- Amended Annual Report (10-K/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended - DECEMBER 31, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from

Commission file number 0-024828

SORL AUTO PARTS, INC.

(Name of Issuer in Its Charter)

DELAWARE

(State or Other jurisdiction

of Incorporation or Organization)

30-0091294

(I.R.S. Employer Identification No.)

NO.1169 YUMENG ROAD

RUIAN ECONOMIC DEVELOPMENT DISTRICT

RUIAN CITY, ZHEJIANG PROVINCE

PEOPLE’S REPUBLIC OF CHINA

(Address of Principal Executive Offices, including zip code.)

86-577-65817720

(Issuer’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK: 0.002 PARVALUE	NASDAQ GLOBAL MARKET

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by referenced in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated ¨ Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

State issuer’s revenues for its most recent fiscal year December 31, 2008: $130,893,422

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity as of the last business day of registrant’s most recently completed second fiscal quarter. As of June 30, 2008, the value was approximately $37,231,185.

State the number of shares outstanding of each of the issuer’s classes of common equity: 18,279,254 as of March 17, 2009.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its annual meeting of shareholders, scheduled for June 10th, 2009, are incorporated by reference into Part III of this report.

The purpose of this amendment is to re-file Item 8, "Financial Statements and Supplementary Data," which as originally filed failed to include the Auditors' opinion, due to an error in the filing process.

ITEM 8 FINANCAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

SORL Auto Parts, Inc. and Subsidiaries

Ruian City, Zhejiang Province

People's Republic of China

We have audited the accompanying consolidated balance sheets of SORL Auto Parts, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for each of the years in the two-year period ended December 31, 2008. SORL Auto Parts, Inc. and Subsidiaries' management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SORL Auto Parts, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

/s/ Rotenberg & Co. LLP

Rotenberg & Co. LLP

Rochester, New York

March 27, 2009

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2008 and 2007

	December 31, 2008				December 31, 2007
	(Audited)				(Audited)
Assets
Current Assets
Cash and Cash Equivalents	US$	7,795,987		US$		4,340,211
Accounts Receivable, Net of Provision		35,797,824				30,586,239
Notes Receivable		7,536,534				9,410,385
Inventory		19,105,845				8,220,373
Prepayments , including $187,813 and $0 from related parties at December 31, 2008 and December 31, 2007, respectively.		1,013,440				1,336,212
Other current assets , including $1,906,070 and $1,761,007 from related parties at December 31, 2008 and December 31, 2007, respectively.		4,445,778				4,275,294
Total Current Assets		75,695,408				58,168,714
Fixed Assets
Property, Plant and Equipment		32,927,306				27,889,182
Less: Accumulated Depreciation		(8,951,886	)			(6,094,229	)
Property, Plant and Equipment, Net		23,975,420				21,794,953

Land Use Rights, Net		14,514,983				13,889,705

Other Assets
Deferred compensation cost-stock options		9,935				69,571
Intangible Assets		161,347				76,150
Less: Accumulated Amortization		(39,018	)			(25,116	)
Intangible Assets, Net		122,329				51,034
Deferred tax assets		189,228				-
Total Other Assets		321,492				120,605
Total Assets	US$	114,507,303		US$		93,973,977

Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Notes Payable , including $0 and $97,503 due to related parties at December 31, 2008 and December 31, 2007, respectively.	US$	4,623,850		US$		5,305,172
Deposit Received from Customers		6,295,857				2,079,946
Short term bank loans		―				3,370,328
Income tax payable		340,138				373,769
Accrued Expenses		2,389,314				1,859,938
Other Current Liabilities		460,124				463,563
Total Current Liabilities		14,109,283				13,452,716

Non-Current Liabilities
Deferred tax liabilities		106,826				-
Total Liabilities		14,216,109				13,452,716

Minority Interest		10,007,166				8,024,152
Stockholders' Equity
Common Stock - $0.002 Par Value; 50,000,000 authorized,
18,279,254 and 18,279,254 issued and outstanding as of
December 31, 2008 and December 31, 2007 respectively		36,558				36,558
Additional Paid In Capital		37,498,452				37,498,452
Reserves		3,126,086				1,882,979
Accumulated other comprehensive income		10,848,248				5,432,189
Retained Earnings		38,774,684				27,646,931
		90,284,028				72,497,109
Total Liabilities and Stockholders' Equity	US$	114,507,303		US$		93,973,977

The accompanying notes are an integral part of these financial statements

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Income

For Years Ended on December 31, 2008 and 2007

	2008			2007

Sales	US$	130,893,422			115,760,070
Include: sales to related parties		2,816,816			1,398,638

Cost of Sales		97,225,582			88,757,611

Gross Profit		33,667,840			27,002,459

Expenses:
Selling and Distribution Expenses		8,423,124			7,461,652
General and Administrative Expenses		9,295,299			6,542,522
Financial Expenses		852,640			1,000,931

Total Expenses		18,571,063			15,005,105

Operating Income		15,096,777			11,997,354

Other Income		683,104			731,982
Non-Operating Expenses		(441,288	)		(141,814	)

Income Before Provision for Income Taxes		15,338,593			12,587,522

Provision for Income Taxes		1,586,503			636,976

Net Income Before Minority Interest & Other Comprehensive Income	US$	13,752,090			11,950,546

Minority Interest		1,381,230			1,206,515

Net Income Attributable to Stockholders		12,370,860			10,744,031

Foreign Currency Translation Adjustment		6,017,843			4,810,800

Minority Interest's Share		601,784			481,080

Comprehensive Income		17,786,919			15,073,751

Weighted average common share - Basic		18,279,254			18,277,094

Weighted average common share - Diluted		18,279,254			18,323,315

EPS - Basic		0.68			0.59

EPS - Diluted		0.68			0.59

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For Years Ended on December 31,2008 and 2007

	2008			2007

Cash Flows from Operating Activities
Net Income	US$	12,370,860			10,744,031
Adjustments to reconcile net income (loss) to net cash from operating activities:
Minority Interest		1,381,230			1,206,515
Bad Debt Expense		32,674			33,848
Depreciation and Amortization		2,706,053			1,769,647
Stock-Based Compensation Expense		59,636			114,045
Loss on disposal of Fixed Assets		24,892			41,418
Deferred tax		(79,663	)		―
Changes in Assets and Liabilities:
Account Receivables		(3,000,167	)		(1,940,993	)
Notes Receivables		2,437,182			(5,485,625	)
Other Currents Assets		111,707			(1,111,529	)
Inventory		(9,977,123	)		(3,266,270	)
Prepayments		400,877			4,425,704
Accounts Payable and Notes Payable		(1,011,371	)		353,406
Income Tax Payable		(33,631	)		(9,019	)
Deposits Received from Customers		3,937,491			1,485,349
Other Current Liabilities and Accrued Expenses		312,840			498,076

Net Cash Flows from Operating Activities		9,673,487			8,858,603

Cash Flows from Investing Activities
Acquisition of Property and Equipment		(3,063,458	)		(10,103,783	)
Sales Proceeds of Disposal of Fixed Assets		4,187			―
Acquisition of Land Use Rights		―			(9,297,253	)
Investment in Intangible Assets		(77,303	)		(26,304	)

Net Cash Flows from Investing Activities		(3,136,574	)		(19,427,340	)

Cash Flows from Financing Activities
Proceeds from (Repayment of) Bank Loans		(3,482,360	)		3,257,911
Proceeds from Share Issuance		―			―
Capital contributed by Minority S/H		―			―

Net Cash flows from Financing Activities		(3,482,360	)		3,257,911

Effects on changes in foreign exchange rate		401,223			513,536

Net Change in Cash and Cash Equivalents		3,455,776			(6,797,290	)

Cash and Cash Equivalents- Beginning of the year		4,340,211			11,137,501

Cash and cash Equivalents - End of the year	US$	7,795,987			4,340,211

Supplemental Cash Flow Disclosures:
Interest Paid		182,385			148,813
Tax Paid		2,106,992			1,784,965

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

Common stock of 49,500 shares issued to key employees 60,000 options issued in 2006 to employees					59,636
4,128 options issued in 2007 for service rendered					23,201
Common stock of 4,128 shares issued in 2007 for service rendered					31,208

Non-Cash Transaction Disclosure:
Exchange of Construction in Progress for Acquisition of Property and Equipment:					2,059,276
Exchange of Construction in Progress for Acquisition of Land Use Rights					4,203,728

SORL Auto Parts, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

For Years Ended on December 31, 2008 and 2007

					Additional				Retained			Accumu. Other
	Number		Common		Paid-in				Earnings			Comprehensive		Stockholders'		Minority
	of Share		Stock		Capital		Reserves		(Deficit)			Income		Equity		Interest
Beginning Balance – Jan 1, 2007		18,275,126		36,550		37,444,051		797,116		17,988,763			1,102,469		57,368,949		6,336,557

Net Income		―		―		―		―		10,744,031			―		10,744,031		1,206,515

Other Comprehensive Income(Loss)		―		―		―		―		―			4,329,720		4,329,720		481,080

Common stock of 4,128 shares issued		4,128		8		31,200		―		―			―		31,208		―

Transfer to reserve		―		―		―		1,085,863		(1,085,863	)		―		―		―

4,128 options issued in 2007		―		―		23,201		―		―			―		23,201		―

Ending Balance - December 31, 2007		18,279,254		36,558		37,498,452		1,882,979		27,646,931			5,432,189		72,497,109		8,024,152

Net Income		―		―		―		―		12,370,860			―		12,370,860		1,381,230

Other Comprehensive Income(Loss)		―		―		―		―		―			5,416,059		5,416,059		601,784

Transfer to reserve		―		―		―		1,243,107		(1,243,107	)		―		―		―

Ending Balance - December 31, 2008		18,279,254		36,558		37,498,452		3,126,086		38,774,684			10,848,248		90,284,028		10,007,166

The accompanying notes are an integral part of these financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

SORL Auto Parts, Inc. is principally engaged in the manufacture and distribution of automotive air brake valves and related components for commercial vehicles weighing more than three tons, such as trucks, and buses, through its 90% ownership of Ruili Group Ruian Auto Parts Company Limited (“Ruian”, or “the Company”) in the People’s Republic of China (“PRC” or “China”). The Company distributes products both in China and internationally under SORL trademarks. The Company’s product range includes 40 categories of brake valves with over 1000 different specifications.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING METHOD

The Company uses the accrual method of accounting for financial statement and tax return purposes.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of SORL Auto Parts, Inc. and its majority owned subsidiaries. All significant inter-company balances and transactions have been eliminated in the consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For certain of the Company’s financial instruments, including cash and cash equivalents, trade receivables and payables, prepaid expenses, deposits and other current assets, short-term bank borrowings, and other payables and accruals, the carrying amounts approximate fair values due to their short maturities.

RELATED PARTY TRANSACTIONS

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The company conducts business with its related parties in the ordinary course of business. All transactions have been recorded at far market value of the goods and services exchanged.

FINANCIAL RISK FACTORS AND FINANCIAL RISK MANAGEMENT

The Company is exposed to the following risk factors:

(i) Credit risks - The Company has policies in place to ensure that sales of products are made to customers with an appropriate credit history. The Company performs ongoing credit evaluations with respect to the financial condition of its creditors, but does not require collateral. In order to determine the value of the Company’s accounts receivable, the Company records a provision for doubtful accounts to cover probable credit losses. Management reviews and adjusts this allowance periodically based on historical experience and its evaluation of the collectiblity of outstanding accounts receivable. The Company has four customers that respectively account for more than 5.5% of its total revenues for the period. The Company also has a concentration of credit risk due to geographic sales as a majority of its products are marketed and sold in the PRC.

(ii) Liquidity risks - Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and ability to close out market positions.

(iii) Interest rate risk - The interest rate and terms of repayments of short-term and long-term bank borrowings are approximately 6.47% per annum. The Company’s income and cash flows are substantially independent of changes in market interest rates. The Company has no significant interest-bearing assets. The Company’s policy is to maintain all of its borrowings in fixed rate instruments.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost or net realizable value, with cost computed on a weighted-average basis. Cost includes all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The initial cost of the asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is provided using the straight-line method over the estimated useful life of the respective assets as follows:

Category		Estimated Useful Life(Years)

Buildings		10-20

Machinery and equipment		5-10

Electronic equipment		5

Motor Vehicles		5-10

Significant improvements and betterments are capitalized where it is probable that the expenditure resulted in an increase in the future economic benefits expected to be obtained from the use of the asset beyond its originally assessed standard of performance. Routine repairs and maintenance are expensed when incurred. Gains and losses on disposal of fixed assets are recognized in the income statement based on the net disposal proceeds less the carrying amount of the assets.

LAND USE RIGHTS

According to the law of China, the government owns all the land in China. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Land use rights are being amortized using the straight-line method over its useful lives. The land use rights is amortized on a straight-line basis over the estimated useful life of 45 years.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets, such as property, plant and equipment and other non-current assets, including intangible assets, are reviewed periodically for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

INTANGIBLE ASSETS

Intangible assets represent mainly the patent of technology, plus the computer software. Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. After initial recognition, intangible assets are measured at cost less any impairment losses. Intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives.

ACCOUNTS RECEIVABLES AND ALLOWANCE FOR BAD DEBTS

The Company presents accounts receivables, net of allowances for doubtful accounts and returns, to ensure accounts receivable are not overstated due to uncollectibility. Accounts receivables generated from credit sales have general credit terms of 90 days for domestic aftermarket customers.

The allowances are calculated based on a detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions affecting the Company’s customer base. The Company reviews a customer’s credit history before extending credit. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The Company will write off the uncollectible receivables once the customers are bankrupt or there is a remote possibility that the Company will collect the outstanding balance. The write-off must be reported to the local tax authorities and receive official approval from them. To date, the Company has not written off any account receivable.

NOTES RECEIVABLE

Notes receivable are issued by some customers to pay certain outstanding receivable balances to the Company with specific payment terms and definitive due dates. Notes receivable do not bear interest.

REVENUE RECOGNITION

Revenue from the sale of goods is recognized when the risks and rewards of ownership of the goods have transferred to the buyer including factors such as when persuasive evidence of an arrangement exits, delivery has occurred, the sales price is fixed and determinable, and collectibility is probable. Revenue consists of the invoice value for the sale of goods and services net of value-added tax (“VAT”), rebates and discounts and returns. The Company nets sales return in gross revenue, i.e., the revenue shown in the income statement is the net sales.

INCOME TAXES

The Company accounts for income taxes under the provision of Statement of Financial Accounting Standards (“SFAS” No. 109), “Accounting for Income Taxes,” whereby deferred income tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary; to reduce deferred income tax assets to the amount expected to be realized.

FOREIGN CURRENCY TRANSLATION

The Company maintains its books and accounting records in Renminbi (“RMB”), the currency of the PRC, The Company’s functional currency is also RMB. The Company has adopted SFAS 52 in translating financial statement amounts from RMB to the Company’s reporting currency, United States dollars (“US$”). All assets and liabilities are translated at the current rate. The shareholders’ equity accounts are translated at appropriate historical rate. Revenue and expenses are translated at the weighted average rates in effect on the transaction dates.

Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are include in the results of operations as incurred.

STOCK-BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”). SFAS 123R revises FASB Statement No. 123 “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25 “Accounting for Stock Issued to Employees”. SFAS 123R requires all public and non-public companies to measure and recognize compensation expense for all stock-based payments for services received at the grant-date fair value, with the cost recognized over the vesting period (or the requisite service period). The Company has adopted SFAS 123R as of January 1, 2005. Refer to Note 19: stock compensation plan for additional information on our stock option plan and related stock-based compensation expense.

EMPLOYEES’ BENEFITS

Mandatory contributions are made to Government’s health, retirement benefit and unemployment schemes at the statutory rates in force during the period, based on gross salary payments. The cost of these payments is charged to the statement of income in the same period as the related salary costs.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are classified as general and administrative expenses and are expensed as incurred.

SHIPPING AND HANDLING COSTS

Shipping and handling cost are classified as selling expenses and are expensed as incurred.

ADVERTISING COSTS

Advertising costs are classified as selling expenses and are expensed as incurred.

WARRANTY CLAIMS

The company provides for the estimated cost of product warranties when the products are sold. Such estimates of product warranties were based on, among other things, historical experience, product changes, material expenses, service and transportation expenses arising from the manufactured product. Estimates will be adjusted on the basis of actual claims and circumstances.

PURCHASE DISCOUNTS

Purchase discounts, if applicable, are netted in the cost of goods sold.

LEASE COMMITMENTS

The Company has adopted SFAS No. 13, “Accounting for Leases”. If the lease terms meet one or all of the following four criteria, it will be classified as a capital lease, otherwise, it is an operating lease: (1) The lease transfers the title to the lessee at the end of the term; (2) the lease contains a bargain purchase option; (3) the lease term is equal to 75% of the estimated economic life of the leased property or more; (4) the present value of the minimum lease payment in the term equals or exceeds 90% of the fair value of the leased property.

RECENTLY ISSUED FINANCIAL STANDARDS

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of SFAS 115", which allows for the option to measure financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The adoption of SFAS No. 159 has not had a material impact on the Company's consolidated results of operations or financial position.

In December 2007, the FASB issued FASB 141(R), "Business Combinations" of which the objective is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. The new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination.

In December 2007, the FASB issued FASB 160 "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No.51" of which the objective is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way - as an entity in the consolidated financial statements. Moreover, Statement 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions.

Both FASB 141(R) and FASB 160 are effective for fiscal years beginning after December 15, 2008. The Company does not believe that the adoption of these standards will have any impact on its financial statements.

In December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB 110 permits companies to continue to use the simplified method, under certain circumstances, in estimating the expected term of “plain vanilla” options beyond December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously stated that the Staff would not expect a company to use the simplified method for share option grants after December 31, 2007. Adoption of SAB 110 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No.161, Disclosures about Derivative Instruments and Hedging Activities- an amendment of FASB statement No.133.SFAS No.161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. SFAS No.161 is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, with early application encouraged. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ending December 31, 2009. The Company is currently evaluating the impact of SFAS No. 161 on its financial statements.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles.” SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the United States. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company is currently evaluating the impact of SFAS 162 on its consolidated financial statements but does not expect it to have a material effect.

Also in May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60" (“SFAS 163”). SFAS 163 interprets Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. SFAS 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 163 on its consolidated financial statements but does not expect it to have a material effect.

NOTE 3 - RELATED PARTY TRANSACTIONS

The Company continued to purchase non-valve automotive products, components for valve parts and packaging materials from the Ruili Group Co., Ltd. The Ruili Group Co., Ltd., is the minority shareholder of the Joint Venture and is controlled by the Zhang family, who is also the controlling party of the Company.

The following related party transactions occurred for the fiscal year ended December 31, 2008 and 2007:

	December 31,
	200 8		200 7
PURCHASES NON-VALVE PRODUCT , COMPONENTS FOR VALVE AUTO PARTS AND PACKAGING MATERIAL FROM FROM:
Ruili Group Co., Ltd.	$	35,344,273	$	26,589,425
Total Purchases	$	35,344,273		26,589,425

PURCHASES LAND USE RIGHTS FROM RUILI GROUP CO., LTD.	$	―	$	13,501,009

PURCHASES PLANT FROM RUILI GROUP CO., LTD.	$	―	$	6,613,724

SALES TO:
Ruili Group Co., Ltd.		2,816,816		1,398,638
Total Sales	$	2,816,816	$	1,398,638

	December 31,
	200 8		2 00 7
ACCOUNTS PAYABLE AND OTHER PAYABLES
Ruili Group Co., Ltd.	$	—	$	97,503
Total	$	—	$	97,503

PREPAYMENTS
Ruili Group Co., Ltd.	$	187,813	$	—
Total	$	187,813	$	—

OTHER ACCOUNTS RECEIVABLE
Ruili Group Co., Ltd.	$	1,906,070	$	1,761,007
Total	$	1,906,070	$	1,761,007

1.	The total purchases from Ruili Group during the fiscal year ended December 31, 2008 consisted of $29.6 million of finished products for non-valve auto parts, $4.2 million of components for non-valve auto parts and $1.6 million of packaging materials.

On September 28, 2007, the Company purchased land use rights, a manufacturing plant, and an office building from Ruili Group for an aggregate purchase price of approximately RMB152 million (approximately $20.1 million translated with an average e xchange rate of 7.5567). DTZ Debenham Tie Leung Ltd., an internationally recognized appraiser, appraised the total asset value at RMB154 million (approximately $20.4 million translated with an average exchange rate of 7.5567). RMB69.4 million (approximatel y $9.1 million translated with an average exchange rate of 7.5567) of the purchase price was paid on a transfer of the Company ’ s an existing project that includes a construction-in-progress and prepayment of land use rights. The remaining balance was paid by the cash generated from operation and a bank credit line.

NOTE 4 - ACCOUNTS RECEIVABLE

The changes in the allowance for doubtful accounts at December 31, 2008 and December 31, 2007 were summarized as follows:

	December 31,2008			December 31,2007
Beginning balance	$	27,987		$	8,769
Add: Increase to allowance		(2,990	)		19,218
Less: Accounts written off		—			—

Ending balance	$	24,997		$	27,987

	December 31, 2008			December 31, 2007
Accounts receivable	$	35,822,821		$	30,614,226
Less: allowance for doubtful accounts		(24,997	)		(27,987	)

Account receivable balance, net	$	35,797,824		$	30,586,239

NOTE 5 - INVENTORIES

On December 31, 2008 and December 31, 2007, inventories consisted of the following:

	December 31 , 200 8		December 31, 200 7

Raw Material	$	2,705,224	$	2,354,637

Work in process		8,074,488		4,157,643

Finished Goods		8,326,133		1,708,093

Total Inventory	$	19,105,845	$	8,220,373

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following, on December 31, 2008 and December 31, 2007:

	December 31,200 8			December 31,200 7
Machinery	$	22,085,672		$	18,118,125
Molds		1,275,561			1,193,488
Office equipment		618,403			358,163
Vehicle		972,422			757,311
Building		7,975,248			7,462,096
Sub-Total		32,927,306			27,889,182

Less: Accumulated depreciation		(8,951,886	)		(6,094,2 29	)

Fixed Assets, net	$	23,975,420		$	21,794,953

Depreciation expense charged to operations was $2,375,363 and $1,689,021 for the fiscal year ended December 31, 2008 and 2007, respectively.

NOTE 7 – LAND USE RIGHTS

	December 31,2008		December 31,2007
Cost:	$	14,927,340	$	13,966,870
Less: Accumulated amortization:		412,357		77,165
Land use rights, net	$	14,514,983	$	13,889,705

According to the law of China, the government owns all the land in China. Companies and individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The company purchased the land use rights from Ruili Group for approximately $13.9 million on September 28, 2007. The Company has not yet obtained the land use right certificate. However, the Company is in the process of applying to obtain the land use right certificate. The remaining balance of land use rights as of Dec 31, 2008 is amortized on a straight-line basis over 44 years, its remaining useful lives. Amortization expenses were $335,192 and $77,165 for the fiscal years ended December 31, 2008 and 2007, respectively.

NOTE 8 - INTANGIBLE ASSETS

Gross intangible assets were $161,347, less accumulated amortization of $39,018 for net intangible assets of $ 122,329 as of December 31, 2008. Gross intangible assets were $76,150, less accumulated amortization of $25,116 for net intangible assets of $51,034 as of December 31, 2007. Amortization expenses were $11,770 and $6,035 for the fiscal years ended December 31, 2008 and 2007 respectively. Future estimated amortization expense is as follows:

	2009		2010				2011				2012				2013				Thereafter
$	16,135		$	16,135			$	16,135			$	16,135			$	16,135			$	42,115

NOTE 9 - PREPAYMENT

Prepayment consisted of the following as of December 31, 2008 and December 31, 2007:

	December 31,		December 31,
	200 8		200 7
Raw material suppliers	$	878,374	$	929,178
Equipment purchase		135,066		407,035

Total prepayment	$	1,013,440	$	1,336,212

NOTE 10- DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

Deferred tax assets as at December 31, 2008 comprise the following:

	Dec 31, 2008
Deferred tax assets - current
Provision		3,990
Warranty		277,892
Deferred tax assets		281,883
Valuation allowance		―
Net deferred tax assets - current		281,883

Deferred tax liabilities - current
Revenue		92,655
Deferred tax liabilities - current		92,655

Net deferred tax assets - current		189,228

Deferred tax liabilities - non-current
Land use right		106,826
Deferred tax liabilities - non-current		106,826

Deferred taxation is calculated under the liability method in respect of taxation effect arising from all timing differences, which are expected with reasonable probability to realize in the foreseeable future. The Company and its subsidiaries do not have income tax liabilities in U.S. and Hong Kong as the Company had no taxable income for the reporting period. The Company’s subsidiary registered in the PRC is subject to income taxes within the PRC at the applicable tax rate.

NOTE 11 - ACCRUED EXPENSES

Accrued expenses consisted of the following as of December 31, 2008 and December 31, 2007:

	December 31, 200 8		December 31, 200 7

Accrued payroll	$	617,522	$	601,733
Other accrued expenses		1,771,792		1,258,205

Total accrued expenses	$	2,389,314	$	1,859,938

NOTE 12 - BANK LOANS

Bank loans represented the following as of December 31, 2008 and December 31, 2007:

	December 31, 2008		December 31, 2007
Secured	$	—	$	3,370,328
Less: Current portion	$	—	$	(3,370,328	)
Non-current portion	$	—	$	—

As of December 31, 2008, the Company had repaid all outstanding short-term loans with banks. The Company did not provide any sort of guarantee to any other parties.

NOTE 13 - INCOME TAXES

The Joint Venture is registered in the PRC, and is therefore subject to state and local income taxes within the PRC at the applicable tax rate on the taxable income as reported in the PRC statutory financial statements in accordance with relevant income tax laws. According to applicable tax laws regarding Sino-Foreign Joint Venture, the Joint Venture is exempted from income taxes in the PRC for the fiscal years ended December 31, 2005 and 2004. Thereafter, the Joint Venture is entitled to a 50% income tax deduction for the following three years ended December 31, 2006, 2007, and 2008. As a result of the Joint Venture obtaining its Sino-foreign joint venture status in 2004, in accordance with applicable PRC tax regulations, the Joint Venture was exempted from PRC income tax in both fiscal 2004 and 2005. Thereafter, the Joint Venture is entitled to a tax concession of 50% of the applicable income tax rate of 26.4% for the two years ended December 31, 2006 and 2007. With the new PRC Enterprise Income Tax Law, effective on 1st January 2008, the China’s enterprises are generally subject to a PRC income tax rate of 25% and the Joint Venture is entitled to a tax concession of 50% of the applicable income tax rate of 25% for the year ended December 31, 2008.

Additionally, the Company increased its investment in the Joint Venture as a result of its financing in December, 2006. In accordance with the Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises, the Joint Venture is eligible for additional preferential tax treatment. For the years 2007 and 2008, the Joint Venture entitled to an income tax exemption on all pre-tax income generated by the company above its pre-tax income generated in the fiscal year 2006. Thereafter, the Joint Venture will enjoy a 50% exemption from the applicable income tax rate of 25% on any pre-tax income above its 2006 pre-tax income, to be recognized in the years 2009, 2010 and 2011. In addition, in accordance with China's relevant regulations of income taxes, there is a benefit, which 40% of the additional investment in the Joint Venture used to purchase eligible domestic equipments can be used as a tax credit to reduce the current income taxes to the limit of any incremental income taxes in addition to the prior year.The company received an income tax benefit of $377,147 and $991,133 in 2008 and 2007, respectively.

The reconciliation of the effective income tax rate of the Joint Venture to the statutory income tax rate in the PRC for the fiscal year ended on December 31, 2008 and 2007 is as follows:

	2008			2007
Statutory tax rate		25.0	%		26.4	%
Tax holidays and concessions		-12.5	%		-13.2	%

Effective tax rate		12.5	%		13.2	%

Income taxes are calculated on a separate entity basis. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes Significant components of the Company’s net deferred tax assets and liabilities are approximately as follows at December 31,2008. No valuation allowance is deemed necessary. There currently is no tax benefit or burden recorded for the United States or Hong Kong . The provisions for income taxes for the years ended December 31, 2008 and 2007, respectively, are summarized as follows:

	2008			2007
PRC only:
Current	$	1,666,166		$	636,976
Deferred		(79,663	)		―

Total	$	1,586,503		$	636,976

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. As the result of the implementation of the FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes – In Interpretation of FASB Statement No. 109, the Company recognized no material adjustments to unrecognized tax benefits. At the adoption date of January 1, 2007 and as of December 31, 2008 and 2007, the Company has no unrecognized tax benefits.

NOTE 14 - LEASES

In December 2006, the Joint Venture entered into a lease agreement with Ruili Group Co., Ltd. for the lease of two apartment buildings. These two apartment buildings are for the Joint Venture’s management personnel and staff, respectively. The lease term is from January 2007 to December 2011 for one of the apartment buildings and from January 2007 to December 2012 for the other.

Future minimum rental payments for the years ended December 31, are as follows:

	2009		2010		2011		2012		2013		Thereafter

Buildings	$	281,167	$	281,167	$	281,167	$	68,219	$	—	$	—
Total	$	281,167	$	281,167	$	281,167	$	68,219	$	—	$	—

NOTE 15 - ADVERTISING COSTS

Advertising costs are expensed as incurred and are classified as selling expenses. Advertising costs were $6,126 and $110,512 for the fiscal years ended December 31, 2008 and 2007, respectively.

NOTE 16 - RESEARCH AND DEVELOPMENT EXPENSE

Research and development costs are expensed as incurred and were $3,219,895 and $1,795,510 for the fiscal years ended December 31, 2008 and 2007, respectively.

NOTE 17 - WARRANTY CLAIMS

Warranty claims were $1,901,974 and $2,152,978 for the fiscal year ended on December 31, 2008 and 2007 respectively. The movement of accrued warranty expenses for fiscal year 2008 is as follows. Accrued warranty expenses are included in Accrued Expenses.

Beginning balance at Jan 01, 2008	$	863,428
Accrued during the fiscal year ended December 31, 2008:	$	1,901,974
Less: Actual Paid during the fiscal year ended December 31, 2008:	$	1,653,833
Ending balance at December 31, 2008	$	1,111,569

NOTE 18 - STOCK COMPENSATION PLAN

(1) The Company’s 2005 Stock Compensation Plan (the Plan) permits the grant of share options and shares to its employees for up to 1,700,000 shares of common stock. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant.

Pursuant to the Plan, the Company issued 60,000 options with an exercise price of $4.79 per share on March 1, 2006. In accordance with the vesting provisions of the grants, the options will become vested and exercisable under the following schedule.

Number of Shares	% of Shares Issued			Initial Vesting Date

60,000		100	%	March 1, 2009

The Company accounts for stock-based compensation in accordance with SFAS No. 123 Revised, “Share-Based Payment.” The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses the assumptions noted in the following table.

Dividend Yield		0.00	%
Expected Volatility		75.75	%
Risk-Free Interest Rate		4.59	%
Contractual Term	3 years
Stock Price at Date of Grant	$	4.79
Exercise Price	$	4.79

Total deferred stock-based compensation expenses related to the 60,000 stock options granted amounted to $178,904. This amount is amortized over three years in a manner consistent with Financial Accounting Standards Board Interpretation No. 123 (R). The amortization of deferred stock-based compensation for these equity arrangements was both $59,636 for the fiscal year ended December 31, 2008 and 2007. As of December 31, 2008, there was $ 9,935 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan. The cost is expected to be recognized over a period of 0.2 years.

A summary of option activity under the Plan as of December 31, 2008 and changes during the fiscal year ended December 31, 2008 is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

January 1, 2006		—	$	—		—	$	—
Granted		60,000		4.79	3Years			—
Exercised		—		—		—		—
Forfeited		—		—		—		—

Outstanding at December 31, 2008		60,000	$	4.79	0.2Years		$	—

Exercisable at December 31, 2008		—		—		—		—

(ii). Subject to all the terms and provisions of the 2005 Stock Compensation Plan, on June 20, 2007, the Company granted to its previous senior manager of investor relations, David Ming He options to purchase 4,128 shares of its common stocks with an exercise price of $7.25 per share. The option became vested and exercisable immediately on the date thereof.

Number of Shares	% of Shares Issued			Initial Vesting Date

4,128		100	%	June 20, 2007

The Company accounts for stock-based compensation in accordance with SFAS No. 123 Revised, “Share-Based Payment.” The fair value of each warrant is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses the assumptions noted in the following table.

Dividend Yield		0.00	%
Expected Volatility		66.70	%
Risk-Free Interest Rate		5.14	%
Contractual Term	3 years
Stock Price at Date of Grant	$	7.09
Exercise Price	$	7.25

Total stock-based compensation expenses related to the 4,128 stock options granted amounted to $23,201. This amount is charged to G&A during 2007 year.

A summary of option activity under the Plan as of December 31, 2008 and changes during the fiscal year ended December 31, 2008 is as follows:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

January 1, 2007		—	$	—		—	$	—
Granted		4,128	$	7.25	3Years			—
Exercised		—		—		—		—
Forfeited		—		—		—		—

Outstanding at December 31, 2008		4,128	$	7.25	1.6Years		$	—

Exercisable at December 31, 2008		4,128	$	7.25	1.6Years		$	—

(2) On January 5, 2006, the Company issued 100,000 warrants for financial services to be provided by Maxim Group LLC and Chardan Capital Markets, LLC, with an exercise price of $6.25 per share. In accordance with the common stock purchase warrant agreement, the warrants became vested and exercisable immediately on the date thereof. As set forth in the agreement, the Company will retain Maxim Group LLC and Chardan Capital Markets, LLC as its exclusive financial advisors and investment bankers for a period of twelve months.

Number of Shares	% of Shares Issued			Initial Vesting Date

100,000		100	%	January 5, 2006

Dividend Yield		0.00	%
Expected Volatility		77.62	%
Risk-Free Interest Rate		4.36	%
Contractual Term	4 years
Stock Price at Date of Grant	$	4.70
Exercise Price	$	6.25

Total deferred stock-based compensation expenses related to the 100,000 warrants granted amounted to $299,052. This amount is amortized over one year in a manner consistent with Financial Accounting Standards Board Interpretation No. 123 (R). The amortization of deferred stock-based compensation for these equity arrangements was $299,052 for the fiscal year ended December 31, 2006.

A summary of option activity with respect to the warrants as of December 31, 2008 and changes during the fiscal year ended December 31, 2008 is as follows:

	Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

January 1, 2006		—	$	—		—	$	—
Granted		100,000	$	6.25	4Years			—
Exercised		—		—		—		—
Forfeited		—		—		—		—

Outstanding at December 31, 2008		100,000	$	6.25	1.1Years		$	—

Exercisable at December 31, 2008		100,000	$	6.25	1.1Years		$	—

NOTE 19- COMMITMENTS AND CONTINGENCIES

(1) According to the law of China, the government owns all the land in China. Companies and individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. The company purchased the land use rights from Ruili Group for approximately $13.9 million on September 28, 2007. The Company has not yet obtained the land use right certificate. However, the Company is in the process of applying to obtain the land use right certificate.

(2) The information of lease commitments is provided in Note 14.

NOTE 20 - OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2008, we do not have any material commitments for capital expenditures or have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

NOTE 21 - SUBSEQUENT EVENTS

On March 24, 2009, we collected $1,463,143 of other accounts receivable due from RuiLi Group, one related party.

NOTE 22 – RESTRICTED NET ASSETS

Relevant PRC laws and regulations permit payments of dividends by our PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, PRC laws and regulations require that annual appropriations of 10% of after-tax income should be set aside prior to payment of dividends as a general reserve fund. As a result of these PRC laws and regulations, our PRC subsidiaries and our affiliated PRC entities are restricted in their ability to transfer a portion of their net assets to us whether in the form of dividends, loans or advances. As of December 31, 2008 and 2007, the amounts of our restricted net assets were approximately $ 3.1 million and $1.9 million, respectively.

Additional Information—Financial Statement Schedule I

This financial statements schedule has been prepared in conformity with accounting principles generally accepted in the United States of America.

SORL AUTO PARTS, INC.

This financial statements schedule has been prepared in conformity with accounting principles generally accepted in the United States of America. The parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the company accounts for its subsidiaries using the equity method. Please refer to the notes to the consolidated financial statements presented above for additional information and disclosures with respect to these financial statements.

Financial Information Of Parent Company

Balance Sheets

	31-Dec-08		31-Dec-07

ASSETS
Current Assets:
Cash and cash equivalents	$	32,718	$	33,288
Other current assets		16,161		16,161
Total current assets		48,879		49,449
Deferred compensation cost-stock options		9,935		69,571
Investments in subsidiaries		81,952,101		69,521,035

TOTAL ASSETS	$	82,010,915	$	69,640,055

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Other current liability		2,486,566		2,486,566
Total current liabilities		2,486,566		2,486,566
Total liabilities		2,486,566		2,486,566
Stockholders' equity:
Common Stock - $0.002 Par Value; 50,000,000 authorized, 18,279,254 and 18,279,254 issued and outstanding as of December 31, 2008 and December 31, 2007 respectively		36,558		36,558
Additional paid-in capital		37,498,452		37,498,452
Retained earnings		41,989,339		29,618,479
Total stockholders' equity		79,524,349		67,153,489

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	82,010,915	$	69,640,055

Financial Information Of Parent Company

Statements Of Income

For Years Ended on Dec 31, 2008 and 2007

	2008		2007

Equity in earnings of subsidiaries	$	12,431,066	$	10,858,638
General and administrative expenses		59,636		114,045
Financial expenses		570		562

Net income attributable to stockholders	$	12,370,860	$	10,744,031

Weighted average common share - Basic		18,279,254		18,277,094

Weighted average common share - Diluted		18,279,254		18,323,315

EPS - Basic		0.68		0.59

EPS - Diluted		0.68		0.59

Financial Information Of Parent Company

For Years Ended On December 31, 2008 And 2007

					Additional		Retained
	Number		Common		Paid-in		Earnings		Stockholders'
	of Share		Stock		Capital		(Deficit)		Equity
Beginning Balance – Jan 1, 2007		18,275,126		36,550		37,444,051		18,874,448		56,355,049

Net Income		―		―		―		10,744,031		10,744,031

Common stock of 4,128 shares issued		4128		8		31,200		―		31,208

4,128 options issued in 2007		―		―		23,201		―		23,201

Ending Balance - December 31, 2007		18,279,254		36,558		37,498,452		29,618,479		67,153,489

Net Income		―		―		―		12,370,860		12,370,860

Ending Balance - December 31, 2008		18,279,254		36,558		37,498,452		41,989,339		79,524,349

Financial Information Of Parent Company

Statements Of Cash Flows

For Years Ended on Dec 31, 2008 and 2007

	2008			2007

Cash flow from operating activities:

Net income	$	12,370,860		$	10,744,031
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries		(12,431,066	)		(10,858,638	)
Stock-Based Compensation Expense		59,636			114,045
Changes in other current assets		―			(14,396	)
Changes in other current liabilities		―			―
Net cash provided by operating activities	$	(570	)	$	(14,958	)

Cash flows from investing activities:
Investment in subsidiaries, net of cash acquired	$	―		$	―

Net cash (used in) provided by investing activities	$	―		$	―

Cash flows from financing activities:
Proceeds from Share Issuance	$	―		$	―

Net cash provided by (used in) financing activities	$	―		$	―

Net change in increase in cash and cash equivalents	$	(570	)	$	(14,958	)
Cash and cash equivalents, beginning of period		33,288			48,246
Cash and cash equivalents, end of period	$	32,718		$	33,288

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1. Financial Statements.

See Item 8 for the financial statements filed with this report.

2. Financial Statement Schedules.

See Item 8 of this report

EXHIBIT INDEX

EXHIBIT NO.		DOCUMENT DESCRIPTION

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 1 st day of April 2009.

	SORL AUTO PARTS, INC.


	By:	/s/ Xiao Ping Zhang
		Xiao Ping Zhang
		Chief Executive Officer and Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities.

Name	Position	Date

/s/ Xiao Ping Zhang	Chief Executive Officer, and Chairman	April 1, 2009
Xiao Ping Zhang

/s/ Xiao Feng Zhang	Chief Operating Officer and Director	April 1, 2009
Xiao Feng Zhang

/s/ Zong Yun Zhou	Chief Financial Officer	April 1, 2009
Zong Yun Zhou

/s/ Li Min Zhang	Director	April 1, 2009
Li Min Zhang

/s/ Zhi Zhong Wang	Director	April 1, 2009
Zhi Zhong Wang

/s/ Yi Guang Huo	Director	April 1, 2009
Yi Guang Huo

/s/ Jiang Hua Feng	Director	April 1, 2009
Jiang Hua Feng

/s/ Jung Kang Chang	Director	April 1, 2009
Jung Kang Chang