- Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company (N-Q)
June 05 2009 - 12:32PM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-Q
QUARTERLY
SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment
Company Act file number:
811-22081
China Finance,
Inc.
(Exact
name of registrant as specified in charter)
22
nd
Floor, Tower 1, China Phoenix Building, Shennan Road,
Shenzhen,China
(Address
of principal executive offices) (Zip code)
Ann
Yu
22
nd
Floor, Tower 1, China Phoenix Building, Shennan Road,
Shenzhen,China
(Name
and address of agent for service)
Registrant's
telephone number, including area code:
:
+86(755)-23990999
Date of
fiscal year end:
December
31
Date of
reporting period:
March 31,
2009
ITEM
1. SCHEDULE OF INVESTMENTS
China
Finance, Inc.
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Schedule
of Investments
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As
of March 31, 2009
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Shares
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Market
Value (Note 1)
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Common
Stocks - 15.72%
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Small
and Medium Sized Enterprises (or operating companies)
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in
the People's Republic of China
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*
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China
Organic Agriculture, Inc. - 1.30%
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(par
value $0.001)
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1,729,273
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380,440
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*
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Gulf
Resources, Inc. - 5.46%
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(par
value $0.001)
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3,339,000
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1,602,720
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*
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Home
System Group - 0.09%
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(par
value $0.001)
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480,000
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26,400
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*
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Jade
Art Group, Inc. - 8.87%
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(par
value $0.001)
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4,340,700
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2,604,420
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Total
Common Stocks (Cost $9,164,596)
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$ 4,613,980
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Loans
Receivable - 75.81%
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Shenzhen
HuaYinTong Electronics - 49.22%
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(9.00%,
due on October 15, 2009)
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14,441,656
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Shenzhen
HuanYaTong Investment Ltd. - 26.59%
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(8.50%,
due on April 1, 2009)
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7,801,325
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Total
Loans Receivable
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$ 22,242,981
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Real
Estate Held for Investment (a) - 5.27%
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$ 1,545,727
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Total
Investments - 96.80%
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$ 28,402,688
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Other
Assets less Liabilities - 3.20%
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938,509
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Net
Assets - 100.00%
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$ 29,341,197
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(a)
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The
Company’s real estate held for investment consists of a building and
related land use rights. The Company values the real estate based on the
cost to purchase and construct a building on the real
estate. The Company evaluates the market price semi-annually
for possible impairment loss, and, as needed, a certified independent
agent performs a property inspection and a market price
evaluation.
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*
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Non-income
producing security.
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µ
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Affiliated
issuer (Note 2).
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(Continued)
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China
Finance, Inc.
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Schedule
of Investments
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As
of March 31, 2009
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The
following information is based upon the federal income tax cost of
portfolio investments
as
of March 31, 2009.
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Gross
unrealized appreciation
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$ -
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Gross
unrealized depreciation
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(4,550,616)
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Net
unrealized appreciation
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(depreciation)
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$ (4,550,616)
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Federal
income tax cost
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$
9,164,596
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The
difference between the acquisition cost and the federal income tax cost of
portfolio investments is due to
certain
timing differences in the recognition of capital losses under accounting
principles generally accepted
in
the United States and income tax
regulations.
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(Continued)
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China
Finance, Inc.
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Notes
to Schedule of Investments
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As
of March 31, 2009
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Note
1 - Investment Valuation
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The Company
generally receives compensation for its surety guarantee services in the form of
Payment Securities.Most of the Payment Securities are shares of small companies
that are traded in the over-the-counter market and are, therefore, generally
considered to be thinly-traded penny stocks.The Company has adopted policies for
the valuation of securities held by the Company as part of the Companys Pricing
Policies and Procedures.These Pricing Policies and Procedures state that the
Company will generally value its portfolio securities at the quoted market price
or pricing service valuation; however, pursuant to these Pricing Policies, the
Board has adopted guidelines and instructions that substitute the Companys
good-faith estimate of fair value for the quoted market price or pricing service
valuation when pricing securities that may be held by the Company including,
without limitation, Payment Securities (the Fair Value Pricing
Instructions).These Fair Value Pricing Instructions are used by the Companywhen:
its portfolio securities are subject to restrictions on resale because they have
not been held by the Company for six months; there are few transactions or
market-makers in the security; the spread between the bid and asked price is
large; and there are substantial variations in the price quotations over
time.
The Fair Value Pricing Instructions are
implemented by the Board, which determines the fair value price of Payment
Securities on a periodic basis (at least quarterly) in accordance with the Fair
Value Pricing Instructions.Using the Fair Value Pricing Instructions, the Board
seeks to determine the price that is representative of the amount that the
Company might reasonably expect to receive for the Payment Securities upon their
current sale. Under the Fair Value Pricing Instructions, the Board considers a
number of factors and criteria including, without limitation: the financial
standing of the issuer; the business and financial plan of the issuer and
comparison of actual results with the plan; the cost of the securities as of the
date received by the Company; the size of position held and the liquidity of the
market; contractual and statutory restrictions on disposition; and pending
public offering with respect to the financial instrument; any pending
reorganization activity affecting the financial instrument (such as merger
proposals, tender offers; debt restructurings, and conversions); the reported
prices and the extent of public trading in similar financial instruments of the
issuer or comparable companies; the ability of the issuer to obtain needed
financing; any changes in the economic conditions affecting the issuer; recent
purchases or sales of securities of the issuers of the securities; pricing by
other dealers in similar securities; and the financial statements of the issuers
of the securities.
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(Continued)
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China
Finance, Inc.
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Affiliated
Securities
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As
of March 31, 2009
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Note
2
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The
company included in the table below is an affiliated issuer (as defined in
The Investment Company Act of 1940) of the Company because the Company
owns 5% or more of the outstanding voting securities of each issuer
listed. A summary of the Company's investments in affiliates for the
period ended March 31, 2009 is noted below:
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Affiliate
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Dividends
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Value
3/31/2009
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Acquisition
Cost
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Jade
Art Group, Inc.
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4,340,700
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$
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-
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$
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$
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2,604,420
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$
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1,446,900
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(Continued)
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China
Finance, Inc.
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Statement
of Financial Accounting Standard No. 157
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As
of March 31, 2009
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In
September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements." This
standard establishes a single authoritative definition of fair value, sets
out a framework for measuring fair value, and requires additional
disclosures about fair value measurements. SFAS No. 157 applies
to fair value measurements already required or permitted by existing
standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The changes to current GAAP
from the application of this Statement relate to the definition of fair
value, the methods used to measure fair value, and the expanded
disclosures about fair value measurements.
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One
key component of the implementation of SFAS 157 included the development
of a three-tier fair value heirarchy. The basis of the tiers is
dependent upon the various "inputs" used to determine the value of the
Company's investments. These inputs are summarized in the three
broad levels listed below:
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•
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Level
1 - quoted prices in active markets for identical
securities.
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•
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Level
2 - other significant inputs (including quoted prices of similar
securities, interest rates,
prepayment
speeds, credit risk, etc.)
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•
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Level
3 - significant unobservable inputs (including the Company's own
assumptions in determining
the
fair value of investments.)
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The
inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those
securities. For example, money market securities are valued
using amortized cost, in accordance with rules under the Investment
Company Act of 1940. Generally, amortized cost approximates the
current market value of a security, but since the valuation is not
obtained from a quoted price in an active market, such securities are
reflected as Level 2.
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The
following is a summary of the inputs used to value the following Company's
net assets as of March
31,
2009:
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Level
1
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Level
2
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Level
3
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Quoted
Prices
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Other
Significant
Observable
Inputs
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Significant
Unoberservable
Inputs
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$1,983,160
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-
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$26,419,528
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Following
is a reconciliation of Level 3 assets (at either the beginning or the
ending of the period) for which
significant
unobservable inputs were used to determine fair
value.
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Investments
in Securities
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Balance
as of 01/01/09
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$34,881,493
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Change
in Unrealized Appreciation/(Depreciation)
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($8,461,965)
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Balance
as of 03/31/09
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$26,419,528
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For
information on the Company's policy regarding valuation of investments and
other significant accounting
policies,
please refer to the Company's most recent semi-annual or annual
shareholder
report.
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ITEM
2. CONTROLS AND PROCEDURES
(a)
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The
Principal Executive Officer and the Principal Financial Officer have
concluded that the registrant’s disclosure controls and procedures are
effective based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the Investment Company Act of
1940 and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of
1934 as of a date within 90 days of the filing of this
report.
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(b)
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There
were no changes in the registrant's internal control over financial
reporting that occurred during the registrant’s last fiscal quarter that
have materially affected, or are reasonably likely to materially affect,
the registrant’s internal control over financial
reporting.
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ITEM
3. EXHIBITS
Certifications
for each principal executive officer and principal financial officer of the
registrant as required pursuant to Rule 30a-2(a) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) are filed herewith as Exhibit A.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
China
Finance, Inc.
By:
(Signature and Title)
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/s/
Ann
Yu
Ann
Yu
Chairman,
Chief Executive Officer and Principal Executive Officer
China
Finance, Inc.
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Date:
June 4, 2009
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
By:
(Signature and Title)
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/s/
Ann
Yu
Ann
Yu
Chairman,
Chief Executive Officer and Principal Executive Officer
China
Finance, Inc.
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Date:
June 4, 2009
By:
(Signature and Title)
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/s/
Liang
Liao
Liang
Liao
Chief
Financial Officer and Principal Financial Officer
China
Finance, Inc.
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Date:
June 4, 2009
China Finance (CE) (USOTC:CHFI)
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