Navstar will assume operational control of and acquire a 70% interest in the combined entity of Dong Fang Zheng Yi Film and TV Communication Company and Beijing Dong Fang Zheng Yi Film Investment Consulting Company.

According to the master agreement entered into with the shareholders of Dong Fang on December 18, 2005, Navstar will pay $800,000 in cash and issue 6.2 million shares of common stock to effect the purchase.

Navstar also agreed to infuse $1.6 million directly into the operations of Dong Fang.

Dong Fang, formed in 1998, has produced television mini-series in China. Dong Fang's TV mini-series are carried across China by major national, regional and local TV networks.

According to audited financial statements, Dong Fang earned a net income of US$661,593 on sales of US$2,943,901 for the fiscal year 2004. According to unaudited figures provided by Dong Fang, for the first six months of 2005 the net income reached approximately US$719,305 earned on sales totaling $3,279,102.

Dong Fang's close business relationship with government-owned CCTV and its high quality content affords the airing of its programming throughout the nation on state-owned television stations. The company's expansion plans include making its productions available on the Internet for those unable to watch at the time of airing.


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