[LOGO] China Finance Inc.
FINAL FOR IMMEDIATE RELEASE
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November 22, 2004
CHINA FINANCE, INC. REPORTS THIRD QUARTER 2004 RESULTS
Company's subsidiary closed first surety guarantee transaction with net
income of $3.96 million in Q3'04
New York, NY, November 22, 2004 - China Finance, Inc. (OTC BB: CHFI), a
Shenzhen, China-based provider of loan and surety guarantees to China's large
and rapidly expanding class of small and medium enterprises (SMEs), today
announced financial results for the third fiscal quarter ended September 30,
2004.
China Finance, Inc.'s Acquisition
China Finance, Inc. on October 8, 2004, completed an acquisition of all of the
outstanding shares of Value Global International Limited and its wholly owned
subsidiary, Shenzhen Shiji Ruicheng Guaranty and Investment Company. Shiji
Ruicheng's core operating business is providing corporate financial guarantees,
including business loan guarantees and surety guarantees to China-based
businesses looking to expand into the United States, and consumer loan
guarantees and professional services to aid individuals in obtaining loans for
their homes and personal assets. Upon completion of the transaction, Value
Global International Limited became a wholly owned subsidiary of China Finance,
Inc.
Financial Highlights
o China Finance, Inc. completed its own reverse merger transaction with
Value Global International Limited to begin operating its guarantee
business
o China Finance, Inc.'s subsidiary Shiji Ruicheng closed its first surety
guarantee transaction with China Digital Communication Group in the third
quarter 2004
o Net income for the quarter from the China Digital Communication Group's
transaction was recorded at $3.96 million by Value Global International
Limited
o Shiji Ruicheng signed 9 letters of intent with prospective clients
o Established U.S. operations in Jersey City, New Jersey
Fiscal Third Quarter Results
Prior to Shiji Ruicheng being acquired by China Finance, Inc., it consummated a
surety guarantee transaction with China Digital Communication Group, which
provided gross revenue of $4.78 million. Net income for the quarter from this
transaction was $3.96 million. At September 30, 2004, China Finance, Inc.'s
subsidiary Shiji Ruicheng had cash and cash equivalents of $11.6 million
compared with cash and cash equivalents of $12.1 million at June 30, 2004. The
Company continues to have no debt. Revenues from Shiji Ruicheng will be
reflected on China Finance, Inc.'s year-end consolidated financial statements.
Focus on Growth of Guarantee Business
"We continue to execute on our plans to increase revenue in our guarantee
business," commented Chairman and Chief Executive Officer Zhi Yong Xu. "Our
market expansion efforts have been rewarded with strong growth in our pipeline
and contributed to signing nine letters of intent with prospective new clients
in the third quarter."
Fiscal Fourth Quarter Outlook
"We have enjoyed solid execution of our plans thus far in fiscal 2004, and we
are encouraged by the responses from our prospective clients to our service
offerings," reported Mr. Xu. "Based on our current pipeline, we expect to see
increased gross revenues and profitability in the December 2004 quarter. With
respect to our pipeline, we are diligently analyzing nine prospective clients
that we believe are in various high growth industries. Additionally, we believe
that we will be able to meet our corporate objective of completing at least one
additional transaction in the current quarter."
Conference Call and Webcast
Interested parties may participate in the conference call by dialing
877-270-4101 (from within the US or Canada), or 706-634-1485 (from outside the
US or Canada), and providing Conference ID# 2151384 upon request 5-10 minutes
prior to the initiation of the call. You can also listen live to the conference
call by visiting: mms://winaudio.mshow.com/195166.asf.
A replay of the call will be accessible until December 6, 2004 by calling
800-642-1687 (from within the US or Canada) or 706-645-9291 (from outside the US
or Canada) and entering Conference ID# 2151384. Approximately 24 hours after the
conference call, a webcast of the call will also be available at China Finance,
Inc.'s website, www.chinafinanceinc.com, under the under the conference calls
section on the investor relations page. Alternatively, you can access the replay
until December 22, 2004 at: rtsp://realaudio.mshow.com/encoder/195166.rm.
ABOUT CHINA FINANCE, INC.
China Finance, Inc. (CFI) is a newly formed company based in the high-technology
region of Shenzhen, China. Its principal business is providing corporate
financial guarantees, including business loan guarantees and surety gurantees to
China-based businesses looking to expand into the United States, and consumer
loan guarantees and professional services to aid individuals in obtaining loans
for their homes and personal assets. Although it is a new firm, CFI brings
together a management team with broad experience in loan guarantees, real estate
development and investment banking. It is putting this expertise to work by
focusing on M&A surety guarantees. For more information, see
www.chinafinanceinc.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This news release contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based upon our current expectations and speak only as
of the date hereof. Our actual results may differ materially and adversely from
those expressed in any forward-looking statements as a result of various factors
and uncertainties, including the recent economic slowdown affecting technology
companies, our ability to successfully develop products, rapid technological
change in our markets, changes in demand for our future products, legislative,
regulatory and competitive developments and general economic conditions. Our
Annual Report on Form 10-KSB, recent and forthcoming Quarterly Reports on Form
10-QSB, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings
discuss some of the important risk factors that may affect our business, results
of operations and financial condition. We undertake no obligation to revise or
update publicly any forward-looking statements for any reason.
# # #
Chunlei (Charles) Wang Brandi Piacente
CFO Investor Relations
China Finance, Inc. The Anne McBride Co.
201-216-9323 212-983-1702 x208
Email: cwang@chinafinanceinc.com Email: bpiacente@annemcbride.com
See Tables Below
China Finance, Inc.
(A Development Stage Company)
Condensed Balance Sheets
September 30,
2004 December 31,
(Unaudited) 2003
------------ ------------
ASSETS US$ US$
Current Assets
Cash $ 54,775 $ 3,794
Deferred compensation 250,000 --
Deposit 10 10
------------ ------------
TOTAL ASSETS 304,785 3,804
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 9,805 6,815
Due to related party 114,920 --
------------ ------------
Total Current Liabilities 124,725 6,815
============ ============
Shareholders' Equity
Common stock, $0.001 par value,
Authorized shares; 100,000,000
Issued and outstanding shares;
111,744 and 10,681,744, respectively 10,682 112
Additional paid-in capital 1,125,837 79,407
Deficit accumulated during development stage (956,459) (82,530)
------------ ------------
Total Shareholders' Equity 180,060 (3,011)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 304,785 $ 3,804
============ ============
The accompanying notes are an integral part of these condensed financial
statements.
China Finance, Inc.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
Period from
For the Three For the Three For the Nine For the Nine March 28, 2000
Months Ended Months Ended Months Ended Months Ended (Inception)
September 30, September 30, September 30, September 30, to September 30,
2004 2003 2004 2003 2004
------------ ------------ ------------ ------------ ------------
Sales $ -- $ -- $ -- $ 390 $ 6,805
Cost of sales -- -- -- (309) (5,217)
------------ ------------ ------------ ------------ ------------
Gross Profit -- -- -- 81 1,588
------------ ------------ ------------ ------------ ------------
Operating Expenses:
General and administrative 61,985 2,130 116,929 7,018 155,876
Travel and entertainment -- 137 -- 967 13,407
Organizational expenses -- -- -- -- 1,000
Professional fees 125,000 294 757,000 1,096 787,764
------------ ------------ ------------ ------------ ------------
Total Expenses 186,985 2,561 873,929 9,081 958,047
------------ ------------ ------------ ------------ ------------
Net loss $ (186,985) $ (2,561) $ (873,929) $ (9,000) $ (956,459)
============ ============ ============ ============ ============
Net loss per share - Basic and
Diluted $ (0.02) $ (0.02) $ (0.08) $ (0.08)
============ ============ ============ ============
Weighted Average Shares
Outstanding -- Basic and Diluted 10,681,744 111,744 10,681,744 111,744
============ ============ ============ ============
The accompanying notes are an integral part of these condensed financial
statements.
China Finance, Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
(Deficit) For the period from March 28, 2000
(inception) through September 30, 2004
(Unaudited)
Deficit
Common stock Accumulated
------------------------- Additional During Total
Number of Par Capital Development Shareholders'
Shares Value Paid-In Stage Equity (Deficit)
---------- ---------- ---------- ---------- ----------
Beginning Balance -- $ -- $ -- $ -- $ --
Issuance in March 2000 of 36,744
shares of common stock for
$7,500 cash 36,744 37 7,463 -- 7,500
Capital contribution of services
of $1,980 and facilities of $750 -- -- 2,730 -- 2,730
Net loss for the period from
inception - (March 28, 2000) to
December 31, 2000 -- -- -- (4,810) (4,810)
As of December 31, 2000 36,744 37 10,193 (4,810) 5,420
Capital contribution of services
of $660 and facilities of $553 . -- -- 1,213 -- 1,213
Issuance in March 2001 of 75,000
shares of common stock for
$75,000 cash, net of offering
costs of $10,517 75,000 75 64,408 -- 64,483
Net loss for the year ended
December 31, 2001 -- -- -- (30,058) (30,058)
As of December 31, 2001 111,744 112 75,814 (34,868) 41,058
Net loss for the year ended
December 31, 2002 -- -- -- (21,189) (21,189)
As of December 31, 2002 111,744 112 75,814 (56,057) 19,869
Capital contribution of
facilities -- -- 3,593 -- 3,593
Net loss for the year ended
December 31, 2003 -- -- -- (26,473) (26,473)
As of December 31, 2003 111,744 112 79,407 (82,530) (3,011)
Issuance in March 2004 of
5,500,000 shares of common stock
for $550,000 5,500,000 5,500 544,500 -- 550,000
Issuance in June 2004 of
5,070,000 shares of common stock
for professional fees 5,070,000 5,070 501,930 -- 507,000
Net loss for the nine months
ended September 30, 2004 -- -- -- (873,929) (873,929)
As of September 30, 2004 10,681,744 10,682 1,125,837 (956,459) 180,060
The accompanying notes are an integral part of these condensed financial
statements.
China Finance, Inc.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
Period from
For the Nine For the Nine March 28, 2000
Months Ended Months Ended (Inception) through
September 30, September 30, September 30,
2004 2003 2004
------------ ------------ ------------
US$ US$ US$
Cash Flows Used in Operating Activities:
Net loss $ (873,929) $ (9,000) $ (956,459)
Adjustments to reconcile net loss to net cash used by
operating activities:
Common stock issued for professional fees 507,000 3,593 514,536
Depreciation -- 334 1,593
Inventory written off -- -- 9,522
Changes in Operating Assets and Liabilities:
(Increase) decrease in deferred compensation (250,000) -- (250,000)
(Increase) decrease in inventory -- 309 (9,522)
(Increase) decrease in deposits -- -- (10)
(Increase) decrease in prepaid expenses -- -- --
Increase (decrease) in accounts payable 2,990 500 9,805
Increase (decrease) due to related party 114,920 -- 114,920
------------ ------------ ------------
Net cash used by operating activities (499,019) (4,463) (565,615)
------------ ------------ ------------
Cash Flows Used in Investing Activities:
Purchase of office equipment -- -- (1,593)
------------ ------------ ------------
Net cash used by investing activities -- -- (1,593)
------------ ------------ ------------
Cash Flows From Financing Activities:
Issuance of common stock for cash net 550,000 -- 621,983
------------ ------------ ------------
Net cash provided by financing activities 550,000 -- 621,983
------------ ------------ ------------
Increase (decrease) in cash 50,981 (4,463) 54,775
Cash, at beginning of period 3,794 9,138 --
------------ ------------ ------------
Cash, at end of period $ 54,775 $ 4,675 $ 54,775
============ ============ ============
Supplemental Cash Flow Disclosures
Interest paid $ -- $ -- $ --
============ ============ ============
Income taxes paid $ -- $ -- $ --
============ ============ ============
The table below reflects selected unaudited pro forma combined balance sheet as
of September 30, 2004, which assumes that the Acquisition occurred January 1,
2004.
CHINA FINANCE, INC.
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORAMTION
VALUE CHINA PRO FORMA
GLOBAL FINANCE COMBINED
------------ ------------ ------------
Sales $ 4,781,395 $ -- $ 4,781,395
Net income (loss) $ 3,957,170 $ (186,985) $ 3,770,185
Weighted Average Shares
Outstanding
-- Basic and Diluted -- -- 57,671,744
Earnings per share
-- Basic and Diluted -- -- $ 0.065
Total assets $ 16,131,576 $ 304,785 $ 16,436,361
Total liabilities $ 42,150 $ 124,725 $ 166,875
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NOTE: For complete footnotes and further explanations to the financial
information, please refer to the third quarter 10QSB filed on 11/18/2004.