##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 (Mark One)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from to
 Commission file number 000-29008
 CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 
 
 
  
 gary.leung@chinactdc.com
 
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, Par Value US$0.01 per share
    
    Nasdaq Capital Market
  
  
   o þ
 o þ
 þ o
  o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o  U.S. GAAP þ
    
    International Financial Reporting Standards as
issued by the International Accounting Standards Board o
    
    Other o
  Item 17 o
    
    Item 18 o
 o þ




---



##### 



TABLE OF CONTENTS
  
 PART IItem 1. Identity of Directors, Senior Management and Advisers
    
    
    2Item 2. Offer Statistics and Expected Timetable
    
    
    2Item 3. Key Information
    
    
    2Item 4. Information on the Company
    
    
    14Item 4A. Unresolved Staff Comments
    
    
    20Item 5. Operating and Financial Review and Prospects
    
    
    21Item 6. Directors, Senior Management and Employees
    
    
    30Item 7. Major Shareholders and Related Party Transactions
    
    
    43Item 8. Financial Information
    
    
    46Item 9. The Offer and Listing
    
    
    46Item 10. Additional Information
    
    
    48Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    56Item 12. Description of Securities Other than Equity Securities
    
    
    57PART IIItem 13. Default, Dividend Arrearages and Delinquencies
    
    
    57Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    57Item 15T. Controls and Procedures
    
    
    57Item 16A. Audit Committee Financial Expert
    
    
    59Item 16B. Code of Ethics
    
    
    59Item 16C. Principal Accountant Fees and Services
    
    
    59Item 16D. Exemptions from the Listing Standards for Audit Committee
    
    
    60Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    60Item 16F. Change in Registrants Certifying Accountant
    
    
    60Item 16G. Corporate Governance
    
    
    60Item 17. Financial Statements
    
    
    61Item 18. Financial Statements
    
    
    61Item 19. Exhibits
    
    
    62SIGNATURES
    
    
    64EX-8.1   List of Company's SubsidiariesEX-12.1 Certification of Chief Executive OfficerEX-12.2 Certification of Chief Financial OfficerEX-13.1 Certification of CEO and CFOEX-23.1 Consent of Friedman LLP to the incorporation by referenceEX-23.2 Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the Registration Statements on Form S-8




---



##### Table of Contents



Introduction
    
    
    CTDC, the Company, us or we refer to China Technology Development Group Corporation
and the Group refers to the Company and all of its subsidiaries as a whole. The term you
refers to holders of our common stock and preferred stock;
    
    Hong Kong and the Government refer to the Hong Kong Special Administrative Region of
the Peoples Republic of China and its government, respectively;
    
    China and the Chinese government refer to the Peoples Republic of China and its
government; and
    
    All references to Renminbi, or Rmb are to the legal currency of China, all references
to U.S. dollars, dollars, $ or US$ are to the legal currency of the United States and
all references to Hong Kong dollars or HK$ are to the legal currency of Hong Kong. Any
discrepancies in any table between totals and sums of the amounts listed are due to rounding.
    1




---



##### Table of Contents



PART I
 
 Item1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 A. Selected financial data.
  2




---



##### Table of Contents



(Amounts
in thousands, except share and per share data)Year Ended December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2008Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    US$Consolidated Statement of Operations Data:Revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    1Cost of sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    3Gross profit
(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (2
    )Operating loss
    
    
    (2,981
    )
    
    
    (13,407
    )
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,338
    )
    
    
    (3,568
    )Other income (expense)Interest income
    
    
    242
    
    
    
    226
    
    
    
    182
    
    
    
    827
    
    
    
    79
    
    
    
    12Finance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (475
    )
    
    
    (70
    )Gain (loss) on disposal of
available-for-sale securities
    
    
    100
    
    
    
    (2,596
    )
    
    
    (488
    )
    
    
    15,405
    
    
    
    (14,049
    )
    
    
    (2,059
    )Impairment on available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,213
    )
    
    
    (2,230
    )Dividend income from available-for-sale
securities
    
    
    67
    
    
    
    115
    
    
    
    4
    
    
    
    58
    
    
    
    48
    
    
    
    7Change in fair value of warrant liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,236
    )
    
    
    (181
    )Exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (482
    )
    
    
    (268
    )
    
    
    (39
    )Others, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (36
    )
    
    
    (5
    )Loss from continuing operations
    
    
    (2,572
    )
    
    
    (15,662
    )
    
    
    (31,087
    )
    
    
    (9,084
    )
    
    
    (54,776
    )
    
    
    (8,029
    )Income (loss) from discontinued operations
    
    
    (7,543
    )
    
    
    (3,870
    )
    
    
    (83,499
    )
    
    
    1,973
    
    
    
    858
    
    
    
    126Net loss
    
    
    (10,115
    )
    
    
    (19,532
    )
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )
    
    
    (7,903
    )Net loss per share
    
    
    (1.47
    )
    
    
    (2.67
    )
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (3.34
    )
    
    
    (0.49
    )Net loss per share from continuing operations
    
    
    (0.39
    )
    
    
    (2.14
    )
    
    
    (2.75
    )
    
    
    (0.64
    )
    
    
    (3.39
    )
    
    
    (0.50
    )Net income (loss) per share from
discontinued operations
    
    
    (1.08
    )
    
    
    (0.53
    )
    
    
    (7.38
    )
    
    
    0.14
    
    
    
    0.05
    
    
    
    0.01Weighted average common shares outstanding:Basic and diluted
    
    
    6,894,497
    
    
    
    7,326,497
    
    
    
    11,311,888
    
    
    
    14,249,051
    
    
    
    16,160,172
 3




---



##### Table of Contents



(Amounts in thousands, except share data)As of December 31,2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2008Rmb
    
    Rmb
    
    Rmb
    
    Rmb
    
    Rmb
    
    US$Consolidated
Balance Sheet Data:Total assets
    
    
    39,355
    
    
    
    117,849
    
    
    
    64,751
    
    
    
    115,888
    
    
    
    62,619
    
    
    
    9,177Total liabilities
    
    
    6,501
    
    
    
    13,626
    
    
    
    14,111
    
    
    
    35,699
    
    
    
    20,389
    
    
    
    2,988Shareholders equity
    
    
    32,854
    
    
    
    98,708
    
    
    
    50,640
    
    
    
    80,189
    
    
    
    42,230
    
    
    
    6,189No of common shares
issued and
outstanding
    
    
    9,044,888
    
    
    
    11,274,497
    
    
    
    13,809,497
    
    
    
    15,028,665
    
    
    
    15,543,669No of treasury
stock (2)
    
    
    (2,150,391
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    During 2005 we disposed of the Zhuhai branch of Beijing BHL Networks Technology Co., Ltd , or
BBHL, and during 2006, we disposed of Anji Science Bio-Product Inc., or Anji Bio, the
production base of our nutraceutical operations. Our management approved the disposal of our
entire nutraceutical operations in April 2007. In April 2008, we disposed of Green Energy
Industry Ltd, including its subsidiaries Fullwing Ltd and Margot Ltd, to Harvest Time
International Holding Ltd, an independent third party, for cash consideration of HK$10,000. In
December 2008, we entered into a sale and purchase agreement to sell our wholly-owned
subsidiary Jingle and its subsidiaries, BHLNet and BBHL, which we refer to collectively as the
Jingle Group, to Sentron Enterprises Limited, an independent party, for cash consideration of
HK$0.2 million. We disposed of all of our non-core business in connection with the completion
of the transaction in February 2009 in order to concentrate all of our resources on our
strategic expansion in the solar business. During 2008, we regarded Jingle Group as
discontinued operations pursuant to Statement of Financial Accounting Standards, or SFAS,
No.144 Accounting for the Impairment or Disposal of Long-Lived Assets. We reported the
operating results up to the date of disposal and the loss resulted from the disposal as
discontinued operations (see Note 5 in our consolidated financial statements). To conform to
the presentation of the current year, we reclassified the comparative operating results of the
discontinued operations for the years ended December 31, 2004, 2005, 2006 and 2007 as
discontinued operations.(2)
    
    The entire treasury stocks of 2,150,391 shares of the Company had been cancelled during the
year ended December 31, 2005. Exchange Rate Information
   Average(1)
    
    High
    
    Low
    
    Period-end(Rmb per U.S. $1.00)2003
    
    
    8.2770
    
    
    
    8.2800
    
    
    
    8.2765
    
    
    
    8.27692004
    
    
    8.2768
    
    
    
    8.2774
    
    
    
    8.2764
    
    
    
    8.27652005
    
    
    8.1472
    
    
    
    8.2765
    
    
    
    8.0702
    
    
    
    8.07022006
    
    
    7.9579
    
    
    
    8.0702
    
    
    
    7.8041
    
    
    
    7.80412007
    
    
    7.5806
    
    
    
    7.7714
    
    
    
    7.2946
    
    
    
    7.29462008
    
    
    6.9193
    
    
    
    7.1818
    
    
    
    6.7899
    
    
    
    6.8225December 2008
    
    
    6.8539
    
    
    
    6.8842
    
    
    
    6.8225
    
    
    
    6.8225January 2009
    
    
    6.8358
    
    
    
    6.8358
    
    
    
    6.8230
    
    
    
    6.8380February 2009
    
    
    6.8368
    
    
    
    6.8487
    
    
    
    6.8326
    
    
    
    6.8398March 2009
    
    
    6.8363
    
    
    
    6.8895
    
    
    
    6.7753
    
    
    
    6.8336
 4




---



##### Table of Contents



Average(1)
    
    High
    
    Low
    
    Period-end(Rmb per U.S. $1.00)April 2009
    
    
    6.8318
    
    
    
    6.8368
    
    
    
    6.8230
    
    
    
    6.8230May 2009
    
    
    6.8242
    
    
    
    6.8306
    
    
    
    6.8190
    
    
    
    6.8281
 
 (1)
    
    Annual averages are calculated by averaging the rates on the last business day of each month
during the relevant year.  B. Capitalization and indebtedness.
  C. Reasons for the offer and use of proceeds.
  D. Risk factors.
   Risks Related to Our Company and Our Industry
 Our limited operating history and evolving business strategy may not serve as an adequate measure
for future prospects and results of our operations.
  We have continued to incur operating losses and we cannot provide assurance that we will achieve or
sustain profitability.
  Operating loss*Year
    
    (in thousands of Rmb)2004
    
    
    (2,981
    )2005
    
    
    (13,407
    )2006
    
    
    (30,785
    )2007
    
    
    (24,495
    )2008
    
    
    (24,338
    )
 5




---



##### Table of Contents



*
    
    Includes profit from discontinued operations of Rmb0.86 million for 2008 and Rmb1.97 million for
2007 and loss from discontinued operations of Rmb83.50 million for 2006.
  
    
    the need to procure additional equipment at reasonable costs and on a timely basis;
    
    the need to raise additional funds to finance the construction and ramp-up of the production
lines, which we may be unable to obtain on reasonable terms or at all;
    
    product upgrading or updating progress by us or our competitors;
    
    our competitors price changes;
    
    our research and development and marketing abilities;
    
    our acquisition costs of new technology or businesses;
    
    employee wage pressure arising from increased competition for skilled employees and increased
governmental staff welfare regulations; and
    
    extraordinary costs incurred for acquisitions or any reductions in work force, if any.
  We expect that we will need to obtain additional financing to continue to operate our business,
including significant capital expenditures to increase our production capacity. If we cannot obtain
additional financing when we need it, our growth prospects and future profitability may be
materially adversely affected.
  
    
    our future financial condition, results of operations and cash flows;
    
    general market conditions for financing activities by companies in our industry; and
    
    economic, political and other conditions in China and elsewhere.
  6




---



##### Table of Contents



We may not be able to implement our growth strategy and manage our planned business expansion
effectively.
   We may not be able to compete successfully in a competitive market against competitors with greater
resources and more advanced technologies.
  
    
    longer operating history;
    
    greater financial, technological, marketing, sales and other resources;
    
    greater profitability in their operations;
    
    superior product functionality in certain areas;
    
    greater name recognition;
    
    a broader range of products to offer; and
    
    a larger base of customers.
    We may not be able to keep pace with the rapid technological changes in the market, new
competition, and new product developments.
  7




---



##### Table of Contents




    
    provide a broad range of solar thin film products;
    
    timely develop and introduce new products with technological advances;
    
    respond promptly to new customer requirements;
    
    comply promptly with evolving industry standards;
    
    provide reliable thin-film solar products to customers at the lowest costs;
    
    control delays and cost overruns due to many external beyond-control factors such as increases in raw
materials prices and problems with equipment vendors;
    
    receive available government subsidies and incentives to support the development of the
solar energy industry; and
    
    execute our business strategy and expansion plan effectively.
 We may be unable to sustain our sales growth if sufficient demand for thin-film products does not
develop or takes longer to develop than we currently expect.
  
    
    efficiency and performance of thin-film solar products compared to crystalline silicon solar products;
    
    cost-effectiveness (cost per watt) of thin-film solar products compared to crystalline silicon solar products and other
non-solar energy sources and products;
    
    reliability of thin-film solar products compared to crystalline silicon solar products and other non-solar energy sources
and products;
    
    availability of government subsidies and incentives to support the development of the PV industry;
    
    breakthrough of other alternative energy technologies, such as wind power and biomass, etc;
    
    price change of other conventional and non-solar alternative energy sources, such as oil; and
    
    capital expenditures by solar products purchasers, which might decrease when the economy slows
down.
  If we are unable to attract, train and retain a skilled labor force, our business may be materially
adversely affected.
  8




---



##### Table of Contents



We rely on a limited number of suppliers for our production lines, equipment and consumables, and
any failure or delay by these suppliers in delivering equipment or consumables could adversely
impact our production.
  We are subject to risks of acquisition of new business, products and technologies.
    We may not successfully integrate acquired business, products and technologies.
  
    
    difficulties assimilating and managing the operations, technologies, intellectual property, products and personnel of any
acquired business;
    
    diversion of management attention to business concerns of the acquired business from that of our existing operations;
    
    declining employee morale and retention issues for employees of the acquired business;
    
    risk of litigation by terminated employees and contractors; and
    
    our lack of familiarity with other conditions and business practices of the acquired business.
  Unauthorized use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
  9




---



##### Table of Contents



We have granted, and expect to continue to grant, stock options under our stock incentive option
plan, which could adversely impact our financial results.
  We have limited business insurance coverage and may incur losses resulting from product liability
claims, business disruption, litigation or natural disasters.
  Risks Associated with Business Operation in China.
  We are subject to risks relating to changes of political and economic policies and conditions in
China.
   10




---



##### Table of Contents



We may experience foreign currency losses due to fluctuations in exchange rates.
   We may have limited legal recourse under Chinese law if disputes arise under our contracts with
third parties.
   Our business may be adversely affected by Chinese government regulations.
  11




---



##### Table of Contents



Risks Associated with Investing in Our Common Stock.
  Our stock price has been and may continue to be volatile.
  There have been historical deficiencies with our internal controls, and there remain areas of our
internal controls that require improvement. If we fail to maintain an effective system of internal
control, we may be unable to accurately report our financial results or prevent fraud, and investor
confidence and the market price of our common shares may be adversely impacted.
    The sale or availability for sale of substantial amounts of our common stock could adversely affect
their market price.
  12




---



##### Table of Contents



Rights of shareholders under British Virgin Islands law may be less than those of shareholders in
U.S. jurisdictions.
    As a foreign private issuer for purposes of U.S. securities laws, we are not subject to certain
rules promulgated by Nasdaq that other Nasdaq-listed issuers are required to comply with.
  
    
    our independent directors do not hold regularly scheduled meetings in executive session;
    
    the compensation of our executive officers is not determined by an independent committee
of the board or by the independent members of the board of directors, and our CEO may be present
and participate in the deliberations concerning his compensation;
    
    related party transactions are not required to be reviewed or approved by our audit
committee or other independent body of the board of directors; and
    
    we are not required to solicit shareholder approval of stock plans (including those in
which our officers or directors may participate), stock issuances that will result in a change in
control, the issuance of our stock in related party transactions or other transactions in which we
may issue 20% or more of our outstanding shares or below market issuances of 20% or more of our
outstanding shares to any person.
  Some information about us may be unavailable due to exemptions under the U.S. Securities Exchange
Act of 1934, or the Exchange Act, for a foreign private issuer.
  
    
    the rules under the Exchange Act requiring the filing with the Securities and Exchange
Commission, or SEC, of quarterly reports on Form 10-Q or current reports on Form 8-K;
 13




---



##### Table of Contents




    
    the provisions of Regulation FD aimed at preventing issuers from making selective
disclosures of material information;
    
    the provisions of the Exchange Act regulating the solicitation of proxies, consents or
authorizations in respect of a security registered under the Exchange Act; and
    
    the provisions of the Exchange Act requiring insiders to file public reports of their
stock ownership and trading activities and establishing insider liability for profits realized from
any short-swing trading transaction.
  
 Item 4. Information on the Company
 A. History and development of the Company.
       14




---



##### Table of Contents



15




---



##### Table of Contents



B. Business overview.
 Company Overview
  Business Strategy
  
    
    Capitalize upon future growth of solar market in China.Since 2008, we have devoted our
resources to developing solar application projects in China. The Peoples Republic of
China, or PRC, government has supported solar power electricity generation through a
variety of recent policy measures, such as national subsidies to BIPV systems announced by
the Ministry of Finance on March 26, 2009. We believe these measures will stimulate the
growth of the solar market in China. We plan
 16




---



##### Table of Contents



to continue to devote our financial, human and technical resources to develop BIPV systems
and solar plants in the Chinese market in 2009.
    
    Improve manufacturing technology and process through continuous innovation.We have
established a technical engineering team with strong research and development
capabilities. We commenced our initial production of SnO2 TCO in September 2008 and have
filed an application with the national patent offices in China for a proprietary
technology that we utilized in key equipment of our TCO glass production line. In 2009, we plan
to continue to devote substantial resources to our research and development efforts in
order to optimize our manufacturing technology and processes with emphasis on improving
our throughput, efficiency and product performance.
    
    Leverage our access to low cost resources to reduce manufacturing and operating costs
while providing reliable solar products and services.As a China-based solar company, we
believe that we enjoy cost advantages, including convenient access to low-cost technical
expertise, labor, land and facilities, over some of our competitors. In response to the
impact posed by the global economic environment, we plan to leverage our competitive cost
advantage to further reduce our manufacturing and operating costs while continuing to
provide reliable solar products and services.
    
    Expand our customer base and develop our solar markets.We intend to expand the
customer base for our solar business both within and outside China. Our marketing and
sales strategy is based on the formation of strategic relationships with key partners,
including thin film solar modules manufacturers and distributors. We believe that we have
the potential to ultimately serve as a provider of high value-added solar products and
solutions to our strategic partners.
 Sales and Marketing
  Seasonal sales
  Source of raw materials
  Description of Products and Services
  17




---



##### Table of Contents



Intellectual Property
    Competition
   Regulation
  Renewable Energy Law and Other Government Directives
  18




---



##### Table of Contents



Environmental Regulations
  Restriction on Foreign Investments
  Tax
      19




---



##### Table of Contents



C. Organizational structure.
  Country of
    
    OwnershipsName
    
    Function
    
    Incorporation
    
    Interests
    
    Direct ParentBHL Solar Technology Company
Limited, or BHLHK (formerly named
as BHL Networks Technology Co.,
Ltd.)
    
    cash management
vehicle
    
    Hong Kong
    
    
    100
    %
    
    CompanyShenzhen Helios New Energy
Technology Limited, or Shenzhen
Helios Energy (formerly named as
Shenzhen Innoessen Biotech Inc.)
    
    management, sale
and marketing office in
southern China
    
    China
    
    
    100
    %
    
    Southwick
International LtdChina Merchants Zhangzhou
Development Zone Trenda Solar Ltd.,
or Zhangzhou Trenda
    
    manufactures SnO2
solar base plates
    
    China
    
    
    100
    %
    
    Trenda
International LtdChina Merchants Zhangzhou
Development Zone Trendar Solar
Tech Ltd., or Zhangzhou Trendar
Tech
    
    manufacturing base
and quality control center
    
    China
    
    
    100
    %
    
    Sinofield Group
LtdChina Merchants Zhangzhou 
Development Zone Broad Shine Solar 
Technology Limited, or Broad Shine
    
    owns a five-story plant
as our manufacturing
site and other
properties at China
Merchants Zhangzhou
Development Zone in
China
    
    China
    
    
    100
    %
    
    Faster Assets
 D. Property, plants and equipment.
     
 Item 4A. Unresolved Staff Comments
  20




---



##### Table of Contents



Item 5. Operating and Financial Review and Prospects
 MANAGEMENTS DISCUSSION AND ANALYSIS
   Critical accounting policies and estimates
  Revenue recognition
  Impairment on available- for- sales securities
  Impairment or disposal of long lived assets
   21




---



##### Table of Contents



Investment in securities
  Research and development costs
  Stock-based compensation
    Recent accounting pronouncements
    22




---



##### Table of Contents



23




---



##### Table of Contents



24




---



##### Table of Contents



A. Operating results.
  (Amounts in thousands of Rmb)*2006
    
    *2007
    
    2008Amount
    
    Amount
    
    AmountRevenues
    
    
    
    
    
    
    
    
    
    
    10Cost of sales
    
    
    
    
    
    
    
    
    
    
    (20
    )Gross profit (loss)
    
    
    
    
    
    
    
    
    
    
    (10
    )Research and development expenses
    
    
    
    
    
    
    
    
    
    
    (133
    )General and administrative expenses
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,195
    )Allowance for doubtful accounts
    
    
    
    
    
    
    
    
    
    
    Operating loss
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,338
    )Interest income
    
    
    182
    
    
    
    827
    
    
    
    79Finance cost
    
    
    
    
    
    
    
    
    
    
    (475
    )(Loss) gain
on disposal of available-for-sale securities
    
    
    (488
    )
    
    
    15,405
    
    
    
    (14,049
    )Impairment of available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    (15,213
    )Dividend
income from available-for-sale securities
    
    
    4
    
    
    
    58
    
    
    
    48Change in fair value of warrant liabilities
    
    
    
    
    
    
    
    
    
    
    (1,236
    )Exchange loss
    
    
    
    
    
    
    (482
    )
    
    
    (268
    )Others income (expense), net
    
    
    
    
    
    
    (7
    )
    
    
    (36
    )Income tax (expenses) credit
    
    
    
    
    
    
    (390
    )
    
    
    712Loss from continuing operations
    
    
    (31,087
    )
    
    
    (9,084
    )
    
    
    (54,776
    )(Loss) profit from discontinued operations
    
    
    (83,499
    )
    
    
    1,973
    
    
    
    858Net loss for the year
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )
 
 *
    
    Certain revenues and expenses of Jingle Group for the fiscal years ended December 31, 2006 and
2007 were reclassified to discontinued operations (see Note 5 to the consolidated financial
statements).   25




---



##### Table of Contents



Comparison of Years ended December 31, 2008, 2007 and 2006
 Revenues.
 Cost of sales.
 Gross profit (loss).
 Research and development expenses
 General and administrative expenses.
  Other income (expense).
 26




---



##### Table of Contents



(Loss) profit from discontinued operations.
 Net loss.
 Taxation
      B. Liquidity and capital resources
 Working capital and cash flows
  27




---



##### Table of Contents



For the years ended December 31,2006
    
    
    2007
    
    
    2008Rmb
    
    
    Rmb
    
    
    Rmb(thousands)Net cash used in operating activities
    
    
    (10,197
    )
    
    
    (17,499
    )
    
    
    (15,131
    )Net cash used in investing activities
    
    
    (4,576
    )
    
    
    (1,943
    )
    
    
    (13,953
    )Net cash
(used in) provided in financing activities
    
    
    (95
    )
    
    
    37,190
    
    
    
    18,676Effect of exchange rate changes on cash
    
    
    19
    
    
    
    (2,317
    )
    
    
    (668
    )Net (decrease) increase in cash and cash equivalents
    
    
    (14,849
    )
    
    
    15,431
    
    
    
    (11,076
    )Cash and cash equivalents at beginning of year
    
    
    18,324
    
    
    
    3,475
    
    
    
    18,906Less: Cash
and cash equivalents at end of year from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,060
    )Cash and cash equivalents at end of year
    
    
    3,475
    
    
    
    18,906
    
    
    
    6,770
  Operating activities
   Investing activities
   Financing activities
    28




---



##### Table of Contents



Restricted net assets
  Capital resources
    C. Research and development, patents and licenses, etc.
  D. Trend information.
  E. Off-balance sheet arrangements.
  F. Tabular disclosure of contractual obligations.
  Amounts in thousandsRmbAs of December 31,2009
    
    
    4712010
    
    
    2762011
    
    
    1662012 and thereafter
    
    
    202Total
    
    
    1,115
 29




---



##### Table of Contents



Commitments
 Capital commitments for construction in progress
  ®
 G. Safe harbor.
 Forward-Looking Statement Disclosure
  
 Item 6. Directors, Senior Management and Employees
 A. Directors and senior management.
  30




---



##### Table of Contents



Name
    
    Age
    
    Positions with the CompanyAlan Li
    
    
    41
    
    
    Chairman of the Board, Executive Director and
Chief Executive OfficerZhenwei Lu
    
    
    38
    
    
    Executive Director and Chief Operating OfficerKang Li
    
    
    41
    
    
    Executive Director and Chief Investment OfficerXu Qian
    
    
    45
    
    
    Executive Director and Co-Chief Executive OfficerJu Zhang
    
    
    46
    
    
    Executive DirectorLoong Cheong Chang
(1) (3)
    
    
    63
    
    
    Independent DirectorXiaoping Wang
    
    
    49
    
    
    Independent DirectorXinping Shi (2) (3)
    
    
    50
    
    
    Independent DirectorYezhong Ni (1)
    
    
    39
    
    
    Independent DirectorWeidong Wang (2) (3)
    
    
    42
    
    
    Independent DirectorYu Keung Poon (1) (2)
    
    
    44
    
    
    Independent DirectorKing Pak Leung
    
    
    62
    
    
    Chief Financial Officer
 
 Note:(1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating Committee Mr. Alan Li
 Mr. Zhenwei Lu
 Mr. Kang Li
 31




---



##### Table of Contents



Mr. Xu Qian
 Mr. Ju Zhang
 Mr. Loong Cheong Chang
 Mr. Xiaoping Wang
 Dr. Xinping Shi
 Mr. Weidong Wang
 Mr. Yu Keung Poon
 32




---



##### Table of Contents



Mr. Yezhong Ni
 Mr. King Pak Leung
  B. Compensation.
    33




---



##### Table of Contents



Number
    
    ExerciseOf
    
    PriceName
    
    Title/Office
    
    options
    
    Per option
    
    Expiration Date(US$)Alan Li
    
    Chairman, Executive Director and Chief Executive Officer
    
    
    100,000
    
    
    2.04
    
    November 10, 2013 (1)120,000
    
    
    1.79
    
    December 30, 2013 (2)Zhenwei Lu
    

Executive Director and Chief Operating Officer
    
    
    80,000
    
    
    2.04
    
    November 10, 2013 (1)80,000
    
    
    1.79
    
    December 30, 2013 (2)Kang Li
    

Executive Director and Chief Investment Officer
    
    
    80,000
    
    
    2.04
    
    November 10, 2013 (1)100,000
    
    
    1.79
    
    December 30, 2013 (2)Ju Zhang
    
    Executive Director
    
    
    10,000
    
    
    2.04
    
    November 10, 2013 (1)10,000
    
    
    1.79
    
    December 30, 2013 (2)Xinping Shi
    
    Independent Director
    
    
    30,000
    
    
    2.04
    
    November 10, 2013 (1)50,000
    
    
    1.79
    
    December 30, 2013 (2)Yezhong Ni
    
    Independent Director
    
    
    20,000
    
    
    2.04
    
    November 10, 2013 (1)40,000
    
    
    1.79
    
    December 30, 2013 (2)Weidong Wang
    
    Independent Director
    
    
    20,000
    
    
    2.04
    
    November 10, 2013 (1)40,000
    
    
    1.79
    
    December 30, 2013 (2)Loong Cheong Chang
    
    Independent Director
    
    
    30,000
    
    
    2.04
    
    November 10, 2013 (1)50,000
    
    
    1.79
    
    December 30, 2013 (2)Yu Keung Poon
    
    Independent Director
    
    
    20,000
    
    
    2.04
    
    November 10, 2013 (1)40,000
    
    
    1.79
    
    December 30, 2013 (2)Xiaoping Wang
    
    Independent Director
    
    
    10,000
    
    
    2.04
    
    November 10, 2013 (1)10,000
    
    
    1.79
    
    December 30, 2013 (2)King Pak Leung
    
    Chief Financial Officer
    
    
    80,000
    
    
    2.04
    
    November 10, 2013 (1)100,000
    
    
    1.79
    
    December 30, 2013 (2)
 34




---



##### Table of Contents



Notes:(1)
    
    These options were granted under our 2007 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on November 10, 2008. One-third of the options vest on November 10,
2009, one-third of the options vest on November 10, 2010, and the remaining one-third of the
options vest on November 10, 2011.(2)
    
    These options were granted under our 2008 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on December 30, 2008. One-third of the options vest on December 30,
2009, one-third of the options vest on December 30, 2010, and the remaining one-third of the
options vest on December 30, 2011.  C. Board practices.
  Board committees
  Audit Committee
   Compensation Committee
 Nominating Committee.
  Term of directors and executive officers
  35




---



##### Table of Contents



D. Employees.
  2008
    
    2007
    
    2006Corporate administration
    
    
    16
    
    
    
    18
    
    
    
    16Finance and accounting
    
    
    9
    
    
    
    10
    
    
    
    6Research and developments
    
    
    0
    
    
    
    3
    
    
    
    6Technology and engineering
    
    
    6
    
    
    
    8
    
    
    
    27Sales and services
    
    
    4
    
    
    
    6
    
    
    
    13Manufacturing
    
    
    34
    
    
    
    3
    
    
    
    0Total
    
    
    69
    
    
    
    48
    
    
    
    68
   E. Share ownership.
  36




---



##### Table of Contents



Number
    
    ExerciseOf
    
    PriceName
    
    Title/Office
    
    options
    
    Per option
    
    Expiration Date(US$)Alan Li
    

Chairman, Executive Director and Chief Executive Officer
    
    
    75,000
    
    
    1.85
    
    September 20, 2015 (1)100,000
    
    
    3.18
    
    September 18, 2016 (2)150,000
    
    
    3.13
    
    May 23, 2012 (3)Zhenwei Lu
    

Executive Director and Chief Operating Officer
    
    
    40,000
    
    
    1.85
    
    September 20, 2015 (1)60,000
    
    
    3.18
    
    September 18, 2016 (2)80,000
    
    
    3.13
    
    May 23, 2012(3)Kang Li
    

Executive Director and Chief
Investment Officer
    
    
    80,000
    
    
    3.13
    
    May 23, 2012 (3)Xu Qian
    

Executive Director and Co-Chief
Executive Officer
    
    
    140,000
    
    
    3.18
    
    September 18, 2016 (2)Ju Zhang
    
    Executive Director
    
    
    10,000
    
    
    1.85
    
    September 20, 2015 (1)10,000
    
    
    3.18
    
    September 18, 2016 (2)Xinping Shi
    
    Independent Director
    
    
    10,000
    
    
    1.85
    
    September 20, 2015 (1)10,000
    
    
    3.18
    
    September18, 2016 (2)30,000
    
    
    3.13
    
    May 23, 2012 (3)Yezhong Ni
    
    Independent Director
    
    
    10,000
    
    
    1.85
    
    September 20, 2015 (1)10,000
    
    
    3.18
    
    September 18, 2016 (2)10,000
    
    
    3.13
    
    May 23, 2012 (3)Weidong Wang
    
    Independent Director
    
    
    10,000
    
    
    1.85
    
    September 20, 2015 (1)10,000
    
    
    3.18
    
    September 18, 2016 (2)10,000
    
    
    3.13
    
    May 23, 2012(3)Loong Cheong Chang
    
    Independent Director
    
    
    30,000
    
    
    3.13
    
    May 23, 2012 (3)Yu Keung Poon
    
    Independent Director
    
    
    20,000
    
    
    3.13
    
    May 23, 2012 (3)Xiaoping Wang
    
    Independent Director
    
    
    10,000
    
    
    3.13
    
    May 23, 2012 (3)
 
 Notes:(1)
    
    These options were granted under our 1996 Stock Option Plan and 2000 Stock Option Plan
pursuant to a board resolution passed on September 20, 2005 and are fully vested.(2)
    
    These options were granted under our 2005 Stock Option Plan pursuant to a board resolution
passed on September 18, 2006 and are fully vested.(3)
    
    These options were granted under our 2006 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on May 23, 2007 and are fully vested. 37




---



##### Table of Contents



Stock Option Plans
  Stock Option Plan
    
    Date of Shareholder Approval1996 Stock Option Plan, or the 1996 Plan
    
    October 10, 19962000 Stock Option Plan, or the 2000 Plan
    
    September 5, 20002005 Stock Option Plan, or the 2005 Plan
    
    October 20, 20052006 Stock Option Plan, or the 2006 Plan
    
    December 22, 20062007 Stock Option Plan, or the 2007 Plan
    
    October 19, 20072008 Stock Option Plan, or the 2008 Plan
    
    December 12, 2008
 1996 Plan
  2000 Plan
  2005 Plan
  2006 Plan
  2007 Plan
 Eligibility
  Shares Subject to the 2007 Plan
  38




---



##### Table of Contents



Administration
  Exercise Price
  Term
  (a)
    
    33 1/3% on the first anniversary of the date of grant;(b)
    
    33 1/3% on the second anniversary of the date of grant; and(c)
    
    the remaining 33 1/3% on the third anniversary of the date of grant.
 Exercise
   39




---



##### Table of Contents



Termination of Relationship
  Death or Disability
   Adjustments Upon Changes in Shares
  Amendments and Termination of the 2007 Plan
  Non-Transferability of Options
  2008 Plan
 Eligibility
  40




---



##### Table of Contents



Shares Subject to the 2008 Plan
  Administration of the 2008 Stock Option Plan
  Exercise Price
  Term
  (a)
    
    33 1/3% on the first anniversary of the date of grant;(b)
    
    33 1/3% on the second anniversary of the date of grant; and(c)
    
    the remaining 33 1/3% on the third anniversary of the date of grant.
 Exercise
   41




---



##### Table of Contents



Termination of Relationship
  Death or Disability
   Adjustments Upon Changes in Shares
  Amendments and Termination of the 2008 Plan
  Non-Transferability of Options
  42




---



##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
 A. Major shareholders.
  Shares of common stock
    
    Percent ofPrincipal Stockholder
    
    beneficially owned (1)
    
    classChina Biotech Holdings Limited
    
    
    4,282,168
    
    
    
    27.44
    %5/F, B&H Plaza, 27 Industry Ave
Shekou, Shenzhen 518067
PR ChinaEastern Ceremony Group Limited
    
    
    1,450,603
    
    
    
    9.30
    %Room 2612, Block B, Zhong Shen Hua Yuan, Cai Tian
South
Road, Fu Tian District, Shenzhen
PR ChinaBeijing Holdings
    
    
    1,009,323
    
    
    
    6.47
    %Room 4301, Central Plaza 18 Harbour Road, Wanchai
Hong KongAlan Li (2)(4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongZhenwei Lu (2)(4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongXu Qian (3)
    
    
    0
    
    
    
    *c/o Rm 4301, Central Plaza,
18 Harbour Road,Wanchai
Hong KongKang Li (2)(4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongJu Zhang (2)(4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongLoong Cheong Chang (4)
    
    
    0
    
    
    
    *c/o 1903, 19/F, West Tower, Shun Tak Centre, 168-200
Connaught Road Central
Hong KongXiaoping Wang (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongXinping Shi (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong Kong
 43




---



##### Table of Contents



Shares of common stock
    
    Percent ofPrincipal Stockholder
    
    beneficially owned (1)
    
    classYezhong Ni (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongWeidong Wang (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongYu Keung Poon (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongKing Pak Leung (4)
    
    
    0
    
    
    
    *c/o Unit 1903, 19/F, West Tower, Shun Tak Centre,
168-200 Connaught Road Central
Hong KongAll officers and directors as a group (12 persons) (2)(3)
    
    
    0
    
    
    
    *
 
 *
    
    less than 1%.(1)
    
    Unless otherwise noted, all persons named have sole voting and investment power with respect
to all shares of common stock beneficially owned by them.(2)
    
    Mr. Alan Li, Chairman of the Board, Executive Director and Chief Executive Officer, Mr.
Zhenwei Lu, Executive Director and Chief Operating Officer, Mr. Kang Li, Executive Director
and Chief Investment Officer, and Mr. Ju Zhang, Executive Director, are also directors of
China Biotech and therefore may be deemed to beneficially own the shares of common stock owned
by China Biotech.(3)
    
    Mr. Xu Qian, Executive Director and Co-Chief Executive Officer, is also the Assistant General
Manager and Chief Financial Officer of Beijing Holdings and therefore may be deemed to
beneficially own the shares of common stock owned by Beijing Holdings.  
    
    Voting rights.The 1,000,000 shares of Series A Preferred Stock have an aggregate
voting power equal to 25% of the combined voting power of our common stock and
preferred stock.
    
    Dividends.Holders of Series A Preferred Stock are entitled to receive dividends
only as, when and if such dividends are declared by the Board of Directors.
    
    Liquidation preference.In the event of any distribution of assets upon any
liquidation, dissolution or winding up of our company, whether voluntary or
involuntary, after payment or provision for payments of our debts and other
liabilities, holders of Series A Preferred Stock are entitled to receive out of our
assets an amount equal to the consideration paid by them for each such share plus any
accrued and unpaid dividends with respect to such shares of Series A Preferred Stock
through the date of such liquidation, dissolution or winding up.
    
    Redemption.The Series A Preferred Stock is not redeemable.
    
    Convertible.The Series A Preferred Stock is not convertible.
  44




---



##### Table of Contents



B. Related party transactions.
  As of the date of this Annual ReportAmounts in thousandsTransactions with related parties
    
    RmbPrepayment for acquisition of property from ZMRE (1)
    
    
    440Receipt for acquisition of property from China Biotech (2)
    
    
    7,302Payment for acquisition of property on behalf of China Biotech (2)
    
    
    5,000Loan from Alan Li (3)
    
    
    792Repayment overdraft of security account China Biotech (4)
    
    
    440CGHL issued an convertible note in principal amount of US$10
million to CMTF Private Equity One (7)
    
    
    68,225
 
 (1)
    
    Broad Shine, a wholly owned subsidiary of our company acquired a property from Zhangzhou
Merchants Real Estate Ltd., or ZMRE, for Rmb0.44 million. China Merchant Group, or CMG, is the
ultimate holding company of China Biotech, and ZMRE is a subsidiary of CMG.(2)
    
    In November 2007, the Company entered into an agreement with China Biotech, one of our major
shareholders, to acquire Faster Assets and its subsidiary, which we refer to collectively as
the Faster Group. We paid the Rmb20.7 million consideration through the issuance of 782,168
shares of common stock and 1,000,000 shares of preferred stock and completed the acquisition
in December 2007. Prior to the acquisition, Faster Group had no business activities and its
major asset was a right to purchase real property located in the Tangyang Industrial Zone of
China Merchants Zhangzhou Development Zone, from China Merchants Zhangzhou Development Zone
Ltd., or CMZDZ, for consideration of Rmb13.08 million, of which Rmb5.78 million was born by
the Faster Group and Rmb7.302 million was committed by China Biotech. In 2008, the Group
received Rmb7.302 million from China Biotech and paid Rmb5.00 million to CMZDZ. The remaining
balance due to CMZDZ is Rmb8.08 million.(3)
    
    On February 25, 2009, BHLHK, a wholly owned subsidiary of our Company, entered into a loan
agreement with Mr. Alan Li to borrow HK$0.90 million for 10 months without interest. Mr. Alan
Li is one of the directors of BHLHK and is our Chairman of the Board of Directors, Executive
Director and Chief Executive Officer. The loan is for its working capital purposes and was
repaid in May 2009.(4)
    
    Represents repayment of overdraft of securities account on behalf of BHLHK by China Biotech
on February 5, 2009.
  As of the date of thisAnnual Report onForm 20-FAmounts inthousandsRmbBalances with related parties:Due from related partiesFunds held by China Biotech for potential
acquisition of solar energy and business
in China (5)
    
    
    5,2825,282Due to related parties:Due to China Biotech (6)
    
    
    859Due to CMZDZ (2)
    
    
    8,085Due to China Biotech (4)
    
    
    4409,384
 (5)
    
    China Biotech has been the major shareholder of our company since January 12, 2007. In view
of China Biotechs experience with acquisitions in China, we deposited HK$6 million with China
Biotech for the purpose of making (with the assistance of China Biotech) potential
acquisitions of solar energy and businesses in China. There was no agreement signed for the
funds deposited with China Biotech and we can withdraw the funds without restriction at any
time.
 45




---



##### Table of Contents



(6)
    
    Represents administrative expenses paid on behalf of Faster and Shenzhen Helios Energy by
China Biotech in China.(7)
    
    On April 28, 2009, the Company, China Green Industry Group Ltd. and China Green Holdings Ltd.
(CGHL), wholly-owned subsidiaries of the Company, and CMTF Private Equity One entered into a
subscription agreement. Pursuant to the subscription agreement, CGHL issued to CMTF Private
Equity One a convertible note in a principal amount of US$10.0 million with three-year
maturity and an interest rate equal to the Hong Kong Prime Rate (the Convertible Note). The
Convertible Note is, at the holders option, either (a) convertible into the outstanding
ordinary shares of CGHL or (b) exchangeable for the Companys common stock. On May 12, 2009,
CGHL received US$10.0 million and closed the offering of the Convertible Note in a principal
amount of US$10.0 million. CMTF Private Equity One is one of the funds managed by CMTF Asset
Management Limited. China Merchants Securities Investment Ltd, one of subsidiaries of CMG,
holds 51% of equity interest of CMTF Asset Management Limited.
  C. Interests of experts and counsel.
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information.
    B. Significant Changes.
  
 Item 9. The Offer and Listing.
 A. Offer and listing details.
   Nasdaq Capital Market
    
    US$(Year Ended)
    
    High
    
    LowDecember 31, 2008
    
    
    9.45
    
    
    
    1.19December 31, 2007
    
    
    10.39
    
    
    
    2.71December 31, 2006
    
    
    12.15
    
    
    
    1.34December 31, 2005
    
    
    8.80
    
    
    
    1.53December 31, 2004
    
    
    5.60
    
    
    
    0.35
 46




---



##### Table of Contents



Nasdaq Capital Market
    
    US$(Quarter Ended)
    
    High
    
    LowMarch 31, 2009
    
    
    3.54
    
    
    
    1.36December 31, 2008
    
    
    3.06
    
    
    
    1.19September 30, 2008
    
    
    4.83
    
    
    
    3.10June 30, 2008
    
    
    7.20
    
    
    
    4.29March 31, 2008
    
    
    9.45
    
    
    
    3.14December 31, 2007
    
    
    10.39
    
    
    
    4.87September 30, 2007
    
    
    7.40
    
    
    
    3.51June 30, 2007
    
    
    4.49
    
    
    
    2.71March 31, 2007
    
    
    8.10
    
    
    
    3.25
  Nasdaq Capital Market
    
    US$(Month Ended)
    
    High
    
    LowMay 31, 2009
    
    
    2.65
    
    
    
    2.29April 30, 2009
    
    
    2.37
    
    
    
    2.16March 31, 2009
    
    
    2.50
    
    
    
    1.36February 27, 2009
    
    
    2.36
    
    
    
    1.64January 30, 2009
    
    
    3.54
    
    
    
    2.20December 31, 2008
    
    
    2.03
    
    
    
    1.46
 B. Plan of Distribution.
  C. Markets.
  D. Selling Shareholders.
  E. Dilution.
  47




---



##### Table of Contents



F. Expenses of the issue.
  
 Item 10. Additional Information.
 A. Share capital.
  B . Memorandum and articles of association.
  Objects and Powers
  Directors
     Share Rights, Preferences and Restrictions
  Rights, preferences and restrictions attaching to common stock
   Rights, preferences and restrictions attaching to Series A Preferred Stock
  48




---



##### Table of Contents



Changing Share Rights
  Shareholder Meetings
     Restrictions on Rights to Own Securities
  Change in Control Provisions
  Disclosure of Share Ownership
  Applicable Law
    49




---



##### Table of Contents



Changes in Capital
  Nasdaq Requirements
   
    
    our independent directors do not hold regularly scheduled meetings in executive
session;
    
    the compensation of our executive officers is not determined by an independent
committee of the board or by the independent members of the board of directors, and our
CEO may be present and participate in the deliberations concerning his compensation;
    
    related party transactions are not required to be reviewed or approved by our audit
committee or other independent body of the board of directors; and
    
    we are not required to solicit shareholder approval of stock plans, including those in
which our officers or directors may participate; stock issuances that will result in a
change in control; the issuance of our stock in related party transactions or other
transactions in which we may issue 20% or
 50




---



##### Table of Contents



more of our outstanding shares; or, below market issuances of 20% or more of our
outstanding shares to any person.
  C. Material contracts.
       51




---



##### Table of Contents



D . Exchange controls.
    E. Taxation.
  52




---



##### Table of Contents



British Virgin Islands Taxation
    United States Federal Income Taxation
   
    
    certain financial institutions;
    
    insurance companies;
    
    brokers dealers;
    
    U.S. expatriates;
    
    traders that elect to mark-to-market;
    
    tax-exempt entities;
    
    persons liable for alternative minimum tax;
    
    persons holding a note, common share as part of a straddle, hedging, conversion or
integrated transaction;
    
    persons whose functional currency is not the U.S. dollar;
    
    persons that actually or constructively own 10% or more of our voting stock; or
    
    persons holding common shares through partnerships or other entities treated as
partnerships for U.S. federal income tax purposes.
   
    
    a citizen or resident of the United States;
    
    a corporation (or other entity taxable as a corporation for U.S. federal income tax
purposes) organized under the laws of the United States, any state in the United States
or the District of Columbia;
    
    an estate whose income is subject to U.S. Federal income taxation regardless of its
source; or
    
    a trust that (1) is subject to the primary supervision of a court within the United
States and one or more U.S. persons have the authority to control all substantial
decisions of the trust or (2) was in existence on August 20, 1996, was treated as a U.S.
person under the Internal Revenue Code on the previous and has a valid election in effect
under applicable U.S. Treasury regulations to be treated as a U.S. person.
   53




---



##### Table of Contents



Taxation of Dividends and Other Distributions on the Common Shares
   Taxation of Dispositions of Common Shares
  Passive Foreign Investment Company
  
    
    at least 75% of its gross income is passive income (the  income test), or
    
    at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable
year) is attributable to assets that produce or are held for the production of passive income(the asset test).
    54




---



##### Table of Contents




    
    the excess distribution or gain will be allocated ratably over
your holding period for the common shares.
    
    the amount allocated to the current taxable year, and any taxable
year prior to the first taxable year in which we became a PFIC,
will be treated as ordinary income, and
    
    the amount to each other taxable year will be subject to the
highest tax rate in effect for that taxable year and interest
charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such taxable
year.
   de minimis
      Information Reporting and Backup Withholding
   55




---



##### Table of Contents



F. Dividends and paying agents.
  G. Statement by experts.
  H. Documents on display.
 www.sec.gov
  I . Subsidiary Information.
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk.
 Foreign exchange risk
     56




---



##### Table of Contents



Interest rate risk
  Inflation
  
 Item 12. Description of Securities Other than Equity Securities.
  
 PART II
 
 Item 13. Default, Dividend Arrearages and Delinquencies.
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
  
 Item 15T. Controls and Procedures
 Disclosure Controls and Procedures
  57




---



##### Table of Contents



Managements Report on Internal Control over Financial Reporting
  
    
    Pertain to the maintenance of records that, in reasonable details,
accurately and fairly reflect the transactions and dispositions of
an issuers assets;
    
    Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with GAAP, and that an issuers receipts and
expenditures are being made only in accordance with authorizations
of its management and directors; and
    
    Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of an
issuers assets that could have a material effect on the financial
statements.
    (1)
    
    lack of internal audit department for carrying internal auditing function over financial
reporting in our company; and(2)
    
    lack of accounting personnel with knowledge of U.S. GAAP and SEC financial reporting
requirements.
  Changes in internal control over financial reporting
  (1)
    
    recruitment of more qualified accounting personnel;(2)
    
    establishment of an internal audit department; and(3)
    
    improvement of communication among the employees to address fraud risk and anti-fraud method.
 58




---



##### Table of Contents



Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 www. chinactdc.com.
 
 Item 16C. Principal Accountant Fees and Services
 Audit Fees
  Audit-Related Fees
   Tax Fees
  All Other Fees
  59




---



##### Table of Contents



Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
  Audit of Financial Statements
  
 Item 16D. Exemptions from the Listing Standards for Audit Committee.
  
 Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers.
  
 Item 16F. Change in Registrants Certifying Accountant
  
 Item 16G. Corporate Governance
   
    
    Nasdaq Rule 5605(b)(2) requires U.S. domestic issuers to hold regularly scheduled meetings at
least twice a year, at which only independent directors are present. We are not subject to such
requirement and our independent directors met only once in executive session in 2008.
    
    Nasdaq Rule 5605(d) requires that compensation of executive must be determined, or recommended to
the board of directors for determination, either by an independent committee or by the independent
members of the board of directors. We are not subject to such requirement and we may elect to
voluntarily comply with such requirement. Our Compensation Committee, which is comprised solely of
independent directors, makes recommendations to the board concerning salaries and incentive
compensation for our executive officers and directors and administrates our stock option plans, but
our CEO may be present and participate in the deliberations concerning his compensation.
    
    Nasdaq Rule 5630 requires related party transactions to be reviewed or approved by audit
committee or other independent body of the board of directors. We are not subject to such
requirement and we may elect to voluntarily comply with such requirement.
    
    In addition, we are not required to solicit shareholder approval of stock plans, including those
in which our officers or directors may participate; stock issuances that will result in a change in
control; the issuance of our stock in related party transactions or other transactions in which we
may issue 20% or more of our outstanding shares; or, below market issuances of 20% or more of our
outstanding shares to any person (Nasdaq Rule 5635).
  60




---



##### Table of Contents



Item 17. Financial Statements.
  
 Item 18. Financial Statements.
  61




---



##### Table of Contents



Item 19. Exhibits.
  ExhibitNumber
    
    Description of Document1.1
    
    Amended and Restated Memorandum and Articles of Association of China Technology Development
Group Corporation, adopted on October 19, 2007.(1)4.1
    
    Sale and purchase agreement with Win Horse Investments Limited in relation to the disposal of
China Natures Technology Inc dated April 27, 2007 (translated version). (2)4.2
    
    Cooperation contract with China Solar Energy Group Limited relating to the solar energy SnO2
production line dated September 7, 2007. (3)4.3
    
    Sale and purchase agreement with China Biotech Holdings Limited relating to shares in Faster
Assets Limited dated November 8, 2007. (4)4.4
    
    Memorandum of completion of sale and purchase agreement relating to shares in Faster Assets
Limited dated December 10, 2007. (4)4.5
    
    Sale and purchase agreement with Total Trump Limited relating to shares in China Natures
Technology Inc dated December 18, 2007. (5)4.6
    
    Sale and purchase agreement with Harvest Time International Holdings Limited relating to
shares in Green Energy Industry Limited dated April 21, 2008. (1)4.7
    
    Securities purchase agreement with institutional investors relating to sell and purchase of
common shares of the Company dated September 23, 2008. (6)4.8
    
    Sale and purchase agreement with Sentron Enterprises Limited relating to shares in Jingle
Technology Limited dated December 29, 2008. (7)4.9
    
    Subscription agreement with CMTF Private Equity One relating to issue and subscription of
convertible note of China Green Holdings Limited dated April 28, 2009. (8)4.10
    
    Convertible Note issued on May 12, 2009 by China Green Holdings Ltd. to CMTF Private Equity
One with a principal amount of $10,000,000. (8)4.11
    
    Registration Rights Agreement, dated as of May 12, 2009, with CMTF Private Equity One. (8)4.12
    
    Guarantee Agreement, dated as of may 12, 2009, with CMTF Private Equity One. (8)8.1
    
    List of all subsidiaries.11.1
    
    Code of Ethics. (2)12.1
    
    Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.13.1
    
    Certification of Chief Executive Officer and Chief Financial Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.
 62




---



##### Table of Contents



ExhibitNumber
    
    Description of Document23.1
    
    Consent of Friedman LLP to the incorporation by reference of their report dated June 26,
2009 included in the Registrants Report on Form 20-F for the fiscal year ended December 31, 200823.2
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the
Registration Statements on Form S-8 (file numbers 333-147806, 333-139608 and 333-127423) of
their report dated June 26, 2009 included in the Registrants Report on Form 20-F for the
fiscal year ended December 31, 2008
 
  (1)
    
    incorporated by reference to the Exhibits to our annual report on Form 20-F for the fiscal
year ended December 31, 2007, SEC File No. 000-29008.(2)
    
    incorporated by reference to the Exhibits to our annual report on Form 20-F for the fiscal
year ended December 31, 2006, SEC File No. 000-29008.(3)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC on
September 25, 2007, SEC File No. 000-29008.(4)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC on
December 13, 2007, SEC File No. 000-29008.(5)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC on
December 20, 2007, SEC File No. 000-29008.(6)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC on
September 24, 2008, SEC File No. 000-29008.(7)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC on
December 30, 2008, SEC File No. 000-29008.(8)
    
    incorporated by reference to the Exhibits to our report on Form 6-K filed with the SEC dated
May 4, 2009, SEC File No. 000-29008. 63




---



##### Table of Contents



SIGNATURES
  CHINA TECHNOLOGY DEVELOPMENT
GROUP CORPORATIONDate:June 26, 2009
    /s/ King Pak LeungName:
    King Pak LeungTitle:
    Chief Financial Officer 64




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm as of December 31, 2007 and 2008
and for the years then ended
    
    
    F  2Report of Independent Registered Public Accounting Firm as of December 31, 2006 and for
the year then ended
    
    
    F  3Consolidated Statements of Operations for the years ended December 31, 2006, 2007 and 2008
    
    
    F  4Consolidated Balance Sheets as of December 31, 2007 and 2008
    
    
    F  5Consolidated Statements of Changes in Shareholders Equity for the years ended December
31, 2006, 2007 and 2008
    
    
    F  6Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2007 and 2008
    
    
    F  8Notes to Consolidated Financial Statements
    
    
    F  10




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 
 F-3




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in thousands except for per share data)
For the years ended December 31, 2006, 2007 and 2008
 *
    
    
    *Notes
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Continuing operations:Revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    1Cost of sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (3
    )Gross profit (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (2
    )Research and development expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (133
    )
    
    
    (19
    )General and administrative expenses **
    
    
    
    
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,195
    )
    
    
    (3,547
    )Operating loss
    
    
    
    
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,338
    )
    
    
    (3,568
    )Other income (expense):Interest income
    
    
    
    
    
    
    182
    
    
    
    827
    
    
    
    79
    
    
    
    12Finance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (475
    )
    
    
    (70
    )(Loss) gain on disposal of available-for-sale securities
    
    
    
    
    
    
    (488
    )
    
    
    15,405
    
    
    
    (14,049
    )
    
    
    (2,059
    )Impairment of available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,213
    )
    
    
    (2,230
    )Dividend income from available-for-sale securities
    
    
    
    
    
    
    4
    
    
    
    58
    
    
    
    48
    
    
    
    7Change in fair value of warrant liabilities
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    (1,236
    )
    
    
    (181
    )Exchange loss
    
    
    
    
    
    
    
    
    
    
    (482
    )
    
    
    (268
    )
    
    
    (39
    )Others, net
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (36
    )
    
    
    (5
    )Loss before income tax expenses
    
    
    
    
    
    
    (31,087
    )
    
    
    (8,694
    )
    
    
    (55,488
    )
    
    
    (8,133
    )Income tax (expenses) credit
    
    
    4
    
    
    
    
    
    
    
    (390
    )
    
    
    712
    
    
    
    104Loss from continuing operations
    
    
    
    
    
    
    (31,087
    )
    
    
    (9,084
    )
    
    
    (54,776
    )
    
    
    (8,029
    )Discontinued operations:
    
    
    5(Loss) profit from discontinued operations, net of income taxes
of Rmb15, nil and nil in the three years ended December 31,
2006, 2007 and 2008, respectively
    
    
    
    
    
    
    (83,499
    )
    
    
    1,973
    
    
    
    858
    
    
    
    126Net loss for the year
    
    
    
    
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )
    
    
    (7,903
    )Net loss per share
    
    
    13-Basic and diluted
    
    
    
    
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (3.34
    )
    
    
    (0.49
    )Net loss per share from continuing operations-Basic and diluted
    
    
    
    
    
    
    (2.75
    )
    
    
    (0.64
    )
    
    
    (3.39
    )
    
    
    (0.50
    )Net (loss) income per share from discontinued operations-Basic and diluted
    
    
    
    
    
    
    (7.38
    )
    
    
    0.14
    
    
    
    0.05
    
    
    
    0.01Weighted average common shares
    
    
    13-Basic and diluted
    
    
    
    
    
    
    11,312
    
    
    
    14,249
    
    
    
    16,160
 
 *
    
    Certain revenues and expenses were reclassified to discontinued operations for comparative
purpose (see Note 5).**
    
    Included in general and administrative expenses were stock-based compensation of Rmb16,431,
Rmb5,788 and Rmb8,738 for the years ended December 31, 2006, 2007 and 2008, respectively.  F-4




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in thousands except share and per share data)
As of December 31, 2007 and 2008
 Notes
    
    
    2007
    
    
    2008
    
    
    2008Rmb
    
    
    Rmb
    
    
    US$ASSETSCURRENT ASSETSCash and cash equivalents
    
    
    
    
    
    
    18,906
    
    
    
    6,770
    
    
    
    992Available-for-sale securities
    
    
    11,18
    
    
    
    44,808
    
    
    
    4,712
    
    
    
    691Trade accounts receivable, net of allowance for doubtful
accounts of nil and nil as of December 31, 2007 and 2008,
respectively
    
    
    
    
    
    
    975
    
    
    
    8
    
    
    
    1Inventories
    
    
    
    
    
    
    267
    
    
    
    211
    
    
    
    31Value added tax recoverable
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    Due from related parties
    
    
    14
    
    
    
    5,612
    
    
    
    5,282
    
    
    
    774Prepaid expenses and other current assets
    
    
    6
    
    
    
    1,466
    
    
    
    941
    
    
    
    138Assets classified as held for sale
    
    5(iv)
    
    
    
    
    
    
    2,439
    
    
    
    357TOTAL CURRENT ASSETS
    
    
    
    
    
    
    72,201
    
    
    
    20,363
    
    
    
    2,984Prepayment for land use right
    
    
    7
    
    
    
    4,490
    
    
    
    4,400
    
    
    
    645Property, plant and equipment, net
    
    
    8
    
    
    
    35,771
    
    
    
    33,331
    
    
    
    4,885Prepayment for acquisition of property, plant and machinery
    
    
    9
    
    
    
    3,426
    
    
    
    4,525
    
    
    
    663TOTAL ASSETS
    
    
    
    
    
    
    115,888
    
    
    
    62,619
    
    
    
    9,177LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    
    
    
    
    
    488
    
    
    
    3
    
    
    
    Accrued professional fees
    
    
    
    
    
    
    5,365
    
    
    
    3,215
    
    
    
    471Income taxes payable
    
    
    
    
    
    
    611
    
    
    
    
    
    
    
    Due to related parties
    
    
    14
    
    
    
    6,691
    
    
    
    8,944
    
    
    
    1,311Deferred tax liabilities
    
    
    4
    
    
    
    1,325
    
    
    
    
    
    
    
    Overdraft from security account
    
    
    19
    
    
    
    
    
    
    
    1,499
    
    
    
    220Warrant liabilities
    
    
    11,16
    
    
    
    
    
    
    
    2,289
    
    
    
    336Other liabilities and accrued expenses
    
    
    10
    
    
    
    18,689
    
    
    
    661
    
    
    
    97Liabilities classified as held for sale
    
    5(iv)
    
    
    
    
    
    
    1,360
    
    
    
    199TOTAL CURRENT LIABILITIES
    
    
    
    
    
    
    33,169
    
    
    
    17,971
    
    
    
    2,634Deferred tax liabilities-non-current
    
    
    4
    
    
    
    2,530
    
    
    
    2,418
    
    
    
    354TOTAL LIABILITIES
    
    
    
    
    
    
    35,699
    
    
    
    20,389
    
    
    
    2,988Contingencies and commitments
    
    
    20SHAREHOLDERS EQUITYCommon stock, (US$0.01 par value; 4,000,000,000 authorized
in 2007 and 2008; shares issued and outstanding: 15,028,665 in 2007 and 15,543,669 in 2008)
    
    
    16
    
    
    
    1,170
    
    
    
    1,205
    
    
    
    177Preferred stock, (US$0.01 par value; 1,000,000,000 shares
authorized; shares issued and outstanding: 1,000,000 in
2007 and 2008)
    
    
    17
    
    
    
    77
    
    
    
    77
    
    
    
    11Additional paid-in capital
    
    
    
    
    
    
    369,779
    
    
    
    394,606
    
    
    
    57,839Accumulated deficit
    
    
    
    
    
    
    (292,873
    )
    
    
    (346,791
    )
    
    
    (50,831
    )Accumulated other comprehensive (loss) income
    
    
    
    
    
    
    2,036
    
    
    
    (6,867
    )
    
    
    (1,007
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    80,189
    
    
    
    42,230
    
    
    
    6,189TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    115,888
    
    
    
    62,619
    
    
    
    9,177
  F-5




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands)
For the years ended December 31, 2006, 2007 and 2008
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income (loss)
    
    
    equityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbBalance at January 1, 2006
    
    
    
    
    
    
    
    
    
    
    11,274,497
    
    
    
    910
    
    
    
    269,924
    
    
    
    (171,176
    )
    
    
    (950
    )
    
    
    98,708Issue of shares
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    165
    
    
    
    48,601
    
    
    
    
    
    
    
    
    
    
    
    48,766Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    3
    
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    505Issue of warrants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234
    
    
    
    
    
    
    
    
    
    
    
    234Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,431
    
    
    
    
    
    
    
    
    
    
    
    16,431Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,586
    )
    
    
    
    
    
    
    (114,586
    )Net unrealized gain on available-for-
sale securities, net of tax provision of nil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    84Reclassification adjustment upon disposal of
available-for-sale securities, net of tax provision of nil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479
    
    
    
    479Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,004
    )Balance at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    13,809,497
    
    
    
    1,078
    
    
    
    335,692
    
    
    
    (285,762
    )
    
    
    (368
    )
    
    
    50,640Issue of shares
    
    
    1,000,000
    
    
    
    77
    
    
    
    782,168
    
    
    
    60
    
    
    
    20,563
    
    
    
    
    
    
    
    
    
    
    
    20,700Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    437,000
    
    
    
    32
    
    
    
    7,736
    
    
    
    
    
    
    
    
    
    
    
    7,768Issue of warrants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,584
    
    
    
    
    
    
    
    
    
    
    
    4,584Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,204
    
    
    
    
    
    
    
    
    
    
    
    1,204Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,111
    )
    
    
    
    
    
    
    (7,111
    )Net unrealized gain on available-for-
sale securities, net of Rmb1,325 tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,247
    
    
    
    6,247
 F-6




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands)
For the years ended December 31, 2006, 2007 and 2008
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income (loss)
    
    
    equityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbReclassification adjustment upon disposal of
available-for-sale securities, net of tax provision of nil
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (84
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,759
    )
    
    
    (3,759
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,707
    )Balance at December 31, 2007
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,028,665
    
    
    
    1,170
    
    
    
    369,779
    
    
    
    (292,873
    )
    
    
    2,036
    
    
    
    80,189Issue of common stock and Series A warrants to investors
    
    
    
    
    
    
    
    
    
    
    498,338
    
    
    
    34
    
    
    
    7,809
    
    
    
    
    
    
    
    
    
    
    
    7,843(net of offering cost of Rmb682)Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    16,666
    
    
    
    1
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    358Modification of warrants issued to non-employees in prior year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,364
    
    
    
    
    
    
    
    
    
    
    
    2,364Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,374
    
    
    
    
    
    
    
    
    
    
    
    6,374Contribution by major shareholder-China Biotech
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,923
    
    
    
    
    
    
    
    
    
    
    
    7,923Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,918
    )
    
    
    
    
    
    
    (53,918
    )Reclassification adjustment upon disposal of
available-for-sale securities, net of Rmb1,325 tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,247
    )
    
    
    (6,247
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,656
    )
    
    
    (2,656
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62,821
    )Balance at December 31, 2008
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,543,669
    
    
    
    1,205
    
    
    
    394,606
    
    
    
    (346,791
    )
    
    
    (6,867
    )
    
    
    42,230
  F-7




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in thousands)
For the years ended December 31, 2006, 2007 and 2008
 2006
    
    
    2007
    
    
    2008
    
    
    2008Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Cash flows from operating activitiesNet loss
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )
    
    
    (7,903
    )Adjustments to reconcile net loss to net cash used in operating activitiesMinority interests in loss of consolidated subsidiaries
    
    
    (5,515
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of intangible asset
    
    
    6,209
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    16,431
    
    
    
    5,788
    
    
    
    8,738
    
    
    
    1,281Impairment of goodwill
    
    
    69,526
    
    
    
    
    
    
    
    
    
    
    
    Amortization of long-term prepayment for rental of land
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    13Depreciation
    
    
    693
    
    
    
    668
    
    
    
    2,093
    
    
    
    307Profit on disposal of property, plant and equipment
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    Impairment of property, plant and equipment
    
    
    2,989
    
    
    
    
    
    
    
    
    
    
    
    Loss (gain) on disposal of available-for-sale securities
    
    
    488
    
    
    
    (15,500
    )
    
    
    14,049
    
    
    
    2,059Impairment of available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    15,213
    
    
    
    2,230Change in fair value of warrant liabilities
    
    
    
    
    
    
    
    
    
    
    1,236
    
    
    
    181Loss (gain) on disposal of subsidiaries
    
    
    7,872
    
    
    
    (2,128
    )
    
    
    
    
    
    
    Income tax expenses
    
    
    
    
    
    
    
    
    
    
    (112
    )
    
    
    (16
    )Allowance for doubtful accounts
    
    
    892
    
    
    
    
    
    
    
    
    
    
    
    Changes in assets and liabilities:(Increase) decrease in trade accounts receivable
    
    
    (1,004
    )
    
    
    482
    
    
    
    289
    
    
    
    42(Increase) decrease in inventories
    
    
    (444
    )
    
    
    1,240
    
    
    
    16
    
    
    
    2Decrease (increase) in due from related parties and other assets
    
    
    1,423
    
    
    
    (378
    )
    
    
    201
    
    
    
    29Increase (decrease) in trade accounts payable
    
    
    614
    
    
    
    (397
    )
    
    
    (267
    )
    
    
    (39
    )Increase in amount due to related parties
    
    
    60
    
    
    
    373
    
    
    
    2,301
    
    
    
    337Increase (decrease) in other current liabilities
    
    
    4,342
    
    
    
    (926
    )
    
    
    (4,348
    )
    
    
    (638
    )(Decrease) increase in income taxes payable
    
    
    (9
    )
    
    
    390
    
    
    
    (600
    )
    
    
    (88
    )(Increase) decrease in taxes recoverable
    
    
    (174
    )
    
    
    
    
    
    
    (112
    )
    
    
    (16
    )Net cash used in operating activities
    
    
    (10,197
    )
    
    
    (17,499
    )
    
    
    (15,131
    )
    
    
    (2,219
    )Cash flows from investing activities(Increase) decrease in security trust account
    
    
    (181
    )
    
    
    19,160
    
    
    
    11
    
    
    
    2Acquisitions, net of cash acquired
    
    
    
    
    
    
    5,783
    
    
    
    
    
    
    
    Cash and cash equivalents disposed of upon disposal of
subsidiaries
    
    
    (3,550
    )
    
    
    900
    
    
    
    
    
    
    
    Proceeds from disposal of available-for-sale securities
    
    
    276
    
    
    
    156,382
    
    
    
    14,633
    
    
    
    2,145Purchase of available-for-sales securities
    
    
    
    
    
    
    (178,470
    )
    
    
    (13,100
    )
    
    
    (1,920
    )Addition of construction in progress
    
    
    
    
    
    
    (829
    )
    
    
    
    
    
    
    Prepayment for acquisition of property and equipment
    
    
    
    
    
    
    (3,426
    )
    
    
    (4,525
    )
    
    
    (663
    )Purchases of property, plant and equipment
    
    
    (1,126
    )
    
    
    (1,443
    )
    
    
    (10,972
    )
    
    
    (1,609
    )Proceeds from disposal of property, plant and equipment
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (4,576
    )
    
    
    (1,943
    )
    
    
    (13,953
    )
    
    
    (2,045
    )Cash flows from financing activitiesProceeds from issue of common stock and warrants
    
    
    
    
    
    
    29,422
    
    
    
    9,365
    
    
    
    1,373Offering costs for issue of common stock and warrants
    
    
    
    
    
    
    
    
    
    
    (469
    )
    
    
    (69
    )Proceeds from exercise of stock option
    
    
    505
    
    
    
    7,768
    
    
    
    358
    
    
    
    53Loan to a third party
    
    
    (600
    )
    
    
    
    
    
    
    
    
    
    
    Overdraft from security account
    
    
    
    
    
    
    
    
    
    
    1,499
    
    
    
    220Contribution by major shareholder- China Biotech
    
    
    
    
    
    
    
    
    
    
    7,923
    
    
    
    1,161Net cash (used in) provided by financing activities
    
    
    (95
    )
    
    
    37,190
    
    
    
    18,676
    
    
    
    2,738
 F-8




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Amount expressed in thousands)
For the years ended December 31, 2006, 2007 and 2008
 2006
    
    2007
    
    2008
    
    2008Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Effect of exchange rate changes on cash and cash equivalents
    
    
    19
    
    
    
    (2,317
    )
    
    
    (668
    )
    
    
    (98
    )Net (decrease) increase in cash and cash equivalents
    
    
    (14,849
    )
    
    
    15,431
    
    
    
    (11,076
    )
    
    
    (1,624
    )Cash and cash equivalents at beginning of year
    
    
    18,324
    
    
    
    3,475
    
    
    
    18,906
    
    
    
    2,771Less: Cash and cash equivalents at end of period from
discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,060
    )
    
    
    (155
    )Cash and cash equivalents at end of year
    
    
    3,475
    
    
    
    18,906
    
    
    
    6,770
    
    
    
    992Supplemental disclosure of cash flow informationIncome taxes paid
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Interest paid
    
    
    
    
    
    
    
    
    
    
    475
    
    
    
    70Supplemental disclosure non-cash investing and financing activitiesIssue of shares for financing activities in 2006
    
    
    48,766
    
    
    
    
    
    
    
    
    
    
    
    Issue of warrants for financing activities in 2006
    
    
    234
    
    
    
    
    
    
    
    
    
    
    
    Issue of shares in exchange for equity interest in Faster Group in 2007
    
    
    
    
    
    
    20,700
    
    
    
    
    
    
    
    Issue of warrants as offering costs for financing activities in 2008
    
    
    
    
    
    
    
    
    
    
    682
    
    
    
    98Construction costs funded through accrued expenses and other current
liabilities
    
    
    
    
    
    
    14,609
    
    
    
    
    
    
    
    Purchase of property, plant and equipment funded through accrued
expenses and other current liabilities
    
    
    
    
    
    
    158
    
    
    
    81
    
    
    
    12
  F-9




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 1 Nature of operations and basis of presentation
      F-10




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies
  (a) Consolidation
   (b) Use of Estimates
  (c) Revenues
   (d) Income Taxes
   F-11




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (e) Concentration of credit risk and major customers
  (f) Foreign currency transaction gains and losses and translation of foreign currencies
    (g) Translation into United States Dollars
  (h) Property, plant and equipment and land use right
  Buildings
    
    20 yearsPlant and machineries
    
    10 yearsComputer equipment
    
    3 yearsFurniture, fixtures and office equipment
    
    3 yearsMotor vehicles
    
    5 years
  (i) Construction in progress
  F-12




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (j) Impairment on available- for- sales securities
  (k) Impairment or disposal of long lived assets
   (l) Trade accounts receivable
  (m) Inventories
  (n) Cash and cash equivalents
  (o) Investment in securities
  F-13




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (p) Fair value Measurement
  (q) Research and development costs
  (r) Employee benefit plans
   (s) Segment reporting
  (t) Comprehensive income (loss)
  (u) Advertising cost
  (v) Earnings per share
  F-14




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (w) Stock-based compensation
    (x) Operating leases
  (y) Reclassifications
  (z) Recent accounting pronouncements
  F-15




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
       F-16




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2 Summary of significant accounting policies (continued)
      F-17




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 3 Acquisition
 Faster Assets Limited
  Income tax expenses
      F-18




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 4 Income tax expenses (continued)
 Composition of income tax expenses
  2006
    
    
    2007
    
    
    2008Rmb
    
    
    Rmb
    
    
    RmbCurrent income tax expenses (credits)- Continuing operations
    
    
    
    
    
    
    390
    
    
    
    (600
    )Deferred income tax expenses
    
    
    
    
    
    
    
    
    
    
    (112
    )Income tax expenses
    
    
    
    
    
    
    390
    
    
    
    (712
    )
 Reconciliation of income tax expenses by applying PRC statutory Enterprise Income Tax rate
  2006
    
    
    2007
    
    
    2008Rmb
    
    
    Rmb
    
    
    RmbNet loss before provision for income taxes
    
    
    (31,087
    )
    
    
    (8,694
    )
    
    
    (55,488
    )PRC statutory tax rate
    
    
    33
    %
    
    
    33
    %
    
    
    25
    %Income tax credit at PRC statutory EIT rate
    
    
    (10,259
    )
    
    
    (2,869
    )
    
    
    (13,872
    )Income or expenses adjusted for inter-group liabilities or
receivables written off
    
    
    
    
    
    
    72
    
    
    
    Effect of income tax rate differences in other jurisdictions
    
    
    9,570
    
    
    
    4,186
    
    
    
    6,984Income not subject to taxation
    
    
    (31
    )
    
    
    (22
    )
    
    
    (9
    )Expenses not deductible for taxation purpose
    
    
    
    
    
    
    21
    
    
    
    4,714Effect of utilization of tax losses not previously recognized
    
    
    
    
    
    
    1,033
    
    
    
    Effect of preferential tax treatment
    
    
    
    
    
    
    226
    
    
    
    Effect of tax losses expired under statute
    
    
    
    
    
    
    
    
    
    
    Effect of tax losses under recognized in prior years
    
    
    
    
    
    
    
    
    
    
    (363
    )Effect of over provision in prior years
    
    
    
    
    
    
    
    
    
    
    (600
    )Effect of tax losses written off
    
    
    
    
    
    
    713
    
    
    
    Effect of tax losses from disposed entities
    
    
    4,059
    
    
    
    4,840
    
    
    
    Effect of change in PRC statutory tax rate
    
    
    
    
    
    
    5
    
    
    
    Effect of change in HK statutory tax rate
    
    
    
    
    
    
    
    
    
    
    21Change in valuation allowance
    
    
    (3,339
    )
    
    
    (7,815
    )
    
    
    2,413Total income tax expenses
    
    
    
    
    
    
    390
    
    
    
    (712
    )
 F-19




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 4 Income tax expenses (continued)
 The principal components of the deferred income tax assets and liabilities are as follows:
 December 31, 2007
    
    
    December 31, 2008Rmb
    
    
    RmbDeferred tax assets:Current deferred tax assets
    
    
    
    
    
    
    Less: valuation allowance
    
    
    
    
    
    
    Current deferred tax assets, net
    
    
    
    
    
    
    Tax loss carryforwards
    
    
    3,777
    
    
    
    6,190Less: valuation allowance
    
    
    (3,777
    )
    
    
    (6,190
    )Non-current deferred tax assets, net
    
    
    
    
    
    
    Deferred tax liability:Unrealized gain on available-for-sales securities
    
    
    (1,325
    )
    
    
    Other intangible asset
    
    
    
    
    
    
    Property, plant and equipment, net
    
    
    
    
    
    
    Current deferred tax liabilities
    
    
    (1,325
    )
    
    
    Property, plant and equipment, net
    
    
    (2,041
    )
    
    
    (1,938
    )Prepayment for land use right
    
    
    (489
    )
    
    
    (480
    )Non-current deferred tax liabilities
    
    
    (2,530
    )
    
    
    (2,418
    )Total
    
    
    (3,855
    )
    
    
    (2,418
    )Reported as:Current deferred tax assets
    
    
    
    
    
    
    Current deferred tax liabilities
    
    
    (1,325
    )
    
    
    Subtotal
    
    
    (1,325
    )
    
    
    Non-current deferred tax assets
    
    
    
    
    
    
    Non-current deferred tax liabilities
    
    
    (2,530
    )
    
    
    (2,418
    )Total
    
    
    (3,855
    )
    
    
    (2,418
    )
   F-20




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5 Disposal and discontinued operations
    2006RmbNet assets disposed of (excluding cash and cash equivalents):Trade accounts receivable, net
    
    
    338Inventories
    
    
    1,523Due from related parties
    
    
    18Prepaid expenses and other assets
    
    
    162Property, plant and equipment, net
    
    
    6,434Intangible asset
    
    
    332Trade accounts payable
    
    
    (301
    )Income taxes payable
    
    
    (4
    )Short term borrowing
    
    
    (3,569
    )Other liabilities and accrued expenses
    
    
    (611
    )4,322Loss on disposal of discontinued operations
    
    
    (7,872
    )(3,550
    )Discharged by:Cash and cash equivalents disposed
    
    
    (3,550
    )
 F-21




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5 Disposal and discontinued operations (continued)
    2007RmbNet assets disposed of (excluding cash and cash equivalents):Other assets
    
    
    750Property, plant and equipment, net
    
    
    46Deferred tax liabilities
    
    
    (491
    )Other liabilities and accrued expenses
    
    
    (1,533
    )(1,228
    )Gain on disposal of discontinued operations
    
    
    2,128900Discharged by:Consideration received
    
    
    935Cash and cash equivalents disposed
    
    
    (35
    )900
    2008RmbNet assets disposed of (excluding cash and cash equivalents):Other liabilities and accrued expenses
    
    
    (1
    )(1
    )Gain on disposal of discontinued operations
    
    
    109Discharged by:Consideration received
    
    
    9Cash and cash equivalents disposed
    
    
    9
 F-22




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5 Disposal and discontinued operations (continued)
    2008RmbAssets held for saleCash and cash equivalents
    
    
    1,060Trade accounts receivable, net
    
    
    678Inventories  merchandise for resale
    
    
    40Value added tax and business tax recoverable
    
    
    279Prepaid expenses and other assets
    
    
    324Property, plant & equipment, net
    
    
    582,439Liabilities associated with assets classified as held for saleTrade accounts payable
    
    
    (218
    )Tax payables
    
    
    (151
    )Other liabilities and accrued expenses
    
    
    (991
    )(1,360
    )
 F-23




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5 Disposal and discontinued operations (continued)
  Year ended
    
    Year ended
    
    Year endedDecember
    
    December
    
    December31, 2006
    
    31, 2007
    
    31, 2008Rmb
    
    Rmb
    
    Rmb
    
    Total
    
    Rmb
    
    Rmb
    
    Rmb
    
    Total
    
    Rmb
    
    Rmb
    
    TotalAnji
    
    
    
    
    
    Jingle
    
    
    
    
    
    
    
    
    
    Green
    
    Jingle
    
    
    
    
    
    Green
    
    JingleBio
    
    CNT
    
    Group
    
    2006
    
    CNT
    
    Energy
    
    Group
    
    2007
    
    Energy
    
    Group
    
    2008Revenues
    
    
    
    
    
    
    52
    
    
    
    9,291
    
    
    
    9,343
    
    
    
    17
    
    
    
    
    
    
    
    7,680
    
    
    
    7,697
    
    
    
    
    
    
    
    5,518
    
    
    
    5,518Cost of sales
    
    
    
    
    
    
    (44
    )
    
    
    (4,244
    )
    
    
    (4,288
    )
    
    
    (17
    )
    
    
    
    
    
    
    (3,866
    )
    
    
    (3,883
    )
    
    
    
    
    
    
    (1,876
    )
    
    
    (1,876
    )Gross profit
    
    
    
    
    
    
    8
    
    
    
    5,047
    
    
    
    5,055
    
    
    
    
    
    
    
    
    
    
    
    3,814
    
    
    
    3,814
    
    
    
    
    
    
    
    3,642
    
    
    
    3,642Selling expenses
    
    
    
    
    
    
    (185
    )
    
    
    (1,109
    )
    
    
    (1,294
    )
    
    
    
    
    
    
    
    
    
    
    (1,108
    )
    
    
    (1,108
    )
    
    
    
    
    
    
    (595
    )
    
    
    (595
    )General and administrative
expenses
    
    
    
    
    
    
    (4,082
    )
    
    
    (3,875
    )
    
    
    (7,957
    )
    
    
    (399
    )
    
    
    (13
    )
    
    
    (3,613
    )
    
    
    (4,025
    )
    
    
    (25
    )
    
    
    (2,899
    )
    
    
    (2,924
    )Bad debt expenses
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    (892
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    
    
    
    
    (6,541
    )
    
    
    
    
    
    
    (6,541
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    (69,526
    )
    
    
    
    
    
    
    (69,526
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating profit (loss)
    
    
    
    
    
    
    (81,218
    )
    
    
    63
    
    
    
    (81,155
    )
    
    
    (399
    )
    
    
    (13
    )
    
    
    (907
    )
    
    
    (1,319
    )
    
    
    (25
    )
    
    
    148
    
    
    
    123Other income
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    1,164
    
    
    
    1,164
    
    
    
    
    
    
    
    725
    
    
    
    725(Loss) profit on
disposal of subsidiaries
    
    
    (7,872
    )
    
    
    
    
    
    
    
    
    
    
    (7,872
    )
    
    
    2,128
    
    
    
    
    
    
    
    
    
    
    
    2,128
    
    
    
    10
    
    
    
    
    
    
    
    10(Loss) profit from operations
before income tax expenses
    
    
    (7,872
    )
    
    
    (81,218
    )
    
    
    91
    
    
    
    (88,999
    )
    
    
    1,729
    
    
    
    (13
    )
    
    
    257
    
    
    
    1,973
    
    
    
    (15
    )
    
    
    873
    
    
    
    858Income tax expenses
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) profit from operations
before minority interests
    
    
    (7,872
    )
    
    
    (81,233
    )
    
    
    91
    
    
    
    (89,014
    )
    
    
    1,729
    
    
    
    (13
    )
    
    
    257
    
    
    
    1,973
    
    
    
    (15
    )
    
    
    873
    
    
    
    858Minority interests
    
    
    
    
    
    
    5,515
    
    
    
    
    
    
    
    5,515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) profit from operations
    
    
    (7,872
    )
    
    
    (75,718
    )
    
    
    91
    
    
    
    (83,499
    )
    
    
    1,729
    
    
    
    (13
    )
    
    
    257
    
    
    
    1,973
    
    
    
    (15
    )
    
    
    873
    
    
    
    858Carrying amounts of
total assets and liabilities
included as part of the
disposal group were as
follows:Total assets
    
    
    12,357
    
    
    
    
    
    
    
    
    
    
    
    12,357
    
    
    
    831
    
    
    
    
    
    
    
    
    
    
    
    831
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    (4,485
    )
    
    
    
    
    
    
    
    
    
    
    (4,485
    )
    
    
    (2,024
    )
    
    
    
    
    
    
    
    
    
    
    (2,024
    )
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
 F-24




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 6 Other assets
  December 31,
    
    
    December 31,2007
    
    
    2008Rmb
    
    
    RmbRental and utility deposits
    
    
    372
    
    
    
    146Advance to staff
    
    
    174
    
    
    
    400Prepayment for insurance
    
    
    331
    
    
    
    210Prepayment for raw materials
    
    
    56
    
    
    
    Prepayment for decoration
    
    
    
    
    
    
    134Deposit in security account
    
    
    495
    
    
    
    Others
    
    
    38
    
    
    
    511,466
    
    
    
    941
 7 Prepayment for land use right
  8 Property, plant and equipment, net
 December 31,
    
    
    December 31,2007
    
    
    2008Rmb
    
    
    RmbBuildings
    
    
    18,712
    
    
    
    20,271Plant and machinery
    
    
    
    
    
    
    8,939Computer equipment
    
    
    1,766
    
    
    
    509Furniture, fixtures and office equipment
    
    
    2,113
    
    
    
    2,497Motor vehicles
    
    
    429
    
    
    
    567Total
    
    
    23,020
    
    
    
    32,783Less: accumulated depreciation
    
    
    (2,687
    )
    
    
    (3,157
    )Add: construction in progress
    
    
    15,438
    
    
    
    3,70535,771
    
    
    
    33,331
  9 Prepayment for acquisition of property, plant and machinery
  F-25




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 10 Other liabilities and accrued expenses
 December 31,
    
    
    December 31,2007
    
    
    2008Rmb
    
    
    RmbDeposits received
    
    
    531
    
    
    
    4Accrued salaries and staff benefits
    
    
    1,350
    
    
    
    367Accrued liability for purchase of property, plant and equipment
    
    
    14,767
    
    
    
    81Accrued filing fee
    
    
    107
    
    
    
    54Accrued courier charges
    
    
    327
    
    
    
    Temporary receipt
    
    
    1,308
    
    
    
    Others
    
    
    299
    
    
    
    15518,689
    
    
    
    661
 11 Fair Value measurements
      Available-for-sales Securities
 SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31, 2008(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbHong Kong
marketable equity
securities
    
    
    4,712
    
    
    
    
    
    
    
    
    
    
    
    4,712
 F-26




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 11 Fair Value measurements (continued)
 Warrant Liabilities
 SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31, 2008(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbWarrant B
    
    
    
    
    
    
    
    
    
    
    2,289
    
    
    
    2,289
   Warrant LiabilityBeginning balance at January 1, 2008
    
    
    Total gains and losses (realized/unrealized):Included in earnings
    
    Rmb1,236Included in other comprehensive income (loss)
    
    
    Purchases, issuances and settlements
    
    Rmb1,053Ending balance at December 31, 2008
    
    Rmb2,289
 12 Stock-based compensation
 (a) Stock Option
   F-27




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 12 Stock-based compensation (continued)
 (a) Stock Option
      F-28




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 12 Stock-based compensation (continued)
  Year Ended December 31,2006
    
    2007
    
    2008Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    average
    
    
    
    
    
    averageexercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    price
    
    
    
    
    
    priceNumber of
    
    (US$ per
    
    Number
    
    (US$ per
    
    Number
    
    (US$ peroptions
    
    option)
    
    of options
    
    option)
    
    of options
    
    option)Outstanding at beginning of
year
    
    
    570,000
    
    
    
    1.68
    
    
    
    1,565,000
    
    
    
    2.66
    
    
    
    2,053,000
    
    
    
    2.98Granted
    
    
    1,030,000
    
    
    
    3.18
    
    
    
    1,000,000
    
    
    
    3.25
    
    
    
    2,410,000
    
    
    
    2.00Exercised
    
    
    (35,000
    )
    
    
    1.85
    
    
    
    (437,000
    )
    
    
    2.44
    
    
    
    (16,666
    )
    
    
    3.13Forfeited
    
    
    
    
    
    
    
    
    
    
    (75,000
    )
    
    
    3.01
    
    
    
    (93,000
    )
    
    
    3.54Outstanding at end of year
    
    
    1,565,000
    
    
    
    2.66
    
    
    
    2,053,000
    
    
    
    2.98
    
    
    
    4,353,334
    
    
    
    2.43
   Options outstanding
    
    Options exercisableWeighted
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    average
    
    
    
    
    
    averageremaining
    
    exercise
    
    
    
    
    
    exerciseNumber
    
    contractual
    
    price (US$
    
    Number
    
    price (US$Date of grant
    
    outstanding
    
    life
    
    per share)
    
    exercisable
    
    per share)December 28, 1999
    
    
    140,000
    
    
    3 years
    
    
    1.15
    
    
    
    140,000
    
    
    
    1.15September 20, 2005
    
    
    395,000
    
    
    8.72 years
    
    
    1.85
    
    
    
    395,000
    
    
    
    1.85September 18, 2006
    
    
    1,030,000
    
    
    9.28 years
    
    
    3.18
    
    
    
    1,030,000
    
    
    
    3.181,565,000
    
    
    
    
    
    
    
    
    
    
    
    1,565,000
  Options exercisableOptions outstanding
    
    
    
    
    
    WeightedWeighted
    
    Weighted
    
    
    
    
    
    averageaverage
    
    average
    
    
    
    
    
    exerciseremaining
    
    exercise
    
    
    
    
    
    priceNumber
    
    contractual
    
    price (US$
    
    Number
    
    (US$ perDate of grant
    
    outstanding
    
    life
    
    per share)
    
    exercisable
    
    share)December 28, 1999
    
    
    50,000
    
    
    2 years
    
    
    1.15
    
    
    
    50,000
    
    
    
    1.15September 20, 2005
    
    
    278,000
    
    
    7.72 years
    
    
    1.85
    
    
    
    278,000
    
    
    
    1.85September 18, 2006
    
    
    770,000
    
    
    8.28 years
    
    
    3.18
    
    
    
    770,000
    
    
    
    3.18May 23, 2007
    
    
    740,000
    
    
    4.39 years
    
    
    3.13
    
    
    
    
    
    
    
    August 3, 2007
    
    
    80,000
    
    
    4.59 years
    
    
    3.53
    
    
    
    
    
    
    
    August 20, 2007
    
    
    135,000
    
    
    4.64 years
    
    
    3.74
    
    
    
    
    
    
    
    2,053,000
    
    
    
    
    
    
    
    
    
    
    
    1,098,000
 F-29




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 12 Stock-based compensation (continued)
  Options exercisableOptions outstanding
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    Weighted
    
    
    
    
    
    averageaverage
    
    average
    
    
    
    
    
    exerciseremaining
    
    exercise
    
    
    
    
    
    priceNumber
    
    contractual
    
    price (US$
    
    Number
    
    (US$ perDate of grant
    
    outstanding
    
    life
    
    per share)
    
    exercisable
    
    share)December 28, 1999
    
    
    50,000
    
    
    1.00 years
    
    
    1.15
    
    
    
    50,000
    
    
    
    1.15September 20, 2005
    
    
    278,000
    
    
    6.72 years
    
    
    1.85
    
    
    
    278,000
    
    
    
    1.85September 18, 2006
    
    
    770,000
    
    
    7.28 years
    
    
    3.18
    
    
    
    770,000
    
    
    
    3.18May 23, 2007
    
    
    693,334
    
    
    3.39 years
    
    
    3.13
    
    
    
    219,991
    
    
    
    3.13August 3, 2007
    
    
    80,000
    
    
    3.59 years
    
    
    3.53
    
    
    
    26,665
    
    
    
    3.53August 20, 2007
    
    
    72,000
    
    
    3.64 years
    
    
    3.74
    
    
    
    23,998
    
    
    
    3.74July 28, 2008
    
    
    130,000
    
    
    4.57 years
    
    
    4.08
    
    
    
    
    
    
    
    November 10, 2008
    
    
    870,000
    
    
    4.86 years
    
    
    2.04
    
    
    
    
    
    
    
    December 30, 2008
    
    
    1,410,000
    
    
    5.00 years
    
    
    1.79
    
    
    
    
    
    
    
    4,353,334
    
    
    
    
    
    
    
    
    
    
    
    1,368,654
       F-30




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 12 Stock-based compensation (continued)
    Stock-based compensation to non-employees
   st nd rd
 st nd rd
 F-31




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 12 Stock-based compensation (continued)
  2006Granted onSeptember 18, 2006Average risk-free rate of return
    
    
    4.833
    %Weighted average expected option life
    
    2 yearsVolatility rate
    
    
    121.62
    %Dividend yield
    
    
    
 2007Granted onMay 23, 2007
    
    
    August 3, 2007
    
    
    August 20, 2007Average risk-free rate of return
    
    
    4.480
    %
    
    
    4.422
    %
    
    
    4.269
    %Volatility rate
    
    
    72.33
    %
    
    
    71.98
    %
    
    
    74.97
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 2008Granted onJuly 28, 2008
    
    
    November 10, 2008
    
    
    December 30, 2008Average risk-free rate of return
    
    
    3.393
    %
    
    
    2.607
    %
    
    
    1.508
    %Volatility rate
    
    
    76.32
    %
    
    
    85.20
    %
    
    
    86.57
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 (b) Stock Purchase Warrants
    2007
    
    
    2007
    
    
    2008July 2, 2007
    
    
    August 31, 2007
    
    
    August 29, 2008Average risk-free rate of return
    
    
    4.584
    %
    
    
    4.06
    %
    
    
    2.214
    %Volatility rate
    
    
    67.81
    %
    
    
    76.51
    %
    
    
    75.77
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
 F-32




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 13 Net (loss) income per share
   Year ended December 31,* 2006
    
    
    * 2007
    
    
    2008Rmb
    
    
    Rmb
    
    
    RmbNet loss for the year
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )Net loss from continuing operations attributable to
holders of Common Stock, basic and diluted
    
    
    (31,087
    )
    
    
    (9,084
    )
    
    
    (54,776
    )Net (loss) income from discontinued operations
attributable to holders of Common Stock, basic and
diluted
    
    
    (83,499
    )
    
    
    1,973
    
    
    
    858Weighted-average shares used in computing basic and
diluted net loss per share
    
    
    11,312
    
    
    
    14,249
    
    
    
    16,160Net loss per share (in Rmb)- Basic and diluted
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (3.34
    )Net loss per share from continuing operations (in Rmb)- Basic and diluted
    
    
    (2.75
    )
    
    
    (0.64
    )
    
    
    (3.39
    )Net
(loss) income per share from discontinued operations
(in Rmb)- Basic and diluted
    
    
    (7.38
    )
    
    
    0.14
    
    
    
    0.05
 
 *
    
    Certain revenues and expenses were reclassified to discontinued operations for comparative
purposes (see Note 5). F-33




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 13 Net (loss) income per share (continued)
  14 Related party transactions
  Year ended December 31,2006
    
    
    2007
    
    
    2008Rmb
    
    
    Rmb
    
    
    RmbTransactions with related partiesSubscription proceeds receivable from China Biotech (Note a)
    
    
    29,422
    
    
    
    
    
    
    
    Acquisition of Faster Group from China Biotech (Note b)
    
    
    
    
    
    
    20,700
    
    
    
    Prepayment for acquisition of property from ZMRE (Note c)
    
    
    
    
    
    
    3,301
    
    
    
    440Receipt for acquisition of property from China Biotech (Note d)
    
    
    
    
    
    
    
    
    
    
    7,302Payment for acquisition of property on behalf of China Biotech (Note d)
    
    
    
    
    
    
    
    
    
    
    5,000
 
  (a)
    
    On November 27, 2006, the Company entered into a subscription agreement with China Biotech to
issue 1,500,000 new shares of Common Stock and 2,000,000 warrants at US$2.50 and US$0.01 each,
respectively. The total consideration was Rmb29,422. The transaction was completed on January
12, 2007 and the subscription proceeds were fully received by the Company on that same date.
Following the completion of the transaction, China Biotech became the major shareholder of the
Company by owning 24.74% of the total outstanding shares of the Company.(b)
    
    On November 8, 2007, the Company entered into an agreement with China Biotech, one of our
major shareholders, to acquire Faster Assets and its subsidiary, which we refer to
collectively as the Faster Group. We paid the Rmb20,700 consideration through the issuance of
782,168 shares of common stock and 1,000,000 shares of preferred stock and completed the
acquisition in December 2007.(c)
    
    Zhangzhou Trendar Tech and Broad Shine,two wholly-owned subsidiaries of the Company, acquired
four properties at a consideration of Rmb3,301 in total from Zhangzhou Merchants Real Estate
Ltd. (ZMRE) on July 3, 2007 and October 22, 2007, respectively. On March 20, 2008, Broad
Shine acquired one property for consideration of Rmb440 from ZMRE. China Merchant Group
(CMG) is the ultimate holding company of China Biotech, and ZMRE is a subsidiary of CMG.(d)
    
    Prior to the acquisition (see Note 3), Faster Group had no business activities and its major
asset was a right to purchase real property located in the Tangyang Industrial Zone of China
Merchants Zhangzhou Development Zone, from China Merchants Zhangzhou Development Zone Ltd., or
CMZDZ, for consideration of Rmb13,085, of which Rmb5,783 was born by the Faster Group and
Rmb7,302 was committed by China Biotech. In 2008, the Group received Rmb7,302 from China
Biotech and paid Rmb5,000 to CMZDZ. The remaining balance due to CMZDZ is Rmb8,085.
 F-34




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 14 Related party transactions (continued)
  December 31,2007
    
    
    2008Rmb
    
    
    RmbBalances with related parties:Due from related parties
Funds held by China Biotech for potential acquisition
of technology and business in China (Note e)
    
    
    5,612
    
    
    
    5,2825,612
    
    
    
    5,282Due to related parties:Due to China Biotech (Note f)
    
    
    908
    
    
    
    859Due to CMZDZ (Note d)
    
    
    5,783
    
    
    
    8,0856,691
    
    
    
    8,944
 
 (e)
    
    China Biotech has been the major shareholder of the Company since January 12, 2007. In view
of China Biotechs experience with acquisitions in China, the Group deposited HK$6,000 with
China Biotech for the purpose of making potential acquisitions (with the assistance of China
Biotech) of technology and businesses in China. There was no agreement signed for the funds
deposited with China Biotech, and the Group can withdraw the funds without any restrictions.(f)
    
    The amount represented administrative expenses paid on behalf of Faster Assets and Shenzhen
Helios Energy by China Biotech in China.  15 Retirement benefits
  16 Common stock
     F-35




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 16 Common stock (continued)
   17 Series A non-convertible and non-redeemable Preferred Stock
   
    
    Voting rightThe 1,000,000 shares of Preferred Stock have an aggregate voting power of 25% of the
combined voting power of the Companys shares, Common Stock and Preferred Stock.
    
    DividendsThe holder is entitled to receive dividends only as, when and if such dividends are
declared by the Board with respect to shares of Preferred Stock.
    
    Liquidation preferenceIn the event of any distribution of assets upon any liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary, after payment or provision for
payments of the debts and other liabilities of the Company, the holder is entitled to
receive out of assets of the Company, whether such assets are capital, surplus or
earnings, an amount equal to the consideration paid by him for each such share plus any
accrued and unpaid dividends with respect to such shares of Preferred Stock through the
date of such liquidation, dissolution or winding up.
    
    RedemptionThe issuer has no right to redeem the Preferred Stock.
    
    Non-convertible
 18 Available-for-sale securities
   December 31,2007
    
    
    2008Rmb
    
    
    RmbCost of available-for-sale securities
    
    
    37,235
    
    
    
    19,925Unrecognized gain (loss)
    
    
    7,573
    
    
    
    Impairment of available-for-sales securities
    
    
    
    
    
    
    (15,213
    )Fair value of available-for-sale securities
    
    
    44,808
    
    
    
    4,712
 19. Overdraft from security account
  F-36




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 20 Contingencies and commitments
   As of December 31,
    
    Rmb2009
    
    
    4712010
    
    
    2762011
    
    
    1662012 and thereafter
    
    
    202Total
    
    
    1,115
    ®
 21 Restricted net assets
  F-37




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 22 Segment information
    Netidentifiable
    
    
    DepreciationOperating
    
    
    
    
    
    
    assets/
    
    
    and
    
    
    CapitalRevenues
    
    
    loss
    
    
    Assets
    
    
    (liabilities)
    
    
    amortization
    
    
    expendituresRmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb2008Solar Energy Operations
    
    
    10
    
    
    
    (4,334
    )
    
    
    43,009
    
    
    
    31,494
    
    
    
    1,679
    
    
    
    7,044Corporate*
    
    
    
    
    
    
    (20,004
    )
    
    
    17,171
    
    
    
    9,657
    
    
    
    504
    
    
    
    47Sub-total
    
    
    10
    
    
    
    (24,338
    )
    
    
    60,180
    
    
    
    41,151
    
    
    
    2,183
    
    
    
    7,091Discontinued operation-IT
Operations
    
    
    
    
    
    
    
    
    
    
    2,439
    
    
    
    1,079
    
    
    
    
    
    
    
    16Group
    
    
    10
    
    
    
    (24,338
    )
    
    
    62,619
    
    
    
    42,230
    
    
    
    2,183
    
    
    
    7,1072007Solar Energy Operations
    
    
    
    
    
    
    (1,073
    )
    
    
    55,761
    
    
    
    32,007
    
    
    
    138
    
    
    
    36,873Corporate*
    
    
    
    
    
    
    (23,422
    )
    
    
    57,019
    
    
    
    47,148
    
    
    
    326
    
    
    
    960Sub-total
    
    
    
    
    
    
    (24,495
    )
    
    
    112,780
    
    
    
    79,155
    
    
    
    464
    
    
    
    37,833Discontinued operation-IT
Operations
    
    
    
    
    
    
    
    
    
    
    3,108
    
    
    
    1,034
    
    
    
    
    
    
    
    74Group
    
    
    
    
    
    
    (24,495
    )
    
    
    115,888
    
    
    
    80,189
    
    
    
    464
    
    
    
    37,9072006Corporate
    
    
    
    
    
    
    (30,785
    )
    
    
    58,193
    
    
    
    49,607
    
    
    
    283
    
    
    
    77Sub-total
    
    
    
    
    
    
    (30,785
    )
    
    
    58,193
    
    
    
    49,607
    
    
    
    283
    
    
    
    77Discontinued operation Nutraceutical Operations
    
    
    
    
    
    
    
    
    
    
    1,964
    
    
    
    (789
    )
    
    
    
    
    
    
    968Discontinued operation-IT
Operations
    
    
    
    
    
    
    
    
    
    
    4,594
    
    
    
    1,822
    
    
    
    
    
    
    
    81Group
    
    
    
    
    
    
    (30,785
    )
    
    
    64,751
    
    
    
    50,640
    
    
    
    283
    
    
    
    1,126
 F-38




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 22 Segment information (continued)
 
 *
    
    The detail of corporate/unallocated items including mainly staff costs, legal and professional
fees are as follows:.  2006
    
    2007
    
    2008Rmb
    
    Rmb
    
    RmbSelling expenses
    
    
    
    
    
    
    
    
    
    
    Unallocated general and administrative expenses
    
    
    (30,785
    )
    
    
    (23,422
    )
    
    
    (20,004
    )Operating loss
    
    
    (30,785
    )
    
    
    (23,422
    )
    
    
    (20,004
    )Cash and cash equivalents
    
    
    1,689
    
    
    
    5,129
    
    
    
    1,688Available-for-sale securities
    
    
    19,867
    
    
    
    44,808
    
    
    
    4,712Due from related parties
    
    
    35,664
    
    
    
    5,612
    
    
    
    5,282Prepayment for acquisition of property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    4,525Other assets
    
    
    972
    
    
    
    1,470
    
    
    
    963Due to related parties
    
    
    (59
    )
    
    
    (6,008
    )
    
    
    (176
    )Deferred tax liabilities
    
    
    
    
    
    
    (1,325
    )
    
    
    Overdraft from security account
    
    
    
    
    
    
    
    
    
    
    (1,499
    )Warrant liabilities
    
    
    
    
    
    
    
    
    
    
    (2,289
    )Other liabilities
    
    
    (8,526
    )
    
    
    (2,538
    )
    
    
    (3,549
    )Net identifiable assets/ (liabilities)
    
    
    49,607
    
    
    
    47,148
    
    
    
    9,657
    23 Subsequent events
 1. Disposal of IT operations
  2. Offering of US$10 million convertible notes of CGHL, wholly-owned subsidiary of the
Company, to CMTF Private Equity One
  F-39