##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
  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, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 000-29008
 CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 
  
  
   
   
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, Par Value US$0.01 each
    
    NASDAQ
   
   
  o þ
 o þ
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
  þ o o
  o o
 o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1. Identity of Directors, Senior Management and AdvisersItem 2. Offer Statistics and Expected TimetableItem 3. Key InformationItem 4. Information on the CompanyItem 5. Operating and Financial Review and ProspectsItem 6. Directors, Senior Management and EmployeesItem 7. Major Shareholders and Related Party TransactionsItem 8. Financial InformationItem 9. The Offer and ListingItem 10. Additional InformationItem 11. Quantitative and Qualitative Disclosures About Market RiskItem 12. Description of Securities Other than Equity SecuritiesPART IIItem 13. Default, Dividend Arrearages and DelinquenciesItem 14. Material Modifications to the Rights of Security Holders and Use of ProceedsItem 15T. Controls and ProceduresItem 16A. Audit Committee Financial ExpertItem 16B. Code of EthicsItem 16C. Principal Accountant Fees and ServicesItem 16D. Exemptions from the Listing Standards for Audit CommitteeItem 16E. Purchase of Equity Securities by the Issuer and Affiliated PurchasersItem 17. Financial StatementsItem 18. Financial StatementsItem 19. ExhibitsSIGNATURESEX-1.1 MEMORANDUM  AND ARTICLES OF ASSOCIATIONEX-4.8 SALE AND PURCHASE AGREEMENTEX-8.1 LIST OF COMPANY'S SUBSIDIARIESEX-12.1 CERTIFICATION OF CEOEX-12.2 CERTIFICATION OF CFOEX-13.1 CERTIFICATION OF CEO AND CFOEX-23.1 CONSENT OF PRICEWATERHOUSECOOPERSEX-23.2 CONSENT OF FRIEDMAN LLPEX-23.3 CONSENT OF DELOITTE TOUCHE TOHMATSU CPA LTD




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Introduction
    
    
    CTDC, Company, us or we refer to China Technology Development Group Corporation.
The term you refers to holders of our common stock and preferred stock.
 
    
    Hong Kong and the Government refer to the Hong Kong Special Administrative Region of
the Peoples Republic of China and its government, respectively.
 
    
    China and the Chinese government refer to the Peoples Republic of China and its
government.
 
    
    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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(Amounts in thousands, except per share data)Year
    
    Year
    
    Year
    
    Year
    
    Year
    
    YearEnded
    
    Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember
    
    December
    
    December
    
    December
    
    December
    
    December31,
    
    31,
    
    31,
    
    31,
    
    31,
    
    31,2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2007Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    Rmb(1)
    
    US$(2)Consolidated Statement of Operations Data:Revenues
    
    
    8,405
    
    
    
    2,720
    
    
    
    6,468
    
    
    
    9,291
    
    
    
    7,680
    
    
    
    1,053Cost of sales
    
    
    4,421
    
    
    
    1,394
    
    
    
    2,491
    
    
    
    4,244
    
    
    
    3,866
    
    
    
    530Gross Profit
    
    
    3,984
    
    
    
    1,326
    
    
    
    3,977
    
    
    
    5,047
    
    
    
    3,814
    
    
    
    523Operating Loss
    
    
    (4,378
    )
    
    
    (10,779
    )
    
    
    (16,676
    )
    
    
    (30,720
    )
    
    
    (25,415
    )
    
    
    (3,484
    )Other Income (expense)Interest income
    
    
    119
    
    
    
    243
    
    
    
    259
    
    
    
    214
    
    
    
    827
    
    
    
    113Finance costs
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    Gain (loss) on disposal of
available-for-sale securities
    
    
    2,013
    
    
    
    100
    
    
    
    (2,596
    )
    
    
    (488
    )
    
    
    15,500
    
    
    
    2,125Dividend income from available-for-sale
securities
    
    
    295
    
    
    
    67
    
    
    
    115
    
    
    
    4
    
    
    
    58
    
    
    
    8Exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559
    
    
    
    77Others, net
    
    
    2
    
    
    
    
    
    
    
    (28
    )
    
    
    (6
    )
    
    
    21
    
    
    
    2Loss from continuing operations
    
    
    (1,308
    )
    
    
    (10,369
    )
    
    
    (18,933
    )
    
    
    (30,996
    )
    
    
    (8,840
    )
    
    
    (1,213
    )Income/(loss) from discontinued operations
    
    
    366
    
    
    
    254
    
    
    
    (599
    )
    
    
    (83,590
    )
    
    
    1,729
    
    
    
    237Net loss for the year
    
    
    (942
    )
    
    
    (10,115
    )
    
    
    (19,532
    )
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (976
    )Net loss per share
    
    
    (0.14
    )
    
    
    (1.47
    )
    
    
    (2.67
    )
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (0.07
    )Net loss per share from continuing operations
    
    
    (0.19
    )
    
    
    (1.51
    )
    
    
    (2.58
    )
    
    
    (2.74
    )
    
    
    (0.62
    )
    
    
    (0.09
    )Net earnings (loss) per share from
discontinued operations
    
    
    0.05
    
    
    
    0.04
    
    
    
    (0.08
    )
    
    
    (7.39
    )
    
    
    0.12
    
    
    
    0.02
 3




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(Amounts in thousands, except per share data)Year
    
    Year
    
    Year
    
    Year
    
    Year
    
    YearEnded
    
    Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember
    
    December
    
    December
    
    December
    
    December
    
    December31,
    
    31,
    
    31,
    
    31,
    
    31,
    
    31,2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2007Rmb
    
    Rmb
    
    Rmb
    
    Rmb
    
    Rmb
    
    US$(2)Consolidated
Balance Sheet
Data: (As of
year-end)Total assets
    
    
    51,582
    
    
    
    39,355
    
    
    
    117,849
    
    
    
    64,751
    
    
    
    115,888
    
    
    
    15,887Total liabilities
    
    
    5,391
    
    
    
    6,501
    
    
    
    13,626
    
    
    
    14,111
    
    
    
    35,699
    
    
    
    4,894Shareholders equity
    
    
    46,191
    
    
    
    32,854
    
    
    
    98,708
    
    
    
    50,640
    
    
    
    80,189
    
    
    
    10,993
 4




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##### Table of Contents



(1)
    
    During the fiscal year ended December 31, 2005, we disposed of the Zhuhai branch of Beijing
BHL Networks Technology Co., Ltd (BBHL) and during the fiscal year ended December 31, 2006,
we disposed of Anji Science Bio-Product Inc. (Anji Bio), the production base of our
Nutraceutical Operations. The management of the Company approved the disposal of the
Nutraceutical Operations on April 23, 2007. During the fiscal year ended December 31,
2007(the 2007 Period), we regarded CNT as discontinued operations pursuant to Statement of
Financial Accounting Standards (SFAS) No.144 Accounting for the Impairment or Disposal of
Long-Lived Assets. The operating results up to the date of disposal and the loss resulted
from the disposal were reported as discontinued operations (see Note 6 in consolidated
financial statements). To conform to the presentation of the current year, the comparative
operating results of the discontinued operations for the years ended December 31, 2003, 2004,
2005 and 2006 were reclassified as discontinued operations.(2)
    
    For the convenience of the reader, translation of amounts from Renminbi into United States
Dollars has been made at the noon buying rate in New York City for cable transfer in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of New York on
December 31, 2007 of Rmb7.2946 = US$1.00. Exchange Rate Information
    Average
    
    High
    
    Low
    
    Period-end(Rmb per U.S. $1.00)2002 (1)
    
    
    8.2770
    
    
    
    8.2800
    
    
    
    8.2669
    
    
    
    8.28002003 (1)
    
    
    8.2770
    
    
    
    8.2800
    
    
    
    8.2765
    
    
    
    8.27692004 (1)
    
    
    8.2768
    
    
    
    8.2774
    
    
    
    8.2764
    
    
    
    8.27652005 (1)
    
    
    8.1472
    
    
    
    8.2765
    
    
    
    8.0702
    
    
    
    8.07022006 (1)
    
    
    7.9579
    
    
    
    8.0702
    
    
    
    7.8041
    
    
    
    7.80412007(1)
    
    
    7.5806
    
    
    
    7.7714
    
    
    
    7.2946
    
    
    
    7.2946December 2007 (2)
    
    
    7.3682
    
    
    
    7.4120
    
    
    
    7.2946
    
    
    
    7.2946
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Average
    
    High
    
    Low
    
    Period-end(Rmb per U.S. $1.00)January 2008 (2)
    
    
    7.2405
    
    
    
    7.2946
    
    
    
    7.1818
    
    
    
    7.1818February 2008 (2)
    
    
    7.1644
    
    
    
    7.1973
    
    
    
    7.1100
    
    
    
    7.1115March 2008 (2)
    
    
    7.0722
    
    
    
    7.1110
    
    
    
    7.0105
    
    
    
    7.0120April 2008 (2)
    
    
    6.9997
    
    
    
    7.0185
    
    
    
    6.9840
    
    
    
    6.9870May 2008 (2)
    
    
    6.9725
    
    
    
    7.0000
    
    
    
    6.9377
    
    
    
    6.9400June 2008(2)(3)
    
    
    6.9034
    
    
    
    6.9633
    
    
    
    6.8630
    
    
    
    6.8630
 
 (1)
    
    Annual average is calculated by averaging the rates on the last business day of each month
during the relevant period.(2)
    
    Monthly average is calculated by averaging the daily rates during the relevant period.(3)
    
    The month end is assumed on June 26, 2008 B. Capitalization and indebtedness.
  C. Reasons for the offer and use of proceeds.
  D. Risk factors.
   (a) Risks Related to Our Company and Our Industry
 (1) Our limited operating history and evolving business strategy may not serve as an adequate
measure for future prospects and results of our operations.
   6




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(2) We may not be able to manage our new business expansion of operations effectively.
  (3) We have continued to incur operating losses and we cannot provide assurance that we will
achieve or sustain profitability.
  Operating lossYear
    
    (in thousands of Rmb)2003
    
    
    (4,378
    )2004
    
    
    (10,779
    )2005
    
    
    (16,676
    )2006
    
    
    (30,720
    )2007
    
    
    (25,415
    )
   
    
    our ability to obtain timely and accurate user sales information;
    
    the effectiveness of our distribution channel;
    
    product upgrading or updating progress by us or our competitors;
    
    the mix of products sold;
    
    our competitors price changes;
    
    our research and development and marketing abilities;
    
    our acquisition costs of new technology or businesses;
    
    employee wage pressure arising from increased competition for skilled employees and increased
governmental staff welfare regulations; and
    
    extraordinary costs incurred for acquisitions or any reductions in work force, if any.
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(4) We expect that we will need to obtain additional financing to continue to operate our business,
including significant capital expenditures to increase our production capacity.
  (5) We may not be competitive and increased competition could seriously harm our business.
  
    
    Longer operating history;
    
    Greater financial, technical, marketing, sales and other resources;
    
    Greater profitability in their operations;
    
    Superior product functionality in certain areas;
    
    Greater name recognition;
    
    A broader range of products to offer; and
    
    A larger base of customers.
   (6) We may face risks in retaining our employees.
  8




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(7) We are subject to risks of excessive reliance on certain significant customers.
  (8) We may not successfully integrate acquired business, products and technologies.
   
    
    the difficulties of integrating, assimilating and managing the operations, technologies,
intellectual property, products and personnel of the acquired business;
    
    the diversion of management attention to business concerns of the acquired business from
that of our existing operation;
    
    declining employee morale and retention issues for employees in the acquired business;
    
    the risk of litigation by terminated employees and contractors; and
    
    our lack of familiarly with other conditions and business practices of the acquired business
  (9) We may not be able to keep pace with the rapid technological changes in the market, new
competition, and new product developments.
   
    
    provide a broad range of network security, network management software products and solar thin film
products;
    
    timely develop and introduce new products with technological advances;
    
    respond promptly to new customer requirements;
    
    comply promptly with evolving industry standards;
    
    provide reliable thin-film solar products to customers at the lowest costs;
    
    control delays and cost overruns due to many external beyond-control factors such as increases in raw
materials prices and problems with equipment vendors;
    
    receive available government subsidies and incentives to support the development of the
solar energy industry; and
 9




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
    
    execute our business strategy and expansion plan effectively.
 (10) We do not intend to pay dividends.
  (11) We are subject to risk of computer hackers attacks.
  (12) We may be unable to sustain our sales growth and profitability if the sufficient demand for
thin-film products does not develop or takes longer to develop than we expected.
  
    
    efficiency and performance of thin-film solar products compared to crystalline silicon solar products;
    
    cost-effectiveness (cost per watt) of thin-film solar products compared to crystalline silicon solar products and other
non-solar energy sources and products;
    
    reliability of thin-film solar products compared to crystalline silicon solar products and other non-solar energy sources
and products;
    
    availability of government subsidies and incentives to support the development of the PV industry;
    
    breakthrough of other alternative energy technologies, such as wind power and biomass, etc.;
    
    price change of other conventional and non-solar alternative energy sources, such as oil; and
    
    capital expenditures by solar products purchasers, which might decrease when the economy slows
down.
  (13) We may not be able to successfully implement our growth strategies.
  (14) We have limited business insurance coverage in China and may incur losses resulting from
product liability claims, business disruption or litigation or natural disasters..
   10




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(15) We may not be able to refine our technology R & D and develop and introduce new solar
solutions which will subsequently result in the reduction of our competitiveness, sales and market
share.
  (16) We are subject to risks of acquisition of new business, products and technologies.
    (17) Unauthorized use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may adversely affect our business.
   (b) Risks Associated with China.
  11




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(1) We are subject to risks relating to operating a business in China.
 We may face foreign competition as a result of Chinas entry into WTO.
 We may experience foreign currency losses due to fluctuations in exchange rates.
    Our operations and assets in China are subject to significant political and economic uncertainties.
 We may have limited legal recourse under Chinese law if disputes arise under our contracts with
third parties.
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(2) Our business may be adversely affected by Chinese government regulations.
 Solar Business
  (c) Risks Associated with Investing in Our Common Stock.
  (1) Our stock price has been and may continue to be volatile.
   (2) The sale or availability for sale of substantial amounts of our common stock could adversely
affect their market price.
  (3) Rights of shareholders under British Virgin Islands law may be less than those of shareholders
in U.S. jurisdictions.
  13




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(4) There have been historical deficiencies with our internal controls and there remain areas of
our internal controls that require improvement. If we fail to maintain an effective system of
internal control, we may be unable to accurately report our financial results or prevent fraud, and
investor confidence and the market price of our common shares may be adversely impacted.
    (5) As a foreign private issuer, we are not subject to certain rules promulgated by Nasdaq that
other Nasdaq-listed issuers are required to comply with.
  
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
 
 
  (6) Some information about us may be unavailable due to exemptions under the Exchange Act for a
foreign private issuer.
  
 
 
 
  
 Item 4. Information on the Company
 A. History and development of the Company.
    15




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16




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##### Table of Contents



B. Business overview.
 Market Overview
 1. Network Security Business:
  2. Solar Energy Business:
 
   17




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Company Overview
    Business Strategy
   Establish and strengthen relationships with key customers and suppliers to facilitate the sales
generation.
  Build up strong research and development capabilities in solar thin-film field.
  Strengthen our experienced management team as well as operational and technical labor force.
  Acquiring companies to realize the vertical consolidation in solar energy value chain.
  Capital Expenditures
 18




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Seasonal sales
  Source of raw materials
   Description of Products and Services
 Network Security Business:
    Solar Energy Business:
    19




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C. Organizational structure.
   Country of
    
    
    OwnershipsName
    
    Incorporation
    
    
    Interests
    
    
    Direct ParentBHL Networks Technology Co Ltd
(BHLHK)
    
    Hong Kong
    
    
    100
    %
    
    The CompanyBeijing BHL Networks Technology
Co Ltd(BBHL)
    
    China
    
    
    76
    %
    
    BHLNetShenzhen
Innoessen Bio-Tech Inc.
(Shenzhen
Innoessen)
    
    China
    
    
    100
    %
    
    Southwick International LtdChina
Merchants Zhangzhou
Development Zone
Trenda Solar Ltd.
(Zhangzhou
Trenda)
    
    China
    
    
    100
    %
    
    Trenda International LtdChina
Merchants Zhangzhou
Development Zone
Trendar Solar Tech
Ltd. (Zhangzhou
Trendar Tech ) (formerly known as China Merchants Zhangzhou
Development Zone Innoessen Biotech Co., Ltd)
    
    China
    
    
    100
    %
    
    Sinofield Group LtdChina
Merchants Zhangzhou
Development Zone
Broad Shine Solar
Technology Ltd
(Broad Shine)
    
    China
    
    
    100
    %
    
    Faster Assets
      D. Property, plant and equipment.
   2
   20




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Item 4A. Unsolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 MANAGEMENTS DISCUSSION AND ANALYSIS
    Revenue recognition.
   Goodwill and impairment of goodwill.
  Impairment or disposal of long lived assets.
   21




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Recent accounting pronouncements.
       A. Results of Operations
  22




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(Amounts in thousands, Rmb)*2005
    
    *2006
    
    2007Percentage
    
    
    
    
    
    Percentage
    
    
    
    
    
    PercentageAmount
    
    of Net sales
    
    Amount
    
    of Net sales
    
    Amount
    
    of Net salesNet sales
    
    
    6,468
    
    
    
    100
    %
    
    
    9,291
    
    
    
    100
    %
    
    
    7,680
    
    
    
    100
    %Cost of sales
    
    
    (2,491
    )
    
    
    38.5
    %
    
    
    (4,244
    )
    
    
    45.7
    %
    
    
    (3,866
    )
    
    
    50.3
    %Gross profit
    
    
    3,977
    
    
    
    61.5
    %
    
    
    5,047
    
    
    
    54.3
    %
    
    
    3,814
    
    
    
    49.7
    %Selling
    
    
    (740
    )
    
    
    11.4
    %
    
    
    (1,109
    )
    
    
    11.9
    %
    
    
    (1,108
    )
    
    
    14.4
    %General and
administrative
expenses
    
    
    (19,785
    )
    
    
    305.9
    %
    
    
    (34,658
    )
    
    
    373.0
    %
    
    
    (28,121
    )
    
    
    366.2
    %Allowance for
doubtful accounts
    
    
    (128
    )
    
    
    2.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating loss
    
    
    (16,676
    )
    
    
    257.8
    %
    
    
    (30,720
    )
    
    
    330.6
    %
    
    
    (25,415
    )
    
    
    330.9
    %Interest income
    
    
    259
    
    
    
    4.0
    %
    
    
    214
    
    
    
    2.3
    %
    
    
    827
    
    
    
    10.8
    %Finance cost
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) gain on
disposal of
available-for-sale
securities
    
    
    (2,596
    )
    
    
    40.1
    %
    
    
    (488
    )
    
    
    5.3
    %
    
    
    15,500
    
    
    
    201.8
    %Dividend income from
available-for-sale
securities
    
    
    115
    
    
    
    1.8
    %
    
    
    4
    
    
    
    
    
    
    
    58
    
    
    
    0.8
    %Exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559
    
    
    
    7.3
    %Others, net
    
    
    (28
    )
    
    
    0.4
    %
    
    
    (6
    )
    
    
    0.1
    %
    
    
    21
    
    
    
    0.3
    %Income tax expenses
    
    
    (5
    )
    
    
    0.1
    %
    
    
    
    
    
    
    
    
    
    
    (390
    )
    
    
    5.1
    %Loss from continuing
operations
    
    
    (18,933
    )
    
    
    292.7
    %
    
    
    (30,996
    )
    
    
    333.6
    %
    
    
    (8,840
    )
    
    
    115.1
    %(Loss) profit from
discontinued
operations
    
    
    (599
    )
    
    
    9.3
    %
    
    
    (83,590
    )
    
    
    899.7
    %
    
    
    1,729
    
    
    
    22.5
    %Net loss for the year
    
    
    (19,532
    )
    
    
    302.0
    %
    
    
    (114,586
    )
    
    
    1,233.3
    %
    
    
    (7,111
    )
    
    
    92.6
    %
 
 *
    
    Certain revenues and expenses of CNT Group for the fiscal years ended December 31, 2005 and 2006
were reclassified to discontinued operations (see Note 6 to consolidated financial statements).      Year ended December 31, 2007 compared to year ended December 31, 2006
 Revenues.
 (1)
    
    sales to Legendsec, the largest customer of BBHL, contributed Rmb1.58 million, or 20.5%, to
the total revenues in 2007. The revenue from Legendsec decreased by Rmb0.82 million, or
34.2%, from
 23




---



##### Table of Contents



Rmb2.4 million in 2006 as they purchased the hardware directly from suppliers.
 (2)
    
    sales to Legend, contributed Rmb0.04 million, or 0.5% to the total revenues in 2007. The
Legend was the second largest customer of BBHL in 2006. The revenue from Legend decreased by
Rmb2.28 million, or 98.3% from Rmb2.32 million in 2006 due to their self development of own
security products.(3)
    
    sales to Computer Associates International Inc CA, the second largest customer of BBHL
contributed Rmb1.52 million, or 19.8% to the total revenues in 2007, the revenue from CA
decreased by Rmb0.35 million, or 18.7%, from Rmb1.87 million in 2006; and(4)
    
    sales to Beijing Radio, the third largest customer of BBHL, contributed Rmb0.8 million, or
10.4%, to the total revenues in 2007.(5)
    
    aggregated sales to customers other than the three largest increased by Rmb1.08 million, or
40.0%, from Rmb2.70 million in 2006 to Rmb3.78 million in 2007 due to more government
departments becoming our new customers.
 Cost of sales.
 Gross profit.
 General and administrative expenses.
  (1)
    
    Salaries and benefits of us decreased by Rmb15.25 million, or 67.9%, from Rmb22.46 million in
2006 to Rmb7.21 million in 2007. The decrease could be further analyzed as follows:
 (a)
    
    salaries and benefits of our Corporate Office decreased by Rmb15.34
million, or 76.4%, from Rmb20.07 million in 2006 to Rmb4.73 million in 2007. The
significant decrease was due primarily to nil stock-based compensation was
recognised in 2007, compared to a stock-based compensation of Rmb14.04 million was
recognized in 2006.(b)
    
    salaries and benefits of our IT Operations decreased by Rmb0.2 million,
or 9.1%, from Rmb2.2 million in 2006 to Rmb2.0 million in 2007, which was due
primarily to the lay-off of certain technical support and post-sales services staff
in 2007.(c)
    
    salaries and benefits of our Solar Energy Operations incurred Rmb0.47
million in 2007.
 (2)
    
    Rental charges increased by Rmb0.38 million, or 37.25%, from Rmb1.02 million in 2006 to
Rmb1.4 million in 2007. The increase was analyzed as follows:
 (a)
    
    the rental charges of Rmb0.96 million was incurred by our Corporate
Office in 2007, compared to Rmb0.47 million was incurred in 2006 due to the
movement to new office.(b)
    
    a saving of rental charges of Rmb0.05 million, or 10%, was achieved
by our IT Operations by moving to another smaller office.
 (3)
    
    Audit fees increased by Rmb1.04 million, or 48.1%, from Rmb2.16 million in 2006 to Rmb3.20
million in 2007. The audit fees of Rmb3.20 million expensed in 2007 included:
 (a)
    
    Audit fee of Rmb1.98 million charged for 2007 by Deloitte Touche Tohmatsu CPA
Ltd, the independent registered public accounting firm appointed by our audit
committee and the Board of Directors of the Company on Febuary 14, 2008;
 24




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##### Table of Contents



(b)
    
    Rmb0.48 million charged by PricewaterhouseCoopers to issue a consent
letter for inclusion of their audit reports, for the fiscal years ended December 31,
2004 and 2005, in the Companys 2006 and 2007 Annual Report.(c)
    
    Fees of Rmb0.07 million and Rmb0.01 million charged for 2007 by
PricewaterhouseCooopers and Friedman LLP, respectively, to issue letters of consent
for the Companys Registration Statement on Form S-8;(d)
    
    Rmb0.36 million of audit fees charged by Friedman LLP due to additional audit
work performed for 2006.;(e)
    
    additional accrual of Rmb0.27 million charged by Friedman LLP for issuing
the consent letter for inclusion of their audit reports, for the fiscal year ended
December 31, 2006, in the Companys 2007 Annual Report.(f)
    
    Audit fee of Rmb0.03 million charged for 2004, 2005 and 2006 for BHL HK by
S L lee & Lau .
 The audit fees of Rmb2.16 million expensed in 2006 included:
 (a)
    
    additional accrual of Rmb0.72 million in audit fees relating to 2005 due to
additional audit work performed by PricewaterhouseCoopers, our former independent
registered public accounting firm;(b)
    
    the audit fee of Rmb1.34 million charged for 2006 by Friedman LLP, the
independent registered public accounting firm appointed by our shareholders meeting
held on December 22, 2006; and(c)
    
    Rmb0.10 million charged by PricewaterhouseCoopers to issue a consent
letter for inclusion of their audit reports, for the fiscal years ended December 31,
2004 and 2005, in the Companys 2006 Annual Report.
 (4)
    
    Legal and other professional fees increased by Rmb5.18 million, or 82.2%, from Rmb6.30
million in 2006 to Rmb11.48 million in 2007. The increase was due primarily to:
 (a)
    
    Rmb4.58 million was incurred in 2007 as the compensation paid to certain
consultants for their services rendered, which represented the fair value of the
400,000 stock warrants issued. Rmb2.39 million was incurred in 2006 as the
compensation paid to certain consultants, which represented the fair value of the
150,000 stock options granted to these consultants; and(b)
    
    Rmb0.88 million charged for 2007 for SOX 404 internal control assistance.(c)
    
    Legal fee increased by Rmb0.49 million, or 25.3%, from Rmb1.93 million in
2006 to Rmb2.42 million in 2007, which was due primarily to review of Form 20-F and
proxy statement in 2007 in relation to corporate and securities matters.(d)
    
    Rmb1.2 million was incurred in 2007 as the compensation paid to certain
consultants, which represented the fair value of the 250,000 stock options granted to
these consultants.
 (5)
    
    Traveling and entertainment expenses increased by Rmb1.16 million, or 184.13%, from Rmb0.63
million in 2006 to Rmb1.79 million in 2007. The increase was due primarily to frequent travels
by our management for setting up our new production base in China in 2007;(6)
    
    Depreciation charges increased by Rmb0.15 million, or 35.7%, from Rmb0.42 million in 2006 to
Rmb0.57 million in 2007, due primarily to increase in property, plant and equipment as a
result of the incorporation of Zhangzhou Trendar Tech.
 Other income (expense).
 Loss(gain) from discontinued operations.
 Net loss.
 Year ended December 31, 2006 compared to year ended December 31, 2005
 Revenues.
 25




---



##### Table of Contents



(1)
    
    sales to Legendsec, the largest and new customer of BBHL, contributed Rmb2.4 million, or
25.83%, to the total revenues in 2006. The contract with Legendsec was entered into in 2005
and its service began in 2006.(2)
    
    sales to Legend, the second largest customer of BBHL consisted of Rmb2.32 million, or 25.0%
of the total revenues in 2006. The revenue from Legend slightly decreased by Rmb0.15 million,
or 6.07% from Rmb2.47 million in 2005.(3)
    
    sales to Computer Associates International Inc CA, the third largest customer of BBHL
consisted of 20% of the total revenues in 2006, increased by Rmb1.84 million, or 61.3 times,
from Rmb0.03 million in 2005 to Rmb1.87 million in 2006; and(4)
    
    aggregated sales to customers other than the three largest decreased by Rmb1.39 million, or
33.98%, from Rmb4.09 million in 2005 to Rmb2.70 million in 2006 due primarily to resources
reallocated to new customer Legendsec in order to improve the profit margin to the Company.
 Cost of sales.
 Gross profit.
 Selling expenses.
 General and administrative expenses.
  (1)
    
    Salaries and benefits of us increased by Rmb13.09 million, or 139.7%, from Rmb9.37 million in
2005 to Rmb22.46 million in 2006. The increase could be further analyzed as follows:
 (a)
    
    salaries and benefits of our Corporate Office increased by Rmb14.76
million, or 278.2%, from Rmb5.31 million in 2005 to Rmb20.07 million in 2006. The
significant increase was due primarily to: (i) stock-based compensation of Rmb14.04
million which was recorded in 2006 for the fair value of 880,000 stock options
granted to directors and senior management; and (ii) most of the Companys staff
joined the Corporate office in the fourth quarter of 2005 so the amount recorded
did not reflect the annualized expenses as in 2006;(b)
    
    salaries and benefits of our IT operations decreased by Rmb1.83
million, or 45.4%, from Rmb4.03 million in 2005 to Rmb2.2 million in 2006, which
was due primarily to the lay-off of certain technical support and post-sales
services staff in 2006.
 (2)
    
    Rental charges increased by Rmb0.03 million, or 3.03%, from Rmb0.99 million in 2005 to
Rmb1.02 million in 2006. The increase was analyzed as follows:
 (a)
    
    the rental charges of Rmb0.47 million was incurred by our Corporate Office in
2006, while Rmb0.3 million incurred in 2005 due to the lease which commenced May 2005;(b)
    
    a saving of rental charges of Rmb0.1 million, or 16.4%, was achieved by our
IT Operations in Beijing by moving to a new office.
 (3)
    
    Audit fees increased by Rmb0.39 million, or 22.0%, from Rmb1.77 million in 2005 to Rmb2.16
million in 2006. The audit fees of Rmb2.16 million expensed in 2006 included:
 (a)
    
    additional accrual of Rmb0.72 million in audit fees relating to 2005 due to
additional audit work performed by PricewaterhouseCoopers, our former independent
registered public accounting firm;
 26




---



##### Table of Contents



(b)
    
    the audit fee of Rmb1.34 million charged for 2006 by Friedman LLP, the
independent registered public accounting firm appointed by our shareholders meeting
held on December 22, 2006; and(c)
    
    Rmb0.10 million charged by PricewaterhouseCoopers to issue a consent
letter for inclusion of their audit reports, for the fiscal years ended December 31,
2004 and 2005, in the Companys 2006 Annual Report.
 (4)
    
    Legal and other professional fees increased by Rmb1.06 million, or 20.2%, from Rmb5.24
million in 2005 to Rmb6.30 million in 2006. The increase was due primarily to:
 (a)
    
    Rmb0.18 million was incurred in 2006 as legal consultation fees in
relation to the dispute with Anji Bio.(b)
    
    Rmb2.39 million was incurred in 2006 as the compensation paid to
certain consultants, which represented the fair value of the 150,000 stock options
granted to these consultants; and(c)
    
    Rmb1.1 million was paid as consultancy fee in 2005 but no such expenses
were incurred in 2006 after the consulting contract expired.
 (5)
    
    Traveling and entertainment expenses increased by Rmb0.12 million, or 23.5%, from Rmb0.51
million in 2005 to Rmb0.63 million in 2006. The increase was due primarily to frequent travels
for investigations performed to search for new production base in China in 2006;(6)
    
    Depreciation charges increased by Rmb0.23 million, or 121.1%, from Rmb0.19 million in 2005 to
Rmb0.42 million in 2006, due primarily to full years depreciation for fixed assets provided
for in 2006, compared to two months of such depreciation in 2005.
 Loss from discontinued operations.
 Net loss.
 Taxation
     B. Liquidity and capital resources
 Working capital and cash flows
 27




---



##### Table of Contents



Capital resources
    C. Research and development, patents and licenses, etc.
 Network Security Business:
  Solar Energy Business:
  28




---



##### Table of Contents



D. Trend Information
  E. Off-balance Sheet Arrangements
  F. Tabular disclosure of contractual obligations.
  Amounts in thousandsAs of December 31,
    
    Rmb2008
    
    
    1,2922009
    
    
    3352010
    
    
    1202011 and thereafter
    
    
    Total
    
    
    1,747
  Commitments
 Capital commitments for construction in progress
  G. Safe Harbor.
 Forward-Looking Statement Disclosure
    29




---



##### Table of Contents




    
    our ability to achieve or sustain profitability in the rapidly changing PV market in which
we operate;
    
    our expectations regarding the worldwide demand for electricity and the market for solar
power;
    
    our ability to successfully integrate acquired businesses, products and technologies;
    
    our ability to keep pace with the rapidly changing technology and products in the market we
operate;
    
    our expectations regarding governmental support for the deployment of solar energy;
    
    our beliefs regarding the acceleration of the adoption of solar technologies;
    
    our expectations regarding the scaling of our manufacturing capacity;
    
    our future business development, results of operations and financial condition ;
    
    our ability to achieve our plans to expand our sales; and
    
    our ability to respond to competition in the China market.
   
 Item 6. Directors, Senior Management and Employees
 A. Directors and senior management.
   30




---



##### Table of Contents



Name
    
    Age
    
    Positions with the CompanyAlan Li
    
    
    40
    
    
    Chairman of the Board, Executive Director and
Chief Executive OfficerZhenwei Lu
    
    
    37
    
    
    Executive Director and Chief Operating OfficerKang Li
    
    
    40
    
    
    Executive Director and Chief Investment OfficerXu Qian
    
    
    44
    
    
    Executive Director and Co-Chief Executive OfficerJu Zhang
    
    
    45
    
    
    Executive DirectorLoong Cheong Chang (1) (3)
    
    
    62
    
    
    Independent DirectorXiaoping Wang
    
    
    48
    
    
    Independent DirectorXinping Shi (2) (3)
    
    
    49
    
    
    Independent DirectorYezhong Ni (1)
    
    
    38
    
    
    Independent DirectorWeidong Wang (2) (3)
    
    
    41
    
    
    Independent DirectorYu Keung Poon (1) (2)
    
    
    43
    
    
    Independent DirectorCharlene Hua
    
    
    33
    
    
    Chief Financial Officer
 
 Note:(1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating Committee Information about Directors and Officers
  Mr. Alan Li
 Mr. Zhenwei Lu
 31




---



##### Table of Contents



Mr. Kang Li
 Mr. Xu Qian
 Mr. Ju Zhang
 Mr. Loong Cheong Chang
 Mr. Xiaoping Wang
 Dr. Xinping Shi
 Mr. Weidong Wang
 32




---



##### Table of Contents



Mr. Yu Keung Poon
 Mr. Yezhong Ni
 Ms. Charlene Hua
  B. Compensation.
     C. Board practices.
  Board committees
  Audit Committee
 33




---



##### Table of Contents



Compensation Committee
 Nominating Committee.
 Term of directors and executive officers
   D. Employees.
  2007
    
    2006Corporate administration
    
    
    18
    
    
    
    16Finance and accounting
    
    
    10
    
    
    
    6Research and developments
    
    
    3
    
    
    
    6Technology and engineering
    
    
    8
    
    
    
    27Sales and services
    
    
    6
    
    
    
    13Manufacturing
    
    
    3
    
    
    
    0Total
    
    
    48
    
    
    
    68
  34




---



##### Table of Contents



E. Share ownership.
   Number
    
    ExerciseName
    
    Title/Office
    
    Of options
    
    Per option
    
    Expiration Date(US$)Alan Li
    
    Chairman, Executive
    
    75,000
    
    1.85
    
    September 20, 2015 (1)Director and Chief
    
    100,000
    
    3.18
    
    September 18, 2016 (2)Executive Officer
    
    150,000
    
    3.13
    
    May 23, 2012 (3)Zhenwei Lu
    
    Executive
Director and
    
    40,000
    
    1.85
    
    September 20, 2015 (1)Chief
Operating Officer
    
    60,000
    
    3.18
    
    September 18, 2016 (2)80,000
    
    3.13
    
    May 23, 2012(3)Kang Li
    
    Executive Director and
    
    80,000
    
    3.13
    
    May 23, 2012 (3)Chief Investment
OfficerXu Qian
    
    Executive Director and
    
    140,000
    
    3.18
    
    September 18, 2016 (2)Co-Chief Executive
OfficerJu Zhang
    
    Executive Director
    
    10,000
    
    1.85
    
    September 20, 2015 (1)10,000
    
    3.18
    
    September 18, 2016 (2)Xinping Shi
    
    Independent Director
    
    10,000
    
    1.85
    
    September 20, 2015 (1)10,000
    
    3.18
    
    September18, 2016 (2)30,000
    
    3.13
    
    May 23, 2012 (3)Yezhong Ni
    
    Independent Director
    
    10,000
    
    1.85
    
    September 20, 2015 (1)10,000
    
    3.18
    
    September 18, 2016 (2)10,000
    
    3.13
    
    May 23, 2012 (3)Weidong Wang
    
    Independent Director
    
    10,000
    
    1.85
    
    September 20, 2015 (1)10,000
    
    3.18
    
    September 18, 2016 (2)10,000
    
    3.13
    
    May 23, 2012(3)Loong Cheong Chang
    
    Independent Director
    
    30,000
    
    3.13
    
    May 23, 2012 (3)
 35




---



##### Table of Contents



Number
    
    ExerciseName
    
    Title/Office
    
    Of options
    
    Per option
    
    Expiration Date(US$)Yu Keung Poon
    
    Independent Director
    
    20,000
    
    3.13
    
    May 23, 2012 (3)Xiaoping Wang
    
    Independent Director
    
    10,000
    
    3.13
    
    May 23, 2012 (3)Charlene Hua
    
    Chief Financial Officer
    
    60,000
    
    3.74
    
    August 20, 2012 (4)
 
 Note:(1)
    
    These options were granted under the Companys 1996 Stock Option Plan and 2000 Stock Option
Plan. These options were granted pursuant to a board resolution passed on September 20, 2005
and were fully vested as of December 31, 2007.(2)
    
    These options were granted under the Companys 2005 Stock Option Plan. These options were
granted pursuant to a board resolution passed on September 18, 2006 and were fully vested as
of December 31, 2007.(3)
    
    These options were granted under the Companys 2006 Stock Option Plan. These options were
granted pursuant to a resolution of the Compensation Committee passed on May 23, 2007.
One-third of the options granted were vested on May 23, 2008 and the remaining two-thirds will
be vested on May 23, 2009.(4)
    
    These options were granted under the Companys 2006 Stock Option Plan. These options were
granted pursuant to a resolution of the Compensation Committee passed on August 20, 2007.
One-third of the options granted will be vested on August 20, 2008 and the remaining
two-thirds will be vested on August 20, 2009. Stock Option Plans
  1996 Stock Option Plan
   2000 Stock Option Plan
   2005 Stock Option Plan
   2006 Stock Option Plan
   36




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##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
 A. Major shareholders.
  Shares of common stock
    
    Percent ofPrincipal Stockholder
    
    beneficially owned (1)
    
    classChina Biotech Holdings Limited (China Biotech)
of 5/F, B&H Plaza, 27 Industry Ave,
Shekou, Shenzhen 518067,
PR China
    
    
    4,837,168
    
    
    
    32.19
    %Beijing Holdings of Room 4301, Central Plaza 18
Harbour Road, Wanchai Hong Kong
    
    
    1,009,323
    
    
    
    6.72
    %Alan Li of c/o Unit 1712-13, Tower 1, Admiralty
Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (2)(4)
    
    
    *Zhenwei Lu of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (2)(4)
    
    
    *Xu Qian of c/o Rm 4301, Central Plaza,
18 Harbour Road,Wanchai, Hong Kong
    
    
    0
    (3)
    
    
    *Kang Li of c/o Unit 1712-13, Tower 1, Admiralty
Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (2)(4)
    
    
    *Ju Zhang of c/o Unit 1712-13, Tower 1, Admiralty
Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (2)
    
    
    *Loong Cheong Chang of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Xiaoping Wang of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Xinping Shi of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Yezhong Ni of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Weidong Wang of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Yu Keung Poon of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *Charlene Hua of c/o Unit 1712-13, Tower 1,
Admiralty Centre, No.18 Harcourt Road, Hong Kong
    
    
    0
    (4)
    
    
    *All officers and directors as a group (12 persons)
    
    
    0
    (2)(3)(4)
    
    
    *Public
    
    
    9,182,174
    
    
    
    61.09
    %
  37




---



##### Table of Contents



l
    
    Voting rightThe 1,000,000 shares of Preferred Stock shall have an aggregate voting power of 25%
of the combined voting power of the entire issuers shares, Common Stock and
Preferred Stock.l
    
    DividendsThe holder shall be entitled to receive dividends only as, when and if such dividends
are declared by the Board with respect to shares of Preferred Stock.l
    
    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
shall be 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.l
    
    RedemptionThe issuer shall have no right to redeem the Preferred Stock.l
    
    Non-convertible
 
 *
    
    less than 1%.(1)
    
    Unless otherwise noted, all persons named in the table have sole voting and investment power
with respect to all shares of common stock beneficially owned by them.(2)
    
    Mr. Alan Li, Chairman of the Board, Executive Director and Chief Executive Officer, Mr.
Zhenwei Lu , Executive Director and Chief Operating Officer, Mr. Kang Li, Executive Director
and Chief Investment Officer and Mr. Ju Zhang, Executive Director, are also directors of China
Biotech and therefore they may be deemed to beneficially own the shares of Common Stock owned
by China Biotech.(3)
    
    Mr. Xu Qian, Executive Director, is also the Assistant General Manager and Chief Financial
Officer of Beijing Holdings and therefore he may be deemed to be beneficially own the shares
of Common Stock owned by Beijing Holdings.(4)
    
    Holds options which are not currently exercisable or which vest within 60 days of the date of
this Annual Report on Form 20-F .  B. Related party transactions.
  Year endedDecember 31, 2007Amounts in thousandsRmbTransactions with related partiesAcquisition of Faster Group from China Biotech (Note 1)
    
    
    20,700Prepayment for acquisition of property from ZMRE (Note 2)
    
    
    3,301
 
  38




---



##### Table of Contents



Year endedDecember31, 2007Amounts inthousandsRmbBalances with related parties:Due from related partiesFunds held by China Biotech for potential acquisition of
technology and business in China (Note 3)
    
    
    5,6125,612Due to related parties:Due to China Biotech (Note 4)
    
    
    908Due to CMZDZ (Note 5)
    
    
    5,7836,691
 (3)
    
    China Biotech has been the major shareholder of the Company since January 12, 2007. China
Biotech has experience in acquisitions in China. In view of China Biotechs experience, the
Company deposited HK$6 million equivalent to Rmb5.612 million with China Biotech for the
purpose of making (with the assistance of China Biotech) potential acquisitions of technology
and businesses in China. There was no agreement signed for the funds deposited with China
Biotech and the Company can withdraw the funds without any restrictions.
 (4)
    
    The amount represented administrative expenses paid on behalf of Faster and Shenzhen
Innoessen by China Biotech in China.
 (5)
    
    The amount represented the amount payable to China Merchant Zhangzhou Development Zone Ltd.
(CMZDZ), a subsidiary of CMG, for the cash of Faster Group acquired.
  C. Interests of experts and counsel.
  
 Item 8. Financial Information
 A. Consolidated Statements and Other Financial Information.
    B. Significant Changes.
 39




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##### Table of Contents



Item 9. The Offer and Listing.
 A. Offer and listing details.
   NASDAQ Capital Market
    
    Common Stock(Year Ended)
    
    High
    
    LowDecember 31, 2007
    
    
    10.390
    
    
    
    2.710December 31, 2006
    
    
    12.150
    
    
    
    1.340December 31, 2005
    
    
    8.800
    
    
    
    1.530December 31, 2004
    
    
    5.600
    
    
    
    0.350December 31, 2003
    
    
    0.700
    
    
    
    0.030
  NASDAQ Capital Market
    
    Common Stock(Quarter Ended)
    
    High
    
    LowMarch 31, 2008
    
    
    9.450
    
    
    
    3.140December 31, 2007
    
    
    10.390
    
    
    
    4.870September 30, 2007
    
    
    7.400
    
    
    
    3.510June 30, 2007
    
    
    4.490
    
    
    
    2.710March 31, 2007
    
    
    8.100
    
    
    
    3.250December 31, 2006
    
    
    9.000
    
    
    
    4.020September 30, 2006
    
    
    4.740
    
    
    
    1.340June 30, 2006
    
    
    7.510
    
    
    
    3.420March 31, 2006
    
    
    12.150
    
    
    
    2.110
 40




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##### Table of Contents



NASDAQ Capital Market
    
    Common Stock(Month Ended)
    
    High
    
    LowMay 31, 2008
    
    
    7.200
    
    
    
    4.560April 30, 2008
    
    
    5.370
    
    
    
    4.290March 31, 2008
    
    
    4.820
    
    
    
    3.140February 28, 2008
    
    
    6.160
    
    
    
    5.140January 31, 2008
    
    
    9.450
    
    
    
    4.970
 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
  41




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##### Table of Contents



Share Rights, Preferences and Restrictions
  Rights, preferences and restrictions attaching to common stock
   Rights, preferences and restrictions attaching to Series A Preferred Stock
       Changing Share Rights
  Shareholder Meetings
  42




---



##### Table of Contents



Restrictions on Rights to Own Securities
  Change in Control Provisions
  Disclosure of Share Ownership
  Applicable Law
      43




---



##### Table of Contents



Changes in Capital
  Nasdaq Requirements
   l
    
    our independent directors do not hold regularly scheduled meetings in executive
session;l
    
    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;l
    
    related party transactions are not required to be reviewed or approved by our audit
committee or other independent body of the board of directors; andl
    
    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.
    44




---



##### Table of Contents



.
   D. Exchange controls.
   45




---



##### Table of Contents



E. Taxation.
  British Virgin Islands Taxation
    United States Federal Income Taxation
   
    

    a dealer in securities or currencies;
 46




---



##### Table of Contents




    
    a trader in securities that elects to use a market-to-market method of accounting for
securities holdings;
    
    a bank;
    
    a life-insurance company;
    
    a tax-exempt organization
    
    a person that holds ADSs or ordinary shares as part of a hedge, straddle or conversion
transaction for tax purposes;
    
    a person whose functional currency for tax purposes is not the U.S. dollar; or
    
    a person that owns or is deemed to own 10% or more of any class of our stock.
   
    
    a citizen or resident of the United States;
    
    a U.S. domestic corporation; or
  
  Distributions
   Taxable Dispositions
  Non-U.S. Holders
  47




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##### Table of Contents



F. Dividends and paying agents.
  G. Statement by experts.
  H. Documents on display.
  www.sec.gov
     I . Subsidiary Information.
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk.
 Foreign exchange risk
    48




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##### Table of Contents



Interest rate risk
  Inflation
  
 Item 12. Description of Securities Other than Equity Securities.
  49




---



##### 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
  u
    
    Pertain to the maintenance of records that, in reasonable details,
accurately and fairly reflect the transactions and dispositions of
an issuers assets;u
    
    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; andu
    
    Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of an
issuers assets that could have a material effect on the financial
statements.
    (1)
    
    lack of formal internal control over financial reporting; and(2)
    
    lack of accounting personnel with knowledge of U.S. GAAP and SEC financial reporting requirements.
 50




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##### Table of Contents



Changes in internal control over financial reporting
      
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  51




---



##### Table of Contents



Item 16C. Principal Accountant Fees and Services
 Audit Fees
  Audit-Related Fees
   Tax Fees
  All Other 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 17. Financial Statements.
  
 Item 18. Financial Statements.
  52




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##### Table of Contents



Item 19. Exhibits.
 1.1
    
    Amended and Restated Memorandum and Articles of Association of China Technology Development
Group Corporation, adopted on October 19, 2007.4.1
    
    Framework Agreement with Legendsec (Beijing) Limited dated February 10, 2006 (translated
version). *4.2
    
    New shares subscription agreements with China Biotech Holdings Limited, Eastern Ceremony
Group Limited and Harvest Smart Overseas Limited dated November 27, 2006. *4.3
    
    Sale and purchase agreement with Win Horse Investments Limited in relation to the disposal of
China Natures Technology Inc dated April 27, 2007 (translated version).*4.4
    
    Cooperation contract with China Solar Energy Group Limited relating to the solar energy SnO2
production line dated September 7, 2007.**4.5
    
    Sale and purchase agreement with China Biotech Holdings Limited relating to shares in Faster
Assets Limited dated November 8, 2007.***4.6
    
    Memorandum of completion of sale and purchase agreement relating to shares in Faster Assets
Limited dated December 10, 2007. ***4.7
    
    Sale and purchase agreement with Total Trump Limited relating to shares in China Natures
Technology Inc dated December 18, 2007. ****4.8
    
    Sale and purchase agreement with Harvest Time International Holdings Limited relating to
shares in Green Energy Industry Limited dated April 21, 2008.8.1
    
    List of all subsidiaries.11.1
    
    Code of Ethics. *12.1
    
    Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of
2002.12.2
    
    Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of
2002.13.1
    
    Certification of Chief Executive Officer and Chief Financial Officer required by Section 906
of the Sarbanes-Oxley Act of 2002.23.1
    
    Consent of PricewaterhouseCoopers to the incorporation by reference in the Registration
Statements on Form S-8 (file number 333-147806, 333-139608 and 333-127423) of their report
dated June 30, 2008 included in the Registrants Report on Form 20-F for the fiscal year ended
December 31, 200723.2
    
    Consent of Friedman LLP to the incorporation by reference in the Registration Statements on
Form S-8 (file numbers 333-147806, 333-139608 and 333-127423) of their report dated June 30,
2008 included in the Registrants Report on Form 20-F for the fiscal year ended December 31,
200723.3
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the
Registration Statements on Form S-8 (file numbers 333-147806, 333-139608 and 333-127423) of
their report dated June 30, 2008 included in the Registrants Report on Form 20-F for the
fiscal year ended December 31, 2007
 
 *
    
    - incorporated by reference to the Exhibits to our Annual Report on Form 20-F for the fiscal year ended December 31, 2006, SEC File No. 000-29008.**
    
    - incorporated by reference to the Exhibits to our Report on Form 6-K filed with the SEC on September 25, 2007, SEC File No. 000-29008.***
    
    - incorporated by reference to the Exhibits to our Report on Form 6-K filed with the SEC on December 13, 2007, SEC File No. 000-29008.****
    
    - incorporated by reference to the Exhibits to our Report on Form 6-K filed with the SEC on December 20, 2007, SEC File No. 000-29008. 53




---



##### Table of Contents



SIGNATURES
  CHINA TECHNOLOGY DEVELOPMENT
GROUP CORPORATIONDate:June 30, 2008
    
    /s/ Charlene HuaName:
    Charlene HuaTitle:
    Chief Financial Officer 54




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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, 2007 and for
the year then ended
    
    F - 2Report of Independent Registered Public Accounting Firm as of December 31, 2006 and for
the year then ended
    
    F - 3Report of Independent Registered Public Accounting Firm as of December 31, 2005 and for
the year then ended
    
    F - 4Consolidated Statements of Operations for the years ended December 31, 2005, 2006 and 2007
    
    F - 5Consolidated Balance Sheets as of December 31, 2006 and 2007
    
    F - 6Consolidated Statements of Changes in Shareholders Equity for the years ended December
31, 2005, 2006 and 2007
    
    F - 7Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007
    
    F - 8Notes to Consolidated Financial Statements
    
    F - 10




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    
 F-3




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    PricewaterhouseCoopers
 F-4




---



##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts expressed in thousands except for per share data)
 For the years ended December 31, 2005, 2006 and 2007
 *
    
    *Notes
    
    2005
    
    2006
    
    2007
    
    2007Rmb
    
    Rmb
    
    Rmb
    
    US$Continuing operations:Revenues
    
    
    22
    
    
    
    6,468
    
    
    
    9,291
    
    
    
    7,680
    
    
    
    1,053Cost of sales
    
    
    
    
    
    
    (2,491
    )
    
    
    (4,244
    )
    
    
    (3,866
    )
    
    
    (530
    )Gross profit
    
    
    
    
    
    
    3,977
    
    
    
    5,047
    
    
    
    3,814
    
    
    
    523Selling expenses
    
    
    
    
    
    
    (740
    )
    
    
    (1,109
    )
    
    
    (1,108
    )
    
    
    (152
    )General and administrative expenses **
    
    
    
    
    
    
    (19,785
    )
    
    
    (34,658
    )
    
    
    (28,121
    )
    
    
    (3,855
    )Allowance for doubtful accounts
    
    
    
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    Operating loss
    
    
    22
    
    
    
    (16,676
    )
    
    
    (30,720
    )
    
    
    (25,415
    )
    
    
    (3,484
    )Other Income (expense):Interest income
    
    
    
    
    
    
    259
    
    
    
    214
    
    
    
    827
    
    
    
    113Finance costs
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (Loss) gain on disposal of available-for-sale securities
    
    
    
    
    
    
    (2,596
    )
    
    
    (488
    )
    
    
    15,500
    
    
    
    2,125Dividend income from available-for-sale securities
    
    
    
    
    
    
    115
    
    
    
    4
    
    
    
    58
    
    
    
    8Exchange gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    559
    
    
    
    77Others, net
    
    
    
    
    
    
    (28
    )
    
    
    (6
    )
    
    
    21
    
    
    
    2Loss before income tax expenses
    
    
    
    
    
    
    (18,928
    )
    
    
    (30,996
    )
    
    
    (8,450
    )
    
    
    (1,159
    )Income tax expenses
    
    
    5
    
    
    
    (5
    )
    
    
    
    
    
    
    (390
    )
    
    
    (54
    )Loss from continuing operations
    
    
    
    
    
    
    (18,933
    )
    
    
    (30,996
    )
    
    
    (8,840
    )
    
    
    (1,213
    )Discontinued operations:
    
    
    6(Loss) profit from discontinued operations, net of income taxes
of Rmb4, Rmb15 and nil in each of the three years ended December
31, 2005, 2006 and 2007
    
    
    
    
    
    
    (599
    )
    
    
    (83,590
    )
    
    
    1,729
    
    
    
    237Net loss for the year
    
    
    
    
    
    
    (19,532
    )
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (976
    )Net loss per share
    
    
    15-Basic and dilutive
    
    
    
    
    
    
    (2.67
    )
    
    
    (10.13
    )
    
    
    (0.50
    )
    
    
    (0.07
    )Net loss per share from continuing operations-Basic and dilutive
    
    
    
    
    
    
    (2.58
    )
    
    
    (2.74
    )
    
    
    (0.62
    )
    
    
    (0.09
    )Net (loss) earning per share from discontinued operations-Basic
    
    
    
    
    
    
    (0.08
    )
    
    
    (7.39
    )
    
    
    0.12
    
    
    
    0.02-Dilutive
    
    
    
    
    
    
    (0.08
    )
    
    
    (7.39
    )
    
    
    0.11
    
    
    
    0.02Weighted average common shares
    
    
    15-Basic
    
    
    
    
    
    
    7,327
    
    
    
    11,312
    
    
    
    14,249-Dilutive
    
    
    
    
    
    
    7,327
    
    
    
    11,312
    
    
    
    15,328
 
 *
    
    Certain revenues and expenses were reclassified to discontinued operations for comparative
purpose (see Note 6).**
    
    Included in general and administrative expenses were stock-based compensation of Rmb3,176,
Rmb16,431 and Rmb5,788 for the years ended December 31, 2005, 2006 and 2007, respectively.  F-5




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##### 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, 2006 and 2007
 Notes
    
    
    2006
    
    
    2007
    
    
    2007Rmb
    
    
    Rmb
    
    
    US$ASSETSCURRENT ASSETSCash and cash equivalents
    
    
    
    
    
    
    3,475
    
    
    
    18,906
    
    
    
    2,592Short-term investments-security trust account
    
    
    
    
    
    
    19,867
    
    
    
    
    
    
    
    Available-for-sale securities
    
    
    20
    
    
    
    165
    
    
    
    44,808
    
    
    
    6,143Trade accounts receivable, net of allowance
for doubtful accounts of nil and nil as of
December 31, 2006 and 2007, respectively
    
    
    
    
    
    
    1,457
    
    
    
    975
    
    
    
    134Inventories
    
    
    
    
    
    
    1,507
    
    
    
    267
    
    
    
    37Value added tax and business tax recoverable
    
    
    
    
    
    
    137
    
    
    
    167
    
    
    
    23Due from related parties
    
    
    16
    
    
    
    36,164
    
    
    
    5,612
    
    
    
    769Prepaid expenses and other current assets
    
    
    7
    
    
    
    1,273
    
    
    
    1,466
    
    
    
    201TOTAL CURRENT ASSETS
    
    
    
    
    
    
    64,045
    
    
    
    72,201
    
    
    
    9,899Prepayment for land use right
    
    
    8
    
    
    
    
    
    
    
    4,490
    
    
    
    615Property, plant and equipment, net
    
    
    9
    
    
    
    706
    
    
    
    35,771
    
    
    
    4,903Prepayment for acquisition of property
    
    
    10
    
    
    
    
    
    
    
    3,426
    
    
    
    470TOTAL ASSETS
    
    
    
    
    
    
    64,751
    
    
    
    115,888
    
    
    
    15,887LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    
    
    
    
    
    885
    
    
    
    488
    
    
    
    67Accrued professional fees
    
    
    
    
    
    
    5,607
    
    
    
    5,365
    
    
    
    735Income taxes payable
    
    
    
    
    
    
    236
    
    
    
    611
    
    
    
    84Due to related parties
    
    
    16
    
    
    
    949
    
    
    
    6,691
    
    
    
    917Deferred tax liabilities
    
    
    5
    
    
    
    492
    
    
    
    1,325
    
    
    
    182Other liabilities and accrued expenses
    
    
    13
    
    
    
    5,942
    
    
    
    18,689
    
    
    
    2,562TOTAL CURRENT LIABILITIES
    
    
    
    
    
    
    14,111
    
    
    
    33,169
    
    
    
    4,547Deferred tax liabilities-non-current
    
    
    5
    
    
    
    
    
    
    
    2,530
    
    
    
    347TOTAL LIABILITIES
    
    
    
    
    
    
    14,111
    
    
    
    35,699
    
    
    
    4,894Contingencies and commitments
    
    
    21SHAREHOLDERS EQUITYCommon stock, (US$0.01 par value;
5,000,000,000 authorized in 2006 and
4,000,000,000 authorized in 2007; shares
issued and outstanding 13,809,497 in 2006
and 15,028,665 in 2007)
    
    
    18
    
    
    
    1,078
    
    
    
    1,170
    
    
    
    160Preferred stock, (US$0.01 par value;
1,000,000,000 shares authorized; shares
issued and outstanding 1,000,000 in 2007)
    
    
    19
    
    
    
    
    
    
    
    77
    
    
    
    11Additional paid-in capital
    
    
    
    
    
    
    335,692
    
    
    
    369,779
    
    
    
    50,692Accumulated deficit
    
    
    
    
    
    
    (285,762
    )
    
    
    (292,873
    )
    
    
    (40,149
    )Accumulated other comprehensive (loss) income
    
    
    
    
    
    
    (368
    )
    
    
    2,036
    
    
    
    279TOTAL SHAREHOLDERS EQUITY
    
    
    
    
    
    
    50,640
    
    
    
    80,189
    
    
    
    10,993TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    
    
    
    
    64,751
    
    
    
    115,888
    
    
    
    15,887
  F-6




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 (Amounts in thousands)
 For the years ended December 31, 2005, 2006 and 2007
 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, 2005
    
    
    
    
    
    
    
    
    
    
    6,894,497
    
    
    
    571
    
    
    
    187,159
    
    
    
    (151,644
    )
    
    
    (3,232
    )
    
    
    32,854Issue of shares
    
    
    
    
    
    
    
    
    
    
    4,380,000
    
    
    
    339
    
    
    
    79,589
    
    
    
    
    
    
    
    
    
    
    
    79,928Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,176
    
    
    
    
    
    
    
    
    
    
    
    3,176Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,532
    )
    
    
    
    
    
    
    (19,532
    )Net unrealized loss on available-for-
sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    (147
    )Reclassification
adjustment upon disposal of
available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,890
    
    
    
    2,890Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (461
    )
    
    
    (461
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,250
    )Balance at December 31, 2005
    
    
    
    
    
    
    
    
    
    
    11,274,497
    
    
    
    910
    
    
    
    269,924
    
    
    
    (171,176
    )
    
    
    (950
    )
    
    
    98,708Issue of shares
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    165
    
    
    
    48,601
    
    
    
    
    
    
    
    
    
    
    
    48,766Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    3
    
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    505Issue of warrants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234
    
    
    
    
    
    
    
    
    
    
    
    234Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,431
    
    
    
    
    
    
    
    
    
    
    
    16,431Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,586
    )
    
    
    
    
    
    
    (114,586
    )Net unrealized gain on available-for-
sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    84Reclassification
adjustment upon disposal of
available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    479
    
    
    
    479Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,004
    )Balance at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    13,809,497
    
    
    
    1,078
    
    
    
    335,692
    
    
    
    (285,762
    )
    
    
    (368
    )
    
    
    50,640Issue of shares
    
    
    1,000,000
    
    
    
    77
    
    
    
    782,168
    
    
    
    60
    
    
    
    20,563
    
    
    
    
    
    
    
    
    
    
    
    20,700Shares issued upon exercise of stock options
    
    
    
    
    
    
    
    
    
    
    437,000
    
    
    
    32
    
    
    
    7,736
    
    
    
    
    
    
    
    
    
    
    
    7,768Issue of warrants during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,584
    
    
    
    
    
    
    
    
    
    
    
    4,584Stock options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,204
    
    
    
    
    
    
    
    
    
    
    
    1,204Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,111
    )
    
    
    
    
    
    
    (7,111
    )Net unrealized gain on available-for-
sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,247
    
    
    
    6,247Reclassification
adjustment upon disposal of
available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (84
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,759
    )
    
    
    (3,759
    )Total comprehensive loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,707
    )Balance at December 31, 2007
    
    
    1,000,000
    
    
    
    77
    
    
    
    15,028,665
    
    
    
    1,170
    
    
    
    369,779
    
    
    
    (292,873
    )
    
    
    2,036
    
    
    
    80,189
  F-7




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts expressed in thousands)
 For the years ended December 31, 2005, 2006 and 2007
 2005
    
    
    2006
    
    
    2007
    
    
    2007Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Cash flows from operating activitiesNet loss
    
    
    (19,532
    )
    
    
    (114,586
    )
    
    
    (7,111
    )
    
    
    (976
    )Adjustments to reconcile net loss to net cash used in operating activitiesMinority interests in loss of consolidated subsidiaries
    
    
    (712
    )
    
    
    (5,515
    )
    
    
    
    
    
    
    Amortization of intangible asset
    
    
    692
    
    
    
    6,209
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    3,176
    
    
    
    16,431
    
    
    
    5,788
    
    
    
    793Impairment of goodwill
    
    
    
    
    
    
    69,526
    
    
    
    
    
    
    
    Amortization of long-term prepayment for rental of land
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    376
    
    
    
    693
    
    
    
    668
    
    
    
    92Profit on disposal of property, plant and equipment
    
    
    (1
    )
    
    
    (4
    )
    
    
    
    
    
    
    Impairment of property, plant and equipment
    
    
    
    
    
    
    2,989
    
    
    
    
    
    
    
    Loss (gain) on disposal of available-for-sale securities
    
    
    2,596
    
    
    
    488
    
    
    
    (15,500
    )
    
    
    (2,125
    )Loss (gain) on disposal of subsidiaries
    
    
    509
    
    
    
    7,872
    
    
    
    (2,128
    )
    
    
    (292
    )Allowance for doubtful accounts
    
    
    128
    
    
    
    892
    
    
    
    
    
    
    
    Changes in assets and liabilities:Decrease (increase) in trade accounts receivable
    
    
    321
    
    
    
    (1,004
    )
    
    
    482
    
    
    
    66Decrease (increase) in inventories
    
    
    79
    
    
    
    (444
    )
    
    
    1,240
    
    
    
    170(Increase) decrease in due from related parties and other assets
    
    
    (7,621
    )
    
    
    1,423
    
    
    
    (378
    )
    
    
    (52
    )Increase (decrease) in trade accounts payable
    
    
    126
    
    
    
    614
    
    
    
    (397
    )
    
    
    (54
    )Increase in amount due to related parties
    
    
    1,093
    
    
    
    60
    
    
    
    373
    
    
    
    51Increase (decrease) in other current liabilities
    
    
    685
    
    
    
    4,342
    
    
    
    (926
    )
    
    
    (127
    )(Decrease) increase in income taxes payable
    
    
    (4
    )
    
    
    (9
    )
    
    
    390
    
    
    
    53Decrease (increase) in income taxes recoverable
    
    
    35
    
    
    
    (174
    )
    
    
    
    
    
    
    Net cash used in operating activities
    
    
    (18,052
    )
    
    
    (10,197
    )
    
    
    (17,499
    )
    
    
    (2,401
    )Cash flows from investing activitiesDecrease (increase) in security trust account
    
    
    6,763
    
    
    
    (181
    )
    
    
    19,160
    
    
    
    2,627Decrease in funds held by related parties for
security investment purposes
    
    
    10,081
    
    
    
    
    
    
    
    
    
    
    
    Acquisitions, net of cash acquired
    
    
    (35
    )
    
    
    
    
    
    
    5,783
    
    
    
    793Cash and cash equivalents disposed of upon disposal ofsubsidiaries
    
    
    (350
    )
    
    
    (3,550
    )
    
    
    900
    
    
    
    123Proceeds from disposal of available-for-sale securities
    
    
    12,511
    
    
    
    276
    
    
    
    156,382
    
    
    
    21,438Purchase of available-for-sales securities
    
    
    
    
    
    
    
    
    
    
    (178,470
    )
    
    
    (24,466
    )Addition of construction in progress
    
    
    
    
    
    
    
    
    
    
    (829
    )
    
    
    (114
    )Prepayment for acquisition of property
    
    
    
    
    
    
    
    
    
    
    (3,426
    )
    
    
    (470
    )Purchases of property, plant and equipment
    
    
    (879
    )
    
    
    (1,126
    )
    
    
    (1,443
    )
    
    
    (198
    )Proceeds from disposal of property, plant and equipment
    
    
    1
    
    
    
    5
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    28,092
    
    
    
    (4,576
    )
    
    
    (1,943
    )
    
    
    (267
    )Cash flows from financing activitiesProceeds from issue of common stock and warrants in 2006
    
    
    
    
    
    
    
    
    
    
    29,422
    
    
    
    4,033Proceeds from exercise of stock option
    
    
    
    
    
    
    505
    
    
    
    7,768
    
    
    
    1,065Loan to a third party (Note 4)
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    Proceeds from short-term borrowings
    
    
    3,500
    
    
    
    
    
    
    
    
    
    
    
    Repayments of short-term borrowings
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    3,490
    
    
    
    (95
    )
    
    
    37,190
    
    
    
    5,098
 F-8




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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, 2005, 2006 and 2007
 2005
    
    
    2006
    
    
    2007
    
    
    2007Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    US$Effect of exchange rate changes on cash and cash equivalents
    
    
    (461
    )
    
    
    19
    
    
    
    (2,317
    )
    
    
    (314
    )Net increase (decrease) in cash and cash equivalents
    
    
    13,069
    
    
    
    (14,849
    )
    
    
    15,431
    
    
    
    2,116Cash and cash equivalents at beginning of year
    
    
    5,255
    
    
    
    18,324
    
    
    
    3,475
    
    
    
    476Cash and cash equivalents at end of year
    
    
    18,324
    
    
    
    3,475
    
    
    
    18,906
    
    
    
    2,592Supplemental disclosure of cash flow informationIncome taxes paid
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    Interest paid
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    Supplemental disclosure non-cash investing and financing activitiesIssue of new shares for business combination in 2005 (Note 3a)
    
    
    79,928
    
    
    
    
    
    
    
    
    
    
    
    Issue of shares for financing activities in 2006
    
    
    
    
    
    
    48,766
    
    
    
    
    
    
    
    Issue of warrants for financing activities in 2006
    
    
    
    
    
    
    234
    
    
    
    
    
    
    
    Issue of shares in exchange for equity interest in Faster
Group in 2007 (Note 3b)
    
    
    
    
    
    
    
    
    
    
    20,700
    
    
    
    2,838
  F-9




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2
    
    Summary of significant accounting policies (continued)
 (q) Employee benefit plans
   (r) Segment reporting
  (s) Comprehensive income (loss)
  (t) Advertising cost
  (u) Earnings per share
  (v) Stock-based compensation
  Compensation 
 F-14




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2
    
    Summary of significant accounting policies (continued)
 (v) Stock-based compensation (continued)
    2005RmbNet loss for the year, as reported
    
    
    (19,532
    )Add: Stock-based compensation, as reported
    
    
    2,475Less: Stock-based compensation determined using the fair value
method
    
    
    (7,791
    )Pro forma loss for the year
    
    
    (24,848
    )Basic and diluted net loss per share (in Rmb)- As reported
    
    
    (2.67
    )- Pro forma
    
    
    (3.39
    )
 (w) Operating leases
  (x) Reclassifications
  (y) Fair value of financial instruments
  F-15




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 2
    
    Summary of significant accounting policies (continued)
 (z) 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, unless otherwise stated)
 3
    
    Acquisition
 CNT
   Acquisition of51%
    
    49%Rmb
    
    RmbConsideration Paid:Shares of Common Stock issued at fair value
    
    
    43,523
    
    
    
    36,405Direct cost related to the acquisition capitalized
    
    
    936
    
    
    
    Subtotal
    
    
    44,459
    
    
    
    36,405Less: Net assets acquired
Cash and cash equivalents
    
    
    247
    
    
    
    2,387Trade accounts receivable, net
    
    
    56
    
    
    
    166Inventories
    
    
    751
    
    
    
    748Due from related parties
    
    
    11
    
    
    
    19Income taxes recoverable
    
    
    18
    
    
    
    Other assets
    
    
    835
    
    
    
    307Property, plant and equipment, net
    
    
    4,665
    
    
    
    4,487Intangible assets
    
    
    3,514
    
    
    
    3,205Trade accounts payable
    
    
    (138
    )
    
    
    (148
    )Income taxes payable
    
    
    
    
    
    
    (2
    )Deferred government grants
    
    
    (139
    )
    
    
    (113
    )Due to a related party
    
    
    (104
    )
    
    
    (119
    )Short term borrowings
    
    
    (40
    )
    
    
    (1,749
    )Deferred tax liabilities
    
    
    (251
    )
    
    
    (241
    )Other liabilities and accrued expenses
    
    
    (466
    )
    
    
    (909
    )Minority interests
    
    
    (2,957
    )
    
    
    (2,702
    )Subtotal
    
    
    6,002
    
    
    
    5,336Goodwill arising from acquisition of Nutraceutical Operations
    
    
    38,457
    
    
    
    31,069
  F-17




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 3
    
    Acquisition (continued)
 (b) Faster Assets Limited
  4.
    
    Write-off of loan to a third party
   5
    
    Income tax expenses
    F-18




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5
    
    Income tax expenses (continued)
    Composition of income tax expenses
  2005
    
    
    2006
    
    
    2007Rmb
    
    
    Rmb
    
    
    RmbCurrent income tax expenses
- Continuing operations
    
    
    5
    
    
    
    
    
    
    
    390Deferred income tax expenses
    
    
    
    
    
    
    
    
    
    
    Income tax expenses
    
    
    5
    
    
    
    
    
    
    
    390
 Reconciliation of income tax expenses by applying PRC statutory Enterprise Income Tax rate
  2005
    
    
    2006
    
    
    2007Rmb
    
    
    Rmb
    
    
    RmbNet loss before provision for income taxes
    
    
    (18,928
    )
    
    
    (30,996
    )
    
    
    (8,450
    )PRC statutory tax rate
    
    
    33
    %
    
    
    33
    %
    
    
    33
    %Income tax credit at PRC statutory EIT rate
    
    
    (6,246
    )
    
    
    (10,229
    )
    
    
    (2,789
    )Income or
expenses adjusted for inter-group liabilities or receivables written off
    
    
    
    
    
    
    
    
    
    
    (137
    )Effect of income tax rate differences in other jurisdictions
    
    
    572
    
    
    
    9,575
    
    
    
    4,192Income not subject to taxation
    
    
    (60
    )
    
    
    (31
    )
    
    
    (22
    )Expenses not deductible for taxation purpose
    
    
    
    
    
    
    
    
    
    
    21Effect of utilization of tax losses not previously recognized
    
    
    
    
    
    
    
    
    
    
    1,033Effect of preferential tax treatment
    
    
    
    
    
    
    
    
    
    
    226Effect of tax losses expired under statute
    
    
    
    
    
    
    
    
    
    
    1,455Effect of tax losses written off
    
    
    
    
    
    
    
    
    
    
    713Effect of tax losses from disposed entities
    
    
    (204
    )
    
    
    4,059
    
    
    
    4,840Effect of change in PRC statutory tax rate
    
    
    
    
    
    
    
    
    
    
    1,114Change in valuation allowance
    
    
    5,943
    
    
    
    (3,374
    )
    
    
    (10,256
    )Total income tax expenses
    
    
    5
    
    
    
    
    
    
    
    390
 F-19




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 5
    
    Income tax expenses (continued)
 The principal components of the deferred income tax assets and liabilities are as follows:
 December 31, 2006
    
    
    December 31, 2007Rmb
    
    
    RmbDeferred tax assets:Current deferred tax assets
    
    
    
    
    
    
    Less: valuation allowance
    
    
    
    
    
    
    Current Deferred Tax Assets, net
    
    
    
    
    
    
    Tax loss carryforwards
    
    
    14,033
    
    
    
    3,777Less: valuation allowance
    
    
    (14,033
    )
    
    
    (3,777
    )Non-current deferred tax assets, net
    
    
    
    
    
    
    Deferrd tax liability:Unrealized gain on available-for-sales securities
    
    
    
    
    
    
    (1,325
    )Other intangible asset
    
    
    (322
    )
    
    
    Property, plant and equipment, net
    
    
    (170
    )Current deferred tax liabilities
    
    
    (492
    )
    
    
    (1,325
    )Property, plant and equipment, net
    
    
    
    
    
    
    (2,041
    )Prepayment for land use right
    
    
    
    
    
    
    (489
    )Non-current deferred tax liabilities
    
    
    
    
    
    
    (2,530
    )Total
    
    
    (492
    )
    
    
    (3,855
    )Reported as:Current deferred tax assets
    
    
    
    
    
    
    Current deferred tax liabilities
    
    
    (492
    )
    
    
    (1,325
    )Subtotal
    
    
    (492
    )
    
    
    (1,325
    )Non-current deferred tax assets
    
    
    
    
    
    
    Non-current deferred tax liabilities
    
    
    
    
    
    
    (2,530
    )Total
    
    
    (492
    )
    
    
    (3,855
    )
   F-20




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 6
    
    Disposal and discontinued operations
 (a) Branch of BBHL in Zhuhai
  2005RmbNet assets disposed of (excluding cash and cash equivalents):Trade accounts receivable, net
    
    
    56Other assets
    
    
    18Goodwill
    
    
    999Income taxes payable
    
    
    (753
    )Other liabilities and accrued expenses
    
    
    (161
    )159Loss on disposal of discontinued operations
    
    
    (509
    )(350
    )Discharged by:Cash and cash equivalents disposed
    
    
    (350
    )
 (b) Discontinued operations
   F-21




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 6
    
    Disposal and discontinued operations (continued)
  2006RmbNet assets disposed of (excluding cash and cash equivalents):Trade accounts receivable, net
    
    
    338Inventories
    
    
    1,523Due from related parties
    
    
    18Prepaid expenses and other assets
    
    
    162Property, plant and equipment, net
    
    
    6,434Intangible asset
    
    
    332Trade accounts payable
    
    
    (301
    )Income taxes payable
    
    
    (4
    )Short term borrowing
    
    
    (3,569
    )Other liabilities and accrued expenses
    
    
    (611
    )4,322Loss on disposal of discontinued operations
    
    
    (7,872
    )(3,550
    )Discharged by:Cash and cash equivalents disposed
    
    
    (3,550
    )
    2007RmbNet assets disposed of (excluding cash and cash equivalents):Other assets
    
    
    750Property, plant and equipment, net
    
    
    46Deferred tax liabilities
    
    
    (491
    )Other liabilities and accrued expenses
    
    
    (1,533
    )(1,228
    )Gain on disposal of discontinued operations
    
    
    2,128900Discharged by:Consideration received
    
    
    935Cash and cash equivalents disposed
    
    
    (35
    )900
 F-22




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 6
    
    Disposal and discontinued operations (continued)
  Year ended
    
    
    Year ended
    
    
    Year endedDecember
    
    
    December
    
    
    December31, 2005
    
    
    31, 2006
    
    
    31,2007Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    Total
    
    
    Rmb
    
    
    Rmb
    
    
    Total
    
    
    RmbZhuhai
    
    
    Anji Bio
    
    
    CNT
    
    
    2005
    
    
    Anji Bio
    
    
    CNT
    
    
    2006
    
    
    CNTRevenues
    
    
    1,040
    
    
    
    1,015
    
    
    
    20
    
    
    
    2,075
    
    
    
    
    
    
    
    52
    
    
    
    52
    
    
    
    17Cost of sales
    
    
    (678
    )
    
    
    (783
    )
    
    
    (16
    )
    
    
    (1,477
    )
    
    
    
    
    
    
    (44
    )
    
    
    (44
    )
    
    
    (17
    )Gross profit
    
    
    362
    
    
    
    232
    
    
    
    4
    
    
    
    598
    
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    Selling expenses
    
    
    
    
    
    
    (111
    )
    
    
    (21
    )
    
    
    (132
    )
    
    
   
    
    
    
    (185
    )
    
    
    (185
    )
    
    
    General and administrative expenses
    
    
    (141
    )
    
    
    (299
    )
    
    
    (1,013
    )
    
    
    (1,453
    )
    
    
    
    
    
    
    (4,082
    )
    
    
    (4,082
    )
    
    
    (399
    )Bad debt expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (892
    )
    
    
    (892
    )
    
    
    Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,541
    )
    
    
    (6,541
    )
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69,526
    )
    
    
    (69,526
    )
    
    
    Operating profit (loss)
    
    
    221
    
    
    
    (178
    )
    
    
    (1,030
    )
    
    
    (987
    )
    
    
    
    
    
    
    (81,218
    )
    
    
    (81,218
    )
    
    
    (399
    )Other income
    
    
    
    
    
    
    125
    
    
    
    73
    
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Finance costs
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) profit on disposal of
subsidiaries
    
    
    (509
    )
    
    
    
    
    
    
    
    
    
    
    (509
    )
    
    
    (7,872
    )
    
    
    
    
    
    
    (7,872
    )
    
    
    2,128(Loss) profit from operations
before income tax expenses
    
    
    (288
    )
    
    
    (53
    )
    
    
    (966
    )
    
    
    (1,307
    )
    
    
    (7,872
    )
    
    
    (81,218
    )
    
    
    (89,090
    )
    
    
    1,729Income tax expenses
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )
    
    
    (Loss) profit from operations
before minority interests
    
    
    (288
    )
    
    
    (57
    )
    
    
    (966
    )
    
    
    (1,311
    )
    
    
    (7,872
    )
    
    
    (81,233
    )
    
    
    (89,105
    )
    
    
    1,729Minority interests
    
    
    
    
    
    
    
    
    
    
    712
    
    
    
    712
    
    
    
    
    
    
    
    5,515
    
    
    
    5,515
    
    
    
    (Loss) profit from operations
    
    
    (288
    )
    
    
    (57
    )
    
    
    (254
    )
    
    
    (599
    )
    
    
    (7,872
    )
    
    
    (75,718
    )
    
    
    (83,590
    )
    
    
    1,729The carrying amounts of total assets
and liabilities included as part of the
disposal group were as follows:Total assets
    
    
    1,423
    
    
    
    
    
    
    
    
    
    
    
    1,423
    
    
    
    12,357
    
    
    
    
    
    
    
    12,357
    
    
    
    831Total liabilities
    
    
    (914
    )
    
    
    
    
    
    
    
    
    
    
    (914
    )
    
    
    (4,485
    )
    
    
    
    
    
    
    (4,485
    )
    
    
    (2,024
    )
 F-23




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 7
    
    Other assets
  December 31,
    
    
    December 31,2006
    
    
    2007Rmb
    
    
    RmbRental and utility deposits
    
    
    375
    
    
    
    372Advance to staff
    
    
    202
    
    
    
    174Prepayment for insurance
    
    
    387
    
    
    
    331Prepayment for consultancy fee
    
    
    122
    
    
    
    9Prepayment for raw materials
    
    
    50
    
    
    
    56Deposit in security account
    
    
    
    
    
    
    495Others
    
    
    137
    
    
    
    291,273
    
    
    
    1,466
 8
    
    Prepayment for land use right
  9
    
    Property, plant and equipment, net
 December 31,
    
    
    December 31,2006
    
    
    2007Rmb
    
    
    RmbBuildings
    
    
    
    
    
    
    18,712Computer equipments
    
    
    1,781
    
    
    
    1,766Furniture, fixtures and office equipments
    
    
    980
    
    
    
    2,113Motor vehicles
    
    
    445
    
    
    
    429Total
    
    
    3,206
    
    
    
    23,020Less: accumulated depreciation
    
    
    (2,500
    )
    
    
    (2,687
    )Add: construction in progress
    
    
    
    
    
    
    15,438706
    
    
    
    35,771
  10
    
    Prepayment for acquisition of property
  F-24




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 11
    
    Intangible assets
      F-25




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 11
    
    Intangible assets (continued)
 ImpairmentBalance as
    
    loss for fiscal
    
    Balance asof
    
    year ended
    
    ofDecember
    
    December 31,
    
    December31, 2005
    
    2006
    
    31, 2006Rmb
    
    Rmb
    
    RmbCore Technology
    
    
    611
    
    
    
    (611
    )
    
    
    Completed technologyBamboo leaf extract for prostate disease
    
    
    202
    
    
    
    (202
    )
    
    
    AOB antioxidant from bamboo leaf extract
    
    
    1,668
    
    
    
    (1,668
    )
    
    
    EOB from bamboo leaf extract
    
    
    1,899
    
    
    
    (1,899
    )
    
    
    Bamboo shoot extractive for dietary
supplements and fertilixer
    
    
    1,829
    
    
    
    (1,829
    )
    
    
    Zhukangning capsule from bamboo leaf extract
    
    
    332
    
    
    
    (332
    )
    
    
    5,930
    
    
    
    (5,930
    )
    
    
    Total
    
    
    6,541
    
    
    
    (6,541
    )
    
    
    
  12
    
    Goodwill
  13
    
    Other liabilities and accrued expenses
 December 31,
    
    
    December 31,2006
    
    
    2007Rmb
    
    
    RmbDeposits received
    
    
    887
    
    
    
    531Accrued salaries and staff benefits
    
    
    2,202
    
    
    
    1,350Accrued liability for purchase of property, plant and equipment
    
    
    1,198
    
    
    
    14,767Accrued filing fee
    
    
    365
    
    
    
    107Accrued courier charges
    
    
    763
    
    
    
    327Temporary receipt*
    
    
    
    
    
    
    1,308Others
    
    
    527
    
    
    
    2995,942
    
    
    
    18,689
 
 *
    
    The amount represented the contract sums received on behalf of BEDC, by BHL Networks Technology
Company Limited (BHLHK) in Hong Kong as the customer of BEDC paid in Hong Kong dollars whereas
BEDC did not maintain a Hong Kong dollar bank account in Hong Kong. BEDC is not a related party as
BEDC is the sole shareholder of China Internet Technology F-26




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 13
    
    Other liabilities and accrued expenses(continued)
  14
    
    Stock-based compensation
 (a) Stock Option
       F-27




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 14
    
    Stock-based compensation (continued)A summary of the stock option activity for both employees and non-employees is as follows:
 Year Ended December 31,2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageexercise
    
    
    
    
    
    
    exercise
    
    
    
    
    
    
    Weightedprice
    
    
    
    
    
    
    price
    
    
    
    
    
    
    averageNumber of
    
    
    (US$ per
    
    
    Number
    
    
    (US$ per
    
    
    Number
    
    
    exerciseoptions
    
    
    option)
    
    
    of options
    
    
    option)
    
    
    of options
    
    
    priceOutstanding at beginning
of year
    
    
    140,000
    
    
    
    1.15
    
    
    
    570,000
    
    
    
    1.68
    
    
    
    1,565,000
    
    
    
    2.66Granted
    
    
    430,000
    
    
    
    1.85
    
    
    
    1,030,000
    
    
    
    3.18
    
    
    
    1,000,000
    
    
    
    3.25Exercised
    
    
    
    
    
    
    
    
    
    
    (35,000
    )
    
    
    1.85
    
    
    
    (437,000
    )
    
    
    2.44Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,000
    )
    
    
    3.01Outstanding at end of year
    
    
    570,000
    
    
    
    1.68
    
    
    
    1,565,000
    
    
    
    2.66
    
    
    
    2,053,000
    
    
    
    2.98
  Options outstanding
    
    
    
    
    
    
    Options exercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    average
    
    
    
    
    
    
    averageremaining
    
    
    exercise
    
    
    
    
    
    
    exerciseNumber
    
    
    contractual
    
    
    price (US$
    
    
    Number
    
    
    price (US$Date of grant
    
    outstanding
    
    
    life
    
    
    per share)
    
    
    exercisable
    
    
    per share)December 28, 1999
    
    
    140,000
    
    
    4 years
    
    
    1.15
    
    
    
    140,000
    
    
    
    1.15September 20, 2005
    
    
    430,000
    
    
    9.72 years
    
    
    1.85
    
    
    
    430,000
    
    
    
    1.85570,000
    
    
    
    
    
    
    
    
    
    
    
    570,000
  Options outstanding
    
    
    
    
    
    
    Options exercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    average
    
    
    
    
    
    
    averageremaining
    
    
    exercise
    
    
    
    
    
    
    exerciseNumber
    
    
    contractual
    
    
    price (US$
    
    
    Number
    
    
    price (US$Date of grant
    
    outstanding
    
    
    life
    
    
    per share)
    
    
    exercisable
    
    
    per share)December 28, 1999
    
    
    140,000
    
    
    3 years
    
    
    1.15
    
    
    
    140,000
    
    
    
    1.15September 20, 2005
    
    
    395,000
    
    
    8.72 years
    
    
    1.85
    
    
    
    395,000
    
    
    
    1.85September 18, 2006
    
    
    1,030,000
    
    
    9.28 years
    
    
    3.18
    
    
    
    1,030,000
    
    
    
    3.181,565,000
    
    
    
    
    
    
    
    
    
    
    
    1,565,000
 F-28




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 14
    
    Stock-based compensation (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)December 28, 1999
    
    
    50,000
    
    
    2 years
    
    
    1.15
    
    
    
    50,000
    
    
    
    1.15September 20, 2005
    
    
    278,000
    
    
    7.72 years
    
    
    1.85
    
    
    
    278,000
    
    
    
    1.85September 18, 2006
    
    
    770,000
    
    
    8.28 years
    
    
    3.18
    
    
    
    770,000
    
    
    
    3.18May 23, 2007
    
    
    740,000
    
    
    4.39 years
    
    
    3.13
    
    
    
    
    
    
    
    August 3, 2007
    
    
    80,000
    
    
    4.59 years
    
    
    3.53
    
    
    
    
    
    
    
    August 20, 2007
    
    
    135,000
    
    
    4.64 years
    
    
    3.74
    
    
    
    
    
    
    
    2,053,000
    
    
    
    
    
    
    
    
    
    
    
    1,098,000
      Stock-based compensation to non-employees
  F-29




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 14
    
    Stock-based compensation (continued)
    2006
    
    2007Granted on
    
    Granted onMay 23, 2007
    
    August 3, 2007
    
    August 20, 2007Average risk-free rate of return
    
    
    4.833
    %
    
    
    4.480
    %
    
    
    4.422
    %
    
    
    4.269
    %Weighted average expected option life
    
    2 years
    
    1year
    
    1year
    
    1yearVolatility rate
    
    
    121.62
    %
    
    
    72.33
    %
    
    
    71.98
    %
    
    
    74.97
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (b) Stock Purchase Warrants
    Granted on
    
    Granted onJuly 2, 2007
    
    August 31, 2007Average risk-free rate of return
    
    
    4.584
    %
    
    
    4.06
    %Weighted average expected option life
    
    1year
    
    1yearVolatility rate
    
    
    67.81
    %
    
    
    76.51
    %Dividend yield
    
    
    
    
    
    
    
 F-30




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 15
    
    Net (loss) income per share
   Year ended December 31,*2005
    
    
    *2006
    
    
    2007Rmb
    
    
    Rmb
    
    
    RmbNet loss for the year
    
    
    (19,532
    )
    
    
    (114,586
    )
    
    
    (7,111
    )Net loss from continuing operations attributable to
holders of Common Stock, basic and diluted shares
    
    
    (18,933
    )
    
    
    (30,996
    )
    
    
    (8,840
    )Net (loss) income from discontinued operations
attributable to holders of Common Stock, basic and
dilutive shares
    
    
    (599
    )
    
    
    (83,590
    )
    
    
    1,729Weighted-average shares used in computing basic and
diluted net loss per share from continuing operation
    
    
    7,327
    
    
    
    11,312
    
    
    
    14,249Incremental shares from assumed conversions of stock
options and warrants
    
    
    
    
    
    
    
    
    
    
    1,079Weighted-average shares used in computing net diluted
loss per share from discontinued operation
    
    
    7,327
    
    
    
    11,312
    
    
    
    15,328Net loss per share (in Rmb)- Basic and dilutive
    
    
    (2.67
    )
    
    
    (10.13
    )
    
    
    (0.50
    )Net loss per share from continuing operations (in Rmb)- Basic and dilutive
    
    
    (2.58
    )
    
    
    (2.74
    )
    
    
    (0.62
    )Net (loss) income per share from discontinued
operations
(in Rmb)- Basic
    
    
    (0.08
    )
    
    
    (7.39
    )
    
    
    0.12- Dilutive
    
    
    (0.08
    )
    
    
    (7.39
    )
    
    
    0.11
 
 *
    
    Certain revenues and expenses were reclassified to discontinued operations for comparative
purposes (see Note 6). F-31




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 15
    
    Net (loss) income per share (continued)
  16
    
    Related party transactions
  Year ended December 31,2005
    
    2006
    
    2007Rmb
    
    Rmb
    
    RmbTransactions with related partiesDisposal of Zhuhai branch of BBHL to BEDC (Note a)
    
    
    1,300
    
    
    
    
    
    
    
    Net operating cash outflows of Zhuhai branch reimbursed (Note a)
    
    
    (1,300
    )
    
    
    
    
    
    
    Acquisition of CNT from Beijing Holdings by issuance of 2,233,800 new
shares at US$2.41 per share and 2,146,200 new shares at US$2.1 per
share respectively (Note b)
    
    
    79,928
    
    
    
    
    
    
    
    Disposal of available-for-sale securities to Beijing Holdings (Note c)
    
    
    2,167
    
    
    
    
    
    
    
    Subscription proceeds receivable from China Biotech (Note d)
    
    
    
    
    
    
    29,422
    
    
    
    Acquisition of Faster Group from China Biotech (Note e)
    
    
    
    
    
    
    
    
    
    
    20,700Prepayment for acquisition of property from ZMRE (Note f)
    
    
    
    
    
    
    
    
    
    
    3,301
 
  (a)
    
    On March 31, 2005, BBHL entered into an agreement with BEDC, the sole shareholder of China
Internet Technology Company Limited (China Internet), the then 17.21% shareholder of the
Company, to sell its Zhuhai branch for a consideration of Rmb1,300. The consideration was
determined based on the operating cash flow generated by Zhuhai branch from May 1, 2002 to
March 31, 2005, the period for which Zhuhai branch was managed and controlled by the Group.
Upon disposal, the Group agreed to reimburse the same aggregated net operating cash outflows
of Rmb1,300 to the Zhuhai branch as part of the conditions of disposal. The consideration of
the transaction was zero as the Group received Rmb1,300 from BEDC and at the same time the
Group transferred Rmb1,300 to Zhuhai branch. The transaction was closed on March 31, 2005 and
resulted in a disposal loss of Rmb509.
 (b)
    
    On September 13, 2005, the Group entered into agreements with Beijing Holdings, the then
47.18% shareholder of the Company, to (i) acquire a 51% equity interest in CNT in exchange for
2,233,800 shares of Common Stock and (ii) obtain an option to acquire the remaining 49% equity
interest in CNT in exchange for 2,146,200 shares of Common Stock. Effective from October 31,
2005, the acquisition of 51% of CNT was completed. Effective from December 22, 2005, the
option was exercised and the remaining 49% equity interest in CNT was acquired by the Group.
 F-32




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 16
    
    Related party transactions (continued)
 (c)
    
    On November 17, 2005, the Group entered into a sale and purchase agreement with Beijing
Holdings to dispose of all of the 6,312,000 shares invested in Xian Haitian Antenna Company
Limited (Xian Haitian) for a cash consideration of Rmb2,167. These shares were previously
held as available-for-sale securities by the Group and it represented approximately 0.975% of
the outstanding shares of Xian Haitian. The sale consideration was determined by the quoted
closing stock price of Xian Haitian at HK$0.33 per share at the date of the agreement. Xian
Haitian is a company engaged in research, development, production, sales, installation,
services and wireless communication network optimization of base station antennas and is also
listed on the Growth Enterprise Market of the Hong Kong Stock Exchange. The shares were
acquired upon the initial public offering (IPO) of Xian Haitian. Its stock price dropped
continuously after the IPO due to poorer operating results as a result of the keen competition
in the market. Beijing Holdings is also a passive investor of Xian Haitian who owns
approximately 8% equity interest of Xian Haitian after its IPO. Beijing Holdings currently
nominates one non-executive director to the board of Xian Haitian and does not participate in
the management or operations of Xian Haitian.
 (d)
    
    On November 27, 2006, the Company entered into a subscription agreement with China Biotech to
issue 1,500,000 new shares of Common Stock and 2,000,000 warrants at US$2.50 each and US$0.01
each, respectively. The total consideration was Rmb29,422. The transaction was completed on
January 12, 2007 and the subscription proceeds were fully received by the Company at the same
date. Following the completion of the transaction, China Biotech became the major shareholder
of the Company by owning 24.74% of the total outstanding shares of the Company.
 (e)
    
    On November 8, 2007, the Group entered into a sale and purchase agreement with China Biotech
to acquire the entire equity interest in Faster Group held by China Biotech at a consideration
of Rmb20,700. The consideration was settled by issuance of 782,168 shares of Common Stock and
1,000,000 shares of Preferred Stock on December 10, 2007.
 (f)
    
    Zhangzhou Trendar Tech and Broad Shine, the two wholly-owned subsidiaries of the Company,
acquired four properties with Rmb3,301 in total from Zhangzhou Merchants Real Estate Ltd.
(ZMRE), a subsidiary of China Merchant Group (CMG), on July 3, 2007 and October 22, 2007,
respectively. CMG is the ultimate holding company of China Biotech (see Note 10).
 (g)
    
    China Biotech has been the major shareholder of the Company since January 12, 2007. China
Biotech has experience in acquisitions in China. In view of China Biotechs experience, the
Group deposited Rmb6,242 with China Biotech for the purpose of making potential acquisitions
(with the assistance of China Biotech) of technology and businesses in China. There was no
agreement signed for the funds deposited with China Biotech and the Group can withdraw the
funds without any restrictions.
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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 16 Related party transactions (continued)
  December 31,2006
    
    
    2007Rmb
    
    
    RmbBalances with related parties:Due from related parties
Subscription proceeds receivable from China Biotech (Note d )
    
    
    29,422
    
    
    
    Funds held by China Biotech for potential acquisition of
technology and business in China (Note g)
    
    
    6,242
    
    
    
    5,612Due from China Biotech (Note h)
    
    
    500
    
    
    
    36,164
    
    
    
    5,612Due to related parties:Due to BEDC, the holding company of a shareholder (Note i)
    
    
    59
    
    
    
    Due to China Biotech (Note j)
    
    
    890
    
    
    
    908Due to CMZDZ (Note k)
    
    
    
    
    
    
    5,783949
    
    
    
    6,691
 
 (h)
    
    The amount represented the loan repayment on behalf of China Biotech by Zhejiang Innoessen.(i)
    
    The amount represented the contract sums received on behalf of BEDC by BHLHK in Hong Kong as
the customer of BEDC paid in Hong Kong dollars whereas BEDC did not maintain a Hong Kong
dollar bank account in Hong Kong.(j)
    
    The amount represented administrative expenses paid on behalf of Faster Assets and Shenzhen
Innoessen by China Biotech in China.(k)
    
    The amount represented the amount payable to China Merchant Zhangzhou Development Zone Ltd.
(CMZDZ), a subsidiary of CMG, for the cash of Faster Group acquired (see Note 3(b) for
details of acquisition of Faster Group).The balances with related parties are unsecured and interest-free, and have no fixed terms of
repayment.
 17
    
    Retirement benefits
  18
    
    Common stock
    F-34




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 19
    
    Series A non-convertible and non-redeemable Preferred Stock
   l
    
    Voting rightThe 1,000,000 shares of Preferred Stock shall have an aggregate voting power of 25% of
the combined voting power of the entire issuers shares, Common Stock and Preferred
Stock.l
    
    DividendsThe holder shall be entitled to receive dividends only as, when and if such dividends
are declared by the Board with respect to shares of Preferred Stock.l
    
    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 shall be
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.l
    
    RedemptionThe issuer shall have no right to redeem the Preferred Stock.l
    
    Non-convertible
 20
    
    Available-for-sale securities
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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 21
    
    Contingencies and commitments
   As of December 31,
    
    Rmb2008
    
    
    1,2922009
    
    
    3352010
    
    
    1202011 and thereafter
    
    
    Total
    
    
    1,747
    F-36




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATIONS
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 22
    
    Segment information
    Netidentifiable
    
    
    DepreciationOperating
    
    
    assets/
    
    
    and
    
    
    CapitalRevenues
    
    
    loss
    
    
    (liabilities)
    
    
    amortization
    
    
    expendituresRmb
    
    
    Rmb
    
    
    Rmb
    
    
    Rmb
    
    
    RmbYear 2007IT Operations
    
    
    7,680
    
    
    
    (907
    )
    
    
    1,034
    
    
    
    106
    
    
    
    74Solar Energy Operations
    
    
    
    
    
    
    (1,073
    )
    
    
    32,007
    
    
    
    138
    
    
    
    36,873Total operating segments
    
    
    7,680
    
    
    
    (1,980
    )
    
    
    33,041
    
    
    
    244
    
    
    
    36,947Corporate*
    
    
    
    
    
    
    (23,435
    )
    
    
    47,148
    
    
    
    326
    
    
    
    960Group
    
    
    7,680
    
    
    
    (25,415
    )
    
    
    80,189
    
    
    
    570
    
    
    
    37,907Year 2006IT Operations
    
    
    9,291
    
    
    
    65
    
    
    
    1,822
    
    
    
    139
    
    
    
    81Corporate
    
    
    
    
    
    
    (30,785
    )
    
    
    49,607
    
    
    
    283
    
    
    
    77Sub-total
    
    
    9,291
    
    
    
    (30,720
    )
    
    
    51,429
    
    
    
    422
    
    
    
    158Discontinued operation
Nutraceutical
Operations
    
    
    
    
    
    
    
    
    
    
    (789
    )
    
    
    
    
    
    
    968Group
    
    
    9,291
    
    
    
    (30,720
    )
    
    
    50,640
    
    
    
    422
    
    
    
    1,126Year 2005IT Operations
    
    
    6,468
    
    
    
    (3,269
    )
    
    
    2,579
    
    
    
    67
    
    
    
    221Corporate
    
    
    
    
    
    
    (13,407
    )
    
    
    14,713
    
    
    
    128
    
    
    
    454Sub-total
    
    
    6,468
    
    
    
    (16,676
    )
    
    
    17,292
    
    
    
    195
    
    
    
    675Discontinued operation
- Nutraceutical
Operations
    
    
    
    
    
    
    
    
    
    
    11,890
    
    
    
    
    
    
    
    16,584Group
    
    
    6,468
    
    
    
    (16,676
    )
    
    
    29,182
    
    
    
    195
    
    
    
    17,259
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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 22
    
    Segment information (continued)
  2007RmbSelling expenses
    
    
    Unallocated
general and administrative expenses
    
    
    (23,435
    )Operating loss
    
    
    (23,435
    )Cash and cash equivalents
    
    
    5,129Short-term investments-security trust account
    
    
    44,808Due from related parties
    
    
    5,612Other assets
    
    
    1,470Due to related parties
    
    
    (6,008
    )Deferred tax liabilities
    
    
    (1,325
    )Other liabilities
    
    
    (2,538
    )Net identifiable assets/ (liabilities)
    
    
    47,148
    23
    
    Subsequent events
 Assignment agreement relating to CNT between Total Trump and China Biotech
  F-38




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##### Table of Contents



CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts expressed in thousands, unless otherwise stated)
 23
    
    Subsequent events (continued)
 2. Discontinuation of IT Operations
  F-39