Global Sources LTD /bermuda 6-K Global Sources LTD.

EXHIBIT 2

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

	At			At
	March 31			December 31
	2006			2005
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	96,147		$	94,321
Available-for-sale securities		29,995			23,982
Accounts receivable, net		4,923			5,545
Receivables from sales representatives		10,209			5,659
Inventory of paper		908			866
Prepaid expenses and other current assets		16,867			10,585
Total Current Assets		159,049			140,958
Property and equipment, net		27,767			28,178
Long term investments		100			100
Bonds held to maturity, at amortized cost		470			463
Other assets		2,235			1,981
Total Assets	$	189,621		$	171,680
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	5,748		$	5,484
Deferred income and customer prepayments		61,383			52,624
Accrued liabilities		9,010			6,644
Income taxes payable		513			405
Total Current Liabilities		76,654			65,157
Liabilities for incentive and bonus plans		307			307
Deferred income and customer prepayments — long term		615			348
Deferred tax liability		411			436
Total Liabilities		77,987			66,248
Minority interest		7,002			6,191
Shareholders’ equity:
Common shares, US$0.01 par value; 50,000,000 shares authorized; 38,428,310 (2005: 38,340,310) shares issued and outstanding		384			383
Additional paid in capital (Note 1)		120,771			127,747
Retained deficit		(16,792	)		(21,199	)
Less: Unearned compensation (Note 1)		—			(7,900	)
Accumulated other comprehensive income		269			210
Total Shareholders’ Equity		104,632			99,241
Total Liabilities and Shareholders’ Equity	$	189,621		$	171,680

Note:   1.   The Company adopted SFAS No.123(R), “ Share Based Payment” with effect from January 1, 2006. The unearned compensation costs associated with the Employee Compensation Plans at the beginning of the year 2006 were reversed as per SFAS No.123(R).

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

	Three months ended March 31
	2006			2005
	(Unaudited)			(Unaudited)
Revenue:
Online and other media services (Note 2)	$	26,090		$	22,636
Exhibitions		3,712			—
Miscellaneous		229			131
		30,031			22,767
Operating Expenses:
Sales		9,712			7,716
Event production		619			—
Community		4,642			3,741
General and administrative		8,850			7,531
Online services development		995			984
Non-cash compensation expense (Note 3)		566			529
Amortization of software cost		302			296
Total Operating Expenses		25,686			20,797
Income from Operations		4,345			1,970
Interest and dividend income		1,030			51
Gain on sale of available-for-sale securities		73			39
Foreign exchange gains (losses), net		(27	)		144
Income before Income Taxes		5,421			2,204
Income Tax Provision		(203	)		(122	)
Net Income before Minority Interest	$	5,218		$	2,082
Minority interest		(811	)		(82	)
Net Income	$	4,407		$	2,000
Retained deficit brought forward	$	(21,199	)	$	(34,577	)
Retained deficit carried forward	$	(16,792	)	$	(32,577	)
Basic net income per share	$	0.11		$	0.06
Shares used in basic net income per share calculations		38,371,599			35,329,744
Diluted net income per share	$	0.11		$	0.06
Shares used in diluted net income per share calculations		38,435,618			35,457,648

Note:   2.   Online and other media services consists of:

	Three months ended March 31
	2006		2005
	(Unaudited)		(Unaudited)
Online services	$	15,094	$	13,093
Print services		10,996		9,543
	$	26,090	$	22,636

Note:   3.   Reflects the non-cash compensation expenses associated with the employee equity compensation plans and Directors Purchase Plan. Non-cash compensation represents the following categories of expenses:

	Three months ended March 31
	2006		2005
	(Unaudited)		(Unaudited)
Sales	$	108	$	148
Community		20		29
General and administrative		405		255
Online services development		33		97
	$	566	$	529

GLOBAL SOURCES LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

	Three months ended March 31
	2006			2005
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	4,407		$	2,000
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		1,071			858
Accretion of U.S. Treasury strips zero % coupons		(7	)		(9	)
Unrealised dividend income on available-for-sale securities		(253	)		—
Unrealised interest income on available-for-sale securities		(8	)		(3	)
Bad debt expense		43			—
Non-cash compensation expense		566			529
Income attributable to minority shareholder		811			82
		6,630			3,457
Changes in assets and liabilities:
Accounts receivables		579			508
Receivables from sales representatives		(4,550	)		(2,883	)
Inventory of paper		(42	)		(54	)
Prepaid expenses and other current assets		(6,029	)		(1,475	)
Long term assets		(254	)		(125	)
Accounts payable		264			549
Accrued liabilities and liabilities for incentive and bonus plans		2,366			1,760
Deferred income and customer prepayments		9,026			7,563
Tax liability		83			52
Net cash provided by operating activities		8,073			9,352
Cash flows from investing activities:
Purchase of property and equipment		(660	)		(616	)
Purchase of available-for-sale securities		(104,674	)		(46,761	)
Sale of available-for-sale securities		98,728			45,249
Net cash used in investing activities		(6,606	)		(2,128	)
Cash flows from financing activities:
Proceeds from the issue of common shares, net of share issue expenses		—			38,304
Amount received towards directors purchase plan		359			118
Net cash generated from financing activities		359			38,422
Net increase in cash and cash equivalents		1,826			45,646
Cash and cash equivalents, beginning of the period		94,321			41,195
Cash and cash equivalents, end of the period	$	96,147		$	86,841
Supplemental cash flow disclosures:
Income tax paid	$	120		$	70