Report of Independent Auditors

SPS JIMMY and MERLIE ALURA

M.R.Y. Auto Supply

Coty of San Fernando Pampanga

We have audited the accompanying Balance Sheets of Sps. Jimmy and Merlie Alura as of December 31, 2007 & 2006 and the related Statements of Income and Expenses and Statements of Cash Flows for the year then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted In the Philippines. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are tree of materials misstatements. An audit also includes examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis of our opinion.

In our opinion, the financial statements referred the above present fairly, in all material respects, the financial position of Sps. Jimmy and Merlie Alura as December 31, 2007 & 2006 and the result of its operations and its Statements of Cash Flows for the year then ended in conformity with accounting principles generally accepted in the Philippines.

Ma. Luisa R. Tolentino

Managing Partner

CPA Certificate No. 29901

BOA Accreditation No. 0179

SEC Accreditation No. 0311-A

BIR Accreditation No. 04-002501-2-2005

TAX Identification No. 141-773-122

March 28, 2008

SPS. JIMMY and MERLIE ALURA

Notes to Financial Statement

Taxpayer Information

M.R.Y. Auto Supply owned and operated Sps. Jimmy and Merle was registered with its BIR in 1994, with (TIN) 147-634-230, with registered address at Gen. Hizon Avenue, City of San Fernando Pampanga. The taxpayer availed of the Tax Amnesty Programs under R.A. 9480

Summary of Significant Accounting Principles

Basis of Preparation

The financial statements of the said business have been prepared on the historical cost basis, and are presented in Philippine pesos, which is the Company’s functional and presentation currency.

Furthermore, the preparation of the financial statements requires the owners use of certain critical accounting estimates and the exercise of its judgment in the process of applying the owners accounting principles. The measurement basis and areas involving higher degree of judgment or areas where assumptions and estimates are significant to financial statements are more fully discussed in the Notes.

Statement of Compliance

The financial statement of the Company have been prepared in compliance with Financial Framework in reference in Generally Accepted Accounting Principles of the Philippines.

Changes in Accounting Principles

The Accounting principles adopted are consistent with those of previous financial year. Except for adoption of the following new amended PFRS and Philippine Interpretations in 2006. Adoption of the following new and amended standards and interpretation did not have any significant effect on the financial company’s financial statements, however, require additional disclosure on the financial statements.

PAS 1, “Presentation of Financial Statements”, provides a framework requiring the faithful representation of the effects of transaction, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities and income and expenses set out in the framework. The changes in financial statement presentation as well as the required disclosures will be included in the 2008 financial statements, as applicable.

PAS 2, “Inventories”, are measured at the lower cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the costs necessary to make the sale. Cost includes in bringing the inventories to their present local and condition

PAS 7, “Cash Flow Statements’’, provides for the proper preparation of the Cash Flow Statement which should be presented as in integral part of the financial statement for each period which the financial statements are presented.

PAS 8, “Accounting Polices, Changes in Accounting Estimates & Errors”, removes the concept of fundamental error and the allowed alternative to retrospective application of voluntary changes in accounting polices and retrospective statement to correct prior period errors. It defines material omission or misstatements and describes how to apply the concept of materiality when applying accounting policies and correcting errors. Adoption of this standard will not have a material statement impact to the owner

PAS 10, “Events after Balance Sheet Date”, where the financial statements should be adjusted for events after balance sheet date, and disclosures should be included about the date when the financial statements were authorized for and about events after the balance sheet date.

PAS 12, “Income Taxes”, where the current tax for current prior periods shell, to the extent upaid, be recognized as a liability. If the amount already paid is respect of current and prior periods exceeds the amount due for those periods, the excess shall be recognized as an assist.

PAS 16, “Property and Equipment “, provides additional guidance and clarification on the recognition and measurement of items of property and equipment. It also provides for each part of an item of property equipment with a cost that is significant in relation to the total costs of the item shall be depreciated separately. It also requires that the cost of an item of property and equipment should include this costs of its dismantling, removal or restoration, the obligation for which the owner incurs as a consequence of installing the item during a particular period for purposes other than inventories during the period. The Owner has yet to determination of the existence of any constructive and or legal obligation related to disbursement, removal or restoration or certain property, and equipment.

Cash

All collection are deposited intact. Payments which are all made by checks, are supported by duly authorized vouchers. The Owner adopts a consistent manner of recording its transactions. It adopts the accrual basis of accounting..

Property and Equipment

The Fixed Assets are valued at cost and their corresponding depreciation for the depreciable assets under the straight line methods (the cost less the salvage value divided by economic life of the preciable asset). Betterment, addition, and repairs that have satisfied any of the condition provided by the accounting principles generally accepted the Philippine with regards to Property Equipment will form part of the cost of the asset.

Payables

The amount presented under payable includes accrued expenses, VAT and Payable in trades which were field and paid after the cut-off date.

Income

The Source of revenue the Owner comes from the sale of auto supplies products.

Income Tax

Income Tax is computed based on the required table computation.