007	2006
	US$	US$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2,108,631	4,311,388
Restricted cash	8,534,135	7,672,729
Notes receivable	1,738,286	3,562,308
Accounts receivable, net	18,957,856	19,345,863
Related parties receivables	31,508,703	28,349,891
Inventories, net	10,384,620	8,825,745
Other receivables	8,681,783	4,822,463
Prepayments and other assets	6,448,517	3,131,071
Total Current Assets	88,362,531	80,021,458

RELATED PARTIES RECEIVABLES (NON CURRENT)	28,967,410	-

PROPERTY, PLANT & EQUIPMENT, net	5,812,963	5,045,953

INVESTMENT	46,486	7,675

	123,189,390	85,075,086


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Short term borrowings	55,505,353	38,626,247
Notes payable	16,174,239	13,482,571
Accounts payable	21,121,952	10,633,850
Related parties payables	5,064,636	3,315,847
Other payables and accruals	1,740,015	497,327
Taxes payable	2,059,348	395,183
Other liabiltities	274,715	137,534
Advance from customers	1,964,681	2,609,730
Total Current Liabilities	103,904,939	69,698,289


STOCKHOLDERS' EQUITY
Common stock	-	-
Paid in capital	-	3,048,765
Additional paid in capital	1,791	1,791
Appropriated of retained earnings	1,254,002	1,143,165
Unappropriated of retained earnings	16,536,419	10,483,369
Accumulated other comprehensive income	1,492,239	699,707
Total Stockholders' Equity	19,284,451	15,376,797
	123,189,390	85,075,086

See accompanying notes to consolidated financial statements

F-3

Zhongsen International Company Group Limited
Consolidated Statements of Operations and Comprehensive Income

	Years ended December 31,
	2007	2006	2005
	US$	US$	US$
REVENUES
Sales	329,922,722	332,535,270	245,086,065
Commissions and other	2,331,556	433,807	-
Total revenues	332,254,278	332,969,077	245,086,065
COSTS AND EXPENSES
Cost of sales	311,152,343	315,093,435	230,577,464
Freight charges	6,588,423	5,847,439	3,205,514
Commissions and rebates	59,961	145,621	1,951,499
Insurance	328,465	270,079	268,125
Selling Expenses	2,717,207	2,319,384	1,747,178
General and Administrative Expenses	1,054,595	482,299	398,315
	321,900,994	324,158,257	238,148,095
INCOME FROM OPERATIONS	10,353,284	8,810,820	6,937,970

OTHER INCOME (EXPENSE)
Miscellaneous income (expense)	106,002	(168,272)	(189,880)
Interest expense	(3,822,435)	(3,474,729)	(2,299,172)
	(3,716,433)	(3,643,001)	(2,489,052)
INCOME BEFORE INCOME TAXES	6,636,851	5,167,819	4,448,918

PROVISION FOR INCOME TAXES
Current	472,964	572,682	205,159
NET INCOME	6,163,887	4,595,137	4,243,759
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain (loss)	(173,468)	96,322	(15,820)
COMPREHENSIVE INCOME	5,990,419	4,691,459	4,227,939

EARNINGS PER COMMON SHARE:

See accompanying notes to consolidated financial statements

F-4

Zhongsen International Company Group Limited
Consolidated Statements of Changes in Stockholders' Equity
In USD

				Additional		Appropriated		Unappropriated	Accumulated Other
		Paid-in		Paid-in		Retained		Retained		Comprehensive		Stockholders'
		Capital		Capital		Earnings		Earnings		Income		Equity

Balance at January 1, 2005	$	1,810,129	$	-	$	417,479	$	2,370,159	$	(4,224)	$	4,593,543

Paid-In Capital For Sentaida Tire		1,238,636		-		-		-		-		1,238,636

Net income		-		-		581,397		3,662,362		-		4,243,759

Foreign currency translation		-		-		-		-		173,449		173,449

Balance at December 31, 2005	$	3,048,765	$	-	$	998,876	$	6,032,521	$	169,225	$	10,249,387

Additional Paid-In Capital		-		1,791		-		-		-		1,791

Net income		-		-		144,289		4,450,848		-		4,595,137

Foreign currency translation		-		-		-		-		530,482		530,482

Balance at December 31, 2006	$	3,048,765	$	1,791	$	1,143,165	$	10,483,369	$	699,707	$	15,376,797

Paid-in capital (Note 15)		(3,048,765)		-		-		-		-		(3,048,765)

Net income		-		-		110,837		6,053,050				6,163,887

Foreign currency translation		-		-		-		-		792,532		792,532

Balance at December 31, 2007	$	-	$	1,791	$	1,254,002	$	16,536,419	$	1,492,239	$	19,284,451

See accompanying notes to consolidated financial statements

F-5

Zhongsen International Company Group Limited
Consolidated statements of Cash Flows

	Years ended December 31,
	2007	2006	2005
	US$	US$	US$
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	6,163,887	4,595,137	4,243,759
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation	697,822	570,110	176,816
Changes in operating assets and liabilities
Accounts receivable	388,007	(4,381,897)	8,550,959
Notes receivable	1,824,022	(2,087,747)	(1,314,616)
Related parties receivables	(3,158,812)	(19,851,279)	7,616,580
Related parties receivables (non current)	(28,967,410)	-	-
Inventories	(1,558,875)	2,029,111	(7,505,999)
Other receivables	(3,859,320)	(715,206)	(1,114,046)
Prepaid expenses	3,186	(1,299)	(1,773)
Prepayments and other assets	(3,320,632)	8,830,947	(10,130,710)
Accounts payable	10,488,102	4,241,435	684,577
Notes payable	2,691,668	50,113	12,068,329
Related parties payables	1,748,789	3,247,556	-
Other payables and accruals	753,143	(162,052)	(1,412,428)
Taxes payable	1,664,165	(305,616)	(538,922)
Other liabilities	137,181	100,852	32,936
Advances from customers	(645,049)	(4,880,415)	(435,025)
Net Cash Provided (Used) by Operating Activities	(14,950,126)	(8,720,250)	10,920,437

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(975,287)	(2,628,317)	(2,935,294)
Restricted cash	(861,406)	(1,954,068)	(2,531,890)
Investment	(38,811)	191,493	(192,856)
Construction in progress	-	(30,317)	(3,097)
Net Cash Used by Investing Activities	(1,875,504)	(4,421,209)	(5,663,137)

CASH FLOWS FROM FINANCING ACTIVITIES
Disposal of investment	-	1,791	-
Net change in short term borrowings	16,879,106	15,796,892	(3,538,303)
Common shares issued	(3,048,765)	-	-
Capital contributions from minority interests	-	-	1,238,636
Long-term borrowings	-	(2,558,363)	-

Net Cash Provided (Used) by Financing Activities	13,830,341	13,240,320	(2,299,667)

Effect of exchange rate change on cash	792,532	51,192	186,470

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(2,202,757)	150,053	3,144,103
CASH AND CASH EQUIVALENTS, beginning of year	4,311,388	4,161,335	1,017,232
CASH AND CASH EQUIVALENTS, end of year	2,108,631	4,311,388	4,161,335

SUPPLEMENTAL DISCLOSURES
Interest paid	4,044,917	3,474,729	2,336,277
Income taxes paid	118,654	226,875	281,165

See accompanying notes to consolidated financial statements

F-6

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Significant Accounting Policies:

Organization

Zhongsen International Company Group Ltd. (also referred to herein as “Zhongsen International”, “the Company”, “we”, “us” and “our” is a corporation formed under the Laws of the Special Administrative Region of Hong Kong of the People’s Republic of China.

Zhongsen International itself has no significant operations and assets other than holds 100% of equity interests in Free Trading Zone Sentaida International Trade Co., Ltd. (“F.T.Z. Sentaida”), Sentaida Tires Co., Ltd. (“Sentaida Tires”) and Zhongsen Holdings Co. Ltd. (“Zhongsen Holdings)” Individually. The operations of three subsidiaries of Zhongsen International constitute the Company’s operations presented under accounting principles generally accepted in the United States. Both F.T.Z. Sentaida and Sentaida Tires are companies incorporated under the Laws of People’s Republic of China, and Zhongsen Holdings is incorporated in the British Virgin Island under the International Business Company Act (Cap.291). Zhognsen Holdings and Zhongsen International are owned by one shareholder. In order to consolidate Zhongsen Holdings into Zhongsen International, the Shareholder transferred his shares of Zhongsen Holdings to Zhongsen International with no consideration in return.

On July 24, 2007, Zhongsen International reached agreements with the shareholders of both F.T.Z. Sentaida and Sentaida Tires to acquire 100% of their equity interests by cash payment. On November 6, 2007, Zhongsen International paid $2,030,273 to the shareholders of F.T.Z. Sentaida and $1,359,051 to the shareholders of Sentaida Tires, respectively, for their equity interest in each company and the acquisition was completed.

Nature of Business

The Company has involved in three kinds of business. Domestic tire distribution is operated under Sentaida Tires. For F.T.Z. Sentaida and Zhongsen Holdings, they both engage in the rubber import and distribution and in the tire export business.

In terms of rubber import and distribution business, the Company has established close business relationships with the world’s top natural rubber suppliers in Southeast Asia. Its client base has covered a majority of the top Chinese and foreign-invested tire manufacturers in China. In 2007, it generated approximately $185.5 million of net sales, which accounted for 56% of the Company’s consolidated revenues.

For tires export business, the Company has established a long-term export agent relationship with major Chinese tire manufacturers and carries selected Chinese brand tires in overseas markets. In 2007, it generated approximately $89.5 million of revenue, representing 27% of Company’s consolidated revenues.

For domestic tire sales and distribution, the Company has one of the largest independent tire distribution networks in China with four major regional distribution facilities selling around one thousand (1,000) independent tire dealers, retailers and corporation clients. It has the most complete product offering in the tire replacement market. In 2007, it generated approximately $55.0 million of revenue, accounted for 17% of the Company’s consolidated revenues.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of holding company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

F-7

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

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

Cash and Cash Equivalent

The Company considers all deposits with an original maturity of three months or less and short-term highly liquid investments, which are readily convertible into cash to be cash and cash equivalents in the consolidated financial statements.

All cash in banks in China is uninsured. Although China is considered economically stable, it is possible that unanticipated events could disrupt banks’ operation. Therefore, the Company has a credit risk exposure of uninsured cash in banks.

Revenue Recognition

SAB 104 outlines has four criteria that all publicly held companies have to follow to recognize revenue : 1. Persuasive evidence of an arrangement exists. 2. Delivery has occurred or services have been rendered. 3. The seller's price to the buyer is fixed or determinable. 4. Collectibility is reasonably assured. The Company recognizes revenue when title and risk of loss passes to the customer and the above criteria have been met. Besides the above criteria, for F.T.Z Sentaida and Zhongsen Holdings, they also recognize the revenue upon shipment of products, provided the above mentioned criteria have been met.

In general, the Company does not allow customers to return products unless there are defects in manufacturing or workmanship. Sales returns need to go through a strict process and have to be authorized by management. Sales returns are continually monitored. Based on historical experience of actual returns, management believes that the Company does not need to have a provision for sales returns.

Concentration of Credit Risk

In the normal course of business, the Company may give credit to its customers after performing a credit analysis based on a number of financial and other criteria. The Company performs ongoing credit evaluations of customers’ financial condition and does not normally require collateral. However, letters of credit and other security are occasionally required for certain new and existing customers.

In the consolidated net sales, the concentration of risk mainly comes from the customers of FTZ Sentaida and Zhongsen Holdings. The top ten customers accounted for approximately 54.86% and 48% of the consolidated net sales for the fiscal years of 2007 and 2006, respectively.

F-8

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable

The top ten of our customers accounted for 85.0%% and 89.4% of the accounts receivable as of December 31, 2007 and 2006, respectively. In 2007, the top one customer accounted for 38.8% of the accounts receivable. The second one accounted for 12.9%. The third and the fourth accounted for 10.4% and 6.2% of the accounts receivable, respectively.

Allowance for doubtful accounts

Inventories

For Sentaida Tires, inventories consist primarily of automotive tires, wheels, automotive service accessories and related products. Inventories are valued at the lower of cost (computed in accordance with the weighted average method) or market. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable merchandise. If any, these merchandise would be sold on discount or returned to vendors at discount in exchange for other merchandise relatively more easier to sell. However, based on management’s experience and assessments, the level of obsolete and slow-moving merchandise was very low and we believe there is no need to have an allowance for obsolescence. Terms with a majority of the Company’s tires vendors allow return of tires products, within limitations, specified in their supply agreements. The inventory of Sentaida Tires as of December 31, 2007 and 2006 was approximately $8.9 million and $5.7 million, respectively.

For Zhongsen Holdings and F.T.Z Sentaida, the inventory for rubber and tires are stated at the lower of cost (computed in accordance with the first-in-first-out method) or market. There was no inventory kept in Zhongsen Holdings, where F.T.Z. Sentaida maintains inventory at minimum level. Management adjusts the inventory level based on the fluctuation of the demand for rubber. As of December 31, 2007 and 2006, the inventory of rubber in F.T.Z. Sentaida was approximately $1.5 million and $3.1 million, respectively.

Property and Equipment

Property and equipment are stated at cost at the date of acquisition. The Company adopts the straight-line method of depreciation at annual rates sufficient to depreciate the cost of the assets less estimated salvage value over the assets’ estimated useful lives. Maintenance and repair expenditures are charged to expense as incurred and expenditures for improvements and major renewals are capitalized. When an asset is sold or retired, the carrying amounts of the assets and the related accumulated depreciation is removed from the account in the year of disposal, and any resulting gain or loss is reflected in the statement of operations. Depreciation is determined by using the straight-line method based on the following estimated useful lives:

Buildings	20 years
Machinery and equipment	5 years
Office equipment	5 years
Vehicles and other	5-8 years

F-9

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These buildings are bought and used by the Company’s Chain Stores to provide car services, retail tires and other merchandise used in cars. In China, land use right is combined with building, especially for commercial buildings and houses.

Office building, warehouses and the related land that currently used by the Company are not directly owned under the Company. They are held by Sentaida Rubber, one of the Company’s related parties. The office building, warehouses and related land are used by the Company are free of charges.

Impairment

Impairments of long-lived assets are recognized when events or changes in circumstances indicate that the carrying amount of the asset or related groups of assets may not be recoverable and the Company’s estimate of undiscounted cash flows over the assets’ remaining estimated useful lives are less than the assets’ carrying value. Measurement of the amount of impairment may be based on appraisals, market values of similar assets or estimated discounted future cash flows resulting from the use and ultimate disposition of the asset.

Throughout the fiscal years 2007 and 2006, management has reviewed the carrying value of long-term fixed assets for impairment when events or circumstances indicate possible impairment. Management has concluded that the estimated future cash flows anticipated to be generated during the remaining life of these assets support their current net carrying value, thus, no impairment charges have been recorded for such periods.

Goodwill and Other Intangible Assets

Under SFAS No. 142 “Goodwill and Other Intangible Assets,” goodwill and intangible assets with indefinite lives are no longer amortized, but are tested for impairment annually and more frequently in the event of an impairment indicator. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives, and reviewed whenever events or circumstances indicate impairment may exist.

Foreign currency translation

The functional currency of the Company is Chinese Yuan (RMB) and their reporting currency is the US dollar. Consolidated balance sheet accounts are translated into US dollars at the period-end exchange rate and all revenue and expenses are translated into US dollars at the average exchange rate prevailing during the period in which these items arise. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in the shareholders’ equity section of the balance sheet. Exchange transaction gains and losses that arise from exchange rate fluctuations affecting transactions denominated in a currency other than the functional currency are included in the statement of operation as incurred. The foreign currency exchange loss in 2007 was approximately $0.17 million and the foreign currency exchange gain in 2006 was about $ 96,322.

Fair Value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Values of Financial Instruments”, requires disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

F-10

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For certain financial instruments, including cash, accounts receivables, related party receivables and other receivables, accounts payable, other payables and accruals, and short term debt, it is assumed that the carrying amounts approximate fair value because of the near term maturities of such obligations. The carrying value of revolving credit facility approximates their fair value due to the variable rate of interest paid. For long-term debt, the carrying amount is assumed to approximate fair value based on the current rates at which the Company could borrow funds with similar terms.

Vendor Rebates

The Company receives rebates from its vendors under a number of different programs. Many of the vendor programs provide for the Company to receive rebates when any of a number of measures is achieved, generally related to the volume of purchases. These rebates are accounted for as a reduction to the price of the product, which reduces the carrying value of inventory. Throughout the year, the amount recognized for annual rebates is based on purchases that management considers probable for the full year. These estimates are continually revised to reflect rebates earned based on actual purchase level.

Customer Rebates

The Company offers rebates to its customers under a number of different programs. The majority of these programs provide for the customers to receive rebates, generally in the form of a reduction in the related accounts receivable balance when certain measures are achieved, generally related to the volume of product purchased from the Company. The amount of rebates is recorded based on the actual level of purchases made by customers that participate in the rebate programs.

Income Taxes

The Company accounts for its income taxes under the provisions of SFAS No. 109 “Accounting for Income Taxes.” This statement requires the use of the asset and liability method of accounting for deferred income taxes. 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 reporting purposes, at the applicable enacted tax rates. The Company provides a valuation allowance against its deferred tax assets when the future realizability of the assets is no longer considered to be more likely than not.

Legal and Tax Proceedings

The Company is involved occasionally in lawsuits as well as audits and reviews regarding its state and local tax filings, arising out of the ordinary conduct of its business. Although no assurances can be given, management does not expect that any of these matters will have a material adverse effect on the Company’s financial statements. As to tax filings, the Company believes that the various tax filings have been made timely, such as income tax, stamp duty, business tax and value-added tax etc., and in accordance with applicable national, regional and local tax code requirements.

F-11

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Product warranty

Sentaida tires, although it has no responsibility for defects in quality or workmanship of the tires, it serves as agent for making damage claims on behalf of its customers from manufacturers. Sentaida Tires may compensate customers first, either by replacing the tires or by a cash refund, and then, will get reimbursement from manufacturers or suppliers in tires or cash. Approximately $0.24 million of tires returned by customers was included in the value of inventory as of December 31, 2007; approximately $0.49 million as of December 31, 2006.

Freight

For the customers to whom the Company offers CIF sales terms, the Company recognizes freight included in the prices as revenue and meanwhile, the freight paid to common carriers is recognized as expenses. Non-CIF customers terms are “freight collect”.

Advertising

Almost all cost relating to advertising and promotion expenses for different brands of tires the Company sells are provided for and assumed by tires manufacturers. The Company usually does not bear these costs.

Related Party Transactions

Related party sales were approximately $63.9 million, which accounted for 19.4% of the Company’s net sales and related party receivables were approximately $60.5 million as of December 31, 2007. For 2006, related party sales were approximately $49 million and related party receivables were approximately $28 million at December 31, 2006.

One of the related parties, Qingdao Sentaida Rubber Co. Ltd. (“Sentaida Rubber”) is a subsidiary of Sentaida Group Ltd, which previously owned 51% of the shares of Sentaida Tires and F.T.Z Sentaida before Sentaida Tires and F.T.Z. Sentaida were acquired by Zhongsen International. It accounted for about $2.0 million of the related party sales and 48.2% of the related party receivables in 2007. The Company believes that the receivables are collectable because all the related party receivable from Sentaida Rubber are guaranteed by Sentaida Group Ltd. In addition, Sentaida Rubber is planning to repay the debt partially by cash and partially by transferring land and building worth approximately $26.3 million to the Company. Actually, all these buildings and lands are used by our Company free of charges from Sentaida Rubber in years. $29 million of the related party receivable from Sentaida Rubber was reclassified as non current related party receivables on consolidated balance sheets.

The Company got approximately $1.2 million commission from Sentaida Rubber for the agent sales contracted between the Company and Sentaida Rubber.

LQJ Global Tire (“LQJ”) is another related party, which now is a wholly owned subsidiary by Sentaida Group. In November 2007, LQJ’s business operation was integrated into Sentaida International Inc., which is also a wholly owned subsidiary of Sentaida Group. Sentaida International Inc. has assumed all the LQJ’s liabilities. LQJ accounted for nearly 88.2% of the related party sales, and about 47.7% of the related party receivables. The sales to LQJ are normal business transactions and the documents are released against acceptance with a maturity of 90 days (D/A 90 days), which is 30 days longer than before.

F-12

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company accrued about $0.4 million interest income for the receivables from Sentaida International. The interest charge was based on the average receivables from Sentaida Rubber for the last three months in 2007 and at an annual average interest rate of 6.8%.

The Company uses office building and warehouse space free of rent from Sentaida Rubber Co., Ltd., a related party.

There were approximate $5.1 million related party payables at December 31, 2007. About $1.6 million owed to wife of the Company’s CEO. About $3.0 million owed to Dongsen Tires Company Limited (“Dongsen”), who is related with the Company through one top management member, Mr. Junfeng Liang in Dongsen’s management team and the Company. Mr. Junfeng Liang involves in decision making of Dongsen’s normal business operations. The nature of the payables is short term borrowing by the Company without interest bearing. Another approximate $ 0.4 million owed to Delinte Logistic Company Limited (“Delinte”), who is a subsidiary of Sentaida Group. These were some expenses that paid by Delinte on behalf on the Company and should be reimbursed from the Company.

2. Acquisition

On July 24, 2007, Zhongsen International reached agreements with the shareholders of both F.T.Z. Sentaida and Sentaida Tires to acquire 100% of their equity interests for a certain amount of cash. In August 2007, such acquisitions were approved by the appropriate Chinese authorities; consequently, both companies changed their status from China domestic companies into that of wholly-owned foreign invested enterprises. $2,030,273 was paid to the shareholders of F.T.Z. Sentaida and $1,359,051 to the shareholders of Sentaida Tires, respectively, for their equity interest in each company. The cash payment was made on November 6, 2007. The acquisition is subject to the following conditions set in the Acquisition Agreement: 1. The management teams of each company will remain as before the acquisition. 2. If Zhongsen International can not obtain equity financing by selling shares in capital markets outside of China within three months (subsequent to December 31, 2007, this period was extended to one year in a newly signed supplementary agreement) after the acquisition agreement was signed, then, the agreement will no longer be binding and Zhongsen International must unwind the whole acquisition transaction; therefore the equity interests will be returned to the original owners of the Company. Therefore, the acquisition was accounted for at the cost of cash paid by Zhongsen International to shareholders, which equal to the paid-in capital of the acquired companies; and no goodwill or negative goodwill was accounted for.

3. Cash and Restricted cash

Restricted cash is included in cash and cash equivalents. It consists of collateral for letters of credit, and notes payable and deposits in foreign currency; usually the deposit terms are within 90 days, although some are up to six months. The restricted cash was approximately $8.5 million and $7.7 million as of December 31, 2007 and 2006, respectively.

4. Property and Equipment

The following table represents the property and equipment at December 31, 2007 and 2006:

	2007(US$)	2006(US$)
Office Equipment	68,155	28,949
Machinery and Equipment	2,311,800	1,826,827
Computer	65,050	71,572
Vehicle	152,659	73,876
Building	4,495,222	3,626,880
Total property and equipment	7,092,886	5,628,104
Less---accumulated depreciation	1,279,923	582,151
Property and equipment (net)	5,812,963	5,045,953

F-13

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation expense as of December 31, 2007 was approximately $0.7 million and approximately $0.57 million as of December 31, 2006. Depreciation expense is included in selling, general and administrative expense in the consolidated statements of operations.

A property that is worth about $1.45 million valued at cost is collateralized for a short term debt for working capital turnover. The collateral term should be one year ending November 27, 2008. Yet the borrowings was repaid in advance in February 2008 and the corresponding collateral term was terminated.

Another property with a cost of $2.68 million was bought under a personal mortgage of three employees of Sentaida Group Ltd. The advance payment of about $ 1.38 million is paid by Sentaida Tires and the about $1.3 million of mortgage is paid every month under the name of the three employees by Sentaida Rubber Ltd. There are agreements between the three employees, Sentaida Tires and Sentaida Rubber Ltd, which clearly indicate that the three employees are just nominal owners of the property and nominal bearers of the mortgage. All the rights and obligations related to the property are assumed by Sentaida Tires. The property is used by Sentaida Tires with no consideration in return. It is the real owner of the property. The advance payment is paid by Sentaida Tires but the mortgage payments are currently paid by Sentaida Rubber Ltd which will be reimbursed by Sentaida Tires later. The interest on the mortgage is floating and it is based on 130% of the annual prime rate of Construction Bank of China. Therefore, the estimation of the mortgage’s remaining balance is based on the year 2007’s prime rate, 6.84% plus 30%, which is equivalent to the annual rate of 8.892%.

The required principal repayments on this mortgage are:

Year	Amount
2008	83,127
2009	83,127
2010	83,127
2011	83,127
2012	83,127
2013--2015	242,445

F-14

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Notes Receivable

Notes receivable was approximately $1.7 million and $3.6 million as of December 31, 2007 and 2006 from Sentaida Tires’ customers, respectively. These notes are due within six months and no interest or additional amounts are required to be received.

6. Other receivables

Other receivables were approximately $8.6 million and $4.9 million as at December 31, 2007 and 2006, respectively. Other receivables mainly come from F.T.Z Sentaida. Approximately $4.4 million was borrowed by two of the Company’s strategic business partners. Approximately $3.5 million should be collected from two of the Company’s suppliers. Among the $3.5 million, $3.3 million was short-term borrowing by the two suppliers and will be paid back by offsetting the Company’s accounts payable; $0.18 million is freight charges and miscellaneous port charges that the Company paid on behalf of the two suppliers first and will be reimbursed later.

7. Prepayments

Prepayments were approximately $6.4 million and $3 million as of December 31, 2007 and 2006, respectively. In 2007, there was approximately $1.4 million of prepayment to FTZ Sentaida’s suppliers, and approximately $5 million were paid to Sentaida Tires’ suppliers.

8. Investment

The Company invested approximately $46,500 in Greatwall Fund. As of December 31, 2007 the market value for the investment was $55,062.

9. Short Term Borrowings

As of December 31, 2007, the Company has about $1.3 million on new short term debt for working capital turnover, which was due on November 27, 2008. The borrowing was collateralized by a property of Sentaida Tire. The property is worth about $1.45 million which approximates cost. The beginning balance of short term debt for working capital turnover was about $4 million which was all repaid in 2007.

F.T.Z. Sentaida has increased credit facility to support business expansion. The total amount of credit facility in 2007 was approximately $115.3 million. The outstanding import bill advance, export bill purchase, documents against payment and documents against acceptance were approximately $54.2 million in total as of December 31, 2007. Corresponding financial charges are based on the interest rate defined in each individual contract between FTZ Sentaida and the banks. In general, the interest rate for import bill advances and export bill purchases is based on the average of three months LIBOR plus 0.8%. The finance charge for opening a letter of credit is approximately 0.1%; finance charges for documents against payment and documents against acceptance are at a rate fluctuating around 0.1%. The letters of credit negotiation charge is at 0.125%.

The obligations of credit are guaranteed by Sentaida Group Ltd, Sentaida Rubber Co. Ltd, and Kaiyang Import and Export Company Limited who is one of the Company’s strategic business partners. Some of the obligations also bear the personal guarantee of stockholders of Sentaida Group, Qin Long (president of the Company) and Xiuqin Li (Mr. Qin long’s wife). The contractual agreements with banks contain covenants which restrict the Company’s ability to incur additional debt, enter into guarantees, make loans and investments, and modify certain material agreements, and other customary covenants. The Company has not violated any of the covenants during the period reported.

F-15

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Notes Payable

Notes payable was approximately $16.2 million and $13.5 million as of December 31, 2007 and 2006, respectively. Most of the notes payable were issued to F.T.Z. Sentaida’s suppliers and were due within six month with no interest charge. Restricted cash for notes payable in 2007 and 2006 were about $7.0 million and $5.6 million, respectively.

11. Accounts Payable

Accounts payable was approximately $21.1 million and $10.6 million as of December 31, 2007 and 2006, respectively. All these amounts were payable to FTZ Sentaida and Sentaida Tires’ normal business suppliers and usually were due within six months.

As of December 31, 2007, accounts payable increased by approximately $11.0 million from the balance as of December 31, 2006. The Company’s purchase from South China Rubber and Tires Co, Ltd. (“South China”) increased substantially in 2007 and its payment terms were changed to 90 days letters of credit, which was 30 days longer than before. This contributed to the increased account payable. The account payable to South China was approximately $7.9 million as of December 31, 2007. In addition, Zhaoyuan Liao Rubber products Co, Ltd. (“Zhaoyuan Liao”) has extended the Company a longer credit terms, which also contributed to the increase in accounts payable. The account payable to Zhaoyuan Liao was approximately $5.7 million. Accounts payable to Regional Rubber Trading Co. Ltd. Was approximately $3.2 million. Accounts payable to these three companies accounted for approximately 80% of consolidated accounts payable.

12. Advances from customers

The advances from customers were approximately $2.0 million and $2.6 million as of December 31, 2007 and 2006, respectively.

13. Income tax and value- added tax payables

The Company accounts for its income taxes by using the asset and liability method of accounting for deferred income taxes. 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 reporting purposes, at the applicable enacted tax rates.

In fiscal 2007, according to the China Tax Law, the Company makes provisions on taxable income at an effective tax rate of 33%. The company makes tax provision and tax payment quarterly, and the tax settlement for the whole year is made before the end of April of the following year.

There are no differences between the book and tax bases of the Company’s assets and liabilities; therefore, there were no deferred tax assets or liabilities as of December 31, 2007 and 2006.

Tax payable as of December 31, 2007 and 2006 were approximately $2.0 million and $0.4 million.

From January 2008, the Company shall determine and pay the income tax in accordance with the Corporate Income Tax Law of the People’s Republic of China (hereinafter “the new CIT Law”) as approved by the National People’s Congress on 16 March 2007. Under the new CIT Law, the applicable income tax rate of the companies within the Group is 25%, which is effective from 1 January 2008.

F-16

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. Appropriated Retained Earnings

In conformity with Chinese Law and the articles of incorporation, the company has to make an appropriation of retained earnings. The appropriated retained earnings are 15% of each year’s net income with a maximum of 50% of paid-in capital. The appropriated retained earnings can be used to offset the Company’s loss, for business expansion or transfer to paid-in capital as additional paid-in capital, or for dividend distribution. Except for offset of the Company’s loss, the balance of the appropriated retained earnings should not be less than 25% of the paid-in capital after the use of the appropriation of retained earnings. The appropriation of retained earnings is made at the year end based on the net income for the year. The appropriated retained earnings as of December 31, 2007 and 2006 were about $1.3 million and $1.1million, respectively.

15. Common Stock

F.T.Z Sentaida and Sentaida Tires do not have authorized shares and never issued any kind of stock. The two companies only have paid-in capital, which equals the registered capital. For Zhongsen Holdings, it has 50,000 authorized shares, which were never issued and it has no paid-in capital either. In addition, Zhongsen International has 10,000 authorized shares, which have not been issued yet. It does not have paid-in capital.

Zhongsen International acquired 100% of equity interests of F.T.Z. Sentaida and Sentaida Tires in 2007 at a cost equal to total paid in capital of F.T.Z Sentaida and Sentaida Tires. The reporting entity changed to Zhongsen International. When consolidating the financial statements of Zhongsen International and its subsidiaries, the paid in capital of F.T.Z. Sentaida and Sentaida Tires, $3,048,765, was eliminated. Therefore, the paid in capital showed as “Zero” on the consolidated balance sheets.

16. Commissions and other

About $2.3 million of commission and other includes approximate $1.4 million of rubber agent 2007 sales income and commissions, about $0.2 million of service income for declaring customs on behalf of customers, about $0.1 million of rental income, about $0.5 million of car service income from chain stores and about $0.1 million of warranty service income.

17. Freight Charges

Freight charges, which includes freight and miscellaneous charges such as port fees, goods handling charges, customs duty and goods loading and unloading charges, etc. were approximately $6.5 million in 2007, $5.8 million in 2006, and $3.2 million in 2005.

18. Selling Expenses

Selling expenses were approximately $2.7 million, $2.3 million and $1.75 million for the fiscal year 2007, 2006 and 2005, respectively. Salary and wages, depreciation, traveling expenses, auto & fuel expenses and insurance premiums accounted for most of the selling expenses.

19. Interest Expense

Interest expense for discounting notes, short term debt for working capital turnover, trading finance, and miscellaneous financial charges, such as fee for issuing letter of credit and bank charges etc, are all included in interest expenses. Interest expense for discounting notes was about $1.1 million, $1.2 million, and $0.7 million in 2007, 2006 and 2005, respectively. Interest for short term debt was about $0.31 million, $0.27 million and $0.16 million in 2007, 2006 and 2005, respectively. Interest for trade finance was approximately $2.6 million, $2.0 million and $1 million in 2007, 2006 and 2005, respectively.

F-17

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20. Subsequent Events

On October 26, 2007, Rub A Dub Soap, Inc, (“RUBD”) entered into a Stock Purchase Agreement with Zhongsen International and each of Zhongsen International’s shareholders. Pursuant to the Stock Purchase Agreement, at the closing on February 5, 2008, RUBD acquired all of the issued and outstanding capital stock of Zhongsen International from the Zhongsen International’s shareholders in exchange for 25,090,000 shares of RUBD common stock, which represents 96.5% of shares outstanding of RUBD.

$1.3 million of short-term borrowing which was originally due on November 27, 2008, was repaid in advance in February 2008.

Sentaida International Inc. is an USA based subsidiary of Sentaida Group, mainly operates in Los Angeles and St. Louis. It accounted for approximate 88.2% of the Company’s related party sales and 47.4% of related party receivables. The Company intends to acquire Sentaida International Inc. in the second quarter of 2008. If the acquisition is completed, the Company’s related party receivables will be decreased dramatically. Additionally, it will bring more revenue into the Company. The method of the acquisition is still under discussion process between Sentaida Group and Zhongsen International Company Group Limited.

21. Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations—a replacement of FASB Statement No. 141,” (“SFAS No. 141 (R)”). SFAS No. 141 (R) requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. In addition, SFAS No. 141(R) will require acquisition costs to be expensed as incurred, acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies, restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS No. 141 (R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008 and is to be applied prospectively. We do not expect the adoption of SFAS No. 141 (R) to have a material impact on our financial position or results of operations; however, the prospective application of the provisions of SFAS No. 141 (R) could have a material impact on the fair values assigned to assets and liabilities of future acquisitions and could cause greater volatility in future financial statements due to the required adjustment increases in contingent liabilities, or decreases in contingent assets through the statement of operations subsequent to the acquisition date.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. We do not expect the adoption of SFAS No. 159 to have a material impact on our consolidated financial position, results of operations or cash flows.

F-18

ZHONGSEN INTERNATIONAL COMPANY GROUP LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB deferred the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statement on a recurring basis (at least annually) until January 1, 2009. We do not expect the adoption of SFAS No. 157 to have a material impact on our consolidated financial position, results of operations or cash flows.

F-19

Rub A Dub Soap, Inc.

Condensed Consolidated Pro Forma Balance Sheet

and Statements of Operations

For Years Ended December 31, 2007 and 2006

On October 26, 2007, Rub A Dub Soap, Inc., (“Parent”) consummated an acquisition agreement with Zhongsen International company group Ltd.( “The Company”). Pursuant to this agreement all shares of the Common Stock of the Company issued and outstanding prior to the closing will be exchanged for the right to receive 25,090,000 shares of the Common Stock of Parent representing 96.5% of shares outstanding after the sale hereby.

The accompanying condensed pro forma consolidated balance sheet represents the consolidated financial position of Parent and the Company as though the reorganization of the Company into Parent and the acquisition of the Company had occurred on December 31, 2007. The accompanying condensed pro forma consolidated statements of operations for the years ended December 31, 2007 and 2006 present the operations of the combined entities as though the reorganization and acquisition had occurred at the beginning of each of those periods.

The condensed pro forma consolidated financial information is for illustrative purposes and is not necessarily the financial position and results of operations that would have occurred had the reorganization and acquisition actually occurred on those days or for any other period.

Parent effected a forward stock split of its authorized and issued common stock on a 2.12 for one share basis. All references in these condensed pro forma consolidated statements to the number of shares outstanding per share amounts of parent and the Company’s common stock have been restated to reflect the effect of the forward stock split for all periods presented. The Company adjusted common stock by $26,000 (26,000,000 at $0.001 par value) and eliminated the accumulated loss of the parent with retained earnings

F-20

Rub A Dub Soap, Inc.
Unaudited consolidated Pro Forma Balance Sheet
As of December 31, 2007

	Zhongsen International		Rub A Dub		Pro Forma
	Company Group Ltd.		Soap, Inc	Adjustment	Results
	US$		US$	US$	US$
ASSETS
CURRENT ASSETS
Cash	$	2,108,631	-	-	$	2,108,631
Restricted cash		8,534,135	-	-		8,534,135
Notes receivable		1,738,286	-	-		1,738,286
Accounts receivable		18,957,856	-	-		18,957,856
Related parties receivable		31,508,703	-	-		31,508,703
Inventories		10,384,620	-	-		10,384,620
Others receivable		8,681,783	-	-		8,681,783
Prepayments and other assets		6,448,517				6,448,517
Total Current Assets		88,362,531	-	-		88,362,531

RELATED PARTIES RECEIVABLES (NON CURRENT)		28,967,410	-	-		28,967,410

PROPERTY, PLANT & EQUIPMENT, net		5,812,963	-	-		5,812,963

INVESTMENT		46,486	-	-		46,486

	$	123,189,390	-	-	$	123,189,390


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Short term borrowings	$	55,505,353	-	-	$	55,505,353
Notes payable		16,174,239	-	-		16,174,239
Accounts payable and accrued expenses		21,121,952	-	-		21,121,952
Related parties payable		5,064,636	-	-		5,064,636
Others payable and accruals		1,740,015	-	-		1,740,015
Taxes payable		2,059,348	-	-		2,059,348
Other liabiltities		274,715	-	-		274,715
Advances from customers		1,964,681	-	-		1,964,681
Total Current Liabilities		103,904,939	-	-		103,904,939

STOCKHOLDERS' EQUITY
Common stock par value $ 0.001 per share		-	-	26,000		26,000
authorized 100,000,000 shares; issued 26,000,000		-	912	(912)		-
Additional paid in capital		1,791	271,548	(271,548)		1,791
Appropriated retained earnings		1,254,002	-	-		1,254,002
Unappropriated retained earnings		16,536,419	(272,460)	246,460		16,510,419
Accumulated other comprehensive income		1,492,239	-	-		1,492,239
Total Stockholders' Equity		19,284,451	-	-		19,284,451
	$	123,189,390	-	-	$	123,189,390

F-21

Rub A Dub Soap, Inc.
Unaudited Consolidated Pro Forma Statement of Operations
For the Year Ended December 31, 2007

	Zhongsen International	Rub A Dub		Pro Forma
	Company Group Ltd	Soap, Inc	Adjustment	Results
	US$	US$	US$	US$
REVENUES
Sales	329,922,722	-	-	329,922,722
Commissions and other	2,331,556	-	-	2,331,556
Total revenues	332,254,278	-	-	332,254,278
COSTS AND EXPENSES
Cost of sales	311,152,343	-	-	311,152,343
Freight charges	6,588,423	-	-	6,588,423
Commissions and rebates	59,961	-	-	59,961
Insurance	328,465	-	-	328,465
Selling expenses	2,717,207	-	-	2,717,207
General and administrative expenses	1,054,595	9,450	-	1,064,045
	321,900,994	9,450	-	321,910,444
INCOME (LOSS) FROM OPERATIONS	10,353,284	(9,450)	-	10,343,834

OTHER INCOME (EXPENSES)
Miscellaneous income	106,003	-	-	106,003
Interest expense	(3,822,436)	-	-	(3,822,436)
	(3,716,433)	-	-	(3,716,433)
INCOME BEFORE INCOME TAX EXPENSE	6,636,851	(9,450)	-	6,627,401

Income tax expense	472,964	-	-	472,964

NET INCOME	6,163,887	(9,450)	-	6,154,437
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain (loss)	(173,468)	-	-	(173,468)
COMPREHENSIVE INCOME	5,990,419	(9,450)	-	5,980,969

EARNINGS PER COMMON SHARE:
Basic and Diluted				0.24

AVERAGE COMMON SHARES OUTSTANDING				26,000,000

F-22

Rub A Dub Soap, Inc.
Unaudited Consolidated Pro Forma Statement of Operations
For the Year Ended December 31, 2006

	Zhongsen International	Rub A Dub
	Company Group Ltd.	Soap, Inc	Adjustment	Pro Forma Results
	US$	US$	US$	US$
REVENUES
Sales	332,535,270	-	-	332,535,270
Commissions and other	433,807	-	-	433,807
Total Revenues	332,969,077	-	-	332,969,077
COSTS AND EXPENSES
Cost of sales	315,093,435			315,093,435
Freight charges	5,847,439	-	-	5,847,439
Commissions and rebates	145,621	-	-	145,621
Insurance	270,079	-	-	270,079
Selling expenses	2,319,384	-	-	2,319,384
General and administrative expenses	482,299	30,710	-	513,009
	324,158,257	30,710	-	324,188,967
INCOME (LOSS) FROM OPERATIONS	8,810,820	(30,710)	-	8,780,110

OTHER INCOME (EXPENSES)
Miscellaneous expense	(168,272)	-	-	(168,272)
Interest expense	(3,474,729)	-	-	(3,474,729)
	(3,643,001)	-	-	(3,643,001)
INCOME BEFORE INCOME TAX EXPENSE	5,167,819	(30,710)	-	5,137,109

Income tax expense	572,682	-	-	572,682
NET INCOME	4,595,137	(30,710)	-	4,564,427
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain (loss)	96,322	-	-	96,322
COMPREHENSIVE INCOME	4,691,459	(30,710)	-	4,660,749

EARNINGS PER COMMON SHARE:
Basic and Diluted	NA	NA	-	0.18

AVERAGE COMMON SHARES OUTSTANDING	-	-	-	26,000,000

F-23

EXHIBIT INDEX

Exhibit No.	Description
3.1	Certificate of Incorporation of the Company [Incorporated by reference to Exhibit 3.1 of the Form 10-KSB filed on August 15, 2006 in Commission file number 0-52142]
3.2	Bylaws of the Company [Incorporated by reference to Exhibit 3.2 of the Form 10-KSB filed on August 15, 2006 in Commission file number 0-52142]
10.1	Share Purchase Agreement, between the Company and Zhongsen, dated October 26, 2007 [Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on October 29, 2007 in Commission file number 0-52142]
10.2*	Employment Agreement, dated November 29, 2007, between Gongsheng Ji and the Company
10.3*	Employment Agreement, dated November 20, 2007, between Junfeng Liang and the Company
16.1	Letter from Sherb & Co., LLP regarding the change in certifying accountants [incorporated by reference to Exhibit 16.1 of current report on Form 8-K, filed on February 05, 2008]
21*	A description of the subsidiaries of the registrant

*filed herewith