CTDC China Technology Development Grp. Corp. (MM)

 

 

(Title of Class)

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

None

TABLE OF CONTENTS

PART I		2
Item 1. Identity of Directors, Senior Management and Advisers		2
Item 2. Offer Statistics and Expected Timetable		2
Item 3. Key Information		2
Item 4. Information on the Company		15
Item 4A. Unresolved Staff Comments		21
Item 5. Operating and Financial Review and Prospects		22
Item 6. Directors, Senior Management and Employees		32
Item 7. Major Shareholders and Related Party Transactions		40
Item 8. Financial Information		43
Item 9. The Offer and Listing		43
Item 10. Additional Information		44
Item 11. Quantitative and Qualitative Disclosures About Market Risk		53
Item 12. Description of Securities Other than Equity Securities		53
PART II		54
Item 13. Default, Dividend Arrearages and Delinquencies		54
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds		54
Item 15T. Controls and Procedures		54
Item 16A. Audit Committee Financial Expert		55
Item 16B. Code of Ethics		56
Item 16C. Principal Accountant Fees and Services		56
Item 16D. Exemptions from the Listing Standards for Audit Committee		56
Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers		56
Item 16F. Change in Registrant’s Certifying Accountant		56
Item 16G. Corporate Governance		56
Item 17. Financial Statements		57
Item 18. Financial Statements		57
Item 19. Exhibits		58
SIGNATURES		59
EX-8.1 List of Company's Subsidiaries
EX-12.1 Certification of Chief Executive Officer
EX-12.2 Certification of Acting Chief Financial Officer
EX-13.1 Certification of Chief Executive Officer and Acting Chief Financial Officer
EX-23.1 Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the registration statements on Form S-8 and Form F-3
EX-23.2 Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company to the incorporation by reference in the registration statements on Form S-8 and Form F-3

Introduction

This Annual Report on Form 20-F includes our audited consolidated financial statements as of December 31, 2009 and 2010 and for each of the years in the three-year period ended December 31, 2010.

Our common stock, par value US$0.01 per share, is listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “CTDC”.

Except as otherwise required, in this Annual Report:

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

For your convenience, this Annual Report contains translations of Renminbi amounts into U.S. dollar amounts. Unless otherwise indicated, the translations have been made at Rmb6.60231 = US$1.00, which was the exchange rates set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2010. See Item 3 “Key Information — Selected Financial Data — Exchange Rate Information” for historical information regarding this rate. You should not construe these translations as representations that the Renminbi amounts actually represent such U.S. dollar amounts or could have been or could be converted into U.S. dollars at the rate indicated or at any other rates.

This Annual Report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our current expectations, assumptions, estimates and projections about our Company, our industry, economic conditions in the markets in which we operate, and certain other matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “project”, “seek”, “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future businesses and operations, margins, profitability, liquidity and capital resources. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results or outcomes to differ materially from those implied by the forward-looking statements. Important factors that may cause actual results or outcomes to differ from those implied by the forward-looking statements include, but are not limited to, those discussed in the Item 3.D “Risk Factors”, Item 4. B “Business Overview” and Item 5 “Operating and Financial Review and Prospects” sections in this Annual Report. In light of these and other uncertainties, you should not conclude that the results or outcomes referred to in any of the forward-looking statements will be achieved. All forward-looking statements included in this Annual Report are based on information available to us on the date hereof, and we do not undertake to update these forward-looking statements to reflect future events or circumstances.

This Annual Report includes statistical data about our industry that comes from information published by third party sources, including financial analysts’ reports, governmental websites and industry research papers. This type of data represents only the estimates of those sources of industry data. In addition, although we believe that data from these companies and institutions is generally reliable, this type of data may not be completely accurate. We caution you not to place undue reliance on this data.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

     Not Applicable.

Item 2. Offer Statistics and Expected Timetable

     Not Applicable.

Item 3. Key Information

A. Selected financial data.

     The following selected consolidated statement of operations data for the years ended December 31, 2008, 2009 and 2010 and the selected consolidated balance sheet data as of as of December 31, 2009 and 2010 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The following selected consolidated statements of operations data for the years ended December 31, 2006 and 2007 and the selected consolidated balance sheet data as of December 31, 2006, 2007 and 2008 have been derived from our audited consolidated financial statements not included in this Annual Report. The selected consolidated financial data should be read in conjunction with those financial statements and the accompanying notes and Item 5. “Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our historical results do not necessarily indicate our results expected for any future periods.

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

		(Amounts in thousands, except share data)
		As of December 31,
		2006				2007				2008				2009				2010				2010
		Rmb				Rmb				Rmb				Rmb				Rmb(2)				US$
Consolidated Balance Sheet Data:
Total assets			64,751				115,888				62,619				119,435				165,855				25,120
Total liabilities			14,111				35,699				20,389				21,734				50,581				7,661
Shareholders’ equity			50,640				80,189				42,230				97,701				115,274				17,459
Number of common shares issued and outstanding			13,809,497				15,028,665				15,543,669				19,300,390				22,425,216				22,425,216

Exchange Rate Information

We normally maintain our financial statements in Renminbi for our PRC operating subsidiaries, as our business is primarily conducted in China and the Renminbi is China’s legal currency. In July 2005, the Chinese government changed its policy of pegging the value of the Renminbi to the U.S. dollar. This revaluation of the Renminbi was based on a conversion of Renminbi into U.S. dollars at an exchange rate of US$1.00=Rmb8.11. Under this policy, the Renminbi is permitted to fluctuate within a band against a basket of foreign currencies. This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi against the U.S. dollar and could result in further and more significant appreciation or depreciation. The Chinese government has signaled a return to a managed appreciation of the Renminbi against the dollar. Although we generate substantially all of our revenue in Renminbi, our U.S. dollar cash deposits are subject to foreign currency translation.

The following table sets forth certain information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this Annual Report or will use in the preparation of our periodic reports or any other information to be provided to you. For the period prior to January 1, 2009, the exchange rates reflect the noon buying rates from the Federal Reserve Bank of New York. For the period after January 1, 2009, the exchange rates reflect those set forth in the H.10 statistical release of the U.S. Federal Reserve Bank.

		Average(1)				High				Low				Period-end
						(Rmb per US$1.00)
2005			8.1472				8.2765				8.0702				8.0702
2006			7.9579				8.0702				7.8041				7.8041
2007			7.5806				7.7714				7.2946				7.2946
2008			6.9193				7.1818				6.7899				6.8225
2009			6.8311				6.8895				6.7753				6.8270
2010			6.7683				6.8346				6.6008				6.6023
December 2010			6.6469				6.6745				6.6008				6.6023
January 2011			6.5973				6.6388				6.5810				6.6065
February 2011			6.5762				6.5971				6.5559				6.5716
March 2011			6.5649				6.5750				6.5470				6.5486
April 2011			6.5279				6.5478				6.4910				6.4910
May 2011			6.4953				6.5087				6.4789				6.4789

On June 17, 2011, the exchange rates set forth in the H.10 statistical release of the U.S. Federal Reserve Board was Rmb6.4700 = US$1.00.

B.  Capitalization and indebtedness.

     Not Applicable.

C.  Reasons for the offer and use of proceeds.

     Not Applicable.

D.  Risk factors.

This Annual Report contains “forward-looking statements” that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including those set forth in the following risk factors and elsewhere in this Annual Report. You should carefully consider the risks described below and other information in this Annual Report before deciding to invest in our Company. If any of the following risks actually occur, our business, financial condition, liquidity, results of operation or prospects could be materially and adversely affected. Accordingly, the trading price of our common stock could decline and you may lose all or part of your investment in our Company.

The risks and uncertainties described below are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations or prospects.

Risks Related to Our Company and Our Industry

Our business strategy has evolved significantly over time, and our limited operating history in the solar business may not serve as an adequate measure for our future results of operations.

We have limited experience in the solar business in which we are currently engaged. We were formed in 1995 and have engaged in a number of different businesses, including sanitary wares and ceramic tiles manufacturing, Internet-related business and nutraceutical-related business. We launched our solar energy business in September 2007, completed the installation of our first SnO2 thin-film base plate production line in June 2008 and made our first commercial shipment of solar base plates in December 2008. Our technology for SnO2 base plates manufacturing is in its early stages, and we did not successfully ramp up the production line to its full capacity as we expected, which resulted in no sales of the SnO2 base plates in 2009. In 2010, we commenced the establishment of a new factory to produce solar modules at our production base and realized the first shipment in September 2010. At the end of 2010, we acquired a company producing PV modules located in Jinjiang, Fujian Province, China. Our historical operating results do not reflect our current focus on the solar industry and, as such, do not provide a meaningful basis for evaluating our current or planned businesses or our future prospects. Accordingly, you should consider our business and prospects in light of the risks, expenses and challenges that we face as an early-stage company seeking to develop and manufacture new products in the rapidly evolving solar industry. Accordingly, you should not rely on our results of operations for any prior periods as an indication of our future performance.

We have incurred significant operating losses, and we do not know whether we will ever achieve or sustain profitability.

We have incurred significant operating losses in the preceding five years as follows:

		Operating loss
Year		(in thousands of Rmb)
2006			(30,785	)
2007			(24,495	)
2008			(24,338	)
2009			(32,331	)
2010			(28,527	)

Our solar business generated no revenues in 2007, de minimis revenues in 2008 and no revenues in 2009. We started to manufacture solar modules in May 2010 and realized the first shipment in September 2010. During the past five years, we have expended and anticipate that we will continue to expend significant financial and other resources as we expand our solar business. The rapidly evolving markets in which we operate our solar business make it difficult for us to predict our future performance. Our ability to achieve profitability in the future is uncertain and will depend largely on the successful expansion of our solar product markets. If we fail to operate our production lines up to their designed capacity, or if we fail to expand our sales network, our results of operations will be materially adversely affected. We cannot accurately estimate our future operating losses because our revenues, gross margins and operating results may fluctuate significantly due to, among other things:

•		the need to procure additional equipment at reasonable cost and on a timely basis;
•		the need to raise additional funds to finance the construction and expansion of production lines, which we may be unable to obtain on reasonable terms or at all;
•		product upgrading or updating by us or our competitors;
•		demand for our solar products and services;
•		our competitors’ price changes;
•		our research and development and marketing activities;
•		our acquisition costs of new technology or businesses;
•		employee wage pressure arising from increased competition for skilled employees and increased governmental staff welfare regulations; and
•		extraordinary costs incurred for any acquisitions or reductions in force.

Our operating results could be materially adversely affected by any of these factors, or by additional factors of which we are currently unaware. As a result, we do not know whether we will ever achieve or sustain profitability.

We expect that we will need to obtain additional financing to continue to operate our solar business, including significant capital expenditures to increase our production capacity. If we cannot obtain additional financing when we need it, our growth prospects and results of operations for our solar business may be materially adversely affected.

We have in the past experienced substantial losses and negative cash flow from operations, and we expect that we will continue to need significant financing to operate our solar business. In particular, we expect that we will require significant additional capital to increase the manufacturing capacity of our solar production lines and to expand our sales network and project development in overseas markets. We will also need cash resources to fund our solar research and development activities in order to remain competitive in the marketplace. In addition, future acquisitions, expansions, market changes or other developments may cause us to require additional financing. Our ability to obtain external financing in the future is subject to a number of uncertainties, including:

•		the trading price of our common stock on Nasdaq;
•		our future financial condition, results of operations and cash flows;
•		general market conditions for financing activities by companies in the solar industry; and
•		economic, political and other conditions in China and elsewhere.

We do not know whether additional financing will be available or whether the terms of such additional financing, if available, will be acceptable to us. If additional financing is not available or not available on terms acceptable or favorable to us, our ability to fund our solar business, expand our solar manufacturing operations, maintain our solar research and development efforts or otherwise respond to competitive pressures may be significantly impaired. If we are required to pay higher than anticipated costs for additional financing, our results of operations or financial condition may be materially adversely affected. In addition, we could be required to make operating and financial covenants that would restrict our operations. If new shares are issued for equity financing or acquisition purposes, interests of existing shareholders will be diluted.

We may not be able to implement our growth strategy and manage our planned solar business expansion effectively.

We anticipate growth in market demand for our photovoltaic, or PV, products in the future, which will require us to continue to expand our business to capture emerging market opportunities and increase our penetration and market share. Our growth strategy requires us to introduce additional solar products through partnerships, joint ventures and acquisitions, including products for which there are no established markets in China and products with respect to which we lack experience and expertise. We do not know whether we will be able to deliver new solar products on a commercially viable basis or in a timely manner, or at all. Any failure in implementing our growth strategy could materially adversely affect our business, financial condition and results of operations.

To manage this planned expansion of our solar business operations, we will need to improve our operational and financial systems, internal procedures and risk control system, increase our manufacturing throughput, and recruit, train and manage our employee base, especially our engineering and manufacturing operation management team. In addition, our management must maintain and strengthen our relationship with our suppliers, strategic partners, customers and local governments. We do not know whether our current and planned systems and internal controls will be adequate to support our planned expansion. If we are not able to manage our business expansion effectively, we will not be able to execute our business strategy or capitalize on market opportunities, and our results of operations would be adversely affected.

We may not be able to compete successfully in a competitive solar market against competitors with greater resources and more advanced technologies.

Many of our competitors in the solar industry have one or more of the following advantages over us:

•		longer operating history;
•		greater financial, technological, marketing, sales and other resources;
•		profitable operations;
•		superior product functionality in certain areas;
•		greater name recognition;
•		a broader range of products to offer; and
•		a larger base of customers.

Current and potential competitors have established, or may establish, cooperative relationships among themselves or with third parties to enhance their sales, which may result in increased competition. As a result of these and other factors, we may be unable to compete successfully with our existing or new competitors. As a result of China’s entrance into the World Trade Organization, or WTO, more and more foreign companies are entering into the Chinese markets, which has resulted in greater competition in China’s developing solar industry.

Our primary competitors in manufacturing solar modules include Suntech Power Holdings, Trina Solar Limited and Yingli Green Energy Holding Company Limited, all of which have greater name recognition than our Company. In addition, we expect to compete with future entrants to the solar market that offer new technological solutions. We may also face competition from large semiconductor manufacturers, a few of which have already announced their intention to enter the solar business.

We may not be able to keep pace with the rapid technological changes in the solar market, new competition, and new product developments.

The markets in which our solar business is involved are characterized by ongoing technological developments, evolving industry standards and rapid changes in customer requirements. The solar energy market is at a relatively early stage of development and the extent to which solar products will be widely adopted is uncertain. Our success will depend on our ability to:

•		provide a broad range of reliable solar products at the lowest cost;
•		timely develop and introduce new products incorporating technological advances;
•		respond promptly to new customer requirements;
•		comply promptly with evolving industry standards;
•		control delays and cost overruns due to external factors beyond our control, such as increases in raw materials prices and problems with equipment vendors;
•		qualify for available government subsidies and incentives to support the development of the solar energy industry; and
•		execute our business strategy and expansion plan effectively.

If we are unable to attract, train and retain a skilled labor force, our business may be materially adversely affected.

Our future success depends significantly on our ability to attract, train and retain a skilled labor force, particularly our technical personnel and executive officers. Recruiting and retaining capable personnel, particularly those with expertise in the solar industry and operations management, are vital to our success. If one or more of our executive officers or key technical persons are unable or unwilling to continue their employment, we may not be able to replace them in a timely and effective manner. In that event, our business could be severely disrupted and we may incur significant expense to recruit and retain replacements. Furthermore, one or more of our current key employees could join our competitors or form a new competitive company. Although we have entered into non-competition and confidentiality agreements with a number of these key employees, these types of agreements may not be enforceable in China and our business may be materially adversely affected by a breach of any of these agreements.

We plan to acquire new businesses, products and technologies in the solar industry and diversify our business by means of mergers and acquisitions. However, we have been unable to complete a number of acquisitions that we have previously announced. We may not be able to complete future acquisitions or effectively integrate any acquired businesses, products and technologies into our Company. As a result, we may lose all or a portion of our investment.

The solar industry is highly competitive and has experienced a significant amount of consolidation, and we expect this trend to continue. We plan to acquire or make investments in complementary companies, products and technologies in the future, and we also intend to diversify our business through mergers and acquisitions.

In October 2009, we entered into a stock purchase agreement with China Technology Solar Power Holdings Limited, or CTSPHL Group, and its direct and indirect shareholders to acquire a 51% equity interest in CTSPHL Group. CTSPHL Group is developing a 100 megawatt grid-connected solar power plant project in Delingha City located in Qaidam Basin in Qinghai Province, Northwestern China. Upon execution of the stock purchase agreement, we paid US$3 million in cash to Good Million Investments Ltd., the direct shareholder of CTSPHL Group, as a deposit for the transaction. Completion of the proposed transaction was subject to a number of conditions, including receipt of an independent valuation report. However, due to the fact that the Chinese government has not determined the specific subsidies and incentives for on-grid solar energy applications for Qinghai Province, we encountered difficulties in determining the fair value of the solar power plant. As a result,

on October 11, 2010, we entered into an agreement with CTSPHL Group to terminate the stock purchase agreement.

In April 2010, we entered into a cooperation framework agreement with Xintang Media Technology (Beijing) Limited, or Xintang, its shareholders and associated companies, pursuant to which we intended to acquire Xintang. Xintang is a Chinese company that conducts advertising and media business in China. Xinhua News Agency has granted Xintang exclusive rights to operate an advertising network and other relevant value-added business using flat-panel displays installed in lobbies, offices, elevators and other public areas in governmental buildings in certain provinces in China. We paid more than Renminbi ten million to Xintang and its shareholders. The completion of this acquisition was contingent upon the satisfaction of a number of conditions, including a fair value determination by an international independent appraiser, completion of restructuring of the target companies, execution of advertising and media business cooperation arrangements between Xintang and Xinhua News Agency and approval from our shareholders in a general meeting. Since these conditions precedent have not been satisfied, however, the parties agreed not to proceed with the transactions. In 2011, our board of directors decided to terminate the cooperation framework agreement and we are discussing with Xintang about the details regarding the termination.

Any acquisitions or strategic investments that we make will involve a number of risks, and we may not realize the expected benefits of these transactions and we may also suffer from the losses. As a result, we may lose all or a portion of our investment. In the event that an acquired company does not perform as anticipated, we could be required to incur a significant impairment of goodwill and other acquired assets. Any impairment of goodwill and other acquired assets may adversely and materially affect our results of operations and financial condition. We may finance these transactions by using our available cash and/or issuing common stock, which could result in significant acquisition-related charges to earnings and dilution to our shareholders. Moreover, we may incur or assume the acquired company’s liabilities, including liabilities that are unknown at the time of acquisition, which may result in a material adverse effect on financial condition, results of operations and prospects.

We may encounter problems integrating any acquired businesses, including:

•		difficulties assimilating and managing the operations, technologies, intellectual property, products and personnel of any acquired business;
•		diversion of management attention to business concerns of the acquired business from that of our existing operations;
•		declining employee morale and retention issues for employees of the acquired business;
•		risk of litigation by terminated employees and contractors; and
•		our lack of familiarity with other conditions and business practices of the acquired business.

Any failure to successfully integrate any acquired business could materially adversely affect our business, financial condition and results of operations.

Unauthorized use of our intellectual property by third parties and any expenses incurred in protecting our intellectual property rights may adversely affect our business.

We rely on applicable trademark and copyright laws and confidentiality agreements with our employees, customers, business partners and others to protect our intellectual property rights in China. We have filed two patent applications and intend to seek additional patents as we deem appropriate. We do not know whether patents will be issued for any of our pending applications. Even if patents are issued, we do not know whether any claims allowed will be sufficiently broad to cover our products or to effectively limit competition against us. Furthermore, any patents that may be issued to us may be challenged, invalidated or circumvented. Although we intend to defend our proprietary rights, policing unauthorized use of proprietary technology and products is difficult.

Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without authorization. The validity, enforceability and scope of protection of intellectual property in technological industries in China are uncertain and still evolving. In particular, the laws and enforcement procedures in China do not protect intellectual property rights to the same extent as do the laws and enforcement procedures in the United States. Litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business and have a material adverse effect on our financial condition and results of operations.

We have granted, and expect to continue to grant, stock options under our stock incentive option plan, which could adversely impact our financial results.

We have adopted various stock option plans to provide incentives to our directors, employees and consultants. As of December 31, 2010, we had an aggregate of 6,221,135 stock options outstanding under our option plans held by directors, officers, employees and consultants. In our consolidated financial statements, we are required to

recognize share-based compensation as compensation expense based on the fair value of equity awards on the date of the grant, with the compensation expense being recognized over the period in which the recipient is required to provide service in exchange for the equity award. The expense associated with share-based compensation may adversely impact our financial results and reduce the attractiveness of stock options as compensation to our directors, officers, employees and consultants. If we do not offer sufficient equity compensation to our directors, officers, employees or consultants, we may not be able to attract and retain key personnel.

We have limited business insurance coverage and may incur losses resulting from product liability claims, business disruption, litigation or natural disasters.

Insurance companies in China offer limited business insurance products and do not, to our knowledge, offer business liability insurance. While business disruption insurance is available to a limited extent in China, we have determined that the risk of disruption, cost of such insurance and the difficulties associated with acquiring such insurance are prohibitive. As a result, except for directors and officers liability insurance, employees’ compensation insurance and social insurance, we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Any business disruption or litigation could result in substantial costs and the diversion of resources.

Risks Associated with Business Operation in China.

A substantial majority of our assets are located in China, and a substantial majority of our revenue is derived from our operations in China. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in China.

We are subject to risks relating to changes of political and economic policies and conditions in China.

China has been, and will continue to be, our primary production base and a substantial majority of our assets are currently located in China. China’s economy differs from the economies of most developed countries in many respects, including the extent of government involvement, control of foreign currencies and allocation of resources. While the government has been pursuing economic reforms to transform its economy from a planned economy to a market-oriented economy since 1978, a substantial part of China’s economy is still being operated under various controls of the Chinese government. By imposing industrial policies and other economic measures, the Chinese government exerts considerable direct and indirect influence on the development of industries. Many of the economic reforms carried out by the Chinese government are unprecedented or experimental and are expected to be refined and improved over time. Such refining and adjustment process may not necessarily have a positive effect on our operations and our future business development. Our business, prospects and results of operations may be materially adversely affected by changes in the economic and social conditions and in the policies of the Chinese government, including the following:

•		changes in government subsidies and economic incentives for the solar industry;
•		adjustments in tax regulations;
•		restrictions on currency conversion;
•		changes in laws and regulations, or their interpretation;
•		the imposition of confiscatory taxation;
•		restrictions on imports and sources of supply;
•		devaluations of currency; and
•		the nationalization or other expropriation of private enterprises.

Although the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization, we do not know whether the Chinese government will continue to pursue these policies or will alter these policies.

We may experience foreign currency losses due to fluctuations in exchange rates.

A substantial portion of our sales is currently denominated in Euros and U.S. dollars, with the remainder in Renminbi, while a substantial portion of our costs and expenses is denominated in Renminbi, Hong Kong dollars and U.S. dollars. Fluctuations in currency exchange rates, particularly among the U.S. dollar, Renminbi and Euro, have had, and could continue to have, an adverse effect on our results of operations.

The value of the Renminbi against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. We rely on the Chinese government’s foreign currency conversion policies, which may change at any time, in regard to our currency exchange needs. In China, the Chinese government has control over Renminbi reserves through, among other things, direct regulation of the conversion of Renminbi into other foreign currencies and restrictions on foreign imports. Although foreign currencies that are required for current account transactions, such as the payment of dividends to shareholders of foreign invested enterprises like us, can be bought freely at authorized

Chinese banks, procedural requirements prescribed by Chinese law must be met. Chinese companies are required to sell their foreign exchange earnings to authorized Chinese banks, and the purchase of foreign currencies for capital account transactions requires prior approval of the Chinese government. This type of heavy regulation by the Chinese government of foreign currency exchange restricts our business operations, and a change in any of these government policies could further negatively impact our operations. The Chinese government recently signaled a return to a managed appreciation of the Renminbi against the dollar. Appreciation or depreciation in the value of the Renminbi to the U.S. dollar would affect our financial results reported in U.S. dollar terms without any underlying change in our business or results of operations.

Very limited hedging instruments are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to use some hedging instruments in the future, the availability and effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure at all.

We may have limited legal recourse under Chinese law if disputes arise under our contracts with third parties.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. In 1979, the Chinese government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past 30 years has significantly enhanced the protections afforded to various forms of foreign investment in China. However, Chinese laws, regulations and legal requirements are constantly changing, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to us and our foreign investors, including you. In addition, we cannot predict the effect of future developments in the Chinese legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws.

The Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, our experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. Our current business operations may be subject to the implementation, interpretation and enforcement of China’s laws by courts or governmental agencies. The resolution of any such matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to enact specific performance, or to seek an injunction under Chinese law, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations.

Our business may be adversely affected by Chinese government directives and regulations.

Growth of the solar energy market, particularly for on-grid applications, depends largely on the availability and size of government subsidies and economic incentives. Until the Chinese government’s subsidies and economic incentives for on-grid and off-grid solar energy applications for specific provinces and regions are determined, we are not able to predict the future demand, if any, for our products. Globally speaking, the growth of many large solar markets, including Germany, Spain and the United States, depends in part on the availability and amounts of government subsidies and economic incentives. In China, the solar market is still in the early development stage and the Chinese government subsidies policies or other incentive programs have not been clearly specified. Although incentive policy trends, such as special government funding and tax credits, are emerging, significant uncertainty still exists. The Chinese government may decide to reduce or eliminate any of these economic incentives for political, financial or other reasons. Any reduction or elimination of these subsidies or incentives would have a materially adverse impact to the solar energy market in China and our financial performance.

Risks Associated with Investing in Our Common Stock.

Our stock price has been and may continue to be volatile.

The price of our common stock has been volatile, ranging from a high of US$3.83 to a low of US$1.71 during the period from January 1, 2010 to June 24, 2011. On June 24, 2011, the closing price of our common stock on Nasdaq was US$1.80 per share. Factors such as variations in our revenue, earnings and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and fluctuations in market prices for our products could cause the market price of our common stock to change substantially. In addition, many factors that we cannot control affect our stock price, including the global financial markets and the confidence of the investment community. Any of these factors may result in large and sudden changes in the volume and price at which our common stock trades. Accordingly, we expect that the price for our common stock on Nasdaq will continue to be volatile in the future.

Our internal controls have been deficient historically and require improvement. If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our common shares may be adversely impacted.

We are subject to reporting obligations under the US securities laws and, under the Sarbanes-Oxley Act of 2002, are required to include our management’s assessment of our internal controls over financial reporting in our annual report. In addition, if we’re classified as accelerated filer or large accelerated filer, as defined by the SEC, in future years, our independent registered public accounting firm must attest to, and report on, the effectiveness of our internal controls over financial reporting.

As of December 31, 2010, our disclosure controls and procedures were not effective because our management has identified material weaknesses in our internal control over financial reporting, which are described in more detail in Item 15T “Controls and Procedures.” We plan to take steps to improve our internal and disclosure controls to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. However, if we are unable to address the existing deficiencies in our existing internal and disclosure controls and procedures, or if we fail to maintain an effective system of internal controls in the future, we may be unable to accurately report our financial results or prevent fraud and as a result, investor confidence and the market price of our common stock may be adversely impacted. We could also become subject to regulatory investigations and sanctions by regulators such as the Securities and Exchange Commission.

The sale or availability for sale of substantial amounts of our common stock could adversely affect the market price of our common stock.

We have issued a significant number of shares of common stock and warrants to purchase shares of common stock in connection with the following transactions:

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

We may require additional cash resources due to changes in business conditions or other future developments, and we may need to obtain additional funds through issuance by us or by one or more of our subsidiaries of new equity or debt securities. We have an effective registration statement on Form F-3 pursuant to which we may offer and sell common stock at any time and from time to time in one or more offerings for a maximum aggregate offering price of up to US$30.0 million. The sale of additional equity or convertible debt securities could result in substantial dilution to our shareholders. Sales of substantial amounts of our common stock or convertible debt securities in the future, or the perception that these sales could occur, could adversely affect the market price of our common stock and could materially impair our future ability to raise capital through offerings of our common stock or convertible debt securities.

Rights of shareholders under British Virgin Islands law may be less than those of shareholders in U.S. jurisdictions.

Our corporate affairs are governed by our Memorandum and Articles of Association and by the International Business Companies Act of the British Virgin Islands. Principles of law relating to such matters as the validity of corporate procedures, the fiduciary duties of our management, directors and controlling shareholders and the rights of our shareholders differ from those that would apply if we were incorporated in a jurisdiction within the United States. Further, the rights of shareholders under British Virgin Islands law are not as clearly established as the rights of shareholders under legislation or judicial precedent in existence in most United States jurisdictions. Thus, you may have more difficulty in protecting your interests in the face of actions by the management,

directors or controlling shareholders than you might have as a shareholder of a corporation incorporated in a United States jurisdiction.

Under the laws of most jurisdictions in the United States, majority and controlling shareholders generally have certain “fiduciary” responsibilities to the minority shareholders. Shareholder action must be taken in good faith and actions by controlling shareholders which are obviously unreasonable may be declared null and void. British Virgin Islands law protecting the interests of minority shareholders may not be as protective in all circumstances as the law protecting minority shareholders in United States jurisdictions. In addition, in most United States jurisdictions, directors owe a fiduciary duty to the corporation and its shareholders, including a duty of care, pursuant to which directors must properly apprise themselves of all reasonably available information, and a duty of loyalty, pursuant to which they must protect the interests of the corporation and refrain from conduct that injures the corporation or its shareholders or that deprives the corporation or its shareholders of any profit or advantage. Many United States jurisdictions have enacted various statutory provisions which permit the monetary liability of directors to be eliminated or limited. Under British Virgin Islands law, liability of a corporate director to the corporation is basically limited to cases of willful malfeasance in the performance of his duties or to cases where the director has not acted honestly and in good faith and with a view to the best interests of the corporation.

We do not know whether the courts of the British Virgin Islands would enforce, either in an original action or in an action for enforcement of judgments of United States courts, liabilities that are predicated upon the securities laws of the United States.

As a foreign private issuer for purposes of U.S. securities laws, we are not subject to certain rules promulgated by Nasdaq that other Nasdaq-listed issuers are required to comply with.

Our common stock is currently listed on the Nasdaq Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by Nasdaq applicable to listed companies. As permitted under Nasdaq rules applicable to foreign private issuers, we are exempt from compliance with the following Nasdaq rules:

	•		our independent directors do not hold regularly scheduled meetings in executive session;
	•		the compensation of our executive officers is not determined by an independent committee of the board or by the independent members of the board of directors, and our CEO may be present and participate in the deliberations concerning his compensation;
	•		related party transactions are not required to be reviewed or approved by our audit committee or other independent body of the board of directors; and
	•		we are not required to solicit shareholder approval of stock plans (including those in which our officers or directors may participate), stock issuances that will result in a change in control, the issuance of our stock in related party transactions or other transactions in which we may issue 20% or more of our outstanding shares or below market issuances of 20% or more of our outstanding shares to any person.

As of the date of this Annual Report on Form 20-F, we have partially complied with the foregoing rules and we may voluntarily comply with one or more of the foregoing provisions in the future.

Some information about us may be unavailable due to exemptions under applicable US securities laws for a foreign private issuer.

We are a foreign private issuer for purposes of US securities laws. As such, we are exempt from certain provisions applicable to United States domestic public companies, including:

	•		the rules under the Securities Exchange Act of 1934, as amended, or Exchange Act, requiring the filing with the Securities and Exchange Commission, or SEC, of quarterly reports on Form 10-Q or current reports on Form 8-K;
	•		the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;
	•		the provisions of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and
	•		the provisions of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

Because of these exemptions, investors are not provided with the same information which is generally available about domestic public companies organized in the United States.

Item 4. Information on the Company

A. History and development of the Company.

Our legal and commercial name is China Technology Development Group Corporation, and our company is often referred to as CTDC. Our company was incorporated as an International Business Company under the laws of the British Virgin Islands on September 19, 1995. Our company was formerly known as Tramford International Limited, and we changed our name to China Technology Development Group Corporation in November 2005. Our registered office is located at P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands, where only corporate administrative matters are conducted through our registered agent, Harneys Corporate Services Limited. Our principal executive office is located at Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong, and our telephone number is (852) 31128461. Our primary internet website is www.chinactdc.com .

China Technology Investment Group Limited (formerly known as China Biotech Holdings Limited), or CTIG, has been the largest shareholder of our company since January 2007. On November 27, 2006, CTIG entered into a subscription agreement with us to purchase 1,500,000 shares of our common stock and entered into a share purchase agreement with Beijing Holdings Limited to acquire 2,000,000 shares of our common stock. The transactions were completed on January 12, 2007. To the best of our knowledge as of the date of this Annual Report, CTIG holds 4,132,168 shares of common stock and 1,000,000 shares of series A preferred stock of our company.

Prior Operations

We previously owned, through our wholly owned Hong Kong subsidiaries, Jing Tai Industrial Investment Company Limited which was subsequently renamed BHL Solar Technology Company Limited, or BHLHK and Jolly Mind Company Limited, or Jolly Mind, a 95% equity interest in each of Linyi Baoquan Bathtub Company Limited, or Baoquan, and Linyi Xinhua Building Ceramics Company Limited, or Xinhua. We refer to Baoquan and Xinhua together as the Sanitary Wares and Ceramics Operations. The Sanitary Wares and Ceramics Operations were Sino-foreign equity joint ventures incorporated under the laws of China. A wholly owned subsidiary of BHLHK, Beijing Taigong Sanitary Wares Company Limited, or Taigong, was also incorporated in Beijing in 1997 under the laws of China as the administrative and sales support office of our Sanitary Wares and Ceramics Operations.

Pursuant to a sale and purchase agreement entered into by BHLHK, Shandong Linyi Industrial Enamel Joint Stock Company, or Linyi Industrial, Jolly Mind and Shandong Luozhang Group Company, or Shandong Luozhang, on July 2, 1999, BHLHK sold its 60% interests in each of the Sanitary Wares and Ceramics Operations to Shandong Luozhang for cash consideration of Rmb28 million. Pursuant to a share purchase agreement dated July 2, 1999 entered into between our company and Linyi Industrial, we sold all of our interest in Jolly Mind, which owned a 35% interest in each of the Sanitary Wares and Ceramics Operations, to Linyi Industrial in exchange for 1,952,291 shares of our common stock which was held by Linyi Industrial. Taigong was voluntarily dissolved in March 2000.

On June 30, 2000, Jingle Technology Co. Ltd., or Jingle, our wholly owned subsidiary incorporated in the British Virgin Islands, entered into an agreement with China Internet Technology Co. Ltd., or China Internet, and Great Legend Internet Technology and Service Co.Ltd., or Great Legend, to acquire all outstanding shares of BHL Networks Technology Co. Ltd., or BHLNet, a company incorporated under the laws of the Cayman Islands, which owns a 76% interest in Beijing BHL Networks Technology Co. Ltd., or BBHL, a company incorporated under the laws of China.

On October 31, 2005, we acquired from Beijing Holdings a 51% equity interest in China Natures Technology Inc., or CNT, and on December 22, 2005, we exercised an option to acquire from Beijing Holdings the remaining 49% equity interest of CNT. As a result, CNT became a wholly owned subsidiary of our company. CNT owned an approximately 71% interest in Zhejiang University (Hangzhou) Innoessen Bio-technology Inc., or Zhejiang Innoessen, the head office of CNT’s research and development and sale and marketing functions. CNT was incorporated in the British Virgin Islands on January 28, 2003. CNT, Zheijiang Innoessen and Anji Bio were principally engaged in the development, manufacturing and marketing of a series of nutraceutical products utilizing bio-active components of bamboo.

Commencing in February 2006, we had a dispute with the then general manager and the minority shareholders of Anji Bio, or Anji Buyers, regarding its future development strategy. Consequently, Zhejiang Innoessen entered into a memorandum with Anji Buyers on July 27, 2006, which we refer to as the Anji Memorandum, pursuant to

which our entire interest in Anji Bio held by Zhejiang Innoessen would be sold to Anji Buyers. The disposal of Anji Bio was not completed by September 30, 2006, which as the original completion date set forth in the Anji Memorandum, due to difference in interpretation of settlement terms between our company and the Anji Buyers. During the fourth quarter of 2006, we continued to negotiate with the Anji Buyers on settlement terms. However, the Anji Buyers refused to cooperate with us again in executing the Anji Memorandum. In view of the fact that we could not exert operational and financial control over Anji Bio and the fact that the property, plant and equipment had been idle for an extended period without regular and proper maintenance, on December 29, 2006 our management decided to abandon Anji Bio and discontinue our nutraceutical operation. Our management approved the disposal of our nutraceutical operations on April 23, 2007.

On April 27, 2007, we entered into a sale and purchase agreement with Win Horse Investments Limited, or Win Horse, to dispose of our entire interest in CNT for cash consideration of HK$10 million. The agreement was subsequently terminated due to the fact that we received no payment from Win Horse. On December 18, 2007, we entered into a sale and purchase agreement with Total Trump Limited, or Total Trump, an independent party, to dispose of our entire interest in CNT for consideration of HK$10 million and we received a deposit of HK$1 million on the same date. As of December 31, 2007, Total Trump was legally entitled to all right, title and interest of CNT. In April 2008, Total Trump informed us of its financial inability to settle the remaining balance of the consideration amount of HK$9 million, or the Unpaid Consideration, on or before June 30, 2008 as required under the sales and purchase agreement. CTIG, our company’s major shareholder, signed a memorandum with our Company to commit additional resources, on an unconditional best efforts basis, to streamline our core business to the solar energy business. In addition, CTIG agreed to assume all payment obligations of the Unpaid Consideration due from Total Trump by entering into an Assignment Agreement with Total Trump on May 8, 2008. The Unpaid Consideration assumed by CTIG was fully paid on June 16, 2008. Our management considered the above transactions as two separate transactions even though they were related to the same disposed business unit due to the fact that Total Trump and CTIG were two separate parties. The HK$1 million deposit received from Total Trump was considered as forfeited by Total Trump. The HK$9 million received from CTIG on June 16, 2008 was recorded as shareholders’ contribution in the additional paid-in capital in shareholders equity for the fiscal year ending December 31, 2008. The additional paid-in capital did not have a dilutive effect on our shareholders.

In April 2008, our Board of Directors decided to discontinue certain non-operational BVI subsidiaries in order to focus on our solar energy operations. On April 21, 2008, we disposed of Green Energy Industry Ltd., including its subsidiaries Fullwing Ltd. and Margot Ltd., to Harvest Time International Holdings Ltd., an independent third party, for a cash consideration of HK$10,000. China Green Food Investment Ltd., Wellknown Ltd. and Green China Club Ltd., which have no business operations and act merely as holding vehicles, are struck off the register according to the board resolution on April 15, 2008. Under the BVI International Business Act, an inactive private company may apply to the Registrar to be struck off the Register. If the company is struck off continuously for more than ten years, it will be deemed to have been dissolved, provided that within the ten-year period creditors or others can apply for the restoration of the company to the Register.

On December 29, 2008, we entered into a sale and purchase agreement to sell our wholly-owned subsidiary Jingle and its subsidiaries, BHLNet and BBHL, to Sentron Enterprises Limited, an independent party, for cash consideration of HK$0.2 million. Upon the completion of the transaction on February 16, 2009, we disposed all of our non-core business and concentrate all of resources on the strategic expansion in the solar business.

Solar Energy Operations

In 2007, our Company was restructured to engage in the business of developing and manufacturing solar energy products, which we refer to as our Solar Energy Operations.

On December 10, 2007, we acquired Faster Assets Limited, or Faster Assets, from CTIG. Faster Assets is incorporated under the laws of British Virgin Islands and owns China Merchants Zhangzhou Development Broad Shine Solar Technology Ltd., or Broad Shine, which was incorporated in China to conduct the Solar Energy Operations. We refer to Faster Assets and Broad Shine together as the Faster Group. In return, we issued 782,168 common shares and 1,000,000 preferred shares to CTIG as consideration valued at Rmb20.7 million. Prior to the acquisition, Faster Group had no business activities and its major assets and liabilities were cash of Rmb5.78 million, plant of Rmb16.70 million, land use right of Rmb4.00 million and balance due to a related party of Rmb5.78 million. Accordingly, this transaction has been accounted for as an acquisition of assets.

On October 27, 2009, we entered into a stock purchase agreement with China Technology Solar Power Holdings Limited, or CTSPHL Group, and its direct and indirect shareholders to acquire a 51% equity interest in CTSPHL Group which, through its wholly-owned subsidiary, is developing a 100 megawatt grid-connected solar power plant project located in Qinghai Province, China. Upon execution of the stock purchase agreement, we paid US$3.0 million in cash to CTSPHL Group as a prepayment for the transaction to be solely used for developing and constructing the solar power plant. Our technical team consisting three engineers worked with CTSPHL Group on site to develop the solar power plant since our execution of the agreement. Completion of the proposed transaction was subject to a number of conditions, including receipt of an independent valuation report. However, due to the

fact that the Chinese government has not determined the specific subsidies and incentives for on-grid solar energy applications for Qinghai Province, we encountered in difficulties in determining the fair value of the solar power plant. Accordingly, on October 11, 2010, we entered into an agreement with CTSPHL Group to terminate the stock purchase agreement.

In May 2010, we commenced the establishment of a new factory at our production base to produce solar modules and by the end of 2010, the factory was already in operation and had an annual production capacity of 65MW. In November 2010, we acquired Linsun Renewable Energy Corporation Limited, including its wholly-owned subsidiary Linsun Power Technology (Quanzhou) Corp. Ltd., which is manufacturing crystalline PV modules in China and exporting its solar products to the European market. In March 2011, we incorporated LSP Solar GmbH, a company with limited liability, in Munich, Germany, to expand our sales network in Europe. We aim to expand our aggregate production capacity of crystalline PV modules to 300MW by the end of 2012.

The following diagram illustrates our corporate structure as of the date of this Annual Report:

B. Business overview.

Company Overview

We are a provider of solar energy products and solutions in China. Founded in September 1995, we were formerly engaged in sanitary wares and ceramic tiles manufacturing, system integration services, network security services and related software development, and manufacturing and marketing of a series of nutraceutical products utilizing bio-active components of bamboo. In 2007, we decided to pursue a different line of business principally engaging in the development of eco-friendly technologies and products, which we refer to as the green industry. In September 2007, we entered into the solar industry by manufacturing SnO2 solar base plates, which are a type of transparent conductive oxide, or TCO, glass. TCO glass is a key component of thin-film solar cells. In 2009, we participated in preliminary design and development of the grid-connected solar power plant located in Qinghai Province, China. In 2010, we commenced manufacturing solar modules from monocrystalline and multicrystalline solar cells.

Our company is headquartered in Hong Kong with production and distribution facilities, together with research and development capability, strategically located in Fujian Province, China.

Business Strategy

Our strategic business goal is to become a leading renewable energy application solution provider. We intend to achieve our strategic business goals primarily through the following strategies:

•

Capitalize upon future growth of solar market in China. Since 2008, we have devoted our resources to developing solar application projects in China. The Chinese government has supported solar power electricity generation through a variety of recent policy measures. We believe these measures will stimulate the growth of the solar market in China. We plan to continue to devote our financial, human

and technical resources to develop building-integrated photovoltaic, or BIPV, systems and solar power plants in the Chinese market.

	•		Improve manufacturing technology and process through continuous innovation. We have established a technical engineering team with strong research and development capabilities. We have developed and supplied transparent solar modules for two on-grid solar power plants in Italy. The transparent solar module which have both a nice appearance and high transparency, is particularly suitable for BIPV projects. We plan to continue to devote substantial resources to our research and development efforts in order to optimize our manufacturing technology and processes with an emphasis on improving our throughput, efficiency and product performance.
	•		Leverage our access to low cost resources to reduce manufacturing and operating costs while providing reliable solar products and services. As a China-based solar company, we believe that we enjoy cost advantages, including convenient access to low-cost technical expertise, labor, land and facilities, over some of our competitors. In response to the impact posed by the global economic environment, we plan to leverage our competitive cost advantage to further reduce our manufacturing and operating costs while providing reliable solar products and services.
	•		Expand our customer base and develop our solar markets. We intend to expand the customer base and sales channels for our solar business both within and outside China. Our marketing and sales strategy is based on the formation of strategic relationships with key partners, including solar module distributors and solar farm developers. We believe that we have the potential to ultimately serve as a provider of high value-added solar products and solutions to our strategic partners.
	•		Implement acquisition growth strategy in the green energy industry. We intend to expand our solar business through acquisitions of complementary companies and technologies. We believe acquisitions will enable our Company to complete the solar industry value chain integration and become an integrated platform for solar energy products and applications. We intend to evaluate potential acquisition targets through the following factors: (a) capability for technology development and innovation; (b) distribution channels for end-products; (c) revenues and cash-in flow; and (d) growth potential in the industry.

Our Products and Services

Our major products are solar modules for electricity generation and the related application products, such as solar power stations, solar home systems, solar lighting and solar chargers. Solar modules are assemblies of solar cells which are electrically interconnected and encapsulated in a weatherproof panel. Solar cells are semiconductor devices that directly convert sunlight into direct current electricity. We produce a variety of solar modules ranging from 5 to 280 watts in power.

We’re involved in the solar system integration and solar plant development and plan to continue to expand our business into overseas markets. We design and install on-grid and off-grid solar systems used in lighting for outdoor public facilities and in commercial buildings. Our service with respect to solar system integration includes engineering, procurement of equipment, construction management, monitoring and maintenance. We work with our strategic partners to develop solar power plants. The power plant development process involves evaluation of sites, obtaining land rights, building, construction and grid-interconnection permits, licenses and approvals from local authorities, construction of the plant, operation and maintenance.

Sources of raw materials

The main raw material required in our manufacturing process is solar cells. We secure the supply of solar cells by forming strategic partnership with the major cells suppliers in China. Other raw materials include ribbon, back sheet, ethylene vinyl acetate, or EVA, connecting systems and aluminum alloy framing and diodes. We believe that all of these raw materials can be purchased on the open market in China from multiple vendors at competitive prices.

Sales and Marketing

We sell solar products through our direct sales personnel to residential, commercial, industrial utilities and power plant developers. Our marketing programs include solar exhibitions, electronic commerce, technology conferences and seminars, advertisement in magazines and newspapers and public relations campaigns. We are developing customer relationships in the Chinese market and other geographic regions to increase our sales.

Intellectual Property

In manufacturing our solar products, we use know-how available in the public domain as well as unpatented know-how developed in-house. We rely on a combination of trade secrets and employee contractual protections to establish and protect our proprietary rights. We believe that many elements of our solar products and manufacturing processes involve proprietary know-how, technology or data that is not coverable by patents or patent applications, including technical processes, equipment designs and procedures. We have taken security measures designed to protect these elements. Substantially all of our research and development personnel have entered into confidentiality and proprietary information agreements with us. These agreements address intellectual property protection issues and require our employees to assign to us all of the inventions, designs and technologies they develop during the course of employment with us.

As of the date of this Annual Report, we have one issued patent and one patent application pending in China, both of which relate to technology we are currently using.

We have pending trademark registration applications for the logos “LSP” and “Linsun Power” in the EU and we have also filed a trademark registration application for the logo “LSP” in the United States.

Our Group has not been subject to any material intellectual property claims.

Competition

In the production of solar modules, our direct competitors include Suntech Power Holdings, Trina Solar Limited and Yingli Green Energy Holding Company Limited, all of which are well known public companies in the solar industry.

Consistent with our business strategy, we plan to develop solar plant projects and expect to offer solar electricity solutions to electric grids in Europe, and we also expect to face competition from other providers of renewable energy solutions, including developers of photovoltaic, solar thermal and concentrated solar power systems, and developers of other forms of renewable energy projects.

Regulation

The most significant regulations or requirements that affect our business activities in China and our shareholders’ right to receive dividends and other distribution from us are summarized below.

      Renewable Energy Law and Other Government Directives

In February 2005, China enacted its Renewable Energy Law, which became effective on January 1, 2006. The Renewable Energy Law sets forth the national policy to encourage and support the development and use of solar and other renewable energy and the use of on-grid generation. It authorizes the relevant government authorities to set favorable prices for the purchase of electricity generated by solar and other renewable power generation system.

The law also sets forth the national policy to encourage the installation and use of solar energy water-heating systems, solar energy heating and cooling systems, solar photovoltaic systems and other solar energy utilization systems. In addition, the law provides financial incentives, such as national funding, preferential loans and tax preferences for the development of renewable energy projects.

In January 2006, the PRC National Development and Reform Commission promulgated two implementation directives with respect to the Renewable Energy Law. These directives set forth specific measures relating to pricing of electricity generated by solar and other renewal power generation systems and sharing by all utility end-users of certain costs incurred by solar and other renewal power.

On March 23, 2009, China’s Ministry of Finance promulgated the Interim Measures for Administration of Government Subsidy Funds for Application of Solar Photovoltaic Technology in Building Construction, or the Interim Measures, to support the demonstration and the promotion of solar photovoltaic application in China. Local governments are encouraged to issue and implement supporting policies for the development of solar photovoltaic technology. Under these Interim Measures, the Ministry of Finance provides subsidies for projects with individual solar installations that are greater that 50 kilowatt-peak in size and have more than 16% conversion efficiency for monocrystalline photovoltaic products, more than 14% conversion efficiency for multicrystalline photovoltaic products and more than 6% conversion efficiency for amorphous silicon photovoltaic products, and gives priority support to solar photovoltaic technology integrated into building construction, grid-connected solar photovoltaic building applications and some public photovoltaic building applications such as schools, hospitals and offices. For 2009, the standard subsidy is set at RMB20 per watt in principle and the detailed standard is to be determined by factors including, but not limited to, the level of

integration of buildings with photovoltaic and the technology of photovoltaic products. The Interim Measures do not apply to projects completed before March 23, 2009, the promulgation date of the Interim Measures.

On April 16, 2009, the General Offices of the PRC Ministry of Finance and the PRC Ministry of Housing and Urban-Rural Development jointly issued the Guidelines for Declaration of Demonstration Project of Solar Photovoltaic Building Applications. These guidelines set the subsidy given out in 2009 to qualified solar projects at no more than RMB20 per watt for projects involving the integration of photovoltaic components into buildings’ structural elements and at no more than RMB15 per watt for projects involving the installation of photovoltaic components onto building rooftops and wall surfaces.

      Environmental Regulations

We are subject to a variety of governmental regulations related to the storage, use and disposal of hazardous materials. The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Law on the Prevention and Control of Water Pollution, the PRC Implementation Rules of the Law on the Prevention and Control of Water Pollution, the PRC Law on the Prevention and Control of Air Pollution, the PRC Law on the Prevention and Control of Solid Waste Pollution and the PRC Law on the Prevention and Control of Noise Pollution.

      Restriction on Foreign Investments

The principal regulation governing foreign ownership of solar power business in China is the Foreign Investment Industrial Guidance Catalogue, updated and effective as of December 1, 2007. Under this regulation, the solar power business is listed as an industry with foreign investments permitted.

      Tax

We are a tax exempted company incorporated in the British Virgin Islands. Our subsidiaries incorporated in Hong Kong and PRC are subject to Hong Kong Profits Tax and Enterprise Income Tax in the PRC, respectively.

Our subsidiaries incorporated in Hong Kong were subject to a tax rate of 16.5% in 2008, 2009 and 2010 on the assessable profits arising in or derived from Hong Kong. For those Hong Kong subsidiaries which generate PRC sourced income, PRC income tax was payable on the assessable profits at a rate of 25% in 2008, 2009 and 2010.

On March 16, 2007, the National People’s Congress adopted the Enterprise Income Tax Law, or New Income Tax Law, which became effective on January 1, 2008 and replaced the previous separate income tax laws for domestic enterprises and foreign-invested enterprises (including PRC subsidiaries of our company) by adopting a unified income tax rate of 25% for most enterprises. In accordance with the implementation rules of the New Income Tax Law, the preferential tax treatments previously granted to various of our PRC subsidiaries will not continue and those subsidiaries will be subject to the statutory 25% tax rate. The 25% tax rate has been used in the calculation of our deferred tax balances, except for Shenzhen Helios Energy and Zhangzhou Trendar. The tax rate for Shenzhen Helios Energy was 20% in 2009 and 22% in 2010, and will increase to 24% in 2011 and 25% in 2012. Among our PRC subsidiaries, only Zhangzhou Trendar obtained the preferential tax treatment that it is fully exempt from the PRC enterprise income tax for 2008 and 2009, followed by a 50% tax exemption for 2010 through 2012.

Since all the PRC subsidiaries of the Company reported accumulated deficits up to December 31, 2010, no provision for PRC dividend withholding tax has been made. Upon distribution of any future earnings in the form of dividends or otherwise in the future, the Group would be subject to the respective tax rate under PRC Enterprise Income Tax Law issued by the State Council.

The Group concluded that it does not have any material uncertain tax positions for the years 2008, 2009 and 2010. The Group classifies interest and/or penalties related to unrecognized tax benefits as a component of income tax provisions; however, for the years ended December 31, 2008, 2009 and 2010, there were no interest and penalties related to uncertain tax positions, and the Group had no material unrecognized tax benefit which would affect the effective income tax rate in future periods. The Group does not anticipate any significant increases or decreases to its liability for unrecognized tax benefits within the next twelve months. For our PRC subsidiaries, the years 2004 to 2010 remain subject to examination by the PRC tax authorities. For the Company’s Hong Kong subsidiaries, their respective tax positions are subject to inspection for the years 2004 to 2010 by the Hong Kong tax authorities.

C. Organizational structure.

The following table set forth the details of our significant subsidiaries as at the date of this Annual Report:

				Country of		Ownerships
Name		Function		Incorporation		Interest				Direct Parent
BHL Solar Technology Company Limited, or BHLHK (formerly named as BHL Networks Technology Co.Ltd.)		cash management vehicle		Hong Kong			100	%		Company
Linsun Renewable Energy Corporation Limited		sale of solar products		Hong Kong			100	%		China Green Holdings Ltd.
Sino Solar Technology (HK) Limited		cooperation with HK companies and institutions		Hong Kong			100	%		Southwick International Ltd.
LSP Solar GmbH		sale and marketing office in Europe		Germany			100	%		China Green Investment Group Ltd.
Shenzhen Helios New Energy Technology Limited, or Shenzhen Helios Energy (formerly named as Shenzhen Innoessen Biotech Inc.)		management, sale and marketing office in southern China		China			100	%		Southwick International Ltd.
Linsun Power Technology (Quanzhou) Corp. Ltd.		manufacturing solar modules		China			100	%		Linsun Renewable Energy Corporation Limited
China Merchants Zhangzhou Development Zone Trenda Solar Ltd.or Zhangzhou Trenda		research and development		China			100	%		Trenda International Ltd.
China Merchants Zhangzhou Development Zone Trendar Solar Tech Ltd., or Zhangzhou Trendar Tech		manufacturing solar modules		China			100	%		Sinofield Group Ltd.
China Merchants Zhangzhou Development Zone Broad Shine Solar Technology Limited, or Broad Shine		owning plant and properties		China			100	%		Faster Assets Limited

D. Property, plants and equipment.

Our principal executive office is located at Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong. Our five-year lease for this property commenced on June 30, 2010 and terminates on June 29, 2015. Our monthly rent for this property is HK$110,000, and we occupy approximately 4,400 square feet of space.

Broad Shine owns a five-story plant at China Merchants ZhangZhou Development Zone in China. The total area is 11,895 square meters, primarily occupied by our solar energy operations. Linsun Power Technology (Quanzhou) Corp. Ltd. leases a plant with area of 2,535 square meters at Jinjiang Economic Development Zone in China from December 10, 2009 to December 9, 2014. The current monthly rent is RMB25,353 and will increase 5% per annum from December 15, 2011 in accordance with the existing tenancy agreement.

We believe that our physical facilities are adequate to conduct our business for the next 12 months. We have not, to our knowledge, violated any environmental laws, ordinances or regulations, and believe that all of our operations comply with applicable environmental laws in all material respects.

Item 4A.		Unresolved Staff Comments

     Not Applicable.

Item 5.		Operating and Financial Review and Prospects

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in this Annual Report. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties described in Item 3.D “Risk Factors”. All financial data referred to in the following discussion have been prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP.

Critical accounting policies and estimates

US GAAP requires that we adopt accounting policies and make estimates that our management believes are appropriate under the circumstances for the purposes of providing a true and fair view of our results of operations and financial condition. Our significant accounting policies are set forth in Note 2 to our consolidated financial statements. Different policies, estimates and assumptions in critical areas could lead to materially different results. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. We believe the following critical accounting policies may be affected by our judgments and estimates used in the preparation of these consolidated financial statements.

Business combinations

The Group accounts for its business combinations using the purchase method of accounting. This method requires that the acquisition cost to be allocated to the assets, including separately identifiable intangible assets, and liabilities the Group acquired based on their estimated fair values.

The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets and forecasted life cycle and forecasted cash flows over that period. Although the Company believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from the forecasted amounts and the difference could be material.

Impairment on available-for-sale securities

In accordance with ASC 320 (formerly SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”), we review our investment in available-for-sale securities, or AFS securities, for potential impairment based on the following factors: the length of the time and extent to which the market value has been below investment cost; the financial condition and near-term prospects of the issuer of AFS securities; and our intent and ability to retain AFS securities for a period of time sufficient to allow for any anticipated recovery in market value. If we determine that the impairment is other than temporary, we will recognize an impairment loss in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment becomes the new cost basis of the investment and will not be adjusted for subsequent recoveries in fair value. During the years ended December 31, 2008, 2009 and 2010, we recognized Rmb15.2 million, Nil, Rmb3.5 million impairment on AFS securities respectively.

Impairment or disposal of long lived assets

In accordance with ASC360-10-35 (formerly referred to SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”), we assess long-lived assets for impairment when events and circumstances exist that indicate the carrying amount of these assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the amount the carrying value exceeding the fair value of the asset. We recognized no impairment charge for the year ended December 31, 2008. Impairment of property, plant and equipment of RMB6,463 and Rmb591 was recognized for the years ended December 31, 2009 and 2010, respectively. It was primarily related to planned abandonment of the operations of an asset group relating to an SnO2 production line operated by China Merchants Zhangzhou Development Zone Trenda Solar Ltd., a subsidiary of the Group in the PRC.

Long-lived assets to be disposed of are stated at the lower of fair value less cost to sell or carrying amount. Expected future operating losses from discontinued operations are recorded in the periods in which the losses are incurred.

Stock-based compensation

We grant stock options to our employees and certain non-employee consultants under our stock option plans. We follow ASC 718 (formerly referred to as SFAS No. 123 (revised 2004) “Share-Based Payment”), whereby entities are required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period during which an employee is required to provide service, known as the requisite service period (usually the vesting period), in exchange for the award. The grant -date fair value of employee share options and similar instruments are estimated using a Binomial Model. If an equity award is modified after the grant date, incremental compensation cost is recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

The determination of the fair value of share options on the grant date using a Binomial Model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including our expected stock price volatility over the vesting period, the risk-free interest rate, the expected dividend yield and actual and projected employee stock option exercise behavior. Furthermore, we are required to estimate forfeitures at the time of the grant and recognize stock-based compensation expense only for those awards that are expected to vest. If actual forfeitures differ from those estimates, we may need to revise those estimates used in subsequent periods.

In accordance with ASC 718, we have elected to recognize share-based compensation expenses, net of a forfeiture rate, using the straight-line method for awards with graded vesting features and service conditions only, and using the graded-vesting attribution method for awards with graded vesting features and performance conditions.

Warrants and option rights

In accordance with ASC 815 (formerly contained in FAS133 and EITF00-19 ), we had accounted for a certain warrant, or Warrant A, and option rights as equity instruments and another warrant, or Warrant B, as a liability instrument during the year ended December 31, 2008 and for the six months ended June 30, 2009. Accordingly, Warrant B was carried at fair value at each reporting date with changes in fair value being recorded in the statements of operations. In connection with the audit of our financial statements for the year ended December 31, 2009 and the adoption of ASC 815-40-15 (earlier referred to as EITF 07-5) as of January 1, 2009, Warrant A and option rights were reclassified as liabilities as Warrant A contains a reset feature whereby the exercise price would be reset to the market price if the market price is lower than the exercise price at a specified date and option rights contain similar features whereby the number of shares to be finally issued under option rights are not fixed. Following the guidance under ASC 815-40-15, we have recorded the cumulative effect of such change as an adjustment to the opening balance of retained earnings. Going forward, warrants and option rights will be carried at fair value at each reporting date with changes in fair value being recorded in the statements of operations. The fair values of the warrants and option rights are estimated using a Binomial Model and Monte Carlo simulation. The reclassification of Warrant A and option rights as liabilities resulted in an increase of Rmb0.27 in net loss per share from Rmb2.42 to Rmb2.69 for the year ended December 31, 2009. In 2010, the Company continued to classify Warrant A and option rights as liabilities and recorded the change in fair value in statements of operations for the year ended December 31, 2010.

The determination of the fair value of warrants on the grant date using a Binomial Model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including our expected stock price volatility over the exercise period, the risk-free interest rate, the expected dividend yield and actual and

projected exercise behavior. If actual results differ from those estimates, we may need to revise those estimates used in subsequent valuations (see Note 12 to the consolidated financial statements).

Convertible note

Upon issuance of a convertible note and for the six months ended June 30, 2009, we separately accounted for the liability and the equity components in a manner that reflected our non-convertible debt borrowing rate under APB 14-1. In connection with the audit of our financial statements for the year ended December 31, 2009, we reclassified the conversion option as a derivative liability in accordance with ASC 815, which had no impact on our net loss per share for the year ended December 31, 2009. The fair value of the embedded derivative is estimated using a Binomial Model (see Note 12 to the consolidated financial statements). In November 2009, the convertible note was entirely exchanged for the Company’s common stock. No convertible note was issued in the year ended December 31, 2010.

Recent accounting pronouncements

In March 2010, the FASB issued Accounting Standards Update 2010-11 (ASU 2010-11), “Derivative and Hedging (Topic 815).” All entities that enter into contracts containing an embedded credit derivative feature related to the transfer of credit risk that is not only in the form of subordination of one financial instrument to another will be affected by the amendments in this Update because the amendments clarify that the embedded credit derivative scope exception in paragraph 815-15-15-8 through 15-9 does not apply to such contracts. ASU 2010-11 is effective at the beginning of the reporting entity’s first fiscal quarter beginning after June 15, 2010. The provisions of ASU 2010-11 did not have a material effect on our consolidated financial statements.

In April 2010, the FASB issued ASU 2010-13, Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in which the Underlying Equity Security Trades—Updates the guidance in ASC 718, Compensation—Stock Compensation, to clarify that share-based payment awards with an exercise price denominated in the currency of a market in which a substantial portion of the underlying equity security trades should not be considered to meet the criteria requiring classification as a liability. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. Early adoption is permitted. We are currently evaluating the potential impact, if any, on our consolidated financial statements.

In April 2010, the FASB issued Update No. 2010-17, or ASU 2010-17, “Revenue Recognition—Milestone Method”, which updates the guidance currently included under topic 605, Revenue Recognition. ASU 2010-17 provides guidance on defining the milestone and determining when the use of the milestone method of revenue recognition for research or development transactions is appropriate. It provides criteria for evaluating if the milestone is substantive and clarifies that a vendor can recognize consideration that is contingent upon achievement of a milestone as revenue in the period in which the milestone is achieved, if the milestone meets all the criteria to be considered substantive. ASU 2010-17 is effective for milestones achieved in fiscal years, and interim periods within those years, beginning after June 15, 2010 and should be applied prospectively. Early adoption is permitted. We are still assessing the impact of this guidance, and we do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.

On July 2010, the FASB Issued Accounting Standards Update 2010-20, Receivables (Topic 310) — Disclosures about the Credit Quality of Financial Receivables and the Allowance for Credit Losses (the ASU). In the aftermath of the global economic crisis, transparent financial reporting has become the subject of worldwide attention, with a focus on improving accounting standards in a number of areas, including financial instruments. The new ASU requires disclosure of additional information to assist financial statement users understand more clearly an entity’s credit risk exposures to finance receivables and the related allowance for credit losses. For public companies, the ASU is effective for interim and annual reporting periods ending on or after December 15, 2010 with specific items, such as the allowance rollforward and modification disclosures effective for periods beginning after December 15, 2010. Nonpublic entities are required to apply the disclosure requirements for annual reporting periods ending on or after December 15, 2011. The adoption of ASU 2010-20 is not expected to have no material effect on our consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-28, Intangibles — Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. This ASU contains the final consensus reached by the EITF meeting on November 19, 2010. The EITF consensus affects all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. The EITF decided to amend Step 1 of the goodwill impairment test so that for those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. For public entities, the amendments in this Update are effective for fiscal years, and interim

periods within those years, beginning after December 15, 2010. Early adoption is not permitted. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities may early adopt the amendments using the effective date for public entities. The adoption of ASU 2010-28 is not expected to have no material effect on our consolidated financial statements.

In December 2010, the FASB issued ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations”. The ASU 2010-29 specifies that if a public company presents comparative financial statements, the entity should only disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. We are currently evaluating the potential impact, if any, on our consolidated financial statements.

A. Operating results.

The following table presents selected statement of operations data for the years ended December 31, 2008, 2009 and 2010.

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

In December 2008, we entered into a sale and purchase agreement to sell our wholly-owned subsidiary Jingle and its subsidiaries, BHLNet and BBHL, which we collectively refer to as the Jingle Group, to Sentron Enterprises Limited, an independent party, for cash consideration of HK$0.2 million. During the fiscal years ended December 31, 2008 and 2009, we classified Jingle Group as held for sales and discontinued operations in accordance with Accounting Standard Codification 205-20 (formerly referred to as SFAS 144 “Discontinued operations”) Operating results for the year ended December 31 2008 of Jingle Group and its subsidiaries and CNT and its subsidiaries are included in “Profit from discontinued operations”. See “Note 5 to the consolidated financial statements — Disposal and discontinued operations” for further discussion.

Comparison of Years ended December 31, 2010, 2009 and 2008

Revenues. In 2010, we commenced to produce crystalline solar modules. We completed our first commercial shipment in September 2010 and recognized Rmb53.70 million of revenue during 2010. The global economic recession in 2008 and 2009 resulted in the cessation of business of many companies that manufacture downstream solar products. Accordingly, the demand for our SnO2 base plate products has been weak. We generated no revenues from our Solar Energy Operations in 2009 and Rmb0.01 million of revenues in 2008 from one customer. Revenues generated by our discontinued operations for 2009 and 2008 are included in profit from discontinued operations for each of those years.

Cost of sales. We commenced commercial shipment and incurred Rmb45.11 million in cost of sales in 2010. Due to the weak demand on our solar products in 2009, there was no cost of sales for our Solar Energy Operations in 2009. Cost of sales for our Solar Energy Operations was Rmb0.02 million in 2008. Cost of sales for our discontinued operations in 2009 and 2008 are included in profit from discontinued operations for each of those years.

Gross profit (loss). Our gross profit was Rmb8.59 million in 2010 from the sales of crystalline solar modules. Gross profit (loss) for our Solar Energy Operations was nil in 2009 and Rmb(0.01) million in 2008 primarily due to low prices offered to a new customer to promote sales.

Research and development expenses . Research and development expenses for our Solar Energy Operations were Rmb0.56 million, Rmb0.55 million and Rmb0.13 million in 2010, 2009 and 2008, respectively, primarily consisting of expenses incurred from significant improvements and refinements to our production lines and existing products.

Selling expenses. Our selling expenses was Rmb3.44 million and nil in 2010 and 2009, respectively. The selling expenses in 2010 consisted primarily:

	•		Rmb3.12 million of goods transportation fees which were incurred resulting from shipment to local and overseas customers;
	•		Rmb0.20 million of exhibition expenses; and
	•		Rmb0.08 million of salaries and benefits expenses.

General and administrative expenses. Our general and administrative expenses increased by Rmb7.56 million, or 30.3 %, from Rmb24.97 million in 2009 to Rmb32.53 million in 2010. This increase was primarily due to:

	•		a Rmb5.31 million increase in consultant fees resulting from consultant fee payable to a related party for assisting the Company in an acquisition, and warrants issued to a related company and another institutional consultant as compensation for services to introduce potential investors and investment projects. The warrants have been fully vested upon grant and certain of the prescribed services will be rendered by these grantees after the current period;
	•		a Rmb2.19 million, or 16.1%, increase in salaries and benefits expenses resulting from an increase in head counts, increment in salaries and bonus paid;

•

a Rmb0.67 million, or 36.9%, increase in audit fees resulting from an increase in fees of our current auditor;

•

a Rmb0.34 million, or 59.5%, increase in travel related expense resulting from increase in local and overseas business trips of our staff caused by increase in business;

•

a Rmb0.33 million increase in commission and fees expense, resulting primarily from payment of commission for an acquisition; and

•

a Rmb0.24 million increase in press release expense resulting from engaging new external investor relationship consultancy service;

partially offset by

•

a Rmb1.05 million, or 36.4%, decrease in legal and other professional fees resulting from a decrease in corporate and securities matters and transactions and the enhanced use of internal personnel for corporate governance, compliance and legal matters; and

•

a Rmb0.94 million, or 36.2%, decrease in depreciation expenses resulting from the impairment of SnO2 production line and allocation of depreciation for production facilities to cost of sales.

General and administrative expenses increased by Rmb0.77 million, or 3.0 %, from Rmb24.20 million in 2008 to Rmb24.97 million in 2009. This increase was primarily due to:

•

a Rmb1.58 million, or 14.0%, increase in salaries and benefits expenses resulting from an increase in stock-based compensation recognized;

•

a Rmb0.48 million, or 22.8%, increase in depreciation expenses resulting from the purchase of additional property, plant and equipment, as well as the expansion of our Solar Energy Operations; and

•

a Rmb0.21 million, or 12.9%, increase in audit fees resulting from an increase in fees of our current auditor as well as an increase in fees of our former auditors in connection with the issuance of a consent;

partially offset by

•

a Rmb0.73 million, or 20.3%, decrease in legal and other professional fees resulting from a decrease in corporate and securities matters and transactions and the enhancement of internal personnel for corporate governance, compliance and legal matters;

•

a Rmb0.31 million, or 31.7%, decrease in rental expenses resulting from our move to a smaller office;

•

a Rmb0.11 million, or 25.2%, decrease in consultant fees resulting from a decrease in our use of external consultants for business development;

•

a Rmb0.18 million, or 46.4%, decrease in office supplies expenses resulting from strengthened control over costs and expenses; and

•

a Rmb0.13 million, or 30.4%, decrease in insurance expenses resulting from a change of insurance carriers in 2009 in respect of major insurance policies.

Impairment on property, plant and equipment and inventories. There was no impairment on property, plant and equipment and inventories in 2008. Impairment on property, plant and equipment was Rmb6.46 million and Rmb0.59 million, respectively, in 2009 and 2010, primarily related to the first SnO2 production line.

Impairment on inventories was Rmb0.35 million and nil in 2009 and 2010, respectively.

Other income (expense) . For 2010, other income consisted mainly of: (i) Rmb1.16 million of change in fair value of trading securities; (ii) Rmb5.20 million of gain on disposal of trading securities; (iii) Rmb1.92 million of change in fair value of investment in convertible note; and (iv) Rmb0.55 million of change in fair value of warrants and option rights. Other expense for 2010 consists mainly of (i) Rmb0.21 million of loss on disposal of available-for-sales securities; (ii) Rmb0.49 million of impairment on other investments which were fully impaired; (iii) Rmb10.30 million of impairment on deposit for business acquisition; (iv) Rmb3.55 million of impairment on available-for-sale securities; and (v) Rmb0.44 million of exchange loss. For 2009, other income consisted primarily of: (i) Rmb3.80 million of change in fair value of warrants and option rights; (ii) Rmb0.11 million of

gain on disposal of available-for-sale securities; (iii) Rmb0.60 million of subsidies from government and other expense consisted primarily of: (i) Rmb5.76 million of interest expenses for accretion to the redemption of the convertible note; (ii) Rmb5.04 million of change in fair value of derivative embedded in convertible note; (iii) Rmb3.43 million of loss on debt extinguishment; (iv) Rmb0.22 million exchange loss on bank account denominated in Hong Kong dollars. Other expense for 2008 consisted primarily of: (i) Rmb15.21 million of impairment of available-for-sale securities; (ii) Rmb14.05 million of loss on disposal of available-for-sale securities; (iii) Rmb1.23 million of change in fair value of warrant liabilities and (iv) Rmb0.48 million interest expenses related to overdraft from security account.

Profit from discontinued operations. Profit from discontinued operations was Rmb4.23 million in 2009 and Rmb0.86 million in 2008. Profit from discontinued operations in 2009 and 2008 related primarily to Jingle Group and its subsidiaries.

Net loss. Net loss for 2010 was Rmb35.12 million, a decrease of Rmb3.35million, or 8.7%, from Rmb38.47million for 2009. Net loss for 2009 was Rmb38.47million, a decrease of Rmb15.45million, or 28.7%, from Rmb53.92 million for 2008.

Taxation

We are a tax exempted company incorporated in the British Virgin Islands. Our subsidiaries incorporated in Hong Kong and PRC are subject to Hong Kong Profits Tax and Enterprise Income Tax in the PRC, respectively.

Our subsidiaries incorporated in Hong Kong were subject to a tax rate of 16.5% in 2008, 2009 and 2010 on the assessable profits arising in or derived from Hong Kong. For those Hong Kong subsidiaries which generate PRC sourced income, PRC income tax was payable on the assessable profits at a rate of 25% in 2008, 2009 and 2010.

On March 16, 2007, the National People’s Congress adopted the Enterprise Income Tax Law, or New Income Tax Law, which became effective on January 1, 2008 and replaced the previous separate income tax laws for domestic enterprises and foreign-invested enterprises (including PRC subsidiaries of our company) by adopting a unified income tax rate of 25% for most enterprises. In accordance with the implementation rules of the New Income Tax Law, the preferential tax treatments previously granted to various of our PRC subsidiaries will not continue and those subsidiaries will be subject to the statutory 25% tax rate. The 25% tax rate has been used in the calculation of our deferred tax balances, except for Shenzhen Helios Energy and Zhangzhou Trendar Tech. The tax rate for Shenzhen Helios Energy was 20% in 2009 and 22% in 2010, and will increase to 24% in 2011 and 25% in 2012. Among our PRC subsidiaries, only Zhangzhou Trendar Tech obtained the preferential tax treatment that it will be fully exempt from the PRC enterprise income tax for 2008 and 2009, followed by a 50% tax exemption for 2010 to 2012.

Since all the Company’s PRC subsidiaries have accumulated deficits at December 31, 2010, no provision for PRC dividend withholding tax has been made. Upon distribution of any future earnings in the form of dividends or otherwise in the future, the Group would be subject to the respective tax rate under PRC Enterprise Income Tax Law issued by the State Council.

The Group concluded that it does not have any material uncertain tax positions for the years 2008, 2009 and 2010. The Group classifies interest and/or penalties related to unrecognized tax benefits as a component of income tax provisions; however, for the years ended December 31, 2008, 2009 and 2010, there were no interest and penalties related to uncertain tax positions, and the Group had no material unrecognized tax benefit which would affect the effective income tax rate in future periods. The Group does not anticipate any significant increases or decreases to its liability for unrecognized tax benefits within the next twelve months. For our PRC subsidiaries, the years 2004 to 2010 remain subject to examination by the PRC tax authorities. For our Hong Kong subsidiaries, their respective tax positions are subject to inspection for the years 2004 to 2010 by the Hong Kong tax authorities.

B. Liquidity and capital resources

Our principal sources of liquidity have been cash generated from operating and financing activities. Our financing activities consist of issuance and sale of our equity and/or debenture securities to investors, and borrowings from third-party and/or related-party lenders. As of December 31, 2010, our cash and cash equivalents of Rmb14.01 million consist of cash on hand primarily and we had a short term loan liability with an outstanding principal amount of Rmb6.04 million.

We have been able to meet our working capital needs, and we believe that we will be able to meet our working capital needs with our existing cash balance, operating cash flow and proceeds from realization in the open market of available for sale and trading securities for the next 12 months. Otherwise, in the short term and long-term, we expect to meet our liquidity needs from our operating cash flows, proceeds from sales of our equity and/or debenture securities to investors and borrowings, as would be considered necessary.

Working capital and cash flows

We have not engaged in any form of off-balance sheet arrangement/relationships with unconsolidated entities or other persons that are reasonably likely to affect materially liquidity and the availability of or requirements for capital resources, or any trading activities that include non-exchange traded contracts accounted for at fair value. Except for the operating lease commitments and capital commitments for construction in progress and investments, as disclosed in Note 22 to our consolidated financial statements, we have no other commitments, which may cause us to make future payments under contracts.

The following table sets forth the summary for cash flows for the periods indicated:

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

Our cash and cash equivalents on hand as of December 31, 2010 was Rmb14.01 million, representing an decrease of Rmb10.60 million, or 43% from Rmb24.61 million at the beginning of the year. Our cash and cash equivalents on hand as of December 31, 2009 was Rmb24.61 million, representing an increase of Rmb17.84 million, or 264% from Rmb6.77 million at the beginning of the year.

     Operating activities

Net cash outflow from operating activities in 2010 was Rmb31.96 million, representing an increase of Rmb14.69 million from an outflow of Rmb17.27 million in 2009. The increase in net cash outflow in 2010 was mainly due to the increase in amounts due from trade accounts receivable, increase in amounts of value added tax and business tax recoverable, partially offset by increase in amounts due to trade accounts payable and increase in other current liabilities and accrued expenses.

Net cash outflow from operating activities in 2009 was Rmb17.27 million, representing an increase of Rmb2.14 million from an outflow of Rmb15.13 million in 2008. The increase in net cash outflow in 2009 was primarily due to the increase in amounts due from related parties.

     Investing activities

Net cash outflow from investing activities in 2010 was Rmb21.97 million, representing a decrease of Rmb13.82 million from an outflow of Rmb35.79 million in 2009. The decrease in net cash outflow in 2010 was mainly due to a decrease in the amount of cash used to finance business acquisitions during the year.

Net cash outflow from investing activities in 2009 was Rmb35.79 million, representing an increase of Rmb21.84 million from an outflow of Rmb13.95 million in 2008. The increase in net cash outflow in 2009 was primarily due to the combined affects of (i) an increase of investment in securities and (ii) prepayment for business acquisition.

     Financing activities

Net cash inflow from financing activities in 2010 was Rmb44.47 million, representing a decrease of Rmb26.46 million, from an inflow of Rmb70.93 million in 2009. This decrease was mainly because we raised less funds in 2010 than in 2009.

Net cash inflow from financing activities in 2009 was Rmb70.93 million, representing an increase of Rmb52.25 million, from an inflow of Rmb18.68 million in 2008. This increase was mainly due to the combined effects of (i) Rmb68.67 million of proceeds from the convertible note during the year; (ii)Rmb1.24 million of proceeds from the issuance of common stock and warrants in June 2009 and (iii) Rmb2.59 million of proceeds from the exercise of stock options during the year.

As of December 31, 2010, after deducting our total liabilities from our cash and cash equivalents, we had a net cash deficit of Rmb36.57 million, representing a decrease of Rmb39.45 million from a net cash surplus of Rmb2.88 million as of December 31, 2009.

As of December 31, 2009, after deducting our total liabilities from our cash and cash equivalents, we had a net cash surplus of Rmb2.88 million, representing an increase of Rmb16.50 million from a net cash deficit of Rmb13.62 million as of December 31, 2008.

Restricted net assets

Under PRC laws and regulations, our PRC subsidiaries are restricted from transferring certain of their net assets to us either in the form of dividends, loans or advances. Amounts restricted include paid up capital and reserves of our PRC subsidiaries with positive net assets totaling approximately Rmb31.63 million as of December 31, 2010.

Capital resources

Our capital expenditures in 2008, 2009 and 2010 were Rmb7.11 million, Rmb1.38 million and Rmb4.81 million, respectively. See Note 24 to the consolidated financial statements included in this Annual Report. We expect our capital expenditures to increase in the future as we expand our Solar Energy Operations.

In April 2009, we and two of our wholly-owned subsidiaries, China Green Industry Group Ltd. and China Green Holdings Ltd., or CGHL, entered into a subscription agreement with CMTF Private Equity One. Pursuant to the subscription agreement, CGHL issued to CMTF Private Equity One a convertible note with a principal amount of US$10.0 million with three-year maturity and an interest rate equal to the Hong Kong Prime Rate. The convertible note was, at the holder’s option, either (a) convertible into the outstanding ordinary shares of CGHL or (b) exchangeable for shares of our common stock. In November 2009, CMTF Private Equity One exchanged the convertible note for 3,322,260 shares of our common stock.

In April 2010, we entered into a subscription agreement with China Wanhe Investment Limited to issue and sell 2,000,000 shares of our common stock in a private placement for a price equal to US$3.01 per share. In May 2010, we received US$6.02 million from the transaction.

From time to time, we evaluate potential investments, acquisitions or divestments and may, if a suitable opportunity arises, make an investment or acquisition or conduct a divestment. As a result, we may need to obtain additional funds through issuance of new equity or debt securities. We may have to seek additional financing sooner than currently anticipated, and we do not know whether we will be able to obtain additional financing on terms acceptable to us, or at all.

Going Concern

During the year ended December 31, 2008, 2009 and 2010, the Group reported net loss of approximately Rmb53.92 million, Rmb38.47 million and Rmb35.12 million respectively. During the year ended December 31, 2008, 2009 and 2010, the Group reported net loss and net negative cash flow from operations of approximately Rmb15.13 million, Rmb17.27 million and Rmb31.96 million respectively. The cash and cash equivalent balance as at December 31, 2010 was Rmb14.01 million.

The directors of the Company consider that the Group will be able to generate adequate cash flows to finance its operations and meet its cash obligations in the following 12 months from December 31, 2010 based on the following:

—

positive operating cash flows are expected to be generated from the profitable operations of manufacturing and sale of solar modules;

—

realization in the open market of available for sale and trading securities with ending carrying amounts at approximately Rmb34.55 million as of December 31, 2010, for cash;

—

tight controls exercised by the board of directors on timing and magnitude of cash outlays for investments initiatives; and

—

proceeds from sales of equity and/or debt securities to investors and borrowings, as would be considered necessary.

Accordingly, the financial statements as of December 31, 2010 had been prepared on a going concern basis.

C.   Research and development, patents and licenses, etc.

Our major research and development section and manufacturing plants are located at China Merchants Zhangzhou Development Zone in Fujian Province of the PRC. During 2009 and 2010, research and development costs were incurred in the development of the new products and processes, including significant improvements and refinements to existing products. Those R&D costs were expensed as incurred.

D.   Trend information.

Except as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net sales, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E.   Off-balance sheet arrangements.

We have no outstanding off-balance sheet arrangements. We do not engage in trading activities involving non-exchange traded contracts.

F.   Tabular disclosure of contractual obligations.

The following table summarizes our contractual obligations under a non-cancellable operating lease as of December 31, 2010.

		(Amounts in thousands)
		Rmb
As of December 31,
2011			1,770
2012			1,710
2013			1,537
2014			1,397
2015			523
Total			6,937

Lease rental costs incurred by our company for the years ended December 31, 2008, 2009 and 2010 amounted to Rmb1.51 million, Rmb0.87 million and Rmb1.52 million, respectively.

Commitments

      Capital commitments for construction in progress

     In September 2007, China Merchants Zhangzhou Development Zone Trenda Solar Ltd., or Zhangzhou Trenda, our wholly-owned subsidiary, entered into a cooperation contract with China Solar Energy Group Limited, or China Solar, an independent third party, to purchase China Solar’s SnO2 solar base plates production lines for an aggregate price of US$8.0 million (equivalent to Rmb58.36 million) for four SnO2 production lines. Half of the price for each production line was to be paid upon delivery. The remaining 50% payment for each production line was to be made by upon successful installation of the production lines and achievement of production requirements. The first SnO2 solar base plant production line was shipped to Zhangzhou Trenda and was installed and tested in December 2008. Due to the inherent deficiencies of the first production line, we and China Solar agreed to reduce the price for the first SnO2 solar base plate production line from US$2.0 million to US$1.0 million. We paid US$1.0 million to China Solar in 2008. Pursuant to the cooperation contract, Zhangzhou Trenda has the right to terminate the purchase of the remaining three SnO2 production lines at an aggregate price of US$6.0 million in the event that the first production line fails to manufacture the products with quality satisfactory to the standard mutually agreed in the cooperation agreement. For the fiscal year ended 2009 and 2010, impairment on the first SnO2 production line was recognized. Owing to the quality issue with the first production line, we don’t expect to purchase any additional production lines from China Solar in the near future.

G.   Safe harbor.

Forward-Looking Statement Disclosure

This Annual Report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our current expectations, assumptions, estimates and projections about us, our industry, economic conditions in the markets in which we operate, and certain other matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “project”, “seek”, “should” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results or outcomes to differ materially from those implied by the forward-looking statements. Important factors that may cause actual results or outcomes to differ from those implied by the forward-looking statements include, but are not limited to, those discussed in the Item 3.D.“Risk Factors”, Item 4. B. “Business Overview” and Item 5. “Operating and Financial Review and Prospects” sections in this Annual Report. In light of these and other uncertainties, you should not conclude that the results or outcomes referred to in any of the forward-looking statements will be achieved. All forward-looking statements included in this Annual Report are based on information available to us on the date hereof, and we do not undertake to update these forward-looking statements to reflect future events or circumstances.

Item 6.   Directors, Senior Management and Employees

A.   Directors and senior management.

As of the date of this Annual Report, our Board of Directors consists of nine directors, four of whom are executive directors and five of whom are independent directors. The following table sets forth the name, age and position of each director and executive officer of our company as of the date of this Annual Report:

Name		Age				Positions with the Company
Alan Li			43			Chairman of the Board, Executive Director and Chief Executive Officer
Zhenwei Lu			40			Executive Director
Tairan Guo			33			Executive Director, Chief Business Development Officer and Acting Chief Financial Officer
Ju Zhang			48			Executive Director
Loong Cheong Chang (1) (3)			65			Independent Director
Xinping Shi (2) (3)			52			Independent Director
Weidong Wang (2) (3)			44			Independent Director
Yu Keung Poon (1) (2)			46			Independent Director
Yezhong Ni (1)			41			Independent Director
Lin-Hsiang Liao			31			Chief Operating Officer
Bruno Luis Diaz Herrera			35			Chief Technology Officer
Weining Zhang			41			Chief Communications Officer

Mr. Alan Li was appointed as an Executive Director on May 24, 2005. He has been our Chief Executive Officer since January 8, 2007 and our Chairman of the Board of the Directors since May 23, 2007. Prior to joining our company, he served as the Executive Director of Shun Tai Investment Limited, a company engaged in investment, merger and acquisition of hospitals and pharmaceuticals factories in China. From 2000 to 2002, Mr. Li was the Executive Director and Vice President of Linchest Technology Ltd. Mr. Li has considerable experience in investment and management of conglomerate companies. His current responsibilities include strategic planning, merger and acquisition and capital market development. Mr. Li holds an MBA from Murdoch University, Australia.

Mr. Zhenwei Lu was appointed as an Executive Director on January 5, 2007. He was the General Manager of China Merchants Technology Co., Ltd., or CMTH, a wholly owned subsidiary of China Merchants Group. Mr. Lu has represented China Merchants Group to establish Shenzhen China Merchants Group Yinke Investment Management Ltd, a RMB venture investment fund, and he is acting as General Manager of this company. China Merchants Group is one of the largest state-owned enterprises directly under the administration of the China State Council and has significant business operations across Hong Kong and China in real estate, energy, logistics, ports, highways and industrial zones. Mr. Lu holds a Bachelors degree from Shanghai Marine College and a Masters degree from Zhongnan University of Economics and Law.

Mr. Tairan Guo was appointed as an Executive Director on January 31, 2010. He joined our company as Assistant to our Chief Executive Officer in 2008 and was promoted to be Chief Business Development Officer and Vice President in 2009. In addition, Mr. Guo has served as our Acting Chief Financial Officer since June 11, 2010. Prior to joining us, Mr. Guo worked with the corporate business development department of HTS, Haniel & Cie GmbH in Duisburg, Germany in 2005, and served as an SAP project manager for Dorma Automatic GmbH in Wuppertal, Germany from 2006 to 2007. Mr. Guo holds Bachelors degrees in German Literature and in Economics from Peking University in China and a Master’s degree of European Culture and Economy from Ruhr-University Bochum in Germany.

Mr. Ju Zhang was appointed as an Executive Director on May 24, 2005. He previously served as Deputy Chairman of China Merchants Technology Holdings Co., Ltd. and was appointed as the Associate Professor of Chinese Academy of Medical Sciences and Peking Union Medical College, the assistant Director of Department of Research in National Committee of Science and Technology and Department of Research in Chinese Ministry of Science and Technology. Mr. Zhang holds a Bachelors degree in Energy Engineering from Tsinghua University and a Masters degree in Philosophy from the Chinese Academy of Social Sciences.

Mr. Loong Cheong Chang was appointed as an Independent Director on January 5, 2007 and became the Chairman of our Audit Committee and a member of our Nominating Committee on March 2, 2007. He previously served as a member of senior management of Orient Overseas Container Line, Ltd. and Island Navigation Corporation International Ltd., Director and General Manager of Noble Ascent Company Ltd. Hong Kong, and Chairman of Audit Committee and Independent Non-Executive Director of Guangshen Railway Company Limited. Mr. Chang is currently a Director of World Target Properties (Shanghai) Ltd. and the Director of Orient International (Shanghai) Ltd. Mr. Chang holds a Certificate of Business Management from Hong Kong Management Association.

Dr. Xinping Shi was appointed as an Independent Director on July 28, 2005 and the Chairman of our Compensation Committee and Nominating Committee on March 2, 2007. Dr. Shi is holding positions as Director of Logistics Management Research Centre, Coordinator of Logistics and Supply Chain Management of the School of Business, and Associate Professor of the Department of Finance and Decision Sciences of the Hong Kong Baptist University. Dr. Shi also serves as an Independent Director of China Merchants Shekou Holdings Company Limited, a company listed on the Shenzhen Stock Exchange; and as a Director of Weboptimal International Limited, a management consulting firm. He is also Guest Professor of the College of Logistics of Beijing Normal University and Advisor of the Chamber of Hong Kong Logistics. Dr. Shi holds a Doctorate degree from Middlesex University and a Master’s degree in Business Administration from Lancaster University, UK.

Mr. Weidong Wang was appointed as an Independent Director on July 28, 2005 and a member of our Compensation Committee and Nominating Committee on March 2, 2007. Mr. Wang served as the Business Representative of Henan Province in China from 1990 to 1991 and the Business Director of China National Cereals, Oils & Foodstuffs Import & Export Corporation from 1991 to 2000. Mr. Wang was appointed the Deputy General Manager of Ceroilfood Enterprises Limited, one of the foreign offices of China Business Bureau in March 2000, and his responsibilities are in charge of overseas business development and management. Mr. Wang has experience in import and export business of oil, cereal products and foodstuffs. He qualified as International Business Engineer in China in 1994 and holds a Masters degree in Public Finance from the Tianjin University of Finance & Economics and an MBA from Murdoch University, Australia.

Mr. Yu Keung Poon was appointed as an Independent Director, a member of our Compensation Committee and the financial expert of our Audit Committee on March 2, 2007. He is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants in England. He is currently the Financial Controller and the Company Secretary of Jiuzhou Development Company Limited. Prior to joining Jiuzhou Development Company Limited, he worked in Ernst &

Young Hong Kong in the auditing field and had assumed the accounting and financial management positions in a number of China affiliated and multinational companies. Mr. Poon holds a professional Diploma in Accountancy from The Hong Kong Polytechnic University and an Executive MBA degree from The Chinese University of Hong Kong.

Mr. Yezhong Ni was appointed as an Independent Director on April 28, 2005 and as a member of our Audit Committee on March 2, 2007. He is a partner of the Kingson Law Firm, one of the leading law firms in South China. He has experience in legal services for banking and finance, bankruptcy and media. As perennial legal counsel of several large-scale enterprises and public institutions, Mr. Ni deals with a large number of legal disputes, mainly syndicated loan related financial derivative tools, comfort letter and floating rate note issues. As the special project legal counsel, Mr. Ni provides legal services focusing on the non-performing-loan structural trade and the syndicated loan issue .Mr. Ni has been appointed by the court as the bankruptcy supervisor for several bankrupt enterprises. Mr. Ni graduated from the Law School of the Peking University.

Mr. Lin-Hsiang Liao was appointed as our Chief Operating Officer on December 13, 2010 and is responsible for operation management of our Company and its subsidiaries. Mr. Liao was the founder and has been Chief Executive Officer of Linsun Renewable Energy Corporation Limited (“LSR”) and has been serving as the General Manager of Linsun Power Technology (Quanzhou) Corp. Ltd. (“LSP”) since 2009. Both LSR and LSP have been wholly-owned subsidiaries of our Company since November 23, 2010. Mr. Liao is familiar with the photovoltaic, or PV, market in Europe with seasoned experiences in operation, production management and marketing. Prior to establishing LSR, Mr. Liao worked as the senior management in several renowned corporations. Mr. Liao holds a Bachelors degree in Computer Science from Oxford Brookes University in the United Kingdom.

Mr. Bruno Luis Diaz Herrera was appointed as our Chief Technology Officer on December 13, 2010 and is responsible for the technology management, product development and R&D strategy of our Company and its subsidiaries. Prior to joining CTDC, Mr. Herrera worked as a senior technical and research advisor for major corporations, such as Siemens and ITER. He also served as Professor in the Master Program in Renewable Energies at University of La Laguna in Spain. Mr. Herrera is an expert with practical experience in PV industry, with experience in designing and operating several solar modules factories and designing and installing PV applications. Mr. Herrera also has experience in the research of solar cell efficiency improvements. Mr. Herrera holds Bachelor Degree in Physics, Engineering Degree in Industrial Engineering and Engineering Degree in Electronics at the University of La Laguna in Spain and Master Degree of Business Administration. Mr. Herrera is fluent in Spanish, English, French, German and Italian.

Ms. Weining Zhang was appointed as our Chief Communications Officer on June 15, 2011, in charge of our public relations and investor relations. Prior to joining CTDC, she served as a director of Perennial Financial Consulting, providing strategy and financial services to clients. Prior to that she worked in the financial industry in roles that included serving as a closing analyst for Credit Suisse First Boston/DLJ, a financial advisor for American Express, a senior manager for Real Options Group, a senior account executive of CCG Elite Investor Relations. Ms. Zhang holds a Bachelors degree in Economics (Quantitative Path) from University of California at Berkeley, US and a specialized MBA from SDA Bocconi, Milan, Italy.

There are no family relationships between the above named officers and directors. Notwithstanding that CTIG is our largest shareholder, we do not have any formal agreement or arrangement with CTIG pursuant with respect to the nomination of directors to our board. All of our directors are appointed and approved by resolutions passed in our board meetings and have been and will be elected at our annual shareholders meeting. All candidates were nominated and recommended by the Nominating Committee based on their experience and capability.

B.   Compensation.

Except for Mr. Alan Li, the Chairman of our Board of Directors, who we paid HK$0.24 million in 2010 as allowance for his capacity as Chairman, we did not pay any cash compensation to our directors in 2010 in their capacity as directors.

The compensation for each member of senior management is principally comprised of base salary, allowance, discretionary bonus and other fringe benefits. The compensation that we pay to our senior management is evaluated on the basis of the following primary factors: our financial results, individual performance, market rates and movements, as well as the individual’s anticipated contribution to our Company and its growth. The aggregate cash base salary, allowance and bonus compensation which we paid to all members of senior management as a group was approximately HK$4.11 million in 2010. The Mandatory Provident Fund, or MPF, that we paid to senior management was HK$0.04 million in 2010. The monthly contribution to the MPF scheme is calculated on the rules set out in the MPF Ordinance in Hong Kong, which is 5% of the relevant income of the employee with a specific ceiling.

In 2010, we granted stock options covering an aggregate of 560,000 shares of common stock to the following directors and executive officers as described as below:

Number

Exercise

Of

Price

Name

Title/Office

options

Per option

Expiration Date

(US$)

Alan Li

Chairman, Executive Director and Chief Executive Officer

120,000

2.50

December 15, 2015 (1)

Zhenwei Lu

Executive Director

80,000

2.50

December 15, 2015 (1)

Tairan Guo

Executive Director, Chief Business Development Officer and Acting Chief Financial Officer

80,000

2.50

December 15, 2015 (1)

Xinping Shi

Independent Director

30,000

2.50

December 15, 2015 (1)

Yezhong Ni

Independent Director

20,000

2.50

December 15, 2015 (1)

Weidong Wang

Independent Director

20,000

2.50

December 15, 2015 (1)

Loong Cheong Chang

Independent Director

30,000

2.50

December 15, 2015 (1)

Yu Keung Poon

Independent Director

20,000

2.50

December 15, 2015 (1)

Lin-Hsiang Liao

Chief Operating Officer

80,000

2.50

December 15, 2015 (1)

Bruno Luis Diaz Herrera

Chief Technology Officer

80,000

2.50

December 15, 2015 (1)

We have no service contracts with any of our directors or executive officers that provide additional benefits to them upon termination.

C. Board practices.

In 2010, our Board of Directors met in person or passed resolutions by written consent 13 times. No director is entitled to any severance benefits upon termination of his directorship with us. Our Board of Directors has concluded that Mr. Yu Keung Poon meets the criteria for an “audit committee financial expert” as established by the US Securities and Exchange Commission, or SEC.

Board committees

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating committee, which are solely comprised of independent directors.

Audit Committee . Mr. Loong Cheong Chang, Mr. Yu Keung Poon and Mr. Yezhong Ni have served as members of our Audit Committee since March 2, 2007. According to our Audit Committee Charter, the responsibilities of

the Audit Committee include the oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) the qualification, appointment, compensation, retention and oversight of our independent auditors, including resolving disagreements between management and the auditors regarding financial reporting and (4) the performance of our independent auditors and of our internal control function. Each member of the Audit Committee meets the independence requirements and standards established by Nasdaq rules and SEC regulations.

The Audit Committee is given the resources and assistance necessary to discharge its responsibilities, including appropriate funding as determined by the Audit Committee, unrestricted access to our personnel, documents and independent auditors. The Audit Committee also has authority, with notice to the Chairman of the Board, to engage outside legal, accounting and other advisors as it deems necessary or appropriate.

The Audit Committee is required to meet at least two times a year and may call a special meeting as required. All members of the Audit Committee are financially literate, which means having a basic understanding of financial controls and reporting, and none of them receive, directly or indirectly, any compensation from our company other than his or her directors’ fee and benefits.

Compensation Committee . Dr. Xinping Shi, Mr. Weidong Wang and Mr. Yu Keung Poon serve as members of the Compensation Committee. The Compensation Committee makes recommendations to the Board of Directors concerning salaries and incentive compensation for our officers, including our Chief Executive Officer and Chief Financial Officer, directors and employees and administers our stock option plans. Each member of the Compensation Committee meets the independence requirements and standards established by Nasdaq rules and SEC regulations.

Nominating Committee. Dr. Xinping Shi, Mr. Loong Cheong Chang and Mr. Weidong Wang serve as members of the Nominating Committee. The purpose of the Nominating Committee is to assist the Board of Directors in identifying qualified individuals to become board members, consultants and officers of our company, in determining the composition of the Board of Directors and in monitoring a process to assess Board effectiveness. Each member of the Nominating Committee meets the independence requirements and standards established by Nasdaq rules and SEC regulations.

The charters of the above-mentioned committees are available on our website: www.chinactdc.com.

Term of directors and executive officers

According to our Articles of Association, one-third of our directors retire from office by rotation at each annual meeting of shareholders, provided that every director is subject to retirement at least once every three years. A retiring director is eligible for re-election and will continue to act as a director throughout the meeting at which he retires.

Our executive officers are elected and appointed by resolution of directors and may be removed at any time, with or without cause, by a resolution of directors.

D. Employees.

As of December 31 of the respective past three years, we had full-time employees, classified by function as follows:

		2010				2009				2008
Corporate administration			27				14				16
Finance and accounting			9				7				9
Technology and engineering			11				9				6
Sales and services			8				0				4
Manufacturing			178				5				34
Total			233				35				69

Compared to the number of employees in 2009, the substantial increase in the number of employees as of December 31, 2010 was mainly due to acquisition of Linsun Renewable Energy Corporation Limited and the addition of working force in our factories.

We do not have any collective bargaining agreements with our employees. None of our employees is represented by a labor union. We have never experienced any material labor disruptions and are unaware of any current efforts or plans to organize employees. We believe we maintain a good working relationship with our employees. From time to time, we also employ part-time employees and independent contractors to support our manufacturing, research and development and sales and marketing activities. We plan to hire additional employees for manufacturing and engineering as we expand our solar business.

E. Share ownership.

To our knowledge, except Mr. Lin-Hsiang Liao, our Chief Operating Officer, none of other executive officers or directors owns shares of our common stock as of the date of this Annual Report. The names and titles of our executive officers and directors to whom we have granted stock options which are vested and outstanding as of the date of this Annual Report and exercisable within 60 days from the date hereof (except as noted) and the number of shares of our common stock subject to such options are set forth in the following table:

Number

Exercise

Of

Price

Name

Title/Office

options

Per option

Expiration Date

(US$)

Alan Li

Chairman, Executive Director and Chief Executive Officer

75,000 100,000 150,000 100,000 120,000 53,000 223,000 150,000

1.85 3.18 3.13 2.04 1.79 2.12 2.12 2.12

September 20, 2015 (1) September 18, 2016 (2) May 23, 2012 (3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2019 (6) October 1, 2014(7) October 1, 2014(8)

Zhenwei Lu

Executive Director

40,000 60,000 80,000 80,000 80,000 80,000

1.85 3.18 3.13 2.04 1.79 2.12

September 20, 2015 (1) September 18, 2016 (2) May 23, 2012(3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Ju Zhang

Executive Director

10,000 10,000 10,000 10,000

1.85 3.18 2.04 1.79

September 20, 2015 (1) September 18, 2016 (2) November 10, 2013 (4) December 30, 2013 (5)

Tairan Guo

Executive Director, Chief Business Development Officer and Acting Chief Financial Officer

20,000 40,000 50,000

2.04 1.79 2.12

November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Xinping Shi

Independent Director

10,000 30,000 22,800 50,000 40,000

3.18 3.13 2.04 1.79 2.12

September18, 2016 (2) May 23, 2012 (3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Yezhong Ni

Independent Director

10,000 10,000 10,000 20,000 40,000 30,000

1.85 3.18 3.13 2.04 1.79 2.12

September 20, 2015 (1) September 18, 2016 (2) May 23, 2012 (3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Weidong Wang

Independent Director

10,000 10,000 10,000 20,000 40,000 30,000

1.85 3.18 3.13 2.04 1.79 2.12

September 20, 2015 (1) September 18, 2016 (2) May 23, 2012(3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Loong Cheong Chang

Independent Director

30,000 30,000 50,000 60,000

3.13 2.04 1.79 2.12

May 23, 2012 (3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Number

Exercise

Of

Price

Name

Title/Office

options

Per option

Expiration Date

(US$)

Yu Keung Poon

Independent Director

20,000 20,000 40,000 30,000

3.13 2.04 1.79 2.12

May 23, 2012 (3) November 10, 2013 (4) December 30, 2013 (5) October 1, 2014(8)

Stock Option Plans

Our stock option plans are designed to provide incentives to our employees (including our directors and officers) and to our non-employee consultants and to offer an additional inducement in obtaining the services of such individuals. Our stock option plans were approved by our shareholders on the following dates:

Stock Option Plan		Date of Shareholder Approval
1996 Stock Option Plan, or the 1996 Plan		October 10, 1996
2000 Stock Option Plan, or the 2000 Plan		September 5, 2000
2005 Stock Option Plan, or the 2005 Plan		October 20, 2005
2006 Stock Option Plan, or the 2006 Plan		December 22, 2006
2007 Stock Option Plan, or the 2007 Plan		October 19, 2007
2008 Stock Option Plan, or the 2008 Plan		December 12, 2008
2009 Stock Option Plan, or the 2009 Plan		September 11, 2009
2010 Stock Option Plan, or the 2010 Plan		December 10, 2010

1996 Plan

Options to purchase an aggregate of 200,000 shares of common stock were granted under the 1996 Plan, and we will not issue additional options under the 1996 Plan. The 1996 Plan was filed as an exhibit to our Registration Statement on Form F-1 (File No. 333-6082).

2000 Plan

Options to purchase an aggregate of 400,000 shares of common stock were granted under the 2000 Plan, and we will not issue additional options under the 2000 Plan. The 2000 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-127423).

2005 Plan

Options to purchase an aggregate of 1,000,000 shares of common stock were granted under the 2005 Plan, and we will not issue additional options under the 2005 Plan. The 2005 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-139608).

2006 Plan

Options to purchase an aggregate of 1,000,000 shares of common stock were granted under the 2006 Plan, and we will not issue additional options under the 2006 Plan. The 2006 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-147806).

2007 Plan

Options to purchase an aggregate of 1,000,000 shares of common stock were granted under the 2007 Plan, and we will not issue additional options under the 2007 Plan. The 2007 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-160837).

2008 Plan

Options to purchase an aggregate of 1,500,000 shares of common stock were granted under the 2008 Plan, and we will not issue additional options under the 2008 Plan. The 2008 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-160837).

2009 Plan

Options to purchase an aggregate of 1,000,000 shares of common stock were granted under the 2009 Plan, and we will not issue additional options under the 2009 Plan. The 2009 Plan was filed as an exhibit to our Registration Statement on Form S-8 (File No. 333-168021).

2010 Plan

Options to purchase an aggregate of 1,000,000 shares of common stock were granted under the 2010 Plan, and we will not issue additional options under the 2010 Plan. The 2010 Plan is substantially similar to the 2009 Plan.

Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders.

The following table sets forth, as of the date of this Annual Report, the beneficial ownership of (i) all persons known to us to be beneficial owners of equal or more than five percent or more of our common stock, (ii) our current officers and directors and (iii) our current officers and director as a group.

		Shares of common stock				Percent of
Principal Shareholder		beneficially owned (1)				class
China Technology Investment Group Limited (formerly known as China Biotech Holdings Limited), or CTIG 5/F, B&H Plaza, 27 Industry Ave Shekou, Shenzhen 518067 PR China			4,132,168				18.37	%
CMTF Private Equity One 48/F, One Exchange Square, Central, Hong Kong SAR, China			3,322,260				14.77	%
China Wanhe Investment Limited Suite 2616, Jardine House, 1 Connaught Place, Central, Hong Kong SAR, China			2,000,000				8.89	%
Lin-Hsiang Liao c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			709,920				3.16	%
Alan Li (2) c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Zhenwei Lu (2) c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Ju Zhang c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Tairan Guo c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Loong Cheong Chang c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Xinping Shi c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Yezhong Ni c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Weidong Wang c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Yu Keung Poon c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Bruno Luis Diaz Herrera c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
Weining Zhang c/o Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central Hong Kong			0				*
All officers and directors as a group (11 persons) (2)			709,920				3.16	%

We have issued a total of 1,000,000 shares of Series A Preferred Stock, all of which are owned by CTIG. The Series A Preferred Stock represents 25% of the combined voting power of our common stock and preferred stock. The rights, preferences and privileges of the Series A Preferred Stock are as follows:

	•		Voting rights. The 1,000,000 shares of Series A Preferred Stock have an aggregate voting power equal to 25% of the combined voting power of our common stock and preferred stock.
	•		Dividends. Holders of Series A Preferred Stock are entitled to receive dividends only as, when and if such dividends are declared by the Board of Directors.
	•		Liquidation preference. In the event of any distribution of assets upon any liquidation, dissolution or winding up of our company, whether voluntary or involuntary, after payment or provision for payments of our debts and other liabilities, holders of Series A Preferred Stock are entitled to receive out of our assets an amount equal to the consideration paid by them for each such share plus any accrued and unpaid dividends with respect to such shares of Series A Preferred Stock through the date of such liquidation, dissolution or winding up.
	•		Redemption. The Series A Preferred Stock is not redeemable.
	•		Convertible. The Series A Preferred Stock is not convertible.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company. As of the date of this Annual Report, we have 22,498,549 issued and outstanding shares of common stock.

The transactions with related parties for the period from January 1, 2010 up to the date of this Annual Report were as follows:

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

		Amounts in
		thousands
		Rmb
Balances with related parties:
Due from related parties
Funds held by CTIG for potential acquisition of technology and business in China (2 and 3)		2,455
		2,455
Due to related parties:
Due to CTIG (4)		853
Due to CMZDZ (5)		8,085
Due to Liao Lin-Hsiang (1)		300
Due to Best Scene Management Limited (6)		1,699
		10,937

All the balances with related parties are unsecured and interest-free, and have no fixed terms of repayment.

C. Interests of experts and counsel.

Not Applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information.

Our consolidated financial statements are included herein under Item 18.

Except for an interim dividend paid in 1997, we have not paid any dividends on our common stock. The payment of dividends in the future, if any, is within the discretion of our Board of Directors and will depend upon our earnings, capital requirements and financial condition and other relevant factors. We do not anticipate declaring or paying any dividends in the foreseeable future.

To our knowledge, there is no litigation pending or threatened against us which would reasonably expected to materially adversely impact our financial condition.

B. Significant Changes.

None.

Item 9. The Offer and Listing.

A. Offer and listing details.

Our authorized share capital is made up of two classes of shares: 4,000,000,000 shares of common stock, US$0.01 par value; and 1,000,000,000 shares of preferred stock, US$0.01 par value. As of the date of this Annual Report, 22,498,549 shares of common stock and 1,000,000 shares of Series A Preferred Stock are issued and outstanding.

The high and low market prices of our common stock for the most recent five full financial years are as follows:

Nasdaq Capital Market		US$
(Year Ended)		High				Low
December 31, 2010			3.83				1.71
December 31, 2009			4.78				1.36
December 31, 2008			9.45				1.19
December 31, 2007			10.39				2.71
December 31, 2006			12.15				1.34

The high and low market prices of our common stock for each financial quarter during the two most recent full financial years and all subsequent quarters are as follows:

Nasdaq Capital Market		US$
(Quarter Ended)		High				Low
March 31, 2011			2.61				2.11
December 31, 2010			2.83				1.84
September 30, 2010			2.51				1.71
June 30, 2010			3.83				2.64
March 31, 2010			3.08				2.46
December 31, 2009			4.78				2.12
September 30, 2009			2.89				1.98
June 30, 2009			3.25				2.16
March 31, 2009			3.54				1.36

The high and low market prices of our common stock for the most recent six months are as follows:

Nasdaq Capital Market		US$
(Month Ended)		High				Low
May 31, 2011			1.99				1.80
April 30, 2011			2.15				1.94
March 31, 2011			2.30				2.11
February 28, 2011			2.38				2.18
January 31, 2011			2.61				2.16
December 31, 2010			2.81				2.04

B. Plan of Distribution.

Not Applicable

C. Markets.

Our common stock is listed on the Nasdaq Capital Market under the symbol CTDC. Our common stock is not listed on any other public trading market.

D. Selling Shareholders.

Not Applicable.

E. Dilution.

Not Applicable.

F. Expenses of the issue.

Not Applicable.

Item 10. Additional Information.

A. Share capital.

Not Applicable.

B . Memorandum and articles of association.

Our company, formerly known as Tramford International Limited, has been registered in the British Virgin Islands, or BVI, since September 19, 1995, under the British Virgin Islands International Business Companies Act (CAP.291) with number 161076. Set forth below is a brief summary of certain provisions of our amended and restated Memorandum and Articles of Association adopted by our shareholders at our annual general meeting held on October 19, 2007. This summary does not purport to be complete and is qualified in its entirety by reference to our Memorandum and Articles of Association incorporated by reference as an exhibit to this Annual Report.

Objects and Powers

Regulation 4 of our Memorandum of Association states that the objects for which our company is established are to engage in any businesses which are not prohibited by law in force in the British Virgin Islands.

Directors

A director who is materially interested in any transaction with us shall declare the material facts of and nature of his interest in good faith at the meeting of the Board of Directors. A director may vote or be counted as the quorum on any resolution of the Board in respect of any transaction in which he is materially interested.

With the prior or subsequent approval by a resolution of members, the directors may subject to the determination of the Compensation Committee, by a resolution of directors, fix the emoluments of directors with respect to services to be rendered in any capacity to us.

The directors may, by a resolution of directors, exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings and property on any part thereof, to issue debentures, debenture stock and other securities.

There is no age limit requirement for retirement or non-retirement of directors. A director shall not require a share qualification.

Share Rights, Preferences and Restrictions

Our authorized share capital is made up of two classes of shares divided into 4,000,000,000 shares of common stock, US$0.01 par value, and 1,000,000,000 shares of preferred stock, US$0.01 par value. Our Board of Directors is vested with the authority to authorize by resolution from time to time the issuance of the preferred shares in one or more series and to prescribe the number of preferred shares within each such series and the voting powers, designations, preferences, limitations, restrictions and relative rights of each such series.

Rights, preferences and restrictions attaching to common stock

No dividend shall be declared and paid unless our directors determine that immediately after the payment of the dividend our company will be able to satisfy its liabilities as they become due in the ordinary course of its business and the realizable value of the assets of our company will not be less than the sum of its total liabilities and its capital. All dividends unclaimed for three years after having been declared may be forfeited by resolution of the directors for the benefit of our company.

All common shares vote as one class and each whole share has one vote. We may redeem, purchase or acquire any of our own shares for such fair value as we by a resolution of directors determine, but only out of surplus or in exchange for newly issued shares of equal value. All common shares have the same rights with regard to dividends and distributions upon our liquidation.

Rights, preferences and restrictions attaching to Series A Preferred Stock

Pursuant to the authority conferred on the Board of Directors by the Memorandum of Association, we have established and created a series of 1,000,000 shares of preferred stock, par value $0.01 per share, designated as Series A Preferred Stock.

The holders of the Series A Preferred Stock shall be entitled to receive dividends only as, when and if such dividends are declared by the Board of Directors with respect to shares of Preferred Stock.

As to payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up of our company, all share of Series A Preferred Stock shall rank prior to all common stock, par value $0.01 per share.

The 1,000,000 shares of Series A Preferred Stock shall have an aggregate voting power of 25% of the combined voting power of our entire shares, including common stock and preferred stock.

In the event of any distribution of assets upon any liquidation, dissolution or winding-up, the holder of the outstanding preferred stock shall be entitled to receive an amount equal to the consideration paid by him for such shares plus any accrued and unpaid dividends, before any payments or distributions are made to any other equity security of our company.

We have no right to redeem such Series A Preferred Stock.

Changing Share Rights

The rights of each class and series of shares that we are authorized to issue shall be fixed by the resolution of directors. If the authorized capital is divided into different classes, the rights attached to any class or series may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or series and of the holders of not less than three-fourths of the issued shares of any other class or series which may be affected by such variation.

Shareholder Meetings

Upon the written request of shareholders holding 20 percent or more of our outstanding voting shares the directors shall convene a meeting of shareholders.

The directors shall convene an annual meeting of our shareholders for the election of directors and such other matters at such times and in such manner and places as the directors consider necessary or desirable.

At least 21 days’ notice of shareholder meetings shall be given to the members whose name appears on the share register and who are entitled to vote at the meetings.

A shareholder meeting will be deemed duly constituted if there are present in person or by proxy the holders of not less than one-third of the votes of the shares entitled to vote at the meeting.

Restrictions on Rights to Own Securities

There are no limitations on the rights to own our securities.

Change in Control Provisions

There are no provisions of our Memorandum of Association and Articles of Association that would have an effect of delaying, deferring or preventing a change in our control and that would have operated only with respect to a merger, acquisition or corporate restructuring involving us.

Disclosure of Share Ownership

There are no provisions governing the ownership threshold above which shareholder ownership must be disclosed.

Applicable Law

Under the laws of most jurisdictions in the US, majority and controlling shareholders generally have certain fiduciary responsibilities to the minority shareholders. Shareholder action must be taken in good faith and actions by controlling shareholders which are obviously unreasonable may be declared null and void. BVI law protecting the interests of minority shareholders may not be as protective in all circumstances as the law protecting minority shareholders in US jurisdictions.

While BVI law does permit a shareholder of a BVI company to sue its directors derivatively, that is, in the name of and for the benefit of our company, and to sue a company and its directors for his benefit and for the benefit of others similarly situated, the circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of a company organized in the US.

Our directors have the power to take certain actions without shareholder approval, including an issue of our shares or an appointment of an independent registered accounting firm, which would require shareholder approval under the laws of most US jurisdictions. In addition, the directors of a BVI corporation, subject in certain cases to court approval but without shareholder approval, may, among other things, implement a reorganization, certain mergers or consolidations, the sale, transfer, exchange or disposition of any assets, property, part of the business, or securities of the corporation, or any combination, if they determine it is in the best interests of our company, its creditors, or its shareholders.

The International Business Companies Act of the British Virgin Islands permits shareholder approval of corporate matters by written consent and the issuance of preferred shares. Currently, our Memorandum and Articles of Association provide for shareholder approval of corporate matters by written consent and the issuance of preferred shares. Our Board of Directors is vested with the authority to authorize the issuance of the preferred shares in one or more series and to prescribe the voting powers, designations, preferences and restrictions of each series of preferred stock. Such ability could have the effect of delaying, deterring or preventing a change in our control without any further action by the shareholders.

As in most US jurisdictions, the board of directors of a BVI corporation is charged with the management of the affairs of the corporation. In most US jurisdictions, directors owe a fiduciary duty to the corporation and its shareholders, including a duty of care, under which directors must properly apprise themselves of all reasonably available information, and a duty of loyalty, under which they must protect the interests of the corporation and refrain from conduct that injures the corporation or its shareholders or that deprives the corporation or its shareholders of any profit or advantage. Many US jurisdictions have enacted various statutory provisions which permit the monetary liability of directors to be eliminated or limited. Under BVI law, liability of a corporate director to the corporation is primarily limited to cases of willful malfeasance in the performance of his duties or to cases where the director has not acted honestly and in good faith and with a view to the best interests of the corporation. However, under our Articles of Association, we are authorized to indemnify any director or officer who is made or threatened to be made a party to a legal or administrative proceeding by virtue of being one of our directors or officers, provided such person acted honestly and in good faith and with a view to our best interests and, in the case of a criminal proceeding, such person had no reasonable cause to believe that his conduct was unlawful. Our Articles of Association also enable us to indemnify any director or officer who was successful in such a proceeding against expense and judgments, fines and amounts paid in settlement and reasonably incurred in connection with the proceeding.

The above description of certain differences between BVI and US corporate laws is only a summary and does not purport to be complete or to address every applicable aspect of such laws. However, we believe that all material differences are disclosed above.

Changes in Capital

The authorized capital of our company may by an ordinary resolution of our shareholders be increased or reduced. In respect of any unissued shares we may increase or reduce the number of such shares, increase or reduce the par value of any such shares or effect any combination of the foregoing by an ordinary resolution of shareholders.

Nasdaq Requirements

Our common shares are currently listed on the Nasdaq Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by Nasdaq as being applicable to listed companies. Nasdaq has adopted its Rule 5600 Series to impose various corporate governance requirements on listed securities. Rule 5615 provides that foreign private issuers such as our company are required to comply with certain specific requirements of the Rule 5600 Series, but, as to the balance of the Rule 5600 Series, foreign private issuers are not required to comply if the laws of their home country do not otherwise require compliance.

We currently comply with the specifically mandated provisions of the Rule 5600 Series. In addition, we have elected to voluntarily comply with certain other requirements of the Rule 5600 Series, notwithstanding that our home country does not mandate compliance; although we may in the future determine to cease voluntary compliance with those provisions of the Rule 5600 Series. However, we have determined not to comply with the following provisions of the Rule 5600 Series since the laws of the British Virgin Islands do not require compliance:

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

We may in the future determine to voluntarily comply with one or more of the foregoing provisions of the Rule 5600 Series.

C. Material contracts.

The following material contracts, except contracts entered into in the ordinary course of business, have been entered into by us or our subsidiaries within the two years preceding the filing date of this Annual Report:

On September 23, 2008, we entered into a Securities Purchase Agreement with certain institutional investors, or Buyers, for a private placement transaction, and the deal was closed on September 26, 2008. Pursuant to the Securities Purchase Agreement, we sold to the Buyers (i) 498,338 shares of our common stock for a purchase price of $3.01 per share; (ii) Series A Warrants to purchase 249,170 shares of our common stock at an exercise price of $6.00 per share exercisable within five years after the closing date; and (iii) Series B Warrants to purchase 1,277,136 shares of our common stock exercisable upon incurrence of a price reset protection clause and dilutive subsequent issuance. Pursuant to the amendments to the Securities Purchase Agreement, the Buyers also have the option to acquire up to an additional 498,338 shares of common stock, additional Series A Warrants to purchase an aggregate amount of up to 249,170 and Series B Warrants to purchase an aggregate amount of up to 1,277,136 until June 23, 2009. As of the date of this Annual Report, some of the Buyers acquired 60,000 additional shares of our common stock, Series A Warrants to purchase up to 30,000 additional shares of common stock and Series B Warrants to purchase up to 60,000 additional shares of our common stock upon incurrence of a price reset protection and dilutive subsequent issuance. The exercise price of Series A Warrants has been adjusted and amended to US$3.00 with effect from September 26, 2010, in accordance with the reset mechanism as set forth therein. The Securities Purchase Agreement, the form of Series A Warrants and the form of Series B Warrants were filed with SEC as Exhibit 99.2, Exhibit 99.3 and Exhibit 99.4 to our report on Form 6-K on September 24, 2008 (File No. 000-29008).

On April 28, 2009, we and two of our subsidiaries, China Green Industry Group Ltd. and China Green Holdings Ltd., or CGHL, entered into a Subscription Agreement with CMTF Private Equity One, or Subscriber. Pursuant to the Subscription Agreement, CGHL issued to the Subscriber a convertible note with principal amount of US$10.0 million with a three-year maturity and an interest rate equal to Hong Kong Prime Rate. We guaranteed the obligations of CGHL under the convertible note. The convertible note was, at the holder’s option, either convertible into the outstanding ordinary shares of the CGHL or exchangeable for shares of our common stock. The Subscription Agreement and other relevant transaction documents was filed with the SEC as exhibits to our report on Form 6-K dated May 4, 2009 (File No. 000-29008). In November 2009, CMTF Private Equity One exchanged the entire principal amount of the Convertible Note for 3,322,260 shares of our common stock. Such shares have been registered with the SEC with effect from October 20, 2010 with our registration statement on Form F-3 dated September 30, 2010 (File No. 333-169665).

On October 27, 2009, we entered into a Stock Purchase Agreement with China Technology Solar Power Holdings Limited, or CTSPHL Group, and its direct and indirect shareholders to acquire a 51% equity interest in CTSPHL Group in consideration of (i) a cash advance in amount of US$3.0 million; (ii) a number of shares of our common stock to be issued at the closing of acquisition; and (iii) a convertible note with a principal amount equal to US$4.18 million to be issued at the second closing of acquisition. CTSPHL Group, through its wholly-owned subsidiary, is developing a 100 megawatt grid-connected solar power plant project located in Delingha City of Qaidam Basin in Qinghai Province, Northwestern China. Upon execution of the stock purchase agreement, we paid US$3.0 million in cash to Good Million Investments Ltd., the direct shareholder of CTSPHL Group, as a prepayment for the transaction to be solely used for developing and constructing the solar power plant. Due to the fact that the Chinese government has not determined the specific subsidies and incentives for on-grid solar energy applications for Qinghai Province, we encountered difficulties in determining the fair value of the solar power plant. As a result, on October 11, 2010, we entered into an agreement with CTSPHL to terminate the stock purchase agreement. Pursuant to this agreement and subsequent amendments, the cash advance will be repaid to us in instalments. As the date of this Annual Report, the Company has received the first instalment settlement of US$1.0 million. The remaining balance of US$2.0 million will be repaid on or before August 31, 2011. The above-mentioned agreements and amendments thereto were filed with the SEC as exhibits to our reports on Form 6-K (File No. 000-29008).

On December 15, 2009, we entered into an Agency Contract with CTIG, pursuant to which we appointed CTIG as our representative to liaise and negotiate with an equipment supplier regarding the purchase of one a-Si thin film solar panel production line, together with a license covering related patents, proprietary technology, technical service and training. We paid US$1 million to CTIG as a deposit for the purchase. On May 13, 2010, the parties amended the Agency Contract to extend the delivery date for three additional months. On June 22, 2010, we terminated the Agency Contract, as amended, with CTIG and the deposit was refunded in full to us upon termination. A translation of the Agency Contract is filed with the SEC as exhibit to our annual report on Form 20-F dated June 30, 2010.

On April 28, 2010, we entered into a Cooperation Framework Agreement with Xintang Media Technology (Beijing) Limited, or Xintang, its shareholders and associated companies, pursuant to which we intended to acquire Xintang indirectly in consideration of (i) US$5 million in cash as advance payment; (ii) shares of our common stock at a price US$3.01 per share (the “Consideration Shares”); and (iii) warrants to purchase our common stock at an exercise price US$3.50 per share (the “Consideration Warrants”). Xintang is a Chinese company and conducts advertising and media business in China. We paid over Renminbi ten million to Xintang and its shareholders. The completion of this acquisition was contingent upon the satisfaction of a number of conditions, including a fair value determination by an international independent appraiser, completion of restructuring of the target companies, execution of advertising and media business cooperation arrangements between Xintang and Xinhua News Agency and approval from our shareholders in a general meeting. Since the aforesaid conditions precedent have not been satisfied, the parties decided not to proceed with the transaction and to terminate the cooperation framework agreement. We are discussing with Xintang about the details regarding the termination. A translation of the Cooperation Framework Agreement was filed with the SEC as exhibit to our report on Form 6-K dated April 29, 2010 (File No. 000-29008).

On April 28, 2010, we entered into a Subscription Agreement with China Wanhe Investment Limited in connection with a private placement transaction, pursuant to which we agreed to issue and sell 2,000,000 shares of the our common stock at a price of US$3.01 per share. The transaction was completed on May 6, 2010 and we received US$6.02 million of gross proceeds, which we used as working capital for our operations. A translation of the Subscription Agreement was filed with the SEC as exhibit to our report on Form 6-K dated April 29, 2010 (File No. 000-29008). The 2,000,000 shares have been registered with the SEC with effect from October 20, 2010 with our registration statement on Form F-3 dated September 30, 2010 (File No. 333-169665).

On November 5, 2010, we, together with China Green Holdings Limited, one of our wholly-owned subsidiaries, entered into a stock purchase agreement with Linsun Renewable Energy Corporation Limited and its stockholders, pursuant to which we purchased and acquired 100% of the outstanding shares of Linsun Renewable Energy Corporation Limited from its stockholders in consideration of 1,064,827 shares of our common stock. The acquisition was consummated on November 23, 2010. Linsun Renewable Energy Corporation Limited has become one of our wholly-owned subsidiaries and, through its wholly-owned subsidiary Linsun Power Technology (Quanzhou) Corp. Ltd., been manufacturing and selling crystalline PV modules. The execution copy of the stock purchase agreement was filed with the SEC as an exhibit to our report on Form 6-K dated November 8, 2010 (File No. 000-29008).

D . Exchange controls.

China’s government imposes control over the convertibility of Rmb into foreign currencies. Under the current unified floating exchange rate system, the People’s Bank of China publishes a daily exchange rate for Rmb, or the PBOC Exchange Rate, based on the previous day’s dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the PBOC Exchange Rate according to market conditions.

Pursuant to the Foreign Currency Administration Rules promulgated in 1996 and amended in 1997 and 2008 and various regulations issued by State Administration of Foreign Exchange, or SAFE, and other relevant PRC government authorities, the Renminbi is freely convertible for routine current-account foreign exchange transactions, including trade-related receipts and payments, interests and dividends. An enterprise can choose to either keep or sell its foreign exchange income under the current account to financial institutions authorized to engage in foreign exchange settlement or sales business. Capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from the PRC Ministry of Commerce, the SAFE or its local counterpart and the PRC National Development and Reform Commission, or the NDRC for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC.

Pursuant to the above-mentioned administrative rules, foreign investment enterprises are required to apply to SAFE for “foreign exchange registration certificates for foreign investment enterprises”. With such foreign exchange registration certificates (which are granted to foreign investment enterprises, upon fulfilling specified conditions and which are subject to review and renewal by SAFE on an annual basis) or with the foreign exchange sales notices from the SAFE (which are obtained on a transaction-by-transaction basis), foreign-invested enterprises may enter into foreign exchange transactions at banks authorized to conduct foreign exchange business to obtain foreign exchange for their needs.

E. Taxation.

The following discussion is a summary of certain anticipated British Virgin Islands and U.S. tax consequences of an investment in our common stock. The discussion does not deal with all possible tax consequences relating to an investment in our common stock and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities, insurance companies and tax-exempt entities) may be subject to special rules. In particular, the discussion does not address the tax consequences under state, local and other national (e.g., non-British Virgin Island) tax laws. Accordingly, each prospective investor should consult its own tax advisor regarding the particular tax consequences to it of an investment in our common stock. The following discussion is based upon laws and relevant interpretations there of in effect as of the date of this Annual Report, all of which are subject to change.

British Virgin Islands Taxation .

Under the International Business Companies Act of the British Virgin Islands as currently in effect, a holder of common stock who is not a resident of the British Virgin Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the common stock and all holders of common stock are not liable to British Virgin Islands income tax on gains realized during the year on sale or disposal of such shares. The British Virgin Islands does not impose a withholding tax on dividends paid by companies incorporated under the International Business Companies Act.

There are no capital gains, gift or inheritance taxes levied by the British Virgin Islands on companies incorporated under the International Business Companies Act. In addition, the common stock is not subject to transfer taxes, stamp duties or similar charges.

There is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands.

United States Federal Income Taxation

U.S. Holders

This summary describes certain material U.S. federal income tax consequences for a U.S. Holder (as defined below) of acquiring, owning and disposing of our common stock. This summary applies only to a U.S. Holder that will hold our common stock as capital assets for tax purposes. This summary does not apply to a U.S. Holder subject to special rules, such as:

	•		certain financial institutions;
	•		insurance companies;
	•		brokers or dealers;
	•		U.S. expatriates;
	•		traders that elect to mark-to-market;
	•		tax-exempt entities;
	•		persons liable for alternative minimum tax;
	•		persons holding our common stock as part of a straddle, hedging, conversion or integrated transaction;
	•		persons whose functional currency is not the U.S. dollar;
	•		persons that actually or constructively own 10% or more of our voting stock; or
	•		persons holding common shares through partnerships or other entities treated as partnerships for U.S. federal income tax purposes.

This summary is based on the United States Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. Accordingly, holders and prospective purchasers should consult their own tax advisors concerning the U.S. federal, state, local and other national tax consequences of purchasing, owning and disposing of common stock in light of their particular circumstances.

For purposes of this summary, a “U.S. Holder” is a beneficial owner of a share of common stock that is:

	•		a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or who meets the substantial presence residency test under U.S. federal income tax laws;
	•		a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state in the United States or the District of Columbia, unless otherwise provided by Treasury Regulations;
	•		an estate whose income is subject to U.S. Federal income taxation regardless of its source; or
	•		a trust that (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) was in existence on August 20, 1996, was treated as a U.S. person under the Internal Revenue Code on the previous day and has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

This summary also assumes that we will not be treated as a controlled foreign corporation. Under the Code, a controlled foreign corporation generally means any foreign corporation if, on any day during its taxable year, more than 50% of either the total combined voting power of all classes of stock of the corporation entitled to vote, or the total value of the stock of the corporation, is owned, directly, indirectly or by attribution, by U.S. persons who each, in turn, own directly, indirectly or by attribution, 10% or more of the total combined voting power of all classes of stock of the corporation entitled to vote. If you are a partner in a partnership or other entity taxable as a partnership that holds common shares, your tax treatment generally will depend on your status and the activities of the partnership. If you are a partner or a partnership holding common stock, you should consult your own tax advisors.

This discussion does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances and does not address the effects of any state, local or non-U.S. tax laws.

Taxation of Dividends and Other Distributions on our Common Stock

In general, and subject to the discussion below under “ Passive Foreign Investment Company,” distributions paid with respect to our common stock to the extent of our current and accumulated earnings and profits as determined under U.S. federal income tax principles, or Taxable Dividends, will be taxed as ordinary income at the time of the receipt of such amounts by the U.S. Holder. Taxable Dividends will be foreign source income and will not be eligible for the dividends-received deduction available to domestic corporations. To the extent amounts paid as distributions on common stock exceed our current and accumulated earnings and profits, these amounts will not be Taxable Dividends but instead will be treated first as a tax-free return of capital reducing the U.S. Holder’s basis in our common stock until such basis is reduced to zero, and then as gain from the sale of the U.S. holder’s common shares. This reduction in a U.S. Holder’s basis in our common stock would increase any capital gain, or reduce any capital loss, realized by the U.S. Holder upon the subsequent sale, redemption or other taxable disposition of our common stock.

Under U.S. tax rules, distributions from foreign corporations are eligible for a reduced tax rate if the distributions are received with respect to stock that is “readily tradable on an established securities market in the United States.” Accordingly, provided that these rules are satisfied, dividends paid to an individual U.S. Holder will be taxed at a maximum rate of 15% (through 2010), provided that the shares with respect to which such dividends are paid are held by the individual U.S. Holder for more than 60 days during the 121-day period beginning 60 days before the date that the relevant share becomes ex-dividend with respect to such dividend. Under current law, the preferential rate on qualified dividend income will expire for taxable years beginning after December 31, 2010. However, there have been legislative proposals to extend the preferential treatment of qualified dividend income for taxable years beginning after December 31, 2010. Dividends that are not eligible for the treatment described above (including dividends received when we are a passive foreign investment company, as described below) generally will be taxable to U.S. Holders as ordinary income, and the special tax consequences described below may apply to such dividends. You should consult your own tax advisor regarding the availability of the reduced dividend rate in light of your own particular circumstances.

If we make a distribution in a currency other than U.S. dollars, you will be considered to receive the U.S. dollar value of the distribution determined at the spot U.S. dollar rate for the foreign currency on the date such distribution is received by you regardless of whether you convert the distribution into U.S. dollars. Any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is

includible in your income to the date you convert the distribution into U.S. dollars will be treated as ordinary income or loss from U.S. sources.

Sale, Exchange or Other Disposition of Common Stock

Subject to the discussion below under “ Passive Foreign Investment Company,” upon a sale, exchange, or other taxable disposition of common stock, a U.S. Holder will generally recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received and (2) the U.S. Holder’s adjusted tax basis in our common stock that are disposed of. Such gain or loss generally will be long-term capital gain or loss if the U.S. Holder has held our common stock for more than one year at the time of disposition. Net long-term capital gain recognized by an individual U.S. Holder is generally subject to taxation at lower rates than short-term capital gain or ordinary income. The deductibility of capital losses is subject to limitations. Any gain generally will be treated as U.S. source income.

Passive Foreign Investment Company

Based on our current income and assets, we do not believe that for our taxable year ended December 31, 2010, we should be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. We do not expect to be a PFIC in the future although there can be no assurance in that regard.

In general, a non-U.S. corporation is considered a PFIC for U.S. federal income tax purposes if either:

•		at least 75% of its gross income is passive income (the “income test”) ; or
•		at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”).

For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person), and cash is categorized as a passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the shares.

We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. In particular, because the total value of our assets for purposes of the asset test generally will be calculated using the market price of our common stock, our PFIC status will depend in large part on the market price of our common stock which may fluctuate considerably. Accordingly, fluctuations in the market price of our common stock may result in our being a PFIC for any year. In addition, the composition of our income and assets is affected by how, and how quickly, we spend the cash we raise in any offering. If we are a PFIC for our taxable year ended December 31, 2010 or any other year during which you hold our common stock, we will continue to be treated as a PFIC for all succeeding years during which you hold our common stock.

If you are a U.S. holder, in the event we are a PFIC for any taxable year during which you hold our common stock, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of our common stock, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for our common stock will be treated as an excess distribution. Under these special tax rules:

•		the excess distribution or gain will be allocated ratably over your holding period for our common stock
•		the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income;
•		the amount allocated to each other taxable year will be subject to the highest tax rate in effect for that taxable year and interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such taxable year; and
•		the total gain realized by you upon the sale or other disposition of the common stock will also be considered an excess distribution and will be subject to tax as described above.

The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of our common stock cannot be treated as capital gains, even if you hold our common stock as capital assets.

Alternatively, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC to elect out of the tax treatment discussed in the two preceding paragraphs. If you make a mark-to-market election for our common stock, you will include in income each year an amount equal to the excess, if any, of the fair market value of our common stock as of the close of your taxable year over your adjusted basis in such common stock. You are allowed a deduction for the excess, if any, of the adjusted basis of our common stock over their fair market value as of the close of the taxable year. However, deductions are

allowable only to the extent of any net mark-to-market gains on our common stock included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of our common stock, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on our common stock, as well as to any loss realized on the actual sale or disposition of our common stock, but only to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such common shares. Your basis in our common stock will be adjusted to reflect any such income or loss amounts. If you make a mark-to-market election, tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the lower applicable capital gains rate would not apply).

The mark-to-market election is available only for “marketable stock” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange or other market, as defined in applicable Treasury regulations. We expect that our common stock will continue to be listed and traded on the Nasdaq Stock Market, and, consequently, if you are a U.S. holder of our common stock, it is expected that the mark-to-market election would be available to you if we are a PFIC.

If we are a PFIC, we do not intend to prepare or provide you with the information necessary to make a “qualified electing fund” election.

Under certain attribution rules, if we are a PFIC, you will be deemed to own your proportionate share of any subsidiary of ours which is also a PFIC, and will be deemed to realize your proportionate share of any gain resulting from the indirect disposition of such subsidiary. In general, no mark-to-market election with respect to such subsidiary will be available.

If you hold our common stock in any year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on our common stock and any gain realized on the disposition of our common stock. In addition, every U.S. Holder who is a shareholder in a PFIC must file an annual report containing the information required by the Internal Revenue Service.

A U.S. holder is encouraged to consult its tax advisor regarding the potential tax consequences of owning our common stock if we were to be treated as a PFIC.

Non-U.S. Holders

Information Reporting and Backup Withholding

Dividend payments with respect to common stock and proceeds from the sale or exchange of common stock may be subject to information reporting to the Internal Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status must provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information.

F. Dividends and paying agents.

Not Applicable.

G. Statement by experts.

Not Applicable.

H. Documents on display.

We are subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the Securities and Exchange Commission. Specially, we are required to file annually a Form 20-F no later than six months after the close of each fiscal year, which is December 31. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the Securities and Exchange Commission at Judiciary Plaza, 100 F. Street, N.E., Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a Web site at www.sec.gov that

contains reports and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. Documents concerning our company that are referred to in this Annual Report may also be inspected at our office, which is Unit 1010-1011, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting requirements and trading restrictions pursuant to Section 16 of the Exchange Act. In addition, we are exempt from the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information.

I . Subsidiary Information.

Not Applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk.

Foreign exchange risk

We are exposed to the risk of foreign currency exchange rate fluctuation. We have never used derivative instruments to hedge our exchange rate risks. As part of our sales transactions are conducted in Euro and the majority of goods sold are procured in Renminbi, therefore there are foreign exchange transactional risks. The Group is also exposed to foreign currency risk on certain financing activities, which are denominated in the U.S. dollars. As HK$ is pegged to the U.S dollars and therefore we consider the foreign exchange exposure to fluctuation in exchange rate to be minimal. The functional currency of our key operating subsidiaries is the Renminbi. Transactions in other currencies are recorded in Renminbi at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are converted into Renminbi at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in our statements of operations as a component of current period earnings.

The China State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of Renminbi into foreign currencies. The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended. Under the Rules, once various procedural requirements are met, Renminbi is convertible for current account transactions, including trade and services, but not for capital account transactions, including direct investment, loan or investment in securities outside China, unless the prior approval of the State Administration of Foreign Exchange of China is obtained. Although the Chinese government regulations now allow greater convertibility of Renminbi for current account transactions, significant restrictions still remain. Capital investments by foreign-invested enterprises outside China are also subject to limitations and requirements in China, such as prior approvals from the PRC Ministry of Commerce, the SAFE and the PRC National Development and Reform Commission, or the NDRC.

The value of the Renminbi is subject to changes in China’s central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Since 1994, the conversion of Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets. Since 1994, the official exchange rate generally has been stable. However, recently there has been increased political pressure on the Chinese government to decouple the Renminbi from the U.S. dollar and the Chinese government recently signaled a return to a managed appreciation of the Renminbi against the dollar.

A substantial portion of our operations is conducted through our Chinese operating companies, and their financial performance and position are measured in terms of Renminbi. In addition, from time to time we may have United States dollar denominated borrowings. Any devaluation of the Rmb against the United States dollar would consequently have an adverse effect on our financial performance and asset values when measured in terms of United States dollar.

Our solar products are primarily procured in China for Renminbi. A substantial portion of our solar products are sold to customers in Europe and a substantial portion of our revenues are denominated in Euro. Therefore a decoupling of the Euro may affect our financial performance in the future.

Interest rate risk

Our exposure to interest rate risk primarily rates to interest expenses incurred on our short-term borrowings. We have not used any derivative financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates.

Inflation

In recent years, China has not experienced significant inflation, and thus inflation has not had a material impact on our results of operations in recent years. According to the National Bureau of Statistics of China, the change in Consumer Price Index in China was 5.9% in 2008, (0.7)% in 2009 and 3.3% in 2010. We have not in the past been materially affected by any such inflation, but we do not know whether we will not be affected in the future.

Item 12. Description of Securities Other than Equity Securities.

Not Applicable.

PART II

Item 13. Default, Dividend Arrearages and Delinquencies.

None.

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

Not Applicable.

Item 15T. Controls and Procedures.

Disclosure Controls and Procedures

As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our company’s management, including our Chief Executive Officer and our Acting Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. As of December 31, 2010, we performed an evaluation under the supervision and with the participation of our management on the effectiveness of our company’s disclosure controls and procedures. Based on that evaluation, our Chief Executive Officers and our Acting Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2010 were not effective because management identified deficiencies in our internal control over financial reporting that they considered to be material weakness in our internal control over financial reporting.

Notwithstanding management’s assessment that our disclosure controls and procedures were ineffective as of December 31, 2010 and the material weakness described below, we believe that the consolidated financial statements included in this Annual Report correctly present our financial condition, results of operations and cash flows for the fiscal years covered thereby in all material respects.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of an issuer’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, or GAAP. Internal control over financial reporting includes policies and procedures that:

•		Pertain to the maintenance of records that, in reasonable details, accurately and fairly reflect the transactions and dispositions of an issuer’s assets;
•		Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that an issuer’s receipts and expenditures are being made only in accordance with authorizations of its management and directors; and
•		Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of an issuer’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, the application of any evaluation of effectiveness to future periods is subject to the risk that

controls may become inadequate because of changes in conditions, or that complication with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the issuer’s annual or interim financial statements will not be prevented or detected on a timely basis. Because of the material weaknesses described below, management concluded that our internal control over financial reporting was not effective as of December 31, 2010 using framework established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The specific material weaknesses identified by management as of December 31, 2010 are described as follows:

(1)		lack of internal audit department to perform the internal auditing function over financial reporting in our company;
(2)		lack of accounting personnel with knowledge of U.S. GAAP and SEC financial reporting requirements; and
(3)		lack of an investment committee, which should comprise directors with appropriate experience, in performing comprehensive pre-investment feasibility study on prospective investment projects in order to assess the risks associated with the projects, the expected returns, and the resources that the Company is expected to deploy in these projects. There is also a lack of such investment committee, or any other designated management and accounting presonnel within the Company, who possess the required skills and knowledge to monitor the ongoing peformance of the investments made by the Company, and to perform periodic impairment assessment on the respective carrying amounts and related prepayments and advances of the investments according to the requirements of US GAAP when indicators of impairment exist.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting due to final rules of the SEC with Release Nos. 33-9142 and 34-62914 for non-accelerated filers. Our management’s report regarding internal control over financial reporting in this Annual Report is not subject to attestation by our Company’s registered public accounting firm pursuant to final rules of the SEC with Release Nos. 33-8934, 34-58028 and 2009-213.

Changes in internal control over financial reporting

We are in the process of developing and implementing remediation plans to address our material weakness. During the year ended December 31, 2010, we made the following changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

(1)		improvement of additional communications to receive internal and external information relating to fraud prevention,
(2)		establishment of more detailed policies and procedures relating to fraud prevention in our employee code of conduct,
(3)		training our existing accounting personnel on U.S. GAAP and other financial reporting requirements promulgated by the SEC.

Our management anticipates remedying the deficiencies to our company’s internal controls and has planned to implement a series of additional remedial measures in 2011, including (1) design internal audit functions and assign proper personnel to take internal audit responsibilities, (2) recruitment of more qualified personnel to take financial reporting responsibilities; (3) establishment of investment committee and perform comprehensive pre-investment feasibility assessments on prospective investment projects, and also conduct thorough impairment assessment on all our investments on a regular basis; and (4) improvement of other internal policies. The exercise will be supervised and with the participation of our management. We are currently still reviewing our efforts to improve our internal controls and may in the future identify additional deficiencies to our internal controls. Should we discover any additional deficiencies, we intend to take appropriate measures to correct or improve our internal controls.

Item 16A. Audit Committee Financial Expert.

Our Board of Directors has appointed Mr. Loong Cheong Chang, Mr. Yu Keung Poon and Mr. Yezhong Ni, all of whom are independent directors, as members of the Audit Committee, and determined Mr. Yu Keung Poon qualifies as an audit committee financial expert as defined under the applicable rules of the SEC issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002 and the Nasdaq Stock Market.

Item 16B. Code of Ethics.

Our Board of Directors has adopted a Code of Ethics that applies to all of our directors and officers, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. We filed the Code of Ethics as Exhibit 14.1 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2006 (File No. 000-29008). An electronic version of the Code of Ethics is posted on our website www.chinactdc.com. A hardcopy of the Code of Ethics is available upon request at our principal place of business at Unit 10-11, 10/F, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong.

Item 16C. Principal Accountant Fees and Services.

Audit Fees

The audit fees billed by PricewaterhouseCoopers Zhong Tian CPAs Limited Company, our independent registered public accounting firm, for the fiscal year ended December 31, 2010 and 2009 amounted to approximately Rmb2.32 million and Rmb1.37 million, respectively. The audit fees billed by Deloitte Touche Tohmatsu CPA Ltd, our former independent registered public accounting firm, for the fiscal year ended December 31, 2008 amounted to approximately Rmb1.04 million.

Audit-Related Fees

Deloitte Touche Tohmatsu CPA Ltd charged our company Rmb0.2 million to issue a consent for inclusion of their audit report for the fiscal year ended December 31, 2008 in our 2010 Annual Report.

Tax Fees

The statutory tax filings of BHLHK required by applicable regulations Hong Kong for the fiscal year ended December 31, 2009 was performed by S L Lee & Lau.

Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Our Audit Committee pre-approves all audit and permissible non-audit services provided by our independent auditors. These services may include audit services and other services.

Audit of Financial Statements

PricewaterhouseCoopers Zhong Tian CPAs Limited Company has been our principal independent registered public accounting firm for the years ended December 31, 2009 and 2010. Deloitte Touche Tohmatsu CPA Ltd was our previous principal independent registered public accounting firm.

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

Not Applicable.

Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers.

Not Applicable.

Item 16F. Change in Registrant’s Certifying Accountant.

Not Applicable.

Item 16G. Corporate Governance.

We are incorporated under the laws of British Virgin Islands. Our common stock is currently listed on the Nasdaq Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by Nasdaq as being applicable to listed companies. Nasdaq has adopted its Rule 5600 Series to impose various corporate governance requirements on listed securities. Rule 5615 provides that foreign private issuers such as our company are required to comply with certain specific requirements of the Rule 5600 Series, but, as to the balance of the Rule 5600 Series, foreign private issuers are not required to comply if the laws of their home country do not otherwise require compliance.

We currently comply with the specifically mandated provisions of the Rule 5600 Series. However, we are permitted to follow the corporate governance practices in the British Virgin Islands in lieu of certain corporate governance requirements contained in the Rule 5600 Series and we have determined not to comply with the following provisions of the Rule 5600 Series since the laws of the British Virgin Islands do not require compliance:

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

We may in the future determine to voluntarily comply with one or more of the foregoing provisions of the Rule 5600 Series.

Item 17. Financial Statements.

We have elected to provide financial statements pursuant to Item 18 (see below).

Item 18. Financial Statements.

The financial statements are filed as Attachment A hereto and are included as part of this Annual Report on Form 20-F.

Item 19. Exhibits.

The following exhibits are furnished along with this Annual Report or are incorporated by reference as indicated.

Exhibit
Number		Description of Document
1.1		Amended and Restated Memorandum and Articles of Association of China Technology Development Group Corporation, adopted on October 19, 2007 (1)
4.1		Stock Purchase Agreement with CTSPHL Group and its shareholders, dated as of October 27, 2009 (3)
4.2		Translation of agreement with CTIG dated as of December 15, 2009 (4)
4.3		Subscription Agreement with China Wanhe Investment Limited dated as of April 28, 2010 (5)
4.4		Translation of Cooperation Framework Agreement with Xintang Media Technology (Beijing) Ltd. dated as of April 28, 2010 (5)
4.5		Stock Purchase Agreement with Linsun Renewable Energy Corporation Limited and its shareholders dated as of November 5, 2010 (6)
8.1		List of all subsidiaries
11.1		Code of Ethics (2)
12.1		Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
12.2		Certification of Acting Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
13.1		Certification of Chief Executive Officer and Acting Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002
23.1		Consent of Deloitte Touche Tohmatsu CPA Ltd. to the incorporation by reference in the Registration Statements on Form S-8 (file numbers 333-168021, 333-160837, 333-147806, 333-139608 and 333-127423) and Form F-3 (file number 333-169665) of their report dated June 26, 2009 included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2010
23.2		Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company to the incorporation by reference in the Registration Statements on Form S-8 (file numbers 333-168021, 333-160837, 333-147806, 333-139608 and 333-127423) and Form F-3 (file number 333-169665)of their report dated June 28, 2011 included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2010

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm as of December 31, 2009 and 2010 and for the years then ended		F — 1
Report of Independent Registered Public Accounting Firm for the year ended December 31, 2008		F — 2
Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010		F — 3
Consolidated Balance Sheets as of December 31, 2009 and 2010		F — 4
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2008, 2009 and 2010		F — 5
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010		F — 7
Notes to the Consolidated Financial Statements		F — 9

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
China Technology Development Group Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of China Technology Development Group Corporation (the “Company”) and its subsidiaries (collectively, the “Group”) at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Zhong Tian CPAs Limited Company
Shenzhen, the People’s Republic of China
June 28, 2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
China Technology Development Group Corporation

     We have audited the accompanying consolidated statements of operations, changes in shareholders’ equity, and cash flows of China Technology Development Group Corporation and its subsidiaries (the “Group”) for the year ended December 31, 2008. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the results of China Technology Development Group Corporation and its subsidiaries’ operations and their cash flows for the year ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte Touche Tohmatsu CPA Ltd.
Shenzhen, China
June 26, 2009

CHINA TECHNOLOGY DEVELOPMENT GROUP CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts expressed in thousands except per share data)
For the years ended December 31, 2008, 2009 and 2010

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