UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

  |_| REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                                       OR

            |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended : December 31, 2003

                                       OR

     |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
         For the transition period from _____________ to _______________

Commission file number:  000-50184

                      YANTAI DAHUA HOLDINGS COMPANY LIMITED
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                                     Belize
                    -----------------------------------------
                 (Jurisdiction of incorporation or organization)

          East of Muping, Yantai, Shandong, People's Republic of China
                    ----------------------------------------
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                      None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

                         Common Shares, $.001 par value

        Securities for which there is a reporting obligation pursuant to
                           Section 15(d) of the Act.

                                      None

The number of outstanding shares of common stock as June 30, 2004 is 33,447,000.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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.

|X| YES            |_| NO

Indicate by check mark which financial statement item the registrant has elected
to follow.

|_| Item 17        |X| Item 18


                                       1
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                           Page No
<S>                                                                                          <C>
Forward-looking Statements                                                                   3


PART I

Item 1   Identity of Directors, Senior Management and Advisers                               3

Item 2   Offer Statistics and Expected Timetable                                             3

Item 3   Key Information                                                                     3

Item 4   Information on the Company                                                          10

Item 5   Operating and Financial Review and Prospects                                        15

Item 6   Directors, Senior Management and Employees                                          17

Item 7   Major Shareholders and Related Party Transactions                                   19

Item 8   Financial Information                                                               20

Item 9   The Offering and Listing                                                            20

Item 10  Additional Information                                                              20

Item 11  Quantitative and Qualitative Disclosures about Market Risk                          22

Item 12  Description of Securities Other than Equity Securities                              22

PART II

Item 13  Defaults, Dividend Arrearages and Delinquencies                                     22

Item 14  Material Modifications to the Rights of Security Holders                            22
         and Use of Proceeds

Item 15  Controls and Procedures                                                             23

Item 16A Audit Committee financial expert                                                    23

Item 16B Code of Ethics                                                                      23

Item 16C Principal Accountant Fees and Services                                              23

Item 16D Exemptions from the Listing Standards for Audit Committee                           24

Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers              24

PART III

Item 17  Financial Statements                                                                24
</TABLE>


                                       2
<PAGE>

<TABLE>
<S>                                                                                          <C>
Item 18  Financial Statements                                                                24

Item 19  Exhibits                                                                            41

Signature                                                                                    42

Consent of Independent Auditor                                                               43

Certification                                                                                44
</TABLE>


(A)   Pursuant to General  Instructions  E(b) of Form 20-F,  this annual  report
      includes the information specified in Parts I, II, III

(B)   Pursuant to General  Instruction  E(c) of Form 20-F,  the  registrant  has
      elected  to provide  the  financial  statements  and  related  information
      specified in Item 18

FORWARD LOOKING STATEMENTS

The statements in this report and the documents incorporated by reference
contain certain forward-looking statements concerning future economic
performance and the plans and objectives of the management for future
operations. These forward-looking statements can be identified by the use of
such words as "project," "expect" and "anticipate," and variations of such
words. Actual results might differ materially from such projections,
expectations and anticipations, due to general economic conditions, supply and
demand for paper, labor conditions, the availability of requisite financing and
other factors. We intend those forward looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and are including this statement for
the purposes of complying with the safe harbor provisions.

You are cautioned not to place undue reliance on these forward-looking
statements. These forward-looking statements are made as of the date of this
annual report on Form 20-F and are not intended to give any assurance as to
future results.

PART I

ITEM 1   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
         Not applicable

ITEM 2   OFFER STATISTICS AND EXPECTED TIMETABLE
         Not applicable

ITEM 3   KEY INFORMATION

A.       SELECTED FINANCIAL DATA

The following selected consolidated financial data with respect to the period
ended December 31, 2002 and the year ended December 31, 2003 has been derived
from our audited consolidated financial statements. The following selected
consolidated financial data should be read in conjunction with "Management's
Discussion and Analysis of Operating and Financial Review" and the Consolidated
Financial Statements and Notes included elsewhere in this annual report.


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                                                       Period from
                                                                                    February 1, 2002
                                                                                        (date of
                                                               YEAR ENDED           incorporation) to
OPERATIONS FOR THE PERIOD                                   DECEMBER 31,2003        December 31, 2002
                                                                   US$                      US$
-------------------------                                  -----------------        ------------------
<S>                                                           <C>                         <C>
OPERATING REVENUE
Sales of goods                                                11,954,095                  3,469,026

COST OF SALES                                                 (8,758,307)                (2,345,510)
                                                           -------------              -------------

GROSS PROFIT                                                   3,195,788                  1,123,516

OPERATING EXPENSES                                            (2,231,873)                  (657,381)

NON-OPERATING INCOME                                              21,148                     21,475
                                                           -------------              -------------
INCOME BEFORE INCOME TAXES                                       985,063                    487,610

PROVISION FOR INCOME TAXES                                      (321,135)                  (147,907)

MINORITY INTEREST IN INCOME OF SUBSIDIARY                        (99,608)                   (50,953)
                                                           -------------              -------------
NET INCOME                                                       564,320                    288,750
                                                           =============              =============
EARNINGS PER SHARE
BASIC NET INCOME PER COMMON STOCK                          US$0.02 CENTS              US$0.01 cents
                                                           =============              =============

                                                                       As of December 31,
                                                                    2003                       2002
ASSETS                                                               US$                        US$

CURRENT ASSETS                                                11,844,660                 10,584,585
NON-CURRENT ASSETS                                            11,111,470                  9,956,551
                                                           -------------              -------------
TOTAL ASSETS                                                  22,956,130                 20,541,136
                                                           =============              =============
LIABILITIES

CURRENT LIABILITIES                                           12,129,663                 10,415,466
NON-CURRENT LIABILITIES                                          135,142                     87,793
                                                           -------------              -------------

TOTAL LIABILITIES                                             12,264,805                 10,503,259
                                                           =============              =============
</TABLE>

The principal operating subsidiary of the Company is Yantai Dahua Paper Industry
Company Limited ("Yantai Dahua Paper"), which was acquired as a result of the
merger with Australia China Investment Limited ("Australia China") pursuant to
the Agreement and Plan of Share Exchange dated January 10, 2003 (see Item 4A for
more information about the transaction). For information purpose, the selected
unaudited financial data of Yantai Dahua Paper for the years ended December 31,
2001, 2002 and 2003 is set out as follows.


                                       4
<PAGE>

STATEMENTS OF OPERATIONS FOR YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003

<TABLE>
<CAPTION>
                                           2001           2002           2003          2003
                                           RMB            RMB            RMB           US$
<S>                                   <C>             <C>            <C>            <C>
OPERATING REVENUE
Sale of goods                          93,616,071     102,149,716     98,826,844     11,954,089

COSTS OF SALES                        (71,455,136)    (72,207,917)   (72,406,639)    (8,758,303)

GROSS PROFIT                           22,160,935      29,941,799     26,420,205      3,195,786

OPERATING EXPENSES
Depreciation                             (376,070)       (401,642)      (380,262)       (45,996)
Handling and shipping costs            (5,900,783)     (4,752,591)    (3,372,475)      (407,934)
Selling, general and administrative   (14,524,343)    (14,321,978)   (14,697,533)    (1,777,813)
                                      -----------    ------------    -----------    -----------
expenses

(LOSS) INCOME FORM OPERATIONS           1,359,739      10,465,588      7,969,935        964,043

NON-OPERATING INCOME
Sundry income                             260,178         520,695        174,834         21,148
                                      -----------    ------------    -----------    -----------

INCOME BEFORE INCOME TAXES              1,619,917      10,986,283      8,144,769        985,191

Provision for income taxes               (131,149)     (2,834,106)    (2,654,893)      (321,135)
                                      -----------    ------------    -----------    -----------

NET (LOSS) INCOME                       1,488,768       8,152,177      5,489,876        664,056
                                      ===========    ============    ===========    ===========
</TABLE>


                                       5
<PAGE>

BALANCE SHEETS AS OF DECEMBER 31, 2001, 2002 AND 2003

<TABLE>
<CAPTION>
                                                             AS OF DECEMBER 31,
                                      ----------------------------------------------------------
                                          2001            2002            2003            2003
                                          RMB             RMB             RMB             US$
<S>                                   <C>             <C>             <C>             <C>
ASSETS

CURRENT ASSETS
Cash and bank balances                  7,596,125       5,667,121       9,537,848      1,153,698
Accounts receivable, trade             47,125,357      56,421,029      62,688,209      7,582,762
Prepayments and other receivables       7,678,627       9,786,474       3,917,819        473,899
Inventories                            14,762,938      13,740,686      17,289,460      2,091,332
Income tax recoverable                         --              --       1,251,098        155,333
Due from related parties                6,064,545       1,889,523       3,277,797        369,482
                                      -----------     -----------     -----------     ----------
TOTAL CURRENT ASSETS                   83,227,592      87,504,833      95,962,231     11,849,506
Property and equipment, net            74,134,902      81,137,911      91,524,141     11,070,754
Construction in progress                1,599,673       1,174,844         366,558         40,710
                                      -----------     -----------     -----------     ----------
TOTAL ASSETS                          158,962,167     169,817,588     189,822,930     22,960,970
                                      -----------     -----------     -----------     ----------

LIABILITIES AND OWNERS' EQUITY

CURRENT LIABILITIES
Short-term loans                        7,395,000      29,870,000      43,090,000      5,212,164
Accounts payable, trade                16,215,222      15,190,144      13,043,061      1,577,688
Accrued charges and other
payables                               15,769,353      17,647,605      17,666,107      2,136,891
Due to related parties                 26,449,009      21,261,928      21,879,765      2,646,575
Income tax payable                         36,988         205,399         432,358         52,298

Deferred tax                                   --       1,897,935       3,933,357        475,779
Due to Directors                               --              --       1,262,987        152,771
                                      -----------     -----------     -----------     ----------
Total current liabilities              65,865,572      86,073,011     101,307,635     12,254,166
                                      -----------     -----------     -----------     ----------
Non-current liabilities
Long-term loans                        18,230,000              --              --             --
Deferred tax                                   --         725,805       1,117,247        135,142
                                      -----------     -----------     -----------     ----------
                                       18,230,000         725,805              --             --
                                      -----------     -----------     -----------     ----------
Owners' equity
Registered capital                     33,590,000      33,590,000      33,590,000      4,063,044

Retained earnings                      37,648,928      45,667,872      49,902,730      6,036,231
Statutory reserves                      3,627,667       3,760,900       3,905,318        472,387
                                      -----------     -----------     -----------     ----------
Total owners' equity                   74,866,595      83,018,772      87,398,048     10,571,662
                                      -----------     -----------     -----------     ----------

Total liabilities and owners'
equity                                158,962,167     169,817,588     189,822,930     22,960,970
                                      ===========     ===========     ===========     ==========
</TABLE>


                                       6
<PAGE>

B.    CAPITALIZATION AND INDEBTEDNESS
      Not Applicable

C.    REASONS FOR THE OFFER AND USE OF PROCEEDS
      Not Applicable

D.    RISKS FACTORS

COMPETITION.

The Company is engaged in, through its subsidiaries, the manufacturing and sales
of paper principally for printing and writing in China. Yantai Dahua Paper is a
leading paper manufacturer in Shandong, China. There are competitors in the
industry that provide similar products and services to those which are provided
by Yantai Dahua Paper. Yantai Dahua Paper's future success will depend to an
extent upon its ability to remain competitive in the areas of service, quality,
price, marketing, product development, service delivery, distribution and client
processing. There can be no assurance that Yantai Dahua Paper will be able to
compete successfully. Prices for the Yantai Dahua Paper's products and services
are typically determined by market conditions. To remain competitive, the
Company reviews and adjusts its pricing structure from time to time in response
to such industry-wide price changes. To the extent that the Company may be
obligated to adjust Yantai Dahua Paper's pricing policies to meet competition,
the Company's financial performance may be adversely affected by its inability
to reduce its costs in response to industry-wide price reductions or by its
inability to increase its prices in response to increases in its costs and
expenses.

LACK OF LIQUIDITY OR DIFFICULTY IN BUYING AND SELLING FOR THE PERIOD FROM
JANUARY 1, 2003 TO DECEMBER 31, 2003.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure in connection with trades in any stock defined as a "penny
stock." The SEC's regulations generally define a penny stock to be an equity
security that has a price of less than $5.00 per share, subject to certain
exceptions No exceptions are applicable to the Company. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith. In addition, unless and until the
securities of the Company are listed for trading on NASDAQ or the Company has $2
million in net tangible assets, trading in the Company's securities will be
subject to Rule 15c2-6 promulgated under the Securities Exchange Act of 1934 for
non-NASDAQ and non-exchange listed securities. Under the penny stock rules,
broker-dealers who recommend such securities to persons other than institutional
accredited investors (generally institutions with assets in excess of
$5,000,000) must make a special written suitability determination for the
purchaser, receive the purchaser's written agreement to the transaction prior to
sale and provide the purchaser with risk disclosure documents which identifies
certain risks associated with investing in penny stock and which describe the
market as well as the purchaser's legal remedies. Further, the broker-dealer
must also obtain a signed and dated acknowledgment from the purchaser
demonstrating that the purchaser has actually received the required risk
disclosure document before a transaction in a penny stock can be consummated.

These requirements may have the effect of reducing the level of trading activity
in the secondary market for securities that become subject to the penny stock
rules. With the Company's securities being subject to the penny stock rules,
investors may find it more difficult to sell such securities, which could have
an adverse effect on the market price thereof. Because our common stock would be
characterized as penny stock, the market liquidity for the Company's securities
could be adversely affected. In such an event, the penny stocks regulations
could limit the ability of broker-dealers to sell the Company's securities and
the ability of stockholders to sell their securities in the secondary market.

THE COMPANY'S DEPENDENCE ON KEY PERSONNEL.

The Company's ability to compete is largely dependent on the personal efforts
and abilities of its senior management. The Company believes that the loss of
the services of any of these executives could have a material adverse effect on
the Company. In addition, the Company believes that its success is dependent on
its ability to attract and retain additional qualified employees, and the
failure to recruit additional skilled personnel could have a materially adverse
effect on the Company's financial condition and results of operations. The
Company currently does not maintain key employee insurance on any of its
employees.


                                       7
<PAGE>

DIVIDEND POLICY.

The Company anticipates that all of its earnings in the foreseeable future will
be retained for the development and expansion of its business and, therefore,
has no current plans to pay cash dividends. The Company's future dividend policy
will depend on the Company's earnings, capital requirements, financial
condition, bank facilities and other factors considered relevant by the Board of
Directors. However, at present, the Company does not have any plans to pay cash
dividends in the future.

THE COMPANY'S OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.

The Company's quarterly and annual operating results may be affected by a wide
variety of factors that could materially adversely affect revenues and
profitability, including: competitive pressures on selling prices; the timing of
customer orders and the deferral or cancellation of orders previously received;
changes in product mix; the Company's ability to introduce new products and
technologies on a timely basis; the introduction of products and technologies by
the Company's competitors; market acceptance of the Company's and the Company's
competitors' products; fulfilling backlog on a timely basis. As a result of the
foregoing and other factors, from time to time we experience material
fluctuations in future operating results on a quarterly or annual basis which
could materially and adversely affect the Company's business, financial
condition and operating results.

EFFECT OF CHANGES IN BELIZE LAWS COULD NEGATIVELY IMPACT SHAREHOLDERS.

Because the Company is incorporated in Belize, it is subject to potential
changes in Belize law. The effects of any change in Belize laws on the Company
are unknown at this time, but such effects may be adverse to the Company's
shareholders' best interests. These potential changes include changes in tax
law, corporate law, political instability, economic collapse, and currency
fluctuations.

INDEMNIFICATION OF OFFICERS AND DIRECTORS FOR SECURITIES LIABILITIES COULD
CREATE LOSS OF RETURN ON INVESTMENT FOR SHAREHOLDERS.

The laws of Belize provide that the Company may indemnify any Director, Officer,
agent and/or employee as to those liabilities and on those terms and conditions
as provided for by law. Further, the Company may purchase and maintain insurance
(but has not done so) on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against the liability
insured against. The foregoing could result in substantial expenditures by the
Company and prevent any recovery from such Officers, Directors, agents and
employees for losses incurred by the Company as a result of their actions.
Further, the Company has been advised that in the opinion of the Securities and
Exchange Commission, indemnification is against public policy and is, therefore,
unenforceable.

At the moment, pursuant to the International Business Companies Act (the "Act")
Articles of Association of Equity Finance Holding Corporation, in addition to
section 57 of the Act, every Director or other officer of the Company shall be
entitled to be indemnified out of the assets of the Company against all losses
or liabilities which he may sustain or incur in or about the execution of the
duties of his office or otherwise in relation thereto, and no Director or other
officer shall be liable for any loss, damage or misfortune which may happen to
or be incurred by the Company in the execution of the duties of his office or in
relation thereto. But this Article shall only have effect in so far as its
provisions are not avoided by the Securities Act of 1933 as amended.


                                       8
<PAGE>

SHAREHOLDER LOSS MIGHT RESULT BECAUSE A U.S. CITIZEN WHO PURCHASES SHARES OF
COMMON STOCK MAY HAVE DIFFICULTY IN ENFORCING HIS RIGHTS AGAINST THE COMPANY.

The Company is incorporated in Belize and engages in business in the People's
Republic of China (`PRC"); its directors and officers and certain of its
advisers are citizens and/or residents of the PRC. The Company engages in,
through its subsidiaries, the manufacturing and sales of paper principally for
printing and writing in the PRC. The main assets of its subsidiaries are located
outside the United States. As a result, it may be difficult for shareholders to
initiate a lawsuit within the United States against the Company or its
subsidiaries or these non-resident persons, or to enforce judgments in the
United States against the Company or its subsidiaries or these persons that are
obtained in a non-United States court. It also may be difficult for shareholders
to enforce a judgment of a United States court or to succeed in a lawsuit in
Belize or China on the assets of the Company's subsidiaries based only on the
United States securities laws.

SHAREHOLDER RIGHTS MAY BE AT RISK AS A RESULT OF THE COMPANY'S ORGANIZING IN
BELIZE.

In Belize, there is no established body of corporate law on which shareholders
can rely for clarifying and protecting their rights. These rights differ
materially from typical rights of investors in U.S. companies. For example, (1)
Shareholders do no have the right to approve mergers and sales of substantially
all of the Company assets by a vote of the majority of common shares
outstanding, and (2) appraisal rights do not exist by law.

POLITICAL AND ECONOMIC INSTABILITY IN THE PRC MAY RESULT IN LOSS TO THE COMPANY
SHAREHOLDERS.

The Company is organized under the laws of Belize but engages in business in the
PRC. Since 1979, the PRC adopted an open-door policy and the country is
gradually shifting itself towards a more market-oriented economy. Such reforms
have resulted in significant economic growth and social progress. Many of the
reforms are unprecedented or experimental and will be refined and improved upon.
The reforms over the past 20 years have significantly opened up the country's
investment and business environment compared with the past, but as the economy
is now at a transitional stage, a number of reforms are subject to further
refinements and readjustments. We are operating on the assumption that, in the
long term, such refinements and readjustments should in most cases improve the
overall investment and business environment that would be advantageous to us.
However, there is no assurance that such reforms will benefit us immediately,
and it is difficult to determine whether such reforms may have direct or
indirect negative impacts on our business and operations in the future.

THE LEGAL AND REGULATORY FRAMEWORK OF THE PRC COULD CREATE LOSSES FOR THE
COMPANY SHAREHOLDERS.

The National People's Congress, or its Standing Committee, is responsible for
the passing of new laws of the PRC and any amendments thereto. The PRC legal
system is based on written statutes. Court judgments are therefore not legally
binding - although judges in subsequent cases will often make reference to them
in forming their judgment. The interpretation of the PRC laws may be subject to
policy changes reflecting the domestic, political and social developments at the
time. Since 1979, to facilitate foreign investments and to meet the needs of
Investors, the PRC government has been developing and modifying its economic
systems by promulgating a series of economic related laws and regulations. As
the legal system of the PRC keeps evolving, the promulgation of new legislation,
the changes to existing laws and regulations and the precedence of national laws
over local regulations may have negative impacts on foreign investors. Although
throughout the past 24 years, the legal system of the PRC in general has been
evolving in favor of foreign investors, there is no guarantee that the changes
and modifications of laws and regulations in future will be advantageous to
foreign investors as in the past. Therefore uncertainty exists as to changes to
and/or development of any PRC laws and regulations and of the legal system
itself. There is no assurance that any change in and interpretation of the PRC
laws and regulations in future will not have any adverse effect on our business
and prospects.


                                       9
<PAGE>

THE CURRENCY OF OUR OPERATING SUBSIDIARY IS NOT FREELY CONVERTIBLE

The State Administration for Exchange Control ("SAEC"), under the authority of
the People's Bank of China (the "PBOC"), controls the conversion of Renminbi
into foreign currency. The value of the Renminbi is subject to changes in
central government policies and to international economic and political
developments affecting supply and demand in the China Foreign Exchange Trading
System market.

Since substantially all of our raw materials are provided by local suppliers
using Renminbi and the majority of our expenses are denominated in Renminbi,
restrictions on currency conversions did not and likely will not materially
affect our operations. Also, since we do not expect to require any raw material
that are not permitted or are limited to purchase using foreign currencies, our
management believes that such restriction will not materially affect our
operations in the future.

However, our ability to pay dividends and meet other obligations depends upon
the receipt of dividends or other payments from our operating subsidiaries and
our other holdings and investments, and our operating subsidiaries located in
China may be subject to restrictions on the conversion of Renminbi to U.S.
dollars and, as a result, may be restricted to make distributions to us.

WE DEPEND ON OUR SUBSIDIARIES' FACTORIES

We have no direct business operations, other than through our ownership of our
subsidiaries for the manufacturing and sales of paper principally for printing
and writing in the PRC. Our results of operations and financial condition are
currently solely dependent on our subsidiaries' factories in the PRC. We
currently maintain fire, casualty and theft insurance covering various of our
stock in trade, goods and merchandise, furniture and equipment, and factory
buildings in the PRC. The proceeds of this insurance may not sufficiently cover
material damage to, or the loss of, any of our factories due to fire, severe
weather, flooding or other cause, and such damage or loss would have a material
adverse effect on our financial condition, business and prospects. However, we
have not suffered from such material damage or loss to date.

ITEM 4 INFORMATION ON THE COMPANY

A.    HISTORY AND DEVELOPMENT OF THE COMPANY

Equity Finance Holding Corporation (Equity Finance), a Belize corporation, the
predecessor of the Company, was a management consulting corporation and marketer
of management and financial consulting services offered principally to small
businesses with annual sales of $2,000,000 to $20,000,000. The Company provided
resources to a variety of business clients, assisting them in developing their
capitalization to achieve corporate growth. Additionally, the Company provided
counsel and expertise to this market segment, which will allow the closely-held
client corporations to be held more broadly.

On February 18, 2003 Equity Finance announced the closing of an Agreement and
Plan of Share Exchange dated January 10, 2003 pursuant to which it acquired
Australia China Investments Limited ("Australia China"), a British Virgin
Islands limited corporation incorporated on February 1, 2002, engaged, by and
through subsidiary, in the production and sale principally of printing and
writing papers in China. At closing, Equity Finance issued an aggregate of
6,000,000 Equity Finance shares and certain Equity Finance stockholders
transferred 3,000,000 of their 4,634,100 Equity Finance shares to Tang Yuxiang
and Qu Shuzhi, the Australia China stockholders, in exchange for all of the
issued and outstanding Australia China shares.

In connection with the exchange, Equity Finance changed its name to Yantai Dahua
Holdings Company Limited (OTC BB: YDHCF), all directors and executive officers
of Equity Finance resigned. Mr. Tang Yuxiang and Mr. Qu Shuzhi were appointed
directors of the Company along with Mr. Yu Shou Ping, Mr. Yu Zhou and Mr. Xiong
Shi Gui, Mr. Tang Yuxiang was appointed Chief Executive Officer and Mr. Leung
Wai Chiu Albert was appointed Chief Financial Officer Mr. Leung subsequently
resigned in December 2003 and Mr. Qu was appointed to fill the position.


                                       10
<PAGE>

Australia China holds 85% of the shares of a sino-foreign joint venture, Yantai
Dahua Paper Industry Company Limited, a sino-foreign equity joint venture
established on April 14, 1994.

Yantai Longda Paper Industry Company Limited, a company incorporated in the PRC,
formerly known as "Muping Paper Manufacturer", an originally state-owned
enterprise but is now a private company jointly owned by management and
employees, is the PRC partner holding 15% of Yantai Dahua Paper.

Yantai Dahua Paper was an equity joint venture with an initial registered
capital of Rmb38,177,000 and planned to operate for a term of 15 years until
April 14, 2009.

Yantai Dahua Paper is principally engaged in manufacturing and selling various
paper products, including printing paper, writing paper and computer paper, etc.

On June 28, 2002, Australia China Investment, Yantai Longda and Australia China
entered into an agreement in which Australia China Investment agreed to transfer
its entire interest and Yantai Longda agreed to transfer its interest in Yantai
Dahua Paper to Australia China (the "Transfer"). The aggregate consideration of
the Transfer is US$8,242,836 which represented 85% of net asset value of Yantai
Dahua Paper as of September 30, 2002.

Upon completion of the transaction, Australia China and Yantai Longda own 85%
and 15% interest in Yantai Dahua Paper, respectively. On July 30, 2002, the
Yantai Foreign Investment Bureau approved the above transfers of interest.

At a meeting of the Board of Directors held on April 3, 2003, the Board of
Directors resolved to issue two additional shares for each common stock issued
and outstanding, as a stock split, for no consideration, to its shareholders of
record on April 13, 2003, to be effected on April 23, 2003.

The additional shares would be of the same class of common stock outstanding,
with the same right and privileges and without change in the par value. Prior to
the split, the Company has a total of 11,149,000 shares of common stock issued
and outstanding. The stock split increased the total issued and outstanding
shares to 33,447,000.

B.    BUSINESS OVERVIEW

The Company is engaged in, through its subsidiaries, the manufacturing and sales
of paper principally for printing and writing in the PRC. Yantai Dahua Paper is
a leading paper manufacturer in Shandong, China and employs over 1,000 staff.

The Company's marketing teams distribute its products through six sales offices
in different parts of the PRC to cater for its clientele of over 210
well-established publishing houses, printing companies and other state-owned
material supplies companies.

Under the leadership of its experienced management, the Company expects to
expand its production capacity to meet the anticipated increase in the demand
for paper and that such increased demand is projected to result in growth in the
Company's revenues and net income.

The Company's production facilities are based at Yantai Dahua Paper, situated at
Muping, Yantai City, Shandong Province. Yantai Dahua Paper's current production
capacity is about 25,000 tons of paper per year.

The major types of paper products manufactured by Yantai Dahua Paper comprise of
Printing Paper, Writing Paper, Computer Paper, and small quantity of other
papers, including newsprint and a new paper product namely Munkedal made by
wooden pulp paper.


                                       11
<PAGE>

For 2001, 2002 and 2003 a break down of the Company's sales of paper products is
summarized as follows:

PRODUCT TYPES               IN TONS                    PERCENTAGE
-------------       ------------------------      ------------------------
                     2001     2002     2003       2001     2002     2003
                    ------   ------   ------      -----    -----    -----
Printing Paper      12,850   15,999   17,356      65.5%    83.2%    82.2%
Writing Paper        2,685    2,060      875      13.7%    10.7%     4.2%
Computer Paper       4,093    1,175      284      20.8%     6.1%     1.3%
Wooden Pulp Paper        0        0    2,606         0%       0%    12.3%
Total               19,628   19,234   21,121       100%     100%     100%

The percentage of each product remains quite stable during 2001 and in year
2002, the sales for printing paper increased with a corresponding decrease in
computer paper. Sale of the wooden pulp paper comprised 12.3% of the sales in
year 2003.

Sales of the Company's paper products are conducted by Yantai Dahua Paper's
sales teams based at the head office in Muping and 6 representative offices
located at Beijing, Shijiazhuang (capital city of Hebei Province), Guangzhou
(capital city of Guangdong province), Lanzhou (capital city of Gansu), Shanghai
and Hangzhou.

The Beijing and Shijiazhuang offices account for roughly 71% of the sales,
Guangzhou 2%, Shanghai and Hangzhou 20%, and Lanzhou 7%. Each of the
representative offices is manned by a Sales Manager and several full-time sales
representatives.

With representative offices covering the capital city and major cities in
northern, eastern, western and southern China, the Company has established a
sales and distribution network serving an established customer base all over
China.

Today, the Company has a list of more than 210 customers through out China. Of
these, nine major customers accounts for about 50% of the yearly sales. These
major customers include major publishers, printers, and state-owned enterprises
and they are material to the Company's business and profitability.

The Company's sales in the second half of the year is usually higher than those
in the first half of the year because the Company usually repairs the equipment
during the Chinese New Year. The sales are affected by the drop in production
because of the repairs.

To produce its three major paper products for the Chinese market, the Company
requires regular supplies of its raw materials from local suppliers. The major
raw materials comprise:

      -     Wheat stalks for conversion into pulp,
      -     Wood pulp,
      -     Chemicals, including sodium hydroxide and liquid chlorine.

Local suppliers supply most of the above raw materials, and Company also brings
in some wood pulp itself, because of its status as a sino-foreign joint venture.

The manufacturing of paper products also requires substantial amount of water,
heat and electricity. At present, the Company supplies its own heat with its new
35 metric tons boiler, which commenced operation in April 2001. The Company has
built a new 3,000 kilo watt electricity generator within its site at Muping by
using internally generated funds for the new generator. With this new facility,
the Company is no longer dependent on the local grid to supply its electricity,
and the Company expects to save on its electricity bill.

Today, there are more than 500 paper manufacturers in China. Of these, about 200
have an annual production capacity of over 20,000 tons. In Shandong province
alone, there are 78 paper manufacturers. Most of these manufacturers are
state-owned enterprises. The principal competitive factors are brand name
recognition, distribution capability, product quality and capability of mass
production.


                                       12
<PAGE>

The paper manufacturing industry, because of the process of cleaning and
bleaching of the pulp, does produce effluents which contaminate the environment
and consumes a great deal of water. In a country where water is a valuable
resource, the Chinese government is implementing stringent measures to protect
the environment. A number of these paper plants that fail to meet the
environmental standards have been and will be closed. Only those that comply
with the environmental standards can continue to produce. The Company has
complied with the said standards.

The Company's plan for the future is based on the following two measures.
      -     Cost saving, and
      -     New products that meet the market's demand.

Costs Saving

To save manufacturing cost, the Company completed its own 3,000 kilo watt power
generation plant at the end of March 2002. Upon completion of the plant, the
Company began to generate its own electricity for the operation of the plant.
Previously, the Company had to purchase about 16,200,000 units of electricity
each year from the local grid at the cost of about Rmb0.65 per unit, meaning it
was spending about Rmb10.5 million each year on electricity supply. With its own
electricity generator, the cost reduced to Rmb0.30 per unit, saving its cost of
electricity by about Rmb5.7 million, or approximately US$ 700,000, per year.

The Company is already generating its own heat supply with its 35 tons boiler,
which commenced operation in April 2001 by using internally generated funds for
the building of boiler. Each year, it needs about 85,000 tons of heat. Comparing
with the cost of heat from external supplier of Rmb 94 per ton, the cost of its
heat supply will be reduced to Rmb 69 per ton. This will reduce the
manufacturing cost by about Rmb 2.1 million, or approximately US$ 250,000, per
year.

The above two measures will improve the Company's bottom line by about Rmb6.2
million, or US$750,000, after deducting depreciation of the boiler and
generator.

New Products

The Company sees an opportunity to develop a new product that meets the demand
of the PRC market. Because of the increasing affluence, and hence the increase
in the general standard of living, of the Chinese people, an increasing demand
on both the quantity and quality of a great variety of commodities is observed.

Due to the foreign suppliers' price competition, the Company has dropped the
development of copper printing paper.

The Company is now developing to manufacture the papers for cigarettes and
dictionary use.

A 40,000 sq. meter piece of land next to the Company's existing plant has been
acquired for the building of the new production plant.

The deposit for purchase of equipment for the new production line has been made.

The major raw material required for the production of the new products is
chemically bleached wood pulp, which can be sourced in the international market
(countries like USA, Canada, Finland and Sweden, etc.) with ease.

The Company has also secured the supply of water, which is required in abundant
amount for the paper making process. The 20 wells owned by the Company can
produce 20,000 cubic meter of underground water per day.

The Company has installed an additional power plant that can generate 6,000 kilo
watts of electricity, thereby guaranteeing the power required for the production
process by using internal fund.


                                       13
<PAGE>

Two more boilers of 35 ton each have been installed to supply the heat required
for the new plant by using internal fund.

Construction work for the factory electricity plant and boiler plant has already
commenced and has completed by using internal fund. The construction work has
been completed earlier than the expected timetable.

The Company also dropped the development of anti-counterfeit paper because the
costs for production is not worth to continue.

C.    ORGANIZATIONAL STRUCTURE

                                              ----------------------
                                              |    The Company     |
                                              ----------------------
                                                       |     100%
                                                       |
      -------------------------               ----------------------
      |     Yantai Longda     |               |   Australia China  |
      -------------------------               ----------------------
                  |    15%                             |     85%
                  |                                    |
                  |                                    |
                  --------------------------------------
                                    |
                                    |
                               -------------------
                               |  Yantai         |
                               |  Dahua Paper    |
                               -------------------


D.    PROPERTY, PLANTS AND EQUIPMENT

Yantai Dahua Paper is situated at Muping East at a site close to the
Yantai-Weihai Highway. The area of the site is about 110,000 square metres. On
the site, the total built-up area is about 22,000 square metres. The built-up
area includes pulp making facilities, 5 paper making plants, storage warehouse,
administration block, boiler plant, electricity generation plant, effluent
treatment plant, and other amenities.

The pulp making facilities can produce up to 20,000 tons of straw pulp per year.

There are 4 paper making plants in Yantai Dahua Paper, with a total production
capacity of 28,000 tons of paper per year. In each of these plants, there is one
paper making machine. Three of the plants produce up to a maximum of 22,000 tons
of paper with a width of 1.76 metres and one produces up to 6,000 tons of paper
with a width of 1.575 metres.

Yantai Dahua Paper also has one dinking line for making pulp from waste paper.
This line of operation is currently not in use because of the high cost of
electricity, making it not profitable to produce pulp from waste paper. With the
new electricity generator, which commenced operation in April 2002, Yantai Dahua
Paper can have the option open whether to utilize this pulp making facility
because the reduction in the cost of electricity will make it viable but has not
done so. This plant has the capacity of producing 6,000 tons of better quality
pulp per year.

ITEM  5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.    OPERATING RESULTS


                                       14
<PAGE>

GENERAL

All statements contained herein that are not historical facts, such as
statements regarding the Company's current business strategy and plans for
future operations are based upon current expectations. These statements are
forward-looking in nature and involve a number of risks and uncertainties. Such
risks and uncertainties include, but are not limited to, those described herein
including, among other things:

      (1) significant increases in competitive pressure in the paper industry;

      (2) general global economic conditions;

      (3) changes in the regulatory environment; and

      (4) changes in the securities markets.

Therefore, the information set forth in such forward-looking statements should
be carefully considered when evaluating the business prospects of the Company.

FINANCIAL RESULTS

The Company has a net income of US$564,320 for the year ended December 31, 2003
comparing with a net income of US$288,750 for the period ended December 31,
2002. The increase in net income is due to the result for the period ended
December 31, 2002 includes only the 3-month period of Yantai Dahua Paper as
Australia China acquired Yantai Dahua Paper in October 2002. In fact, the net
income of Yantai Dahua Paper, being the major operating subsidiary, has
decreased during the year 2003. The decrease in the net income relates primarily
to a decrease in sales of goods.

The cash and bank increase this year because the new special purpose short term
loan obtained has not been fully utilized.

The inventories balance increase is due to the increase in the production after
the completion of new production facilities.

The increase of the property and equipment is due to the purchase of new
equipment and the completion of new production facilities. This also leads to
the decrease in prepayment and receivables in respect of deposits for
construction transferred to the property and equipment upon completion.

We believe that inflation has not had a material impact on our results of
operations for the year ended December 31, 2003 or for the period ended December
31, 2002.

INFORMATION REGARDING SIGNIFICANT FINANCIAL FACTORS

Inflation generally affects companies by the cost of labor, equipment, and raw
materials. The Company does not believe that inflation has had, or will have,
any material effect on the Company's business

B.    LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

The Company had an audited operating revenue of US$11,954,095 with net income
after tax and minority of US$564,320 for the year ended December 31, 2003.


                                       15
<PAGE>

The Company's primary sources of funding are (i) cash flow from operating
activities and (ii) borrowings from credit agreements with various banks.

There are no material unused sources of liquidity. The Company is in the opinion
that the working capital is sufficient for the Company's present requirement.

There is no legal or economic restrictions on the abilities of subsidiaries to
transfer funds to the Company in the form of cash dividends, loans or advances
are.

Information relating to the Company's cash flow and borrowings as at December
31, 2003 can be reflected in the audited accounts to be disclosed.

C.    RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
      The Company has not invested into research and development.

D.    TREND INFORMATION

      Sales
      Because of the increasing affluence, and hence the increase in the general
      standard of living, of the Chinese people, an increasing demand on both
      the quantity and quality of a great variety of commodities is observed.
      Books and magazines are among those in demand. Therefore, it is not
      surprising that consumption of copper printing paper, used mostly in the
      printing of books and magazines for the upper end market, has been
      increasing at about 18% per annum for the last ten years.

      Production
      Upon the completion of the Company's plan to construct a new production
      plant, production will be increased by an additional 30,000 tons of copper
      printing paper, which is projected to or is expected to generate extra
      revenue of up to US$ 25 million per year.

      Price
      Due to the keen competition in the paper market, the Company is unlikely
      to increase the price of its products.

E.    OFF-BALANCE SHEET ARRANGEMENTS
      The Company has not made any off-balance sheet arrangement.

F.    TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
      The Company has the following contractual obligations as at December 31,
      2003:

<TABLE>
<CAPTION>
                                                                                        Payments due by period of
                                                                         -------------------------------------------------------
Contractual Obligations                                                  Total (Rmb)   Less than   1-3        3-5      More than
                                                                                        1 year    years      years      5 years
-----------------------                                                  -----------   ---------   ---        ---      ---------
<S>                                                                           <C>        <C>        <C>        <C>        <C>
Long-term Debt Obligations                                                    -          -          -          -          --
Capital (Finance) Lease Obligations                                           -          -          -          -          --
Operating Lease Obligations                                                   -          -          -          -          --
Purchase Obligations                                                          -          -          -          -          --
Other Long-term  Liability  reflected on the Company's Balance Sheet          -          -          -          -          --
under the GAAP of the primary financial statements
Total                                                                         -          -          -          -          --
</TABLE>

G.    SAFE HARBOR

      The safe harbor provided in Section 27A of the Securities Act and Section
      21E of the Exchange Act ("statutory safe harbors") shall apply to
      forward-looking information provided pursuant to Item 5F..


                                       16
<PAGE>

ITEM  6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.    DIRECTORS AND SENIOR MANAGEMENT

Australia China's Key Management Team consists of the following persons:

Mr. TANG Yuxiang, age 55, is Chairman & Chief Executive Officer of Australia
China. He has been working in the paper industry since 1984, when he was
appointed as Party Secretary and then Plant Manager of Yantai Longda. Since the
inception of Yantai Paper in 1994, he has been General Manager and Chairman of
the Board of the joint venture. His previous experience includes 18 years
experience in an agricultural machinery plant in Yantai Longda, where he was
promoted to Deputy Plant Manager, a position he held from 1979 to 1982. He is a
graduate of Shandong Agricultural Machinery Institute and is a Chinese
government endorsed Senior Economist.

Mr. YU Shou Ping, age 56, is Director & Chief Operating Officer. He has been
Deputy General Manager and Director of Yantai Paper since 1994. He is
responsible for its manufacturing operations. He has been working in the paper
industry since August 1984. He is a graduate of Shandong Muping Electricity
University.

Mr. QIAO Xuezhou, age 41, is Deputy General Manager, Sales & Purchasing of
Yantai Paper. He manages its sales and purchasing operations, including the six
offices in the PRC. He joined Yantai Longda in 1980 and was promoted to Deputy
Plant Manger in 1989. He was appointed to his present position in 1994. He is a
graduate of Yantai University.

Ms. JIANG Min, age 41, is Chief Engineer of Yantai Dahua Paper. She is
responsible for its engineering, technical and quality operations. She joined
Yantai Longda in 1982 and was appointed to her present position in 1994. She is
a graduate of Shandong Technical College of Light Industry, majoring in pulp and
paper manufacturing.

Mr. QU Shuzhi, age 43, is Deputy General Manager & Chief Financial Officer of
Yantai Paper. He is responsible for its accounting and general administration.
He joined Yantai Longda in 1979 as an accountant, and was promoted to Chief
Accountant in 1988. He was appointed Deputy General Manager & Chief Accountant
in 2001. He was appointed as Chief Financial Officer upon Albert Leung resigned
in December 2003. He is a graduate of in Finance Management at the China
Agricultural University.

Mr. QU Dongqing, age 39, has been Assistant to Mr. TANG Yuxiang since June 2000.
He is responsible for Human Resources and General Administration. He joined
Yantai Longda in 1980 as an officer of the trade union within Yantai Longda.
From 1986 to 1996, he served as Manager, General Administration of Yantai
Longda. From 1996 to 2000, he served as Plant Manager of an iron lid
manufacturer branch of Yantai Longda.

The Company's Key Management Team consists of the following persons:

Mr. TANG Yuxiang, Chief Executive Officer and a Director. Please see his
biographical sketch above.

Mr. QU Shuzhi, Director. Please see his biographical sketch above.

Mr. YU Shou Ping, Director. Please see his biographical sketch above.

Mr. YU Zhou, Independent Director, aged 46. He is working for an information
technology company since 1996.

Mr. XIONG Shi Gui, Independent Director, aged 69. He was a law graduate in PRC
in 1958. Since graduation, Mr. Xiong has been working for the Government in
respect of education work. He is now working for Sincere College Shanghai as an
Associate Dean.


                                       17
<PAGE>

B.    COMPENSATION

COMPENSATION TO DIRECTORS

For the year ended December 31, 2002 there was no compensation paid by the
Company to its directors as a group. In the year 2003, the Company has no plans
to pay the directors any compensation. There are no stock options, retirement
plans, nor agreements for compensation upon separation from the Board of
Directors.

COMPENSATION TO OFFICERS

For the Company, the salaries paid by the Company or its subsidiaries to the
officers are:

NAME                               ANNUAL
                                   SALARY
------------                       ---------
TANG Yuxiang                       US$12,000
YU Shou Ping                       US$8,000
QU Shuzhi                          US$8,000
QU Dongqing                        US$8,000

The Officers are not compensated by Australia China.

C.    BOARD PRACTICES

The following persons serve as a member of the Company's Board of Directors:

NAME                             POSITION
Mr. TANG Yuxiang                 Chairman & Chief Executive Officer
Mr. QU Shuzhi                    Director
Mr. YU Shou Ping                 Director
Mr. YU Zhou                      Independent Director
Mr. XIONG Shi Gui                Independent Director

There are no directors' service contracts with us or any of our subsidiaries
providing for benefits upon termination of employment.

D.    EMPLOYEES

The Company has 1,180 employees as of December 31, 2003. Management considers
the relationship with employees to be excellent.

As stipulated by PRC regulations, the Company participates in a retirement plan
for all employees. Pursuant to the plan, all retired employees of Yantai Dahua
Paper are entitled to certain retirement benefits. Yantai Dahua Paper is
required to make contributions to a state sponsored retirement plan at
approximately 20% of the basic amount which is within the range from RMB400 to
RMB468 stipulated by the PRC government. Yantai Dahua Paper determines the base
amount with reference to the basic salary of its employees and has no further
obligations for the actual payments of any post-retirement benefits. The state
sponsored retirement plan is responsible for the entire pension obligations
payable to the employees.

The Company's pension expense for the period ended December 31, 2002 and the
year ended December 31, 2003 was US$40,620 and US$191,460 respectively.


                                       18
<PAGE>

E.    SHARE OWNERSHIP

The following table set forth the share ownership of the Company as at June 28,
2004

<TABLE>
<CAPTION>
Name                                          Shares          Percentage       Owned by
--------------------------------          ----------             ------       ------------
<S>                                       <C>                    <C>          <C>
Magic Growth Investments Limited          18,000,000             53.82%       TANG Yuxiang
Success Channel Limited                    3,000,000              8.97%       QU Shuzhi
Everwell Strategy Limited                  3,000,000              8.97%       QU Dongqing
</TABLE>

Tang Yuxiang is a director and shareholder of Magic Growth Investmenrs Limited.
Qu Shuzhi is a director and shareholder of Success Channel Limited. Qu Dongqing
is a director and shareholder of Everwell Strategy Limited.

ITEM  7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    MAJOR SHAREHOLDERS

Please see Item 6E for share ownership information regarding our principal
shareholders and directors.

B.    RELATED PARTY TRANSACTIONS

From time to time, the Company may enter into transaction with parties that have
relationship with our officers or directors or entities in which we have an
ownership interest. Such transactions are reviewed by the Board of Directors and
are subject to the approval of members of the Board of Directors who do not have
a personal interest in the applicable transaction. We disclose all material
transactions that, in our judgment, constitute related party transactions;
related parties include our subsidiaries, investments accounted for under the
equity method, members of our management and owners of a significant percentage
of our common stock and their family members, and any other party that we
significantly influence. In the opinion of management, the terms of the related
party transactions are fair to the Company.

<TABLE>
<CAPTION>
      (a)   Name and relationship of related parties            Existing relationships with the Company
            <S>                                                 <C>

            Yantai Longda Paper Industry (YLPI)                 Joint venturer of a subsidiary
            Muping Iron Cover Manufacturing Factory (MIC)       Branch of YLPI
            Muping Paper Product Manufacturing Factory (MPP)    Branch of YLPI
            Muping Vegetable Processing Factory (MVP)           Branch of YLPI
            Mr. Tang Yuxiang                                    Stockholder / Director
            Mr. Qu Shuzhi                                       Stockholder / Director
</TABLE>

<TABLE>
<CAPTION>
       (b)    Related party transactions
                                                                 As of December 31, 2003
                                                               ---------------------------
                                                                  2003             2002
                                                                  US$              US$
<S>                                                            <C>              <C>
                  (i)    Due from related parties
                         MVP                                      12,043           13,521
                         MPP                                      27,528           43,390
                         MIC                                     111,762          165,042
                                                               ---------        ---------
                                                                 151,333          221,953
                                                               =========        =========

                  (ii)   Due to a related party
                         YLPI   (Note 2)                       2,646,576        2,571,843
                                                               =========        =========
                  (iii)  Due to stockholders
                         Mr. Tang Yuxiang                         89,035            2,037
                         Mr. Qu Shuzhi                            16,330            2,037
                                                               ---------        ---------
                                                                 105,365            4,074
                                                               =========        =========

</TABLE>


                                       19
<PAGE>

                  Note  1: The amounts due represent non-trade unsecured
                           advances which are interest-free and repayable on
                           demand.

                  Note  2: Loans from YLPI amounting to US$2,540,160 and
                           US$2,552,256 as of December 31, 2003 and 2002
                           respectively represented loans borrowed from banks by
                           YLPI on behalf of the Company.

C.    INTERESTS OF EXPERTS AND COUNSEL

      Not   Applicable

ITEM  8 FINANCIAL INFORMATION

A.    CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

The Company's audited financial statements are filed in this annual report as
Item 18.

B.    SIGNIFICANT CHANGES

At a meeting of the Board of Directors held on April 3, 2003, the Board of
Directors resolved to issue two additional shares for each common stock issued
and outstanding, as a stock split, for no consideration, to its shareholders of
record on April 13, 2003, effected on April 23, 2003.

The additional shares were of the same class of common stock outstanding, with
the same rights and privileges and without change in the par value. Prior to the
split, the Company had a total of 11,149,000 shares of common stock issued and
outstanding. The stock split increased the total issued and outstanding shares
to 33,447,000.

ITEM  9 THE OFFER AND LISTING

      Not Applicable

ITEM  10 ADDITIONAL INFORMATION

A.    SHARE CAPITAL

      Not Applicable

B.    MEMORANDUM AND ARTICLES OF ASSOCIATION

This information, contained in the by-laws of Equity Finance Holding Corporation
and the Memorandum of Association and Articles of Association of Equity Finance
Holding Corporation, IBC No. 6825, incorporated, Belize, 6 March 1998, is hereby
incorporated by specific reference in this annual report to Exhibits 1 and 2 to
the registration statement Form 8-A12G dated February 20, 2003.

C.    MATERIAL CONTRACTS

      Not applicable

D.    EXCHANGE CONTROLS

Belize has no system of exchange controls. There are no Belize restrictions on
the repatriation of capital or earnings of a Belize public company to
non-resident investors. There are no laws in Belize or exchange restrictions
affecting the remittance of dividends, profits, interest, royalties and other
payments to non-resident holders of the Company's securities.

The PRC has a system of exchange controls. The Renminbi exchange rate system is
the base for stable operation of PRC's exchange control system. The Regulations
on Exchange Control of the PRC promulgated with the State Council's approval in
January 1996 point out that the exchange rate for Renminbi is a single, managed
floating exchange rate based on market demand and supply.


                                       20
<PAGE>

Foreign exchange system reform began in 1994 with the establishment of the China
Region Exchange Trading Center in Shanghai which is linked to 34 cities by a
computer network and extends to the nearby regions. After segmentation by
administration areas was discarded, a nationwide unified interbank trading
market was established. The Center has adopted a membership system with 384 unit
members - at present comprising the head offices of Chinese-funded banks and
their authorized branches, foreign-funded banks and authorized non-bank
financial institutions, which represent the main trading body on the market.
Following foreign- funded enterprises' participation in the banking system for
the settlement and sales of foreign exchange, foreign-funded banks are also
permitted to engage in such business, so that the interbank trading market is
further stimulated.

At present, there are three foreign currencies tradable with the Remninbi at the
Center: US dollars, Japanese yen and Hong Kong dollars. The daily weighted
average is published by the People's Bank of China as the middle rate for the
ensuing business day; each bank may quote prices within the permitted floating
limits of 0.15 per cent for US dollars and 1 per cent for Japanese yen and Hong
Kong dollars.

For other currencies, cross rates are fixed on the basis of the international
market level and a floating margin as specified by the People's Bank of China.
Thus the establishment and normal operation of the nationwide interbank trading
market has geared the Renminbi rate to market supply and demand. In January 1994
the single exchange rate system was hailed as a strategic decision by the IMF,
and has created favorable conditions for China to participate in international
competition with others on a fair and equal footing. In order to ensure the
healthy development of the national economy and maintain basic stability of the
Renminbi rate, the People's Bank of China exercises necessary control and
intervenes in the light of state macroeconomic control targets.

Now Renminbi payments for foreign trade and non-trade transactions as well as
transfers of capital gains within China may be converted into foreign currencies
for remittance or transfer abroad.

The following table sets forth certain information concerning exchange rates
between Renminbi and U.S. dollars for the periods indicated:

CALENDAR YEAR                      YEAR AVERAGE
                                   (RMB PER US$)

   1999                              8.2785
   2000                              8.2784
   2001                              8.2772
   2002                              8.2672
   2003                              8.2672

E.    TAXATION


                                       21
<PAGE>

Yantai Dahua Paper is subject to income taxes on an entity basis on income
arising in or derived from the tax jurisdictions in which it operates.

Yantai Dahua Paper is established and is carrying on business in the PRC and
subject to the PRC enterprise income tax at a rate of 24%.

Deferred income tax of US$122,461 and US$293,553 has been provided to the
Company for the period ended December 31, 2002 and the year ended December 31,
2003 respectively.

The Company is incorporated in Belize and the Belize tax laws are summarized as
follows. Unless exempt under an investment incentive, resident companies are
liable for corporate income tax on all of their income, whether derived from
Belize or not, although foreign earned income is taxed only on remittances to
Belize. A company is resident if it is incorporated in Belize or if it's central
management and control are exercised in Belize. If a company does not operate
under a Fiscal Incentives (Approved Enterprise Order) the total tax payable is
35% of the chargeable income.

Corporate income tax is charged on net profits, as adjusted for tax purposes.
Net profits comprise the aggregate amount of net income derived from conducting
business in Belize. Inventory valuation is not specifically addressed in income
tax law and, in any event, is inapplicable to the Company. Methods that conform
to generally accepted accounting principles may be used as long as they are
consistently applied. Dividends are taxable in the hands of recipients, the cash
amount of the dividends paid being grossed up by the amount of corporate income
tax paid by the distributing company, although the latter is liable only for
corporate income tax and does not actually account to the tax authorities for
any withholding. Some dividends are not taxable on recipients, including those
paid to exempt entities and those paid under specified tax incentives.

F.    DIVIDENDS AND PAYING AGENTS

      SEE ITEM 8.B.

G.    STATEMENT BY EXPERTS

      Not Applicable

H.    DOCUMENTS ON DISPLAY

      Not Applicable

I.    SUBSIDIARY INFORMATION

      Not Applicable

ITEM  11 QUANTITATIVE INFORMATION ABOUT MARKET RISK

The Company does not maintain nor invest in market sensitive or interest rate
sensitive holdings. Therefore, the Company has no quantitative or qualitative
exposure to market risk associated with activities in derivative financial
instruments, other financial instruments and derivative commodity instruments.

ITEM  12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable


PART II

ITEM 13  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None

ITEM  14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS

Not applicable

ITEM  15 CONTROLS AND PROCEDURES

Based on their evaluation of the Company's internal disclosure controls and
procedures completed on 15th June 2004, Mr. Tang Yuxiang, Chief Executive
Officer, and Mr. Qu Shuzhi, Chief Financial Officer, have concluded that the
Company's controls and procedures (as defined in Rule 13a -15 and Rule 15d-15(c)
of the Securities Exchange Act of 1934) are adequate and effective on ensuring
the accuracy and intensity of the information in this annual report. There have
not been any significant changes made in the Company's internal controls and
procedure or any other factors that could significantly affect these controls.


                                       22
<PAGE>

See Items 99A and 99B for statements of management concerning the internal
control over the Company's financial reporting.

ITEM  16.

A.    Audit committee financial expert

The Company does not have an audit committee financial expert serving on our
board of directors other than Mr. Qu Shuzhi, the Deputy General Manager and
Chief Financial Officer who is not independent. After the Company are successful
in raising capital, the Company will seek to retain an independent audit
committee financial expert. At present, there is no requirement for forming the
audit committee but the Company will form the said committee upon further
requirement from the change of law.

B.    Code of Ethics

The Company has not yet adopted a code of ethics that applies to its principal
executive officer but is in the course of preparing such code.

C.    Principal Accountant Fees and Services

(a)   Audit Fees The Company paid Moores Rowland Mazars for the last two years
      to audit our financials information according to the US GAAP. The
      aggregate amount paid for audit in the last two years is $88,000.

(b)   Audit-Related Fees The Company did not pay any audit-related fees to its
      auditors in either of the last two fiscal years.

(c)   Tax Fees The Company did not pay any tax fees to its auditors in either of
      the last two fiscal years.

(d)   All Other Fees The Company did not pay any other fees to its auditors in
      either of the last two fiscal years.

(e)   Pre-approval policies and procedures

      On January 2, 2004 our board of directors adopted resolutions in
accordance with the Sarbanes-Oxley Act of 2002 requiring pre-approval of all
auditing services and all audit related, tax or other services not prohibited
under Section 10A(g) of the Securities Exchange Act of 1934, as amended to be
performed for us by our independent auditors, subject to the de minimus
exception described in Section 10A(i)(1)(B) of the Exchange Act. These
resolutions authorized our independent auditor to perform audit services
required in connection with the annual audit relating to the fiscal year ended
December 31, 2003. Our board of directors also appointed and authorized Mr. Qu
Shuzhi to grant pre-approvals of other audit, audit-related, tax and other
services requiring board approval to be performed for us by our independent
auditor, provided that the designee, following any such pre-approvals,
thereafter reports the pre-approvals of such services at the next following
regular meeting of the Board.

      The percentage of audit-related, tax and other services that were approved
by the board of directors is zero.


                                       23
<PAGE>

(f)   If percentage greater than 50%, disclose the percentage of hours expended
      on the principal accountant's engagement to audit the Company's financial
      statements for the most recent fiscal year that were attributed to work
      performed by persona other than the principal accountant's full-time,
      permanent employees.

D.    Exemptions from the Listing Standards for Audit Committees Not Applicable

E.    Purchase of Equity Securities by the Issuer and Affiliated Purchasers Not
      Applicable

PART III

ITEM  17. FINANCIAL STATEMENTS

Not Applicable

ITEM  18. FINANCIAL STATEMENTS

                                                      PAGE NO.
                                                      --------

INDEPENDENT ACCOUNTANTS' REPORT                          26

CONSOLIDATED STATEMENTS OF OPERATIONS                    27

CONSOLIDATED BALANCE SHEETS                              28

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY           29

CONSOLIDATED STATEMENTS OF CASH FLOWS                    30

NOTES TO FINANCIAL STATEMENTS                            31


                                       24
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders of
YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
(A company incorporated in Belize)


We have audited the accompanying consolidated balance sheets of Yantai Dahua
Holdings Company Limited and its subsidiaries (the "Company") as of December 31,
2003 and 2002 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31, 2003 and
2002. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of December 31, 2003 and 2002 and the results of its operations and
its cash flows for the years ended December 31, 2003 and 2002, in conformity
with generally accepted accounting principles in the United States.

MOORES ROWLAND MAZARS
Chartered Accountants
Certified Public Accountants
Hong Kong

Date: June 29, 2004


                                       25
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)

CONSOLIDATED STATEMENTS OF OPERATIONS

================================================================================

<TABLE>
<CAPTION>
                                                                                   February 1, 2002
                                                                                       (date of
                                                                                   incorporation) to
                                                            YEAR ENDED                December 31,
                                                            DECEMBER 31, 2003            2002
                                               NOTE           US$                        US$
<S>                                              <C>        <C>                    <C>
OPERATING REVENUE
Sales of goods                                                11,954,095              3,469,026

COST OF SALES                                                 (8,758,307)            (2,345,510)
                                                             -----------           ------------
GROSS PROFIT                                                   3,195,788              1,123,516

OPERATING EXPENSES
Depreciation                                                  (1,005,337)               (11,248)
Handling and shipping costs                                     (407,935)               (85,956)
Selling, general and administrative expenses                    (818,601)              (560,177)
                                                             -----------           ------------
INCOME FROM OPERATIONS                                           963,915                466,135

NON-OPERATING INCOME
Sundry income                                                     21,148                 21,475
                                                             -----------           ------------

INCOME BEFORE INCOME TAXES                                       985,063                487,610

Provision for income taxes                       6              (321,135)              (147,907)
                                                             -----------           ------------
INCOME AFTER INCOME TAXES                                        663,928                339,703

MINORITY INTEREST IN INCOME OF SUBSIDIARY                        (99,608)               (50,953)
                                                             -----------           ------------

NET INCOME                                                       564,320                288,750
                                                             ===========           ============


EARNINGS PER SHARE
BASIC COMMON STOCK OUTSTANDING                                33,447,000             33,447,000
                                                             ===========           ============

BASIC NET INCOME PER COMMON STOCK                           US$0.02 CENTS          US$0.01 cents
                                                            =============          =============
</TABLE>

The accompanying notes are an intregal part of these financial statements.
--------------------------------------------------------------------------------


                                       26
<PAGE>


YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)

CONSOLIDATED BALANCE SHEET

================================================================================

                                                          As of December 31,
                                                       ------------------------
                                                         2003            2002
ASSETS                                        NOTE       US$             US$

CURRENT ASSETS
Cash and cash equivalents                               1,160,173        692,099
Accounts receivable, trade                              7,582,766      6,824,688
Prepayments and other receivables                         859,055      1,183,772
Inventories                                      7      2,091,333      1,662,073
Due from related parties                       10b        151,333        221,953
                                                       ----------     ----------
TOTAL CURRENT ASSETS                                   11,844,660     10,584,585
Property and equipment, net                      8     11,070,760      9,814,442
Construction in progress                                   40,710        142,109
                                                       ----------     ----------
TOTAL ASSETS                                           22,956,130     20,541,136
                                                       ==========     ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Short-term loans                                 9      5,212,166      3,613,075
Accounts payable, trade                                 1,577,689      1,837,400
Accrued charges and other payables                      2,059,790      2,134,655
Due to a related party                         10b      2,646,576      2,571,843
Due to stockholders                            10b        105,365          4,074
Income tax payable                                         52,298         24,845
Deferred tax                                              475,779        229,574
                                                       ----------     ----------
TOTAL CURRENT LIABILITIES                              12,129,663     10,415,466
                                                       ----------     ----------
NON-CURRENT LIABILITIES
Deferred tax                                              135,142         87,793
                                                       ----------     ----------
MINORITY INTEREST IN SUBSIDIARY                         1,595,419      1,506,291
                                                       ----------     ----------

STOCKHOLDERS' EQUITY
Common stock, par value US$0.001 each;
      100,000,000 shares authorized
33,447,000 shares issued and outstanding        11         33,447         33,447
Additional paid-in capital                              8,209,389      8,209,389
Retained earnings                                         821,903        275,052
Statutory reserves                              12         31,167         13,698
                                                       ----------     ----------

TOTAL STOCKHOLDERS' EQUITY                              9,095,906      8,531,586
                                                       ----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             22,956,130     20,541,136
                                                       ==========     ==========

The accompanying notes are an intregal part of these financial statements.
--------------------------------------------------------------------------------

                                       27
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
================================================================================

<TABLE>
<CAPTION>
                                         COMMON STOCK
                                     ---------------------
                                                              ADDITIONAL
                                       No. of                  PAID-IN       RETAINED     STATUTORY
                                       shares      Amount       CAPITAL      EARNINGS      RESERVES      TOTAL
                                                     US$          US$          US$           US$          US$

<S>                                  <C>           <C>         <C>           <C>           <C>        <C>
Balance as of February 1, 2002       33,447,000     33,447     8,209,389           --          --     8,242,836
Net income for the year                      --         --            --      288,750          --       288,750
Transfer to statutory reserves               --         --            --      (13,698)     13,698            --
                                     ----------     ------     ---------      -------      ------     ---------
Balances as of December 31, 2002     33,447,000     33,447     8,209,389      275,052      13,698     8,531,586
Net income for the year                      --         --            --      564,320          --       564,320
Transfer to statutory reserves               --         --            --      (17,469)     17,469            --
                                     ----------     ------     ---------      -------      ------     ---------
BALANCES AS OF DECEMBER 31, 2003     33,447,000     33,447     8,209,389      821,903      31,167     9,095,906
                                     ==========     ======     =========     ========      ======     =========
</TABLE>

The accompanying notes are an intregal part of these financial statements.
--------------------------------------------------------------------------------


                                       28
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================

<TABLE>
<CAPTION>
                                                                                                                 Period from
                                                                                                                February 1, 2002
                                                                                        YEAR ENDED                  (date of
                                                                                       DECEMBER 31,             incorporation) to
                                                                                               2003             December 31, 2002
                                                                                                US$                     US$
<S>                                                                                      <C>                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                                  564,320                   288,750

Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation                                                                       1,005,337                   129,548
       Exchange gain                                                                              -                       (17)
       Loss on disposal of property, plant and equipment                                     23,442                         -
       Minority interest                                                                     99,608                    50,953
       Provision for doubtful debts                                                         334,904                         -
Changes in working capital:
       Accounts receivable, trade                                                        (1,092,982)                  287,026
       Prepayments and other receivables                                                    324,717                  (443,238)
       Inventories                                                                         (429,260)                   61,619
       Due from related parties                                                              70,620                         -
       Accounts payable, trade                                                             (259,711)                 (305,329)
       Accrued charges and other payables                                                   116,667                    (7,289)
       Due to a related party                                                                74,733                  (113,338)
       Income tax                                                                           321,007                   146,979
                                                                                         ----------                  --------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                 1,153,402                    95,664
                                                                                         ----------                  --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash flows from acquisition of subsidiary (Note 13)                                               -                   846,047
Purchases of property and equipment                                                      (2,019,511)                 (184,278)
Addition to construction in progress                                                       (366,199)                 (115,334)
                                                                                         ----------                  --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                                      (2,385,710)                  546,435
                                                                                         ----------                  --------
NET CASH FROM FINANCING ACTIVITIES:
Issue of stocks                                                                                   -                    50,000
Due to stockholders                                                                         101,291                         -
New bank loan                                                                             2,851,075                         -
Repayment of amount borrowed                                                             (1,251,984)                        -
                                                                                         ----------                  --------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 1,700,382                    50,000
                                                                                         ----------                  --------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                   468,074                   692,099

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR                                          692,099                         -
                                                                                         ----------                  --------

CASH AND CASH EQUIVALENTS AT END OF THE YEAR                                              1,160,173                   692,099
                                                                                        ===========                  ========
</TABLE>

The accompanying notes are an intregal part of these financial statements.
--------------------------------------------------------------------------------


                                       29
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

1.    ORGANIZATION AND PRINCIPAL ACTIVITIES

      Yantai Dahua Holdings Company Limited ("YDHC") was incorporated in Belize
      on March 6, 1998 as a limited liability company. The former name of YDHC
      was Equity Finance Holding Corporation ("Equity Finance") which was
      changed to its existing name on February 18, 2003.

      Prior to the reorganization as described in Note 2 below on February 18,
      2003 with Australia China Investment Limited ("ACIL"), a company
      incorporated under the International Business Companies Act of the British
      Virgin Islands ("BVI") on February 1, 2002, Equity Finance had been a
      management consulting company and marketer of management and financial
      consulting services offered principally to small businesses assisting them
      in accessing the U.S. capital markets for financing.

      After recapitalization, YDHC and its subsidiaries (collectively referred
      to as the "Company") are principally engaged in the manufacturing and
      selling various paper products, including printing paper, writing paper
      and computer paper, etc. The head office of its principal operating
      subsidiary is located at East of Muping City, Yantai, Shandong, the
      People's Republic of China (the "PRC").


2.    BASIS OF PRESENTATION

      Effective February 18, 2003, pursuant to an Agreement and Plan of Share
      Exchange dated January 10, 2003 ("Share Exchange Agreement"), Equity
      Finance merged with an operating entity, ACIL, resulting in the
      stockholders and management of ACIL having actual and effective control of
      Equity Finance.

      For accounting purposes, the transaction has been treated as a
      recapitalization of ACIL with Equity Finance being the legal survivor and
      ACIL being the accounting survivor and the operating entity. These
      transactions are considered as capital transactions in substance rather
      than business combinations. That is, the historical financial statements
      prior to February 18, 2003, are those of ACIL, even though they were
      labeled as those of Equity Finance (YDHC).

      The recapitalization transaction was effected by an exchange of stock
      under which the stockholders of ACIL, Mr. Tang Yuxiang and Mr. Qu Shuzhi
      exchanged all of the outstanding shares (824,283,600 shares) of ACIL for
      6,000,000 new shares of Equity Finance and 3,000,000 existing shares from
      Equity Finance's stockholders.

      In the recapitalization, historical stockholders' equity of the accounting
      survivor, ACIL, prior to the merger was retroactively restated for the
      equivalent number of new shares issued (6,000,000 shares) in the merger
      with an offset to additional paid-in capital. Retained earnings of the
      accounting survivor, ACIL, is carried forward after the recapitalization.
      Operations since February 1, 2002 (being date of incorporation of ACIL)
      and up to the date of recapitalization are those of the accounting
      survivor, ACIL. Earnings per share for periods prior to the
      recapitalization are restated to reflect the equivalent number of shares.
      Upon completion of the transaction, the financial statements become those
      of the operating company, with adjustments to reflect the changes in
      equity structure and receipt of the assets / liabilities of the public
      shell, Equity Finance. Following the recapitalization, Equity Finance held
      100% of the issued and outstanding shares of ACIL and Mr. Tang Yuxing and
      Mr. Qu Shuzhi became the principal stockholders of Equity Finance.


                                       30
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

3.    INVESTMENTS

      Details of the investments in subsidiaries other than ACIL are as follows:

      Yantai Dahua Paper Industry Limited ("YDPI") was established in the PRC on
      April 14, 1994 as a sino-foreign equity joint venture which was planned to
      operate for a term of 15 years until April 14, 2009.

      On June 28, 2002, Australia China Investment Pty Limited ("ACIP"), the
      then 26% equity owner of YDPI, and Yantai Longda Paper Industry Limited
      ("YLPI"), the then 74% equity owner of YDPI, entered into an agreement
      (the "Agreement") in which ACIP agreed to transfer its entire interest and
      YLPI agreed to transfer its 59% interest in YDPI to ACIL (the "Transfer").
      The aggregate consideration of the Transfer is US$8,242,836 which
      represented 85% of net asset value of YDPI as of September 30, 2002. Upon
      completion of the transaction, ACIL and YLPI own 85% and 15% interest in
      YDPI respectively. On July 30, 2002, the Yantai Foreign Investment Bureau
      approved the above transfers of interest.

      On July 30, 2002, Yantai Foreign Investment Bureau also approved YDPI's
      application for the extension of operating period for an additional 15
      years to 2024.


4.    BASIS OF PRESENTATION

      The financial statements have been presented in United States dollars
      (US$) and prepared in accordance with accounting principles generally
      accepted in the United States of America ("US GAAP").


5.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


      BASIS OF CONSOLIDATION
      The financial statements include the accounts of YDPI and its subsidiaries
      (see note 3) in which YDPI has a controlling financial interest. The
      results of operations of the subsidiary acquired during the period is
      included from the effective date of acquisition. All significant
      intercompany accounts and transactions have been eliminated.

      SUBSIDIARY
      A subsidiary is an affiliate controlled by YDPI directly, or indirectly
      through one or more intermediaries. The term control (including the terms
      controlling, controlled by and under common control with) means the
      possession, direct or indirect, of the power to direct or cause the
      direction of the management and policies of a person, whether through the
      ownership of voting stocks, by contract, or otherwise.


                                       31
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

5.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      REVENUE RECOGNITION
      Net sales represent the invoiced value of goods, net of value-added tax
      ("VAT") and returns. The Company generally recognizes product revenue when
      persuasive evidence of an arrangement exists, delivery has occurred, the
      fee is fixed or determinable, and collectibility is probable.

      INCOME TAXES
      The Company did not carry on any business and did not maintain any branch
      office in the United States of America.

      Provision for income and other related taxes has been made in accordance
      with the tax rates and laws in effect in the PRC.

      Income tax expense is computed based on pre-tax income included in the
      consolidated statements of operations. The Company provides for deferred
      income taxes using the liability method, by which deferred income taxes
      are recognized for all significant temporary differences between the
      carrying amounts and tax bases assets and liabilities and their reported
      amounts. The tax consequences of those differences are classified as
      current or non-current based upon the classification of the related assets
      or liabilities in the financial statements.

      PROPERTY AND EQUIPMENT AND DEPRECIATION
      Property and equipment are stated at cost less accumulated depreciation.
      The cost of an asset consists of its purchase price and any directly
      attributable costs of bringing the asset to its present working condition
      and location for its intended use. Expenditures incurred after the assets
      have been put into operation, such as repairs and maintenance, are charged
      to the consolidated statement of operations in the year in which they are
      incurred. In situations where it can be clearly demonstrated that the
      expenditure has resulted in an increase in the future economic benefits
      expected to be obtained from the use of the assets, the expenditure is
      capitalized.

      When assets are sold or retired, their costs and accumulated depreciation
      are removed from the accounts and any gain or loss resulting from their
      disposal is included in the consolidated statement of operations.

      When assets are transferred between property and equipment and other
      classes of assets, the cost of such an asset on transfer is deemed to be
      the carrying amount of the asset as stated under its original
      classification.

      Depreciation is calculated to write off the cost of property and equipment
      using the straight-line method at rates based on their estimated useful
      lives from the date on which they become fully operational and after
      taking into account their estimated residual values.


                                       32
<PAGE>
YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================


5.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
      The long-lived assets held and used by the Company are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the assets may not be recoverable. It is reasonably
      possible that these assets could become impaired as a result of technology
      or other industry changes. Determination of recoverability of assets to be
      held and used is by comparing the carrying amount of an asset to the
      future net undiscounted cash flows to be generated by the assets. If such
      assets are considered to be impaired, the impairment to be recognized is
      measured by the amount by which the carrying amount of the assets exceeds
      the fair value of the assets. Assets to be disposed of are reported at the
      lower of the carrying amount or fair value less costs to sell.

      INVENTORIES
      Inventories are stated at the lower of cost or market. The cost of
      inventories is determined using the weighted average cost method.
      Potential losses from obsolete and slow-moving inventories are provided
      for when identified. Costs of work-in-progress and finished goods include
      direct materials, direct labor and an attributable portion of
      manufacturing overhead.

      STATEMENT OF CASH FLOWS
      Cash equivalents are defined as short-term, highly liquid investments that
      are readily convertible to known amounts of cash and which are subject to
      an insignificant risk of changes in value. An investment normally
      qualifies as a cash equivalent only when it has a maturity of three months
      or less from its acquisition date.

      FOREIGN CURRENCY TRANSLATION
      The Company maintains its accounting books and records in US$. Foreign
      currency transactions during the year are translated to US$ at the
      approximate rates of exchange on the dates of transactions. Monetary
      assets and liabilities denominated in foreign currencies at the balance
      sheet date are translated at the approximate rates of exchange at that
      date. Non-monetary assets and liabilities are translated at the rates of
      exchange prevailing at the time the asset or liability was acquired.
      Exchange gains or losses are recorded in the consolidated statement of
      operations.

      On consolidation, the financial statements of the subsidiaries are
      translated into US$ using the closing rate method. The balance sheet items
      are translated into US$ using the exchange rates at the respective balance
      sheet dates. The capital and various reserves are translated at historical
      exchange rates prevailing at the time of the transactions while income and
      expenses items are translated at the average exchange rate for the year.
      All exchange differences arising on consolidation are recorded within
      equity. The amount of such translation adjustments were not significant
      for the period, no other comprehensive income was recognized.


                                       33
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

5.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      EARNINGS PER SHARE
      Basic earnings per share are computed by dividing income available to
      common stockholders by the weighted average number of common stocks
      outstanding. The computation of diluted earnings per share is similar to
      the computation of basic earnings per share except that the weighted
      average number of common stocks outstanding is adjusted to include
      estimates of additional shares that would be issued if potentially
      dilutive common stocks had been issued. In addition, income available to
      common stockholders is adjusted to include any changes in income or loss
      that would result from the assumed issuance of the dilutive common stocks.
      There were no dilutive securities outstanding during the period.

      USES OF ESTIMATES
      The preparation of the Company's financial statements in conformity with
      US GAAP requires the management to make estimates and assumptions that
      affect the amounts reported in the financial statements and accompanying
      notes. Actual amounts could differ from those estimates.

      ALLOWANCE FOR DOUBTFUL ACCOUNTS
      The Company provides an allowance for doubtful accounts equal to the
      estimated uncollectable amounts. The Company's estimate is based on
      historical collection experience and a review of the current status of
      trade accounts receivable. It is reasonably possible that the Company's
      estimate of the allowance for doubtful accounts will change. Accounts
      receivable are presented net of an allowance for doubtful accounts of
      US$612,033 and US$277,129 as of December 31, 2003 and 2002 respectively.

      SEGMENT INFORMATION
      Operating segments are defined as components of a company about which
      separated financial information is available that is evaluated regularly
      by the operating decision maker in deciding how to allocate resources and
      in assessing performance. The Company operates in a single business
      segment of manufacturing and selling of paper products which are sold in
      the PRC. There are no reportable business or geographical segments
      identified and no segment information is disclosed accordingly.

      RELATED PARTIES
      Parties are considered to be related if one party has the ability,
      directly or indirectly, to control the other party, or exercise
      significant influence over the other party in making financial and
      operating decisions. Parties are also considered to be related if they are
      subject to common control or common significant influence.

      RECENTLY ISSUED ACCOUNTING STANDARDS
      There are no new accounting pronouncements for which adoption is expected
      to have a material effect on the Company's financial statements.


                                       34
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

6.    PROVISION FOR INCOME TAXES

      The Company is subject to income taxes on an entity basis on income
      arising in or derived from the tax jurisdictions in which it operates.

      The subsidiary is established and is carrying on business in the PRC. The
      subsidiary is subject to the PRC enterprise income tax at a rate of 24%.

      Income tax expense is comprised of the following: Period from

                                                              February 1, 2002
                                                                (date of
                                                 YEAR ENDED   incorporation) to
                                                DECEMBER 31,    December 31,
                                                    2003            2002
                                                     US$            US$

Current tax                                         27,582        25,446
Deferred tax                                       293,553        122,461
                                                   -------        -------
Income tax expenses                                321,135        147,907
                                                   =======        =======

The reconciliation of the PRC statutory income tax rate to the effective income
tax rate based on income stated in the statement of operations is as follows:

                                                      %              %

 Statutory rate                                         24             24
 Non-deductible activities                               9              6
                                                   -------        -------
 Effective tax rate                                     33             30
                                                   =======        =======

Components of the Company's deferred tax liabilities are as follows:

                                                    AS OF DECEMBER 31,
                                                      2003           2002
                                                     US$             US$

 Deferred sales of goods                            60,909        36,032
 Depreciation                                      115,411        68,049
 Capitalized inventory costs                       399,356        202,389
 Others                                             35,245        10,897
                                                   -------        -------
                                                   610,921        317,367
                                                   =======        =======



                                       35
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

<TABLE>
<CAPTION>
7.    INVENTORIES

      Inventories comprise the following:

                                                                       As of December 31,
                                                                 ----------------------------
                                                                         2003          2002
                                                                          US$           US$

<S>                                                                <C>              <C>
      Raw materials                                                  847,194        1,148,035
      Finished goods                                               1,244,139          514,038
                                                                 -----------      -----------

                                                                   2,091,333        1,662,073
                                                                 ===========      ===========

8.    PROPERTY AND EQUIPMENT

                                                                       As of December 31,
                                                                 ----------------------------
                                           Estimated useful
                                                lives
                                           ----------------          2003           2002
                                                Years                 US$            US$
      COST
          Buildings and fixtures                20-50             4,553,553        4,148,088
          Plant and machinery                   10-25            11,729,095        9,868,128
          Motor vehicles                          10                273,486          279,586
                                                                 ----------       ----------
                                                                 16,556,134       14,331,802

      ACCUMULATED DEPRECIATION                                   (5,485,374)      (4,517,360)
                                                                -----------      -----------

      PROPERTY AND EQUIPMENT, NET                                11,070,760        9,814,442
                                                                ===========      ===========

9.    BANKING FACILITIES

      The Group had various lines of credit under banking facilities as follows:


                                                                       As of December 31,
                                                                 ----------------------------
                                                                     2003             2002
                                                                     US$              US$
      FACILITIES GRANTED
      Committed credit lines                                       5,212,166        4,552,935
                                                                 ===========      ===========
      UTILIZED FACILITIES
      Committed credit lines                                       5,212,166        3,613,075
                                                                 ===========      ===========
      UNUTILIZED FACILITIES
      Committed credit lines                                              --          939,859
                                                                 ===========      ===========
</TABLE>


      There are no significant commitment fees or requirements for compensating
      balances associated with any lines of credit.


                                       36
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

9.    BANKING FACILITIES (CONTINUED)

      The Group had the following banking facilities:
<TABLE>
<CAPTION>
                                                                                 As of December 31,
                                                                              ------------------------
                                                                                2003            2002
                                                                                US$             US$
<S>                                                                           <C>             <C>
      Collateralized by guarantee of a third party (note)                     2,066,000       759,629
      Collateralized by certain property and equipment of the Company and
          guarantee of a third party (note)                                   3,146,166     3,628,800
      Collateralized by certain property and equipment of the Company                --       164,506
                                                                              ---------     ---------
                                                                              5,212,166     4,552,935
                                                                              =========     =========
</TABLE>

      Note: These guarantees are given by Yantai Yinhe Knitting Company Limited
            and YLPI separately.


10.   RELATED PARTY TRANSACTIONS

<TABLE>
<CAPTION>
      (a)    Name and relationship of related parties              Existing relationships
                                                                      with the Company
<S>                                                              <C>
            YLPI                                                 Joint venturer of a subsidiary
            Muping Iron Cover Manufacturing Factory (MIC)        Branch of YLPI
            Muping Paper Product Manufacturing Factory (MPP)     Branch of YLPI
            Muping Vegetable Processing Factory (MVP)            Branch of YLPI
            Mr. Tang Yuxiang                                     Stockholder / Director
            Mr. Qu Shuzhi                                        Stockholder / Director
</TABLE>

<TABLE>
<CAPTION>
      (b)    Related party transactions
                                            As of December 31,
                                          ---------------------
                                            2003          2002
                                            US$           US$
      <S>                                  <C>         <C>
      (i)    Due from related parties
             MVP                           12,043        13,521
             MPP                           27,528        43,390
             MIC                          111,762       165,042
                                        ---------     ---------
                                          151,333       221,953
                                        =========     =========

      (ii)   Due to a related party
             YLPI   (Note 2)            2,646,576     2,571,843
                                        =========     =========


      (iii)  Due to stockholders
             Mr. Tang Yuxiang              89,035         2,037
             Mr. Qu Shuzhi                 16,330         2,037
                                        ---------     ---------

                                          105,365         4,074
                                        =========     =========

            Note  1: The amounts due represent non-trade unsecured advances
                     which are interest-free and repayable on demand.

            Note  2: Loans from YLPI amounting to US$2,540,160 and US$2,552,256
                     as of December 31, 2003 and 2002 respectively represented
                     loans borrowed from banks by YLPI on behalf of the Company.
</TABLE>


                                       37
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

11.   COMMON STOCK

      As of December 31, 2003, the authorized share capital of YDHC is
      US$100,000 consisting of 100,000,000 shares of common stock, par value
      US$0.001 each.

      As described in Note 2 above, pursuant to the Share Exchange agreement,
      YDHC issued 6,000,000 shares of common stock, par value, US$0.001 each.

      By a resolution of the board of directors passed on April 3, 2003, YDHC
      issued two shares for each common stock issued and outstanding, as a stock
      split, for no consideration, to YDHC's stockholders. The additional shares
      would be of the same class of common stock outstanding. After the issuance
      of shares, the stock split of 11,149,000 shares increased the total issued
      and outstanding shares to 33,447,000 shares.


12.   STATUTORY RESERVES

      According to the Articles of Association of YDPI, income of the subsidiary
      is distributable to its joint venture partners after transfer to statutory
      reserves. Being a sino-foreign equity joint venture, the subsidiary is
      required to maintain a reserve fund, an enterprise development fund and a
      staff welfare and bonus fund as a percentage of profit after tax.

      Statutory reserves of the subsidiary include the reserve fund and the
      staff welfare and bonus fund. Pursuant to the Articles of Association of
      the subsidiary, the board of directors determines the percentage of
      appropriations to the reserve fund and the staff welfare and bonus fund.
      The reserve fund can be used to make good losses in previous years.

      The staff welfare and bonus fund, which is to be used for the welfare of
      the staff and workers of the subsidiary, is of a capital nature. The
      nature of enterprise development fund is set aside for the future
      development of the subsidiary.


                                       38
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

13.   SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION

      Analysis of the net cash inflow in respect of the acquisitions during the
      period from February 1, 2002 (date of incorporation) to December 31, 2002:

                                                            US$
      Cash consideration (note 3)                       8,242,836
      Settled by advance from stockholders of ACIL     (8,242,836)
      Cash and cash equivalents acquired                  846,047
                                                       ----------
      Cash flows from acquisition of subsidiary           846,047
                                                       ==========

14.   RETIREMENT BENEFITS AND OTHER EMPLOYMENT BENEFITS

      As stipulated by the PRC rules and regulations, YDPI participates in a
      retirement plan for all employees. Pursuant to the plan, all retired
      employees of the subsidiary are entitled to certain retirement benefits.
      The subsidiary is required to make contributions to a state sponsored
      retirement plan at approximately 20% of the basic amount which is within
      the range from US$57 to US$278 stipulated by the PRC government. The
      subsidiary determines the base amount with reference to the basic salary
      of its employees and has no further obligations for the actual payments of
      any post-retirement benefits. The state sponsored retirement plan is
      responsible for the entire pension obligations payable to the employees.

      The pension expense for the year ended December 31, 2003 and period ended
      December 31, 2002 was US$191,460 and US$40,620 respectively.


                                       39
<PAGE>

YANTAI DAHUA HOLDINGS COMPANY LIMITED
(Formerly Equity Finance Holding Corporation)
NOTES TO THE FINANCIAL STATEMENTS
================================================================================

15.   OPERATING RISK

(a)   Country risk
      Currently, revenues are derived from sale of paper products to customers
      in the PRC. The 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. The management does not believe these risks
      to be significant. There can be no assurance, however, those changes in
      political and other conditions will not result in any adverse impact.

(b)   Credit risk
      Financial instruments consist principally of temporary cash investments
      and accounts receivable.The places its temporary cash investments with
      various financial institutions in the PRC. The management believes that no
      significant credit risk exists as these investments are placed principally
      with government-owned financial institutions in the PRC.The business
      activities and accounts receivable are principally with customers in PRC.
      Management believes that no significant credit risk exists as credit
      losses, when realized, have been within the range of management's
      expectations. No single customer accounted for greater than 10% of total
      revenue in the each year.

      The fair values of all of the financial instruments approximate their
      carrying values.


                                       40
<PAGE>

ITEM  19. EXHIBITS

The following financial statement are filed as part of this annual report on
Form 20-F  incorporated by reference to Item 18 of this report:

      Independent Auditors' Report

      Consolidated Statements of Operations for the period for year ended
      December 31, 2003

      Consolidated Balance Sheets at December 31, 2003

      Consolidated Statements of Stakeholders' Equity for year ended December
      31, 2003

      Consolidated Statements of Cash Flows for year ended December 31, 2003


The following exhibits are filed as exhibits to this annual report on Form 20-F:

      1A    Memorandum of Association of Equity Finance Holding Corporation*

      1B    Articles of Association of Equity Finance Holding Corporation** --

      23    Consent of Moores Rowland Mazars, Chartered Accountants

      99A   Certification of Tang Yuxiang Pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002

      99B   Certification of Qu Shuzhi Pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002

      99C   Certification of Tang Yuxiang Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

      99D   Certification of Qu Shuzhi Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002


                                       41
<PAGE>

SIGNATURE


The registrant hereby certifies that it meets all the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report registration statement on its behalf


                                      YANTAI  DAHUA  HOLDINGS  COMPANY  LIMITED


                                         By:/s/ Tang Yuxiang
                                         Tang Yuxiang,
                                         Chairman and Chief Executive Officer

Date:  June 30, 2004


Name                     Title                                   Date


/s/ TANG Yuxiang
----------------
TANG Yuxiang             Chariman and                            June 30, 2004
                         Chief Executive Officer


/s/ QU Shuzhi
----------------
QU Shuzhi                Director and                            June 30, 2004
                         Chief Financial Officer


/s/ YU Shou Ping
----------------
YU Shou Ping             Director                                June 30, 2004



                                       42