Subject: IFCSS Financial Report (1)

From: dong (D.C.)
Date: Tue, 10 May 94 12:56:46 CDT

From: hq (IFCSS Headquarter)
Subject: IFCSS Financial Report (1)

Jeff W.S.Lin
Certified Public Accountant
414 Hungerford Dr. Suite 236
Rockville, MD 20850

Phone (301)762-5588

March 15, 1994

To the Board of Directors
   IFCSS Foundation,Inc.

I have compiled the accompanying Balance Sheet of IFCSS
Foundation,Inc. (a nonprofit organization) as of December 31,
1993,and the related statement of revenue and expenses-historical
and budgeted,changes in fund balance and cash flows for the six
months period ended, in accordance with Standards for Accounting
and Review Services issued by the American Institute of Certified
Public Accountants.

A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
I have not audited or reviewed the accompanying financial
statements and, accordingly, do not express an opinion or any
other form of assurance on them.

Respectfully Submitted,

Jeff W.S. Lin

=================================================================

FINANCIAL STATEMENTS OF IFCSS FOUNDATION, INC.

For the Period Ended December 31, 1993

=================================================================

IFCSS FOUNDATION, INC.

BALANCE SHEET

As of December 31, 1993

ASSETS

CURRENT ASSETS
  CASH-CKING (IFCSS FOUNDATION)    $  191,908.39
  CASH-CKING (INSURANCE PROGRAM)       34,753.10
  CASH-CHECKING (NED)                   8,355.23
  CASH-SAVING (6.4 FOUNDATION)         94,133.37
  ADVANCE TO EMPLOYEES                    142.76
  GRANT RECEIVABLE-NED (NOTE 3)         1,800.00

      TOTAL CURRENT ASSETS                        $  331,092.85

FIXED ASSETS
  FURNITURE & EQUIPMENT (NOTE 2)       32,454.02
  ACCUMULATE DEPRECIATION             (17,542.34)

      TOTAL FIXED ASSETS                          $   14,911.68

OTHER ASSETS
  SECURITY DEPOSITS                       743.50

      TOTAL OTHER ASSETS                                 743.50

          TOTAL ASSETS                            $  346,748.03

=================================================================

IFCSS FOUNDATION, INC.

BALANCE SHEET

As of December 31, 1993

LIABILITIES AND FUND BALANCE

CURRENT LIABILITIES
  ACCOUNTS PAYABLE                     $   11,836.16
  FEDERAL WITHHOLDING PAYABLE               1,090.09
  STATE UNEMPLOYEMENT TAX PAYABLE             401.61
  STATE WITHHOLDING PAYABLE - VA              115.00
  STATE WITHHOLDING PAYABLE - DC              119.34
  FEDERAL INCOME TAX PAYABLE               25,958.96
  STATE INCOME TAX PAYABLE                 15,895.04

      TOTAL CURRENT LIABILITIES                       $55,416.20
FUND BALANCE
  FUND BALANCE                            279,339.51
  CURRENT EXCESS (DEFICIT)                 11,992.32

      TOTAL FUND BALANCE                              $291,331.83
  
          TOTAL LIABILITIES & FUND BALANCE            $346,748.03

=================================================================

IFCSS FOUNDATION, INC.
STATEMENT OF REVENUE & EXPENSES - COMBINED
For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993    Pct
REVENUE
  DONATION - GENERAL                    $   105,176.73    42.10
  INSURANCE COMMISSION (NOTE 2)             134,464.20    53.83
  CONFERENCE REGISTRATION                    10,465.00     4.19
  LESS: RETURN                                 (295.00)  ( 0.12)

      TOTAL REVENUE                         249,810.93   100.00

PROGRAM SERVICE EXPENSES
  CONFERENCE & CONVENTION                    25,519.13    10.22
  RELIEF SUBSIDIES                           19,595.86     7.84
  PROFESSIONAL SERVICES                       5,671.33     2.27
  ACTIVITY COSTS                              1,103.50     0.44
  NEWSLETTER EXPENSES (NOTE 3)                5,814.99     2.33
  INTERNSHIP EXPENSES (NOTE 3)                1,291.00     0.52
  FLOOD RELIEF SUBSIDIES                      5,500.00     2.20
  SPORTS PROGRAM                                490.89     0.20

      TOTAL PROGRAM SERVICE EXPENSES         64,986.70    26.01

          GROSS PROFIT                      184,824.23    73.99

OPERATING EXPENSES
  ADVERTISING                                 6,191.20     2.48
  ACCOUNTING                                  1,300.00     0.52
  AUDITING                                      570.09     0.23
  BANK CHARGES                                  887.03     0.36
  BAD DEBT                                       70.00     0.03
  CONFERENCE & CONVENTION                     3,328.18     1.33
  DEPRECIATION                                2,895.41     1.16
  DUES & SUBSCRIPTIONS                          721.83     0.29
  HEALTH INSURANCE                            2,059.20     0.82
  MISCELLANEOUS                                 845.06     0.34
  NEWSLETTER                                    632.10     0.25
  OFFICE SUPPLY                               3,320.53     1.33
  OTHER ACTIVITY -4TH TERM                    5,215.24     2.09
  PAYROLL TAXES                               3,170.15     1.27
  POSTAGE & FREIGHT                           1,692.09     0.68
  PRINTING                                    2,852.33     1.14
  STATIONARY                                    259.72     0.10
  PUBLIC RELATIONS                            1,329.52     0.53
  RENT                                        6,452.44     2.58
  REPAIR & MAINTENANCE                          119.28     0.05
  SALARIES & HOUSING ALLOWANCE               49,279.50    19.73
  TELEPHONE                                   7,942.43     3.18
  TRAVEL                                     46,703.29    18.70
  VIDEO TAPE EXPENSES                            84.00     0.03
  TOTAL EXPSENSES                           147,920.62    59.21

                                        6 Months Ended
                                         Dec. 31, 1993    Pct

OPERATING INCOME                             36,903.61    14.77

OTHER INCOME/EXPENSES
  INTEREST INCOME                             3,091.58     1.24
  OTHER INCOME                                1,386.13     0.55
  INCOME TAX - FEDERAL (INS. COMM.)          19,044.96     7.62
  INCOME TAX - STATE   (INS. COMM.)          10,344.04     4.14

      TOTAL OTHER INCOME                    (24,911.29)   (9.97)

        EXCESS OF REVENUE OVER EXPENSES  $   11,992.32     4.80

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - HEADQUARTER

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  DONATION - GENERAL                    $    80,159.69  100.00
  
      TOTAL REVENUE                          80,159.69  100.00

PROGRAM SERVICE EXPENSES

        GROSS PROFIT                         80,159.69  100.00

OPERATING EXPENSES
  ACCOUNTING                                  1,300.00    1.62
  BANK CHARGES                                  690.46    0.86
  BAD DEBT                                       70.00    0.09
  DEPRECIATION                                2,895.41    3.61
  DUES & SUBSCRIPTIONS                          297.04    0.37
  HEALTH INSURANCE                            2,059.20    2.57
  MISCELLANEONS                                 435.11    0.54
  OFFICES SUPPLY                              1,334.12    1.66
  OTHER ACTIVITY - 4TH TERM                   5,215.24    6.51
  PAYROLL TAXES                               3,170.15    3.95
  POSTAGE & FREIGHT                             371.75    0.46
  PRINTING                                      382.08    0.48
  PUBLIC RELATIONS                              322.70    0.40
  RENT                                        6,452.44    8.05
  REPAIR & MAINTENANCE                          119.28    0.15
  SALARIES & HOUSING ALLOWANCE               49,279.50   61.48
  TELEPHONE                                   4,736.94    5.91
  TRAVEL                                      3,241.58    4.04
  ALLOCATED G & EXP. (NOTE 2)               (72,394.99) (90.31)

  TOTAL EXPENSES                              9,978.01   12.45

        OPERATING INCOME                     70,181.68   87.55

OTHER INCOME/EXPENSES       
  INTEREST INCOME                             1,567.92    1.96
  OTHER INCOME                                1,386.13    1.73

      TOTAL OTHER INCOME                      2,954.05    3.69

        EXCESS OF REVENUE OVER EXPENSES   $  73,135.73   91.24

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - COUNCIL

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
PROGRAM SERVICE EXPENSES
  TELE-CONFERENCE                             4,073.88   0.00

      TOTAL PROGRAM SERVICE EXPENSES          4,073.88   0.00

        GROSS PROFIT                         (4,073.88)  0.00

OPERATING EXPENSES
  AUDITING                                      570.09   0.00
  MISCELLANEOUS                                 138.07   0.00
  OFFICE SUPPLY                                 152.15   0.00
  TELEPHONE REIMBURSE.                        1,339.65   0.00
  ALLOCATED G & A EXP. (NOTE 2)               6,614.16   0.00

  TOTAL EXPENSES                              8,814.12   0.00
 
        OPERATING INCOME                    (12,888.00)  0.00

OTHER INCOME/EXPENSES

        EXCESS OF REVENUE OVER EXPENSES     (12,888.00)  0.00

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - JUNE 4TH FUND

For the Period Ended December 31, 1993]

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  DONATION _ GENERAL                    $    15,032.39  100.00
  
      TOTAL REVENUE                          15,032.39  100.00

PROGRAM SERVICE EXPENSES
  CONFFERENCE & CONVENTION                      276.50    1.84
  RELIEF SUBSIDIES                           19,595.86  130.36

      TOTAL PROGRAM SERVICE EXPENSES         19,872.36  132.20

          GROSS PROFIT                       (4,839.97) (32.20)

OPREATING EXPENSES
  BANK CHARGES                                    3.00    0.02
  STATIONARY                                     25.52    0.17
  TRAVEL                                         56.00    0.37
  ALLOCATEL G & A EXP. (NOTE 2)               4,209.01   28.00

  TOTAL EXPENSES                              4,293.53   28.56

          OPERATING INCOME                   (9,133.50) (60.76)

OTHER INCOME/EXPENSES
  INTEREST INCOME                             1,176.44    7.83

      TOTAL OTHER INCOME                      1,176.44    7.83

          EXCESS OF REVENUE OVER EXPENSES    (7,957.06) (52.93)

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXP. - INSURANCE PROGRAM

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec.31, 1993   Pct
REVENUE
  INSURANCE COMMISSION (NOTE 2)         $  134,464.20  100.00
  
      TOTAL REVENUE                        134,464.20  100.00

PROGRAM SERVISE EXPENSES
  ACTIVITY COSTS                             1,103.50    0.82

      TOTAL PROGRAM SERVICE EXPENSES         1,103.50    0.82

          GROSS PROFIT                     133,360.70   99.18

OPERATING EXPENSES
  ADVERTISING                                6,191.20    4.60
  BANK CHARGES                                  94.12    0.07
  OFFICE SUPPLY                              1,693.80    1.26
  PRINTING                                     844.15    0.63
  PROMOTION                                  1,006.82    0.75
  TELEPHONE                                     46.25    0.03
  TRAVEL                                     2,222.01    1.65
  ALLOCATED G & A EXP. (NOTE 2)             23,690.72   17.62

  TOTAL EXPENSES                            35,789.07   26.62

          OPERATING INCOME                  97,571.63   72.56

OTHER INCOME/EXPENSES
  INTEREST INCOME                              310.78    0.23
  INCOME TAX - FEDERAL (INS. COMM.)         19,044.96   14.16
  INCOME TAX - STATE (INS. COMM.)           10,344.04    7.69

      TOTAL OTHER INCOME                   (29,078.22) (21.63)

         EXCESS OF REVENUE OVER EXPENSES  $ 68,493.41   50.94 

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REV. & EXP. - CSPA/CSS - PROTECTION

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  DONATION - GENERAL                   $        529.00  176.92
  LESS: RETURN                                 (230.00) (76.92)

      TOTAL REVENUE                             299.00  100.00

PROGRAM SERVICE EXPENSES
  PROFESSIONAL SERVICES                       4,110.00  999.00

      TOTAL PROGRAM SERVICE EXPENSES          4,110.00  999.00
  
          GROSS PROFIT                       (3,811.00)(999.00)

OPERATING EXPENSES
  BANK CHARGES                                   21.23    7.10
  CONFERENCE & CONBERTION                       560.00  187.29
  MISCELLANEOUS                                 158.44   52.99
  POSTAGE & FREIGHT                           1,187.50  397.16
  PRITING                                        63.48   21.23
  ALLOCATED G & A EXP. (NOTE 2)               9,019.31  999.00

TOTAL EXPENSES                               11,009.96  999.00

         OPERATING INCOME                   (14,820.96)(999.00)

OTHER INCOME/EXPENSES
  INTEREST INCOME                                 0.85    0.28

      TOTAL OTHER INCOME                          0.85    0.28

        EXCESS OF REVENUE OVER EXPENSES   $ (14,820.11)(999.00)

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - 5TH CONGRESS

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  CONFERENCE REGISTRATION               $    10,465.00  100.63
  LESS: RETURN                                  (65.00) ( 0.63)

      TOTAL REVENUE                          10,400.00  100.00

PROGRAM SERVICE EXPENSES
  CONFERENCE & CONVENTION                    21,460.82  206.35

      TOTAL PROGRAM SERVICE EXPENSES         21,460.82  206.35

          GROSS PROFIT                      (11,060.82)(106.35)

OPERATING EXPENSES 
  CONFERENCE & CONVENTION                     2,554.29   24.56
  MISCELLANEOUS                                   6.65    0.06
  NEWSLETTER                                    632.10    6.08
  PRINTING                                    1,207.62   11.61
  TELEPHONE                                      83.86    0.81
  TRAVEL                                     40,726.03  391.60
  ALLOCATED G & A EXP. (NOTE 2)               4,209.01   40.47

  TOTAL EXPENSES                             49,419.56  475.19

          OPERATING INCOME                  (60,480.38)(581.54)

PTHER INCOME/EXPENSES                 

         EXCESS OF REVENUE OVER EXPENSES  $ (60,480.38)(581.54)

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REV. & EXP. -SUPERVISORY COMMITTEE

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
PROGRAM SERVICE EXPENSES
OPERATING EXPENSES
  ALLOCATED G & A EXP. (NOTE 2)               1,803.86   0.00

  TOTAL EXPENSES                              1,803.86   0.00

          OPERATING INCOME                   (1,803.86)  0.00  

PTHER INCOME/EXPENSES

          EXCESS OF REVENUE OVER EXPENSES  $ (1,803.86)  0.00

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXP. - WORKING COMMITTEE

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE 
  DONATION - GENERAL                    $       400.00  100.00

      TOTAL REVENUE                             400.00  100.00

PROGRAM SERVICE EXPENCSES
  SPORTS PROGRAM                                490.89  122.72

      TOTAL PROGRAM SERVICE EXPENSES            490.89  122.72

          GROSS PROFIT                          (90.89)( 22.72)

OPERATING EXPENSES
  CONFERENCE & CONVENTION                       213.89   53.47
  MISCELLANEOUS                                 106.79   26.70
  OFFICE SUPPLY                                 140.46   35.12
  PRINTING                                      355.00   88.75
  TELEPHONE                                   1,319.40  329.85
  TRAVEL                                        457.67  114.42
  VIDEO TAPES                                    84.00   21.00
  ALLOCATED G & A EXPENSES (NOTE 2)           6,614.16  999.00

  TOTAL EXPENSES                              9,291.37  999.00

        OPERATING INCOME                     (9,382.26)(999.00)

OTHER INCOME/EXPENSES

        EXCESS OF REVENUE OVER EXPENSES  $   (9,382.26)(999.00)

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - PROJECT

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  DONATION - GENERAL                    $     1,370.00  100.00

      TOTAL REVENUE                           1,370.00  100.00

PROGRAM SERVICE EXPENSES

          GROSS PROFIT                        1,370.00  100.00

OPERATING EXPENSES
  DUES & SUBSCRIPTION                           424.79   31.01
  TELEPHONE                                      73.08    5.33
  ALLOCATED G & A EXP. (NOTE 2)               5,411.59  395.01

  TOTAL EXPENSES                              5,909.46  431.35

        OPERATING INCOME                     (4,539.46)(331.35)

OTHER INCOME/EXPENSES

        EXCESS OF REVENUE OVER EXPENSES  $   (4,539.46)(331.35)

=================================================================
IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - FUND RAISING

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
PROGRAM SERVICE EXPENSES
OPERATING EXPENSES
  STATIONARY                                    234.20    0.00
  ALLOCATED G & A EXP. (NOTE 2)               6,012.87    0.00

  TOTAL EXPENSES                              6,247.07    0.00
  
        OPERATING INCOME                     (6,247.07)   0.00

OTHER INCOME/EXPENSES

        EXCESS OF REVENUE OVER EXPENSES   $  (6,247.07)   0.00

=================================================================
IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - NED

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
  DONATION - GENERAL                    $     2,185.65  100.00

      TOTAL REVENUE                           2,185.65  100.00

PROGRAM SERVICE EXPENSES
  PROFESSIONAL SERVICE                        1,561.33   71.44
  NEWSLETTER EXPENSES  (NOTE 3)               5,814.99  266.05
  INTERNSHIP EXPENSES                         1,291.00   59.00

      TOTAL PROGRAM SERVICE EXPENSES          8,667.32  396.56

          GROSS PROFIT                       (6,481.67)(296.56)

OPERATING EXPENSES
  BANK CHARGES                                   78.22    3.58
  POSTAGE & FREIGHT                             132.84    6.08
  TELEPHONE                                     343.25   15.70

  TOTAL EXPENSES                                554.31   25.36

          OPERATING INCOME                   (7,035.98)(321.92)

OTHER INCOME/EXPENSES
  INTEREST INCOME                                35.59    1.63

      TOTAL OTHER INCOME                         35.59    1.63

        EXCESS OF REVENUE OVER EXPENSES    $ (7,000.39)(320.29)

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF REV. & EXP. - ROUNDTABLE MEETING

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE
PROGRAM SERVICE EXPENSES
  CONFERENCE & CONVENTION                     ( 292.07)   0.00
 
      TOTAL PROGRAM SERVICE EXPENSES          ( 292.07)   0.00

          GROSS PROFIT                          292.07    0.00

OPERATING EXPENSES
  ALLOCATED G & A EXP. (NOTE 2)               4,810.30    0.00

  TOTAL EXPENSES                              4,810.30    0.00

          OPERATING INCOME                   (4,518.23)   0.00

OTHER INCOME/EXPENSES

          EXCESS OF REVENUE OVER EXPENSES  $ (4,518.23)   0.00

=================================================================
IFCSS FOUNDATION, INC.

STATEMENT OF REVENUE & EXPENSES - FLOOD RELIEF

For the Period Ended December 31, 1993

                                        6 Months Ended
                                         Dec. 31, 1993   Pct
REVENUE 
  DONATION - GENERAL                    $     5,500.00  100.00
    
      TOTAL REVENUE                           5,500.00  100.00

PROGRAM SERVICE EXPENSES
  FLOOD RELIEF SUBSIDIES                      5,500.00  100.00

      TOTAL PROGRAM SERCISE EXPENSES          5,500.00  100.00

OPERATING EXPENSES
OTHER INCOME/EXPENSES

=================================================================

IFCSS FOUNDATION, INC.

STATEMENT OF CHANGES IN FUND BALANCE

For the Year Ended June 30, 1993

FUND BALANCE - JULY 1, 1993           $   279,339.51

  EXCESS OF REVENUE OVER EXPENSES          11,992.32

FUND BALANCE - DECEMBER 31, 1993      $   291,331.83

=================================================================
IFCSS FOUNDATION, INC.

STATEMENT OF CASH FLOWS

For the Period Ended December 31, 1993

INCREASE (DECREASE) IN CASH OR CASH EQUIVALENTS

CASH FLOW FROM OPERATING ACTIVITIES
  EXCESS OF REVENUE OVER EXPENSES                     $ 11,992.32
  ADJUSTMENTS TO RECONCILE CASH FLOW
  DEPRECIATION                             2,895.41
  DECREASE (INCREASE) IN CURRENT ASSETS
    ADVANCE TO EMPLOYEES                   ( 142.76)
    GRANTS RECEIVABLE - NED                6,500.00
  INCREASE (DECREASE) IN CURRENT LIABILITIES
    ACCOUNTS PAYABLE                      (7,448.99)
    FEDERAL WITHHOLDING PAYABLE           (1,699.22)
    FEDERAL UNEMPLOYMENT INSURANCE        (  483.11)
    STATE UNEMPLOYMENT TAX PAYABLE        (  572.17)
    STATE WITHHOLDING PAYABLE - VA        (  248.00)
    FEDERAL INCOME TAX PAYABLE            17,724.96
    STATE INCOME TAX PAYABLE              10.436.04
      TOTAL ADJUSTMENTS                                 26,962.16

      CASH PROVIDED (USED) BY OPERATIONS                38,954.48

CASH FLOW FROM INVESTING ACTIVITIES
  SALES (PURCHASES) OF ASSETS
    FURNITURE & EQUIPMENT  (NOTE 2)        (  999.86)
    SECURITY DEPOSITS                      (  743.50)

      CASH PROVIDED (USED) BY INVESTING               (1,743.36)

      NET INCREASE (DECREASE) IN CASH                  37,211.12

      CASH AT BEGINNING OF PERIOD                      291,938.97

      CASH AT END OF PERIOD                          $ 329,150.09

=================================================================

IFCSS FOUNDATION, INC.

Notes to the Financial Statements

Note 1 - Organization & Purposes
     The IFCSS Foundation, Inc., (the Foundation) was organized
in Maryland on August 14, 1989 under the name of the Independent
Federation of Chinese Students and Scholars, Inc. and
subsequently changed to the name of the IFCSS Foundationg, Inc.
and such changes were approved by the State Department of
Assessments and Taxation of Maryland on Norvember 3, 1989.

     The Foundation is a not-for -profit organization exempt from
income tax under Section 501(c)(3) of the U.S. Internal Revenue
Code. The purposes of the Foundation are to (1) disseminate
information and educate the public regarding the democratic
movement in China; (2) promote freedom, democracy, the rule of
law and human right in China; and (3) to provide assistance to
Chinese Nationals, expecially students and scholars, residing in
the United States.

Note 2 - Summary of Significant Accounting Policies

     (a) Basis of Accounting
         The accompany financial statements of the Foundation
have been prepared on the accrual basis of accounting, whereas
the `Returns of Organization Exempt from Income Tax' were filed
based on cash basis from the inception of the foundation.

     (b) Fund Accounting
         In order to ensure observance of limitations and
restrictions placed on the use of public support and grants
available to the Foundation, the accounts are maintained in
accordance with the principles of `fund accounting.' This is the
procedure by which resources for various purposes are classified
for accounting and reporting purposes into funds that are in
accordance with activities or objectives specified by the public
supports and the grant agreements.

     (c) Functional Expenses
         Direct Expenses are charged to thirteen funds
respectively. All administrative expenditures are allocated to
these funds, except National Endorsement for Democracy (NED) fund
which specifically excludes all indirest costs per Grant
Agreement, based on direct hours devoted to these funds by
headquarter staff.

     (d) Unrelated Business Revenue and Income
         Although the Foundation itself is exempt from the U.S.
and local income taxes, any income generated from unrelated trade
or business are taxable per the Internal Revenue Code.

         The Foundation, during the course of its operation has
earned substantial amount of commission from the insurance
carrier. As result, the Foundation has reported net profits of $
71,528.44, net of U.S. income tax and D.C. franchise tax
Insurance Program Fund account.

     (e) Property and Equipment and Depreciation
         Property and Equipment is stated at cost. Depreciation
is computed by applying the Modified Accelerated Cost Recovery
System (MACRS) of the Internal Revenue Code Section 168. Under
MACRS, Recovery property is depreciated by applying to its
depreciable basis a prescribed depreciation method for its
prescribed recovery period.

     (f) Income Taxes
         The Foundation qualifies as a tax-exempt organization
ynder Section 501(c)(3) of Internal Revneue Code, as such all
income generated from the not-for-profit activities are exempted
from the U.S. & local income taxes with the exception of net
income earned in the Insurance Program Fund (Please see note
2(e)).

Note 3 - Grant Revenues
         The Foundation was awarded two small grants from
National Endownment for Democracy, Inc. (NED) since July of 1991
as amended on June 26, 1992. The grants awarded are for the
purposes of supporting the democratic education activities of the
Foundation and supporting the publication and distribution of a
bi-monthly newsletter which keeps members of the Foundation
informed on current events in China and the overseas democracy
movement. As of the Period ended December 31, 1993, there were
still $ 1,800 grant balance yet to be collected.