U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-KSB

/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

               For The Fiscal Year Ended: December 31, 2004

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                     For the Transition Period From __ to __

                          Commission File No. 333-46114

                               China Finance, Inc.
                      (Exact name of issuer in its charter)


                Utah                                87-0650976
     (State of Incorporation)                (I.R.S. Employer I.D. No.:)

                         111 Pavonia Avenue, Suite 615,
                              Jersey City, NJ 07310
                                  201-216-0880
          (Address and telephone number of principal executive offices)

SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:  None.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of each class to be so registered:    Common Stock, par value $0.001 per
                                            share

Check whether the issuer (1) filed all reports 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 |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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 reference in Part III of this Form 10-KSB
or any amendments to this Form 10-KSB. [ ]

The issuer's revenues for the year ended December 31, 2004 were $4,822,976.

The aggregate market value of the common stock, par value $0.001 per share, held
by non-affiliates of the issuer was approximately $7,183,164 based on the
closing bid price of $1.39 per share of common share as reported by the OTC
Bulletin Board on March 1, 2005. As of March 1, 2005, there were 57,671,744
shares of the issuer's common stock outstanding.

The following documents are incorporated by reference:
None.

Transitional Small Business Disclosure Format (check one)   Yes |_|     No |X|
<PAGE>


                                TABLE OF CONTENTS

                                                                          Page

PART I                                                                      1

      Item 1.     Description of Business...................................1

      Item 2.     Description of Property...................................9

      Item 3.     Legal Proceedings.........................................9

      Item 4.     Submission of Matters to a Vote of Security Holders.......9

PART II                                                                     9

     Item 5.     Market for Common Equity and Related Stockholder
                 Matters....................................................9

     Item 6.     Management Discussion and Analysis and Plan of
                 Operations................................................10

     Item 7.     Financial Statements......................................12

     Item 8.     Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure.......................27

     ITEM 8A.    Controls and Procedures...................................27

     ITEM 8B.    Other Information.........................................27

PART III                                                                   27

     Item 9.     Directors and Executive Officers of the Registrant........27

     Item 10.    Executive Compensation....................................29

     Item 11.    Security Ownership of Certain Beneficial
                 Owners and Management.....................................31

     Item 12.    Certain Relationships and Related Transactions............33

     Item 13.    Exhibits and annual reports on Form 8-K...................33

     Item 14.    Principal Accountant Fees and Services....................35

SIGNATURES.................................................................37

<PAGE>


                                     PART I

         Certain statements in this annual report on Form 10-KSB are
"forward-looking statements." These forward-looking statements include, but are
not limited to, statements about the plans, objectives, expectations and
intentions of China Finance, Inc., a Utah corporation, and other statements
contained in this annual report that are not historical facts. Forward-looking
statements in this annual report or hereafter included in other publicly
available documents filed with the Securities and Exchange Commission, reports
to our stockholders and other publicly available statements issued or released
by us involve known and unknown risks, uncertainties and other factors which
could cause our actual results, performance (financial or operating) or
achievements to differ from the future results, performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements. Such future results are based upon management's best estimates based
upon current conditions and the most recent results of operations. When used in
this annual report, the words "expect," "anticipate," "intend," "plan,"
"believe," "seek," "estimate" and similar expressions are generally intended to
identify forward-looking statements, because these forward-looking statements
involve risks and uncertainties. There are important factors that could cause
actual results to differ materially from those expressed or implied by these
forward-looking statements, including our plans, objectives, expectations and
intentions and other factors discussed under "Risk Factors."

ITEM 1.      DESCRIPTION OF BUSINESS

         History

         China Finance, Inc. (formerly known as Kubla Khan, Inc.) (the
"Company," "we," "us," or "our") was incorporated on March 28, 2000 in the state
of Utah. Until March 31, 2004, we operated a business consisting of a purchase
overrun and distressed merchandise resale network. On March 31, 2004, we
completed a private placement of 5,500,000 shares of our common stock. As part
of such private placement we issued 3,000,000 shares of our common stock to Fang
Xuemei and 2,000,000 shares of our common stock to Xu ZhongNan. The purchase
price per share of each of such shares was $.10, for an aggregate purchase price
of $500,000. The issuance of these shares constituted approximately 98% of our
issued and outstanding stock as of March 31, 2004. As a result of the
acquisition and change in control, on June 30, 2004, we abandoned our business
plan of establishing a purchase overrun and distressed merchandise resale
network and made ourselves available for an extraordinary corporate transaction,
such as a merger, sale or reorganization. In connection with Messrs. Xuemei and
ZhongNan's acquisition of our securities, new directors were added to our board
of directors and the old directors tendered their resignations.

         Prior to our acquisition of Value Global International Limited, a
British Virgin Islands company ("Value Global") and its wholly-owned subsidiary,
Shenzhen Shiji Ruicheng Guaranty and Investment Co., Ltd. ("Shiji Ruicheng"),
which acquisition is discussed below, Shiji Ruicheng entered into the surety
guarantee business and focused on providing surety guarantees to China-based
companies that were seeking to expand operations into the United States.

         On August 9, 2004, we filed the Articles of Merger of China Finance,
Inc. and Kubla Khan, Inc. with the Secretary of State of the State of Utah,
which was approved on August 20, 2004. No amendments to the Articles of
Incorporation of Kubla Khan were effected as part of the merger other than the
change of our corporate name to "China Finance, Inc."

         On August 5, 2004, we entered into an agreement for the sale and
purchase of shares (the "Sale Agreement") with Value Global, JuXiang Ruan, Top
Interest International Limited, ZuHong Xu and ZaoZhen Fang, each as shareholders
of Value Global, and Qian Fan and Huan Ya Tong Investment Development Co.
Limited, pursuant to which we acquired (the "Acquisition") all of the issued and
outstanding equity securities of Value Global and its wholly-owned subsidiary,
Shiji Ruicheng. Value Global had acquired Shiji Ruicheng on July 1, 2004. On
October 8, 2004, we completed the Acquisition upon which Value Global and Shiji
Ruicheng became our wholly-owned subsidiaries.

                                       1
<PAGE>

         We acquired all of the outstanding shares of Value Global and in
exchange issued shares of our common stock to each of the shareholders of Value
Global. Based on mutually-agreed upon valuations for each of Value Global and
us, the shareholders of Value Global received 46,990,000 restricted shares (the
"Shares") of our common stock, representing approximately 81.5% of our
outstanding common stock as of October 8, 2004, for their holdings in Value
Global. In connection with the Acquisition, we also entered into a Registration
Rights and Lock-Up Agreement (the "Registration Rights Agreement") with the four
shareholders of Value Global. Pursuant to the Registration Rights Agreement,
Value Global's shareholders have agreed to a "lock up" provision whereby they
will not sell or otherwise dispose of the Shares until after either one year
(with respect to 25% of the Shares) or two years (with respect to 60% of the
Shares) from October 8, 2004. Under the Registration Rights Agreement, we also
granted Value Global's shareholders certain registration rights with respect to
the Shares.

         As further discussed in the accompanying financial statements, the
acquisition of Value Global by China Finance has been treated as a
recapitalization of Value Global, with Value Global emerging as the "accounting
acquirer." As such, the historical financial statements of Value Global (and its
operating subsidiary Shiji Ruicheng) have been presented as if the
recapitalization had occurred on the date that Value Global (and its subsidiary)
first had operating activity.

         Products and services

         Through our wholly-owned subsidiary Shiji Ruicheng, we provide
guarantees to China's privately owned small- and medium-sized enterprises
("SMEs") when they seek access to capital or to be acquired by a United States
reporting company in a merger. We operate two business segments:

         Surety Guarantee: we provide surety guarantees to Chinese SMEs seeking
to be acquired by a United States reporting company in a "reverse merger" or
other merger and acquisition transactions. The surety guarantee business
generates revenues through fees, which typically are based on a percentage of
the transaction. Our surety guarantee provides contractual guarantees which help
to ensure the successful fulfillment of a reverse merger or other merger and
acquisition transaction for Chinese companies desiring to become a
publicly-traded company in the U.S.

         Loan Guarantee: we also provide guarantees to SMEs and individuals
obtaining loans from a Chinese bank for their business operations and/or
personal use. The corporate loan guarantee and the consumer loan guarantee
businesses require a certain percentage of the loan amount as the upfront fee.
Loan maturities are short, ranging from 1-5 years, and are guaranteed through a
wide range of collateral.

         Market

         After a quarter of a century of economic reform and open-door policy,
China's private enterprises are becoming a driving force in China's economy. The
growth of SMEs has generated a significant demand for capital, which we believe
provides us with a significant business opportunity.

         The region of Shenzhen, the focus of our business, is one of the
special economic zones established soon after China opened its economy to the
world. With a population of about 53 million, it has become a major
manufacturing and exporting center in China, specializing in technology. The
Chinese central government has designated it as one of the nation's three
high-tech development centers, along with Shanghai and Beijing.

         Industry

         The financial guarantee industry in China is relatively new but has
been growing due to the lack of a standardized, easily accessible credit system
and increasing demand for capital from China's SMEs. Recognizing the limited
financial opportunities available to SMEs, the central government created a
network of credit guarantee agencies in the late 1990s under the auspices of the
SME Bureau of the State Economic and Trade Commission ("SETC"). This Bureau
maintains a listing of the types of firms which can apply for a guarantee. After
checking on a given firm's financial background (using data provided by the
State Administration for Industry and Commerce) and reviewing the proposed
project, one of the more than 200 guarantee agencies nationwide uses the SETC's
money to guarantee the SME's bank loan.

                                       2
<PAGE>

         Under the SETC's criteria, we believe that only a small number of
China's SMEs actually qualify for a guarantee. We believe that the lack of
qualified SMEs under presently established SETC criteria creates an opportunity
for private financial guarantee providers to better serve this sector. In
addition to the SME Bureau, there are other private financial guarantee
providers, such as Shenzhen Small & Medium Enterprise Credit Guarantee Center
and Shenzhen Zhong Ke Zhi Guarantee Group, with which we compete in Shenzhen. We
believe that the financial guarantee industry is growing and we expect more
competition in the future.

         Marketing Strategy

         To capture the market, we have three main focuses in our marketing
strategy: (1) our push strategy, (2) our pull strategy, and (3) business
development.

         o  Push strategy: we'll continue to leverage our management's existing
            relationships to capture new business.

         o  Pull strategy: we plan to increase brand penetration in major
            Chinese cities to position us as a well-capitalized and leading
            financial services company in China.

         o  Business Development: In our Shenzhen office, we launched a new
            division of our surety guarantee business to service the rapidly
            growing Internet services market in China. We believe that the
            success of several other Chinese companies in this sector has
            created opportunities for additional companies to expand their
            presence in the U.S. As a result, we have decided to strengthen our
            focus on this market by adding a division dedicated to growing our
            Internet client base. We are expecting a high demand for our surety
            guarantee services from SMEs in the Internet services industry. Part
            of our business development strategy includes expanding of our
            relationships with other U.S. service providers, such as legal
            counsel, accounting firms and investor relations, to provide proper
            referrals in the U.S. aftermarket.

         Strategic Partner

         In December 2004, we signed a strategic partnership agreement with Hong
Kong-based Onanma Services Limited, a well known Chinese initial public offering
(IPO) and M&A consulting firm. Onanma Services Limited was founded in 1992. It
is a financial services firm whose core business is providing consulting
services for corporate M&A, IPO, and related transactions. Onanma Services
Limited operates branch offices in China's major cities, among them Beijing and
Shanghai.

         Under the strategic partnership agreement, Onanma Services Limited will
operate as our strategic partner by extending our surety guarantee services to
Onanma's client base. We will now have the ability to offer its surety guarantee
services to Onanma's clients by providing them the option of going public in the
U.S. by way of reverse merger or M&A transaction.

         Our Clients

         Our subsidiary Shiji Ruicheng, which was acquired by us on October 8,
2004, closed its first surety guarantee transaction with China Digital
Communication Group (OTC Bulletin Board: CHID) on September 30, 2004. China
Digital Communication Group successfully acquired Billion Electronics, a
Shenzhen based company and one of China's largest battery shell manufacturers
and distributors for electronic digital devices, which include mobile phones,
MP3 players and digital cameras.

         We also provided a surety guarantee to Shenzhen ChaseTop Technology
Limited in connection with it entering into a reverse merger to become a U.S.
public company. Shenzhen Chase Top Technology Limited, based in China and
founded in 2003, utilizes its NPS (Network Payment System) as an online payment
platform for e-commerce transactions. The company's technology platform
functions as a bridge that connects consumers and businesses with their
financial institutions. The company's platform offers functionality for payment
processing online, capital clearance, and inquiries. NPS's features supply
consumers and businesses with security and convenience while shopping online.
Through NPS, businesses and consumers are able to improve their purchasing
efficiency by shortening transaction clearing times and simplifying its payment
procedures.

                                       3
<PAGE>

         For loan guarantee services, our wholly-owned subsidiary, Shiji
Ruicheng, provided its first loan guarantee to Shenzhen Yi Jin Li Co., Ltd. to
assist them in obtaining a loan from Xinye Bank in Shenzhen, China in the amount
of approximately $242,000. For these loan guarantee services, Shiji Ruicheng
collected upfront fees of $9,676 from Shenzhen Yi Jin Li Co., Ltd.

         Risk Control

         We have an extensive due diligence process executed by a team focused
on quality assurance. Our selection criterion is strict and largely depends on
the results of our due diligence process. First, we select those companies in
industries which we believe are strong and growing. Second, most companies must
have existing profitability with several years of track record of consecutive
financial performance. Third, we must believe the company has significant growth
potential in terms of annualized growth rate. Lastly, we only select those
companies which we believe have strong management teams.

         As part of our surety and loan guarantee business, we conduct research
and background investigations for our clients and act as financial intermediary
throughout the transaction. Final contracts are subject to the approval of our
independent Guarantee Contract Management Committee. This committee is typically
composed of third-party accountants, lawyers and other experts in the guarantee
business.

         We also have the following approaches to minimize our risks:

         o  We require that our clients' agree to established financial
            benchmarks which they must satisfy. We believe this enables us to
            better screen clients and accept only those clients with qualified
            financial performance. We also believe this will increase the
            probability of these clients being able to close a deal;

         o  We require that our clients provide collateral, such as receivables
            or fixed assets, to guarantee their performance;

         o  We follow formal internal control procedures for reviewing a
            client's financial statements and operations; and

         o  We adhere to our four-step examination/approval decision process,
            which consists of:

            o  Client application and project examination. This is the initial
               phase of a project where we examine client's application and its
               business and the industry in which it competes. We also determine
               whether a potential client meets financial benchmarks that we
               establish.

            o  Primary evaluation and due diligence. Once a client passes the
               initial examination, we implement a systematic and sophisticated
               evaluation and due diligence to determine whether to accept the
               client and go forward in the approval process.

            o  Committee evaluation and expert consultation. After the primary
               evaluation and due diligence phase, the selected clients will be
               presented to the independent Guarantee Contract Management
               Committee for further review.

            o  Once a selected client is approved by the independent Guarantee
               Contract Management Committee, the final step is approval by our
               CEO and Chairman of the Board.

                                        4
<PAGE>

         About the Investment Company Act of 1940

         We acquired Value Global and its subsidiary, Shiji Ruicheng, on October
8, 2004. Shiji Ruicheng closed its first surety guarantee transaction whereby
Value Global received as its fee certain shares of common stock of China Digital
Communication Group, which had completed its acquisition of Billion Electronics.
As both Value Global and Shiji Ruicheng are our wholly owned subsidiaries, we
inadvertently fell under the definition of an "investment company" pursuant to
Section 3(a)(1) of the Investment Company Act of 1940, as amended (the "1940
Act"). Because in excess of 40% of our total assets (excluding cash) are held in
securities of another entity (China Digital Communication Group), we remained
under this definition at December 31, 2004. We intend to continue to pursue our
primary business of issuing surety guarantees and, in reliance upon Rule 3a-2 of
the 1940 Act (the "Transient Investment Companies Rule"), we have one year from
October 8, 2004 to resolve this matter and demonstrate our intention to be in a
business other than that of investing, reinvesting, owning, holding or trading
in securities of another company.

         We are currently reviewing alternatives available to us, including
commencing or acquiring other lines of business, acquiring other assets such as
real property, restructuring the components of our current assets by disposing
of the common stock held by us, and requiring prospective clients to pay a
portion of their fees in cash and not exclusively in common stock. We may also
consider requesting an order for exemptive relief from the SEC to exclude us
from the 1940 Act definition of an "investment company," in order to avoid the
requirements, rules and regulations of the 1940 Act, including registration as
an investment company. We are not permitted to rely on the Transient Investment
Companies Rule more frequently than once during any three-year period. In the
event that we are unsuccessful in identifying a viable alternative, we may not
be able to avoid regulation under the 1940 Act unless we significantly
restructure our business plan, which may have a significant impact on our
ability to conduct business operations as currently contemplated, and on our
results of operations and financial condition.

         Government Regulation

         We are subject to all applicable laws, policies and regulations that
govern the financial guarantee industry in China adopted by China's central
bank, the People's Bank of China ("PBOC"), which sets monetary policy and,
together with the State Administration of Foreign Exchange, foreign-exchange
policies. According to the 1995 Central Bank law, the State Council maintains
oversight of PBOC policies. As a U.S. public company, we are also subject to
Federal and state securities laws.

         Competition

         We believe that the financial and intellectual capital required to
enter the financial guarantee business limits the number of our competitors.
According to the management's best information, there are no similar surety
guarantee providers in the market. But in the future, there might be other new
players that enter into the surety guarantee business and compete with us
despite the high intellectual and financial capital required. Our loan guarantee
business competes with several loan guarantee providers in the Shenzhen
financial guarantee market, which are larger in size and have greater financial
resources than we do. In the future, there may be foreign financial institutions
that enter into the financial guarantee market in China. These foreign financial
institutions may pose serious competition to us. Currently, foreign financial
institutions are prohibited from entering into the Chinese financial guarantee
market.

         Employees

         As of December 31, 2004, we had 20 employees, all of which were full
time employees. Our employees are not represented by a labor union and are not
covered by a collective bargaining agreement. We believe that our employee
relations are good.

                                  RISK FACTORS

In addition to the other information in this annual report, our business is
subject to numerous risks which should be considered carefully in evaluating our
business and prospects.

                                       5
<PAGE>

Financial Risks

         We face risks of becoming subject to the Investment Company Act of
1940, including the risk that we may have to significantly restructure or
abandon our current business plan. By accepting shares of our client companies'
securities for payment of our fees, we believe that we may become subject to the
requirements, rules and regulations of the 1940 Act. There can be no assurance
that we would qualify to register as an "investment company." Even if we did
qualify to so register, the regulations of the SEC under the 1940 Act would
significantly affect our current management and operational control and place
undue restraints on our execution of our business plan. If we cannot register
under the 1940 Act, we may have to alter our current business plan, including
commencing or acquiring other lines of business, acquiring other assets such as
real property, restructuring the components of our current assets by disposing
of the shares of client's securities held by us, and requiring prospective
clients to pay a portion of their fees in cash and not exclusively in shares of
their equity securities. In the event that we are unsuccessful in identifying a
viable alternative, we may not be able to avoid regulation under the 1940 Act
unless we significantly restructure or abandon our business plan, which may have
a significant impact on our ability to conduct business operations as currently
contemplated, and on our results of operations and financial condition.

         We have risks related to collecting fees in shares of other companies'
securities. Because we receive shares of securities from our client companies as
payment for our services, our assets and future earnings are linked to the price
of the shares of securities we acquire from our clients. Therefore, our
financial risks are correlated with the securities risks and business risks of
our client companies. Although we have strict due diligence policies and
procedures as well as risk control procedures, the risks related to our holdings
of other companies' stocks are unpredictable.

         We face risks related to our having to pay on our guarantees. We may be
obligated to pay on our surety guarantees if the underlying transactions fail to
close. We may also be obligated to pay on our loan guarantees if a client fails
to repay its loan to the bank. While we try to minimize these risks by
performing due diligence and financial assessments of our clients and by taking
a security interest in the collateral of our clients, there can be no assurance
that we will not have to pay on our guarantees. Furthermore, we cannot assure
you that the collateral in which we have a security interest will be sufficient
to cover all or a portion of the amount of our guarantees. If our clients fail
to close the underlying transaction or default on their loans, our business
could be materially adversely affected.

         We have recently adopted a new business plan. There is no assurance
that we will be successful in executing our business plan. We have abandoned our
previous business plan and have adopted a new business plan to provide
guarantees through our wholly-owned subsidiary, Shiji Ruicheng, to China's
rapidly growing class of privately-owned small- and medium-sized enterprises
(SMEs) when they seek access to capital or to be acquired by a U.S. reporting
company in a merger. In connection with furthering our new business plan, we
appointed new directors and officers. There can be no assurance that we will be
successful in executing our new business plan. In addition, our prospects must
be considered in light of the risks and uncertainties inherent in and
traditionally encountered by companies in an early stage of development in new
and rapidly evolving markets.

         We will need additional financing in the future, which we may not be
able to obtain on reasonable terms, if at all. We currently anticipate that our
available funds and resources, including fee revenue, will be sufficient to meet
our anticipated needs for working capital and capital expenditures for the next
twelve months. We will need to raise additional funds in the future in order to
fund our business plans, to develop new or enhanced financial services, to
respond to competitive pressures or to acquire complementary businesses or
technologies. If additional funds are raised through the issuance of equity or
convertible debt securities, the current shareholders may experience dilution
and any such securities may have rights, preferences or privileges senior to
those of the rights of our common stock. There can be no assurance that
additional financing will be available on terms favorable to us, if at all. If
adequate funds are not available or are not available on acceptable terms, we
may not be able to execute our business plan, develop or enhance our services or
respond to competitive pressures. Any such inability could have a material
adverse effect on our business, results of operations and financial condition.

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<PAGE>

         We face competition from companies many of which have greater financial
and other resources than we do. The guarantee markets in which we compete is
highly competitive. We expect competition to persist and intensify in the
future. Our competitors include the Shenzhen Small & Medium Enterprise Credit
Guarantee Center and Shenzhen Zhong Ke Zhi Guarantee Group. A number of
competitors have or may develop greater capabilities and resources than we have.
Similarly, there can be no assurance that additional competitors with greater
resources than ours will not enter our market. State Economic and Trade
Commission (SETC) SME Bureau may expand their existing services to SMEs and
become our competitors. If and when the Chinese government allows foreign
financial institutions to enter into the financial guarantee industry in China,
they may also become our competitors. Competitive pressures from current or
future competitors could cause our services to lose market acceptance or result
in significant price erosion, which would have a material adverse effect upon
our business, results of operations or financial condition.

         We are dependent on key personnel. We are highly dependent on the
services of Zhiyong Xu, our Chairman and Chief Executive Officer, as well as
other principal members of our management team. Our executives not only manage
our day to day business operations, but are essential to our ability to
establish and maintain relationships with our customers. Continued growth and
profitability will depend upon our ability to maintain our current leadership
infrastructure and recruit and retain qualified and experienced executive
personnel. Competition in our industry for executive-level personnel are strong
and there can be no assurance that we will be able to hire, motivate and retain
highly effective executive employees.

         Efforts to comply with recently enacted changes in securities laws and
regulations have required substantial financial and personnel resources and we
still may fail to comply. As directed by Section 404 of the Sarbanes-Oxley Act
of 2002, the SEC adopted rules requiring public companies to include a report of
management on the company's internal controls over financial reporting in their
annual reports on Form 10-KSB. In addition, the public accounting firm auditing
the company's financial statements must attest to and report on management's
assessment of the effectiveness of the company's internal controls over
financial reporting. This requirement will first apply to our annual report on
Form 10-KSB for our fiscal year ending December 31, 2006. If we are unable to
conclude that we have effective internal controls over financial reporting or,
if our independent auditors are unable to provide us with an unqualified report
as to the effectiveness of our internal controls over financial reporting as of
December 31, 2006 and future year ends as required by Section 404 of the
Sarbanes-Oxley Act of 2002, investors could lose confidence in the reliability
of our financial statements, which could result in a decrease in the value of
our securities. The formal process of evaluating our internal controls over
financial reporting, which has and will require the devotion of substantial
financial and personnel resources, is not complete. Given the status of our
efforts, coupled with the fact that guidance from regulatory authorities in the
area of internal controls continues to evolve, uncertainty exists regarding our
ability to comply by applicable deadlines.

Securities Risks

         There is a limited public market for our common stock. There is
currently a limited public market for the shares of our common stock. There can
be no assurances that such limited market will continue or that any shares of
our common stock may be sold without incurring a loss. The market price of our
common stock may not necessarily bear any relationship to our book value,
assets, past operating results, financial condition or any other established
criteria of value, and may not be indicative of the market price for our common
stock in the future. Further, the market price for our common stock may be
volatile depending on a number of factors, including business performance,
industry dynamics, news announcements or changes in general economic conditions.

         Disclosure relating to low-priced stocks. Our common stock is currently
listed for trading on the OTC Bulletin Board or on the "pink sheets", which are
generally considered to be less efficient markets than markets such as NASDAQ or
other national exchanges, and which make it more difficult for our shareholders
to conduct trades. It may also make it more difficult for us to obtain future
financing. Further, our securities are subject to the "penny stock rules"
adopted pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The penny stock rules apply to non-NASDAQ
companies whose common stock trades at less than $5.00 per share or which have
tangible net worth of less than $5,000,000 ($2,000,000 if the company has been
operating for three or more years). Such rules require, among other things, that
brokers who trade "penny stock" to persons other than "established customers"
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information concerning trading in the security,
including a risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade "penny stocks" because of
the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. In
the event that we remain subject to the "penny stock rules" for any significant
period, there may develop an adverse impact on the market, if any, for our
securities. Because our securities are subject to the "penny stock rules,"
investors will find it more difficult to dispose of our securities. Further, for
companies whose securities are traded in the over-the-counter market, it is more
difficult to obtain accurate quotations and to obtain coverage for significant
news events because major wire services, such as the Dow Jones News Service,
generally do not publish press releases about such companies.

                                       7
<PAGE>

         Number of authorized shares of common stock available for future
issuance; possible dilutive effects. On April 21, 2004, holders of a majority of
shares of our voting stock adopted by written consent resolutions to amended our
Articles of Incorporation to increase the number of shares of Common Stock
authorized to be issued from 50,000,000 to 100,000,000, of which 57,671,744 are
issued and outstanding. We may issue a substantial number of additional
securities in connection with future financing or acquisitions. To the extent
that additional shares of Common Stock are issued, dilution of the interests of
all of our shareholders will occur. We currently are not committed to issue any
shares of common stock.

         We do not intend to pay dividends on our common stock. We have not paid
any dividends on our common stock to date and there are no plans for paying
dividends on our common stock in the foreseeable future. We intend to retain
earnings, if any, to provide funds for the execution of our new business plan.
We do not intend to declare or pay any dividends in the foreseeable future.
Therefore, there can be no assurance that holders of common stock will receive
any additional cash, stock or other dividends on their shares of common stock
until we have funds, which our board of directors determines can be allocated to
dividends.

Risks Associated With Doing Business In Asia

         Changes in the political and overall economic conditions of the Asian
region, which are outside the control of management, could have a material
adverse effect on our business, operating results and financial condition. We
have historically conducted transactions with customers outside the United
States in United States dollars. Payroll and other costs of foreign operations
are payable in foreign currencies, primarily Hong Kong dollars and Chinese
Renminbi. To the extent future revenue is denominated in foreign currencies, we
would be subject to increased risks relating to foreign currency exchange rate
fluctuations that could have a material adverse affect on our business,
financial condition and operating results. To date, we have not engaged in any
hedging transactions in connection with our international operations.

         Internal political risks. Changes in laws and regulations, or their
interpretation, or the imposition of confiscatory taxation, restrictions on
currency conversion, imports and sources of supply, devaluations of currency or
the nationalization or other expropriation of private enterprises could have a
material adverse effect on our business, results of operations and financial
condition. Under its current leadership, the Chinese government has been
pursuing economic reform policies that encourage private economic activity and
greater economic decentralization. There is no assurance, however, that the
Chinese government will continue to pursue these policies, or that it will not
significantly alter these policies from time to time without notice. In
addition, the Chinese government could enact laws which restrict or prohibit us
from conducting our surety and loan guarantees.

         Lack of remedies and impartiality under the Chinese legal system.
Unlike the United States, China has a civil law system based on written statutes
in which judicial decisions have little precedence value. The Chinese government
has enacted some laws and regulations dealing with matters such as corporate
organization and governance, foreign investment, commerce, taxation and trade.
However, their experience in implementing, interpreting and enforcing these laws
and regulations is limited, and our ability to enforce commercial claims or to
resolve commercial disputes is unpredictable. These matters may be subject to
the exercise of considerable discretion by agencies of the Chinese government,
and forces unrelated to the legal merits of a particular matter or dispute may
influence their determination.

         Moreover, our Chief Executive Officer and Chairman of the Board, Chief
Financial Officer and one other member of our board reside in the PRC. This may
make it more difficult for us and our shareholders to bring and enforce claims
against these persons.

                                       8
<PAGE>

Other Risks

         Utah law and our articles of incorporation impose limitations on the
liability of our directors to our shareholders. Our articles of incorporation
provide, as permitted by governing Utah law, that our directors shall not be
personally liable to our stockholders for monetary damages for breach of
fiduciary duty as a director, with certain exceptions. Our bylaws require us to
provide mandatory indemnification of directors to the fullest extent permitted
by Utah law, except for matters arising under the securities laws of the United
States. Further, we may elect to adopt forms of indemnification agreements to
cover directors and officers. These provisions and agreements may discourage
shareholders from bringing suit against a director for breach of fiduciary duty
and may reduce the likelihood of derivative litigation brought by shareholders
on behalf of us against a director.

ITEM 2.      DESCRIPTION OF PROPERTY

         Since May 1, 2004, we have leased office space located at Shenzhen
Central Business Tower 1506-1508, Fuhua Yi Road, Futian, Shenzhen City, PRC for
$1790.87 (equivalent to RMB14, 822.30) per month. This lease has a term of three
years from May 1, 2004 to April 30, 2007. Since May 1, 2004, we have also leased
office space located at Shenzhen Central Business Tower 1509, Fuhua Yi Road,
Futian, Shenzhen City, PRC for $640.23 (equivalent to RMB5298.90) per month.
This lease has a term of three years from May 1, 2004 to April 30, 2007. We also
lease office space located at 111 Pavonia Avenue, Suite 615, Jersey City, New
Jersey 07310 pursuant to a month-to-month lease for $4,263.00 per month.

ITEM 3.      LEGAL PROCEEDINGS

         We are not currently a party to any pending legal proceeding.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the quarter ended December 31, 2004, no matters were submitted
to a vote of our security holders.

                                    PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         As of December 31, 2004, our authorized capital stock consisted of
100,000,000 shares of common stock, par value $0.001 per share, and 57,671,744
shares of common stock were issued and outstanding. Or transfer agent is
Colonial Stock Transfer Company, 66 Exchange Place, Salt Lake City, Utah, 84111.

         Our common stock is traded on the OTC Bulletin Board under the symbol
"CHFI.OB." The following table sets forth, for the periods indicated, the high
and low bid price for our common stock as reported on such quotation system,
which quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.

Quarter Ending:                     High                    Low
---------------                     ----                    ---

2003
March 19, 2003                     $ 0.05                 $ 0.05
May 28, 2003                       $ 0.06                 $ 0.06
September 30, 2003                 $ 0.05                 $ 0.05
December 30, 2003                  $ 3.00                 $ 3.00

2004
March 31, 2004                     $ 3.00                 $ 3.00
June 30, 2004                      $ 0.56                 $ 0.30
September 30, 2004                 $ 2.30                 $ 2.00
December 30, 2004                  $ 2.35                 $ 2.35

                                       9
<PAGE>

There were 68 record holders of our common stock as of March 18, 2005. We have
not declared or paid dividends on our common stock to date and intend to retain
future earnings, if any, for use in our business for the foreseeable future.

Recent Issuances of Unregistered Securities

         None.

ITEM 6.      MANAGEMENT DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS

         For accounting purposes, the acquisition of Value Global has been
treated as a recapitalization of Value Global with Value global as the
accounting acquirer. The financial statements have been restated to present the
operations of Value Global from the date operations first occurred which
coincides with the commencement of the business of Shiji Ruicheng. Therefore,
the following discussion is only for the period from the inception of our
wholly-owned subsidiary, Shenzhen Shiji Ruicheng, to December 31, 2004.

         The following discussion and analysis should be read in conjunction
with the consolidated financial statements and related notes included elsewhere
in this annual report.

Plan of Operation

         Since our inception in March 2000 and until June 30, 2004, we operated
a business consisting of a purchase overrun and distressed merchandise resale
network. On June 30, 2004, we abandoned this business.

         On October 8, 2004, we acquired all of the issued and outstanding
equity securities of Value Global, along with its wholly-owned subsidiary, Shiji
Ruicheng (the "Acquisition"). Through Shiji Ruicheng, we provide guarantees to
China's privately owned small-and medium-sized enterprises ("SMEs") when they
seek access to capital or to be acquired by a United States reporting company in
a merger. We operate two business segments:

         Surety Guarantee: we provide surety guarantees to Chinese small- and
medium-sized enterprises ("SMEs") seeking to be acquired by a United States
reporting company in a "reverse merger" or other merger and acquisition
transaction. The surety guarantee business generates revenues through fees,
which typically are based on a percentage of the transaction. We provide
contractual guarantees which help to facilitate the completion of a reverse
merger or other merger and acquisition transaction entered into by Chinese
companies desiring to become a publicly-traded company in United States.

         Loan Guarantee: we also provide guarantees to SMEs and individuals
obtaining loans from a Chinese bank for their business operations and/or
personal use. The corporate loan guarantee and the consumer loan guarantee
businesses require a certain percentage of the loan amount as the upfront fee.
Loan maturities are short, ranging from one to five years, and are guaranteed
through a wide range of collateral.

         Revenues

         Revenues for the year ended December 31, 2004 were $4,822,976, almost
all of which were derived primarily from our first surety guarantee transaction.
This amount is based on the fair market value of the shares of China Digital
Communication Group's common stock as of the date the transaction was completed.
We currently hold all of the shares China Digital Communication Group's common
stock that we received as a fee for our services.

         Net Income

         Net income for the year ended December 31, 2004 was $3,505,801.

         Selling, general and administrative expenses

                                       10
<PAGE>

         Selling, general and administrative expenses for the year ended
December 31, 2004 were $1,317,175. We incurred these selling, general and
administrative expenses in connection with executing our new business plan. We
are subject to all of the risks, expenses, delays, problems and difficulties
frequently encountered in the establishment of a new business.

         As of December 31, 2004, we had cash and cash equivalents of
$11,512,987. Cash flows from operating activities were ($1,096,924) for the year
ended December 31, 2004. We expect that our cash and cash equivalents will be
sufficient to satisfy our cash requirements for the next twelve months. On a
long-term basis, our liquidity is dependent on our successfully executing our
new business plan, receipt of revenues, and additional infusions of capital
through equity and debt financing. Any funds raised from an offering of our
equity or debt will be used to continue to develop and execute our new business
plan. However, there can be no assurance that we will be able to obtain
additional equity or debt financing on terms acceptable to us, if at all.

         We do not currently own any plant or significant equipment, and during
2005, we do not anticipate purchasing any plant or significant equipment, except
as may be required if we cannot or choose not to register as an investment
company under the 1940 Act. For more information, see "Business - About the
Investment Company Act of 1940." We do not anticipate incurring significant
changes in the number of our employees.

Off-Balance Sheet Arrangements

         In the ordinary course of business, we enter into arrangements to
facilitate our business purpose of providing surety and loan guarantees to
small- and medium-sized enterprises. We structure transactions to meet the
financial needs of our clients, manage credit, market or liquidity risks or to
optimize our capital.

         We may enter into these transactions which, under generally accepted
accounting principles, may not be recorded on our balance sheet or which may be
recorded in amounts different from the full contract or notional amount of the
transaction. Our primary off-balance sheet arrangements would result from our
providing surety and loan guaranties in which we would provide contractual
assurance of the completion of a transaction or guaranty the timely re-payment
of principal and interest of our client to a third party, all in exchange for a
guaranty fee. In these transactions, we would have both a non-contingent
obligation related to the compensation received for assuming the credit risk and
a contingent obligation related to the guaranty of payment in the event the
underlying loan to the borrower goes into default, or in the event that the
parties fail to perform under the surety guarantee contract.

         Transactions described above would require accounting treatment under
FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45").
Under that standard, we would be required to recognize the fair value of
guarantees issued or modified after December 31, 2002 for non-contingent
guaranty obligations, and also a liability for contingent guaranty obligations
based on the probability that the guaranteed party will not perform under the
contractual terms of the guaranty agreement.

         We did not have any non-contingent or contingent guaranty obligations
at December 31, 2004 requiring recognition or disclosure under FIN 45. At
December 31, 2004, we have guaranteed the timely re-payment of principal and
interest of one party to a bank in exchange for a fee, whereby we have placed
cash on deposit with the bank equal to the full amount of the loan outstanding
to the borrower. The maximum amount of exposure to us is recorded on our balance
sheet as "Loans Receivable" in the accompanying financial statements.

Critical Accounting Policies

         The discussion and analysis of our financial condition and results of
operations in this annual report are based upon our consolidated financial
statements, which have been prepared in accordance with generally accepted
accounting principles in the United States. The preparation of financial
statements requires management to make estimates and judgments that affect the
reported amounts of assets and liabilities, revenues and expense and disclosures
at the date of the financial statements. On an on-going basis, we evaluate our
estimates, including, but not limited to, those related to revenue recognition,
accounts receivables, inventories, impairment of property and equipment and of
intangibles. We use authoritative pronouncements, historical experience and
other assumptions as the basis for making estimates. Actual results could differ
from those estimates.

                                       11
<PAGE>

         For a discussion of our critical accounting policies, please see
footnote two to our consolidated financial statements contained elsewhere in
this annual report.

ITEM 7.      FINANCIAL STATEMENTS

         The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements and related notes included elsewhere
in this annual report. Such information is incorporated herein by reference.


                                       12
<PAGE>

                       China Finance, Inc. and Subsidiary
                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2004

                                    CONTENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders' Equity (Deficit)

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

                                       13
<PAGE>

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
China Finance, Inc. and Subsidiary
Jersey City, New Jersey

We have audited the accompanying consolidated balance sheet of China Finance,
Inc. and Subsidiary as of December 31, 2004, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the period from
inception (June 24, 2004), through December 31, 2004. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with The Public Company Accounting
Oversight Board Standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of China Finance, Inc and
Subsidiary, as of December 31, 2004 and the results of its operations and its
cash flows for the period from inception (June 24, 2004), through December 31,
2004, in conformity with generally accounting principles accepted in the United
States of America.

Rotenberg & Co., LLP

/s/ Rotenberg & Co., LLP

Rochester, New York
February 23, 2005


                                       14
<PAGE>

China Finance, Inc. and Subsidiary
Consolidated Balance Sheet
At December 31, 2004

                                                               2004
ASSETS                                                         US$
Current assets
Cash and cash equivalents                                   11,512,987
Loan Receivable                                                241,645
Marketable Securities                                        3,648,243
Prepaid expenses                                                 1,601
Deferred Compensation                                          125,000
                                                         -----------------
Total Current Assets                                        15,529,476

Property, plant and equipment, net                              19,888
                                                         -----------------
TOTAL ASSETS                                                15,549,364
                                                         =================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts Payable                                                 1,815
Accrued expenses                                                28,397
Deferred revenue                                                 6,708
                                                         -----------------
Total Current Liabilities                                       36,920
                                                         -----------------

Shareholder's Equity
Common Stock, 100,000,000 Shares Authorized
Par Value $.001 57,671,744 ; Issued
And Outstanding                                                 57,672
Additional paid-in capital                                  13,078,373
Retained Earnings                                            3,505,801
Accumulated Other Comprehensive Income (Loss)               (1,129,402)
                                                         -----------------
Total Stockholders' Equity                                  15,512,444
                                                         -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  15,549,364
                                                         =================

The accompanying notes are an integral part of these consolidated financial
statements.

                                       15
<PAGE>

China Finance, Inc. and Subsidiary
Consolidated Statement of Operations
For the Period from Inception (June 24, 2004), Through December 31, 2004

                                                                2004
                                                                US$

Revenue                                                      4,822,976
Operating expenses:
    General and administrative                                 435,175
    Professional fees                                          882,000
                                                          -----------------
Total operating expenses                                     1,317,175
                                                          -----------------

Net income before income tax                                 3,505,801
    Provision for income taxes                                      --
                                                          -----------------
Net Income (Loss)                                            3,505,801

Other Comprehensive Income (Loss)
Unrealized Loss on Marketable Securities                    (1,129,402)
                                                          -----------------

Other Comprehensive Income (Loss)                            2,376,399
                                                          =================

Earnings Per Share
    Basic and Diluted                                              .05   (1)
                                                          =================

Weighted Average Number of Shares
    Basic and Diluted                                       51,712,456
                                                          =================

(1) Earnings per share amount reflect the recapitalization as if it had occurred
on the date of inception.

The accompanying notes are an integral part of these consolidated financial
statements.


                                       16
<PAGE>

China Finance, Inc. and Subsidiary
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period from Inception (June 24, 2004), Through December 31, 2004

<TABLE>
<CAPTION>
                                                                                     Accumulated Other        Total
                                Common Stock               Additional                  Comprehensive      stockholders'
                                 Number of        Par       paid-in      Retained      Income (Loss)         equity
                                   shares        value      capital      Earnings                           (deficit)

<S>                             <C>             <C>        <C>          <C>           <C>                 <C>
Balances June 24, 2004                   --     $    --    $       --   $        --   $            --     $          --

Issuance of common stock
in connection with
recapitalization of       (1)
Value Global                     46,990,000      46,990     12,035,066           --                --        12,082,056

Issuance of shares in
connection with acquisition
of Public Shell                  10,681,744      10,682      1,043,307           --                --         1,053,989

Net Income for the Period                --          --             --    3,505,801                --         3,505,801

Unrealized Loss on                       --          --             --           --        (1,129,402)       (1,129,402)
Marketable Securities

                               -------------   --------   ------------  -----------   ----------------   ----------------
As of December 31, 2004          57,671,744    $ 57,672   $ 13,078,373  $ 3,505,801   $    (1,129,402)     $ 15,512,444
                               =============   ========   ============  ===========   ================   ================
</TABLE>

(1) Reflects the shares issued to Value Global by China Finance in connection
with the recapitalization.

The accompanying notes are an integral part of these consolidated financial
statements.


                                       17
<PAGE>

China Finance, Inc. And Subsidiary
Consolidated Statement of Cash Flows
For the Period from Inception (June 24, 2004), Through December 31, 2004


                                                                     2004
                                                                      US$

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                         3,505,801
Non-cash revenue and expenses:
Receipt of marketable securities for services rendered            (4,777,645)
Expenses Paid in Connection With Acquisition of
  Public Shell                                                        (3,211)
Depreciation                                                           2,457
Issuance of Common Stock for Professional Services                   507,000

CHANGES IN OPERATING ASSETS AND LIABILITIES:
(Increase) decrease in loan receivable                              (241,645)
(Increase) decrease in deferred compensation                        (125,000)
Increase (Decrease) in deferred revenue                                6,708
(Increase) decrease in prepaid expenses                               (1,601)
Increase (decrease) in accrued expense                                28,397
Increase (decrease) in accounts payable                                1,815
                                                                ----------------
Net cash from operating activities                                (1,096,924)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment                                          (9,415)
Leasehold improvements                                               (12,930)
                                                                ----------------
Net cash from investing activities                                   (22,345)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash                                 12,632,256
                                                                ----------------
Net cash from financing activities                                12,632,256

Net change in cash and cash equivalents                           11,512,987
Cash and cash equivalents at beginning of year                            --
                                                                ----------------
Cash and cash equivalents at end of year                          11,512,987
                                                                ================

Interest Paid                                                             --
                                                                ================
Taxes Paid                                                                --
                                                                ================

The accompanying notes are an integral part of these consolidated financial
statements.


                                       18
<PAGE>

CHINA FINANCE, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
December 31, 2004 and 2003

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES

         China Finance, Inc., incorporated on March 28, 2000 in the state of
         Utah, with its principal executive offices in Jersey City, New Jersey.
         The Company incorporated under the name of Kubla Khan, Inc. From 2001
         to 2003, upon completion of a public offering of its common stock, the
         Company began doing business as an overstock and overrun specialist
         whereby it purchases excess production of clothing and other personal
         items from manufacturers or jobbers. These items are then transported
         to the Intermountain Area of Utah where they are sold directly to the
         public, sold to discount retail stores, or placed on consignment with
         such stores. In 2003, the Company abandoned its overrun stock business.

         On April 21, 2004, the Company's board of directors approved, among
         other things, an amendment to the Company's Articles of Incorporation
         to increase the number of shares of Common Stock authorized from
         50,000,000 to 100,000,000. As of the same date, shareholders of the
         Company holding 89% of the then total issued and outstanding shares of
         Common Stock eligible to vote at a meeting of shareholders executed a
         written consent which approved, among other things, an amendment to the
         Company's Articles of Incorporation to increase the number of shares of
         Common Stock authorized from 50,000,000 to 100,000,000. In connection
         with such written consent, on May 11, 2004, the Company filed a
         Schedule 14C with the SEC (the "Information Statement"). The
         Information Statement was amended and re-filed with the SEC on June 7,
         2004.

         On August 9, 2004, the Company amended its Articles of Incorporation to
         change its name from Kubla Khan, Inc. to China Finance, Inc.

         On October 8, 2004, the Company completed the acquisition (the
         "Acquisition") of all of the issued and outstanding equity securities
         of Value Global International Limited, a British Virgin Islands company
         ("Value Global") and its wholly-owned subsidiary, Shenzhen Shiji
         Ruicheng Guaranty and Investment Co., Ltd. ("Shiji Ruicheng"). Shiji
         Ruicheng principally provides corporate financial guarantees, including
         business loan guarantees and surety guarantees to China-based
         businesses looking to expand into the United States, and consumer loan
         guarantees and professional services to aid individuals in obtaining
         loans for their homes and personal assets. Upon completion of the
         Acquisition, Value Global became a wholly-owned subsidiary of the
         Company.

         The Company acquired all of the outstanding shares of Value Global and
         in exchange issued shares of its common stock to each of the
         shareholders of Value Global. Based on mutually-agreed upon valuations
         for each of Value Global and the Company, the shareholders of Value
         Global received 46,990,000 restricted shares (the "Shares") of the
         Company's common stock, representing approximately 81.5 % of the
         outstanding common stock of the Company as of October 8, 2004, for
         their holdings in Value Global. On August 5, 2004, the Company entered
         into an agreement for the sale and purchase of shares (the "Sale
         Agreement") with Value Global, JuXiang Ruan, Top Interest International
         Limited, ZuHong Xu and ZaoZhen Fang, each as shareholders of Value
         Global, and Qian Fan and Huan Ya Tong Investment Development Co.,
         Limited, which agreement set forth the terms of the Acquisition.

         For accounting purposes, the acquisition of Value Global has been
         treated as a recapitalization of Value Global with Value global as the
         accounting acquirer. The financial statements have been restated to
         present the operations of Value Global from the date operations first
         occurred which coincides with the commencement of the business of Shiji
         Ruicheng.

         In connection with the Acquisition, the Company entered into a
         Registration Rights and Lock-Up Agreement (the "Registration Rights
         Agreement") with the four shareholders of Value Global. Pursuant to the
         Registration Rights Agreement, Value Global's shareholders have agreed
         to a "lock up" provision whereby they will not sell or otherwise
         dispose of the Shares until after either one year (with respect to 25%
         of the Shares) or two years (with respect to 60% of the Shares) from
         October 8, 2004. Under the Registration Rights Agreement, the Company
         also granted Value Global's shareholders certain registration rights
         with respect to the Shares.

                                       19
<PAGE>

         The Company's principal business is, through its wholly-owned
         subsidiary Shenzhen Shiji Ruicheng Guaranty and Investment Co., Ltd.,
         providing guarantees to China's privately owned small and medium
         enterprises (SMEs) when they seek access to capital or to be acquired
         by a United States reporting company in a merger.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      Economic and Political Risks

         The Company faces a number of risks and challenges since its operation
         is in the PRC and its primary market is in the PRC. The Company's
         operations in the PRC are subject to special considerations and
         significant risks not typically associated with companies in North
         America and Western Europe. The Company's results may be adversely
         affected by changes in the political and social conditions in the PRC,
         and by changes in governmental policies with respect to laws and
         regulations, anti-inflationary measures, currency conversion and
         remittance abroad, and rates and methods of taxation, among other
         things.

         (b)      Principals of Consolidation

         The Consolidated financial statements include the accounts of China
         Finance, Inc. and its wholly owned subsidiary Value Global
         International Limited and Shenzhen Shiji Ruicheng Guaranty and
         Investment Co., Ltd. All significant intercompany accounts have
         been eliminated.

         (c)      Cash and Cash Equivalents

         For financial reporting purpose, the Company considers all highly
         liquid investments purchased with original maturity of three months or
         less to be cash equivalents.

         (d)      Foreign Currency Translation

         The accompanying financial statements are presented in the United
         States dollars (US$). The functional currency of the Company is the
         Renminbi (RMB). The financial statements are translated into the United
         States dollars from the RMB at year-end exchange rates as to assets and
         liabilities and average exchange rates as to revenues and expenses.
         Capital accounts are translated at their historical exchange rates when
         the capital transactions occurred.

                                                              December 31, 2004
                                                              -----------------
                Period end RMB : US$ exchange rate                 8.2766
                Average period RMB : US$ exchange rate             8.2766

         The RMB is not freely convertible into foreign currency and all foreign
         exchange transactions must take place through authorized institutions.
         No representation is made that the RMB amounts could have been, or
         could be, converted into the US$ at the rates used in translation.

                                       20
<PAGE>

         (e)      Use of Estimates

         The preparation of the financial statements in conformity with
         generally accepted accounting principles in the United States of
         America 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 periods. Management makes these estimates using the best
         information available at the time the estimates are made; however
         actual results could differ materially from those estimates.

         (f)      Comprehensive Income

         Comprehensive income is defined to include all changes in equity except
         those resulting from investments by owners and distributions to owners.
         Among other disclosures, all items that are required to be recognized
         under current accounting standards as components of comprehensive
         income should be reported in a financial statement that is presented
         with the same prominence as other financial statements. The Company's
         only current component of comprehensive income is unrealized loss on
         marketable securities.

         (g)      Fair Value of Financial Instruments

         The Company's financial instruments include cash, accounts payable and
         due to related party at December 31, 2004 and December 31, 2003. The
         carrying values of the financial instruments approximate their fair
         value due to their relatively short-term nature.

         (h)      Revenue Recognition

         The Company Operates in two primary business segments:

         Surety Guarantee: the Company provides surety guarantees to Chinese
         SMEs seeking to be acquired by a United States reporting company in a
         "reverse merger" or other merger and acquisition transaction. The
         surety guarantee business generates revenues through fees, which
         typically are based on a percentage of the transaction. The surety
         guarantee service of the Company provides contractual guarantees which
         help to ensure the successful fulfillment of a reverse merger or other
         merger and acquisition transaction for Chinese companies desiring to
         become a publicly-traded company in the U.S.

         Loan Guarantee: the Company also provides guarantees to SMEs and
         individuals obtaining loans from a Chinese bank for their business
         operations and/or personal use. The corporate loan guarantee and the
         consumer loan guarantee businesses require a certain percentage of the
         loan amount as the upfront fee. Loan maturities are short, ranging from
         1-5 years, and are guaranteed through a wide range of collateral.

         (i)      Property, Plant and Equipment

         Property, plant and equipment are carried at cost. The cost of repairs
         and maintenance is expensed as incurred; major replacements and
         improvements are capitalized.

         When assets are retired or disposed of, the cost and accumulated
         depreciation are removed from the accounts, and any resulting gains or
         losses are included in income in the year of disposition.

         Depreciation is calculated on a straight-line basis over the estimated
         useful life of the assets. The estimated useful lives are:

            Electronic Equipment                          5 Years
            Furniture & Fixtures                          5 Years
            Leasehold Improvements                        3 Years

         (j)      Income taxes

         Taxes on profits earned by its wholly owned subsidiary Shiji Ruicheng
         are calculated in accordance with taxation principles currently
         effective in the PRC. The Company accounts for income taxes using the
         liability method. Deferred tax assets and liabilities are recognized
         for the future tax consequences attributable to differences between the
         financial statement carrying amounts of existing assets and liabilities
         and their respective tax bases. Deferred tax assets and liabilities are
         measured using enacted tax rates expected to apply to taxable income in
         the years in which those temporary differences are expected to be
         recovered or settled. The effect on deferred tax assets and liabilities
         of a change in tax rates is recognized in income in the period that
         includes the enactment date. A valuation allowance is provided for the
         amount of deferred tax assets that, based on available evidence, are
         not expected to be realized.

                                       21
<PAGE>

         Taxes on profits earned by its wholly owned subsidiary Value Global are
         calculated in accordance with taxation principles currently effective
         in the British Virgin Island. Value Global is an International Business
         Company (IBC) registered in the British Virgin Islands that is exempt
         from all taxes and withholding taxes in the British Virgin Islands and
         pay only Registration Fees and Annual License Fees which amount to
         US$300 per annum unless authorized capital is higher than US$50,000. In
         this situation, the fee rises to US$1,000.

         The Company accounts for income taxes in accordance with SFAS No. 109,
         "Accounting for Income Taxes," for taxes on U.S. taxable income using
         the asset and liability approach, which requires recognition of
         deferred tax liabilities and assets for the expected future tax
         consequences of temporary differences between the carrying amounts and
         the tax basis of such assets and liabilities. This method utilizes
         enacted statutory tax rates in effect for the year in which the
         temporary differences are expected to reverse and gives immediate
         effect to changes in income tax rates upon enactment. Deferred tax
         assets are recognized, net of any valuation allowance, for temporary
         differences and net operating loss and tax credit carryforwards.
         Deferred income tax expense represents the change in net deferred
         assets and liability balances.

         (k)      Marketable Securities

         Marketable Securities are classified as available for sale at December
         31, 2004. Such securities are reported at fair value based on quoted
         market prices, with unrealized gains and losses excluded from net
         income and reported as a component of accumulated other comprehensive
         income in stockholders' equity until sold. There may be risks
         associated with holding securities traded in the over the counter
         markets. There are no guarantees that the Company will ultimately be
         able to realize the prices quoted by the OTC marketplace.

         (l)      Net Income (Loss) Per Common Share

         Net income (loss) per common share is computed in accordance with SFAS
         No. 128, "Earnings Per Share". Basic earnings per common share is
         calculated by dividing income available to common shareholders by the
         weighted-average number of common shares outstanding for each period.
         Diluted earnings per common share is calculated by adjusting the
         weighted-average shares outstanding assuming conversion of all
         potentially dilutive stock options, warrants and convertible securities
         (common stock equivalents). Diluted earnings per share is the same as
         basic earnings per share for all of the periods presented as there were
         no common stock equivalents.

         (m)      Recent Pronouncements

         In April 2002, the Financial Accounting Standards Board ("FASB") issued
         Statement of Financial Accounting Standards ("SFAS") No.145, Rescission
         of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
         13, and Technical Corrections. SFAS 145 rescinds the provisions of SFAS
         No. 4 that requires companies to classify certain gains and losses from
         debt extinguishments as extraordinary items, eliminates the provisions
         of SFAS No. 44 regarding transition to the Motor Carrier Act of 1980
         and amends the provisions of SFAS No. 13 to require that certain lease
         modifications be treated as sale leaseback transactions. The provisions
         of SFAS 145 related to classification of debt extinguishments are
         effective for fiscal years beginning after May 15, 2002. Earlier
         application is encouraged.

                                       22
<PAGE>

         In July 2002, the FASB issued SFAS No. 146, "Accounting for
         Restructuring Costs." SFAS 146 applies to costs associated with an exit
         activity (including restructuring) or with a disposal of long-lived
         assets. Those activities can include eliminating or reducing product
         lines, terminating employees and contracts and relocating plant
         facilities or personnel. Under SFAS 146, the Company will record a
         liability for a cost associated with an exit or disposal activity when
         that liability is incurred and can be measured at fair value. SFAS 146
         will require the Company to disclose information about its exit and
         disposal activities, the related costs, and changes in those costs in
         the notes to the interim and annual financial statements that include
         the period in which an exit activity is initiated and in any subsequent
         period until the activity is completed. SFAS 146 is effective
         prospectively for exit or disposal activities initiated after December
         31, 2002, with earlier adoption encouraged. Under SFAS 146, a company
         cannot restate its previously issued financial statements and the new
         statement grandfathers the accounting for liabilities that a company
         had previously recorded under Emerging Issues Task Force Issue 94-3.

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
         Stock-Based Compensation-Transition and Disclosure - an amendment of
         SFAS Statement No. 123, "Accounting for Stock Based Compensation" which
         provides alternative methods for accounting for a change by registrants
         to the fair value method of accounting for stock-based compensation.
         Additionally, SFAS 148 amends the disclosure requirements of SFAS 123
         to require disclosure in the significant accounting policy footnote of
         both annual and interim financial statements of the method of
         accounting for stock based-compensation and the related pro forma
         disclosures when the intrinsic value method continues to be used. The
         statement is effective for fiscal years beginning after December 15,
         2002, and disclosures are effective for the first fiscal quarter
         beginning after December 15, 2002.

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
         133 on Derivative Instruments and Hedging Activities". SFAS No. 149
         amends and clarifies financial accounting and reporting for derivative
         instruments, including certain derivative instruments embedded in other
         contracts (collectively referred to as derivatives) and for hedging
         activities under SFAS No. 133, "Accounting for Derivative Instruments
         and Hedging Activities".

         The changes in SFAS No. 149 improve financial reporting by requiring
         that contracts with comparable characteristics be accounted for
         similarly. This statement is effective for contracts entered into or
         modified after June 30, 2003 and all of its provisions should be
         applied prospectively.

         In May 2003, the FASB issued SFAS No. 150, "Accounting For Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity". SFAS No. 150 changes the accounting for certain financial
         instruments with characteristics of both liabilities and equity that,
         under previous pronouncements, issuers could account for as equity. The
         new accounting guidance contained in SFAS No. 150 requires that those
         instruments be classified as liabilities in the balance sheet.

         SFAS No. 150 affects the issuer's accounting for three types of
         freestanding financial instruments. One type is mandatory redeemable
         shares, which the issuing company is obligated to buy back in exchange
         for cash or other assets. A second type includes put options and
         forward purchase contracts, which involves instruments that do or may
         require the issuer to buy back some of its shares in exchange for cash
         or other assets. The third type of instruments that are liabilities
         under this SFAS is obligations that can be settled with shares, the
         monetary value of which is fixed, tied solely or predominantly to a
         variable such as a market index, or varies inversely with the value of
         the issuers' shares. SFAS No. 150 does not apply to features embedded
         in a financial instrument that is not a derivative in its entirety.

         Most of the provisions of Statement 150 are consistent with the
         existing definition of liabilities in FASB Concepts Statement No. 6,
         "Elements of Financial Statements". The remaining provisions of this
         SFAS are consistent with the FASB's proposal to revise that definition
         to encompass certain obligations that a reporting entity can or must
         settle by issuing its own shares. This SFAS shall be effective for
         financial instruments entered into or modified after May 31, 2003 and
         otherwise shall be effective at the beginning of the first interim
         period beginning after June 15, 2003, except for mandatory redeemable
         financial instruments of a non-public entity, as to which the effective
         date is for fiscal periods beginning after December 15, 2004.

                                       23
<PAGE>

         In January 2003, and as revised in December 2003, the FASB issued
         Interpretation No. 46, "Consolidation of Variable Interest Entities"
         "Interpretation No. 46"), an interpretation of Accounting Research
         Bulletin ("ARB") No. 51", "Consolidated Financial Statements".
         Interpretation No. 46 addresses consolidation by business enterprises
         of variable interest entities, which have one or both of the following
         characteristics: (i) the equity investment at risk is not sufficient to
         permit the entity to finance its activities without additional
         subordinated support from other parties, which is provided through
         another interest that will absorb some or all of the expected losses of
         the entity; (ii) the equity investors lack one or more of the following
         essential characteristics of a controlling financial interest: the
         direct or indirect ability to make decisions about the entity's
         activities through voting rights or similar rights; or the obligation
         to absorb the expected losses of the entity if they occur, which makes
         it possible for the entity to finance its activities; the right to
         receive the expected residual returns of the entity if they occur,
         which is the compensation for the risk of absorbing the expected
         losses.

         In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
         Accounting and Disclosure Requirements for Guarantees, Including
         Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45
         elaborates on the existing disclosure requirements for most guarantees,
         including loan guarantees such as standby letters of credit. It also
         clarifies that at the time a company issues a guarantee, the Company
         must recognize an initial liability of the fair market value of the
         obligations it assumes under that guarantee and must disclose that
         information in its interim and annual financial statements. The initial
         recognition and measurement provisions of FIN 45 apply on a prospective
         basis to guarantees issued or modified after December 31, 2002.

         Interpretation No. 46, as revised, also requires expanded disclosures
         by the primary beneficiary (as defined) of a variable interest entity
         and by an enterprise that holds a significant variable interest in a
         variable interest entity but is not the primary beneficiary.

         Interpretation No. 46, as revised, applies to small business issuers no
         later than the end of the first reporting period that ends after
         December 15, 2004. This effective date includes those entities to which
         Interpretation No. 46 had previously been applied. However, prior to
         the required application of Interpretation No. 46, a public entity that
         is a small business issuer shall apply Interpretation No. 46 to those
         entities that are considered to be special-purpose entities no later
         than as of the end of the first reporting period that ends after
         December 15, 2003.

         Interpretation No. 46 may be applied prospectively with a
         cumulative-effect adjustment as of the date on which it is first
         applied or by restating previously issued financial statements for one
         or more years with a cumulative-effect adjustment as of the beginning
         of the first year restated.

         Management does not expect these recent pronouncements to have a
         material impact on the Company's financial position or results of
         operations.

3.       Loan Receivable

         The Company has guaranteed the obligation of an unrelated company with
         a bank and has placed $241,625 on deposit with the bank to secure the
         full amount of the bank's loan to this borrower. The Company will be
         repaid the money upon the bank's receipt of repayment from the
         borrower. The original amount of the loan was for $241,625 and the
         obligation is due to the bank on the next business day after July 30,
         2005. The Company has received a guaranty fee from the borrower in the
         amount of 4% of the original loan amount. Interest is also due on the
         loan at 5.31% per annum. The Company has collateralized the loan with a
         security interest in the borrower's machinery and equipment as well as
         the personal guarantees of the principals of the borrowers.

                                       24
<PAGE>

4.       MARKETABLE SECURITIES

         Marketable Securities consists of 2,171,573 shares of China Digital
         Communication Group (CHID.OB) representing approximately 4% interest in
         the overall shares. A summary is as follows:

                                                              2004

         Cost                                               $ 4,777,645
         Less: Unrealized Loss                               (1,129,402)
                                                        ------------------
         Fair Market Value                                  $ 3,648,243
                                                        ==================

5.       PROPERTY, PLANT AND EQUIPMENT

         Property, Plant and Equipment consisted of the following at
December 31:


                                                              2004

         Cost:
         Electronic Equipment                                 $   4,237
         Office Furniture                                         5,175
         Leasehold Equipment                                     12,933
                                                       -------------------

                                                                 22,345
         Less Accumulated depreciation and
           Amortization:                                         (2,457)
                                                       -------------------

         Property, plant and equipment, net                   $  19,888
                                                       ===================

         Depreciation expense relating to property, plant and equipment was
         $2,457 for the years ended December 31, 2004.

6.       INFORMATION ABOUT OPERATING SEGMENTS

         The Company's reportable segments have been determined based upon the
         nature of the services offered, availability of discreet internal
         financial information and other factors:

                                                              2004

         Surety Guarantee:
             Revenue                                       $   4,806,858
                                                       -------------------

             Net Income                                        3,497,851
                                                       -------------------

             Total Assets                                     15,497,403
                                                       -------------------


         Loan Guarantee:
             Revenue                                              16,118
                                                       -------------------

             Net Income                                            7,950
                                                       -------------------

             Total Assets                                         51,961
                                                       -------------------

                                       25
<PAGE>

7.       DEFERRED COMPENSATION

         On April 1, 2004, the Company entered into a consulting agreement with
         a company to perform marketing, mergers and acquisitions and financial
         consulting services for 12 months. The Company paid the consultant
         $500,000 and will also reimburse the consulting company for expenses
         incurred. The amount is being amortized over one year resulting in
         $375,000 in consulting expenses for the fiscal year ended December 31,
         2004 and deferred consulting of $125,000 at December 31, 2004. The
         Company has also accrued $7,990 of expenses due to the consulting
         company at December 31, 2004.

8.       COMMITMENTS

         The Company rents office spaces under three operating leases. The
         leases vary in term from month to month up to 3 year leases expiring
         through April 2007. Rent expense for the years ended December 31, 2004
         and 2003 was approximately $6,000 and $4,263, respectively. Future
         minimum lease terms for the next three years amount to:

                     2005                 2006                 2007
                  ----------           ----------           ---------
                   $ 29,173             $ 29,173             $ 9,724

9.       COMMON STOCK

         During 2000, the Company issued 36,744 shares of its common stock, par
         value $0.001 per share (the "Common Stock"), to four individuals for
         $7,500 cash. On April 29, 2001, the Company completed an initial public
         offering ("IPO") of 75,000 shares of its common stock at $1.00 per
         share. Costs related to the IPO consisting of legal and accounting
         costs as well as filing fees were deferred and included in other assets
         at December 31, 2000. Such costs were charged as a reduction to paid-in
         capital upon successful completion of the IPO in 2001.

         On March 31, 2004, the Company completed a private offering of 500,000
         shares of its common stock at a per share purchase price of $0.10 to 5
         investors resulting in gross proceeds to the Company of $50,000.

         On March 31, 2004, the Company entered into a subscription agreement
         with two investors, Fang Xuemei and Xu ZhongNan, to issue and sell
         5,000,000 fully paid and non-assessable shares of the restricted Common
         Stock of the Company, par value $0.001, at a per share purchase price
         of $0.10, for an aggregate of $500,000. The new investors then owned
         approximately 89% of the issued and outstanding stock. Following the
         change of the Company's control, the Company abandoned the
         above-mentioned business.

         On June 10, 2004, the Company filed a registration statement on Form
         S-8 which registered 5,070,000 shares of the Common Stock issuable
         pursuant to the China Finance, Inc. 2004 Equity Incentive Plan. The
         5,070,000 shares of Common Stock were issued to nine consultants in
         June 2004 for mergers and acquisitions consulting services, provided
         from January 2004 through June 30, 2004. The consulting agreements
         expired June 30, 2004. The Company determined that the closing market
         price of its trading common stock was not an accurate measure to value
         the consulting services received and therefore recorded the consulting
         expenses for the year ended December 31, 2004 based on the value of the
         services, amounting to $507,000.

                                       26

<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES

         Under the supervision and with the participation of the Company's
management, including our chief executive officer and the chief financial
officer, the Company conducted an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of
December 31, 2004, the end of the period covered by this report (the "Evaluation
Date"). Based on this evaluation, the Company's chief executive officer and
chief financial officer concluded that as of the Evaluation Date the Company's
disclosure controls and procedures were effective such that the material
information required to be included in its SEC reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
relating to the Company, including its consolidating subsidiaries, and was made
known to them by others within those entities, particularly during the period
when this report was being prepared.

         Additionally, there were no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the Evaluation Date. We have not identified any
significant deficiencies or material weaknesses in our internal controls, and
therefore there were no corrective actions taken.

ITEM 8B. OTHER INFORMATION

         Not applicable.

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain information regarding our
directors and executive officers as of March 28, 2004:

     Name                   Age                       Position
--------------              ---           -------------------------------------
Zhiyong Xu                   30           Chairman and Chief Executive Officer
Liang Liao                   29           Chief Financial Officer
Li Guo                       27           Secretary and Director
Zhongping Wang               36           Director

         There are no family relationships among the officers and directors.

         Zhiyong Xu became the Company's Chief Executive Officer and Chairman
of the Board in October 2004. From February 2003 to September 2004, Mr. Xu was a
Director and Secretary of Industries International, Inc. Mr. Xu served as a Vice
President of Shenzhen Wonderland Telecommunication Technology Co., a
telecommunications company and an affiliate of Industries International, from
November 2002 to February 2003. From November 2000 to November 2002, he served
as the General Manager of Shenzhen Chuang Li Xing Power Company Limited, a
battery manufacturer. From November 1998 to November 2000, Mr. Xu served as the
Deputy General Manager of Hubei Ezhou Yixiang Chemical and Engineering Co.,
Ltd., a chemical manufacturer.

         Liang Liao became the Company's Chief Financial Officer in March 2005.
Mr. Liao was the Chief Financial Officer of Shenzhen Mingtai Industrial
Development Co, Ltd., an electronics distributor, from December 2003 to March
2005. Mr. Liao was the Senior Auditing Manager of Shenzhen Meishi Power
Industries Co. Ltd., a provider of electric power, from September 2002 to
November 2003. From March 2000 to August 2002, he served as the Finance Manager
of Shenzhen Xieli Paper Co., Ltd., a paper manufacturer. From October 1998 to
February 2000, he served as the Controller of Ganzhou Tongtianyan Tourism
Development Co., Ltd., a tourism development company. Mr. Liao is a Member of
the Institute of Certificated Accountants of China and holds a Bachelor's Degree
in Business from Jiangxi Gannan Normal University.

                                       27
<PAGE>

         Ms. Li (Sabrina) Guo became the Company's Secretary and Director in
March 2005. Ms. Guo has been a Vice President of the Company since October 2004.
Ms. Guo served as the Assistant Manager of Bank of China, New York branch, from
April 2004 to October 2004. From September 2000 to April 2003, she served as a
Project Manager of China International Trust and Investment Corporation, a
transnational conglomerate providing full financial services. Ms. Guo received
her BS in Finance from the University of International Business and Economics,
an MBA from the University of Illinois with a concentration in Finance and is
currently working on her CFA Level II certification.

         Zhongping Wang became a member of the Company's board of directors in
October, 2004. From March 2004 to October 2004, he served as the Company's
Secretary. From December 2002 through December 2003, Mr. Wang served as a
consultant to Shenzhen Gaoyi Electronics Co. Ltd., an electronic device
manufacturer. From March 1991 through December 2002, Mr. Wang was a sales
manager of Shenzhen Wonderland Telecommunication Technology Co., a
telecommunications company. From March 1988 through February 1991, he served as
a sales manager in Huangshi Textile Co. Ltd., a textile company.

         None of our board members serve as board members of any other public
companies.

         The directors named above will serve until the next annual meeting of
our shareholders and until his or her successor shall have been elected and
qualified. Officers hold their positions at the pleasure of the Board of
Directors.

BOARD COMMITTEES AND DESIGNATED DIRECTORS

         The Company's Audit Committee charter (the "Charter") was adopted on
March 31, 2004. Its responsibilities are set forth in its Charter, which is
included in its entirety as Annex A to the Information Statement the Company
filed with the Securities and Exchange Commission on June 7, 2004. The Company
is in the process of searching for individuals to serve on its board and to be
members of its audit committee, including at least one individual qualified to
serve as an "audit committee financial expert" within the meaning of the rules
and regulations of the SEC and/or on the audit committee generally.

         The Charter provides that the Audit Committee shall oversee and review
with the full board any issues with respect to the Company's financial
statements, the structure of the Company's legal and regulatory compliance, the
performance and independence of the Company's independent auditors and the
performance of the Company's internal audit function. Under the Charter, the
Committee retains its independent auditors to undertake appropriate reviews and
audits of the Company's financial statements, determines the compensation of the
independent auditors, and approves the scope and cost of the engagement of an
auditor before the auditor renders audit and non-audit services. The preparation
of the Company's financial statements is the responsibility of the Company's
management. The Audit Committee will maintain oversight of the independent
public accountants by discussing the overall scope and specific plans for their
audits, the results of their examinations, their evaluations of the Company's
internal accounting controls, and the overall quality of the Company's financial
reporting.

         The Audit Committee will also maintain oversight of the Company's
internal audit function by reviewing the appointment and replacement of our
manager of internal auditing and periodically meets with the manager of internal
auditing to receive and review reports of the work of our internal audit
department. The Audit Committee shall meet with management on a regular basis to
discuss any significant matters, internal audit recommendations, policy or
procedural changes, and risks or exposures, if any, that may have a material
effect on our financial statements.

         The Company is currently listed on the OTC Bulletin Board and is
therefore not required to have a nominating committee or a compensation
committee. The Company will evaluate establishing such committees in the future.

                                       28
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons who own more than 10% of our common stock to file
reports of ownership and changes in ownership of our common stock with the
Securities and Exchange Commission. Directors, executive officers and persons
who own more than 10% of our common stock are required by Securities and
Exchange Commission regulations to furnish to us copies of all Section 16(a)
forms they file.

         To our knowledge, based solely upon review of the copies of such
reports received or written representations from the reporting persons, we
believe that during our 2004 fiscal year our directors, executive officers and
persons who own more than 10% of our common stock complied with all Section
16(a) filing requirements, except as set forth below:

Section 16(a) Beneficial Ownership Annual Reporting Compliance


                                                    Number of
                                  Number of     Transactions Not   Failure to
          Name                   late reports    Timely reported   File Form(s)
-------------------------        ------------   ----------------   ------------
Zhiyong Xu                             1               1               0
Juxiang Ruan                           1               1               0
Zuda Xu                                1               1               0
Zuhong Xu                              1               1               0
China US Bridge Capital
  Limited                              1               1               0
Guoqing Yu                             1               1               0

CODE OF ETHICS

         In April 2004, we adopted a Code of Ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. A copy of the
Code was attached as Exhibit 14.1 to our annual report for the year ended
December 31, 2003 and has been incorporated by reference into this annual
report. A copy of the Code of Ethics will be made available to any shareholder,
free of charge, upon written request to us at our principal executive offices at
111 Pavonia Avenue, Suite 615, Jersey City, New Jersey 07310.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth all cash compensation paid or to be paid
by the Company, as well as certain other compensation paid or accrued, during
each of the Company's last three fiscal years to each named executive officer.

<TABLE>
<CAPTION>
                                            Annual Compensation           Long Term Compensation Awards
                                   ------------------------------------   -----------------------------
Name/Principal                                                              Restricted        Stock       All Other
Position             Fiscal Year    Salary ($)   Bonus ($)    Other ($)   Stock Award ($)    Options      Comp. ($)
---------------      -----------   -----------   ---------    ---------   ---------------    -------      ---------
<S>                  <C>           <C>           <C>          <C>          <C>               <C>          <C>
Zhiyong Xu, CEO      2004          $ 18,000(1)   --           --           --                --           --
Yali Xu              2004                 -(2)   --           --           14,000            --           --
</TABLE>


         (1) Zhiyong Xu commenced serving as our Chief Executive Officer in
October 2004. The salary earned by Mr. Xu has been deferred and will be paid to
him on March 31, 2005.

                                       29
<PAGE>

         (2) Yali Xu served as our Chief Executive Officer from March 2004 until
he was replaced by Zhiyong Xu in October 2004. Prior to Yali Xu serving as our
Chief Executive Officer, no officer received any salary, bonus or compensation
of any kind since 2001.

OPTION/SAR GRANTED DURING THE LAST FISCAL YEAR

         None.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

         None.

DIRECTORS' COMPENSATION

         The current members of the Board of Directors are not paid for their
services as a director. Directors are reimbursed for certain approved expenses
incurred in connection with Company business and for certain approved expenses
incurred in connection with attendance at non-telephonic Board meetings and
non-telephonic committee meetings.

         In connection with their positions, each of Messrs. Xu and Liao and Ms.
Guo entered into at-will employment agreements which provide for an annual
salary of $72,000 for Mr. Xu and $48,000 for each of Mr. Liao and Ms. Guo,
subject to increase from time to time. Messrs. Xu's and Liao's employment
agreements are for a term of three years and Ms. Guo's is for a term of one
year, each subject to earlier termination. In the event either of Mr. Xu, Mr.
Liao or Ms. Guo is terminated for good cause or an involuntary termination,
which includes the officer resigning and a change-in-control of the Company,
such officer's employment agreement terminates and he or she is not entitled to
any other compensation or benefits. Ms. Guo is entitled to any medical coverage
provided by the Company to its U.S. employees.

         In connection with entering into their respective employment
agreements, each of Messrs. Xu and Liao and Ms. Guo also entered into
Noncompetition, Nonsolicitation and Nondisclosure Agreements, which, among other
things, restricts their ability to accept employment at a competitor of the
Company and requires them not to disclose any confidential information of the
Company except under prescribed circumstances. Each of the aforementioned
employment agreements and Noncompetition, Nonsolicitation and Nondisclosure
Agreements are filed as exhibits hereto.


                                       30
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 17, 2005, information
regarding the beneficial ownership of our common stock with respect to each of
our executive officers, each of our directors, each person known by us to own
beneficially more than 5% of the common stock, and all of our directors and
executive officers as a group. The term "executive officer" means our Chief
Executive Officer, Chief Financial Officer and Secretary. Each individual or
entity named has sole investment and voting power with respect to shares of
common stock indicated as beneficially owned by them, subject to community
property laws, where applicable, except where otherwise noted.

<TABLE>
<CAPTION>
                                                  Amount of beneficial
         Name of Beneficial Owner                       ownership               Percent of class
         ------------------------                 --------------------          ----------------
<S>                                                    <C>                             <C>
Juxiang Ruan (1)                                       16,709,480                      28.9%
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

Top Interest International Limited (1)                 12,922,250(2)                   22.4%
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

China U.S. Bridge Capital Limited (1)                  10,880,000(3)                   18.9%
16/F UNIT05B Convention Plaza Office Tower 1
Harbor Road Wan Chai  HongKong, P.R. China.

Zuhong Xu (1)                                          8,667,800                       15.0%
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

Shenzhen Li Gao Fa Electronics Limited (1)             5,180,000(4)                    9.0%
16/F UNIT05B Convention Plaza Office Tower 1
Harbor Road Wan Chai  HongKong, P.R. China.

Xuemei Fang (1)                                        3,000,000                       5.2%
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

Zhiyong Xu                                             --                               --
c/o China Finance, Inc.
111 Pavonia Avenue, Suite 615
Jersey City, New Jersey 07310

Liang Liao                                             --                               --
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

Li Guo                                                 --                               --
c/o China Finance, Inc.,
111 Pavonia Avenue, Suite 615
Jersey City, New Jersey 07310

Zhongping Wang                                         --                               --
c/o China Finance, Inc.
Shenzhen Central Business Tower
1706-1709 Fuhua Yi Road
Futian, Shenzhen, Guangdong 51800, P.R. China

All of the officers and directors as a group           --                               --
(4 persons)
</TABLE>

                                       31
<PAGE>

------------------
(1) Derived from a Schedule 13D/A filed jointly by each of the parties with the
SEC on December 30, 2004.

(2) Top Interest International Limited has sole voting and dispositive power
over 7,742,250 shares of our common stock. Top Interest International Limited
owns a controlling interest (51%) of Shenzhen Li Gao Fa Electronics Limited and
is deemed the beneficial owner of 5,180,000 shares held by Shenzhen Li Gao Fa
Electronics Limited. Zuda Xu is the sole director and shareholder of Top
Interest International Limited and is deemed the beneficial owner of the shares
held by Top Interest.

(3) China U.S. Bridge Capital Limited has sole voting and dispositive power over
5,700,000 shares of our common stock. China U.S. Bridge Limited owns a
controlling interest (49%) of Shenzhen Li Gao Fa Electronics Limited and has
shared voting and dispositive power over the 5,180,000 shares held by Shenzhen
Li Gao Fa Electronics Limited. By virtue of being the Chief Executive Officer,
Manager and controlling member of, and holder of a 1% interest in, China U.S.
Bridge Capital Limited, Guoqing Yu is deemed the beneficial owner of the shares
held by China U.S. Bridge Capital Limited.

(4) Shenzhen Li Gao Fa Electronics Limited has shared voting and dispositive
power over the shares held by it.

Equity Compensation Plan Information

         On April 1, 2004, we entered into a consulting agreement with Fairmay
Limited. On June 10, 2004, the company registered 5,070,000 shares issued to
these nine individual consultants under the Kubla Khan, Inc. 2004 Equity
Incentive Plan.

                                       32
<PAGE>

         The following table sets forth aggregate information regarding the
Kubla Khan, Inc. 2004 Equity Incentive Plan, which is our only equity
compensation plans in effect as of the date hereof:

<TABLE>
<CAPTION>
                                                           Number of
                    Plan category                       securities to be    Weighted-average   Number of securities
                                                          issued upon      exercise price of  remaining available for
                                                          exercise of         outstanding      future issuance under
                                                          outstanding           options/        equity compensation
                                                        options/warrants        warrants               plans
                                                              (a)                  (b)                  (c)
<S>                                                         <C>                        <C>               <C>
Equity compensation plans approved by security                     --                   --               --
holders
Equity compensation plans not approved by security          5,070,000                  $0.10             --
holders
Total                                                       5,070,000                  $0.10             --
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During calendar years 2002 and 2003, we were parties to an agreement
with William Roberts, our former President and a director, whereby we rented
office space from Mr. Roberts on a month-to-month basis for $500 per month. This
agreement terminated on March 31, 2004 upon the consummation of the private
offering of 5,500,000 shares of our Common Stock. We do not have any related
party transactions or proposed related party transactions. We do not believe our
transaction with China Digital Communication Group is a related party
transaction because the interests of certain persons to this transaction arose
solely from their ownership of our securities, for which they did not receive
any extra or special benefit, and from their ownership of securities of China
Digital, for which such persons had no voting power.

ITEM 13. EXHIBITS AND ANNUAL REPORTS ON FORM 8-K

(a) Financial Statements (included in Part II of this annual report):

         Report of Independent Registered Public Accounting Firm
         Balance Sheet
         Statement of Loss and Accumulated Deficit Statements of Cash Flows
         Statement of Stockholder's Equity
         Notes to Consolidated Financial Statements

(b)     Exhibits

        2.1          Agreement for the Sale and Purchase of Shares in Value
                     Global International Limited, dated as of August 5, 2004,
                     between Kubla Khan, Incorporated and Juxiang Ruan, Top
                     Interest International Limited, Zuhong Xu, and Zaozhen
                     Fang, the shareholders of Value Global International
                     Limited, Value Global International Limited and Qian Fan
                     and Huan Ya Tong Investment Development Co., Limited.
                     (Incorporated herein by reference to Exhibit 2.1 to the
                     Registrant's Current Report on Form 8-K, filed with the SEC
                     on August 20, 2004).

        3.1.1        Articles of Incorporation (Incorporated herein by reference
                     to Exhibit 3.1.1 to the Registrant's Registration Statement
                     on Form SB-2, filed with the SEC on September 19, 2000).

        3.1.2        Amendment Articles of Incorporation (Incorporated herein by
                     reference to Exhibit 3.1.2 to the Registrant's Registration
                     Statement on Form SB-2, filed with the SEC on September 19,
                     2000).

                                       33
<PAGE>

        3.2          Bylaws (Incorporated herein by reference to Exhibit 3.2 to
                     the Registrant's Registration Statement on Form SB-2, filed
                     with the SEC on September 19, 2000).

        4.1*         Kubla Khan, Inc. 2004 Equity Incentive Plan (Incorporated
                     herein by reference to Exhibit 4.1 to the Registrant's
                     Registration Statement on Form S-8, filed with the SEC on
                     June 10, 2004).

        10.1+        Strategic Partnership Agreement, dated as of December 15,
                     2004, between Onanma Services Limited and China Finance,
                     Inc.

        10.2*        Employment Agreement, dated as of October 12, 2004, between
                     China Finance, Inc. and Zhiyong Xu (Incorporated herein by
                     reference to Exhibit 10.2 to the Registrant's Current
                     Report on Form 8-K/A, filed with the SEC on November 8,
                     2004).

        10.3         Noncompetition, Nonsolicitation and Nondisclosure Agreement
                     dated as of October 12, 2004, between China Finance, Inc.
                     and Zhiyong Xu (Incorporated herein by reference to Exhibit
                     10.3 to the Registrant's Current Report on Form 8-K/A,
                     filed with the SEC on November 8, 2004).

        10.4*        Employment Agreement, dated as of October 12, 2004, between
                     China Finance, Inc. and Alex Hu (Incorporated herein by
                     reference to Exhibit 10.4 to the Registrant's Current
                     Report on Form 8-K/A, filed with the SEC on November 8,
                     2004).

        10.5         Noncompetition, Nonsolicitation and Nondisclosure Agreement
                     dated as of October 12, 2004, between China Finance, Inc.
                     and Alex Hu (Incorporated herein by reference to Exhibit
                     10.5 to the Registrant's Current Report on Form 8-K/A,
                     filed with the SEC on November 8, 2004).

        10.6*        Employment Agreement, dated as of October 12, 2004, between
                     China Finance, Inc. and Charles Wang (Incorporated herein
                     by reference to Exhibit 10.6 to the Registrant's Current
                     Report on Form 8-K/A, filed with the SEC on November 8,
                     2004).

        10.7         Noncompetition, Nonsolicitation and Nondisclosure Agreement
                     dated as of October 12, 2004, between China Finance, Inc.
                     and Charles Wang (Incorporated herein by reference to
                     Exhibit 10.7 to the Registrant's Current Report on Form
                     8-K/A, filed with the SEC on November 8, 2004).

        10.8         Resignation letter of Xiaohin Liu dated October 11, 2004
                     (Incorporated herein by reference to Exhibit 10.10 to the
                     Registrant's Current Report on Form 8-K/A, filed with the
                     SEC on November 8, 2004).

        10.9         Resignation letter of ZhongPing Wang dated October 11, 2004
                     (Incorporated herein by reference to Exhibit 10.11 to the
                     Registrant's Current Report on Form 8-K/A, filed with the
                     SEC on November 8, 2004).

        10.10*       Employment Agreement and Noncompetition, Nonsolicitation
                     and Nondisclosure Agreement, dated as of March 17, 2005,
                     between the Registrant and Liang Liao (Incorporated herein
                     by reference to Exhibit 10.12 to the Registrant's Current
                     Report on Form 8-K, filed with the SEC on March 17, 2005).

        10.11*       Employment Agreement and Noncompetition, Nonsolicitation
                     and Nondisclosure Agreement, dated as of March 17, 2005,
                     between the Registrant and Li Guo (Incorporated herein by
                     reference to Exhibit 10.13 to the Registrant's Current
                     Report on Form 8-K, filed with the SEC on March 17, 2005).

                                       34
<PAGE>

        14.1         Code of Ethics (Incorporated herein by reference to Exhibit
                     14.1 to the Registrant's Annual Report on Form 10-KSB filed
                     with the SEC on April 13, 2004).

        16.1         Letter of Randy Simpson, CPA, P.C. (Incorporated herein by
                     reference to Exhibit 16.1 to the Registrant's Annual Report
                     on Form 10-KSB/A filed with the SEC on June 7, 2004).

        16.2         Letter of Moores Rowland Mazars (Incorporated herein by
                     reference to Exhibit 16.1 to the Registrant's Current
                     Report on Form 8-K filed with the SEC on July 20, 2004).

        16.3         Letter of Weinberg & Company, P.A. (Incorporated herein by
                     reference to Exhibit 16.1 to the Registrant's Current
                     Report on Form 8-K/A, filed with the SEC on January 5,
                     2005)

        17.1         Resignation letter of YaLi Xu dated October 11, 2004
                     (Incorporated herein by reference to Exhibit 10.8 to the
                     Registrant's Current Report on Form 8-K/A, filed with the
                     SEC on November 8, 2004).

        17.2         Resignation letter of Zhongnan Xu dated October 11,
                     2004 (Incorporated herein by reference to Exhibit 10.9 to
                     the Registrant's Current Report on Form 8-K/A, filed with
                     the SEC on November 8, 2004).

        17.3         Resignation letter of Chunlei (Charles) Wang dated March
                     17, 2005 (Incorporated herein by reference to Exhibit 10.14
                     to the Registrant's Current Report on Form 8-K, filed with
                     the SEC on March 17, 2005).

        21.1+        Subsidiaries of Registrant.

        23.1+        Consent of Rotenberg & Company, LLP.

        31.1+        Certification of Chief Executive Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002.

        31.2+        Certification of Chief Financial Officer pursuant to
                     Section 302 of the Sarbanes-Oxley Act of 2002.

        32+          Certification of Chief Executive Officer and Chief
                     Financial Officer pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002.

         ----------------------------

         +   Filed herewith.

         *   Represents a management contract or compensatory plan or
             arrangement.

                                       35
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEE

         The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal account for the audit of our
annual financial statement and review of financial statements included in our
10-KSB and 10-QSB reports and services normally provided by the accountant in
connection with statutory and regulatory filings or engagements were $5,000 for
fiscal year ended 2003 and $31,309.71 for fiscal year ended 2004, which also
included the audit and review of financial statements included in our report on
Form 8-K filed with SEC on November 8, 2004 in connection with the Acquisition
of Value Global.

AUDIT-RELATED FEES

         There were no other aggregate fees billed in either of the last two
fiscal years for other audit related services.

TAX FEES

         The aggregate fees in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning were $750 paid to our previous principal accountant
Randy Simpson, CPA P.C. for fiscal year ended 2004 for preparing 2001, 2002, and
2003 Tax Returns. There were no tax fees for fiscal year ended 2003.

ALL OTHER FEES

         There were no other aggregate fees billed in either of the last two
fiscal years for products and services provided by the principal accountant,
other than the services reported above.

         We do not have an audit committee currently serving and as a result our
board of directors performs the duties of an audit committee. However, we're
actively searching for financial experts to fill in the audit committee. Our
board of directors will evaluate and approve in advance, the scope and cost of
the engagement of an auditor before the auditor renders audit and non-audit
services. We do not rely on pre-approval policies and procedures.


                                       36
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      CHINA FINANCE, INC.


Date: March 28, 2005                  By:   /s/ Zhiyong Xu
                                            --------------
                                            Zhiyong Xu
                                            Chairman and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
     Signature                              Capacity in Which Signed                    Date
----------------------------       ------------------------------------------     ------------------
<S>                                <C>                                               <C>
By: /s/ Zhiyong Xu                 Chairman and Chief Executive Officer              March 28, 2005
    ------------------------       (Principal Executive Officer)
    Zhiyong Xu


By: /s/ Liang Liao                 Chief Financial Officer (Principal                March 28, 2005
    ------------------------       Financial Officer)
    Liang Liao


By: /s/ Li Guo                     Secretary and Director                            March 28, 2005
    ------------------------
      Li Guo


By: /s/ Zhongping Wang             Director                                          March 28, 2005
    ------------------------
       Zhongping Wang
</TABLE>


                                       37