10-K 1 f10k2008_chaolei.htm 2008 ANNUAL REPORT f10k2008_chaolei.htm
 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
 
x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2008
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________ to ___________
 
Commission File No. 000-50214
 
Chaolei Marketing and Finance Company
 (Name of small business issuer in its charter)
 
Florida
65-0968839
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
 
2416 Lincoln Street, Hollywood, FL 33020
Florida
33020
(Address of principal executive offices)
(Zip Code)
 
(305) 909-6987
 (Registrant’s telephone number, including area code)
 
Securities registered under Section 12(b) of the Exchange Act:
   
Title of each class registered:
Name of each exchange on which registered:
None
None
 
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001
(Title of class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.        Yes o    No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o     No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.   x
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 o
  
Accelerated filer
 o
         
Non-accelerated filer
(Do not check if a smaller reporting company)
 o
  
Smaller reporting company
 x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o   No x
  
As of April 9, 2009, the registrant had 59,966,756 shares of its common stock outstanding.

Documents Incorporated by Reference: None.
 
 

 
TABLE OF CONTENTS

       
PAGE
   
PART I
     1
ITEM 1.
       1
ITEM 1A.
       2
ITEM 2.
       2
ITEM 3.
       2
ITEM 4.
       2
         
   
PART II
     2
ITEM 5.
       2
ITEM 6.
       3
ITEM 7.
       3
ITEM 7A.
       7
ITEM 8.
       F-
ITEM 9.
       8
ITEM 9A(T).
       8
         
   
PART III
     9
ITEM 10.
       9
ITEM 11.
       11
ITEM 12.
       13
ITEM 13.
       14
ITEM 14.
       14
         
   
PART IV
     15
ITEM 15.
       15
         
SIGNATURES
         16
  


PART I

 

General

Chaolei Marketing and Finance Company (previously BioTex Holdings, Inc.) was incorporated on December 17, 1999 under the laws of the State of Florida to engage in any lawful corporate undertaking.

In June, 2005 pursuant to a Stock Purchase Agreement and Share Exchange between the Company and BioTex Corp. (“Corp”), a Florida corporation, whereby the Company purchased all of the outstanding shares of Corp. and Corp. became a wholly owned subsidiary of the Company. BioTex Corp was established in 2003 to develop and employ technologies from around the world to process biomass (plant derived) waste, extract the usable fractions, and then utilize or sell those extractions in further downstream processes.  

On December 30, 2005, pursuant to a Stock Purchase Agreement and Share Exchange by and among the Company, Corp and BTX Holdings, Inc., a Florida corporation (“BTX”), BTX purchased all of the outstanding shares of Corp. Pursuant to the Agreement, the Company transferred all of the outstanding shares of Corp. to BTX and Corp. became a wholly owned subsidiary of BTX. Since the Company had no other assets than Corp. and all of the shares of Corp. were transferred to BTX, the Company became a shell company as defined in Rule 12b-2 of the Exchange Act. 

On October 22, 2007, we entered into an Agreement to acquire a Marketing and Commission Agreement with Sichuan Chaolei Industry Stock Company, 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. Pursuant to this Agreement, the Company agrees to be CICO’s exclusive sales agent throughout the World, in China and outside of China, for all products and services offered by CICO. As consideration for this exclusive right, CICO shall pay the Company a 10% commission on worldwide sales. We issued 53,793,990 shares of common stock to CICO shareholders as identified in Schedule B of the Agreement, as well as 3,000,000 shares of common stock to the individuals identified on Schedule C of the Agreement as a finder’s fee for this transaction. Pursuant to the Agreement, we filed with the state of Florida to change our name to Chaolei Marketing and Finance Company.
 
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 will 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, the Company 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.  Currently, polysilicon products sell for approximately $300 per kilo.

In December 2007, the Company 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.  Currently, polysilicon products sell for approximately $300 per kilo.
 
 
-1-

 
Sales Marketing
 
All sales will initially be generated through sales by external sales and marketing representatives, including those at our main supplier, CICO.
  
Employees
 
As of April 9, 2009, the Company has 5 part-time employees.


Not applicable because we are a smaller reporting company.


We have no properties and at this time has no agreements to acquire any properties. We currently use the offices of management at no cost to us. Management has agreed to continue this arrangement until further notice.


There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.
 
PART II
 

ITEM 5.   MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
No Public Market for Common Stock

There is no trading market for our Common Stock at present and there has been no trading market to date. There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Holders

There are 2,850 holders of our Common Stock. The issued and outstanding shares of our Common Stock were issued in accordance with the exemptions from registration afforded by Section 4(2) of the Securities Act of 1933.
 
 
-2-

 
Dividends

Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.

Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

Recent Sales of Unregistered Securities

On October 22, 2007, we entered into an Agreement to acquire a Marketing and Commission Agreement with Sichuan Chaolei Industry Stock Company, LTD (“Sichuan”).  Pursuant to this Agreement, the Company agrees to be Sichuan’s sales agent throughout the World, in China and outside of China, for all products and services offered by Sichuan.  As consideration for this Agreement, we issued 53,793,990 shares of common stock to Sichuan shareholders 3,000,000 shares of common stock as a finder’s fee for this transaction.

These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance of shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, the size of the offering, and the manner of the offering. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) since these shareholders agreed to and received share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market, and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act of 1933 for this transaction.

Equity Compensation Plan Information

The following table sets forth certain information as of December 31, 2008, with respect to compensation plans under which our equity securities are authorized for issuance:

   
(a)
(b)
(c)
   
_________________
_________________
_________________
   
Number of securities to be issued upon exercise of outstanding
options, warrants and rights
Weighted-average exercise price of
outstanding options, warrants
and rights
Number of securities remaining available
for future issuance under equity
compensation plans (excluding
securities  reflected in column (a))
         
 
Equity compensation
None
    
 
Plans approved by
      
 
Security holders
      
         
 
Equity compensation
None
    
 
Plans not approved
      
 
By security holders
      
 
Total
      

ITEM 6.      SELECTED FIANANCIAL DATA
 
Not applicable because we are a smaller reporting company.

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. 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.
 
 
-3-

 
BUSINESS OVERVIEW

We were incorporated on December 17, 1999 under the laws of the State of Florida to engage in any lawful corporate undertaking. In June, 2005 pursuant to a Stock Purchase Agreement and Share Exchange between the Company and BioTex Corp.(“Corp”), a Florida corporation, whereby the Company purchased all of the outstanding shares of Corp. and Corp. became a wholly owned subsidiary of the Company.  BioTex Corp was established in 2003 to develop and employ technologies from around the world to process biomass (plant derived) waste, extract the usable fractions, and then utilize or sell those extractions in further downstream processes.  

On December 30, 2005, pursuant to a Stock Purchase Agreement and Share Exchange by and among the Company, Corp and BTX Holdings, Inc., a Florida corporation (“BTX”), BTX purchased all of the outstanding shares of Corp. Pursuant to the Agreement, the Company transferred all of the outstanding shares of Corp. to BTX and Corp. became a wholly owned subsidiary of BTX. Since the Company had no other assets than Corp. and all of the shares of Corp. were transferred to BTX, the Company became a shell company as defined in Rule 12b-2 of the Exchange Act. 
 
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 first quarter of 2009.

Results of Operations for the Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

The following table presents the statement of operations for the year ended December 31, 2008 as compared to the year ended December 31, 2007. The discussion following the table is based on these results.
 
   
For The Years Ended December 31,
  
   
2008
    
2007
  
             
REVENUE
  
$
137,365
    
$
14,489
  
                 
Total operating expenses
    
199,592
      
30,458
  
                 
NET LOSS
  
$
(62,166)
    
$
(15,969
)

Total Revenues

We had revenues of $137,175 for the year ended December 31, 2008 and $14,489 for the year ended December 31, 2007.  This increase is attributable to the receipt of commissions on sales of Sichuan Chaolei Industry Stock Co, Ltd. pursuant to a Sales and Marketing Agreement entered into by the Companies on October 17, 2007.

Operating Expenses

Operating expenses for the year ended December 31, 2008 increased to $199,592 from $30,458 for the year ended December 31, 2007 representing an increase of $169,134. The increase is attributable to an expansion in the operations of our business pursuant to a Sales and Marketing Agreement entered into by the Company and Sichuan Chaolei Industry Stock Co,, Ltd. on October 17, 2007.

 
-4-
 
Net income (loss)

Net loss was $62,166 for the year ended December 31, 2008, compared to $15,969 for the same period ended December 31, 2007, an increase of $46,197.  Our net losses increased because of an expansion in the operations of our business pursuant to a Sales and Marketing Agreement entered into by the Company and Sichuan Chaolei Industry Stock Co, Ltd. on October 17, 2007.
 
Liquidity and Capital Resources
 
As of December 31, 2008, we have assets of $82,669 consisting of cash of $14,567, accounts receivable of $14,308 and intangible assets of $53,794 and total liabilities of $12,000, compared with December 31, 2007 when we had assets of $133,235 consisting of cash of $69,952, accounts receivable of $14,489 and intangible assets of $53,794, and total liabilities of $400, consisting of accounts payable of $400.
 
We believe that we will need additional funding to satisfy our cash requirements for the next twelve months. Completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that additional financing will be available. In the absence of additional financing, we may be unable to proceed with our plan of operations.
 
We intend to hire additional employees for sales, administrative and finance support staff as necessary, though we have no time frame in which we expect to hire such staff. Additional sales staff, when required, will be hired on a commission basis, and administrative and finance support staff will only be hired when revenues are such that the company can support such a staff.   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.

We anticipate that our general and administrative expenses for the next 12 months will total $183,200.

The breakdown is as follows:
 
General and Administrative
      
 
Legal and Accounting
  
$
45,000
  
 
Telecommunications
    
1,200
  
 
Office Supplies
    
500
  
 
Postage & Shipping
    
1,200
  
 
Travel
    
10,000
  
 
Utilities
    
4,800
  
 
Taxes and Licenses
    
500
  
 
Salaries and Wages
    
120,000
  
  TOTAL 
  
$ 
183,200
  
 
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 may be required and we would then not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we would likely seek additional financing to support the continued operation of our business. We anticipate that depending on market conditions and our plan of operations, we could incur operating losses in the foreseeable future. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit from our business operations to cover our operating expenses.
 
 We anticipate that our operational, and general and administrative expenses for the next 12 months will total approximately $183,200. 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 our progress with the execution of our business plan. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

 
-5-
 
 
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)., we will require additional funds to continue to implement and expand our business plan during the next twelve months.

Critical Accounting Policies
 
Our significant accounting policies are summarized in Note 2 of our financial statements included in this annual report on Form 10-K for the year ended December 31, 2008. 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 of 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.
 
Recent Accounting Pronouncements
 
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”.  This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and 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, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.  SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary.  SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.
   
 In April 2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3, “Determination of the Useful Life of Intangible Assets”. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). 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 expected cash flows used to measure the fair value of the asset under SFAS 141R, and other GAAP. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162”).  SFAS 162 identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.  This statement shall be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board’s amendments to AU section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.  The Company is currently evaluating the impact of SFAS 162, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.
 
 
-6-
 
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.
  
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 7A.  QUANTITIATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET RISK

Not applicable because we are a smaller reporting company.
 
 
-7-
 
 
ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
 
 
 
 
CHAOLEI MARKETING AND FINANCE COMPANY
 
FINANCIAL STATEMENTS
 
For the years ended December 31, 2008 and 2007


 
CONTENTS
 

 
Page
   
Report of Independent Registered Public Accounting Firm
F-2
   
Balance Sheets
F-3
   
Statements of Operations
F-4
   
Statement of Changes in Stockholders' Equity
F-5
   
Statement of Cash Flows
F-6
   
Notes to Financial Statements
    F-7 - F-13


F-1

 

Report of Independent Registered Public Accounting Firm



To The Stockholders and Board of Directors
of Chaolei Marketing and Finance Company

    We have audited the accompanying balance sheets of as of December 31, 2008 and 2007 and the related statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2008 and 2007. 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 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provided a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Chaolei Marketing and Finance Company as of December 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended December 31, 2008 and 2007 in conformity with accounting principles generally accepted in the United States.

    The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company’s need to seek new sources or methods of financing or revenue to pursue its business strategy, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans as to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


Jewett, Schwartz, Wolfe & Associates

Hollywood, Florida
April 4, 2009


 
F-2
 
 
CHAOLEI MARKETING AND FINANCE COMPANY
f/k/a BIOTEX HOLDINGS,INC
BALANCE SHEETS
  
             
ASSETS
  
   
December 31,
    
December 31,
  
   
2008
    
2007
  
CURRENT ASSETS
            
Cash
   $ 14,567     $ 64,952  
Accounts receivable
     14,308       14,489  
  Total current assets
     28,875       79,441  
                 
Intangible asset
     53,794       53,794  
                 
TOTAL ASSETS
   $ 82,669     $ 133,235  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
                 
CURRENT LIABILITIES
                
Accounts payable
   $ 12,000     $ 400  
  Total current liabilities
     12,000       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 December 31, 2008 and December 31, 2007
     60,000       60,000  
Additional paid in capital
     114,416       114,416  
Accumulated deficit
     (103,747 )     (41,581 )
Total Stockholders’ Equity
     70,669       132,835  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 82,669     $ 133,235  
 
 
The accompanying notes are an integral part of these financial statements
F-3
 
 
CHAOLEI MARKETING AND FINANCE COMPANY
f/k/a BIOTEX HOLDINGS,INC
STATEMENTS OF OPERATIONS
  
       
       
   
For The Years Ended December 31,
  
   
2008
    
2007
  
             
REVENUE
   $ 137,175     $ 14,489  
                 
                 
OPERATING EXPENSES
                
Stock compensation
     -       -  
General and administrative
     77,555       8,048  
Professional fees
     122,037       22,410  
  Total operating expenses
     199,592       30,458  
                 
Other income (expense):
                
Interest income
     251       -  
NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
     (62,166 )     (15,969 )
                 
Provision for income taxes
     -       -  
                 
NET INCOME (LOSS)
   $ (62,166 )   $ (15,969 )
                 
Net loss per share - basic and diluted
   $ 0.00     $ (0.00 )
                 
Weighted average number of shares outstanding during the period - basic and diluted
     59,966,756       13,985,861  
                 
 
 
The accompanying notes are an integral part of these financial statements
F-4
 
CHAOLEI MARKETING AND FINANCE COMPANY
f/k/a BIOTEX HOLDINGS,INC
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
  
                                           
                               
   
Preferred Stock
    
Common Stock
    
Additional Paid-In
    
Accumulated Deficit
        
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Total
  
                                           
                                           
BALANCE, December 31, 2005
     -     $ -     $ 1,709,467     $ 1,710     $ 9,752     $ (15,712 )   $ (4,250 )
                                                         
Common stock issued  services
     -       -       816,104       816       1,584       -       2,400  
                                                         
Net loss, 2006
     -       -       -       -       -       (9,900 )     (9,900 )
                                                         
BALANCE, December 31, 2006
     -     $ -     $ 2,525,571     $ 2,526     $ 11,336     $ (25,612 )   $ (11,750 )
                                                         
Common stock issued for marketing agreement
     -       -       53,793,990       53,794       -       -       53,794  
                                                         
Common stock issued for services
     -       -       3,680,087       3,680       1,320               5,000  
                                                         
Capital contributions from related parties
     -       -       -       -       101,760               101,760  
                                                         
Net Loss, 2007
     -       -       -       -       -       (15,969 )     (15,969 )
                                                         
BALANCE, December 31, 2007
     -     $ -     $ 59,999,648     $ 60,000     $ 114,416     $ (41,581 )   $ 132,835  
                                                         
Net Loss, 2008
                                             (62,166 )     (62,166 )
                                                         
BALANCE, December 31, 2008
     -     $ -     $ 59,999,648     $ 60,000     $ 114,416     $ (103,747 )   $ 70,669  
 
 
The accompanying notes are an integral part of these financial statements
F-5
 
 
CHAOLEI MARKETING AND FINANCE COMPANY
f/k/a BIOTEX HOLDINGS,INC
STATEMENTS OF CASH FLOWS
  
             
             
   
For The Years Ended December 31,
  
   
2008
    
2007
  
             
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net loss
   $ (62,166 )   $ (15,969 )
Adjustments to reconcile net income (loss) to net cash provided in operating activities:
                
Common stock issued for services
     -       5,000  
Non-cash capital contributions from related parties
     -       26,760  
Change in assets and  liabilities
                
  Decrease (increase) accounts receivable
     181       (14,489 )
  Increase (decrease) accounts payable and accrued expenses
     11,600       (11,350 )
Net cash provided by operating activities
     (50,385 )     (10,048 )
                 
CASH FLOWS FROM FINANCING  ACTIVITIES:
                
  Capital contribution related parties
     -       75,000  
          Net cash provided by financing activities
     -       75,000  
                 
NET INCREASE (DECREASE) IN CASH
     (50,385 )     64,952  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     64,952       -  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 14,567     $ 64,952  
                 
Supplemental disclosure of non cash investing & financing activities:
                
Cash paid for income taxes
   $ -     $ -  
Cash paid for interest expense
   $ -     $ -  
Common stock issued for services
   $ -     $ 5,000  
Non-cash capital contributions from related parties
   $ -     $ 26,760  
 
 
The accompanying notes are an integral part of these financial statements
F-6
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 
 
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.

As reflected in the accompanying financial statements, the Company has a net loss of $62,166 for the year ended December 31, 2008, and accumulated net losses of $103,747. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, generate revenue, and secure additional financing. The Company believes it is taking actions to further implement its business plan and generate revenue, including additional financing which the Company is currently pursuing, but the Company will not be able to continue as a going concern in the absence of obtaining sufficient funding. The financial statements do not include any adjustments that might be necessary if the Company is unable 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.


F-7
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 

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 collectability 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 December 31, 2008 and, therefore, no reserve has been recorded.

Concentration of Credit Risk

During the years ended December 31, 2008 and 2007 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.

F-8
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 
 
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.

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 December 31, 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.
 
 
F-9
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 
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.

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 9, 2008, the agreement was extended until March 31, 2009.
 
 

F-10
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 
 
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. On December 9, 2008, the agreement was extended until March31, 2009.
 
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.  

NOTE 6 – EQUITY

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.

NOTE 6 – INCOME TAXES

At December 31, 2008 and 2007 we had deferred tax assets principally arising from the net operating loss carry forwards for income tax purposes multiplied by an approximate expected rate of 40.5%. As management of the Company cannot determine that it is more likely than not that we will realize the benefit of the deferred tax assets, a valuation allowance equal to the deferred tax asset has be established at December 31, 2008.

 
F-11
 
CHAOLEI MARKETING AND FINANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
 December 31, 2008 and 2007
 
 
The significant components of the deferred tax asset at December 31, 2008 and 2007 were as follows:

    2008     2007  
Current:
            
    Federal
   $ -     $ -  
    State
     -       -  
Deferred:
                
    Federal
     (21,758 )     (5,510 )
    State
     (3,419 )     (878 )
Tax (benefit) from the decrease in valuation allowance
     25,177       6,388  
Provision (benefit) for income taxes, net
   $ -     $ -  
                 

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:
                                                                                                                               
   
 2008
     
Statutory federal income tax rate
  
35.0%
State income taxes
  
5.5%
 Other    - %
Valuation allowance
   (40.5)%
Effective tax rate
  
(0.0 )%


Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes.   The net deferred tax assets and liabilities are comprised of the following:   
 
   
2008
  
Net operating loss-carryforwards
   $ 103,747  
Depreciation and amortization
     -  
Other
     -  
Deferred income tax asset
   $ 103,747  
         

The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:
 
   
2008
  
Deferred tax assets:
   $ -  
   Current
     -  
   Non-current
     42,017  
Less: valuation allowance
     (42,017 )
Net deferred income tax asset
   $ -  
 
The Company has made a 100% valuation allowance of the deferred income tax asset at December 31, 2008, as it is not expected that the deferred tax assets will be realized.  The net increase in valuation allowance during the year ended December 31, 2008 was approximately $18,789.


F-12

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

No.

ITEM 9A(T).  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”) (the Company’s principal financial and accounting officer), 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. 
 
Management's Annual Report on Internal Control Over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2008, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
 
Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
 
-8-

 
PART III
   
 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Our executive officers and directors and their ages as of April 7, 2009 are as follows:
 
Name
Age
Position
Date Appointed
Fan Luo
52
President,
Chief Executive Officer,
Chief Financial Officer, Principal Accounting Officer, and
Chairman of the Board of Directors
October 22, 2007
Cuiling Jia
43
Director
October 22, 2007
Chaoyi Zhong(1)
44
Director
May 27, 2008
Zhou Bin
66
Director
October 22, 2007
Zhong Hua
25
Director and Secretary
October 22, 2007
Liu Xingyou
63
Vice President
October 22, 2007
Zhou Qin
46
Vice President
October 22, 2007
Liao Xueji
53
Vice President
October 22, 2007
Lei Li
43
Vice President of Finance
October 22, 2007
 
Note (1): Effective May 27, 2008 Mr. Shan Wang resigned as a member of our Company's Board of Directors. The resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Effective May 27, 2008, Mr.Chaoyi Zhong was appointed to fill the vacancy on the Board of Directors. 
 
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.
 
Fan Luo, Chairman, President, CEO, CFO and Principal Accounting Officer
 
Mrs. Luo, our President, CEO, CFO and Chairman of the Board of Directors, has been engaged in senior administrative work in government and Metallurgy enterprise.  She has rich experience in management as well as business administration, and great foresight in technical fields. She is also the President and Chairman of Sichuan Chaolei Industrial Stock Co, Ltd., which is located in Chengdu, Sichuan Province, China, and has led that company to become a silicon production enterprise with a promising future.  She currently holds a Masters degree in Metallurgy and a MBA.
 
Cuiling Jia, Director
 
Ms. Jia earned a bachelor degree in economics management.  Prior to joining the Company, she was engaged in the securities brokerage field for 11 years.  She was the director of securities brokerage at Tiantong Securities Co., LTD.  She passed the qualification examination of national security brokerage, proxy security issuing and security investment consulting.  She is a licensed securities broker in China
 
Chaoyi Zhong, Director

Mr. Zhong is a senior economic manager and visiting professor who has worked in government, universities, and enterprises in China.  He has successively served in various executive officer and board positions in China state owned enterprises, as well as foreign-owned enterprises.   Mr. Zhong has rich theoretical knowledge and practical experience in enterprise management, production management, asset and capital operation.
 
 
-9-

 
Zhou Bin, Director
 
Zhou Bin graduated from Lanzhou University with a Masters Degree in nuclear physics. At the Chinese Academy of Science, Zhou Bin has been engaged in exploration and design of industrial automatic products and applications of computer for over 10 years prior to joining the Board of CMFC.  He presided over the building of the computer center in the Xinjiang Weiwuer autonomous region in China.  He completed an independent study in Great Britain of the computer automatic test as well as data acquisition and processing system data was collected from over 3530 employees of Solartron Company.  Zhou Bin earned a provincial award for advancement in the field of science and technology for the national science foundation project of young scholars where studies were completed on superficial exposure depths and its effect on the body and on optical fiber super-micronutrient analysis systems.  Zhou also presided over a national five-year plan research and development project---“12-4K-2-03: completing the exploration of 12 industrial automatic products through cooperation, and gaining national award.

Zhong Hua, Director and Secretary
 
Zhong Hua, age 24, graduated from Sichuan Normal University, majoring in tourism and art design.  Zhong was once a clerk of Chengdu Jiazhou international hotel and China Railway Container Transportation Co., Ltd.
 
Liu Xingyou, Vice President
 
Liu Xingyou, age 62, has over twenty years experience in the legal field. Liu was once the president of the People’s Court of Sichuan Province, and an investigator in the CPC Pengzhou Municipal Party Committee. Liu has a strong professional knowledge of law, administrative management and good organization and planning abilities.
 
Zhou Qin, Vice President
 
Zhou Qin, age 45, earned a masters degree in aviation and space navigation system engineering and management engineering at North-West Industrial University. A former air force colonel in the People’s Liberation Army, Zhou was at the head of the educational administration department and director of the teaching planning office, the managing officer of Air Force Equipment Plant of Chengdu Military Region and the assistant general manager of the Sichuan Traffic and Oilseeds Company.

Liao Xueji, Vice President
 
Liao Zueji, age 52, was once the colonel in the People’s Liberation Army.  Liao has many years of enterprise management experience.  Liao completed multiple theses for the China Military Library and Contemporary National Defense Library of China.  Liao was once the deputy executive president of Sichuan Longtan Mineral Water Plant and deputy executive manager of Chaoran Water Industry CO.,LTD.
 
Lei Li, Vice President of Finance
 
Lei Li, age 42, headed up the finance department of the Nitrogenous Fertilizer Plant and Insulated Materials CO.,LTD in Sichuan Ya’an.  Lei was an audit assistant in the Sichuan Zhongheng Accountant Office and department manager of Sichuan Qianjing Accounting Company.
 
None of the officers or directors have any material plan, contract or arrangement to which an officer or director is a party or in which he or she participates that is entered into in connection with the triggering event or any grant or award to any such covered person under any such plan, contract or arrangement in connection with any such event.
 
Term of Office
 
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. 

All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’ fees and reimburse Directors for expenses related to their activities.
 
 
-10-
 
None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years.

Audit Committee

We do not have a standing audit committee of the Board of Directors.  Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so.  We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-B is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.

Involvement in Certain Legal Proceedings
     
To our knowledge, during the past five (5) years, none of our directors, executive officers, promoters, control persons, or nominees has been:
 
§
the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
 
§
convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
§
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
 
§
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.

Auditors; Code of Ethics; Financial Expert

We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Furthermore, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.
 
Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with any of our executives or directors.

ITEM 11.   EXECUTIVE COMPENSATION

Compensation of Executive Officers

Our officers and directors have received compensation in the form of common stock  for services rendered to us, and are not accruing any compensation pursuant to any agreement with us. However, our officers and directors anticipate receiving benefits as beneficial shareholders of us and, possibly, in other ways.
 
 
-11-
 

 
SUMMARY COMPENSATION TABLE

Name and Principal Position
Year 
  
Salary
($)
  
Bonus
($) 
  
Stock Awards
($)
  
Option Awards
($) 
  
Non-Equity Incentive Plan Compensation
($)
  
Non-Qualified Deferred Compensation Earnings
($) 
  
All Other Compensation
($)
  
Totals
($)
                                   
Fan Luo
President, CEO, CFO, and
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Chairman
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Cuiling Jia
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Director
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Chaoyi Zhong
Director (1)
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
       
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Zhou Bin
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Director
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Zhong Hua
Secretary and
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Director
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Liu Xingyou
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Vice President
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Zhou Qin
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Vice President
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Liao Xueji
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
Vice President
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
                                           
Lei Li
Vice President
2008
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
of Finance
2007
    
0
  
0
    
0
  
0
    
0
  
0
    
0
  
0
 
Note (1): Effective May 27, 2008 Mr. Shan Wang resigned as a member of our Company's Board of Directors. The resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Effective May 27, 2008, Mr.Chaoyi Zhong was appointed to fill the vacancy on the Board of Directors.

Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through April 9, 2009.

Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised during period ending April 9, 2009 by the executive officer named in the Summary Compensation Table.

Long-Term Incentive Plan (‘LTIP’) Awards Table. There were no awards made to a named executive officer in the last completed fiscal year under any LTIP.

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
 
 
-12-
 
Employment Agreements

We do not have any employment agreements with our officers or directors currently.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our capital stock, as of April 9, 2009, for: (i) each director; (ii) each person who is known to us to be the beneficial owner of more than 5%of our outstanding common stock; (iii) each of our executive officers named in the Summary Compensation Table; and (iv) all of our current executive officers and directors of as a group. Except as otherwise indicated in the footnotes, all information with respect to share ownership and voting and investment power has been furnished to us by the persons listed. Except as otherwise indicated in the footnotes, each person listed has sole voting power with respect to the shares shown as beneficially owned.
 
 
Title of Class
Name and Address
of Beneficial Owner
Amount and Nature
of Beneficial Owner
Percent of
Class (1)
       
Common Stock
Luo Fan
No.7, Unit 2, Building 3,
No.14, South West Fuqin Road, Jinniu District
Chengdu, Sichuan 610031  
China
10,621,226
18%
       
Common Stock
Cuiling Jia
No.101, Unit 2, Buliding 4
No.29 South Dongguan Street
Penglai  Shandong 265600
China
3,727,092
6%
       
Common Stock
Zhou Bin
No.426,Unit3,Building4  No.79
4th Section of 1st Ring Road
Jinjiang District
Chengdu Sichuan 610031
China
 
53,106
0.09%
Common Stock
Zhong Hua
No.3, Unit3, Building 2
No.99,Baojai Lane,Qingyang District
Chengdu, Sichuan 610017  
China
 
 690,379
1.15%
Common Stock
Liu Xingyou
No.16,Zhengfu Street
Pengzhou
Sichuan    611944                      
China
 
531,061
0.81%
Common Stock
Liao Xueji
No.11,Unit2,Building1
No.26,Ping'an Street
Chenghua District
Chengdu Sichuan  610000
China
159,398
0.27%
       
Common Stock
Lei Li
No.19,Unit2,Building7
No.18,Xinkang Road
Ya'an Sichuan 625000
China
53,106
0.09%
       
Common Stock
Chaoyi Zhong (1)
Address:
0
0%
       
Common Stock
Zhou Qin
Address:
0
0%
       
Common Stock
All officers and directors as a group (9 persons)
15,144,989
25%
 
Note (1): Effective May 27, 2008 Mr. Shan Wang resigned as a member of our Company's Board of Directors. The resignation was not the result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Effective May 27, 2008, Mr. Chaoyi Zhong was appointed to fill the vacancy on the Board of Directors.
 
-13-

 
Based on 59,999,756 shares of our common stock issued and outstanding as of April 9, 2009.

Securities authorized for issuance under equity compensation plans.

We have no equity compensation plans.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
We currently use the offices of management at no cost to us. Management has agreed to continue this arrangement until we complete an acquisition or merger.
 
ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees
 
For our fiscal year ended December 31, 2008, we were billed approximately $14,000 for professional services rendered for the audit and reviews of our financial statements. For our fiscal year ended December 31, 2007, we were billed approximately $ 14,926 for professional services rendered for the audit and reviews of our financial statements.
 
Audit Related Fees
 
For our fiscal years ended December 31, 2008 and 2007 we did not incur any audit related fees.
 
Tax Fees
 
For our fiscal years ended December 31, 2008 and 2007, we were billed 0.00 and $1,000, respectively for professional services rendered for tax compliance, tax advice, and tax planning.
 
All Other Fees
 
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2008 and 2007.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

-  
approved by our audit committee; or

-  
entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does  not  have  records of  what percentage of the above fees were pre-approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
 
-14-
  
PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 
a) Documents filed as part of this Annual Report
 
1. Financial Statements
 
2. Financial Statement Schedules
 
3. Exhibits
 
   
Exhibit No.
Title of Document
   
   
31.1
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
   
31.2
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
   
32.1
Section 1350 Certification of Chief Executive Officer
   
32.2
Section 1350 Certification of Chief Financial Officer

 
-15-
 

 
SIGNATURES
     
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Chaolei Marketing and Finance Company
  
       
Date: April 9, 2009
By:
/s/ Luo Fan
  
   
Luo Fan
  
   
Chairman of the Board of Directors,
Chief Executive Officer,
Chief Financial Officer, Controller,
Principal Accounting Officer
  

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Name
  
Title
  
Date
         
/s/Luo Fan
  
Chairman of the Board of Directors,
  
April 9, 2009
Luo Fan
  
CEO, CFO, Controller and
Principal Accounting Officer
   
 
 
 
 
-16-