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Share Name | Share Symbol | Market | Type |
---|---|---|---|
China Finance Inc (CE) | USOTC:CHFI | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.000001 | 0.00 | 01:00:00 |
ITEM
1.
|
REPORTS
TO STOCKHOLDERS.
|
CONSOLIDATED
FINANCIAL STATEMENTS
|
AT
|
December
31, 2008
|
CHINA
FINANCE, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF ASSETS AND LIABILITIES
|
||||||||
December
31, 2008
|
December
31,
2007
|
|||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Marketable
Securities, at
fair value (cost $9,164,596 and $20,356,019, respectively)
|
$
|
12,578,681
|
$
|
33,263,952
|
||||
Loans
Receivable(Cost $22,242,981 and $14,024,255, respectively)
|
22,242,981
|
14,024,255
|
||||||
Real
Estate Held for Investment(Cost $1,545,727 and $1,444,576,
respectively)
|
1,545,727
|
1,444,576
|
||||||
Total
Investments
|
36,367,389
|
48,732,783
|
||||||
Cash
denominated in foreign currencies (Cost $43,655 and $344,471,
respectively)
|
43,655
|
344,471
|
||||||
Cash
|
168,590
|
654,937
|
||||||
Restricted
Cash denominated in foreign currencies (Cost $224,274 and $5,054,112,
respectively)
|
224,274
|
5,054,112
|
||||||
Surety
Guarantee Fee Receivables
|
-
|
903,074
|
||||||
Loan
Guarantee Fee Receivables
|
213,419
|
408,284
|
||||||
Receivables
from the sale of marketable securities
|
1,658,805
|
-
|
||||||
Prepaid
and Other Assets
|
530,306
|
305,703
|
||||||
Property,
Plant and Equipment – Net
|
535,380
|
556,801
|
||||||
Total
Assets
|
$
|
39,741,818
|
$
|
56,960,165
|
||||
LIABILITIES
AND NET ASSETS
|
||||||||
Liabilities
|
||||||||
Accrued
Expenses
|
$
|
1,975,548
|
$
|
984,205
|
||||
Other
payable
|
387,024
|
119,603
|
||||||
Deferred
income
|
73,350
|
198,224
|
||||||
Total
Liabilities
|
2,435,922
|
1,302,032
|
||||||
Net
Assets
|
||||||||
Common
Stock - 100,000,000 Shares Authorized; Par Value $.001;
|
||||||||
557,671,744
Issued and Outstanding in December 31, 2008 and December 31,
2007
|
57,672
|
57,672
|
||||||
Paid-In
Capital
|
13,078,373
|
13,078,373
|
||||||
Accumulated
Undistributed Income
|
||||||||
Accumulated
Undistributed Investment Income-net
|
18,782,854
|
21,884,338
|
||||||
Accumulated
Undistributed Net Realized Gains (Losses) on Investment
Transactions
|
(1,057,010)
|
6,297,808
|
||||||
Net
Unrealized Appreciation (Depreciation) in Value of
Investments
|
3,414,086
|
12,907,933
|
||||||
Accumulated
Unrealized Gain on Translation of Assets and Liabilities in
Foreign
Currency
|
3,029,921
|
1,432,009
|
||||||
Total
Net Assets (equivalent to $0.65 and $0.97 per share based on 57,671,744
outstanding shares on December 31, 2008 and December 31,
2007)
|
37,305,896
|
55,658,133
|
||||||
Total
Liabilities and Net Assets
|
$
|
39,741,818
|
$
|
56,960,165
|
CHINA
FINANCE, INC. AND SUBSIDIARIES
|
||||||||||||
SCHEDULES
OF INVESTMENTS
|
||||||||||||
December
31, 2008
|
||||||||||||
Non-income
producing Common Stocks – 34.59%
(Small
and Medium Sized Enterprises (or operating companies) in the People’s
Republic of China)
|
Shares
|
Cost
|
Value
|
|||||||||
Home
System Group – 0.07% (par value $0.001)
|
480,000
|
480,000
|
24,000
|
|||||||||
Gulf
Resources, Inc. – 2.75% (par value $0.001)
|
3,339,000
|
1,836,450
|
1,001,700
|
|||||||||
China
Organic Agriculture, Inc. – 1.33%(par value $0.001)
|
1,729,273
|
2,507,446
|
484,196
|
|||||||||
Jade
Art Group, Inc. – 30.44% (par value $0.001)
|
4,340,700
|
4,340,700
|
11,068,785
|
|||||||||
Total Investments in
Securities
|
$
|
9,164,596
|
$
|
12,578,681
|
||||||||
Loans
Receivable – 61.16%
|
Value
|
|||||||||||
Shenzhen
HuaYinTong Electronics – 39.71% (interest rate 9%, due on October
15,2009)
|
$
|
14,441,656
|
||||||||||
Shenzhen
HuanYaTong Investment– 21.45% (interest rate 8.5%, due on April
1,2009)
|
7,801,325
|
|||||||||||
Total
Loans Receivable
|
$
|
22,242,981
|
||||||||||
Real
Estate Held for Investment – 4.25%
|
$
|
1,545,727
|
||||||||||
Total
Investments
|
$
|
36,367,389
|
||||||||||
December
31, 2007
|
||||||||||||
Non-income
producing Common Stocks – 68.26%
(Small
and Medium Sized Enterprises (or operating companies) in the People’s
Republic of China)
|
Shares
|
Cost
|
Value
|
|||||||||
China
3C Group – 4.78% (par value $0.001)
|
682,128
|
$
|
68,213
|
$
|
2,329,467
|
|||||||
Universal
Travel Group – 4.69% (par value $0.001)
|
600,000
|
360,000
|
2,286,000
|
|||||||||
Home
System Group – 1.03% (par value $0.001)
|
480,000
|
480,000
|
504,000
|
|||||||||
Gulf
Resources, Inc. – 18.91% (par value $0.001)
|
3,339,000
|
1,836,450
|
9,215,640
|
|||||||||
China
Ivy School, Inc. – 2.14% (par value $0.001)
|
3,480,750
|
1,740,375
|
1,044,225
|
|||||||||
Gulin
Paper, Inc. – 1.96% (par value $0.001)
|
1,702,762
|
1,277,072
|
953,547
|
|||||||||
China
Organic Agriculture, Inc. – 7.77%(par value $0.001)
|
1,729,273
|
2,507,446
|
3,787,108
|
|||||||||
China
9D Construction Group – 2.36% (par value $0.001,
restricted until
February 9, 2008
)
|
2,251,621
|
1,148,327
|
1,148,327
|
|||||||||
China
9D Construction Group – 0.68% (par value $0.001,
restricted until April 17,
2008
)
|
649,967
|
974,950
|
331,483
|
|||||||||
Jade
Art Group, Inc. – 4.45% (par value $0.001,
restricted until April 1,
2008
)
|
4,340,700
|
1,446,900
|
2,170,350
|
|||||||||
Jade
Art Group, Inc. – 8.91% (par value $0.001,
restricted until April 1,
2008
)
|
8,681,400
|
2,893,800
|
4,340,700
|
|||||||||
Beijing
Logistic, Inc. – 8.65% (par value $0.001,
restricted until April
18,2008
)
|
5,619,124
|
4,214,343
|
4,214,343
|
|||||||||
Orient
Paper, Inc. – 1.93% (par value $0.001,
restricted until May 1,
2008
)
|
1,877,525
|
1,408,143
|
938,763
|
|||||||||
Total Investments in
Securities
|
$
|
20,356,019
|
$
|
33,263,952
|
||||||||
Loans
Receivable – 28.78%
|
Value
|
|||||||||||
Shenzhen
HuaYinTong Electronics – 23.15% (interest rate 9%, due on October
15,2008)
|
$
|
11,282,255
|
||||||||||
Fujian
ZangTianYua – 6.48% (interest rate 6.48%, due on May
22,2008)
|
2,742,000
|
|||||||||||
Total
Loans Receivable
|
$
|
14,024,255
|
||||||||||
Real
Estate Held for Investment – 2.96%
|
$
|
1,444,576
|
||||||||||
Total
Investments
|
$
|
48,732,783
|
CHINA
FINANCE, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
For
the years ended December 31,
|
2008
|
2007
|
||||||
Investment
Income
|
||||||||
Surety
Guarantee Revenue
|
$
|
—
|
$
|
16,774,054
|
||||
Loan
Guarantee Revenue
|
244,454
|
201,741
|
||||||
Loan
Revenue
|
1,709,648
|
616,480
|
||||||
Interest
income
|
21,335
|
73,877
|
||||||
Other
income
|
123,571
|
—
|
||||||
Total
Investment Income
|
2,099,008
|
17,666,152
|
||||||
Expenses
|
||||||||
Legal
Services
|
192,910
|
191,394
|
||||||
Office
Rent
|
2,362,850
|
1,362,917
|
||||||
Payroll
|
547,756
|
512,314
|
||||||
Advertising
|
57,059
|
125,087
|
||||||
Depreciation
and Amortization
|
169,590
|
121,112
|
||||||
Bad
debt expenses
|
903,074
|
—
|
||||||
Other
General and Administrative
|
952,998
|
824,062
|
||||||
Total
Expenses
|
5,186,237
|
3,136,886
|
||||||
Net
Investment Income Before Income Tax Expense
|
(3,087,229)
|
14,529,266
|
||||||
Income
Tax Expense
|
14,255
|
10,501
|
||||||
Net
Investment Income
|
(3,101,484)
|
14,518,765
|
||||||
Realized
and Unrealized Gain (Loss) From Investments and Foreign
Currency
|
||||||||
Realized
Gain(Loss) from Securities Transactions
|
(7,354,818)
|
10,084,199
|
||||||
Unrealized
Gain(Loss) on Marketable Securities
|
(9,493,847)
|
1,900,377
|
||||||
Unrealized
Gain on Translation of Assets and Liabilities in Foreign
Currency
|
1,597,912
|
704,772
|
||||||
Net
Realized and Unrealized Gain(Loss) from Investments and Foreign
Currency
|
(15,250,753)
|
12,689,348
|
||||||
Net
Increase(Decrease) in Net Assets From Operations
|
$
|
(18,352,237)
|
$
|
27,208,113
|
CHINA
FINANCE, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN NET ASSETS
|
||||||||
For
the years ended December 31,
|
2008
|
2007
|
||||||
Net
Increase (Decrease) in Net Assets From Operations:
|
||||||||
Net
Investment Income
|
$
|
(3,101,484)
|
$
|
14,518,765
|
||||
Realized
(Loss) on the sale of Property, Plant and Equipment
|
—
|
—
|
||||||
Realized
Gain(Loss) from Securities Transactions
|
(7,354,818)
|
10,084,199
|
||||||
Unrealized
Gain (Loss) on Marketable Securities
|
(9,493,847)
|
1,900,377
|
||||||
Unrealized
Gain on Translation of Assets and Liabilities in Foreign
Currency
|
1,597,912
|
704,772
|
||||||
Increase
in Net Assets From Operations
|
$
|
(18,352,237)
|
$
|
27,208,113
|
||||
Capital
Share Transactions
|
—
|
—
|
||||||
Increase(Decrease) in
Net Assets
|
$
|
(18,352,237)
|
$
|
27,208,113
|
||||
Net
Assets:
|
||||||||
Beginning
of period
|
55,658,133
|
28,450,020
|
||||||
End
of period (including $18,782,854 and $21,884,338 undistributed net
investment income on December 31, 2008 and 2007,
respectively)
|
$
|
37,305,896
|
$
|
55,658,133
|
CHINA
FINANCE, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
For
the years ended December 31,
|
2008
|
2007
|
||||||
Cash
Flows from Operating Activities
|
||||||||
Net Increase
(Decrease) in Net Assets From Operations
|
$
|
(18,352,237)
|
$
|
27,208,113
|
||||
Adjustments
to reconcile net increase in net assets from operations to net cash used
in operating activities:
|
||||||||
Proceeds
from Sale of Marketable Securities
|
3,836,605
|
10,601,666
|
||||||
Bad
Debt expenses
|
903,074
|
—
|
||||||
Receipt
of Marketable Securities for Services Rendered
|
—
|
(15,870,981
|
)
|
|||||
Depreciation
and Amortization
|
169,590
|
121,112
|
||||||
Loss
on Sale of Property, Plant and Equipment
|
—
|
—
|
||||||
Realized
(Gain)Loss from Marketable Securities
|
7,354,818
|
(10,084,199
|
)
|
|||||
Marketable
Securities Written-off Expenses
|
—
|
70,000
|
||||||
Unrealized
(Gain) Loss on Marketable Securities
|
9,493,847
|
(1,900,377
|
)
|
|||||
Unrealized
(Gain) Loss on Foreign Currency Translation
|
(1,597,912
|
)
|
(704,772
|
)
|
||||
Changes
in Loans Receivable
|
(8,218,726
|
)
|
(3,533,323
|
)
|
||||
Changes
in Noninvestment Assets and Liabilities
|
||||||||
Surety
Guarantee Fee Receivables
|
—
|
(903,074
|
)
|
|||||
Loan
Guarantee Fee Receivables
|
194,865
|
(408,284
|
)
|
|||||
Receivable
for Marketable Securities Sold
|
(1,658,805)
|
—
|
||||||
Prepaid
and Other Assets
|
(224,603
|
)
|
(222,877
|
)
|
||||
Accrued
Expense
|
991,343
|
913,041
|
||||||
Deferred
Revenue
|
(124,874)
|
198,224
|
||||||
Other
Payable
|
267,421
|
103,167
|
||||||
Net
Cash Used in Operating Activities
|
(6,965,594)
|
5,587,436
|
||||||
Cash
Flows from Investing Activities
|
||||||||
Proceeds
from Sale of Property, Plant and Equipment
|
—
|
—
|
||||||
Acquisition
of Property, Plant and Equipment
|
(122,915
|
)
|
(170,091
|
)
|
||||
Leasehold
Improvement
|
—
|
—
|
||||||
Changes
in Restricted Cash Denominated in Foreign Currencies
|
4,829,838
|
(5,054,112
|
)
|
|||||
Net
Cash Used in Investing Activities
|
(4,706,923
|
)
|
(5,224,203
|
)
|
||||
Cash
Flows from Financing Activities
|
—
|
—
|
||||||
Effect
on Change of Foreign Exchange Rate
|
1,471,508
|
582,501
|
||||||
Change
in Cash
|
(787,163)
|
945,734
|
||||||
Cash
- Beginning of Year
|
999,408
|
53,674
|
||||||
Cash
- End of Year
|
$
|
212,245
|
$
|
999,408
|
||||
Supplementary
Cash Flow Disclosures:
|
||||||||
Interest
Paid
|
$
|
—
|
$
|
—
|
||||
Income
Taxes Paid
|
$
|
14,255
|
$
|
10,501
|
·
|
There
are few transactions or market-makers in the security;
|
·
|
The
spread between the bid and asked prices is large;
|
·
|
And
price quotations vary substantially over
time
|
·
|
Financial
standing of the issuer
|
·
|
Business
and financial plan of the issuer and comparison of actual results with the
plan
|
·
|
Cost
at date of purchase
|
·
|
Size
of position held and the liquidity of the market
|
·
|
Contractual
restrictions on disposition
|
·
|
Pending
public offering with respect to the financial
instrument
|
·
|
Pending
reorganization activity affecting the financial instrument (such as merger
proposals, tender offers, debt restructurings, and
conversions)
|
·
|
Reported
prices and the extent of public trading in similar financial instruments
of the issuer or comparable companies
|
·
|
Ability
of the issuer to obtain needed financing
|
·
|
Changes
in the economic conditions affecting the issuer
|
·
|
A
recent purchase or sale of a security of the company
|
·
|
Pricing
by other dealers in similar
securities
|
·
|
Financial
statements of investees
|
Level
1
|
Level
2
|
Level
3
|
|
Quoted Prices
|
Other Significant Observable
Inputs
|
Significant Unobservable
Inputs
|
|
China
Finance, Inc.
|
$1,485,896
|
—
|
$34,881,493
|
Investments
in Securities
|
||||
Balance
as of 01/01/08
|
$
|
31,114,568
|
||
Decrease
in Marketable Securities
|
$
|
(4,552,952)
|
||
Increase
in Loan Receivable
|
$
|
8,218,726
|
||
Change
in Foreign Currency Exchange Rate
|
$
|
101,151
|
||
Balance
as of 12/31/08
|
$
|
34,881,493
|
Electronic
Equipment
|
5
Years
|
Furniture
and Fixtures
|
5
Years
|
Automobile
|
10
Years
|
Leasehold
Improvements
|
Term
of Lease or Useful Life
|
December
31,
|
2008
|
2007
|
Year
End
1US
Dollar =
|
6.82
RMB
|
7.290
RMB
|
Weighted
Average
1US
Dollar =
|
6.937
RMB
|
7.595
RMB
|
2008
|
2007
|
|||||||
Cost:
|
||||||||
Electronic
Equipment and Office Furniture
|
$
|
356,204
|
$
|
228,907
|
||||
Automobile
|
329,781
|
308,200
|
||||||
Total
Cost
|
$
|
685,985
|
$
|
537,107
|
||||
Less: Accumulated
Depreciation
|
(150,605
|
)
|
(69,089
|
)
|
||||
$
|
535,380
|
$
|
468,018
|
|||||
Leasehold
Improvement, Net
|
—
|
88,783
|
||||||
Net
Property, Plant and Equipment
|
$
|
535,380
|
$
|
556,801
|
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||
$
|
2,400,000
|
$
|
2,300,000
|
$
|
2,200,000
|
$
|
2,200,000
|
$
|
2,300,000
|
Per
Share Operating Performance (For a share of common stock outstanding
throughout the period)
|
2008
|
2007
|
2006
|
2005
|
For
the Period from
Inception(June
24,2004)
Through
December 31,
2004
|
||||||||||||||||||
Net
Assets Value, beginning of period
|
$ | 0.97 | $ | 0.49 | $ | 0.22 | $ | 0.27 | $ | — | |||||||||||||
Income
from Operations:
|
|||||||||||||||||||||||
Net
Investment Income (Loss)
|
(0.05 | ) | 0.26 | 0.07 | (0.01 | ) | 0.06 | ||||||||||||||||
Net
Gains (Loss) on Securities (both realized and unrealized)
|
(0.27 | ) | 0.22 | 0.20 | (0.04 | ) | 0.21 | ||||||||||||||||
Total
Income from Operations
|
(0.32 | ) | 0.48 | 0.27 | (0.05 | ) | 0.27 | ||||||||||||||||
Net
Assets Value, end of period
|
0.65 | 0.97 | 0.49 | 0.22 | 0.27 | ||||||||||||||||||
Net
Assets, end of period
|
$ | 37,305,896 | $ | 55,658,133 | $ | 28,450,020 | $ | 12,803,193 | $ | 15,512,444 | |||||||||||||
Per
Share Market Value, end of period
|
$ | 2.00 | $ | 1.15 | $ | 0.98 | $ | 0.40 | $ | 2.20 | |||||||||||||
Total
Investment Return
|
73.91 | % | 17.35 | % | 145.00 | % | (81.82 | %) | 80.33 | % | |||||||||||||
Ratio
of Expenses to Average Net Assets
|
11.16 | % | 7.46 | % | 6.13 | % | 5.40 | % | 9.20 | % | (1 ) | ||||||||||||
Ratio
of Net Investment Income to Average Net Assets
|
(6.67 | %) | 34.52 | % | 20.47 | % | (2.59 | %) | 24.47 | % | (1 ) | ||||||||||||
Portfolio
Turnover Rate
|
0 | % | 42.97 | % | 0 | % | 14.99 | % | 0 | % |
Name,
Age and Address
|
Title
and Length of
Service
with the Company
|
Principal
Occupations
During
the Last Five Years
|
Other
Directorships Held
|
Ann
Yu*
Age:
49
c/o
China Finance, Inc.
1330
Ave of the Americas,
21st
floor
New
York NY 10019
|
Director,
CEO, Chairman, Chief Compliance Officer & Secretary since August
2008
|
CEO,
Chairman, Chief Compliance Officer & Secretary since August 2008;
President of SHY since June 30, 2008; Vice President of SHY from May
2005-June 2008; Manager of Risk Management for SHY from August 2004-June
2008; Manager of the finance department of Jin Tian Group Co., Ltd. from
1992 to 2004; CFO and the Manager of the finance department of
Shenzhen Technology Industry Park from 1988 to 1992; Loan Officer of
Industrial and Commercial Bank of China, Anhui Branch from 1982 to
1987.
|
None
|
Name,
Age and Address
|
Title
and Length of
Service
with the Company
|
Principal
Occupations
During
the Last Five Years
|
Other
Directorships Held
|
Yifang
Li
Age:
49
No.
44 New Street,
Xiangcheng
District
Xiangfan
City, Hubei Province, P.R. China
|
Director
since 2007
|
President
and Secretary of Xiangyang Institute of Business Studies.
|
None
|
Denming
Yung
Age:
51
No.
7 Yunji Road,
Fandong
District
Xiangfan
City, Hubei Province, P.R. China
|
Director
since 2007
|
Manager
of Department of Finance Management of People’s Bank of China, XiangFan
City Center Branch.
|
None
|
Name,
Age and Address
|
Title
and Length of
Service
with the Company
|
Principal
Occupations
During
the Last Five Years
|
Other
Directorships Held
|
Liang
Liao
Age:
31
c/o
China Finance, Inc.
Shenzhen
Central Business Tower
1706-1709
Fuhua Yi Road
Futian,
Shenzhen, Guangdong 51800, P.R. China
|
CFO
since 2005
|
Chief
Financial Officer since March 2005; December 2003-March 2005, Chief
Financial Officer of Shenzhen Mingtai Industrial Development Co, Ltd., an
electronics distributor; September 2002-November 2003, Senior Auditing
Manager of Shenzhen Meishi Power Industries Co. Ltd.; March 2000-August
2002, Finance Manager of Shenzhen Xieli Paper Co., Ltd.
|
None
|
Name/Position
|
Aggregate
Annual Compensation
|
Ann
Yu, Director, CEO, CCO
|
$65,000
|
Liang
Liao, Chief Financial Officer
|
$48,000
|
ITEM
2.
|
CODE
OF ETHICS.
|
(a)
|
The
registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to its Principal Executive Officer,
Principal Financial Officer, and Principal Accounting Officer(s), or
persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third
party.
|
(c)
|
There
have been no amendments to any provisions of such code of ethics during
the period covered by this report.
|
(d)
|
The
registrant has not granted, during the period covered by this report, any
waivers, including an implicit waiver, from any provision of such code of
ethics.
|
(e)
|
|
Not
applicable.
|
(f)(1)
|
A
copy of the code of ethics that applies to the registrant’s Principal
Executive Officer and Principal Financial Officer is filed pursuant to
Item 12.(a)(1) below.
|
ITEM
3.
|
AUDIT
COMMITTEE FINANCIAL EXPERT.
|
(a)(1)
|
The
registrant does not have an audit committee financial expert serving on
its audit committee.
|
(a)(2)
|
Not
applicable.
|
(a)(3)
|
At
this time, the registrant believes that the collective experience provided
by the members of the audit committee together offer the registrant
adequate oversight for the registrant's level of financial
complexity.
|
ITEM
4.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
|
(a)
|
Audit
Fees – Audit fees for the registrant for the fiscal years ended December
31, 2008 and December 31, 2007 were $22,000 and $17,500, respectively.
These amounts represent aggregate fees billed by Rotenberg & Co.,
LLP (“Accountant”) in connection with the annual audit of the
registrant’s financial statements and for services normally provided by
the Accountant in connection with the registrant’s statutory and
regulatory filings.
|
(b)
|
Audit-Related
Fees – There were no additional fees billed in the fiscal years ended
December 31, 2008 or December 31, 2007 for assurance and related services
by the Accountant that were reasonably related to the performance of the
audit of the registrant’s financial statements that were not reported in
paragraph (a) of this Item.
|
(c)
|
Tax
Fees – The tax fees in the fiscal years ended December 31, 2008 and
December 31, 2007 for professional services rendered by the Accountant for
tax compliance, tax advice, and tax planning were $2,200 and $2,200,
respectively. These services were for the completion of the
fund’s federal and state income tax returns and excise tax
returns.
|
(d)
|
All
Other Fees –The Accountant billed $10,975 for consulting services during
the fiscal year ended December 31, 2007. There were no other
fees billed by the Accountant which were not disclosed in paragraphs (a)
through (c) of this Item during the fiscal year ended December 31,
2008.
|
(e)(1)
|
The
registrant’s Board of Trustees pre-approved the engagement of the
Accountant for the last two fiscal years at an audit committee meeting of
Board of Trustees called for such purpose and will pre-approve the
Accountant for each fiscal year thereafter at an audit committee meeting
called for such purpose. The charter of the audit committee
states that the audit committee should pre-approve any audit services and,
when appropriate, evaluate and pre-approve any non-audit services provided
by the Accountant to the
registrant.
|
(e)(2)
|
There
were no services as described in each of paragraph (b) through (d) of this
Item that were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.
|
(f)
|
|
Not
applicable.
|
(g)
|
|
Not
applicable.
|
(h)
|
|
Not
applicable.
|
ITEM
5.
|
AUDIT
COMMITTEE OF LISTED REGISTRANTS.
|
|
The
registrant has a separately-designated standing audit committee comprised
of independent trustees. The members of the audit committee are as
follows:
|
|
YiFang
Li
|
|
DenMing
Yung
|
ITEM
6.
|
SCHEDULE
OF INVESTMENTS.
|
|
A
copy of the schedule of investments of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this
Form.
|
ITEM
7.
|
DISCLOSURE
OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
|
|
A
copy of the registrant’s Proxy Voting Policies and Procedures is set forth
below.
|
I.
|
Introduction
|
II.
|
Specific
Proxy Voting Policies and
Procedures
|
|
1.
|
General
|
|
2.
|
Procedures
|
III.
|
Voting
Guidelines
|
|
1.
|
Corporate
Governance
|
·
|
Limit
directors’ liability and broaden directors’ indemnification
rights;
|
|
And
expects to generally
vote
against
proposals to:
|
·
|
Adopt
or continue the use of a classified Board structure;
and
|
·
|
Add
special interest directors to the board of directors (e.g., efforts to
expand the board of directors to control the outcome of a particular
decision).
|
|
b.
|
Audit
Committee Approvals
|
|
c.
|
Shareholder
Rights
|
·
|
Adopt
confidential voting and independent tabulation of voting results;
and
|
·
|
Require
shareholder approval of poison
pills;
|
·
|
Adopt
super-majority voting requirements;
and
|
·
|
Restrict
the rights of shareholders to call special meetings, amend the bylaws or
act by written consent.
|
·
|
Prohibit
the payment of greenmail (i.e., the purchase by the company of its own
shares to prevent a hostile
takeover);
|
·
|
Adopt
fair price requirements (i.e., requirements that all shareholders be paid
the same price in a tender offer or takeover context), unless the Proxy
Manager deems them sufficiently limited in scope;
and
|
·
|
Require
shareholder approval of “poison
pills.”
|
·
|
Adopt
classified boards of directors;
|
·
|
Reincorporate
a company where the primary purpose appears to the Proxy Manager to be the
creation of takeover defenses; and
|
·
|
Require
a company to consider the non-financial effects of mergers or
acquisitions.
|
|
3.
|
Capital
Structure Proposals
|
·
|
Eliminate
preemptive rights.
|
|
4.
|
Compensation
|
|
a.
|
General
|
·
|
Require
shareholders approval of golden parachutes;
and
|
·
|
Adopt
golden parachutes that do not exceed 1 to 3 times the base compensation of
the applicable executives.
|
·
|
Adopt
measures that appear to the Proxy Manager to arbitrarily limit executive
or employee benefits.
|
|
5.
|
Stock
Option Plans and Share Issuances
|
·
|
Establish
or continue stock option plans and share issuances that are not in the
best interest of the shareholders.
|
|
6.
|
Corporate
Responsibility and Social Issues
|
IV.
|
Conflicts
|
V.
|
Company
Disclosure
|
|
A.
|
Disclosure
of Company Policies and Procedures With Respect to Voting Proxies Relating
to Portfolio Securities
|
|
B.
|
Disclosure
of the Fund’s Complete Proxy Voting
Record
|
(i)
|
The
name of the issuer of the portfolio
security;
|
(ii)
|
The
exchange ticker symbol of the portfolio security (if available through
reasonably practicable means);
|
(iii)
|
The
Council on Uniform Security Identification Procedures (“CUSIP”) number for
the portfolio security (if available through reasonably practicable
means);
|
(iv)
|
The
shareholder meeting date;
|
(v)
|
A
brief identification of the matter voted
on;
|
(vi)
|
Whether
the matter was proposed by the issuer or by a security
holder;
|
(vii)
|
Whether
the Company cast its vote on the
matter;
|
(viii)
|
How
the Company cast its vote (e.g., for or against proposal, or abstain; for
or withhold regarding election of directors);
and
|
|
(ix)
|
Whether
the Company cast its vote for or against
management.
|
VI.
|
Recordkeeping
|
(i)
|
A
copy of this Policy;
|
(ii)
|
Proxy
Statements received regarding the Company’s
securities;
|
(iii)
|
Records
of votes cast on behalf of the Company;
and
|
(iv)
|
A
record of each shareholder request for proxy voting information and the
Company’s response, including the date of the request, the name of the
shareholder, and the date of the
response.
|
VII.
|
Proxy
Voting Committee
|
A.
|
General
|
B.
|
Powers
and Methods of Operation
|
VIII.
|
Other
|
|
This
Policy may be amended, from time to time, as determined by the
Board.
|
ITEM
8.
|
PORTFOLIO
MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
|
(a)(1)
|
As
of December 31, 2008, the overall management of the business and affairs
of the Registrant is vested in its Board of Directors in accordance with
applicable corporate laws and the Registrant’s organizational
documents. The Registrant does not have an investment
adviser. The decisions related to the day-to-day management of
the Registrant’s portfolio are made by Registrant management, subject to
the oversight of the Board of
Directors.
|
|
Ann
(Guo-Qiong) Yu has been the Chief Executive Officer and Chief Compliance
Officer of the Registrant since August 2008. Ms. Yu has been
the President of Shenzhen Hua Yin Guaranty and Investment (“SHY”), a
wholly owned subsidiary of the Registrant since June 30,
2008. From 1992 to August 2004, Ms. Yu was the Manager of
Finance Department of Jin Tian Group Co., Ltd. Ms. Yu was the Manager of
Risk Management from August 2004 to June 2008 and the Vice President of
SHY from May 2005 to June 2008. Ms. Yu is primarily responsible
for the investment decisions for the Registrant’s
portfolio.
|
|
Yifang
Li has been a Director of the Registrant since 2007. Ms. Li is
also the President and Secretary of Xiangyang Institute of Business
Studies.
|
|
Denming
Yung has been a Director since 2007. Mr. Yung is also the
Manager of the Department of Finance Management of People’s Bank of China,
XiangFan City Center Branch.
|
(a)(2)
|
None
of the persons identified in (a)(1) above managed any other
portfolios.
|
(a)(3)
|
As
of December 31, 2008, the only person identified in (a)(1) above that
received any compensation is Ann (Guo-Qiong) Yu. She receives a
fixed salary of $65,000 per year from the Registrant for her role of Chief
Executive Officer of the
Registrant.
|
(a)(4)
|
As
of December 31, 2008, the following table indicates the dollar range of
equity securities in the Registrant beneficially owned by the Board of
Directors.
|
Name
of Portfolio Managers
|
Dollar
Range of Equity Shares Beneficially Owned
|
Ann
(Guo-Qiong) Yu
|
$
500,001---- $ 1,000,000
|
Yifang
Li
|
None
|
Denming
Yung
|
None
|
|
ITEM
9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
|
Period
|
(a)
Total
Number of
Shares
(or
Units)
Purchased
|
(b)
Average
Price
Paid per
Share
(or
Unit)
|
(c)
Total
Number of Shares
(or
Units) Purchased as
Part
of Publicly
Announced
Plans or
Programs
|
(d)
Maximum
Number (or
Approximate
Dollar Value) of
Shares
(or Units) that May Yet Be
Purchased
Under the Plans or
Programs
|
January
1-31, 2008
|
||||
February
1-29, 2008
|
||||
March
1-31, 2008
|
||||
April
1-30, 2008
|
||||
May
1-31, 2008
|
||||
June
1-30, 2008
|
||||
July
1-31, 2008
|
||||
August
1-31, 2008
|
||||
September
1-30, 2008
|
||||
October
1-31, 2008
|
300,000*
|
$4.96*
|
||
November
1-31, 2008
|
||||
December
1-30, 2008
|
||||
Total
|
ITEM
10.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
|
Not
applicable.
|
ITEM
11.
|
CONTROLS
AND PROCEDURES.
|
(a)
|
The
Principal Executive Officer and the Principal Financial Officer have
concluded that the registrant’s disclosure controls and procedures are
effective based on their evaluation of the disclosure controls and
procedures as of a date within 90 days of the filing of this
report.
|
(b)
|
There
were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period
covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over
financial reporting.
|
ITEM
12.
|
EXHIBITS.
|
|
(a)(1)
|
Code
of Ethics required by Item 2 of Form N-CSR is filed herewith as Exhibit
12.(a)(1).
|
(a)(2)
|
Certifications
required by Item 12.(a)(2) of Form N-CSR are filed herewith as Exhibit
12.(a)(2).
|
(a)(3)
|
Not
applicable.
|
(b)
|
Certifications
required by Item 12.(b) of Form N-CSR are filed herewith as Exhibit
12.(b).
|
China
Finance, Inc.
|
By: /s/ Ann Yu |
Ann Yu, Chief Executive Officer |
Date: March 12, 2009 |
By: /s/ Ann Yu |
Ann Yu, Chief Executive Officer |
Date: March 12, 2009 |
By: /s/ Liang Liao |
Liang Liao, Chief Financial Officer |
Date: March 12, 2009 |
1 Year China Finance (CE) Chart |
1 Month China Finance (CE) Chart |
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