Sino Katalytics Investment Corporation and its subsidiaries are principally engaged in investing in listed and unlisted companies in Hong Kong and the PRC. In particular, the Company is uniquely positioned as a premier investor or investment holding for China-focused alternative investment opportunities such as private equities and proprietary industry specific funds.

PRIVATE EQUITY IN CHINA
The global economic condition was stagnant and full of uncertainties in the past year. Fortunately, the financial turmoil caused lesser damage to China when compared with those developed countries. This showed the government’s success in sustaining stable development in the local economy which further strengthened investors’ confidence towards China.

According to the China Private Equity Report Q2 2009 conducted by Zero2IPO, the number of deals dropped by 72.3% and
31.6% as compared to Q2’08 and Q1’09; however, the total investment amount rose 85.4% from US$2.86 billion and 10
folds from US$470 million accordingly. This is an indication that the market has eliminated many poor quality deals and what
remained were worth more to the investors.

The Group not only continued our focus on telecommunications/Media/Technology (“TMT”) and finance services sectors, but also began looking elsewhere for investments with higher liquidity and are more appropriate for a passive investor such as ourselves. During the Year, the Group actively adjusted its investment strategy by allocating resources to our existing portfolio with more certain prospects and investing in other sectors with high potentials, such as natural resources and alternate energy, to diversify our portfolio.

Investment Portfolio
The following summarises the recent status of the major investments in our portfolio:

CNI Bullion Limited (�CNI Bullion�)
The Group owns a 30% interest in CNI Bullion. CNI Bullion is a member of the Chinese Gold and Silver Exchange Society and was formed in March 2005 by a group of experienced bullion practitioners. CNI Bullion’s services include the trading of London Gold, local Hong Kong Gold and London Silver; providing the latest news of major financial markets; and also other ancillary value-added services including price alerts through instant mobile phone messaging.

Quidam Assets Limited (�Quidam�)
The Group owns approximately 18% interest in Quidam Assets Limited. Quidam’s subsidiary, Orbrich (China) International Factors Company Limited (“OIF”), is currently the only wholly foreign-owned financial guaranty and factoring Company in China. OIF is licensed by the Tianjin Government and the PRC Ministry of Commerce to provide factoring services that include financing, sales ledger administration and debt collection. It serves companies all over China through its four factoring hubs located in Tianjin, Shanghai, Chongqing and Hong Kong. OIF is also expected to expand into private equity investments as well as SME loan areas in the near future and is well positioned to become a major financial services operator in Northern China.

UCCTV Holdings Limited (�Winwide�)
The Group is a lead investor into UCCTV of which the Group now owns 20%. The founders of UCCTV secured an exclusive operation rights from the state-owned CCTV.com to operate and manage its online travel channel (www.u.cctv.com, or “U.CCTV.
com”), providing users with a superior multimedia platform to view travel content and to acquire travel services online. The services provided by the platform included information broadcast and distribution, online travel services fulfillment, industry research, advertising operations and business travel information for global consumers. The Group is helping UCCTV to establish a WFOE structure which is ready for future IPO overseas, and is expecting UCCTV to build “U.CCTV.com” into a well known brand in the online travel market in China in the next few years.

IIN Network Education Limited (�KAL�)
The Group currently owns 15% of IIN, which operates a Sinoforeign joint venture subsidiary called China School Resources (“CSR”) in Beijing along with a division of the Ministry of Education. CSR is a provider of electronic education content to elementary schools and middle schools throughout China since 1999, which is used by over 2 million teachers and 20 million students in tens of thousands of campuses. The Group invested into IIN in order to help IIN transform from a traditional distribution model into an online distribution model in the next several years.

Investments in Securities
The Group continued to pursue our strategy of investing part of our resources in listed securities as a risk diversification tool and
to provide liquidity as needed. Given the recent stock market is relatively unstable, the Group will adhere to our prudent approach in allocating our financial resources into the listed equities portfolio to maintain a profitable investment strategy in listed securities.