##### 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, 2010


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































tairan.guo@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
  U.S. GAAP þ
    
    International Financial Reporting Standards as
issued by the International Accounting Standards Board o
    
    Other o
  o o
 o þ




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##### 



TABLE OF CONTENTS
  
 PART I
    
    2Item 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
    
    15Item 4A. Unresolved Staff Comments
    
    21Item 5. Operating and Financial Review and Prospects
    
    22Item 6. Directors, Senior Management and Employees
    
    32Item 7. Major Shareholders and Related Party Transactions
    
    40Item 8. Financial Information
    
    43Item 9. The Offer and Listing
    
    43Item 10. Additional Information
    
    44Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    53Item 12. Description of Securities Other than Equity Securities
    
    53PART II
    
    54Item 13. Default, Dividend Arrearages and Delinquencies
    
    54Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    54Item 15T. Controls and Procedures
    
    54Item 16A. Audit Committee Financial Expert
    
    55Item 16B. Code of Ethics
    
    56Item 16C. Principal Accountant Fees and Services
    
    56Item 16D. Exemptions from the Listing Standards for Audit Committee
    
    56Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers
    
    56Item 16F. Change in Registrants Certifying Accountant
    
    56Item 16G. Corporate Governance
    
    56Item 17. Financial Statements
    
    57Item 18. Financial Statements
    
    57Item 19. Exhibits
    
    58SIGNATURES
    
    59EX-8.1 List of Company's SubsidiariesEX-12.1 Certification of Chief Executive OfficerEX-12.2 Certification of Acting Chief Financial OfficerEX-13.1 Certification of Chief Executive Officer and Acting Chief Financial OfficerEX-23.1 Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the registration statements on Form S-8 and Form F-3EX-23.2 Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company to the incorporation by reference in the registration statements on Form S-8 and Form F-3




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##### 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/or 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, or PRC, and
its government, respectively; 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




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##### Table of Contents



PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 A. Selected financial data.
  2




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##### Table of Contents



(Amounts in thousands, except share and per share data)Year Ended December 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb(1)
    
    
    Rmb(1)
    
    
    Rmb(1)
    
    
    Rmb(1)
    
    
    Rmb(2)
    
    
    US$Consolidated Statement
of Operations Data:Revenues
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    53,700
    
    
    
    8,134Cost of sales
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    (45,113
    )
    
    
    (6,833
    )Gross profit
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    8,587
    
    
    
    1,301Operating loss
    
    
    (30,785
    )
    
    
    (24,495
    )
    
    
    (24,338
    )
    
    
    (32,331
    )
    
    
    (28,527
    )
    
    
    (4,319
    )Other income (expense) :Interest income
    
    
    182
    
    
    
    827
    
    
    
    79
    
    
    
    7
    
    
    
    40
    
    
    
    6Finance costs
    
    
    
    
    
    
    
    
    
    
    (475
    )
    
    
    (5,799
    )
    
    
    (83
    )
    
    
    (13
    )Impairment on deposit
for business
acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,301
    )
    
    
    (1,560
    )Change in value of
trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162
    
    
    
    176Gain on disposal of
trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,196
    
    
    
    787Dividend income from
available-for-sale
securities
    
    
    4
    
    
    
    58
    
    
    
    48
    
    
    
    71
    
    
    
    
    
    
    
    (Loss) gain on
disposal of
available-for-sale
securities
    
    
    (488
    )
    
    
    15,405
    
    
    
    (14,049
    )
    
    
    111
    
    
    
    (213
    )
    
    
    (32
    )Impairment on
available-for-sale
securities
    
    
    
    
    
    
    
    
    
    
    (15,213
    )
    
    
    
    
    
    
    (3,549
    )
    
    
    (538
    )Impairment on other
investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (571
    )
    
    
    (489
    )
    
    
    (74
    )Change in fair
value of investment
in convertible note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,917
    
    
    
    290Change in fair
value of derivative
embedded in
convertible note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,040
    )
    
    
    
    
    
    
    Change in fair value
of warrants and
option rights
    
    
    
    
    
    
    
    
    
    
    (1,236
    )
    
    
    3,798
    
    
    
    555
    
    
    
    84Loss on debt
extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,434
    )
    
    
    
    
    
    
    Subsidies from
government
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    Exchange loss
    
    
    
    
    
    
    (482
    )
    
    
    (268
    )
    
    
    (218
    )
    
    
    (442
    )
    
    
    (68
    )Others, net
    
    
    
    
    
    
    (7
    )
    
    
    (36
    )
    
    
    (2
    )
    
    
    (491
    )
    
    
    (74
    )Loss from continuing
operations
    
    
    (31,087
    )
    
    
    (9,084
    )
    
    
    (54,776
    )
    
    
    (42,696
    )
    
    
    (35,121
    )
    
    
    (5,319
    )(loss) profit from
discontinued operations
    
    
    (83,499
    )
    
    
    1,973
    
    
    
    858
    
    
    
    4,227
    
    
    
    
    
    
    
    Net loss
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
    
    
    (5,319
    )Net loss per share
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (3.34
    )
    
    
    (2.42
    )
    
    
    (1.69
    )
    
    
    (0.26
    )Net loss per share from
continuing operations
    
    
    (2.75
    )
    
    
    (0.64
    )
    
    
    (3.39
    )
    
    
    (2.68
    )
    
    
    (1.69
    )
    
    
    (0.26
    )Net (loss) earnings per
share from discontinued
operations
    
    
    (7.38
    )
    
    
    0.14
    
    
    
    0.05
    
    
    
    0.26
    
    
    
    
    
    
    
    Basic weighted average
common shares
outstanding
    
    
    11,311,888
    
    
    
    14,249,051
    
    
    
    16,160,172
    
    
    
    15,927,168
    
    
    
    20,746,185
    
    
    
    20,746,185
 3




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##### Table of Contents



(Amounts in thousands, except share data)As of December 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb(2)
    
    
    US$Consolidated
Balance Sheet Data:Total assets
    
    
    64,751
    
    
    
    115,888
    
    
    
    62,619
    
    
    
    119,435
    
    
    
    165,855
    
    
    
    25,120Total liabilities
    
    
    14,111
    
    
    
    35,699
    
    
    
    20,389
    
    
    
    21,734
    
    
    
    50,581
    
    
    
    7,661Shareholders equity
    
    
    50,640
    
    
    
    80,189
    
    
    
    42,230
    
    
    
    97,701
    
    
    
    115,274
    
    
    
    17,459Number of common
shares issued and
outstanding
    
    
    13,809,497
    
    
    
    15,028,665
    
    
    
    15,543,669
    
    
    
    19,300,390
    
    
    
    22,425,216
    
    
    
    22,425,216
 
 (1)
    
    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, BHL Networks
Technology Co. Ltd. (Cayman), or BHLNet, and Beijing BHL Networks Technology Co. Ltd, or 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. During 2008, we regarded Jingle
Group as discontinued operations pursuant to Accounting Standard Codification 205-20 (formerly
refer to SFAS 144 Discontinued operations). We reported the operating results of these
businesses from the beginning of the year up to the date of disposal and the loss resulted
from the disposal are reported in the year of disposal as discontinued operations (see Note 5
to our audited consolidated financial statements included elsewhere in this Annual Report). 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, 2006, 2007, 2008 and
2009 as discontinued operations. 4




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##### Table of Contents



(2)
    
    In November 2010, we acquired 100% equity interest in Linsun Renewable Energy Corporation
Limited. The consideration for the acquisition was accounted for US$2,215 as of December 31,
2010, satisfied by the issuance of our 1,064,827 common stock. For details on purchase price
allocation and pro forma information, see Note 3 to our audited consolidated financial
statements relating to the acquisition of Linsun Renewable Energy Corporation Limited included
elsewhere in this Annual Report. Exchange Rate Information
  5




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Average(1)
    
    High
    
    Low
    
    Period-end(Rmb per US$1.00)2005
    
    
    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
    
    
    
    6.82252009
    
    
    6.8311
    
    
    
    6.8895
    
    
    
    6.7753
    
    
    
    6.82702010
    
    
    6.7683
    
    
    
    6.8346
    
    
    
    6.6008
    
    
    
    6.6023December 2010
    
    
    6.6469
    
    
    
    6.6745
    
    
    
    6.6008
    
    
    
    6.6023January 2011
    
    
    6.5973
    
    
    
    6.6388
    
    
    
    6.5810
    
    
    
    6.6065February 2011
    
    
    6.5762
    
    
    
    6.5971
    
    
    
    6.5559
    
    
    
    6.5716March 2011
    
    
    6.5649
    
    
    
    6.5750
    
    
    
    6.5470
    
    
    
    6.5486April 2011
    
    
    6.5279
    
    
    
    6.5478
    
    
    
    6.4910
    
    
    
    6.4910May 2011
    
    
    6.4953
    
    
    
    6.5087
    
    
    
    6.4789
    
    
    
    6.4789
 
 (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.
   6




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Risks Related to Our Company and Our Industry
 Our business strategy has evolved significantly over time, and our limited operating history in the
solar business may not serve as an adequate measure for our future results of operations.
  We have incurred significant operating losses, and we do not know whether we will ever achieve or
sustain profitability.
  Operating lossYear
    
    (in thousands of Rmb)2006
    
    
    (30,785
    )2007
    
    
    (24,495
    )2008
    
    
    (24,338
    )2009
    
    
    (32,331
    )2010
    
    
    (28,527
    )
  
    
    the need to procure additional equipment at reasonable cost and on a timely basis;
    
    the need to raise additional funds to finance the construction and expansion of
production lines, which we may be unable to obtain on reasonable terms or at all;
    
    product upgrading or updating by us or our competitors;
    
    demand for our solar products and services;
    
    our competitors price changes;
    
    our research and development and marketing activities;
    
    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 any acquisitions or reductions in force.
 7




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We expect that we will need to obtain additional financing to continue to operate our solar
business, including significant capital expenditures to increase our production capacity. If we
cannot obtain additional financing when we need it, our growth prospects and results of operations
for our solar business may be materially adversely affected.
  
    
    the trading price of our common stock on Nasdaq;
    
    our future financial condition, results of operations and cash flows;
    
    general market conditions for financing activities by companies in the solar industry;
and
    
    economic, political and other conditions in China and elsewhere.
  We may not be able to implement our growth strategy and manage our planned solar business expansion
effectively.
   We may not be able to compete successfully in a competitive solar market against competitors with
greater resources and more advanced technologies.
  
    
    longer operating history;
    
    greater financial, technological, marketing, sales and other resources;
    
    profitable operations;
    
    superior product functionality in certain areas;
    
    greater name recognition;
    
    a broader range of products to offer; and
    
    a larger base of customers.
 8




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We may not be able to keep pace with the rapid technological changes in the solar market, new
competition, and new product developments.
  
    
    provide a broad range of reliable solar products at the lowest cost;
    
    timely develop and introduce new products incorporating technological advances;
    
    respond promptly to new customer requirements;
    
    comply promptly with evolving industry standards;
    
    control delays and cost overruns due to external factors beyond our control, such as
increases in raw materials prices and problems with equipment vendors;
    
    qualify for available government subsidies and incentives to support the development of
the solar energy industry; and
    
    execute our business strategy and expansion plan effectively.
 If we are unable to attract, train and retain a skilled labor force, our business may be materially
adversely affected.
  We plan to acquire new businesses, products and technologies in the solar industry and diversify
our business by means of mergers and acquisitions. However, we have been unable to complete a
number of acquisitions that we have previously announced. We may not be able to complete future
acquisitions or effectively integrate any acquired businesses, products and technologies into our
Company. As a result, we may lose all or a portion of our investment.
   9




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##### Table of Contents




    
    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 any expenses incurred in
protecting our intellectual property rights may adversely affect our business.
   We have granted, and expect to continue to grant, stock options under our stock incentive option
plan, which could adversely impact our financial results.
  10




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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.
  
    
    changes in government subsidies and economic incentives for the solar industry;
    
    adjustments in tax regulations;
    
    restrictions on currency conversion;
    
    changes in laws and regulations, or their interpretation;
    
    the imposition of confiscatory taxation;
    
    restrictions on imports and sources of supply;
    
    devaluations of currency; and
    
    the nationalization or other expropriation of private enterprises.
  We may experience foreign currency losses due to fluctuations in exchange rates.
   11




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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 directives and regulations.
  Risks Associated with Investing in Our Common Stock.
 Our stock price has been and may continue to be volatile.
  12




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Our internal controls have been deficient historically and require improvement. If we fail to
maintain an effective system of internal controls, 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
the market price of our common stock.
  
    
    In September 2008, we issued an aggregate of 498,338 shares of common stock and
warrants to purchase up to an additional 1,526,306 shares of common stock to investors. In
June 2009, we issued an additional 60,000 shares of common stock and warrants to purchase
an additional 90,000 shares of common stock to the same investors. In October 2009, we
issued 222,821 shares to the investors upon their exercise of Series B Warrants due to the
occurrence of the price reset event. If we issue common stock at a price less than $3.01
per share in the future, we may trigger the anti-dilution provisions embedded in these
warrants.
    
    In April 2009, one of our wholly owned subsidiaries, China Green Holdings, Ltd., issued
a US$10.0 million convertible note to an investor. In November 2009, the investor
exchanged the entire principal amount of the convertible note for 3,322,260 shares of our
common stock.
    
    In May 2010, we issued and sold 2,000,000 shares of common stock to China Wanhe
Investment Ltd. at a price of $3.01 per share in connection with a private placement.
    
    In November 2010, we issued and allotted totally 1,064,827 shares of common stock to
Mr. Liao Lin-Hsiang and Goldpoly Company Limited as payment for the acquisition of Linsun
Renewable Energy Corporation Limited and its subsidiaries.
  Rights of shareholders under British Virgin Islands law may be less than those of shareholders in
U.S. jurisdictions.
  13




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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 applicable US securities laws
for a foreign private issuer.
  
    
    the rules under the Securities Exchange Act of 1934, as amended, or 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;
    
    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.
  14




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Item 4. Information on the Company
 A. History and development of the Company.
 www.chinactdc.com
  Prior Operations
      15




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Solar Energy Operations
    16




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##### 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 Chinese government has
supported solar power electricity generation through a variety of recent policy measures.
We believe these measures will stimulate the growth of the solar market in China. We plan
to continue to devote our financial, human
 17




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and technical resources to develop
building-integrated photovoltaic, or BIPV, systems and solar power plants in the Chinese
market.
 
    
    Improve manufacturing technology and process through continuous innovation.We have
established a technical engineering team with strong research and development
capabilities. We have developed and supplied transparent solar modules for two on-grid
solar power plants in Italy. The transparent solar module which have both a nice
appearance and high transparency, is particularly suitable for BIPV projects. We plan to
continue to devote substantial resources to our research and development efforts in order
to optimize our manufacturing technology and processes with an 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 providing reliable
solar products and services.
    
    Expand our customer base and develop our solar markets.We intend to expand the
customer base and sales channels 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 solar module distributors and solar farm developers. 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.
    
    Implement acquisition growth strategy in the green energy industry.We intend to expand
our solar business through acquisitions of complementary companies and technologies. We
believe acquisitions will enable our Company to complete the solar industry value chain
integration and become an integrated platform for solar energy products and applications.
We intend to evaluate potential acquisition targets through the following factors: (a)
capability for technology development and innovation; (b) distribution channels for
end-products; (c) revenues and cash-in flow; and (d) growth potential in the industry.
 Our Products and Services
   Sources of raw materials
  Sales and Marketing
  18




---



##### Table of Contents



Intellectual Property
     Competition
   Regulation
  Renewable Energy Law and Other Government Directives
     19




---



##### Table of Contents



Environmental Regulations
  Restriction on Foreign Investments
  Tax
      20




---



##### Table of Contents



C. Organizational structure.
  Country of
    
    OwnershipsName
    
    Function
    
    Incorporation
    
    Interest
    
    Direct ParentBHL Solar
Technology Company
Limited, or BHLHK
(formerly named as
BHL Networks
Technology Co.Ltd.)
    
    cash management vehicle
    
    Hong Kong
    
    
    100
    %
    
    CompanyLinsun Renewable Energy Corporation Limited
    
    sale of solar products
    
    Hong Kong
    
    
    100
    %
    
    China Green Holdings
Ltd.Sino Solar Technology (HK) Limited
    
    cooperation with HK
companies and
institutions
    
    Hong Kong
    
    
    100
    %
    
    Southwick
International Ltd.LSP Solar GmbH
    
    sale and marketing
office in Europe
    
    Germany
    
    
    100
    %
    
    China Green
Investment Group
Ltd.Shenzhen 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 Ltd.Linsun Power
Technology
(Quanzhou) Corp.
Ltd.
    
    manufacturing solar modules
    
    China
    
    
    100
    %
    
    Linsun Renewable
Energy Corporation
LimitedChina Merchants
Zhangzhou
Development Zone
Trenda Solar Ltd.or
Zhangzhou Trenda
    
    research and
development
    
    China
    
    
    100
    %
    
    Trenda International
Ltd.China Merchants
Zhangzhou
Development Zone
Trendar Solar Tech
Ltd., or Zhangzhou
Trendar Tech
    
    manufacturing solar modules
    
    China
    
    
    100
    %
    
    Sinofield Group Ltd.China Merchants Zhangzhou Development Zone
Broad Shine Solar Technology Limited, or Broad Shine
    
    owning plant and
properties
    
    China
    
    
    100
    %
    
    Faster Assets Limited
 D. Property, plants and equipment.
    
 Item 4A.
    
    Unresolved Staff Comments
  21




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##### Table of Contents



Item 5.
    
    Operating and Financial Review and Prospects
 MANAGEMENTS DISCUSSION AND ANALYSIS
  Critical accounting policies and estimates
  Business combinations
    Impairment on available-for-sale securities
  22




---



##### Table of Contents



Impairment or disposal of long lived assets
   Stock-based compensation
    Warrants and option rights
   23




---



##### Table of Contents



Convertible note
  Recent accounting pronouncements
      24




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##### Table of Contents



A. Operating results.
  (Amounts in thousands of Rmb)2008
    
    
    2009
    
    
    2010Amount
    
    
    Amount
    
    
    AmountRevenues
    
    
    10
    
    
    
    
    
    
    
    53,700Cost of sales
    
    
    (20
    )
    
    
    
    
    
    
    (45,113
    )Gross income (loss)
    
    
    (10
    )
    
    
    
    
    
    
    8,587Research and development expenses
    
    
    (133
    )
    
    
    (552
    )
    
    
    (557
    )Selling expenses
    
    
    
    
    
    
    
    
    
    
    (3,436
    )General and administrative expenses
    
    
    (24,195
    )
    
    
    (24,970
    )
    
    
    (32,530
    )Impairment on property, plant and equipment
    
    
    
    
    
    
    (6,463
    )
    
    
    (591
    )Impairment on inventories
    
    
    
    
    
    
    (346
    )
    
    
    Operating loss
    
    
    (24,338
    )
    
    
    (32,331
    )
    
    
    (28,527
    )Other income (expense):Interest income
    
    
    79
    
    
    
    7
    
    
    
    40Finance costs
    
    
    (475
    )
    
    
    (5,799
    )
    
    
    (83
    )Impairment on deposit for business acquisition
    
    
    
    
    
    
    
    
    
    
    (10,301
    )Change in fair value of trading securities
    
    
    
    
    
    
    
    
    
    
    1,162Gain on disposal of trading securities
    
    
    
    
    
    
    
    
    
    
    5,196Dividend income from available-for-sale securities
    
    
    48
    
    
    
    71
    
    
    
    (Loss) gain on disposal of available-for-sale securities
    
    
    (14,049
    )
    
    
    111
    
    
    
    (213
    )Impairment on available-for-sale securities
    
    
    (15,213
    )
    
    
    
    
    
    
    (3,549
    )Impairment on other investments
    
    
    
    
    
    
    (571
    )
    
    
    (489
    )Change in fair value of investment in convertible note
    
    
    
    
    
    
    
    
    
    
    1,917Change in fair value of derivative embedded in convertible note
    
    
    
    
    
    
    (5,040
    )
    
    
    Change in fair value of warrants and option rights
    
    
    (1,236
    )
    
    
    3,798
    
    
    
    555Loss on debt extinguishment
    
    
    
    
    
    
    (3,434
    )
    
    
    Subsidies from government
    
    
    
    
    
    
    600
    
    
    
    Exchange loss
    
    
    (268
    )
    
    
    (218
    )
    
    
    (442
    )Others, net
    
    
    (36
    )
    
    
    (2
    )
    
    
    (491
    )Income tax credit
    
    
    712
    
    
    
    112
    
    
    
    104Loss from continuing operations
    
    
    (54,776
    )
    
    
    (42,696
    )
    
    
    (35,121
    )Profit from discontinued operations
    
    
    858
    
    
    
    4,227
    
    
    
    Net loss for the year
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
  25




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##### Table of Contents



Comparison of Years ended December 31, 2010, 2009 and 2008
 Revenues.
 Cost of sales.
 Gross profit (loss).
 Research and development expenses
 Selling expenses.
 
    
    Rmb3.12 million of goods transportation fees which were incurred resulting from
shipment to local and overseas customers;
    
    Rmb0.20 million of exhibition expenses; and
    
    Rmb0.08 million of salaries and benefits expenses.
 General and administrative expenses.
 
    
    a Rmb5.31 million increase in consultant fees resulting from consultant fee payable to
a related party for assisting the Company in an acquisition, and warrants issued to a
related company and another institutional consultant as compensation for services to
introduce potential investors and investment projects. The warrants have been fully vested
upon grant and certain of the prescribed services will be rendered by these grantees after
the current period;
    
    a Rmb2.19 million, or 16.1%, increase in salaries and benefits expenses resulting from
an increase in head counts, increment in salaries and bonus paid;
 26




---



##### Table of Contents




    
    a Rmb0.67 million, or 36.9%, increase in audit fees resulting from an increase in fees
of our current auditor;
 
    
    a Rmb0.34 million, or 59.5%, increase in travel related expense resulting from increase
in local and overseas business trips of our staff caused by increase in business;
 
    
    a Rmb0.33 million increase in commission and fees expense, resulting primarily from
payment of commission for an acquisition; and
 
    
    a Rmb0.24 million increase in press release expense resulting from engaging new
external investor relationship consultancy service;
  
    
    a Rmb1.05 million, or 36.4%, decrease in legal and other professional fees resulting
from a decrease in corporate and securities matters and transactions and the enhanced use
of internal personnel for corporate governance, compliance and legal matters; and
 
    
    a Rmb0.94 million, or 36.2%, decrease in depreciation expenses resulting from the
impairment of SnO2 production line and allocation of depreciation for production
facilities to cost of sales.
  
    
    a Rmb1.58 million, or 14.0%, increase in salaries and benefits expenses resulting from
an increase in stock-based compensation recognized;
 
    
    a Rmb0.48 million, or 22.8%, increase in depreciation expenses resulting from the
purchase of additional property, plant and equipment, as well as the expansion of our
Solar Energy Operations; and
 
    
    a Rmb0.21 million, or 12.9%, increase in audit fees resulting from an increase in fees
of our current auditor as well as an increase in fees of our former auditors in connection
with the issuance of a consent;
  
    
    a Rmb0.73 million, or 20.3%, decrease in legal and other professional fees resulting
from a decrease in corporate and securities matters and transactions and the enhancement
of internal personnel for corporate governance, compliance and legal matters;
 
    
    a Rmb0.31 million, or 31.7%, decrease in rental expenses resulting from our move to a
smaller office;
 
    
    a Rmb0.11 million, or 25.2%, decrease in consultant fees resulting from a decrease in
our use of external consultants for business development;
 
    
    a Rmb0.18 million, or 46.4%, decrease in office supplies expenses resulting from
strengthened control over costs and expenses; and
 
    
    a Rmb0.13 million, or 30.4%, decrease in insurance expenses resulting from a change of
insurance carriers in 2009 in respect of major insurance policies.
 Impairment on property, plant and equipment and inventories.
  Other income (expense)
 27




---



##### Table of Contents



Profit from discontinued operations.
 Net loss.
 Taxation
      28




---



##### Table of Contents



B. Liquidity and capital resources
   Working capital and cash flows
   For the years ended December 31,2008
    
    
    2009
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb(thousands)Net cash generated in operating activities
    
    
    (15,131
    )
    
    
    (17,268
    )
    
    
    (31,958
    )Net cash used in investing activities
    
    
    (13,953
    )
    
    
    (35,791
    )
    
    
    (21,969
    )Net cash generated from financing activities
    
    
    18,676
    
    
    
    70,929
    
    
    
    44,470Effect of exchange rate changes on cash
    
    
    (668
    )
    
    
    (29
    )
    
    
    (1,140
    )Net increase (decrease) in cash and cash equivalents
    
    
    (11,076
    )
    
    
    17,841
    
    
    
    (10,597
    )Cash and cash equivalents at beginning of year
    
    
    18,906
    
    
    
    6,770
    
    
    
    24,611Less: cash and cash equivalents at end of year from discontinued operations
    
    
    (1,060
    )
    
    
    
    
    
    
    Cash and cash equivalents at end of year
    
    
    6,770
    
    
    
    24,611
    
    
    
    14,014
  Operating activities
   Investing activities
   29




---



##### Table of Contents



Financing activities
     Restricted net assets
  Capital resources
     Going Concern
   
    
    positive operating cash flows are expected to be generated from the
profitable operations of manufacturing and sale of solar modules;
 
    
    realization in the open market of available for sale and trading
securities with ending carrying amounts at approximately Rmb34.55
million as of December 31, 2010, for cash;
 
    
    tight controls exercised by the board of directors on timing and
magnitude of cash outlays for investments initiatives; and
 
    
    proceeds from sales of equity and/or debt securities to
investors and borrowings, as would be considered necessary.
 30




---



##### Table of Contents



C. Research and development, patents and licenses, etc.
  D. Trend information.
  E. Off-balance sheet arrangements.
  F. Tabular disclosure of contractual obligations.
  (Amounts in thousands)RmbAs of December 31,2011
    
    
    1,7702012
    
    
    1,7102013
    
    
    1,5372014
    
    
    1,3972015
    
    
    523Total
    
    
    6,937
  Commitments
 Capital commitments for construction in progress
  31




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##### Table of Contents



G. Safe harbor.
 Forward-Looking Statement Disclosure
  
 Item 6. Directors, Senior Management and Employees
 A. Directors and senior management.
  Name
    
    Age
    
    Positions with the CompanyAlan Li
    
    
    43
    
    
    Chairman of the Board, Executive Director and Chief Executive OfficerZhenwei Lu
    
    
    40
    
    
    Executive DirectorTairan Guo
    
    
    33
    
    
    Executive Director, Chief Business Development Officer and Acting
Chief Financial OfficerJu Zhang
    
    
    48
    
    
    Executive DirectorLoong Cheong Chang (1) (3)
    
    
    65
    
    
    Independent DirectorXinping Shi (2) (3)
    
    
    52
    
    
    Independent DirectorWeidong Wang (2) (3)
    
    
    44
    
    
    Independent DirectorYu Keung Poon (1) (2)
    
    
    46
    
    
    Independent DirectorYezhong Ni (1)
    
    
    41
    
    
    Independent DirectorLin-Hsiang Liao
    
    
    31
    
    
    Chief Operating OfficerBruno Luis Diaz Herrera
    
    
    35
    
    
    Chief Technology OfficerWeining Zhang
    
    
    41
    
    
    Chief Communications Officer
 
 (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating Committee 32




---



##### Table of Contents



Mr. Alan Li
 Mr. Zhenwei Lu
 Mr. Tairan Guo
 Mr. Ju Zhang
 Mr. Loong Cheong Chang
 Dr. Xinping Shi
 Mr. Weidong Wang
 Mr. Yu Keung Poon
 33




---



##### Table of Contents



Mr. Yezhong Ni
 Mr. Lin-Hsiang Liao
 Mr. Bruno Luis Diaz Herrera
 Ms. Weining Zhang
  B. Compensation.
   34




---



##### Table of Contents



Number
    
    ExerciseOf
    
    PriceName
    
    Title/Office
    
    options
    
    Per option
    
    Expiration Date(US$)Alan Li
    
    Chairman, Executive
Director and Chief
Executive Officer
    
    
    120,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Zhenwei Lu
    
    Executive Director
    
    
    80,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Tairan Guo
    

Executive Director,
Chief Business
Development Officer and
Acting Chief Financial
Officer
    
    
    80,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Xinping Shi
    
    Independent Director
    
    
    30,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Yezhong Ni
    
    Independent Director
    
    
    20,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Weidong Wang
    
    Independent Director
    
    
    20,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Loong Cheong Chang
    
    Independent Director
    
    
    30,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Yu Keung Poon
    
    Independent Director
    
    
    20,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Lin-Hsiang Liao
    
    Chief Operating Officer
    
    
    80,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)Bruno Luis Diaz Herrera
    
    Chief Technology Officer
    
    
    80,000
    
    
    
    2.50
    
    
    December 15, 2015 (1)
 
 Notes:(1)
    
    These options were granted under our 2010 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on December 15, 2010. One-third of the options vest on December 15,
2011, one-third of the options vest on December 15, 2012, and the remaining one-third of the
options vest on December 15, 2013.  C. Board practices.
  Board committees
  Audit Committee
 35




---



##### Table of Contents



Compensation Committee
 Nominating Committee.
  Term of directors and executive officers
   D. Employees.
  2010
    
    2009
    
    2008Corporate administration
    
    
    27
    
    
    
    14
    
    
    
    16Finance and accounting
    
    
    9
    
    
    
    7
    
    
    
    9Technology and engineering
    
    
    11
    
    
    
    9
    
    
    
    6Sales and services
    
    
    8
    
    
    
    0
    
    
    
    4Manufacturing
    
    
    178
    
    
    
    5
    
    
    
    34Total
    
    
    233
    
    
    
    35
    
    
    
    69
 36




---



##### Table of Contents



E. Share ownership.
  Number
    
    ExerciseOf
    
    PriceName
    
    Title/Office
    
    options
    
    Per option
    
    Expiration Date(US$)Alan Li
    
    Chairman, Executive
Director and Chief
Executive Officer
    
    
    75,000
100,000
150,000
100,000
120,000
53,000
223,000
150,000
    
    
    
    1.85
3.18
3.13
2.04
1.79
2.12
2.12
2.12
    
    
    September 20, 2015 (1)
September 18, 2016 (2)
May 23, 2012 (3)
November 10, 2013 (4)
December 30, 2013 (5)
October 1, 2019 (6)
October 1, 2014(7)
October 1, 2014(8)Zhenwei Lu
    
    Executive Director
    
    
    40,000
60,000
80,000
80,000
80,000
80,000
    
    
    
    1.85
3.18
3.13
2.04
1.79
2.12
    
    
    September 20, 2015 (1)
September 18, 2016 (2)May 23, 2012(3)November 10, 2013 (4)
December 30, 2013 (5)October 1, 2014(8)Ju Zhang
    
    Executive Director
    
    
    10,000
10,000
10,000
10,000
    
    
    
    1.85
3.18
2.04
1.79
    
    
    September 20, 2015 (1)
September 18, 2016 (2)November 10, 2013 (4)December 30, 2013 (5)Tairan Guo
    

Executive Director,
Chief Business
Development Officer
and Acting Chief
Financial Officer
    
    
    20,000
40,000
50,000
    
    
    
    2.04
1.79
2.12
    
    
    November 10, 2013 (4)
December 30, 2013 (5)October 1, 2014(8)Xinping Shi
    
    Independent Director
    
    
    10,000
30,000
22,800
50,000
40,000
    
    
    
    3.18
3.13
2.04
1.79
2.12
    
    
    September18, 2016 (2)
May 23, 2012 (3)
November 10, 2013 (4)
December 30, 2013 (5)
October 1, 2014(8)Yezhong Ni
    
    Independent Director
    
    
    10,000
10,000
10,000
20,000
40,000
30,000
    
    
    
    1.85
3.18
3.13
2.04
1.79
2.12
    
    
    September 20, 2015 (1)
September 18, 2016 (2)
May 23, 2012 (3)
November 10, 2013 (4)
December 30, 2013 (5)
October 1, 2014(8)Weidong Wang
    
    Independent Director
    
    
    10,000
10,000
10,000
20,000
40,000
30,000
    
    
    
    1.85
3.18
3.13
2.04
1.79
2.12
    
    
    September 20, 2015 (1)
September 18, 2016 (2)
May 23, 2012(3)
November 10, 2013 (4)
December 30, 2013 (5)
October 1, 2014(8)Loong Cheong Chang
    
    Independent Director
    
    
    30,000
30,000
50,000
60,000
    
    
    
    3.13
2.04
1.79
2.12
    
    
    May 23, 2012 (3)
November 10, 2013 (4)December 30, 2013 (5)
October 1, 2014(8)
 37




---



##### Table of Contents



Number
    
    ExerciseOf
    
    PriceName
    
    Title/Office
    
    options
    
    Per option
    
    Expiration Date(US$)Yu Keung Poon
    
    Independent Director
    
    
    20,000
20,000
40,000
30,000
    
    
    
    3.13
2.04
1.79
2.12
    
    
    May 23, 2012 (3)
November 10, 2013 (4)
December 30, 2013 (5)
October 1, 2014(8)
 
 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.(4)
    
    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 such options vested on
November 10, 2009, one-third vest on November 10, 2010 and the remaining one-third vest on
November 10, 2011.(5)
    
    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 such options vested on
December 30, 2009, one-third vest on December 30, 2010 and the remaining one-third vest on
December 30, 2011.(6)
    
    These options were granted under our 2000 Stock Option Plan and 2005 Stock Option Plan
pursuant to a resolution of the Compensation Committee passed on October 1, 2009 and are fully
vested.(7)
    
    These options were granted under our 2006 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on October 1, 2009. One-third of such options vested on October
1, 2010 and the remaining two-thirds vest on October 1, 2011.(8)
    
    These options were granted under our 2009 Stock Option Plan pursuant to a resolution of the
Compensation Committee passed on October 1, 2009. One-third of such options vested on October
1, 2010, one-third vest on October 1, 2011 and the remaining one-third vest on October 1,
2012. 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, 20082009 Stock Option Plan, or the 2009 Plan
    
    September 11, 20092010 Stock Option Plan, or the 2010 Plan
    
    December 10, 2010
 38




---



##### Table of Contents



1996 Plan
  2000 Plan
  2005 Plan
  2006 Plan
  2007 Plan
  2008 Plan
  2009 Plan
  2010 Plan
  39




---



##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
 A. Major shareholders.
  Shares of common stock
    
    Percent ofPrincipal Shareholder
    
    beneficially owned (1)
    
    classChina Technology Investment Group Limited
(formerly known as China Biotech Holdings Limited), or CTIG
5/F, B&H Plaza, 27 Industry Ave
Shekou, Shenzhen 518067
PR China
    
    
    4,132,168
    
    
    
    18.37
    %CMTF Private Equity One
48/F, One Exchange Square, Central,
Hong Kong SAR, China
    
    
    3,322,260
    
    
    
    14.77
    %China Wanhe Investment Limited
Suite 2616, Jardine House,
1 Connaught Place, Central,
Hong Kong SAR, China
    
    
    2,000,000
    
    
    
    8.89
    %Lin-Hsiang Liao
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    709,920
    
    
    
    3.16
    %Alan Li (2)
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Zhenwei Lu (2)
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central 
Hong Kong
    
    
    0
    
    
    
    *Ju Zhang
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Tairan Guo
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Loong Cheong Chang
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Xinping Shi
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Yezhong Ni
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Weidong Wang
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Yu Keung Poon
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Bruno Luis Diaz Herrera
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *Weining Zhang
c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre,168-200 Connaught Road Central
Hong Kong
    
    
    0
    
    
    
    *All officers and directors as a group (11 persons) (2)
    
    
    709,920
    
    
    
    3.16
    %
 
 *
    
    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, excluding any stock options. For
details of stock options granted to the directors and officers please refer to Item 6.E Share
ownership.(2)
    
    Mr. Alan Li, Chairman of the Board, Executive Director and Chief Executive Officer, and Mr.
Zhenwei Lu, Executive Director and Chief Operating Officer, are also directors of CTIG and
therefore may be deemed to beneficially own the shares of common stock owned by CTIG. 40




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##### Table of Contents




    
    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.
   Amounts in thousandsRmbTransactions with related partiesAdvance from Liao Lin-Hsiang (1)
    
    8,097Repayment of deposit from CTIG for acquisition of production line (2)
    
    6,626Service fee paid and payable pursuant to a service agreement signed with CTIG (3)
    
    2,548Short term loan from Best Scene Management Limited (6)
    
    1,699
 41




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##### Table of Contents



(1)
    
    On November 23, 2010, the Group acquired 100% of the outstanding shares of Linsun Renewable
Energy Corporation Limited (LSRHK) and its wholly-owned subsidiary Linsun Power Technology
(Quanzhou) Corp. Ltd. (LSPPRC). Prior to the acquisition, Liao Lin-Hsiang was holding 66.67%
of LSRHK. Liao Lin-Hsiang advanced Rmb8.10 million to LSPPRC before the acquisition. The
advance was for LSPPRCs working capital purposes and Rmb7.80 million has been repaid before
December 31, 2010.(2)
    
    In December 2009, we entered into an agency contract regarding the purchase of one a-Si thin
film solar panel production line (the Agency Contract) with CTIG. Pursuant to the Agency
Contract, we appointed CTIG as our representative to liaise and negotiate with an equipment
supplier to purchase one a-Si thin film solar panel production line, together with a license
for patents, proprietary technology, technical service and training. We paid USD1.0 million to
CTIG as a deposit for the purchase. On May 13, 2010, we amended the Agency Contract to extend
the delivery date for three additional months. On June 22, 2010, we terminated the Agency
Contract, as amended, with CTIG and the deposit was refunded in full to us upon termination.
As of the date of this Annual Report, our balances with related parties are as follows: Amounts inthousandsRmbBalances with related parties:Due from related partiesFunds held by CTIG for potential acquisition
of technology and business in China (2 and 3)
    
    2,4552,455Due to related parties:Due to CTIG (4)
    
    853Due to CMZDZ (5)
    
    8,085Due to Liao Lin-Hsiang (1)
    
    300Due to Best Scene Management Limited (6)
    
    1,69910,937
 
 (3)
    
    CTIG has been the largest shareholder of our company since January 12, 2007. In view of
CTIGs experience with acquisitions in China, we deposited HK$6 million with CTIG for the
purpose of making (with the assistance of CTIG) potential acquisitions of technology and
businesses in China. There is no agreement between our company and CTIG for the deposited funds and we can withdraw the funds without restriction at any time.
In 2010, CTIG assisted the Company to successfully acquire Linsun Group. In May 2011, the
Company entered into an agreement with CTIG to pay a service fee amounting HK$3 million to CTIG
for the successful acquisition of Linsun Group.(4)
    
    The amount represents administrative expenses paid on behalf of Faster and Shenzhen Helios
Energy by CTIG in China.(5)
    
    Prior to the acquisition of Faster Group in 2007, Faster Group had no business activities and
its major asset was a right to purchase a real estate located in the Tangyang Industrial Zone
of China Merchants Zhangzhou Development Zone, from China Merchants Zhangzhou Development Zone
Ltd., or CMZDZ, for a consideration of Rmb13,085, of which Rmb5,783 was borne by the Faster
Group and Rmb7,302 was committed to be settled by CTIG. China Merchant Group (CMG) is the
ultimate holding company of CTIG, and CMZDZ is a subsidiary of CMG. In 2008, the Group
received Rmb7,302 from CTIG and paid Rmb5,000 to CMZDZ. The remaining balance due to CMZDZ is
Rmb8,085.(6)
    
    On June 1, 2011, Southwick International Limited entered a loan agreement with Best Scene
Management Limited, which is under common control with the Company. The loan is interest free
and it would mature six months after payment of loan. The loan remains outstanding as of this
Annual Report date.  42




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##### Table of Contents



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, 2010
    
    
    3.83
    
    
    
    1.71December 31, 2009
    
    
    4.78
    
    
    
    1.36December 31, 2008
    
    
    9.45
    
    
    
    1.19December 31, 2007
    
    
    10.39
    
    
    
    2.71December 31, 2006
    
    
    12.15
    
    
    
    1.34
  Nasdaq Capital Market
    
    US$(Quarter Ended)
    
    High
    
    LowMarch 31, 2011
    
    
    2.61
    
    
    
    2.11December 31, 2010
    
    
    2.83
    
    
    
    1.84September 30, 2010
    
    
    2.51
    
    
    
    1.71June 30, 2010
    
    
    3.83
    
    
    
    2.64March 31, 2010
    
    
    3.08
    
    
    
    2.46December 31, 2009
    
    
    4.78
    
    
    
    2.12September 30, 2009
    
    
    2.89
    
    
    
    1.98June 30, 2009
    
    
    3.25
    
    
    
    2.16March 31, 2009
    
    
    3.54
    
    
    
    1.36
  Nasdaq Capital Market
    
    US$(Month Ended)
    
    High
    
    LowMay 31, 2011
    
    
    1.99
    
    
    
    1.80April 30, 2011
    
    
    2.15
    
    
    
    1.94March 31, 2011
    
    
    2.30
    
    
    
    2.11February 28, 2011
    
    
    2.38
    
    
    
    2.18January 31, 2011
    
    
    2.61
    
    
    
    2.16December 31, 2010
    
    
    2.81
    
    
    
    2.04
 43




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##### Table of Contents



B. Plan of Distribution.
  C. Markets.
  D. Selling Shareholders.
  E. Dilution.
  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
  44




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##### Table of Contents



Rights, preferences and restrictions attaching to common stock
   Rights, preferences and restrictions attaching to Series A Preferred Stock
       Changing Share Rights
  Shareholder Meetings
     Restrictions on Rights to Own Securities
  Change in Control Provisions
  45




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##### Table of Contents



Disclosure of Share Ownership
  Applicable Law
       Changes in Capital
  46




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##### Table of Contents



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 more of our outstanding shares; or, below market
issuances of 20% or more of our outstanding shares to any person.
  C. Material contracts.
    47




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##### Table of Contents



48




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##### Table of Contents



D . Exchange controls.
    E. Taxation.
  British Virgin Islands Taxation
   
 United States Federal Income Taxation
   
    
    certain financial institutions;
    
    insurance companies;
    
    brokers or dealers;
    
    U.S. expatriates;
    
    traders that elect to mark-to-market;
    
    tax-exempt entities;
    
    persons liable for alternative minimum tax;
    
    persons holding our common stock 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.
 49




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##### Table of Contents




    
    a citizen or resident of the United States, including an alien individual who is a
lawful permanent resident of the United States or who meets the substantial presence
residency test under U.S. federal income tax laws;
    
    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, unless otherwise provided by Treasury Regulations;
    
    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 day and has a valid election in
effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
   Taxation of Dividends and Other Distributions on our Common Stock
    50




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##### Table of Contents



Sale, Exchange or Other Disposition of Common Stock
  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).
    
    
    the excess distribution or gain will be allocated ratably over your holding period for our common stock
    
    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;
    
    the amount allocated 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; and
    
    the total gain realized by you upon the sale or other disposition of the common stock will also be considered an excess
distribution and will be subject to tax as described above.
   51




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##### Table of Contents



de minimis
      Information Reporting and Backup Withholding
   F. Dividends and paying agents.
  G. Statement by experts.
  H. Documents on display.
 www.sec.gov
 52




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##### Table of Contents



I . Subsidiary Information.
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk.
 Foreign exchange risk
      Interest rate risk
  Inflation
  
 Item 12. Description of Securities Other than Equity Securities.
  53




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##### Table of Contents



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
   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.
  54




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##### Table of Contents



(1)
    
    lack of internal audit department to perform the internal auditing function over financial
reporting in our company;(2)
    
    lack of accounting personnel with knowledge of U.S. GAAP and SEC financial reporting
requirements; and(3)
    
    lack of an investment committee, which should comprise directors
with appropriate experience, in performing comprehensive pre-investment
feasibility study on prospective investment projects in order to assess the
risks associated with the projects, the expected returns, and the resources
that the Company is expected to deploy in these projects. There is also a lack
of such investment committee, or any other designated management and accounting
presonnel within the Company, who possess the required skills and knowledge to
monitor the ongoing peformance of the investments made by the Company, and to
perform periodic impairment assessment on the respective carrying amounts and
related prepayments and advances of the investments according to the requirements of
US GAAP when indicators of impairment exist.
  Changes in internal control over financial reporting
  (1)
    
    improvement of additional communications to receive internal and external information relating
to fraud prevention,(2)
    
    establishment of more detailed policies and procedures relating to fraud prevention in our
employee code of conduct,(3)
    
    training our existing accounting personnel on U.S. GAAP and other financial reporting
requirements promulgated by the SEC.
  
 Item 16A. Audit Committee Financial Expert.
  55




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##### Table of Contents



Item 16B. Code of Ethics.
 www.chinactdc.com.
 
 Item 16C. Principal Accountant Fees and Services.
 Audit Fees
  Audit-Related Fees
  Tax Fees
  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.
   56




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##### Table of Contents




    
    Nasdaq Rule 5605(b)(2) requires U.S. domestic issuers to hold regularly scheduled meetings at
which only independent directors are present. Our independent directors did not meet in executive
session in 2010.
    
    Nasdaq Rule 5605(d) requires that compensation of executive officers must be determined, or
recommended to the board of directors for determination, either by committee comprised solely of
independent directors or by a majority of independent members of the board of directors. In
addition, Rule 5605(d) provides that the chief executive officer may not be present during a vote
or deliberations concerning his compensation. Our Compensation Committee, which is comprised
solely of independent directors, makes recommendations to our Board of Directors concerning
salaries and incentive compensation for our executive officers and directors and administrates our
stock option plans, but our Chief Executive Officer may be present and participate in the
deliberations concerning his compensation. In addition, the Compensation Committee has authorized
our Chief Executive Officer to determine the compensation and bonus for other executive officers.
    
    Nasdaq Rule 5630 requires related party transactions to be reviewed and overseen on an ongoing
basis by the companys audit committee or other independent body of the board of directors.
    
    In addition, we are not required to solicit shareholder approval of the following: 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; and below market
issuances of 20% or more of our outstanding shares to any person (Nasdaq Rule 5635).
  
 Item 17. Financial Statements.
  
 Item 18. Financial Statements.
  57




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##### 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
    
    Stock Purchase Agreement with CTSPHL Group and its shareholders, dated as of October 27, 2009
(3)4.2
    
    Translation of agreement with CTIG dated as of December 15, 2009 (4)4.3
    
    Subscription Agreement with China Wanhe Investment Limited dated as of April 28, 2010 (5)4.4
    
    Translation of Cooperation Framework Agreement with Xintang Media Technology (Beijing) Ltd.
dated as of April 28, 2010 (5)4.5
    
    Stock Purchase Agreement with Linsun Renewable Energy Corporation Limited and its
shareholders dated as of November 5, 2010 (6)8.1
    
    List of all subsidiaries11.1
    
    Code of Ethics (2)12.1
    
    Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act
of 200212.2
    
    Certification of Acting Chief Financial Officer required by Section 302 of the
Sarbanes-Oxley Act of 200213.1
    
    Certification of Chief Executive Officer and Acting Chief Financial Officer required by
Section 906 of the Sarbanes-Oxley Act of 200223.1
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the
Registration Statements on Form S-8 (file numbers 333-168021, 333-160837, 333-147806,
333-139608 and 333-127423) and Form F-3 (file number 333-169665) of their report dated June
26, 2009 included in our Annual Report on Form 20-F for the fiscal year ended December 31,
201023.2
    
    Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company to the incorporation by
reference in the Registration Statements on Form S-8 (file numbers 333-168021, 333-160837,
333-147806, 333-139608 and 333-127423) and Form F-3 (file number 333-169665)of their report
dated June 28, 2011 included in our Annual Report on Form 20-F for the fiscal year ended
December 31, 2010
 
 Notes:(1)
    
    incorporated by reference to the exhibits to our annual report on Form 20- F for the fiscal
year ended December 31, 2007.(2)
    
    incorporated by reference to the exhibits to our annual report on Form 20-F for the fiscal
year ended December 31, 2006.(3)
    
    incorporated by reference to the exhibits to our report on Form 6-K filed with the SEC dated
October 27, 2009.(4)
    
    incorporated by reference to the exhibits to our annual report on Form 20-F for the fiscal
year ended December 31, 2009.(5)
    
    incorporated by reference to the exhibits to our report on Form 6-K filed with the SEC dated
April 29, 2010.(6)
    
    incorporated by reference to the exhibits to our report on Form 6-K filed with the SEC dated
November 8, 2010. 58




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##### Table of Contents



SIGNATURES
  CHINA TECHNOLOGY DEVELOPMENT
GROUP CORPORATIONDate: June 28, 2011
    /s/ Tairan GuoName:
    Tairan GuoTitle:
    Acting Chief Financial Officer 59




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport
of Independent Registered Public Accounting Firm as of
December 31, 2009 and 2010 and for the years then ended
    
    F  1Report of Independent Registered Public Accounting Firm for the year ended December 31, 2008
    
    F  2Consolidated
Statements of Operations for the years ended December 31, 2008,
2009 and 2010
    
    F  3Consolidated
Balance Sheets as of December 31, 2009 and 2010
    
    F  4Consolidated
Statements of Changes in Shareholders Equity for the years
ended December 31, 2008, 2009 and 2010
    
    F  5Consolidated
Statements of Cash Flows for the years ended December 31, 2008,
2009 and 2010
    
    F  7Notes to the Consolidated Financial Statements
    
    F  9




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
  
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 F-2




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts expressed in thousands except per share data)
For the years ended December 31, 2008, 2009 and 2010
 Notes
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$ (Note 2 (h))Continuing operations:Revenues
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    53,700
    
    
    
    8,134Cost of sales
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (45,113
    )
    
    
    (6,833
    )Gross income (loss)
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    8,587
    
    
    
    1,301Research and development expenses
    
    
    
    
    
    
    (133
    )
    
    
    (552
    )
    
    
    (557
    )
    
    
    (84
    )Selling expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,436
    )
    
    
    (520
    )General and administrative expenses*
    
    
    
    
    
    
    (24,195
    )
    
    
    (24,970
    )
    
    
    (32,530
    )
    
    
    (4,927
    )Impairment on property, plant and equipment
    
    
    9
    
    
    
    
    
    
    
    (6,463
    )
    
    
    (591
    )
    
    
    (89
    )Impairment on inventories
    
    
    
    
    
    
    
    
    
    
    (346
    )
    
    
    
    
    
    
    Operating loss
    
    
    
    
    
    
    (24,338
    )
    
    
    (32,331
    )
    
    
    (28,527
    )
    
    
    (4,319
    )Other income (expense):Interest income
    
    
    
    
    
    
    79
    
    
    
    7
    
    
    
    40
    
    
    
    6Finance costs
    
    
    
    
    
    
    (475
    )
    
    
    (5,799
    )
    
    
    (83
    )
    
    
    (13
    )Impairment on prepayment for business acquisition
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    (10,301
    )
    
    
    (1,560
    )Change in fair value of trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162
    
    
    
    176Gain on disposal of trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,196
    
    
    
    787Dividend income from available-for-sale securities
    
    
    
    
    
    
    48
    
    
    
    71
    
    
    
    
    
    
    
    (Loss) gain on disposal of available-for-sale securities
    
    
    
    
    
    
    (14,049
    )
    
    
    111
    
    
    
    (213
    )
    
    
    (32
    )Impairment on available-for-sale securities
    
    
    
    
    
    
    (15,213
    )
    
    
    
    
    
    
    (3,549
    )
    
    
    (538
    )Impairment on other investments
    
    
    
    
    
    
    
    
    
    
    (571
    )
    
    
    (489
    )
    
    
    (74
    )Change in fair value of investment in convertible note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,917
    
    
    
    290Change in fair value of derivative embedded in convertible note
    
    
    12,21
    
    
    
    
    
    
    
    (5,040
    )
    
    
    
    
    
    
    Change in fair value of warrants and option rights
    
    
    12,17
    
    
    
    (1,236
    )
    
    
    3,798
    
    
    
    555
    
    
    
    84Loss on debt extinguishment
    
    
    21
    
    
    
    
    
    
    
    (3,434
    )
    
    
    
    
    
    
    Subsidies from government
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    
    
    
    
    Exchange loss
    
    
    
    
    
    
    (268
    )
    
    
    (218
    )
    
    
    (442
    )
    
    
    (68
    )Others, net
    
    
    
    
    
    
    (36
    )
    
    
    (2
    )
    
    
    (491
    )
    
    
    (74
    )Loss before income tax expenses
    
    
    
    
    
    
    (55,488
    )
    
    
    (42,808
    )
    
    
    (35,225
    )
    
    
    (5,335
    )Income tax credits (expenses)
    
    
    4
    
    
    
    712
    
    
    
    112
    
    
    
    104
    
    
    
    16Loss from continuing operations
    
    
    
    
    
    
    (54,776
    )
    
    
    (42,696
    )
    
    
    (35,121
    )
    
    
    (5,319
    )Discontinued operations:
    
    
    5Profit from discontinued operations, net of income taxes
    
    
    
    
    
    
    858
    
    
    
    4,227
    
    
    
    
    
    
    
    Net loss for the year attributable to the shareholders of the Company
    
    
    
    
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
    
    
    (5,319
    )Net loss per share
    
    
    14-Basic and diluted
    
    
    
    
    
    
    (3.34
    )
    
    
    (2.42
    )
    
    
    (1.69
    )
    
    
    (0.26
    )Net loss per share from continuing operations
    
    
    14-Basic and diluted
    
    
    
    
    
    
    (3.39
    )
    
    
    (2.68
    )
    
    
    (1.69
    )
    
    
    (0.26
    )Net earnings per share from discontinued operations
    
    
    14-Basic and diluted
    
    
    
    
    
    
    0.05
    
    
    
    0.26
    
    
    
    
    
    
    
    Weighted average common shares (in thousands)
    
    
    14-Basic and diluted
    
    
    
    
    
    
    16,160
    
    
    
    15,927
    
    
    
    20,746
    
    
    
    20,746
 
 *
    
    Included in general and administrative expenses are stock-based compensation of Rmb8,738,
Rmb8,706 and Rmb8,015 for the years ended December 31, 2008, 2009 and 2010, respectively.  F-3




---



##### 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, 2009 and 2010
 Notes
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    US$ (Note 2 (h))ASSETSCURRENT ASSETSCash and cash equivalents
    
    
    
    
    
    
    24,611
    
    
    
    14,014
    
    
    
    2,123Other investments
    
    
    
    
    
    
    336
    
    
    
    
    
    
    
    Trading securities
    
    
    12
    
    
    
    3,825
    
    
    
    20,429
    
    
    
    3,094Available-for-sale securities
    
    
    12,19
    
    
    
    27,432
    
    
    
    14,120
    
    
    
    2,139Trade accounts receivable, net of Nil
allowance for doubtful accounts as of
December 31, 2009 and 2010, respectively
    
    
    
    
    
    
    
    
    
    
    19,354
    
    
    
    2,931Inventories (As of December 31, 2009
including raw materials of Rmb82, finished goods
of Rmb210; as of December 31, 2010 including raw
materials of Rmb5,661, work-in-progress of
Rmb279, finished goods of Rmb907)
    
    
    
    
    
    
    292
    
    
    
    6,847
    
    
    
    1,037Value added tax and business tax recoverable
    
    
    
    
    
    
    
    
    
    
    5,481
    
    
    
    830Due from related parties
    
    
    15
    
    
    
    12,053
    
    
    
    2,455
    
    
    
    372Prepaid expenses and other current assets
    
    
    6
    
    
    
    716
    
    
    
    29,686
    
    
    
    4,496Prepayment for business acquisition, net of
impairment provision of nil and Rmb10,301 as
of December 31, 2009 and 2010 respectively
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    TOTAL CURRENT ASSETS
    
    
    
    
    
    
    69,265
    
    
    
    112,386
    
    
    
    17,022Prepayment for land use right
    
    
    8
    
    
    
    4,310
    
    
    
    4,220
    
    
    
    639Property, plant and equipment, net
    
    
    9
    
    
    
    25,258
    
    
    
    31,428
    
    
    
    4,760Intangible assets
    
    
    10
    
    
    
    
    
    
    
    12,962
    
    
    
    1,963Goodwill
    
    
    10
    
    
    
    
    
    
    
    4,859
    
    
    
    736Deposit for investment
    
    
    20
    
    
    
    20,602
    
    
    
    
    
    
    
    TOTAL ASSETS
    
    
    
    
    
    
    119,435
    
    
    
    165,855
    
    
    
    25,120LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    
    
    
    
    
    3
    
    
    
    11,803
    
    
    
    1,788Accrued professional fees
    
    
    
    
    
    
    3,713
    
    
    
    4,098
    
    
    
    621Income tax payable
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    10Due to related parties
    
    
    15
    
    
    
    8,944
    
    
    
    9,238
    
    
    
    1,399Government subsidies
    
    
    
    
    
    
    300
    
    
    
    300
    
    
    
    45Liabilities relating to warrants
    
    
    12
    
    
    
    3,003
    
    
    
    2,448
    
    
    
    371Short term loan
    
    
    11(a
    )
    
    
    
    
    
    
    6,041
    
    
    
    915Other current liabilities and accrued expenses
    
    
    11(b
    )
    
    
    3,465
    
    
    
    11,156
    
    
    
    1,689TOTAL CURRENT LIABILITIES
    
    
    
    
    
    
    19,428
    
    
    
    45,147
    
    
    
    6,838Deferred tax liabilities-non-current
    
    
    4
    
    
    
    2,306
    
    
    
    5,434
    
    
    
    823TOTAL LIABILITIES
    
    
    
    
    
    
    21,734
    
    
    
    50,581
    
    
    
    7,661Contingencies and commitments
    
    
    22SHAREHOLDERS EQUITYCommon stock, (US$0.01 par value;
4,000,000,000 authorized in 2009 and 2010;
19,300,390 and 22,425,216 shares issued and
outstanding as of December 31, 2009 and 2010,
respectively)
    
    
    17
    
    
    
    1,463
    
    
    
    1,670
    
    
    
    253Preferred stock, (US$0.01 par value;
1,000,000,000 shares authorized; 1,000,000
shares issued and outstanding as of December
31, 2009 and 2010)
    
    
    18
    
    
    
    77
    
    
    
    77
    
    
    
    12Additional paid-in capital
    
    
    
    
    
    
    482,329
    
    
    
    545,911
    
    
    
    82,685Accumulated deficit
    
    
    
    
    
    
    (384,299
    )
    
    
    (419,420
    )
    
    
    (63,527
    )Accumulated other comprehensive loss
    
    
    
    
    
    
    (1,869
    )
    
    
    (12,964
    )
    
    
    (1,964
    )TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    97,701
    
    
    
    115,274
    
    
    
    17,459TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    119,435
    
    
    
    165,855
    
    
    
    25,120
  F-4




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands except share data)
For the years ended December 31, 2008, 2009 and 2010
 AccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    (loss) income
    
    
    equityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbBalance at January 1, 2008
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,028,665
    
    
    
    1,170
    
    
    
    369,779
    
    
    
    (292,873
    )
    
    
    2,036
    
    
    
    80,189Issue of common stock, warrants and options to investors (net of offering cost of Rmb682)
    
    
    
    
    
    
    
    
    
    
    498,338
    
    
    
    34
    
    
    
    7,809
    
    
    
    
    
    
    
    
    
    
    
    7,843Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    16,666
    
    
    
    1
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    358Modification of warrants issued to non-employees in prior year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,364
    
    
    
    
    
    
    
    
    
    
    
    2,364Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,374
    
    
    
    
    
    
    
    
    
    
    
    6,374Contribution by major shareholder  China Technology Investment Group Limited
(formerly known as China Biotech Holdings Limited), (CTIG)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,923
    
    
    
    
    
    
    
    
    
    
    
    7,923Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,918
    )
    
    
    
    
    
    
    (53,918
    )Reclassification adjustment upon disposal of available-for-sale securities, net of tax
provision of Rmb1,325
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    )
    
    
    42,230Effect of adoption of ASC 815-40-15 resulting from reclassification of warrants and option rights (Note 17)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,488
    )
    
    
    961
    
    
    
    
    
    
    
    (7,527
    )Balance at 1 January 2009
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,543,669
    
    
    
    1,205
    
    
    
    386,118
    
    
    
    (345,830
    )
    
    
    (6,867
    )
    
    
    34,703
 F-5




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands except share data)
For the years ended December 31, 2008, 2009 and 2010
 AccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    
    shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    (loss) income
    
    
    equityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbIssue of shares upon exercise of option rights
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    4
    
    
    
    1,121
    
    
    
    
    
    
    
    
    
    
    
    1,125Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    136,864
    
    
    
    10
    
    
    
    2,580
    
    
    
    
    
    
    
    
    
    
    
    2,590Issue of shares upon conversion of convertible note
    
    
    
    
    
    
    
    
    
    
    3,322,260
    
    
    
    228
    
    
    
    80,764
    
    
    
    
    
    
    
    
    
    
    
    80,992Issue of shares upon exercise of stock purchase warrant
    
    
    
    
    
    
    
    
    
    
    14,776
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Issue of shares upon exercise of Warrant B
    
    
    
    
    
    
    
    
    
    
    222,821
    
    
    
    15
    
    
    
    3,041
    
    
    
    
    
    
    
    
    
    
    
    3,056Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,706
    
    
    
    
    
    
    
    
    
    
    
    8,706Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,469
    )
    
    
    
    
    
    
    (38,469
    )Net unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,228
    
    
    
    9,228Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,230
    )
    
    
    (4,230
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,471
    )Balance at December 31, 2009
    
    
    1,000,000
    
    
    
    77
    
    
    
    19,300,390
    
    
    
    1,463
    
    
    
    482,329
    
    
    
    (384,299
    )
    
    
    (1,869
    )
    
    
    97,701Issue of shares, net of offering costs
    
    
    
    
    
    
    
    
    
    
    3,064,827
    
    
    
    203
    
    
    
    52,324
    
    
    
    
    
    
    
    
    
    
    
    52,527Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    59,999
    
    
    
    4
    
    
    
    752
    
    
    
    
    
    
    
    
    
    
    
    756Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,015
    
    
    
    
    
    
    
    
    
    
    
    8,015Issue of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,491
    
    
    
    
    
    
    
    
    
    
    
    2,491Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,121
    )
    
    
    
    
    
    
    (35,121
    )Net unrealized loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,374
    )
    
    
    (9,374
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,721
    )
    
    
    (1,721
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,216
    )Balance at December 31, 2010
    
    
    1,000,000
    
    
    
    77
    
    
    
    22,425,216
    
    
    
    1,670
    
    
    
    545,911
    
    
    
    (419,420
    )
    
    
    (12,964
    )
    
    
    115,274
  F-6




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts expressed in thousands)
For the years ended December 31, 2008, 2009 and 2010
 2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Cash flows from operating activitiesNet loss
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
    
    
    (5,319
    )Adjustments to reconcile net loss to net cash used in operating activitiesStock-based compensation
    
    
    8,738
    
    
    
    8,706
    
    
    
    8,015
    
    
    
    1,214Warrants granted as service compensations
    
    
    
    
    
    
    
    
    
    
    2,491
    
    
    
    377Impairment on property, plant and equipment
    
    
    
    
    
    
    6,463
    
    
    
    591
    
    
    
    89Impairment on inventories
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    33Amortization of long-term prepayment for land use right
    
    
    90
    
    
    
    90
    
    
    
    90
    
    
    
    14Depreciation
    
    
    2,093
    
    
    
    2,425
    
    
    
    2,043
    
    
    
    309Loss (gain) on disposal of available-for-sale securities
    
    
    14,049
    
    
    
    (111
    )
    
    
    213
    
    
    
    32Gain on disposal of trading securities
    
    
    
    
    
    
    
    
    
    
    (5,196
    )
    
    
    (787
    )Change in fair value of trading securities
    
    
    
    
    
    
    
    
    
    
    (1,162
    )
    
    
    (176
    )Change in fair value of investment in convertible note
    
    
    
    
    
    
    
    
    
    
    (1,917
    )
    
    
    (290
    )Impairment on available-for-sale securities
    
    
    15,213
    
    
    
    
    
    
    
    3,549
    
    
    
    538Impairment on other investments
    
    
    
    
    
    
    571
    
    
    
    489
    
    
    
    74Impairment on deposit for business acquisition
    
    
    
    
    
    
    
    
    
    
    10,301
    
    
    
    1,560Finance costs
    
    
    
    
    
    
    5,760
    
    
    
    
    
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    3,434
    
    
    
    
    
    
    
    Change in fair value of derivative embedded in convertible note
    
    
    
    
    
    
    5,040
    
    
    
    
    
    
    
    Change in fair value of warrants and option rights
    
    
    1,236
    
    
    
    (3,798
    )
    
    
    (555
    )
    
    
    (84
    )Gain on disposal of subsidiaries
    
    
    
    
    
    
    (4,560
    )
    
    
    
    
    
    
    Deferred tax benefit
    
    
    (112
    )
    
    
    (112
    )
    
    
    (167
    )
    
    
    (25
    )Changes in assets and liabilities:Decrease (increase) in trade accounts receivable
    
    
    289
    
    
    
    398
    
    
    
    (13,662
    )
    
    
    (2,069
    )Decrease (increase) in inventories
    
    
    16
    
    
    
    (428
    )
    
    
    (979
    )
    
    
    (148
    )(Increase) decrease in due from related parties and other current
assets
    
    
    201
    
    
    
    (6,519
    )
    
    
    1,230
    
    
    
    186Increase in value added tax and business tax recoverable
    
    
    
    
    
    
    
    
    
    
    (4,152
    )
    
    
    (629
    )(Decrease) increase in trade accounts payable
    
    
    (267
    )
    
    
    (124
    )
    
    
    10,539
    
    
    
    1,596Increase in government subsidies
    
    
    
    
    
    
    300
    
    
    
    
    
    
    
    Increase in amount due to related parties
    
    
    2,301
    
    
    
    
    
    
    
    2,548
    
    
    
    386(Decrease) increase in other current liabilities and accrued expenses
    
    
    (4,348
    )
    
    
    2,260
    
    
    
    (11,429
    )
    
    
    (1,731
    )(Decrease) increase in income taxes payable
    
    
    (600
    )
    
    
    
    
    
    
    63
    
    
    
    10Increase in taxes recoverable
    
    
    (112
    )
    
    
    
    
    
    
    
    
    
    
    Decrease in cash classified as held for sale
    
    
    
    
    
    
    1,060
    
    
    
    
    
    
    
    Net cash used in operating activities
    
    
    (15,131
    )
    
    
    (17,268
    )
    
    
    (31,958
    )
    
    
    (4,840
    )Cash flows from investing activitiesDecrease (increase) in account maintained with a security broker
    
    
    11
    
    
    
    (20
    )
    
    
    
    
    
    
    Acquisitions of subsidiaries, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    1,415
    
    
    
    214Cash and cash equivalents disposed of upon disposal of subsidiaries, net of
cash received
    
    
    
    
    
    
    (830
    )
    
    
    
    
    
    
    Proceeds from disposal of available-for-sale securities and trading securities
    
    
    14,633
    
    
    
    28,794
    
    
    
    33,813
    
    
    
    5,121Purchase of available-for-sales securities and trading securities
    
    
    (13,100
    )
    
    
    (46,853
    )
    
    
    (28,427
    )
    
    
    (4,306
    )Investment in convertible notes
    
    
    
    
    
    
    
    
    
    
    (14,280
    )
    
    
    (2,163
    )Prepayment for acquisition of property and equipment
    
    
    (4,525
    )
    
    
    4,525
    
    
    
    
    
    
    
    Prepayment for business acquisition
    
    
    
    
    
    
    (20,602
    )
    
    
    (10,301
    )
    
    
    (1,560
    )Purchases of property, plant and equipment
    
    
    (10,972
    )
    
    
    (805
    )
    
    
    (4,189
    )
    
    
    (634
    )Net cash used in investing activities
    
    
    (13,953
    )
    
    
    (35,791
    )
    
    
    (21,969
    )
    
    
    (3,328
    )
 F-7




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 (Amount expressed in thousands)
For the years ended December 31, 2008, 2009 and 2010
 2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Cash flows from financing activitiesProceeds from issue of common stock, warrants and/or option rights
    
    
    9,365
    
    
    
    1,240
    
    
    
    39,664
    
    
    
    6,008Offering costs for issue of common stock, warrants and/or option rights
    
    
    (469
    )
    
    
    (74
    )
    
    
    (1,991
    )
    
    
    (302
    )Proceeds from exercise of stock options
    
    
    358
    
    
    
    2,590
    
    
    
    756
    
    
    
    115Proceeds from issue of convertible note, net of issuance costs
    
    
    
    
    
    
    68,672
    
    
    
    
    
    
    
    Overdraft from security account
    
    
    1,499
    
    
    
    (1,499
    )
    
    
    
    
    
    
    Contribution by a substantial shareholder- CTIG
    
    
    7,923
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from draw down of a short term loan
    
    
    
    
    
    
    
    
    
    
    6,041
    
    
    
    915Net cash generated from financing activities
    
    
    18,676
    
    
    
    70,929
    
    
    
    44,470
    
    
    
    6,736Effect of exchange rate changes on cash and cash equivalents
    
    
    (668
    )
    
    
    (29
    )
    
    
    (1,140
    )
    
    
    (173
    )Net (decrease) increase in cash and cash equivalents
    
    
    (11,076
    )
    
    
    17,841
    
    
    
    (10,597
    )
    
    
    (1,605
    )Cash and cash equivalents at beginning of year
    
    
    18,906
    
    
    
    6,770
    
    
    
    24,611
    
    
    
    3,728Less: Cash and cash equivalents at end of period from
discontinued operations
    
    
    (1,060
    )
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents at end of year
    
    
    6,770
    
    
    
    24,611
    
    
    
    14,014
    
    
    
    2,123Supplemental disclosure of cash flow informationInterest paid
    
    
    475
    
    
    
    39
    
    
    
    83
    
    
    
    13Supplemental disclosure non-cash investing and financing activitiesIssue of warrants as offering costs for financing
activities in 2008 and 2009
    
    
    682
    
    
    
    54
    
    
    
    
    
    
    
    Construction costs funded through accrued expenses and
other current liabilities
    
    
    
    
    
    
    231
    
    
    
    
    
    
    
    Conversion of convertible note in 2009
    
    
    
    
    
    
    82,975
    
    
    
    
    
    
    
    Purchase of property, plant and equipment funded
through accrued expenses and other current liabilities
    
    
    81
    
    
    
    66
    
    
    
    82
    
    
    
    12Business acquisition through issuance of shares (Note 3)
    
    
    
    
    
    
    
    
    
    
    14,854
    
    
    
    2,215
  F-8




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 1 Nature of operations and basis of presentation
         F-9




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 1 Nature of operations and basis of presentation (Contd)
   
    
    positive operating cash flows are expected to be generated from the
profitable operations of manufacturing and sale of solar modules;
    
    realization in the open market of available for sale and trading securities
with ending carrying amounts at approximately Rmb34,549 as of December 31, 2010, for
cash; and
    
    tight controls exercised by the board of directors on timing and magnitude of
cash outlays for investments initiatives; and
    
    proceeds from sales of equity and/or debt securities to
investors and borrowings, as would  be considered necessary.
  2 Summary of significant accounting policies
  (a) Consolidation
   (b) Business combinations
    F-10




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (i) Property, plant and equipment and land use right (continued)
  (j) Construction in progress
  (k) Intangible assets acquired through business combinations
  Long term supply contract
    
    5 yearsCustomer relationship
    
    5 years
 (l) Goodwill
   (m) Impairment or disposal of long lived assets
   F-13




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (n) Trade accounts receivable
  (o) Inventories
  (p) Cash and cash equivalents
  (q) Investment in securities
      (r) Fair value Measurement
  (s) Research and development costs
  F-14




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (t) Employee benefit plans
   (u) Segment reporting
  (v) Comprehensive (loss) income
  (w) Advertising costs
  (x) Earnings or loss per share
  (y) Stock-based compensation
  (z) Convertible note
  F-15




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (aa) Warrants and option rights
  (ab) Operating leases
  (ac) Government subsidies
  (ad) Shipping and handling
  (ae) Recent accounting pronouncements
   F-16




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 2 Summary of significant accounting policies (continued)
 (ae) Recent accounting pronouncements (continued)
    3 Acquisition
   F-17




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 3 Acquisition (continued)
  Amortization Life
    
    
    Linsun Group(in Years)
    
    
    RmbCurrent assets (including trade accounts receivable of Rmb5,692)
    
    
    
    
    
    
    15,146Cash and cash equivalents
    
    
    
    
    
    
    3,415Fixed assets/noncurrent assets
    
    
    
    
    
    
    4,614Goodwill
    
    
    N/A
    
    
    
    4,859Intangible assets:Supplier contract
    
    
    5
    
    
    
    7,152Customers relationship
    
    
    5
    
    
    
    6,030Total assets acquired
    
    
    
    
    
    
    41,216Current liabilities
    
    
    
    
    
    
    (21,067
    )Deferred tax liabilities  non current
    
    
    
    
    
    
    (3,295
    )Total liabilities assumed
    
    
    
    
    
    
    (24,362
    )Total purchase consideration (1,064,827 common shares of the Company at US$2.08 per share and advances to Linsun Group by
the Group at Rmb2,000)
    
    
    
    
    
    
    16,854
  Unaudited Proforma information on the acquisition
  December 31, 2010RMBRevenues (including sales of Rmb3,250 made to the Groups subsidiary
after acquisition):
    
    
    25,793Net income:
    
    
    1,059
  December 31, 2009
    
    
    December 31, 2010RMB
    
    
    RMBNet revenues:
    
    
    
    
    
    
    87,765Net loss attributable to common stockholders
    
    
    (38,469
    )
    
    
    (41,282
    )Net loss per share attributable to the Company basic and diluted
    
    
    (2.26
    )
    
    
    (1.90
    )
 F-18




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 Income tax expenses (credits)
          F-19




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 4 Income tax expenses (credits) (continued)
 Composition of income tax expenses (credits)
  2008
    
    
    2009
    
    
    2010Rmb
    
    
    Rmb
    
    
    RmbCurrent income tax expenses (credits)- Continuing operations
    
    
    (600
    )
    
    
    
    
    
    
    63Deferred income tax credits
    
    
    (112
    )
    
    
    (112
    )
    
    
    (167
    )Income tax credits
    
    
    (712
    )
    
    
    (112
    )
    
    
    (104
    )
 Reconciliation of income tax expenses by applying PRC statutory Enterprise Income Tax rate
  2008
    
    
    2009
    
    
    2010Rmb
    
    
    Rmb
    
    
    RmbNet loss before provision for income taxes
    
    
    (55,488
    )
    
    
    (42,808
    )
    
    
    (35,225
    )PRC statutory tax rate
    
    
    25%
    
    
    
    25%
    
    
    
    25%Income tax credit at PRC statutory EIT rate
    
    
    (13,872
    )
    
    
    (10,702
    )
    
    
    (8,806
    )Effect of
income tax rate differences in other jurisdictions
    
    
    6,984
    
    
    
    7,101
    
    
    
    8,163Income not subject to taxation
    
    
    (9
    )
    
    
    
    
    
    
    (7
    )Expenses not deductible for taxation purpose
    
    
    4,714
    
    
    
    2,007
    
    
    
    1,287Effect of tax losses unrecognized in prior years
    
    
    (363
    )
    
    
    
    
    
    
    Effect of over provision in prior years
    
    
    (600
    )
    
    
    
    
    
    
    Effect of changes in Hong Kong statutory tax rate
    
    
    21
    
    
    
    
    
    
    
    Change in valuation allowance
    
    
    2,413
    
    
    
    1,482
    
    
    
    (741
    )Total income tax credits
    
    
    (712
    )
    
    
    (112
    )
    
    
    (104
    )
 F-20




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 4 Income tax expenses (credits) (continued)
 The principal components of the deferred income tax assets and liabilities are as follows:
 December 31, 2009
    
    
    December 31, 2010Rmb
    
    
    RmbDeferred tax assets:Tax loss carryforwards
    
    
    4,167
    
    
    
    4,588Less: valuation allowance
    
    
    (4,167
    )
    
    
    (4,588
    )Non-current deferred tax assets, net
    
    
    
    
    
    
    Deferred tax liability:Property, plant and equipment, net
    
    
    (1,836
    )
    
    
    (1,734
    )Prepayment for land use right
    
    
    (470
    )
    
    
    (460
    )Intangible assets
    
    
    
    
    
    
    (3,240
    )Non-current deferred tax liabilities
    
    
    (2,306
    )
    
    
    (5,434
    )Total
    
    
    (2,306
    )
    
    
    (5,434
    )Reported as:Current deferred tax assets
    
    
    
    
    
    
    Current deferred tax liabilities
    
    
    
    
    
    
    Subtotal
    
    
    
    
    
    
    Non-current deferred tax assets
    
    
    
    
    
    
    Non-current deferred tax liabilities
    
    
    (2,306
    )
    
    
    (5,434
    )Total
    
    
    (2,306
    )
    
    
    (5,434
    )
   5 Disposal and discontinued operations
    2008RmbNet assets disposed of (excluding cash and cash equivalents):Other liabilities and accrued expenses
    
    
    (1
    )(1
    )Gain on disposal of discontinued operations
    
    
    109Settled by:Consideration received
    
    
    9Cash and cash equivalents disposed
    
    
    9
 F-21




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or 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
    )
  2009RmbNet assets disposed of (excluding cash and cash equivalents):Trade accounts receivable, net
    
    
    288Inventories  merchandise for resale
    
    
    42Value added tax and business tax recoverable
    
    
    279Prepaid expenses and other assets
    
    
    298Property, plant and equipment, net
    
    
    49Trade accounts payable
    
    
    (94
    )Tax payable
    
    
    25Other liabilities and accrued expenses
    
    
    (2,027
    )Accumulated other comprehensive loss
    
    
    (4,250
    )(5,390
    )Gain on disposal of Jingle Group
    
    
    4,560(830
    )Discharged by:Consideration received
    
    
    176Cash and cash equivalents disposed
    
    
    (1,006
    )(830
    )
 F-22




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 5 Disposal and discontinued operations (continued)
  Year endedYear ended December 31, 2008
    
    December 31, 2009Rmb
    
    Rmb
    
    Total
    
    Rmb
    
    TotalGreen
    
    Jingle
    
    
    
    JingleEnergy
    
    Group
    
    2008
    
    Group
    
    2009Revenues
    
    
    
    
    
    
    5,518
    
    
    
    5,518
    
    
    
    4
    
    
    
    4Cost of sales
    
    
    
    
    
    
    (1,876
    )
    
    
    (1,876
    )
    
    
    (2
    )
    
    
    (2
    )Gross profit
    
    
    
    
    
    
    3,642
    
    
    
    3,642
    
    
    
    2
    
    
    
    2Selling expenses
    
    
    
    
    
    
    (595
    )
    
    
    (595
    )
    
    
    (182
    )
    
    
    (182
    )General and administrative expenses
    
    
    (25
    )
    
    
    (2,899
    )
    
    
    (2,924
    )
    
    
    (153
    )
    
    
    (153
    )Operating (loss) profit
    
    
    (25
    )
    
    
    148
    
    
    
    123
    
    
    
    (333
    )
    
    
    (333
    )Other income
    
    
    
    
    
    
    725
    
    
    
    725
    
    
    
    
    
    
    
    Profit on disposal of subsidiaries
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    4,560
    
    
    
    4,560Profit (loss) from operations before income tax expenses
    
    
    (15
    )
    
    
    873
    
    
    
    858
    
    
    
    4,227
    
    
    
    4,227Income tax expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit (loss) from operations
    
    
    (15
    )
    
    
    873
    
    
    
    858
    
    
    
    4,227
    
    
    
    4,227Carrying amounts of total assets and liabilities
included as part of the disposal group were as
follows:Total assets
    
    
    
    
    
    
    2,439
    
    
    
    2,439
    
    
    
    1,962
    
    
    
    1,962Total liabilities
    
    
    (1
    )
    
    
    (1,360
    )
    
    
    (1,361
    )
    
    
    (6,346
    )
    
    
    (6,346
    )
 F-23




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 6 Prepaid expenses and other current assets
  December 31,
    
    
    December 31,2009
    
    
    2010Rmb
    
    
    RmbRental and utility deposits
    
    
    124
    
    
    
    327Advance to staff
    
    
    400
    
    
    
    280Prepayment for insurance
    
    
    156
    
    
    
    197Prepayment for raw materials purchase (Note a)
    
    
    23
    
    
    
    8,655Prepayment for decoration
    
    
    
    
    
    
    10Prepayment for consultancy fee
    
    
    
    
    
    
    207Deposits for investments (Note 20)
    
    
    
    
    
    
    19,877Others
    
    
    13
    
    
    
    133716
    
    
    
    29,686
  7 Prepayment for business acquisition
   F-24




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 8 Prepayment for land use right
  9 Property, plant and equipment, net
 December 31,
    
    
    December 31,2009
    
    
    2010Rmb
    
    
    RmbBuildings
    
    
    24,246
    
    
    
    24,196Plant and machinery
    
    
    1,609
    
    
    
    8,727Computer equipment
    
    
    486
    
    
    
    640Furniture, fixtures and office equipment
    
    
    2,022
    
    
    
    3,601Motor vehicles
    
    
    567
    
    
    
    862Total
    
    
    28,930
    
    
    
    38,026Less: accumulated depreciation
    
    
    (4,348
    )
    
    
    (7,277
    )Add: construction in progress
    
    
    676
    
    
    
    67925,258
    
    
    
    31,428
   F-25




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 10 Goodwill and Other Intangible Assets
      Year ended
    
    
    Year endedDecember
    
    
    December31, 2010
    
    
    31, 2009Gross Carrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountRmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbSupplier contract
    
    
    7,152
    
    
    
    (119
    )
    
    
    7,033
    
    
    
    
    
    
    
    
    
    
    
    Customer relationship
    
    
    6,030
    
    
    
    (101
    )
    
    
    5,929
    
    
    
    
    
    
    
    
    
    
    
    13,182
    
    
    
    (220
    )
    
    
    12,962
    
    
    
    
    
    
    
    
    
    
    
    
   Years
    
    Rmb2011
    
    
    2,6362012
    
    
    2,6362013
    
    
    2,6362014
    
    
    2,6362015
    
    
    2,41812,962
 11 Short term loan, other liabilities and accrued expenses
 (a) Short term loan
   F-26




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 11 Short term loan, other liabilities and accrued expenses
 (b) Other liabilities and accrued expenses
 December 31,
    
    
    December 31,2009
    
    
    2010Rmb
    
    
    RmbDeposits received
    
    
    36
    
    
    
    2,550Accrued salaries and staff benefits
    
    
    831
    
    
    
    894Accrued liability for purchase of property, plant and equipment
    
    
    297
    
    
    
    313Interest payable
    
    
    1,900
    
    
    
    1,833Accrued freight charge
    
    
    
    
    
    
    3,012Advance due to an ex-shareholder by Linsun Group
    
    
    
    
    
    
    2,000Others
    
    
    401
    
    
    
    5542009
    
    
    20093,465
    
    
    
    11,156
 12 Fair Value measurements
      F-27




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 12 Fair Value measurements (continued)
 Investment in Equity Securities (classified as Trading and AFS securities)
 Fair Value Measurement at December 31, 2009Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    Unobservable
    
    
    Total atIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31,(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2009Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbOther investments
    
    
    
    
    
    
    
    
    
    
    336
    
    
    
    336Trading securities
    
    
    3,825
    
    
    
    
    
    
    
    
    
    
    
    3,825Available-for-sale securities
    
    
    27,432
    
    
    
    
    
    
    
    
    
    
    
    27,432Total
    
    
    31,257
    
    
    
    
    
    
    
    336
    
    
    
    31,593
 Fair Value Measurement at December 31, 2010Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    Unobservable
    
    
    Total atIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbTrading securities
    
    
    20,429
    
    
    
    
    
    
    
    
    
    
    
    20,429Available-for-sale securities
    
    
    14,120
    
    
    
    
    
    
    
    
    
    
    
    14,120Total
    
    
    34,549
    
    
    
    
    
    
    
    
    
    
    
    34,549
  Investment in convertible note
   Investment in Bond
 2009
    
    
    2010Rmb
    
    
    RmbBeginning balance at January 1
    
    
    
    
    
    
    Investments made
    
    
    
    
    
    
    14,280Total gains (realized/unrealized) included in earnings
    
    
    
    
    
    
    1,917Conversion
    
    
    
    
    
    
    (16,197
    )Ending balance at December 31
    
    
    
    
    
    
    
 F-28




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 12 Fair Value measurements (continued)
 Liabilities relating to warrants and option rights
 SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31, 2009(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbWarrant A (Notes 17)
    
    
    
    
    
    
    
    
    
    
    3,003
    
    
    
    3,003
 SignificantQuoted Prices in Active
    
    
    Other
    
    
    SignificantMarkets for Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31, 2010(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbWarrant A (Notes 17)
    
    
    
    
    
    
    
    
    
    
    2,448
    
    
    
    2,448
   2009
    
    
    2010Risk-free rate(1)
    
    
    2.110
    %
    
    
    0.901
    %Volatility rate(2)
    
    
    71.75
    %
    
    
    76.54
    %Dividend yield(3)
    
    
    
    
    
    
    
 
 1.
    
    The risk-free interest rate represents the yields to maturity of U.S. Government Strips with
respective terms to maturity as at the valuation date.2.
    
    Expected volatility is estimated based on the historical volatility of the Companys stock
price and/or the comparable public-traded companies.3.
    
    The Company has no expectation of paying dividends on its common stock. F-29




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 12 Fair Value measurements (continued)
  Warrants and option rights
 2009
    
    
    2010Rmb
    
    
    RmbBeginning balance at January 1
    
    
    2,289
    
    
    
    3,003Fair value on January 1, 2009 upon adoption of
ASC 815-40-15 (Note 2(aa))
    
    
    7,527
    
    
    
    Issuances
    
    
    617
    
    
    
    Total gains (realized/unrealized):Included in earnings
    
    
    (3,798
    )
    
    
    (555
    )Included in other comprehensive income (loss)
    
    
    
    
    
    
    Settlement/Cancelled upon expiry of terms
    
    
    (3,632
    )
    
    
    Ending balance at December 31
    
    
    3,003
    
    
    
    2,448
   Derivative embedded in convertible note
 2009RmbBeginning balance at January 1
    
    
    Issuances
    
    
    29,960Total losses (realized/unrealized) included in earnings
    
    
    5,040Settlement
    
    
    (35,000
    )Ending balance at December 31
    
    
    
 F-30




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation
 (a) Stock Option
      F-31




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
 (a) Stock Option (continued)
     Year Ended December 31,2008
    
    
    2009
    
    
    2010Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    exerciseprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    priceNumber of
    
    
    (US$ per
    
    
    Number of
    
    
    (US$ per
    
    
    Number of
    
    
    (US$ peroptions
    
    
    option)
    
    
    options
    
    
    option)
    
    
    options
    
    
    option)Outstanding at beginning of year
    
    
    2,053,000
    
    
    
    2.98
    
    
    
    4,353,334
    
    
    
    2.43
    
    
    
    5,414,470
    
    
    
    1.82Granted
    
    
    2,410,000
    
    
    
    2.00
    
    
    
    1,366,000
    
    
    
    2.14
    
    
    
    1,235,000
    
    
    
    2.50Exercised
    
    
    (16,666
    )
    
    
    3.13
    
    
    
    (136,864
    )
    
    
    2.75
    
    
    
    (59,999
    )
    
    
    1.90Forfeited
    
    
    (93,000
    )
    
    
    3.54
    
    
    
    (168,000
    )
    
    
    1.92
    
    
    
    (368,336
    )
    
    
    2.25Outstanding at end of year
    
    
    4,353,334
    
    
    
    2.43
    
    
    
    5,414,470
    
    
    
    1.82
    
    
    
    6,221,135
    
    
    
    2.38
  F-32




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
 (a) Stock Option (continued)
  Options outstanding
    
    
    Options exercisableWeightedWeighted
    
    
    Weighted
    
    
    
    
    
    
    averageaverage
    
    
    average
    
    
    
    
    
    
    exerciseremaining
    
    
    exercise
    
    
    
    
    
    
    priceNumber
    
    
    contractual
    
    
    price (US$
    
    
    Number
    
    
    (US$ perDate of grant
    
    outstanding
    
    
    life
    
    
    per share)
    
    
    exercisable
    
    
    share)February 8, 2005
    
    
    50,000
    
    
    6.11 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
  Options outstanding
    
    
    Options exercisableWeightedWeighted
    
    
    Weighted
    
    
    
    
    
    
    averageaverage
    
    
    average
    
    
    
    
    
    
    exerciseremaining
    
    
    exercise
    
    
    
    
    
    
    priceNumber
    
    
    contractual
    
    
    price (US$
    
    
    Number
    
    
    (US$ perDate of grant
    
    outstanding
    
    
    life
    
    
    per share)
    
    
    exercisable
    
    
    share)February 8, 2005
    
    
    50,000
    
    
    5.11 years
    
    
    
    1.15
    
    
    
    50,000
    
    
    
    1.15September 20, 2005
    
    
    255,000
    
    
    5.72 years
    
    
    
    1.85
    
    
    
    255,000
    
    
    
    1.85September 18, 2006
    
    
    725,000
    
    
    6.28 years
    
    
    
    3.18
    
    
    
    725,000
    
    
    
    3.18May 23, 2007
    
    
    578,334
    
    
    2.39 years
    
    
    
    3.13
    
    
    
    578,334
    
    
    
    3.13August 3, 2007
    
    
    80,000
    
    
    2.59 years
    
    
    
    3.53
    
    
    
    80,000
    
    
    
    3.53August 20, 2007
    
    
    56,000
    
    
    2.64 years
    
    
    
    3.74
    
    
    
    56,000
    
    
    
    3.74July 28, 2008
    
    
    130,000
    
    
    3.57 years
    
    
    
    4.08
    
    
    
    43,331
    
    
    
    4.08November 10, 2008
    
    
    824,136
    
    
    3.86 years
    
    
    
    2.04
    
    
    
    244,127
    
    
    
    2.04December 30, 2008
    
    
    1,410,000
    
    
    4.00 years
    
    
    
    1.79
    
    
    
    469,990
    
    
    
    1.79July 7, 2009
    
    
    30,000
    
    
    4.52 years
    
    
    
    2.35
    
    
    
    
    
    
    
    October 1, 2009
    
    
    1,276,000
    
    
    4.75 years
    
    
    
    2.12
    
    
    
    53,000
    
    
    
    2.125,414,470
    
    
    
    
    
    
    
    
    
    
    
    2,554,782
 F-33




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
 (a) Stock Option (continued)
  Options outstanding
    
    
    Options exercisableWeightedWeighted
    
    
    Weighted
    
    
    
    
    
    
    averageaverage
    
    
    average
    
    
    
    
    
    
    exerciseremaining
    
    
    exercise
    
    
    
    
    
    
    priceNumber
    
    
    contractual
    
    
    price (US$
    
    
    Number
    
    
    (US$ perDate of grant
    
    outstanding
    
    
    life
    
    
    per share)
    
    
    exercisable
    
    
    share)February 8, 2005
    
    
    50,000
    
    
    4.10 years
    
    
    
    1.15
    
    
    
    50,000
    
    
    
    1.15September 20, 2005
    
    
    255,000
    
    
    4.72 years
    
    
    
    1.85
    
    
    
    255,000
    
    
    
    1.85September 18, 2006
    
    
    725,000
    
    
    5.71 years
    
    
    
    3.18
    
    
    
    725,000
    
    
    
    3.18May 23, 2007
    
    
    535,000
    
    
    1.39 years
    
    
    
    3.13
    
    
    
    535,000
    
    
    
    3.13August 3, 2007
    
    
    80,000
    
    
    1.59 years
    
    
    
    3.53
    
    
    
    80,000
    
    
    
    3.53August 20, 2007
    
    
    31,000
    
    
    1.63 years
    
    
    
    3.74
    
    
    
    31,000
    
    
    
    3.74July 28, 2008
    
    
    130,000
    
    
    2.57 years
    
    
    
    4.08
    
    
    
    86,665
    
    
    
    4.08November 10, 2008
    
    
    724,135
    
    
    2.86 years
    
    
    
    2.04
    
    
    
    477,462
    
    
    
    2.04December 30, 2008
    
    
    1,280,000
    
    
    3.00 years
    
    
    
    1.79
    
    
    
    866,657
    
    
    
    1.79July 7, 2009
    
    
    30,000
    
    
    3.52 years
    
    
    
    2.35
    
    
    
    10,000
    
    
    
    2.35October 1, 2009
    
    
    1,146,000
    
    
    4.41 years
    
    
    
    2.12
    
    
    
    430,661
    
    
    
    2.12December 15, 2010
    
    
    1,235,000
    
    
    4.96 years
    
    
    
    2.50
    
    
    
    
    
    
    
    6,221,135
    
    
    
    
    
    
    
    
    
    
    
    3,547,445
  F-34




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
         F-35




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
     Stock-based compensation to non-employees
    F-36




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
    2008Granted onJuly 28, 2008
    
    
    November 10, 2008
    
    
    December 30, 2008Average risk-free rate of return(1)
    
    
    3.393
    %
    
    
    2.607
    %
    
    
    1.508
    %Volatility rate(2)
    
    
    76.32
    %
    
    
    85.20
    %
    
    
    86.57
    %Dividend yield(3)
    
    
    
    
    
    
    
    
    
    
 2009Granted onJuly 07 ,2009
    
    
    Oct 01 ,2009Average risk-free rate of return(1)
    
    
    2.79
    %
    
    
    2.28
    %Volatility rate(2)
    
    
    79.65
    %
    
    
    79.68
    %Dividend yield(3)
    
    
    
    
    
    
 F-37




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 13 Stock-based compensation (continued)
 2010Granted onDecember 15, 2010Average risk-free rate of return(1)
    
    
    2.20
    %Volatility rate(2)
    
    
    76.79
    %Dividend yield(3)
    
    
 
 1.
    
    The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the
expected life of the awards in effect at the time of grant.2.
    
    Expected volatility is estimated based on the historical volatility of the Companys stock
price and/or the comparable public-traded companies.3.
    
    The Company has no expectation of paying dividends on its common stock.
 (b) Stock Purchase Warrants
   F-38




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated
 13 Stock-based compensation (continued)
  2007
    
    
    2008August 31, 2007
    
    
    August 29, 2008Average risk-free rate of return
    
    
    4.06
    %
    
    
    2.214
    %Volatility rate
    
    
    76.51
    %
    
    
    75.77
    %Dividend yield
    
    
    
    
    
    
    
    2010
    
    
    2010January 12, 2010
    
    
    April 14, 2008Average risk-free rate of return
    
    
    2.512
    %
    
    
    0.992
    %Volatility rate
    
    
    78.50
    %
    
    
    83.06
    %Dividend yield
    
    
    
    
    
    
    
 14 Net (loss) earnings per share
   F-39




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 14 Net (loss) earnings per share (continued)
  Year ended December 31,2008
    
    
    2009
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb(Amounts expressed in thousands, except per share data)Net loss for the year attributable to the
shareholders of the Company
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )Net loss from continuing operations attributable to
holders of Common Stock, basic and diluted
    
    
    (54,776
    )
    
    
    (42,696
    )
    
    
    (35,121
    )Net income from discontinued operations attributable
to holders of Common Stock, basic and diluted
    
    
    858
    
    
    
    4,227
    
    
    
    Weighted-average shares used in computing basic and
diluted net loss per share
    
    
    16,160
    
    
    
    15,927
    
    
    
    20,746Net loss per share (in Rmb)- Basic and diluted
    
    
    (3.34
    )
    
    
    (2.42
    )
    
    
    (1.69
    )Net loss per share from continuing operations (in Rmb)- Basic and diluted
    
    
    (3.39
    )
    
    
    (2.68
    )
    
    
    (1.69
    )Net earnings per share from discontinued operations
(in Rmb)- Basic and diluted
    
    
    0.05
    
    
    
    0.26
    
    
    
    
  F-40




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 15 Related party transactions
  Year ended December 31,2008
    
    
    2009
    
    
    2010Rmb
    
    
    Rmb
    
    
    RmbTransactions with related partiesPrepayment for acquisition of property from ZMRE (Note a)
    
    
    440
    
    
    
    
    
    
    
    Proceeds from acquisition of property from CTIG (Note b)
    
    
    7,302
    
    
    
    
    
    
    
    Payment for acquisition of property on behalf of CTIG (Note b)
    
    
    5,000
    
    
    
    
    
    
    
    Loan from Chief Executive Officer, Alan Li (Note c)
    
    
    
    
    
    
    792
    
    
    
    Repayment of overdraft of a security account CTIG (Note d)
    
    
    
    
    
    
    440
    
    
    
    Issuance of an convertible note in principal amount of US$10,000 by
CGHL to CMTF (Note e)
    
    
    
    
    
    
    68,672
    
    
    
    Deposit payment to CTIG for acquisition of a-Si thin film solar
panel production line
(Note f)
    
    
    
    
    
    
    6,867
    
    
    
    Repayment of a deposit from CTIG for acquisition of the production
line (Note f)
    
    
    
    
    
    
    
    
    
    
    6,626Advance from ex-shareholder of Linsun Group, Liao Lin-Hsiang (Note g)
    
    
    
    
    
    
    
    
    
    
    8,097Service fee paid and payable pursuant to a service agreement signed
with CTIG (Note h)
    
    
    
    
    
    
    
    
    
    
    2,548
 
 Note(a)
    
    Zhangzhou Trendar Tech and Broad Shine, two wholly-owned subsidiaries of the Company,
acquired four properties at an aggregate consideration of Rmb3,301 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 CTIG, and ZMRE is a subsidiary of CMG.(b)
    
    Prior to the acquisition of Faster Group in 2007, Faster Group had no business activities and
its major asset was a right to purchase a real estate located at the Tangyang Industrial Zone
of the China Merchants Zhangzhou Development Zone from China Merchants Zhangzhou Development
Zone Ltd. (CMZDZ), for a consideration of Rmb13,085. China Merchant Group (CMG) is the
ultimate holding company of CTIG, and CMZDZ is a subsidiary of CMG. Out of the total payment
to be made, Rmb5,783 was to be was borne by the Faster Group and Rmb7,302 was to be settled by
CTIG on behalf of Faster Group. In 2008, the Group received Rmb7,302 from CTIG but it only
paid Rmb5,000 to CMZDZ for the purchase of the property. The remaining balance due to CMZDZ
was Rmb8,085 as of December 31, 2009 and 2010.(c)
    
    On February 25, 2009, BHL Solar Technology Company Limited (BHLHK), a wholly owned
subsidiary of the Company, entered into a loan agreement with Mr. Alan Li, to borrow HK$900
from him for a period of 10 months without interest. Mr. Alan Li is one of the directors of
BHLHK and is the Chairman of the Board of Directors, Executive Director and Chief Executive
Officer of the Company. The loan was for working capital financing purposes and the amount was
fully repaid in May 2009. F-41




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 15 Related party transactions (continued)
 (d)
    
    The amount represents repayment of overdraft of a securities account on behalf of BHLHK by
CTIG on February 5, 2009.(e)
    
    In April 2009, the Company and two of the Companys subsidiaries, China Green Industry Group
Ltd. and China Green Holdings Ltd. (CGHL), wholly-owned subsidiaries of the Company, entered
into a subscription agreement with CMTF Private Equity One, (CMTF). CMTF Private Equity One
is one of the funds managed by CMS Capital (HK) Co., Ltd. (formerly known as CMTF Asset
Management Limited), which is an indirect subsidiary of CMG. CMTF Private Equity One is a
shareholder of the Company as at December 31, 2010. Pursuant to the subscription agreement,
CGHL issued to CMTF a convertible note at a principal amount of US$10,000 with a three-year
maturity period and at an interest rate equal to the Hong Kong Prime Rate. The convertible
note was, at the holders option, either convertible into the outstanding ordinary shares of
CGHL or exchangeable for shares of the Companys common stock. In November 2009, CMTF
exchanged the convertible note for 3,322,260 shares of the Companys common stock.(f)
    
    On December 15, 2009, the Company entered into an agency contract regarding purchase of one
a-Si thin film solar panel production line with CTIG (the Agency Contract). Pursuant to the
Agency Contract, the Company appointed CTIG as its representative to liaise and negotiate with
equipment supplier to purchase one a-Si thin film solar panel production line, together with
the rights of use of its patents, proprietary technology, technical service and provision of
relevant training. The Company paid US$1,000 to CTIG for financing the payment of a deposit
for the purchases on December 16, 2009. On June 22, 2010, the Company decided not to
undertake the purchase and terminated the Agency Contract with CTIG. The deposit was refunded
in full to the Company before end of 2010.(g)
    
    On 23 November 2010, the Group acquired 100% shareholding of Linsun Group (Note 1). Prior to
the acquisition, Liao Lin-Hsiang held 66.67% interests in LSRHK. Liao Lin-Hsiang had advanced
Rmb8.10 million to LSPPRC before the acquisition for working capital financing purposes.
Rmb7.80 million had been repaid by the Group as at December 31, 2010.As of December 31, 2009 and 2010, the balances with related parties were as follows:
 December 31,2009
    
    
    2010Rmb
    
    
    RmbBalances with related parties:Due from related partiesFunds held by CTIG for acquisition of technology and
business in China (Note f and h)
    
    
    12,053
    
    
    
    2,45512,053
    
    
    
    2,455Due to related parties:Due to CTIG (Note i)
    
    
    859
    
    
    
    853Due to CMZDZ (Note b)
    
    
    8,085
    
    
    
    8,085Due to Liao Lin-Hsiang (Note g)
    
    
    
    
    
    
    3008,944
    
    
    
    9,238
 F-42




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 15 Related party transactions (continued)
 (h)
    
    In view of CTIGs experience in doing acquisitions in China, the Group made a temporary
advance of HK$6,000 to CTIG in order to facilitate it to make acquisitions of technology
related businesses in China. The advance is interest free and repayable on demand. In 2010,
CTIG assisted the Company to successfully acquire Linsun Group. In May 2011, the Company
entered into an agreement with CTIG to pay a service fee amounting HK$3,000 (equivalent to
approximately Rmb2,548) to CTIG for that transaction. Such services fee was deducted from the
temporary advance previously made to CTIG, as mutually agreed between the parties.
 (i)
    
    The amount represents administrative expenses paid on behalf of Faster Assets and Shenzhen
Helios Energy by CTIG in China.
  16 Retirement benefits
  17 Common stock
    F-43




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 17 Common stock (continued)
        F-44




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 18 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-convertibleThe Preferred Stock is not convertible into common stock.
 F-45




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 19 Available-for-sale securities
   December 31,2009
    
    
    2010Rmb
    
    
    RmbCost of available-for-sale securities
    
    
    18,204
    
    
    
    18,139Impairment
    
    
    
    
    
    
    (3,549
    )Unrecognized gain (loss)
    
    
    9,228
    
    
    
    (470
    )Fair value of available-for-sale securities
    
    
    27,432
    
    
    
    14,120
  20 Deposit for investment
   F-46




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 21 Convertible note
   22 Contingencies and commitments
   As of December 31,
    
    Rmb2011
    
    
    1,7702012
    
    
    1,7102013
    
    
    1,5372014
    
    
    1,3972015
    
    
    523Total
    
    
    6,937
  F-47




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 22 Contingencies and commitments (continued)
     23 Restricted net assets
  24 Segment information
   F-48




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 24 Segment information (continued)
  NetOperating
    
    
    
    
    
    
    identifiable
    
    
    Depreciationincome
    
    
    
    
    
    
    assets/
    
    
    and
    
    
    CapitalRevenues
    
    
    (loss)
    
    
    Assets
    
    
    (liabilities)
    
    
    amortization
    
    
    expendituresRmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb2010Solar Energy
Operations
    
    
    53,700
    
    
    
    222
    
    
    
    160,244
    
    
    
    84,566
    
    
    
    2,327
    
    
    
    4,675Corporate*
    
    
    
    
    
    
    (28,749
    )
    
    
    5,611
    
    
    
    30,707
    
    
    
    26
    
    
    
    134Total
    
    
    53,700
    
    
    
    (28,527
    )
    
    
    165,855
    
    
    
    115,273
    
    
    
    2,353
    
    
    
    4,8092009Solar Energy
Operations
    
    
    
    
    
    
    (12,329
    )
    
    
    32,576
    
    
    
    20,633
    
    
    
    2,174
    
    
    
    1,298Corporate*
    
    
    
    
    
    
    (20,002
    )
    
    
    86,859
    
    
    
    77,068
    
    
    
    341
    
    
    
    81Total
    
    
    
    
    
    
    (32,331
    )
    
    
    119,435
    
    
    
    97,701
    
    
    
    2,515
    
    
    
    1,3792008Solar 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
    
    
    
    
    
    
    
    16Total
    
    
    10
    
    
    
    (24,338
    )
    
    
    62,619
    
    
    
    42,230
    
    
    
    2,183
    
    
    
    7,107
 F-49




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 24 Segment information (continued)
 
 *
    
    The detail of corporate/unallocated items including mainly staff costs, legal and professional
fees are as follows: 2008
    
    2009
    
    2010Rmb
    
    Rmb
    
    RmbUnallocated general and administrative expenses
    
    
    (20,004
    )
    
    
    (20,002
    )
    
    
    (28,749
    )Operating loss
    
    
    (20,004
    )
    
    
    (20,002
    )
    
    
    (28,749
    )Cash and cash equivalents
    
    
    1,688
    
    
    
    22,009
    
    
    
    2,636Other investments
    
    
    
    
    
    
    336
    
    
    
    Trading securities
    
    
    
    
    
    
    3,825
    
    
    
    20,429Available-for-sale securities
    
    
    4,712
    
    
    
    27,432
    
    
    
    14,120Due from related parties
    
    
    5,282
    
    
    
    12,053
    
    
    
    4,285Prepayment for acquisition of property, plant
and equipment
    
    
    4,525
    
    
    
    
    
    
    
    Other non-current assets
    
    
    
    
    
    
    20,602
    
    
    
    200Other assets
    
    
    963
    
    
    
    603
    
    
    
    3,097Due to related parties
    
    
    (176
    )
    
    
    (177
    )
    
    
    Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    (3,241
    )Overdraft from security account
    
    
    (1,499
    )
    
    
    
    
    
    
    Liabilities relating to warrants
    
    
    (2,289
    )
    
    
    (3,003
    )
    
    
    (2,449
    )Other liabilities
    
    
    (3,549
    )
    
    
    (6,612
    )
    
    
    (8,370
    )Net identifiable assets
    
    
    9,657
    
    
    
    77,068
    
    
    
    30,707
    F-50




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, except share data or unless otherwise stated)
 25. Additional information- condensed financial statements of the Company
     F-51




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
(Amounts expressed in thousands)
For the years ended December 31, 2008, 2009 and 2010
 2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$General and administrative expenses
    
    
    (14,657
    )
    
    
    (16,253
    )
    
    
    (22,876
    )
    
    
    (3,465
    )Operating loss
    
    
    (14,657
    )
    
    
    (16,253
    )
    
    
    (22,876
    )
    
    
    (3,465
    )Other income (expense):Share of results of subsidiaries
    
    
    (37,912
    )
    
    
    (16,175
    )
    
    
    (2,763
    )
    
    
    (418
    )Interest income
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Finance costs
    
    
    
    
    
    
    (5,760
    )
    
    
    
    
    
    
    Impairment on prepayment for business acquisition
    
    
    
    
    
    
    
    
    
    
    (10,301
    )
    
    
    (1,560
    )Change in fair value of derivative embedded in convertible note
    
    
    
    
    
    
    3,798
    
    
    
    
    
    
    
    Change in fair value of warrants and option rights
    
    
    (1,236
    )
    
    
    (5,040
    )
    
    
    555
    
    
    
    84Loss on debt extinguishment
    
    
    
    
    
    
    (3,434
    )
    
    
    
    
    
    
    Exchange loss
    
    
    (79
    )
    
    
    (165
    )
    
    
    167
    
    
    
    25Gain on disposal of subsidiaries
    
    
    
    
    
    
    4,560
    
    
    
    
    
    
    
    Others, net
    
    
    (40
    )
    
    
    
    
    
    
    97
    
    
    
    15Net loss for the year
    
    
    (53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
    
    
    (5,319
    )
 F-52




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
(Amounts expressed in thousands except share data)
As of December 31, 2009 and 2010
 2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    US$ASSETSCURRENT ASSETSCash and cash equivalents
    
    
    8,509
    
    
    
    299
    
    
    
    45Due from subsidiaries
    
    
    180,904
    
    
    
    216,825
    
    
    
    32,841Prepaid expenses and other current assets
    
    
    179
    
    
    
    20,293
    
    
    
    3,074TOTAL CURRENT ASSETS
    
    
    189,592
    
    
    
    237,417
    
    
    
    35,960Property, plant and equipment, net
    
    
    336
    
    
    
    161
    
    
    
    24Prepayment for acquisition of property, plant
and machinery
    
    
    
    
    
    
    
    
    
    
    Other non-current asset
    
    
    20,602
    
    
    
    
    
    
    
    Investment in subsidiaries
    
    
    (102,180
    )
    
    
    (109,283
    )
    
    
    (16,552
    )TOTAL ASSETS
    
    
    108,350
    
    
    
    128,295
    
    
    
    19,432LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccrued professional fees
    
    
    3,713
    
    
    
    4,060
    
    
    
    615Due to a related party
    
    
    
    
    
    
    2,548
    
    
    
    386Due to subsidiaries
    
    
    1,669
    
    
    
    1,910
    
    
    
    289Liabilities relating to warrants
    
    
    3,003
    
    
    
    2,449
    
    
    
    371Other current liabilities and accrued expenses
    
    
    2,328
    
    
    
    2,118
    
    
    
    322TOTAL CURRENT LIABILITIES
    
    
    10,713
    
    
    
    13,085
    
    
    
    1,983TOTAL LIABILITIES
    
    
    10,713
    
    
    
    13,085
    
    
    
    1,983Contingencies and commitmentsSHAREHOLDERS EQUITYCommon stock, (US$0.01 par value;
4,000,000,000 authorized in 2008 and 2009;
shares issued and outstanding: 15,534,669 and
19,300,390 as of December 31, 2008 and 2009,
respectively)
    
    
    1,463
    
    
    
    1,670
    
    
    
    253Preferred stock, (US$0.01 par value;
1,000,000,000 shares authorized; shares
issued and outstanding: 1,000,000 as of
December 31, 2008 and 2009)
    
    
    77
    
    
    
    77
    
    
    
    12Additional paid-in capital
    
    
    482,265
    
    
    
    545,847
    
    
    
    82,675Accumulated deficit
    
    
    (384,299
    )
    
    
    (419,420
    )
    
    
    (63,527
    )Accumulated other comprehensiveloss
    
    
    (1,869
    )
    
    
    (12,964
    )
    
    
    (1,964
    )TOTAL SHAREHOLDERS EQUITY
    
    
    97,637
    
    
    
    115,210
    
    
    
    17,449TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    108,350
    
    
    
    128,295
    
    
    
    19,432
 F-53




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 (Amounts in thousands except share data)
For the years ended December 31, 2008, 2009 and 2010
 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, 2008
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,028,665
    
    
    
    1,170
    
    
    
    369,715
    
    
    
    (292,873
    )
    
    
    2,036
    
    
    
    80,125Issue of common stock, warrants and options to investors
(net of offering cost of Rmb682)
    
    
    
    
    
    
    
    
    
    
    498,338
    
    
    
    34
    
    
    
    7,809
    
    
    
    
    
    
    
    
    
    
    
    7,843Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    16,666
    
    
    
    1
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    358Modification of warrants issued to non-employees in prior year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,364
    
    
    
    
    
    
    
    
    
    
    
    2,364Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,374
    
    
    
    
    
    
    
    
    
    
    
    6,374Contribution by major shareholder-China Biotech
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,923
    
    
    
    
    
    
    
    
    
    
    
    7,923Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,918
    )
    
    
    
    
    
    
    (53,918
    )Share of subsidiaries equity transactions:Net unrealized gain on 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
    
    
    
    394,542
    
    
    
    (346,791
    )
    
    
    (6,867
    )
    
    
    42,166Effect of
adoption of ASC 815-40-15 resulting from reclassification of warrants and option rights (Note16)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,488
    )
    
    
    961
    
    
    
    
    
    
    
    (7,527
    )Balance at 1 January 2009
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,543,669
    
    
    
    1,205
    
    
    
    386,054
    
    
    
    (345,830
    )
    
    
    (6,867
    )
    
    
    34,639
 F-54




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands except share data)
For the years ended December 31, 2008, 2009 and 2010
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    

shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income (loss)
    
    
    EquityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbIssue of shares upon exercise of option rights
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    
    4
    
    
    
    1,121
    
    
    
    
    
    
    
    
    
    
    
    1,125Shares
issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    136,864
    
    
    
    10
    
    
    
    2,580
    
    
    
    
    
    
    
    
    
    
    
    2,590Issue of shares upon conversion of convertible note
    
    
    
    
    
    
    
    
    
    
    3,322,260
    
    
    
    228
    
    
    
    80,764
    
    
    
    
    
    
    
    
    
    
    
    80,992Issue of shares upon exercise of stock purchase warrant
    
    
    
    
    
    
    
    
    
    
    14,776
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Issue of shares upon exercise of Warrant B
    
    
    
    
    
    
    
    
    
    
    222,821
    
    
    
    15
    
    
    
    3,041
    
    
    
    
    
    
    
    
    
    
    
    3,056Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,706
    
    
    
    
    
    
    
    
    
    
    
    8,706Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,469
    )
    
    
    
    
    
    
    (38,469
    )Share of subsidiaries equity transactions:Net unrealized gain on available-for-
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,228
    
    
    
    9,228Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,230
    )
    
    
    (4,230
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,471
    )Balance at
January 1, 2010
    
    
    1,000,000
    
    
    
    77
    
    
    
    19,300,390
    
    
    
    1,463
    
    
    
    482,265
    
    
    
    (384,299
    )
    
    
    (1,869
    )
    
    
    97,637
 F-55




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##### Table of Contents



CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts in thousands except share data)
For the years ended December 31, 2008, 2009 and 2010
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid in
    
    
    Accumulated
    
    
    comprehensive
    
    

shareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    deficit
    
    
    income (loss)
    
    
    EquityRmb
    
    
    
    
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbIssue of shares, net of offering costs
    
    
    
    
    
    
    
    
    
    
    3,064,827
    
    
    
    203
    
    
    
    52,316
    
    
    
    
    
    
    
    
    
    
    
    52,519Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    59,999
    
    
    
    4
    
    
    
    760
    
    
    
    
    
    
    
    
    
    
    
    764Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,491
    
    
    
    
    
    
    
    
    
    
    
    2,491Issue of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,015
    
    
    
    
    
    
    
    
    
    
    
    8,015Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,121
    )
    
    
    
    
    
    
    (35,121
    )Share of subsidiaries equity transactions:Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,095
    )
    
    
    (11,095
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,216
    )Balance at December 31, 2010
    
    
    1,000,000
    
    
    
    77
    
    
    
    22,425,216
    
    
    
    1,670
    
    
    
    545,847
    
    
    
    (419,420
    )
    
    
    (12,964
    )
    
    
    115,210
 F-56




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
(Amounts expressed in thousands)
For the years ended December 31, 2008, 2009 and 2010
 2008
    
    
    2009
    
    
    2010
    
    
    2010Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Cash flows from operating activities(53,918
    )
    
    
    (38,469
    )
    
    
    (35,121
    )
    
    
    (5,319
    )Net cash used in operating activities
    
    
    (13,810
    )
    
    
    (48,375
    )
    
    
    (40,707
    )
    
    
    (6,166
    )Net cash used in investing activities
    
    
    (4,784
    )
    
    
    (15,961
    )
    
    
    (81
    )
    
    
    (12
    )Net cash generated from financing activities
    
    
    17,177
    
    
    
    72,428
    
    
    
    38,608
    
    
    
    5,848Effect of exchange rate changes on cash and cash
equivalents
    
    
    270
    
    
    
    (872
    )
    
    
    (6,030
    )
    
    
    (914
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,147
    )
    
    
    7,220
    
    
    
    (8,210
    )
    
    
    (1,244
    )Cash and cash equivalents at beginning of year
    
    
    2,436
    
    
    
    1,289
    
    
    
    8,509
    
    
    
    1,289Cash and cash equivalents at end of year
    
    
    1,289
    
    
    
    8,509
    
    
    
    299
    
    
    
    45Supplemental disclosure of cash flow informationIncome taxes paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Supplemental disclosure non-cash investing and
financing activitiesIssue of warrants as offering costs for
financing activities in 2008
    
    
    682
    
    
    
    54
    
    
    
    
    
    
    
    Conversion of convertible note in 2009
    
    
    
    
    
    
    82,975
    
    
    
    
    
    
    
    Purchase of property, plant and equipment
funded through accrued expenses and other
current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-57