Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as "believes," "estimates," "could," "possibly," "probably," anticipates," "projects," "expects," "may," "will," or "should" or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations.

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Background

Cavico Corp. (the "Company," "Cavico" or "we") was incorporated in Delaware on September 13, 2004 under the name Laminaire Corp. On November 9, 2004, the name of the Company was changed to Agent 155 Media Group, Inc. On May 2, 2006, the Company's name was changed to Cavico Corp.

During 2007 and 2006, as described below, we acquired Cavico Vietnam Joint Stock Company, a corporation organized under the laws of Vietnam ("CVJSC") as our wholly owned subsidiary. As a result of legal restrictions on the foreign ownership of Vietnamese entities imposed by the Vietnamese government, the acquisition of CVJSC occurred in multiple steps, as follows:

· On April 18, 2006, we entered into an asset purchase agreement with CVJSC. Under the terms of the agreement, Cavico purchased all of the assets of CVJSC in consideration for the issuance to CVJSC of 79,000,000 shares of our common stock. CVJSC subsequently transferred 60,062,200 of these shares of our common stock to the former shareholders of CVJSC in return for their shares of CVJSC stock. An additional 18,937,800 shares of our common stock were deposited into a CVJSC bonus plan for that entity's management, of which 4,937,800 shares were distributed to CVJSC's management in 2006.

· Following our purchase of the CVJSC assets, and pending the grant of the requisite approval of the acquisition of CVJSC by a Vietnamese government agency as required under Vietnamese law, CVJSC continued to use the assets subject to our control. Government approval of the acquisition of CVJSC was granted in January 2007. Following the grant of this approval and our subsequent acquisition of CVJSC to become our wholly-owned subsidiary, all assets previously purchased from CVJSC by the Company in April 2006 were transferred back to CVJSC. Also, at that time, CVJSC changed its name to Cavico Vietnam Company Limited.

The transaction was accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of Cavico Vietnam Company Limited obtained control of the consolidated entity. Accordingly, the merger of the two companies is recorded as a recapitalization of Agent 155 Media Group, Inc., with Cavico Vietnam Company Limited being treated as the continuing entity. The historical financial statements to be presented are those of Cavico Vietnam Company Limited, our wholly-owned subsidiary.

Critical Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the parent
company, Cavico Corp., and its following subsidiaries:

                                                                 % of Ownership
    Subsidiary                                                12/31/08     12/31/07
    Cavico Vietnam Company Limited                               100 %        100 %
    Cavico Bridge and Underground Construction JSC                66 %         66 %
    Cavico Mining and Construction JSC                            26 %         26 %
    Cavico Trading JSC                                            63 %         63 %
    Cavico Construction and Infrastructure Investment JSC         69 %         69 %
    Cavico Power and Resource JSC                                 78 %         78 %
    Cavico Transport JSC                                          74 %         74 %
    Cavico Hydropower Construction JSC                            73 %         73 %
    Cavico Energy Construction JSC                                38 %         38 %
    Cavico Tower JSC                                              38 %         39 %
    Cavico Industry and Technical Service JSC                     67 %         65 %
    Cavico Manpower JSC                                           30 %         30 %
    Cavico Stone and Mineral JSC                                  36 %         35 %
    Cavico PHI Cement JSC                                         93 %         38 %
    Cavico Luong Son JSC                                          93 %        100 %
    Cavico Land JSC                                               13 %         11 %

Cavico Vietnam Company has a control in the management and decision making of all these subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Estimates

The preparation of financial statements in 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets and the collectibility of accounts receivable.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all cash and highly liquid investments with initial maturities of three months or less to be cash equivalents.

Investment in Marketable Securities

Investments with original maturities of less than 90 days are considered cash equivalents, and all other investments are classified as short-term investments.

Inventories

Inventories are stated at the weighted-average method. Market value for raw materials is based on replacement cost and for work-in-process on net realizable value.

Accounts Receivable

We grant credit to customers within Vietnam and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries that we serve. Our main customers were project management units established by Electricity of Vietnam, which accounts for 49.65% of all accounts receivable. Reserves for uncollectable amounts are provided, based on past experience and a specific analysis of the accounts, which management believes are sufficient. We reserved for uncollectable amounts of $597,349 and $369,590 for the year ended December 31, 2008 and 2007, respectively.

Property and Equipment

Property and equipment, including renewals and betterments, are stated at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. We follow the practice of capitalizing property and equipment purchased over $600. The cost of ordinary maintenance and repairs is charged to operations while renewals and replacements are capitalized. Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the related assets, which range from two to twenty five years.

Long-Lived Assets

Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long-lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long lived assets impairment is determined by management.

Real Estate Activities

Cavico Tower's, one of our subsidiaries, principal business activities consist of civil and industrial construction; internal and external fitting out; land leveling and surface improvement; building leasing; real estate business; restaurants and supermarkets operation; real estate consulting; machine and equipment leasing; materials, machinery and equipment trading for construction, transport, hydropower; dealers for buying and selling goods, construction materials trading. During the year 2008, the major activities of the Company were capital expenditures related to building construction in the amount of $1,519,241.

Fair Value of Financial Instruments

The carrying amount of cash, cash equivalents, investment securities, notes payable, accounts receivable, accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. The carrying amount of the notes payable and long-term debt are reasonable estimates of fair value as the loans bear interest based on market rates currently available for debt with similar terms.

Revenue Recognition

For all construction contracts, revenue is recorded when the persuasive evidence of an arrangement exists, work has been completed, price is fixed or determined and collection is reasonably assured.

We recognize revenues from construction projects based upon work that is periodically certified as completed by our customers or which is virtually complete. Production costs, including materials, labor and subcontractor costs are allocated to revenue based upon the ratio of total costs incurred to date compared to total work to date. Costs related to work performed but not completed are included in work in progress. Customer-furnished materials, labor, and equipment, and in certain cases subcontractor materials, labor, and equipment are included in revenues and cost of revenue when management believes that we are responsible for the acceptability of the project by client. Contracts are not segmented between types of services such as engineering and construction, and accordingly, gross margin is recognized under construction services.

Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined. Claims against customers are recognized as revenue upon settlement. Revenues recognized in excess of amounts billed are classified as current assets under contract work-in-progress. Amounts billed to clients in excess of revenues recognized to date are classified as current liabilities under advance billing on contracts.

Other Comprehensive Income

We have adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income". SFAS 130 requires reporting and displaying comprehensive income and its components in a full set of general-purpose financial statement.

Foreign Currency Translation

We account for translation of foreign currency in accordance with Statement of Financial Accounting Standards No. 52 "Foreign Currency Translation." The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income." Gains and losses resulting from foreign currency transactions are reflected in the income statement.

Results of Operations

Results of Operations for the year ended December 31, 2008 compared to the year ended December 31, 2007.

Net Sales

We generated $58,006,269 in net sales during the year ended December 31, 2008 compared to $37,850,606 during the year ended December 31, 2007, mostly from construction and mining projects. Company's net sales from mining construction decreased by $62,621 or 1% to $4,259,850 for the year ending December 31, 2008 from $4,322,471 for the year ending December 31, 2007. This was due principally to a reduction in mining activity in the Nui Beo mine and the redeployment of some of our equipment from that mine to other civil engineering projects
(primarily new hydro power construction projects resulting in higher revenues)
based on the Company's expectation that the size of that project would decrease at the annual rate of 10% to 20% as stipulated in the agreement with the owner of the mine. The Company's net sales from civil construction increased by $18,936,592 or 60% to $50,430,360for the year ending December 31, 2008 from $31,493,768 for the year ending December 31, 2007. This is due to an increase in hydro power construction projects. The Company's net sales from other operations
(leasing machinery and equipment, selling materials, steel fabrication)
increased by $1,281,692 or 63% to $3,316,059 for the year ending December 31, 2008 from $2,034,367 for the year ending December 31, 2007.

The revenues from our major projects in 2008 compared to 2007 are as follows;

                        Buon Kuop        A Luoi Tunnel      Buon TuaSrah       Bac Binh        Daksrong
2008                   $  7,925,582     $     7,525,751     $   4,654,046     $ 2,218,872     $ 1,723,083
2007                      4,218,525           1,120,120         2,992,497         634,483       1,377,619

Contract Amount          31,226,535          53,662,263        13,322,030       6,176,577       4,454,112
Contract period           2003-2008           2007-2010         2006-2008       2004-2007       2007-2008

The revenues from Buon Kuop Project increased by $3,707,057 or 88% during the year ending December 31, 2008 compared to the year ending December 31, 2007 and revenue for the year ending December 31, 2009 are anticipated approximately $2.8 million as the project is being completed. The revenues from A Luoi Tunnel Project increased by $6,405,631 or 572% for the year ending December 31, 2008 compared to the year ending December 31, 2007 and revenue for the year ending December 31, 2009 is anticipated approximately $10.7 million. The revenues from Buon TuaSha Project increased by $1,661,549 or 56% for the year ending December 31, 2008 compared to the year ending December 31, 2007 and the Company anticipates approximately $3.7 million in revenue for the year ending December 31, 2009.

Cost of production

Costs of Goods sold were $48,712,916 and $31,339,235 for the year ended December 31, 2008 and 2007, respectively. Cost of Goods sold includes capitalization of interest expenses of $5,872,378 and $3,045,838 for the year ended December 31, 2008 and 2007, respectively. The increase in capitalization of interest was due to new loans added in 2008.

Cost of Goods sold (without capitalization of interest expenses) increased by $14,547,141 or 51% to $42,840,538 for the year ending December 31, 2008 from $28,293,397 for the year ending December 31, 2007. Cost of Goods sold excluding capitalization of interest expenses as a percentage of sales decreases by 1% to 74% for the year ended December 31, 2008 from 75% of sales for the year ended December 31, 2007.

Company's cost of production from mining construction for the year ended December 31, 2008 was $3,315,077, of which as a percentage of sales increased by 16% to 78% in 2008 from 62% of sales for the year ended December 31, 2007. The increased cost of production from mining construction as a percentage of sales was due to increase of the inflation which resulted in cost of fuels, materials, spare parts increase. Company's cost of production from civil construction for the year ended December 31, 2008 was $42,461,358, of which as a percentage of sales decreases by 1% to 84% for the year ended December 31, 2008 from 85% of sales for the year ended December 31, 2007. The decrease of cost of civil construction as a percentage of sales was due to the improvement in efficiency of machinery and equipment. Company's cost of production from other operations (i.e. leasing machinery and equipment, selling steel fabrication) for the year ended December 31, 2008 was $2,636,481, of which as a percentage of sales increased by 8% to 80% for the year ended December 31, 2008 from 72% for the year ended December 31, 2007. The increase of cost of production from other operation as a percentage of sales was due to decrease of demand in trading which result in smaller sales price increase compared to cost increase.

The cost of goods sold including project depreciation and interest from our major projects in 2008 compared to 2007 are as follows;

2008                    Buon Kuop       A Luoi Tunnel       Buon TuaSrah       Bac Binh        Daksrong
Cost of goods sold     $ 7,722,660     $     6,088,541     $    4,262,512     $ 2,752,757     $ 1,744,058
Depreciation               234,601             558,265            514,143         135,259         124,296
Interest                   352,645             742,701            737,461         306,908         205,651



2007                    Buon Kuop       A Luoi Tunnel       Buon TuaSrah       Bac Binh        Daksrong
Cost of goods sold     $ 3,595,349     $       539,577     $    2,811,692     $   784,476     $   997,733
Depreciation               348,753              55,975            281,756         232,565         104,383
Interest                   152,831              92,296            488,958         377,462         101,461

The costs of goods sold on these projects were increased in 2008 compared to 2007 generally in proportion to the increase in revenue.

The cost of goods sold from Buon Kuop project increased by $4,127,311 or 115% during the year ending December 31, 2008 compared to the year ending December 31, 2007. The percentage of cost of good sold to sales was increased to 97% in 2008 compared to 85% in 2007. The cost of goods sold from A Luoi Tunnel project increased by $5,548,964, or 102% for the year ending December 31, 2008 compared to 2007 since the project started in 2007. The percentage of cost of good sold to sales for this project increased to 81% in 2008 compared to 48% in 2007. The cost of goods sold from Buon TuaSha project increased by $1,450,820 or 52% for the year ending December 31, 2008 compared to 2007. The percentage of cost of good sold to sale for this project was decreased to 92% in 2008 compared to 94% in 2007.

Gross Profit

The gross profit for the year ended December 31, 2008 was $9,293,353 or 16% of sales compared to $6,511,371 or 17% of sales for the year ended December 31, 2007. The increase in gross profit is due to an increase in sales by $20,155,663 in comparison to increase in cost of goods sold by $17,373,681 as described above.

The gross profits from our major projects in 2008 compared to 2007 are as follows:

       Buon Kuop       A Luoi Tunnel       Buon TuaSrah       Bac Binh      Daksrong
2008   $  202,922     $     1,437,210     $      391,534     $ (533,885 )   $ (20,975 )
2007      623,176             580,543            180,805       (149,993 )     379,886

The Company recorded losses from Bac Binh project and Daksrong project in 2008. This was due to extension of projects and a loss of time caused by bad weather in Bac Binh and Daksrong as well as a delay by project consultant and other contractors ( Daksrong ). The Company has not gotten a compensation approval from the clients for these additional costs.

Operating expenses

The company's operating expenses in 2008 was $6,980,042, compared to $4,851,362 in 2007 with an increase of $2,128,680. The increase in operating expenses was mainly resulted from increased in the size of our support facilities as we prepare for the future growth of the Company and its subsidiaries, noted as follows:

· Rent expenses increased by $75,122 to $439,270 for the year ended December 31, 2008 from $364,148 for the year ended December 31, 2007.

· Payroll expenses increased by $835,406 to $2,463,276 for the year ended December 31, 2008 from $1,627,870 for the year ended December 31, 2007.

· Other administration cost of other subsidiaries increased by $593,724 to $2,505,140 for the year ended December 31, 2008 from $1,911,416 for the year ended December 31, 2007.

· Administrative cost of corporate office (mainly audit fees, legal fees and consulting fees) increased by $769,801 to $1,279,949 for the year ended December 31, 2008 from $510,148 for the year ended December 31, 2007.

· Selling expenses were decreased by $3,924 to $78,779 for the year ended December 31, 2008 from $82,703 for the year ended December 31, 2007.

The Company also recorded a bad debt expense of $212,828 and $404,044 for the year ended December 31, 2008 and 2007, respectively.

Other Income (expenses)

The total other income (expenses) decreased by $10,376,254 to $2,671,115 as expenses for the year ended December 31, 2008 from $7,705,139 as income for the year ended December 31, 2007. Other income includes gain from disposal of fixed assets and leased machinery of $44,471 for the year ended December 31, 2008 compared to $119,986 in 2007. Other income also includes loss on sale of marketable securities of $439,934 for the year ended December 31, 2008 compared to a gain of $9,684,686 in 2007. During the year ended December 31, 2007, we sold 1,897,985 shares of common stock of Habubank and received $7,073,823 with a profit of $5,065,028 and we also sold shares of common stock of six subsidiaries to reduce the ownership in these entities from 100% to a range of 49% to 72% and received $8,419,607 with a profit of $3,543,201. In 2007 we sold 538,370 shares of common stock of Cavico Mining to reduce the ownership in this entity from 50 % to 39% and received $1,563,752 with a profit of $627,533. Income from sales of our investment at other subsidiaries was $448,924 for the year ended December 31, 2007. We recorded $100,982 loss on foreign currency exchange for the year ended December 31, 2008 compared to $250,870 loss in 2007. This loss was resulted from the currency exchange difference measured at the year end on the loan in Euro. The interest income during the year ended December 31, 2008 was $891,898 compared to $1,046,394 in 2007.

Interest expense excluding capitalized interest increased by $175,045 to $3,101,243 for the year ended December 31, 2008 from $2,926,198 for the year ended December 31, 2007. The increase was due to additional loans added in 2008.

Net Income

The Company had net income of $631,816 for the year ended December 31, 2008, compared to $5,894,868 for the year ended December 31, 2007. The decrease of $5,263,052 was mainly due to the decrease of $10,124,620 in gain on sale of marketable securities and an increase in operating expenses of $2,128,680 and the increase of $508,867 in minority interest which was offset by an increase in gross profit of 2,781,982, and taxes change of $4,968,767 from $2,283,822 as a tax benefit in 2008 compared to $2,684,945 as a tax expense in 2007.

The net income per share for the year ended December 31, 2008 was $0.01 compared to $0.05 for the year period ended December 31, 2007.
The decrease in unrealized gains of $9,639,883 in marketable securities resulted from an unrealized loss of $6,352,628 in 2008 and an unrealized gain of 3,287,255 in 2007. The cost and current fair value of the marketable securities as of December 31, 2008 were $4,475,051 and $1,820,406, respectively. The majority of marketable securities are invested in Vietnamese companies.

Liquidity and Capital Resources

The Company's working capital deficit as of December 31, 2008 increased to $(26,621,023) compared to $(15,611,618) as of December 31, 2007 as current assets increased less than the increase in current liabilities. The major factors contributed to this decrease in working capital in 2008 compared to 2007 were a decrease of $8,033,630 in investment available for sale and an increase of $9,179,246 in advances from customers . Generally in Vietnam, bank loans are granted on a yearly basis and renewed each year. The Company has $50,141,069 in maturing debts in 2009 of which $12,455,320 has been paid off in the first quarter of 2009.

As of December 31, 2008, the Company had $3,148,985 in cash, current accounts receivable of $9,184,339, an inventory of $3,940,768, a construction WIP of $29,606,602 and net fixed assets of $22,979,090. Our current accounts receivable was increased by $1,525,068 from the prior year end. Our accounts receivable increase was due to an increase in sales from completed projects. Our current construction WIP for the current year was increased by $6,992,796 from the prior year end. Our construction WIP increase was due to an increase in work in progress from new projects. We anticipate our accounts receivable and inventory will continue to increase in 2009 as we completed and added more new projects.

The Company's total current liabilities as of December 31, 2008 were $84,504,794 which was increased by $17,070,430 from the prior year end. The current liabilities were represented mainly accounts payable of $10,234,650, accrued expenses of $4,485,336, advances from customers of $15,102,331, and short term loans, including loans from related parties of $50,349,736. Advances from customers increased mainly due to Damb'ri HP project for which we received approximately $3.04 million, Nam Chien HP project for which we received approximately $0.5 million and Ta Trach HP project for which we received approximately $4.99 million during the year ended December 31, 2008. Current Notes payable including loans from related parties increased by $8,091,359 from the prior year end. This increase is mainly due to an increase in financial needs for new projects such as A Luoi HP, Nam Chien HP, Song Tranh HP, Dong Nai 4 HP, Dasiat HP, Dong Nai 3 HP, Nho Que HP, ZaHung HP. We anticipate our current liabilities will continue to increase in 2009 as we added new loans and received advances for new projects.

Cash flows

The Company used cash of $835,595 in operating activities for the year ended December 31, 2008 compared to $10,095,134 from operating activities for the year ended December 31, 2007. The major reasons are an increase in advances from customer of $10,135,499 in 2008 compared to $4,792,728 in 2007. an increase in payable to employees in the amount of $2,009,274 and $48,346 during the year ended December 31, 2008 and 2007, respectively and due to a reduction in gain or loss from other investment activities from gain of $9,684,686 in 2007 to $439,934 loss in 2008.

In investing activities, the Company used net cash of $12,769,359 for the year ended December 31, 2008 to purchase property, equipment and investments in other entities. The Company spent $13,053,533 for the purchase of fixed assets, which primarily included vehicles, equipment, machinery and intangible assets. The . . .