f10q0908_chaolei.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q

_____________________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.

Chaolei Marketing and Finance Company

(Exact name of registrant as specified in the Charter)

Florida		000-50214		65-0968839
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

2416 Lincoln Street, Hollywood, FL 33020

(Address of Principal Executive Offices)

_____________________

(305) 909-6987

(Issuer Telephone number)

_____________________

(Former Name or Former Address if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o

Accelerated Filer o

Non-Accelerated Filer o

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of October 20, 2008: 59,999,756 shares of common stock.

CHAOLEI MARKETING AND FINANCE COMPANY

FORM 10-Q

September 30, 2008

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4T.	Controls and Procedures	12

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Submission of Matters to a Vote of Security Holders	13
Item 5.	Other Information	13
Item 6.	Exhibits and Reports on Form 8-K	13

SIGNATURES		14

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

CHAOLEI MARKETING AND FINANCE COMPANY f/k/a BIOTEX HOLDINGS, INC BALANCE SHEETS


ASSETS
	September 30,			December 31,
	2008			2007
	(Unaudited)			(Audited)
CURRENT ASSETS
Cash	$	62,144		$	64,952
Accounts receivable		14,308			14,489
Total current assets		76,452			79,441

Intangible asset		53,794			53,794

TOTAL ASSETS	$	130,246		$	133,235

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,500		$	400
Total current liabilities		2,500			400

COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS’ EQUITY

Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding	$	-		$	-
Common stock, $0.001 par value, 100,000,000 shares authorized, 59,999,756 shares issued and outstanding, as of September 30, 2008 and December 31, 2007		60,000			60,000
Additional paid in capital		114,416			114,416
Accumulated deficit		(46,670	)		(41,581	)
Total Stockholders’ Equity		127,746			132,835

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	130,246		$	133,235

The accompanying notes are an integral part of these financial statements.

CHAOLEI MARKETING AND FINANCE COMPANY f/k/a BIOTEX HOLDINGS, INC STATEMENTS OF OPERATIONS


	For The Three Months Ended September 30,					For The Nine Months Ended September 30,
	2008		2007			2008			2007

REVENUE	$	-	$	-		$	137,175		$	-

OPERATING EXPENSES
Stock compensation		-		-			-			2,000
General and administrative		31,460		-			62,481			-
Professional fees		19,813		1,500			79,992			4,500
Total operating expenses		51,273		1,500			142,473			6,500

Other income (expense):
Interest income		179		-			209			-
NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		51,094		(1,500	)		(5,089	)		-

Provision for income taxes		-		-			-			-

NET INCOME (LOSS)	$	51,094	$	(1,500	)	$	(5,089	)	$	(6,500	)

Net loss per share - basic and diluted	$	0.00	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average number of shares outstanding during the period - basic and diluted		59,966,756		9,474,925			59,966,756			9,004,978

The accompanying notes are an integral part of these financial statements.

CHAOLEI MARKETING AND FINANCE COMPANY f/k/a BIOTEX HOLDINGS, INC STATEMENT OF CASH FLOWS


	For The Nine Months Ended September 30,
	2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,089	)	$	(6,500	)
Adjustments to reconcile net income (loss) to net cash provided in operating activities:
Common stock issued for services		-			2,000
Change in assets and liabilities
Accounts receivable		181			-
Accounts payable and accrued expenses		2,100			(500	)
Net cash provided by operating activities		(2,808	)		(5,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution related parties		-			5,000
Net cash provided by financing activities		-			5,000

NET INCREASE (DECREASE) IN CASH		(2,808	)		-

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		64,952			-

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	62,144		$	-

Supplemental disclosure of non cash investing & financing activities:
Cash paid for income taxes	$	-		$	-
Cash paid for interest expense	$	-		$	-
Common stock issued for services	$	-		$	-
Non-cash capital contributions from related parties	$	-		$	-

The accompanying notes are an integral part of these financial statements.

CHAOLEI MARKETING AND FINANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

September 30, 2008

NOTE 1 – ORGANIZATION

Organization

Chaolei Marketing and Finance Company (f/k/a BioTex Holdings, Inc.) (the Company) was established to act as a sales, marketing and finance agent of Sichuan Chaolei Industry Stock Co, Ltd. (CICO), a company organized in the People’s Republic of China that mines silicon, produces poly- and mono- crystalline silicon ingots and wafers for use in photovoltaic cells and computer chips. Additionally, CICO owns a subsidiary company that produces pipes for hydroelectric projects.

Biotex Holdings, Inc. (previously Capital Ventures Group I, Inc.) was incorporated on December 17, 1999 under the laws of the State of Florida to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

The financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has incurred operating losses since its inception. This condition raises substantial doubt as to the Company’s ability to continue as a going concern.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Estimates that are critical to the accompanying financial statements arise from the determination of the fair value of the Company’s investment. Because such determination involves subjective judgment, it is at least reasonably possible that the Company’s estimates could change in the near term with respect to this matter.

Revenue Recognition

The Company derives its revenue from the sale of mined silicon, and poly- and mono-crystaline silicon ingots and wafers. The Company presents revenue in accordance with Staff Accounting Bulletin (SAB) No. 104 “Revenue Recognition in Financial Statements”. Under SAB 104, revenue is realized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured.

Accounts Receivable

The Company is required to estimate the collectibility of its accounts receivable. The Company's reserve for doubtful accounts is estimated by management based on a review of historic losses and the age of existing receivables from specific customers. The Company considers all accounts receivable collectible as of September 30, 2008 and, therefore, no reserve has been recorded.

CHAOLEI MARKETING AND FINANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

September 30, 2008

Concentration of Credit Risk

During the three and nine months ended September 30, 2008 one customer accounted for 100% of the Company's sales.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes (SFAS No. 109). Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Due to the net loss incurred in all periods, there is no provision for income taxes provided as a full valuation allowance has been established.

Net Loss Per Share

Basic and diluted net losses per common share are presented in accordance with SFAS No.128, Earning Per Share (SFAS No. 128), for all periods presented.

Stock-Based Compensation

In December 2004, Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment, (SFAS No. 123(R)) which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). SFAS No. 123(R) supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, (APB No. 25). SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Additionally, SFAS No. 123(R) amends the presentation of the statement of cash flows and requires additional annual disclosures. SFAS No. 123(R) is effective for public companies beginning with the first interim period that begins after June 15, 2005. In April 2005, the Securities and Exchange Commission adopted a new rule that postponed the effective date for SFAS No. 123(R) to the fiscal year beginning after June 15, 2005. The Company has adopted SFAS No. 123(R) on January 1, 2006, but as the Company does not have an option plan, there will be no effect upon implementation.

Goodwill and Indefinite-Lived Intangible Assets

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method, acquired in business combinations is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. Under this standard, goodwill and intangibles with indefinite useful lives are no longer amortized. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter, or more frequently if events and circumstances indicate impairment may have occurred in accordance with SFAS No. 142.

CHAOLEI MARKETING AND FINANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

September 30, 2008

If the carrying value of a reporting unit's goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. SFAS No. 142 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value. The Company currently carries $53,794 as an intangible asset associated with the acquisition of the sales and marketing agreement with CICO. The Company does not believe any impairment of this asset has occurred as of September 30, 2008 and, therefore, has recorded no loss from impairment in its Statement of Operations.

Long-Lived Assets

The Company's accounting policy regarding the assessment of the recoverability of the carrying value of long-lived assets, including property and equipment and purchased intangible assets with finite lives, is to review the carrying value of the assets, annually, during the fourth quarter, or whenever events or changes in circumstances indicate that they may be impaired. If this review indicates that the carrying value will not be recoverable, as determined based on the projected undiscounted future cash flows, the carrying value is reduced to its estimated fair value.

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations

In December, 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (hereinafter “SFAS No. 141 (revised 2007)”). This statement establishes principles and requirements for how an acquirer a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree, b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The scope of SFAS No. 141 (revised 2007) is broader than the scope of SFAS No. 141, which it replaces. The effective date of SFAS No. 141 (revised 2007) is for all acquisitions in which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this statement has no immediate material effect on the Company’s financial condition or results of operations.

Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB 51

In December, 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (hereinafter “SFAS No. 160”). This statement establishes accounting and reporting standards that require a) the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of financial position with equity, but separate from the parent’s equity, b) the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, c) changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, d) when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value and e) entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The effective date of this standard is for fiscal years and interim periods beginning on or after December 15, 2008. The adoption of this statement had no immediate material effect on the Company’s financial condition or results of operations.

CHAOLEI MARKETING AND FINANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

September 30, 2008

Disclosure about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities,” an amendment of FASB Statement No. 133, (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Company’s financial statements.

Determination of the Useful Life of Intangible Assets

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets,”, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under FASB 142 “Goodwill and Other Intangible Assets”. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of the expected cash flows used to measure the fair value of the asset under FASB 141 (revised 2007) “Business Combinations” and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its financial statements.

NOTE 4 – AGREEMENTS

On December 1, 2007, the Company entered into a 6 month employment agreement with its Assistant Secretary. The Company is obligated to pay to our Assistant Secretary $5,000 on the 15th of every month beginning December 15, 2007 and ending May 15, 2008. On April 12, 2008, the Company entered in to a 6 month employment agreement with its Assistant Secretary. The Company is obligated to pay to our Assistant Secretary $5,000 on the 15th of every month beginning June 1, 2008 and ending December 31, 2008.

On December 1, 2007 the Company entered into a 12 month Consulting Agreement with a consulting company to provide regulatory compliance, business development and other ancillary business services. The Company is obligated to pay the Consultant $5,000 per month, beginning December 1, 2007 and ending November 30, 2008.

NOTE 5 – NOTES PAYABLE

On November 14, 2007, the Company borrowed $1,000 from a related party. The note was unsecured, bears interest at 10% and was due December 31, 2007. The note and accrued interest was fully repaid as of December 31, 2007.

CHAOLEI MARKETING AND FINANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

September 30, 2008

NOTE 6 – EQUITY

In January 2006 the Company issued 816,104 shares of common stock valued at $2,400 to its President in accordance with his employment agreement.

In March 2007 the Company issued 680,087 shares of common stock valued at $2,000 for services

During 2007, related parties paid $26,760 of bills on behalf of the Company and contributed $75,000 in working capital. The Company recorded the transactions as capital contributions in the amount of $101,760.

On October 22, 2007, pursuant to a Sales and Marketing Agreement, (the ”SMA”) by and between the Company and Sichuan Chaolei Industry Stock Co., Ltd. a company organized under the laws of China (“CICO”), the Company purchased the right to act as CICO’s exclusive worldwide sales, marketing and finance agent for 56,794,042 shares of common stock, of which 53,794,042 were distributed to the CICO shareholders on a 1 for 1 basis, and 3,000,000 were distributed as consulting fees to an independent consultant of CICO’s . These shares were valued at $3,000. Pursuant to the SMA, the Company will receive 10% of all worldwide sales of CICO from the beginning of time and ending on October 22, 2057. As a result, the Company began operations as a sales and marketing agent, and is no longer a public shell corporation.

Reverse Stock Split

On October 19, 2007, the Company's stockholders approved a 1 for 2.9408 reverse stock split for its common stock. As a result, stockholders of record at the close of business on October 19, 2007, received one shares of common stock for every ten shares held. Common stock, additional paid-in capital and share and per share data for prior periods have been restated to reflect the stock split as if it had occurred at the beginning of the earliest period presented.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Results of Operation

On October 22, 2007, we entered into an Agreement with Sichuan Chaolei Stock Industry Co., Ltd, (“CICO”) a company located in Chengdu, Sichuan Province, People’s Republic of China. Pursuant to the agreement, we acquired a Sales and Marketing Agreement from CICO for 53,793,990 shares of our common stock which provided for us to become the exclusive sales and marketing agent for CICO. The acquisition was approved by the unanimous consent of our Board of Directors on October 22, 20007. Pursuant to the Agreement, we filed an amendment in the State of Florida changing the name of the company to Chaolei Marketing and Finance Company. Pursuant to the Sales and Marketing Agreement, we will receive a commission of 10% of CICO’s worldwide revenues from all sources. While we have signed supply contracts with 2 major customers during the 4th Quarter of 2007, sales of silicon products will show gradual increases until the first quarter of 2009, when full scale delivery should begin.

During the second quarter of 2008, an earthquake struck Sichuan Province, China. The effects of this earthquake are still being felt. Our main supplier, Sichauan Chaolei Industry Stock Co., Ltd is located in Sichuan province. As a result of the earthquake, CICO was forced to halt its mining operations temporarily, which has temporarily interrupted our revenues. It is anticipated that revenues will begin again during the fourth quarter of 2008 or first quarter of 2009.

Plan of Operations

Our plan of operations for the next twelve months is focused on the following primary objectives.

	1.	Find additional customers to purchase mono- and poly-stadium silicon ingots and chips from our contracted supplier, Sichuan Chaolei Stock Industry Co., Ltd.

	2.	Raising capital through private debt or equity offerings;

Subject to the requisite financing, we believe that we can complete the following objectives within the time period specified:

New Supply Agreements

In October, 2007, we entered into an agreement with Sichuan Chaolei Stock Industry Company, Ltd., or CICO, a Chinese company located in Chengdu, Sichuan Province, People’s Republic of China which caused us to become CICO’s exclusive sales and marketing agent worldwide. We receive a commission of 10% of global sales, payable each month based on our and CICO’s sales figures. On October 22, 2007, the effective date of the transaction, we issued 53,794,042 shares to approximately 2700 shareholders in exchange for the sales and marketing agreement. Additionally, our sole director and officer named a new board of directors, and hired new executive officers, and resigned his positions at the company.

New Sales Contracts

In December 2007, we executed an off-take sales agreement with Canadian Solar, Inc., a Canadian company engaged in the business of research, production, sales and after service of photovoltaic products that convert solar energy into electricity. CSI is producing solar voltaic products and solar power products for a wide range of applications, as well as works with the OEM process for some of the world’s leading solar voltaic companies. It is listed on the NASDAQ stock market under the symbol CSIQ. The Agreement calls for the purchase of these products beginning in 2009 and continuing until 2014. While the Agreement defines the quantities of silicon products to be delivered in each year, it requires delivery agreements to be negotiated and signed at the end of each year for the following year based on current market prices of silicon.

In December 2007, we executed off-take sales agreements with Osung LST Co., Ltd, a Korean company engaged in the business of research, production, sales and after service of photovoltaic products such as solar grade silicon ingots and wafers. Osung is listed on the Korean stock market KOSDAQ, under the symbol 052420.KQThe Agreement calls for the purchase of these products beginning in 2009 and continuing until 2014. While the Agreement defines the quantities of silicon products to be delivered in each year, it requires delivery agreements to be negotiated and signed at the end of each year based on current market prices of silicon.

Sales Marketing

All sales will initially be generated through sales by external sales and marketing representatives, including those at our main supplier, CICO.

Administrative Costs

We do expect to hire several employees for sales, marketing, administrative and finance support staff as necessary. Completion of our plan of operations is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without significant revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we may require financing to potentially achieve our goal of profit, revenue and growth.

The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and status of our business plan. In the event we are not successful in reaching our initial revenue targets, additional funds will be required and we may then not be able to proceed with our business plan for the development and marketing of our core products and services. Should this occur, we would likely seek additional financing to support the continued operation of our business. We intend to raise the funds through equity sales and debt, though no definitive agreements have been signed yet.

Going Concern Consideration

As reflected in the accompanying financial statements, we have limited operations, a stockholders' equity of $127,746 and a working capital of $62,144 and used cash in operations of $2,808. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

We believe that actions presently being taken to obtain additional funding and implement our strategic plans provide the opportunity for us to continue as a going concern.

Liquidity and Capital Resources

As of September 30, 2008, we have assets of $130,246 consisting of cash of 62,144, accounts receivable of $14,308 and intangible assets of $53,794 and total liabilities of $2,500.

Cash and cash equivalents from inception to date have been sufficient to cover expenses involved in starting our business. Current cash on hand is insufficient to support our operations for the next twelve months. Therefore, we will require additional funds to continue to implement and expand our business plan during the next twelve months.

Critical Accounting Pronouncements

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

Recent Accounting Pronouncements

In December, 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), “Business Combinations” (hereinafter “SFAS No. 141 (revised 2007)”). This statement establishes principles and requirements for how an acquirer a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree, b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The scope of SFAS No. 141 (revised 2007) is broader than the scope of SFAS No. 141, which it replaces. The effective date of SFAS No. 141 (revised 2007) is for all acquisitions in which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this statement has no immediate material effect on the Company’s consolidated financial condition or results of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures about Market Risks

We conduct our business in United States dollars. Our market risk is limited to the United States domestic, economic and regulatory factors.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There have been no changes in the Company's internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Currently we are not aware of any litigation pending or threatened by or against the Company.

Item 1A. Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits and Reports of Form 8-K.

(a) Exhibits

31.1 Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002

(b) Reports of Form 8-K

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHAOLEI MARKETING AND FINANCE COMPANY

Date: October 20, 2008	By:	/s/ Luo Fan
		Luo Fan
		Chief Executive Officer, Chief Financial Officer