UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2003


          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
           For the transition period from __________ to  ____________

                        Commission File Number 000-30173

                      HUAYANG INTERNATIONAL HOLDINGS, INC.
                 (Name of small business issuer in its charter)

                 Nevada                                58-1667944
 ----------------------------------------  ------------------------------------
     (State or other Jurisdiction of       (I.R.S. Employer Identification No.)
             Incorporation)

   386 Qingnian Avenue, Shenyang, China                  110004
 (Address of principal executive offices)              (Zip Code)

                 Issuer's telephone number: (86) (24) 2318-0688

         Securities registered under Section 12(b) of the Exchange Act:


     Title of each class          Name of each exchange on which registered

            NONE                                  NONE
           ------                                ------

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, par value $0.02
                        ---------------------------------
                                (Title of Class)

Checked whether the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 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 [ ]  NO [X]

If the answer is no, identify report(s):
     Form 10-KSB


<PAGE>
Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [ ]

The  issuer's revenues for its most recent fiscal year, ended December 31, 2003,
were:  $523,727.

As  of  May  10,  2004, the aggregate market value of the $0.02 Par Value Common
Stock  held  by non-affiliates of the registrant was approximately $85,040 based
on the closing price of the stock on that date.  This amount excludes the market
value of 6,000,000 shares of Common Stock beneficially owned by the registrant's
directors  and  officers.

The  number  of shares of common stock , par value $0.02, outstanding on May 12,
2004,  was  7,700,807.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

Transitional Small Business Disclosure Format (Check one): Yes [ ]  No [X]


<PAGE>
<TABLE>
<CAPTION>
                      HUAYANG INTERNATIONAL HOLDINGS, INC.

                                      INDEX

                                                                       Page
PART I
<S>                                                                    <C>
Item 1.   Description of Business . . . . . . . . . . . . . . . . . . . . 1

Item 2.   Description of Property . . . . . . . . . . . . . . . . . . . . 5

Item 3.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 8

Item 4.   Submission of Matters to a Vote of Security Holders . . . . . . 9

PART II

Item 5.   Market for Common Equity, Related Stockholder Matters
          and Small Business Issuer Purchases of Equity Securities . . .  9

Item 6.   Management's Discussion and Analysis or Plan of  . . . . . . . 10
          Operation

Item 7.   Financial Statements . . . . . . . . . . . . . . . . . . . . . 15

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure . . . . . . . . . . . . . . . . . . . 15

Item 8A.  Internal Controls and Procedures . . . . . . . . . . . . . . . 16

PART III

Item 9.   Directors and Executive Officers of the Registrant . . . . . . 17

Item 10.  Executive Compensation . . . . . . . . . . . . . . . . . . . . 19

Item 11.  Security Ownership of Certain Beneficial Owners and
          Management and Related Stockholder Matters . . . . . . . . . . 19

Item 12.  Certain Relationships and Related Transactions . . . . . . . . 19

Item 13.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 21

Item 14.  Principal Accountant Fees and Services . . . . . . . . . . . . 22


<PAGE>

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . .F-1
</TABLE>


<PAGE>
                                     PART I.

Item  1.  Description  of  Business

OVERVIEW

     This  Annual Report on Form 10-KSB and the documents incorporated herein by
reference  contain  forward-looking  statements  based  on current expectations,
estimates  and projections about our industry, management's beliefs, and certain
assumptions  made  by  management.  The  actual results may vary materially from
these  expectations, estimates and projections. See "Management's Discussion and
Analysis  or  Plan  of  Operation."

     The  2002  numbers  included  in  this  Annual  Report  on Form 10-KSB were
originally  audited  by  Thomas  Leger  &  Company, LLP and included in the Form
10-KSB  for  the year ended December 31, 2002. On May 14, 2004, we were informed
that  Thomas  Leger  would  not  be reissuing their opinion for the inclusion of
these  numbers  to  be  utilized  in  the current 10-KSB. We have included these
numbers  as  unaudited.  We  have  engaged Weinberg & Company, P.A., our current
auditors,  to  reaudit the 2002 numbers. Because of the late date, they have not
had sufficient time to finalize this process. Immediately upon completion of the
audit,  we  will file a Form 10-KSB/A to include Weinberg's opinion on the audit
of  2002.

     Huayang  International  Holdings,  Inc.  ("HIHI",  the  "Company", "We", or
"Registrant"),  formerly  known as Power Capital Corp. ("PCC"), is a real estate
development  company  engaged  in  the  development  and construction of Huayang
International  Mansion  (the  "Mansion"),  a  163,000  square-meter  hotel,
residential,  retail  and  office  complex in the city of Shenyang, the People's
Republic of China.  The Company's current activities include selling and leasing
of  the  residential,  retail  and  office  properties  in  the  Mansion.

STRUCTURE OF THE COMPANY

     We  conduct  our  real  estate  business  through  our 95% owned subsidiary
Shenyang  Haitong  House  Properties  Development,  Ltd  ("Haitong").

     At  the  beginning of 2002, we were also holding a 20% stake in each of the
following  joint  ventures:  Changyang  International Hotel (Shenyang) Co., Ltd.
("Hotel"),  Changhua  (Shenyang)  Business  Co.,  Ltd.  ("Business  Center") and
Changyuan  (Shenyang) Park Co., Ltd. ("Garage") (collectively referred to as the
"Hotel  Group").  The  Hotel  Group owns the hotel properties in the Mansion. In
September  2002,  we  sold  our  20%  equity  interest in the Hotel Group to the
majority  shareholder  of  the  Hotel  Group.  See "The Hotel Group" for further
details  of  the  Hotel  Group  and  the  transaction.

HISTORY

     We are a public company, incorporated under the laws of the State of Nevada
and  traded  on  the  Over  the  Counter ("OTC") Bulletin Board under the symbol
"HIHI".

     On  December  29,  1995, PCC signed an acquisition agreement, as amended on
January 5, 1996, with the Huayang International Trust (the "Trust"), whereby the
Trust sold its 95% investment in Haitong and 20% investments in the Hotel Group,
which  includes  Hotel,  Business  Center  and  Garage,  to  PCC in exchange for
6,000,000  shares  of  common stock of PCC. On January 5, 1996, 6,000,000 shares
were  transferred  to  the


                                      - 1 -
<PAGE>
Trust. At the date of acquisition, PCC changed its name to Huayang International
Holdings,  Inc. Our shares commenced trading on the OTC Bulletin Board under the
symbol  "HIHI" from January 24, 1996. On December 15, 1999, the Company's shares
were  delisted from the OTC Bulletin Board because it was not in compliance with
the  newly  adopted  OTC  Bulletin  Board  Eligibility  Rule, which requires all
companies  to  be fully reporting under the Securities Exchange Act of 1934, and
for  their  Form  10SB  to  be  in  a "no comment" stage with the Securities and
Exchange  Commission  (the  "Commission").  On  January  10,  2002,  the Company
completed  requirements to comply with the Eligibility Rule and was re-listed on
the  OTC  Bulletin  Board  under  the  symbol  "HIHI".

     In  September  2002,  we  sold  all of our 20% equity interest in the Hotel
Group  to the majority shareholder of the Hotel Group. See "The Hotel Group" for
further  details  of  the  transaction.

BUSINESS

     We  are  engaged  in  real  estate  development business. As of now, we are
primarily  engaged  in  developing  the  Huayang  International  Mansion  (the
"Mansion"). The Mansion is a mixed-use complex with a total construction area of
approximately 163,000 square meters. The Mansion is located in Shenyang, a major
Chinese  city  with  a population of nearly seven million, offering residential,
office,  retail,  hotel,  recreation,  shopping  and  conference  facilities.

     We  conduct  our  real  estate  business  primarily  through  our 95% owned
subsidiary  Haitong, which activities include selling and leasing of real estate
properties  in  Tower A and Podium A. The Mansion consists of two towers and two
podiums.  Haitong  owns  Tower  A  and Podium A of the building, while the Hotel
Group  owned Tower B and Podium B, which is managed by Starwood Hotels & Resorts
as  Sheraton  Shenyang  Lido  Hotel.

     For  detailed  information  about the Mansion and our real estate operating
data,  please  see  Item  2,  "Description  of  Property".

MARKET  AND  COMPETITION

     Shenyang  is  the  capital city of Liaoning Province. It is a major Chinese
city  with  a  population  of  nearly  7  million.  It  was  ranked by the State
Statistical  Bureau  as  one of the largest cities in China in terms of Economic
Strength.  Shenyang  is  one  of the most important industrial centers of China.
Shenyang  is  also  the  most  important  traffic hub for northeastern China. It
connects  Beijing  with  major  cities  such  as  Dalian,  Harbin,  Dandong, and
Changchun  as  well  as  countries  including  Russia, Mongolia and North Korea.


                                      - 2 -
<PAGE>
     In  the  process  of China's economic reform, Shenyang has put great effort
into  developing  projects  with  high  economic  growth  potential  and  has
significantly  improved  its  infrastructure  to  ensure  that  its economy will
continue  to  grow. The city has given priority to the automobile manufacturing,
service, and high technology sectors and has been quite successful in attracting
investments  in  these  sectors.  For  example, major automakers such as Toyota,
General  Motors  and  Ford  all  have  established  joint  ventures in the city.

     The  economic  development  has  led to a higher level of demand for office
space,  retail  space,  business  apartments and hotels, especially for high-end
properties  with  good  locations  and quality services. We quickly responded to
market  demands  and  initiated the Huayang International Mansion project, which
provides  office  space,  luxury  residential units, retail space, entertainment
functions,  convention  and  exhibition  functions as well as a five-star hotel.

     We  are  in direct competition with a number of real estate development and
property  management  companies  that also provide office space to businesses in
Shenyang.  Some  of  these  companies may have more resources than we do, or are
able  to  offer  similar  services  at  a  better  price  than  those  we offer.

THE  HOTEL  GROUP

     In  order to enhance the efficiency of the hotel operations of the Mansion,
the  Company  had entered into several joint ventures to operate various aspects
of  the  hotel  operations:  Changyang  International Hotel (Shenyang) Co., Ltd.
("Hotel"),  Changhua  (Shenyang)  Business  Co.,  Ltd.  ("Business  Center") and
Changyuan  (Shenyang) Park Co., Ltd. ("Garage") (collectively referred to as the
"Hotel  Group").

     At the beginning of 2002, we held a 20% stake in each of the joint ventures
in  the  Hotel  Group.  Yick  Ho, Ltd., a wholly owned subsidiary of Cheung Kong
(Holdings)  Limited,  a  Hong  Kong based corporation whose shares are listed on
The  Stock  Exchange  of  Hong  Kong  Limited,  owned 70% of the Hotel Group. In
September  2002,  we  sold  all of our 20% equity interest in the Hotel Group to
Yick  Ho,  Ltd.,  and agreed to apply the selling price directly as a payment to
certain  debt  owed  to  a  related  party.  Greater China Appraisal Limited, an
international  appraisal  firm  headquartered  in  Hong  Kong,  served  as  an
independent  appraiser  for  the  valuation  of our equity interest in the Hotel
Group  in  conjunction with the payment of the debt. In connection with the sale
of  our  equity  interest in the Hotel Group, a loss of $1,864,142 from the sale
was  recorded.

     Before  we sold our equity interest in the Hotel Group, the hotel had had a
soft  opening  in 2002 and had generated minimal revenues. We recorded a loss of
$821,778  in  respect  of  the  Hotel  Group for the first two quarters of 2002.
Operating  results of the Hotel Group for the second half of 2002 and thereafter
have  been  excluded  from  our  consolidated  financial  statements.


                                      - 3 -
<PAGE>
PROJECT  FUNDING

     Our  projects  were financed through a combination of debt financing in the
form  of  mortgage  notes,  capital  contributions by Mr. Gao Wanjun, one of our
officers,  directors and controlling shareholders, and shareholder loans made to
us  by  Mr.  Gao  Wanjun.

GOVERNMENT  REGULATION

     Our projects are subject to various laws and governmental regulations, such
as  zoning  regulations,  relating  to  our  business  operations  and  project
developments.  We  must  obtain  and  keep current various licenses, permits and
regulatory  approvals  for  our  development projects. We believe that we are in
compliance  with  all laws, rules and regulations applicable to our projects and
that such laws, rules and regulations do not currently have a material impact on
our  operations.  Due  to  the  increasing levels of development in the areas of
China  where  we  currently  operate, it is possible that new laws, rules and/or
regulations  may be adopted that could affect our projects or proposed projects.
The  enactment  of  such  laws,  rules or regulations in the future could have a
negative impact on our project growth or profitability, which could decrease our
projected  revenues  or  increase  our  costs  of  doing  business.

EMPLOYEES

     As  of December 31, 2003, we had 10 employees, all of whom are salaried. No
employee  group  is  covered under a collective bargaining agreement. We believe
our  relationship  with  our  employees  is  good.

RECENT  DEVELOPMENT

     In  September  2002, we entered into an agreement to acquire Jiahe Medicine
Group  ("Jiahe"  or the "Selling Party"), a pharmaceutical company organized and
operating  in  China.  The  acquisition terms included the issuance of 1,900,000
restricted  shares  of  our common stock to the Selling Party as a consideration
and  a requirement that the Selling Party satisfy certain contingencies prior to
December  31,  2002.  These  contingencies  include:  Jiahe  complete  its  GMP
renovation and pass the government's GMP examination, government approval of the
transaction,  and  transfer into the Company of the title of certain properties.
If  the Selling Party failed to satisfy these contingencies, the Company had the
option to reduce the number of shares issued to the Selling Party or rescind the
transaction.  On  April  2,  2003,  because  the  Selling  Party still could not
satisfy  certain  outstanding  contingencies,  we  rescinded  the  acquisition
transaction  and  cancelled  the 1,900,000 restricted shares of our common stock
issued  in  the  custody  of  the Chairman in connection with the acquisition of
Jiahe.  Financial activities of Jiahe have not been included in the accompanying
consolidated  financial  statements  for  the  years ended December 31, 2003 and
2002.


                                      - 4 -
<PAGE>
Item  2.  Description  of  Property

HEADQUARTERS

     Our headquarters consists of a 1,818 square meter leased facility in Podium
A  of  the  Huayang  International  Mansion, located at No. 386 Qingnian Street,
Heping  District, Shenyang, China 110004. We own the building floor in which the
office  is  located.

HUAYANG  INTERNATIONAL  MANSION

     We  are  engaged  in real estate development and have developed the Huayang
International  Mansion  (the  "Mansion"),  a  mixed-use  complex  with  a  total
construction area of 163,000 square meters.  The Mansion is located in Shenyang,
a  major  Chinese  city  with  a  population  of  nearly seven million, offering
residential,  hotel,  office,  recreation,  shopping  and conference facilities.

     The Mansion is conveniently located in the City's Special Economic Zone for
new  and hi-tech enterprises, and is only approximately 15 minutes away from the
city's  international  airport and approximately 10 minutes away from the city's
main railway station. Qingnian Avenue, a major traffic thoroughfare for the city
passes the building. Wulihe Stadium, the city's newest and most advanced stadium
is  located  just  on  the  northern  side  of the building. Regent Park, on the
western  side of the building, is a luxury residential development.  JW Marriott
Hotel  and  China Northern Airline's main office face the building's south side.
To  the  east,  across  Qingnian Avenue is Riverside Garden, considered the most
luxurious  residential  development  in  northeastern  China.  Some  major
entertainment  facilities,  such as Summer Place (a water park), the Science and
Technology  Museum  and  the  Wulihe  Riverside  Park  are  also located nearby.

     The Mansion consists of two towers and two podiums.  Haitong operates Tower
A  and  Podium  A.

TOWER  A  AND  PODIUM  A

     Tower  A  is  a  22-story  construction with 330 office units, 220 business
apartments,  and  66  penthouse apartments, totaling approximately 56,410 square
meters  of  floor  space.  As  of December 31, 2003, approximately 38,082 square
meters  of  floor space had been sold. Haitong plans to sell an additional 6,585
square  meters  of  the  floor  space  in the future while holding the remaining
11,743  square  meters  of the floor space in Tower A for rental purpose.  As of
December 31, 2003, approximately 6,112 square meters of the floor space owned by
Haitong  was  leased  (representing an occupancy rate of 33.3%), and the average
rent  was  approximately  $104  per  square  meter  per  year.


                                      - 5 -
<PAGE>
     Podium  A consists of six stories with a total area of approximately 26,912
square  meters,  22,000  square meters of which is commercial space for sale and
lease.  As  of  December  31,  2003, approximately 10,924 square meters of floor
space had been sold. Haitong plans to sell an additional 12,655 square meters of
the floor space in the future while holding the remaining 3,333 square meters of
the floor space for rental or self use. HIHI occupies approximately 1,818 square
meters  on  the sixth floor as its headquarters.  As of December 31, 2003, 1,515
square meters of the commercial space was leased at approximately $40 per square
meter  per  year.  Taking  the  space  occupied  by HIHI as its headquarter into
account,  the  occupancy  rate  of  Podium  A was 20.8% as of December 31, 2003.

     There are various business and professions carried on in Tower A and Podium
A.  Currently  no tenant on its own occupies ten percent or more of the rentable
floor  space.  Haitong  pays business tax at five percent of the gross sales and
leases  and  real  estate  tax  at twelve percent of the gross sales and leases.
     In  the opinion of the management, the properties are adequately covered by
insurance.

     The  following is the schedule of the lease expirations in respect of Tower
A  ("Tower")  and  Podium  A  ("Podium") for each of the ten years starting from
2004:

<TABLE>
<CAPTION>
                                                                             Percentage of gross
                 No. of tenants       Total area in sq.     Annual rent        annual rental
                      whose           meter covered by      represented         represented
               leases will expire        such leases       by such leases      by such leases
              --------------------  --------------------  ---------------  -----------------------
                Tower     Podium      Tower     Podium     Tower   Podium    Tower       Podium
              ---------  ---------  ---------  ---------  -------  ------  ----------  -----------
<S>           <C>        <C>        <C>        <C>        <C>      <C>     <C>         <C>
2004                  9          1   2,002.64      15.00   84,313   1,007       79.3%         1.0%

2005                  1          0     227.80       0.00   22,018       0      100.0%         0.0%

2006                  0          1       0.00   1,500.00        0  10,068        0.0%        21.7%

2007 and              0          0       0.00       0.00        0       0        0.0%         0.0%
each of the
years from
2008 to 2013
</TABLE>

     The  Tower was completed in 1999, and the Podium was completed in 2001. The
total  cost  of developing Tower A and Podium A was approximately US$70 million.
This cost was paid through a combination of bank loans and mortgages, guaranteed
by  Haitong  and secured by its assets, and capital contributions and loans from
shareholders.  We  currently  have bank loans totaling US$3,298,416 outstanding,
which  are  secured by a mortgage on the properties. The current annual interest
rates  on  these  bank loans are 6.435%. These bank loans are in default as they
were  due in 2001. According to the terms of the loan agreements, the banks have
the  right  to  impose  default  interests  at  a  daily  rate


                                      - 6 -
<PAGE>
of  0.021%  on  us.  We  are  working  with  the  respective banks to extend the
repayment  terms  or sell certain properties to offset the loan balance with the
proceeds.


POLICIES  WITH  RESPECT  TO  CERTAIN  ACTIVITIES

     The  following  is  a  discussion  of  our  investment  policies, financing
policies  and  policies with respect to certain other activities. These policies
have been determined by our directors and may be amended or revised from time to
time  at  the  discretion  of  the directors without a vote of the stockholders.

1)   Investment  Policies

     Investment  in  Real  Estate or Interests in Real Estate - We may invest in
office  buildings,  apartments  and income producing real estate which may offer
satisfactory  levels  of  cash  flow  and  prospects for growth in cash flow and
value.  We will focus primarily in China, particularly the Northeast part of the
country,  but  may  consider  valid opportunities in other regions. We intend to
actively  manage  and  operate  a  majority  of our income producing real estate
investments.  We may enter into joint ventures and other arrangements with third
parties  who  may  provide  equity  or  expertise  in  a  variety of real estate
ventures. We intend to rehabilitate properties when the expected returns justify
the costs of rehabilitation. We intend to build office buildings, apartments and
other  income  producing real estate properties when the expected returns are in
excess  of  those  available in acquisitions and justify the increased risk. Our
real  estate  investments  will  generally  be  for  income. But we may sell the
properties depending on the value realization on a case-by-case basis. We do not
have  a policy limiting the amount or percentage of assets that will be invested
in  any  specific  property.

     Investment  in  Real Estate Mortgages - While we will emphasize equity real
estate  investments  and  have  no  current plans to invest in mortgages, we may
invest  in  real  estate  mortgages  in  the  future.

     Securities  of  or  Interests  in  Persons Primarily Engaged In Real Estate
Activities  -  We  may  invest  in securities of entities engaged in real estate
activities  or  securities  of  other  issuers,  including  for  the  purpose of
exercising  control  over  such  entities.

     Investments  in  Other  Securities  -  While  we  will  emphasize  equity
investments  in  real  estate projects, we may consider bonds, preferred stocks,
common  stocks  or  other  types  of securities in entities which invest in real
estate.  In  particular, we may enter into joint ventures and other arrangements
with  third  parties  that  may provide equity or expertise in a variety of real
estate  ventures.

2)   Financing  Policies


                                      - 7 -
<PAGE>
     We  may finance our investments through both public and private secured and
unsecured debt offerings, as well as public and private placements of our equity
securities.  The  equity securities may include both common and preferred equity
issues.  There  are  currently no restrictions on the amount of debt that we may
incur.  For  the past three years, our projects are mainly financed through bank
loans  and investment from our principal equity shareholders. While we may issue
preferred  stock  and  bonds, we did not issue any senior securities in the past
three  years.

     We do not have a policy limiting the number or amount of mortgages that may
be  placed  on  any  particular  property,  but  mortgage financing instruments,
including  those  currently encumbering our properties, usually limit additional
indebtedness  on such properties. We may also use bond financing from affordable
housing  programs  where  appropriate.

3)   Lending  Policies

     We  did  not  in the past and do not intend to make loans to other persons.

4)   Policies  with  Respect  to  Other  Activities

     We  may  spin-off to our common stockholders, shares of our subsidiaries or
shares  of  other  entities we have acquired through the sale of our properties,
investments  or  otherwise.  These  spin-offs  may  be  taxable  or non-taxable,
depending upon the facts and circumstances. We did not engage in such activities
in  the  past  three  years.

     We  may  make investments other than as previously described. We may engage
in  the  purchase  and sale of investments. We may offer its shares of common or
preferred  stock  in  exchange  for  property  and  to  repurchase  or otherwise
reacquire  our  shares  of  common  or  preferred  stock  and may engage in such
activities  in  the  future. Specifically, we may consider an odd lot program to
repurchase  common stock from holders of fewer than 100 shares. We do not intend
to  engage  in  trading,  underwriting  or  the  agency  distribution or sale of
securities  of  other  issuers. We may invest in securities of other issuers for
the purpose of exercising control. In the past three years, we did not engage in
any  of  the  above  activities.

     We  intend  to  make  annual  reports  to  our shareholders, which provides
updated  information  about  our  operations  as  well  as  financial statements
certified  by  independent  public  accountants.

Item  3.  Legal  Proceedings

     We are not a party to, nor are any of our respective properties the subject
of,  any  material  pending  legal  or  arbitration  proceeding.


                                      - 8 -
<PAGE>
Item  4.  Submission  of  Matters  to  a  Vote  of  Security  Holders

     No  matters  were  submitted  to  a  vote of shareholders during the fourth
quarter  of  the  fiscal  year  ended  December  31,  2003.


Item  5.  Market  for Registrant's Common Equity and Related Stockholder Matters

     Our  shares are currently traded on the OTC Bulletin Board under the symbol
"HIHIE.OB".  The  following table sets forth the high and low bid quotations for
the  Common  Stock  for the periods indicated as reported by the Bulletin Board.
These  quotations  represent  inter-dealer  prices  and  do  not  include retail
markups,  markdowns  or  commissions  and  may  not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                        High Bid  Low Bid
                        --------  -------
<S>                     <C>       <C>
     Fiscal Year 2003:
       First Quarter        0.09     0.05
       Second Quarter       0.07     0.02
       Third Quarter        0.08     0.04
       Fourth Quarter       0.05     0.05

     Fiscal Year 2002:
       First Quarter        0.17     0.06
       Second Quarter       1.45     0.21
       Third Quarter        0.70     0.11
       Fourth Quarter       0.17     0.06
</TABLE>

     On  May  10,  2004, the closing price for the Company's Common Stock on the
Bulletin  Board  System  was  $0.05  per  share.  As of May 12, 2004, there were
approximately  250  holders  of  record  of  our  common  stock.

     We  have  not  paid dividends and do not anticipate paying dividends in the
foreseeable  future.  The board of directors intends to retain earnings, if any,
to finance our growth. Accordingly, any payment of dividends by us in the future
will depend upon the need for working capital and our financial conditions of at
that  time.


                                      - 9 -
<PAGE>
Item  6.  Management's  Discussion  and  Analysis  or  Plan  of  Operation

FORWARD-LOOKING  STATEMENTS

     The  following  discussion  of  the  financial  condition  and  results  of
operations  should  be  read  in  conjunction  with  our  consolidated financial
statements  and  related  notes  thereto.  The  following  discussion  contains
forward-looking  statements. Huayang International Holdings, Inc. is referred to
herein  as  "the Company", "we" or "our." The words or phrases "would be," "will
allow,"  "intends to," "will likely result," "are expected to," "will continue,"
"is  anticipated," "estimate," "project," or similar expressions are intended to
identify  "forward-looking statements". Such statements include those concerning
our  expected  financial  performance,  our  corporate  strategy and operational
plans.  Actual  results  could  differ  materially  from  those projected in the
forward-looking  statements  as a result of a number of risks and uncertainties,
including:  (a)  our  attempt to enter into the technology sector and whether we
can successfully incorporate such business into our operations; (b) our low cash
balances  which  may impede our ability to grow our business and compete against
our  competitors  and  other  liquidity  related  risks  discussed  below  under
"Liquidity  and  Capital  Resources";  (c)  any economic, political, regulatory,
legal  and  social  conditions in China that may negatively affect our business;
and  (d)  our  dependence  upon funding from related companies.  Statements made
herein  are as of the date of the filing of this Form 10-KSB with the Securities
and Exchange Commission and should not be relied upon as of any subsequent date.
Unless  otherwise  required  by  applicable  law,  we  do  not undertake, and we
specifically  disclaim  any obligation, to update any forward-looking statements
to  reflect  occurrences,  developments,  unanticipated  events or circumstances
after  the  date  of  such  statement.

YEAR  2003  OVERVIEW

     During  the fiscal year of 2003, the Company continued its business to sell
and  lease  its real estate properties in the Huayang International Mansion. The
Company  conducts  its  real  estate  business  primarily  through its 95% owned
subsidiary  Shenyang Haitong House Properties Development Co., Ltd. ("Haitong").

     In  September  2002, we entered into an agreement to acquire Jiahe Medicine
Group  ("Jiahe"  or the "Selling Party"), a pharmaceutical company organized and
operating  in  China.  The  acquisition terms included the issuance of 1,900,000
restricted  shares  of  our common stock to the Selling Party as a consideration
and  a requirement that the Selling Party satisfy certain contingencies prior to
December  31,  2002.  These  contingencies  include:  Jiahe  complete  its  GMP
renovation and pass the government's GMP examination, government approval of the
transaction,  and  transfer into the Company of the title of certain properties.
If  the Selling Party failed to satisfy these contingencies, the Company had the
option to reduce the number of shares issued to the Selling Party or rescind the
transaction.  On  April  2,  2003,  because  the  Selling  Party still could not
satisfy  certain  outstanding  contingencies,  we  rescinded  the  acquisition


                                     - 10 -
<PAGE>
transaction  and  cancelled  the 1,900,000 restricted shares of our common stock
issued  in  the  custody  of  the Chairman in connection with the acquisition of
Jiahe.  Financial activities of Jiahe have not been included in the accompanying
consolidated  financial  statements  for  the  years ended December 31, 2003 and
2002.

RESULTS  OF  OPERATIONS

     The  following  table  reflects the percentage relationship to net sales of
certain  items included in the Company's statement of operations for each of the
fiscal  years  ended  December  31,  2003  and  2002:

<TABLE>
<CAPTION>
                                                      Fiscal Year
                                                 --------------------
                                                    2003       2002
                                                            (unaudited)
                                                 ----------  --------
<S>                                              <C>         <C>
     Real estate sales                                 0.0%     31.7%
     Real estate rental income                       100.0      68.3
                                                 ----------  --------

     Net sales:                                      100.0%    100.0%
                                                 ==========  ========

     Cost and expenses:
       Cost of real estate sold                        0.0%   (17.8)%
       Real estate operating expenses                (89.4)    (36.6)
       Allowance for doubtful accounts                 0.0    (451.6)
       Impairment of real estate                  (2,070.9)      0.0
       Depreciation expenses                         (77.0)    (32.4)
       Interest expense                              (48.1)    (20.9)
       Other operating expenses                       (0.3)     (8.9)
     Other income                                      0.0       3.8
     Minority interest                               108.0      23.5
     Discontinued Operations
       Loss from investment in affiliates              0.0     (40.5)
       Loss on sale of investment in affiliates        0.0     (91.8)
       Extraordinary items                             0.0     137.5
                                                 ----------  --------

     Net Loss                                    (2,077.7)%  (435.7)%
                                                 ==========  ========
</TABLE>

Revenues

     Revenues  for  the  fiscal year ended December 31, 2003 were $523,727, down
74.2% from $2,030,976 for the fiscal year ended December 31, 2002. This drop was
primarily  the  effect  of  decreasing  rental  income and the fact that no real
estate  sales  was  recorded  during the year. There was no real estate sales in
2003 because the property market declined sharply following the SARS outbreak in
China  in  mid 2003. In addition to decreasing annual rent per square meter, the
Company  sold  part  of  its  real  estate  during


                                     - 11 -
<PAGE>
the  second  half  of  2002, which resulted in the decrease in the total area of
real  estate  available  for leasing in 2003. There were no real estate sales in
fiscal  year  2003,  as  compared to $643,828 in 2002. Revenues from real estate
rental  income in fiscal year 2003 dropped by 62.2% to $523,727, from $1,387,148
in  fiscal  year  2002.  As of December 31, 2003, the net carrying value of real
estate  rental property was $6,681,080 and the net carrying value of real estate
held  for  development  and  sale  was  $2,603,586.

Costs  and  Expenses

     In  the  fiscal year ended December 31, 2003, total costs and expenses were
$11,970,803  which  was 3.7% higher than $11,539,945 of total costs and expenses
in  the  fiscal year ended December 31, 2002. This increase was primarily due to
the provision for impairment of long-lived assets of $10,845,792.  The provision
comprised of impairments of $9,661,059 and $1,184,733 against real estate rental
property  and  real  estate held for development and sale, respectively, and was
determined  by  the  Company  based on its best estimate of an undiscounted cash
flow  forecast  and  a  valuation.

     If  the  provision  for  impairment of long-lived assets is excluded, there
were  still  significant  decreases  in  costs and expenses due to the following
reasons:

     i)   There  was  no  allowance  for  doubtful  accounts  in 2003 whereas an
          allowance of $9,171,084 was made against the receivable from a related
          party  in  2002.

     ii)  As  there  was no real estate sales in 2003, there was no cost of real
          estate  sold  in  2003,  as  compared  to  $360,690  in  2002.

     iii)  Depreciation  expenses  decreased  by  38.8% to $403,483 in 2003 from
          $658,972  in  2002, because part of the real estate was disposed of in
          2002.

     iv)  Interest expenses decreased by 40.7% to $252,096 in 2003 from $424,916
          in  2002,  which  was  a  result  of  the  reduction  in  bank  loans.

     v)   Real  estate  operating  expenses dropped by 37.1% to $467,982 in 2003
          from  $743,498  in  2002  because  there was approximately $600,000 of
          stock  obsolescence  loss  relating  to  spare  parts and construction
          materials  in  2002.  Apart  from this obsolescence loss, there was an
          increase  in  traveling  expenses  of  approximately $172,000 in 2003.

     vi)  Other  operating  expenses  dropped  by  99.2%  to $1,450 in 2003 from
          $180,785 in 2002 because head office expenses of $135,153 incurred for
          2003  was  included  under  real  estate  operating  expenses.

Loss  from  Continuing  Operations


                                     - 12 -
<PAGE>
     Loss  from  continuing  operations  was $10,881,480 in 2003, as compared to
$8,954,922  in  2002.  The  increase  in  loss was primarily attributable to the
decrease  in  real  estate rental income, the impairment loss on real estate and
that  no  real  estate  sales  occurred  in  2003.

Extraordinary  Items

     In  2002,  the  Company  sold  its  20%  interest in the Hotel Group.  As a
result,  the loss from investment in the Hotel Group of $821,778 and the loss on
sale  of  investment  in  the  Hotel  Group  of  $1,864,142  were recorded under
discontinued  operations.  There  was  no  discontinued  operation  in  2003.

     In  2002, extraordinary item comprised gain on debt extinguishments, net of
income  tax  effect,  of  $2,791,537.  There  was no extraordinary item in 2003.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Our  liquidity  consists  of  cash,  receivables,  real  estate  held  for
development  and  sale  and  receipts from rental activities. As of December 31,
2003,  our  cash  balance  was  $302,172.  Our past operations were supported by
related  companies  which  from  time  to  time  lent funds to us. However, such
financing  from  related  companies may not always be available, and the Company
may  need  to  secure  further  financing to support its operations. Future cash
needs  may  be  financed  by a combination of cash flows from rental and leasing
operations,  future  advances under bank loans, and if needed, other alternative
financing  arrangements,  which  may  or  may  not  be  available  to  us.

     As  of  December  31,  2003,  a related company owed to us in the amount of
$2,505,987  against  which  the  related  company  has  signed  and  executed  a
promissory  note  for an amount of $2,532,000 dated January 30, 2004 in favor of
the  Company.  The  promissory  note  is  repayable  by installments as follows:

<TABLE>
<CAPTION>
     Period                             Installment payment schedule
     ---------------------------------  --------------------------------------
<S>                                     <C>
     Year 2004                          Monthly installment of $24,000 each
     Year 2005                          Quarterly installment of $121,000 each
     Year 2006                          Quarterly installment of $181,000 each
     First three quarters of year 2007  Quarterly installment of $266,000 each
     Fourth quarter of year 2007        Final payment of $238,000
</TABLE>

     The  promissory  note  bears  interest  at 5.5% per annum. In addition, the
promissory  note  is  secured  by  a  security  agreement dated January 30, 2004
executed  by  the  related  company  for  the benefit of the Company whereby the
related  company grants and conveys to the Company a security interest in all of
its  fixed  and  current  assets  which  it


                                     - 13 -
<PAGE>
owns.  According  to  the  related  company's  management  accounts, the related
company  had total assets and net assets of approximately $17.9 million and $6.2
million,  respectively  as  of  December  31,  2003.

     We  do  not  have any material commitments for capital expenditures for the
year  ending  December  31,  2004.  We  anticipate,  based  on  the scale of our
existing  operations  and  apart from the requirement to repay our bank loans as
discussed  below,  that  our  projected  cash  flows  from  operations  would be
sufficient  to  support  our  planned  operations  for  the  next twelve months.

     Our projection of future cash requirements is affected by numerous factors,
including but not limited to, changes in customer receipts, real estate industry
trends,  operating  cost  fluctuations,  and  unplanned  capital  spending.

     As of December 31, 2003, we had total bank debt of $3,298,416. We also owed
$1,760,772  to  related  parties.  Our  indebtedness  poses substantial risks to
holders  of  our  Common  Stock,  including  the risks such as (i) a substantial
portion  of  our  cash  flow from operations will be dedicated to the payment of
interest  on  such indebtedness, (ii) our indebtedness may impede our ability to
obtain  financing  in  the  future for working capital, capital expenditures and
general  corporate  purposes  and  (iii)  our  debt  position  may leave us more
vulnerable  to  economic  downturns  and  may  limit  our  ability  to withstand
competitive  pressures.  If  we are unable to generate sufficient cash flow from
operations  in  the  future  to  service  our indebtedness and to meet our other
commitments,  we  will  be  required  to adopt one or more alternatives, such as
refinancing  or  restructuring  our  indebtedness,  selling  material  assets or
operations,  or seeking to raise additional debt or equity capital. There can be
no  assurance that any of these actions could be effected on satisfactory terms,
that  they  would  enable  us to continue to satisfy our capital requirements or
that they would be permitted by the terms of existing or future debt agreements.

     All  of  our  bank  debt  is  secured  by  properties in the Mansion. As of
December  31, 2003, our lenders held an aggregate of $3,298,416 of liens against
the  Mansion  as  security  for bank loans of the same amount. We are in default
under  such  bank  loans. The loans are immediately due and payable and the bank
may  foreclose on the Mansion, which would have a material adverse effect on us.
We are currently working with the respective banks to extend the repayment terms
or  sell  certain  properties  to  offset  the  loan  balance with the proceeds.

EFFECT  OF  FLUCTUATIONS  IN  FOREIGN  EXCHANGE  RATES

     We  operate  in  the  People's  Republic  of  China, maintain our financial
control  center in Shenyang, PRC, and record most of our operating activities in
Renminbi  ("RMB"),  the  Chinese  currency. The exchange rate between RMB and US
Dollars  has  been  relatively  stable for the last few years. We do not believe
that  fluctuations  in  the


                                     - 14 -
<PAGE>
foreign exchange rates will have a material effect on our consolidated financial
statements.  The RMB exchange rates, however, are fixed by the government of the
PRC,  and a change in the exchange rate by the PRC could have a material adverse
effect  on  our  consolidated  financial  statements.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Market  risk  represents  the  risk  of  change  in the value of short term
investments  and  financial  instruments  caused  by  fluctuations in investment
prices,  interest  rates  and  foreign  currency  exchange  rates.

     The  Company  operates in the People's Republic of China, and is exposed to
foreign  exchange  rate fluctuations related to the translation of the financial
results  of  our  operations in China into U.S. dollars during consolidation. As
exchange  rates vary, these results, when translated, may vary from expectations
and  adversely  impact  overall  expected  profitability.

     The  effect  of  foreign  exchange rate fluctuations on the Company for the
fiscal  year  ended  December  31,  2003  was  immaterial.

     The  Company  has  not entered into any derivative financial instruments to
manage  interest  rate  risk  or  for  speculative  purpose and is not currently
evaluating  the  future  use  of  such  financial  instruments.

     The  Company  does not hold cash equivalents or marketable securities as of
December  31,  2003  and  has  no  plans to do so within the next twelve months.

Item  7.  Financial  Statements

     The  consolidated financial statements and schedules that constitute Item 7
are attached  at the end of this Annual Report on Form 10-KSB. An index to these
consolidated  financial  statements and schedules is also included in Item 13 of
this  Annual  Report  on  Form  10-KSB.

Item  8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
          Financial  Disclosure

     The  2002  numbers  included  in  this  Annual  Report  on Form 10-KSB were
originally  audited  by  Thomas  Leger  &  Company, LLP and included in the Form
10-KSB  for  the year ended December 31, 2002. On May 14, 2004, we were informed
that  Thomas  Leger  would  not  be reissuing their opinion for the inclusion of
these  numbers  to  be  utilized  in  the current 10-KSB. We have included these
numbers  as  unaudited.  We  have  engaged Weinberg & Company, P.A., our current
auditors,  to  reaudit the 2002 numbers. Because of the late date, they have not
had sufficient time to finalize this process. Immediately upon completion of the
audit,  we  will file a Form 10-KSB/A to include Weinberg's opinion on the audit
of  2002.

     On  March  1, 2003, the Company terminated the engagement of Moore Stephens
Wurth  Frazer  and  Torbet, LLP as its independent accountants. On the same day,
the Company engaged Thomas Leger, LLP as its new independent accountants for the
fiscal  year  2002.  Details  with  respect  to  these  matters were "previously
reported"  within  the


                                     - 15 -
<PAGE>
meaning  of  Rule  12b-2 in the Company's reports on Form 8-K, as amended, filed
with  the  Commission  on  March  21,  2003.

     On  February  5,  2004,  Thomas  Leger,  LLP  resigned  as  the  Company's
independent  accountants.  On  February 16, 2004, the Company engaged Weinberg &
Company,  P.A.  of  Boca  Raton,  Florida and Los Angeles, California as its new
independent  accountants  for  the  fiscal year 2003.  The Company has requested
Thomas  Leger,  LLP  to  furnish  the  Company  with  a  letter addressed to the
Securities and Exchange Commission stating whether it agrees with the statements
made  by  the  Company in response to Item 304(a) regarding its involvement with
the  Company  as  independent  accountants  and, if not, stating the respects in
which it does not agree.  Details with respect to these matters were "previously
reported" within the meaning of Rule 12b-2 in the Company's reports on Form 8-K,
filed  with  the  Commission  on  February  19,  2004.

Item  8A.  Internal  Controls  and  Procedures

     As  of  the end of the period covered by this report, the Company conducted
an  evaluation under the supervision and with the participation of the principal
executive  officer  and principal financial officer, of the Company's disclosure
controls  and  procedures  (as defined in Rule 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the  principal  executive  officer and the principal financial officer concluded
that  the  Company's  disclosure controls and procedures are effective to ensure
that  information  required  to  be  disclosed by the Company in reports that it
files  or  submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules  and  forms.  There  was no change in the Company's internal controls over
financial  reporting during the Company's most recently completed fiscal quarter
that  has materially affected, or is reasonably likely to materially affect, the
Company's  internal  control  over  financial  reporting.


                                     - 16 -
<PAGE>
                                    PART III

Item  9.  Directors  and  Executive  Officers  of  the  Registrant

     The  following  table  sets  forth  our  directors  and executive officers,
appointed  to  serve  until  their  removal  or  resignation.

<TABLE>
<CAPTION>
     NAME              AGE               POSITION
     ----------------  ---  -----------------------------------
<S>                    <C>  <C>
     Mr. Gao Wanjun     50  Chairman, President and Chief
                              Executive Officer
     Ms. Wang Yufei     35  Secretary, Chief Financial Officer
                              and Director
     Mr. Wang Shaohua   46  Director of the Company and
                              Deputy General Manager of
                              Haitong
     Mr. Yu Yingtian    39  Director of the Company and
                              Principal Accounting Manager
                              of Haitong
     Mr. Yin Liangpei   61  Director (independent)
     Ms. Wang Yunfen    61  Director (independent)
</TABLE>

     Each  of  our  directors  holds office until the next annual meeting of the
stockholders,  or  until  his  successor is elected and qualified. The Company's
by-laws  provide for not less than one director. The by-laws permit the Board of
Directors  to fill any vacancy on the Board. Officers serve at the discretion of
the  Board  of  Directors.

     The following is the background information about our directors and
officers.

     Mr. Gao Wanjun: Mr. Gao has been serving as our Chairman of the Board of
Directors, President and CEO since December 1995. In April 1992, Mr. Gao founded
Haitong and has been serving as the General Manager since then. In April 1993
Mr. Gao founded Huayang Industry and Commerce (Shenyang) Group ("Huayang
Group"), an international group of real estate companies with operations in
China, Hong Kong and the United States. He has been serving as Chairman of
Huayang Group since April 1993.

     Ms. Wang Yufei: Ms. Wang joined us in December 1995 and has been serving as
Secretary and Director of the Company. She became our Chief Financial Officer in
2001.  Prior  to  working  for  the  Company,  Ms. Wang was Secretary of Huayang
Industry  and  Commerce  (Shenyang) Group, an international group of real estate
companies  with  operations  in  China, Hong Kong and the United Sates. Ms. Wang
graduated  from  Liaoning  University,  Shenyang,  China.


                                     - 17 -
<PAGE>
     Mr. Wang Shaohua: An architectural engineer, Mr. Wang joined the Company in
1992  and  was  promoted to Deputy General Manager of Haitong later. He holds an
engineer  degree  in civil and industrial architecture and has over twenty years
of  experience.

     Mr.  Yu  Yingtian:  Mr. Yu is a Principal Accounting Manager of Haitong. He
joined  the  Company  in  1995  as an accounting manager and has been working in
Haitong's  finance  department since then. Before joining the Company, he worked
as  an  accountant in several other companies. Mr. Yu has more than twelve years
of  accounting  experience.  He  graduated  from Northeast University, Shenyang,
China.  Mr.  Yu  is  a  member  of  our  audit  committee.

     Mr.  Yin Liangpei: Mr. Yin is a Professor of Law and Dean of the Law School
of  Shenyang  University.  He  is  a leading scholar in legal studies, with nine
published books and dozens of published articles. He is also an executive member
of  the  City's  Congress  of  Shenyang.  Professor  Yin  graduated from Beijing
University  of  Law  and  Political  Sciences,  Beijing,  China.  He  is also an
independent director for Lingyuan Steel and Iron Company. Mr. Yin is a member of
our  audit  committee.

     Ms.  Wang  Yunfen:  Ms. Wang graduated from Jilin University of Finance and
Trade, and has over 35 years of finance and accounting experience. She served as
head  of  the finance department for several companies in China, including Jilin
Chemical  Industrial  Group,  a  major corporation in China. Since 1998, she has
been  the  head  of  the finance department for Harbin Xinke Nami Technology Co.
Ltd.  Ms.  Wang  is  Chair  of  our  audit  committee.

     Based  solely  upon  a  review  of  forms  3  and  4 and amendments thereto
furnished  to  the  Company pursuant to Section 240.16a-3(e) of the Exchange Act
during  its  most  recent  fiscal  year, and any written representation from the
reporting  person  (as  hereinafter  defined)  that  no  Form 5 is required, the
Company  is not aware of any person who, at any time during the fiscal year, was
a  director,  officer, beneficial owner of more than ten percent of any class of
equity  securities  of  the  Company  registered  pursuant  to Section 12 of the
Exchange  Act  ("reporting  person"),  that failed to file on a timely basis, as
disclosed  in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years, except as follows:

     None of our officers, directors and ten percent shareholders filed a Form 3
as  required  when the Company completed the reverse merger in 1996.  This is an
administrative  oversight  and  the  Company  has  requested  that all officers,
directors  and  ten  percent shareholders file a Form 3 within 10 days of filing
this  annual  report.

     There are no family relationships between or among the directors, executive
officers  or  persons nominated or charged by the company to become directors or
executive  directors.


                                     - 18 -
<PAGE>
     The  Company has not adopted a code of ethics that applies to the Company's
principal  executive  and  financial officers.  The Company expects to establish
and  adopt  a  code  of  ethics  during  the  second  quarter  of  2004.

Item  10.  Executive  Compensation

     Currently,  none  of  the  officers  or directors are being remunerated for
their  services  for  us.


Item  11.  Security  Ownership  of  Certain Beneficial Owners and Management and
           Related  Stockholder  Matters

     The  following  table  sets  forth  as  of May 12, 2004 certain information
regarding  the  ownership  of our voting securities by each stockholder known to
our  management to be 1) the beneficial owner of more than 5% of our outstanding
Common  Stock, 2) each of our directors and nominees, and 3) all named executive
officers  and  directors  as a group. Except as otherwise noted, we believe that
the  beneficial  owners  of  the common stock listed below, based on information
provided  by  such owners, have sole investment and voting power with respect to
such  shares.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL
  OWNER                                        COMMON STOCK
-----------------------------------------  ----------------------
                                            NUMBER    PERCENTAGE
                                           ---------  -----------
<S>                                        <C>        <C>
Huayang International Trust (1)            6,000,000        80.0%
                                           ---------  -----------

All Officers and Directors as a Group (2)  6,000,000        80.0%
                                           =========  ===========
</TABLE>

1)   Except as otherwise noted, the address of each beneficial owner is Shenyang
     Haitong  House Properties Development, Ltd., No.386 Qingnian Street, Heping
     District,  Shenyang,  China  110004. These 6,000,000 shares are held by the
     Huayang  International  Trust,  of which Mr. Gao Wanjun is the trustee. Mr.
     Gao Wanjun, his wife and their children are the beneficiaries of the trust.
2)   Save as disclosed in the above, no other officer or director has beneficial
     ownership  in  the  shares  of  common  stock  of  the  Company.

Item  12.  Certain  Relationships  and  Related  Transactions

     HIHI  is  conducting  business  with  a  related  company  in  which HIHI's
president and majority shareholder has a direct and indirect ownership interest.
The  related  company  manages  property  rental  and  sales  activities for the
Company.  The  related


                                     - 19 -
<PAGE>
company  received  sales  in  the amount of $388,144 and paid other taxes in the
amount  of  $240,129  on  behalf  of the Company while the Company received cash
arising from previous sales in the amount of $1,190,293 from the related company
and  paid  operating expenses in the amount of $103,012 on behalf of the related
company  in  2003.  As  of  December  31, 2003, the balance due from the related
company  amounted to $2,505,987 against which the related company has signed and
executed a promissory note for an amount of $2,532,000 dated January 30, 2004 in
favor  of  the  Company.  The  promissory  note  is repayable by installments as
follows:

<TABLE>
<CAPTION>
     Period                             Installment payment schedule
     ---------------------------------  --------------------------------------
<S>                                     <C>
     Year 2004                          Monthly installment of $24,000 each
     Year 2005                          Quarterly installment of $121,000 each
     Year 2006                          Quarterly installment of $181,000 each
     First three quarters of year 2007  Quarterly installment of $266,000 each
     Fourth quarter of year 2007        Final payment of $238,000
</TABLE>

     The  promissory  note  bears  interest  at 5.5% per annum. In addition, the
promissory  note  is  secured  by  a  security  agreement dated January 30, 2004
executed  by  the  related  company  for  the benefit of the Company whereby the
related  company grants and conveys to the Company a security interest in all of
its  fixed  and  current  assets  which  it  owns.

     The  Company  entered  into  an  agreement  with  Huayang  International
Investment,  Ltd. ("HIIL") in 1997.  HIIL is 50% owned by Mr. Gao Wanjun and the
remaining  50% owned by the brother of Mr. Gao Wanjun.  The Company owed HIIL in
the  amount  of  $1,710,772  as of December 31, 2003.  Shenyang Yuayuan Property
Management  Co., Ltd. ("Huayuan") is a minority shareholder of the Company.  The
Company  owed  Huayuan  in  the  amount  of  $50,000  as  of  December 31, 2003.


                                     - 20 -
<PAGE>
Item  13.  Exhibits  and  Reports  on  Form  8-K

(a)(1)  and  (a)(2)  Financial  Statements  and  Financial  Statement  Schedules

<TABLE>
<CAPTION>
                          INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<S>                                                                               <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . .F-1 to F-2

Consolidated Balance Sheet as of December 31, 2003 . . . . . . . . . . . . . . . . . . F-3

Consolidated Statements of Operations And Comprehensive Loss for the Years Ended
December 31, 2003 and 2002 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . F-4

Consolidated Statement of Changes in Stockholders' Equity
For the Years Ended December 31, 2003 and 2002 (unaudited) . . . . . . . . . . . . . . F-5

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2003 and 2002 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . F-6

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . F-7 to F-34
</TABLE>

(a)(3)  Exhibits

<TABLE>
<CAPTION>
     Exhibit                         Document Description
     Number   ---------------------------------------------------------------------
     -------
<S>           <C>

     21       List of Subsidiaries of the Registrant

     31.1     Certifications by Chief Executive Officer Pursuant to Rule 13a-14(a)

     31.2     Certifications by Chief Financial Officer Pursuant to Rule 13a-14(a)

     32.1     Certification by Chief Executive Officer Pursuant to Rule 13a-14(b)
               and 18 U.S.C. Section 1350

     32.2     Certification by Chief Executive Officer Pursuant to Rule 13a-14(b)
               and 18 U.S.C. Section 1350
</TABLE>

b)   Reports  on  Form  8-K

     On  February  19,  2004,  the  Company  filed a Form 8-K regarding Item 4 -
Changes  in  Registrant's Certifying Accountant - relating to the resignation of
Thomas  Leger & Co, LLP as the Company's independent auditors and the engagement
of  Weinberg  &


                                     - 21 -
<PAGE>
Company,  P.A.  of  Boca  Raton,  Florida  and  Los  Angeles,  California as the
Company's  independent  auditors.

Item  14.  Principal  Accountant  Fees  and  Services

Audit  Fees

     Thomas  Leger  &  Co.,  L.L.P. ("Leger"), the Company's former accountants,
billed  the  Company  a total of $63,080 during the year ended December 31, 2003
for  professional  services  rendered  by  Leger  for the audit of the Company's
annual  financial  statements and the review of financial statements included in
the  Company's  Form  10-QSB.

Tax  Fees

     For  the  year ended December 31, 2003 and December 31, 2002, neither Leger
nor Weinberg & Company, P.A. ("Weinberg") provided professional services for tax
compliance,  tax  advice,  and  tax  planning  to  the  Company.

All  Other  Fees

     For  the years ended December 31, 2003 and December 31, 2002, neither Leger
nor  Weinberg  billed  the  Company  for  products and services other than those
described  above.


                                   SIGNATURES

     In  accordance  with Section 13 or 15(d) of the Securities and Exchange Act
of  1934,  the company has duly caused this report to be signed on its behalf by
the  undersigned,  thereunto  duly  authorized.

                             HUAYANG  INTERNATIONAL  HOLDINGS,  INC.


Date:  May 14, 2004          By:  /s/  Gao  Wanjun
                                  ---------------------------------------
                                  Name:   Gao  Wanjun
                                  Title:  Chairman,  President  and
                                          Chief  Executive  Officer


                                     - 22 -
<PAGE>
Pursuant to the requirements of the Securities 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.


Date:  May 14, 2004          By:  /s/  Gao  Wanjun
                                  ---------------------------------------
                                  Name:   Gao  Wanjun
                                  Title:  Chairman,  President  and
                                          Chief  Executive  Officer

Date:  May 14, 2004          By:  /s/  Wang  Yufei
                                  ---------------------------------------
                                  Name:   Wang  Yufei
                                  Title:  Secretary,  Director  and
                                          Chief  Financial  Officer

Date:                        By:  _______________________________________
                                  Name:   Wang  Shaohua
                                  Title:  Director

Date:                        By:  _______________________________________
                                  Name:   Wang  Shaohua
                                  Title:  Director

Date:                        By:  _______________________________________
                                  Name:   Yu  Yintian
                                  Title:  Director


Date:                        By:  _______________________________________
                                  Name:   Yin  Liangpei
                                  Title:  Director

Date:                        By:  _______________________________________
                                  Name:   Wang  Yunfen
                                  Title:  Director


                                     - 23 -
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT


To  the  Board  of  Directors  and  Stockholders  of:
Huayang  International  Holdings,  Inc.:

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Huayang
International  Holdings,  Inc. and its subsidiary ("the Company") as of December
31,  2003  and  the  related  statements  of  operations and comprehensive loss,
shareholders'  equity and cash flows for the year then ended. These consolidated
financial  statements  are  the  responsibility of the Company's management. Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the audit to obtain reasonable assurance about whether the consolidated
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An  audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as,  evaluating  the  overall  consolidated financial statement presentation. We
believe  that  our  audit  provides  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  the Huayang
International  Holdings, Inc. and its subsidiary as of December 31, 2003 and the
results  of  their  operations  and  their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying  consolidated financial statements have been prepared assuming
the  Company  will  continue  as  a  going  concern. As discussed in Note 3, the
Company  incurred a net loss of $10,881,480 for the year ended December 31, 2003
and has current liabilities of $8,370,810 as of December 31, 2003. These matters
raise  substantial  doubt  about  the  Company's  ability to continue as a going
concern.  Management's  plans regarding these matters are also described in Note
3.  The  consolidated  financial  statements do not include any adjustments that
might  result  from  the  outcome  of  this  uncertainty.


                                      F-1
<PAGE>
WEINBERG  &  COMPANY,  P.A.

Boca  Raton,  Florida
April  12,  2004


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
   HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                CONSOLIDATED BALANCE SHEET
                 AS OF DECEMBER 31, 2003


                          ASSETS
                          ------
                                                    2003
                                                 -----------
<S>                                              <C>
ASSETS:
  Real estate rental property, net               $ 6,681,080
  Real estate held for development
  and sale                                         2,603,586
  Property, plant, and equipment, net              1,252,909
  Cash and cash equivalents                          302,172
Due from related company, less allowance
  for doubtful accounts of $9,171,084              2,505,987
  Accounts receivable                                    520
  Other assets                                        25,995
                                                 -----------
TOTAL ASSETS                                     $13,372,249
                                                 ===========

           LIABILITIES AND SHAREHOLDERS' EQUITY
           ------------------------------------

LIABILITIES:
  Bank loans                                     $ 3,298,416
  Account payable and accrued
  liabilities                                        778,868
  Payable to related parties                       1,760,772
  Taxes payable                                    2,348,849
  Minority Interests                                 183,905
                                                 -----------
TOTAL LIABILITITES                                 8,370,810
                                                 -----------

COMMITMENTS AND CONTINGENCIES                              -
</TABLE>

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


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
     HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                CONSOLIDATED BALANCE SHEET
                  AS OF DECEMBER 31, 2003

                LIABILITIES AND SHAREHOLDERS' EQUITY(CONTINUED)
                -----------------------------------------------
<S>                                            <C>
SHAREHOLDERS' EQUITY
  Common stock, par value $0.02 per
  Share, authorized 50,000,000 shares;
  issued and outstanding 7,700,807
  shares                                            154,016
  Paid in capital                                18,342,291
  Accumulated deficit                           (13,520,739)
  Accumulated other comprehensive loss               25,871
                                               -------------

TOTAL SHAREHOLDERS' EQUITY                        5,001,439
                                               -------------

TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY                         $ 13,372,249
                                               =============
</TABLE>

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


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
         HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
           FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                           2003           2002
                                       -------------  -------------
                                                       (unaudited)
<S>                                    <C>            <C>
REVENUE
Real estate sales                      $          -   $    643,828
Real estate rental income                   523,727      1,387,148
                                       -------------  -------------
Total Revenues                              523,727      2,030,976
                                       -------------  -------------

COSTS AND EXPENSES
Cost of real estate sold                          -        360,690
Real estate operating expenses              467,982        743,498
Allowance for doubtful accounts                   -      9,171,084
Impairment of real estate                10,845,792              -
Depreciation and amortization expense       403,483        658,972
Interest expense                            252,096        424,916
Other operating expenses                      1,450        180,785
                                       -------------  -------------
Total Costs and Expenses                 11,970,803     11,539,945
                                       -------------  -------------

Other income                                      -         76,083
                                       -------------  -------------
Loss before income taxes and
minority interest                       (11,447,076)    (9,432,886)
Income taxes                                      -              -
Minority interest                           565,596        477,964
                                       -------------  -------------

Loss before other deductions            (10,881,480)    (8,954,922)
Loss from investment in affiliates                -       (821,778)
Loss on sale of investment in
affiliates                                        -     (1,864,142)
                                       -------------  -------------

Loss before extraordinary item          (10,881,480)   (11,640,842)
Gain on extraordinary item, net of
income tax effect                                 -      2,791,537
                                       -------------  -------------

Net loss                                (10,881,480)    (8,849,305)
                                       -------------  -------------
</TABLE>

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


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
         HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
       FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002(CONTINUED)

                                               2003           2002
                                           -------------  ------------
                                                           (unaudited)
<S>                                        <C>            <C>
Other comprehensive loss
  Foreign currency translation
  gain/(loss)                                    53,251       (44,727)
                                           -------------  ------------

Comprehensive loss                         $(10,828,229)  $(8,894,032)
                                           =============  ============

Weighted average shares outstanding
Basic and diluted                             7,700,807     7,504,140
                                           =============  ============

Basic and diluted loss per share:
Loss from operations                       $      (1.41)  $     (1.19)
Loss from investment in affiliates                    -         (0.11)
Loss on sale of investment in affiliates              -         (0.25)
Extraordinary item                                    -          0.37
                                           -------------  ------------

Net loss per share                         $      (1.41)  $     (1.18)
                                           =============  ============
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                           HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                              FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                                             Accumulated
                                                             Accumulated        other
                         Common stock        Additional       Earnings      comprehensive
                      Shares     Amount   paid-in capital     (Deficit)        income           Total
                     ---------  --------  ----------------  -------------  ---------------  -------------
<S>                  <C>        <C>       <C>               <C>            <C>              <C>
BALANCE AS
  JANUARY 1,2002
  (unaudited)        7,500,807  $150,016        18,296,291     6,210,046           17,347     24,673,700

Issuance of common
stock for services     200,000     4,000            46,000             -                -         50,000

Foreign currency
  translation loss           -         -                 -             -          (44,727)       (44,727)
Net loss                     -         -                 -    (8,849,305)               -     (8,849,305)
                     ---------  --------  ----------------  -------------  ---------------  -------------
BALANCE AS OF
DECEMBER 31, 2002
(unaudited)          7,700,807   154,016        18,342,291    (2,639,259)         (27,380)    15,829,668

Foreign currency
  translation gain           -         -                 -             -           53,251         53,251
Net loss                     -         -                 -   (10,881,480)               -    (10,881,480)
                     ---------  --------  ----------------  -------------  ---------------  -------------
BALANCE AS OF
  DECEMBER 31, 2003  7,700,807  $154,016  $     18,342,291  $(13,520,739)  $       25,871   $  5,001,439
                     =========  ========  ================  =============  ===============  =============
<FN>
         The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                      F-7
<PAGE>
<TABLE>
<CAPTION>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                    2003           2002
                                                -------------  ------------
                                                                (unaudited)
<S>                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                      $(10,881,480)  $(8,849,305)
  Adjustments to reconcile net loss to
    net cash provided by operating activities:
  Gain on sales of real estate                             -      (283,138)
  Impairment of real estate                       10,845,792             -
  Allowance for doubtful accounts                          -     9,171,084
  Depreciation and amortization                      403,483       658,972
  Loss on sale of investment in affiliates                 -     1,864,142
  Inventory write down                                     -       702,330
  Stock issued for legal services                          -        50,000
  Extraordinary gain                                       -    (2,791,537)
  Minority interest                                 (565,596)     (477,964)

  Changes in operating assets and liabilities:
  (Increase)/ decrease in:
   Accounts receivable                                  (520)            -
   Other assets                                        5,841             -
   Due from and to related party, net              1,521,572             -
  Increase/ (decrease) in:
   Account payable and accrued liabilities           181,240             -
   Income taxes payable                                6,600             -
   Other taxes payable                            (1,216,413)            -
  Net cash provided by
   operating activities                              300,519        44,584
                                                -------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of equipment                               (2,682)            -
                                                -------------  ------------
  Net cash used in
   investing activities                               (2,682)            -
                                                -------------  ------------
</TABLE>

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


                                      F-8
<PAGE>
<TABLE>
<CAPTION>
        HUAYANG INTERNATIONAL HOLDINGS, INC. and subsidiary
         CONSOLIDATED STATEMENTS OF CASH FLOWS(CONTINUED)
          FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                             2003      2002
                                           --------  ---------
                                                    (unaudited)
<S>                                        <C>       <C>
CASH FLOWS FROM FINANCING ACTIVITIES              -         -
                                           --------  ---------

NET INCREASE IN CASH AND
  CASH EQUIVALENTS                          297,837    44,584

  Effect of exchange rate changes on cash     4,225   (44,727)

  Cash and cash equivalents, at
  beginning of year                             110       253
                                           --------  ---------
CASH AND CASH EQUIVALENTS, AT END OF
  YEAR                                     $302,172  $    110
                                           ========  =========
SUPPLEMENTARY CASH FLOWS INFORMATION
  Interest paid                            $120,818  $      -
                                           ========  =========
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                      F-9
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003

NOTES

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES

     The  consolidated  financial  statements of Huayang International Holdings,
     Inc.  and  Subsidiary  (the "Company" or "HIHI") reflect the activities and
     financial  transactions  of  it  and  its subsidiary Shenyang Haitong House
     Properties  Development  Ltd.  (HAITONG).  The  Company has a 95% ownership
     interest  in  HAITONG.  HIHI is incorporated under the laws of the State of
     Nevada  in the United States. HAITONG is incorporated under the laws of the
     People's  Republic  of  China  ("PRC").

     Basic  of  Consolidation

     The  consolidated  financial statements include the accounts of the Company
     and  its  subsidiary.  All  material intercompany balances and transactions
     have  been  eliminated  on  consolidation.

2.   BASIS  OF  PRESENTATION

     The  consolidated  financial  statements  are  prepared  in accordance with
     generally  accepted  accounting  principles  used  in  the United States of
     America.


                                      F-10
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

3.   GOING  CONCERN

     The  accompanying  consolidated  financial  statements  have  been prepared
     assuming the Company will continue as a going concern. The Company incurred
     a  net  loss  of  $10,881,480  for the year ended December 31, 2003 and has
     current  liabilities  of  $8,370,810 as of December 31, 2003. These matters
     raise  substantial doubt about the Company's ability to continue as a going
     concern.  The  consolidated  financial  statements  do  not  include  any
     adjustment  that  might  result  from  the  outcome  of  this  uncertainty.

     Management's  plans  with  regards  to this matter include working with the
     banks to cure the default of the bank loans in the amount of $3,298,416(see
     Note  9)and to obtain additional financings as deemed necessary to continue
     as  a  going  concern.


4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     Economic  and  political  risks

     The Company faces a number of risks and challenges since its operations are
     in  the  PRC  and  its  primary  market  is  in  the  PRC.

     Real  estate  rental  property

     Real estate rental property is stated at cost less accumulated depreciation
     and  amortization.  Depreciation  and  amortization  of  real estate rental
     property  is  being  provided  on a straight-line method over the estimated
     useful  lives  of  40  to  50  years.


                                      F-11
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Real  estate  held  for  development  and  sale

     Real estate held for development and sale is stated at the lower of cost or
     net realizable value. Expenditures for land development are capitalized and
     are  allocated  to  development  projects  by  the  specific identification
     method.  Costs  are  allocated  to specific units based on the ratio of the
     unit sales price to the estimated total project sales price times the total
     project  costs.

     Cash  and  cash  equivalents

     For  financial  reporting  purposes,  the  Company  considers cash and cash
     equivalents  to  include  cash  on hand and demand deposits with banks. The
     Company  had  no  cash  equivalents  at  December  31,  2003.

     The  Company  maintains  no  bank accounts in the United States of America.

     Property,  plant  and  equipment

     Property,  plant and equipment are carried at cost. The cost of maintenance
     and  repairs  is  expensed  as  incurred,  whereas  major  replacement  and
     improvements  are  capitalized.

     When  assets  are  retired  or  disposed  of,  the  cost  and  accumulated
     depreciation  are  removed  from  the  accounts,  and any resulting gain or
     losses  are  included  in  income  in  the  year  of  disposition.


                                      F-12
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Depreciation  is  calculated  on  a  straight-line basis over the estimated
     useful  life  of  the  assets.  The  percentages  applied  are:

     Buildings                                                  2.5%
     Equipment                                                   10%
     Office equipment and furniture                              20%

     Impairment  of  Long-lived  Assets

     In  August 2001, the Financial Accounting Standards Boards ( "FASB") issued
     statement of Financial Accounting Standards ("SFAS") No. 144 Accounting for
     Impairment  or Disposal of Long-Lived Assets. This pronouncement superceded
     SFAS  No.  121,  Accounting  for  the Impairment of Long-Lived Assets to be
     Disposed of and was required to be adopted on January 1, 2002. SFAS No. 144
     retained the fundamental provisions of SFAS no. 121 as it related to assets
     to be held and used and assets to be sold. SFAS No. 144 requires impairment
     losses  to  be  recorded  on assets to be held and used by the Company when
     indicators  of  impairment  are  present  and  the  undiscounted cash flows
     estimated to be generated by those assets are less than the carrying amount
     of  the  assets.  When an impairment loss is required for assets to be held
     and used by the Company, the related assets are adjusted to their estimated
     fair  value.  Fair  value  represents the amount at which an asset could be
     bought  or  sold in a current transaction between willing parties, that is,
     other  than  a  forced  or  liquidation  sale.


                                      F-13
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

5.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Impairment  of  Long-lived  Assets  (continued)

     The estimation process involved in determining if assets have been impaired
     and  in  the determination of fair value is inherently uncertain because it
     requires  estimates  of  current market yields as well as future events and
     conditions.  Such  future events and conditions include economic and market
     conditions,  as  well  as  availability  of  suitable  financing  to  fund
     acquisition  and  development  activities. The realization of the Company's
     revenue  producing  assets  is  dependent  upon future uncertain events and
     conditions,  and accordingly, the actual timing and amounts realized by the
     Company  may  be  materially  different  from  their estimated value. As of
     December  31,  2003,  management used its best estimate of the undiscounted
     cash flows as well as obtained a valuation, to evaluate the carrying amount
     and have determined that an impairment of $9,661,409 and $1,184,776 against
     real  estate  rental  properties  and  real estate held for development and
     sale,  respectively.

     Fair  value  of  financial  instruments

     The  carrying  value  of  financial  instruments  include  cash  and  cash
     equivalents,  accounts  payable,  and  accrued  liabilities and bank loans,
     approximates  their  fair  value  at  December  31 2003 and 2002 due to the
     relatively  short-term  nature  of  these  instruments.


                                      F-14
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Foreign  currency  translation

     The  Company  maintains its books and accounting records in Reminb ("RMB"),
     the  PRC  currency.  The accompanying consolidated financial statements are
     presented in United States dollars. The financial statements are translated
     into United States dollars from RMB at year-end exchange rates as to assets
     and  liabilities  and  weighted  average  exchange rates as to revenues and
     expenses.  Capital  accounts  are  translated  at their historical exchange
     rates  when  the  capital  transactions  occurred.

<TABLE>
<CAPTION>
                                              2003      2002
                                             ------  -----------
                                                     (unaudited)
<S>                                          <C>     <C>
     Year end RMB : US$ exchange rate        8.2767       8.3000
     Average yearly RMB : US $exchange rate  8.2770       8.3000
</TABLE>

     No  presentation  is  made  that  RMB  amounts could have been or could be,
     converted  into  US  dollar  at  those  rates.  On January 1, 1994, the PRC
     government  introduced  a  single  rate  of exchange as quoted daily by the
     People's Bank of China ( the "Unified Exchange Rate"). The quotation of the
     exchange  rates  does not imply free convertibility of RMB to other foreign
     currencies. All foreign exchange transactions continue to take place either
     through the Bank of China or other banks authorized to buy and sell foreign
     currencies  at  the  exchange  rates  quoted by the People's Bank of China.
     Approval  of  foreign  currency  payments  by  the  Bank  of China or other
     institutions  requires  submitting a payment application form together with
     supplier's  invoice,  shipping  documents  and  signed  contracts.


                                      F-15
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Revenue  recognition

     Real  estate  sales  are reported in accordance with the provisions of SFAS
     No.  66.  Profit  from the sales of development properties, less applicable
     taxes,  is  recognized  by  the  full  accrual  method  when  the  sale  is
     consummated. A sale is not considered consummated until (a) the parties are
     bound by the terms of a contract, (b) all consideration has been exchanged,
     (c)  any  permanent  financing  of which the seller is responsible has been
     arranged  (d)  all  conditions precedent to closing have been performed (e)
     the  seller  does  not  have  substantial  continuing  involvement with the
     property,  and  (f)  the  usual  risks  and  rewards of ownership have been
     transferred  to  the  buyer.

     Sales  transactions  not  meeting  all  the  conditions of the full accrual
     method  are accounted for using the deposit method of accounting. Under the
     deposit  method,  all  costs  are  capitalized  as  incurred,  and payments
     received  from  the  buyer  are  recorded  as  a  deposit  liability.

     Real  estate  rental  income,  less  applicable taxes, is recognized on the
     straight-line  basis  over  the  terms  of  the  tenancy  agreements.


                                      F-16
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Income  taxes

     Deferred  tax assets are measured using enacted tax rates in the US and PRC
     expected  to  apply to taxable income in the years in which those temporary
     differences  are expected to be recovered or settled. A valuation allowance
     is  provided  for  deferred  tax assets if it is more likely than not these
     items  will  either  expire  before  the  Company  is able to realize their
     benefits,  or  that  future  deductibility  is  uncertain.

     Use  of  estimates

     The  preparation  of  consolidated  financial statements in conformity with
     generally  accepted  accounting  principles in the United States of America
     requires  management  to  make  estimates  and  assumptions that affect the
     reported  amounts  of  assets  and liabilities and disclosure of contingent
     assets  and  liabilities  at  the  date of the financial statements and the
     reported  amounts  of  revenues  and expenses during the reporting periods.
     Actual  results when ultimately realized could differ from those estimates.


                                      F-17
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Stock-based  compensation

     SFAS  No.  123,  Accounting  for Stock-Based Compensation ("SFAS No. 123"),
     defines  a  fair-value-based  method of accounting for stock-based employee
     compensation  and  transactions  in  which  an  entity  issues  its  equity
     instruments to acquire goods or services from non-employees, and encourages
     but  does not require companies to record compensation cost for stock-based
     employee  compensation at fair value. The Company has chosen to account for
     stock-based  employee  compensation  using  the  intrinsic  value  method
     prescribed  in  Accounting  Principles Board Opinion No. 25, Accounting for
     Stock  issued  to  Employees  and  related  interpretations.  Accordingly,
     compensation  cost for stock options is measured for the excess, if any, of
     the  quoted  market  price  of the Company's stock at the date of the grant
     over  the  amount  an  employee  must  pay  to  acquire  the  stock.

     Stock  compensation  expense  for  stock  granted to non-employees has been
     determined  in  accordance  with  SFAS  No. 123 and the Emerging Task Force
     consensus  in  Issue No. 96-18, "Accounting for Equity Instruments that are
     Issued  to  Other  than  Employees  for  Acquiring,  or in Conjunction with
     Selling  Goods  or  Services"  ("EITF96-18"),  as  the  fair  value  of the
     consideration  received or the fair value of the equity instruments issued,
     whichever  is  more  reliably  measured.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
     Compensation-Transition  and  Disclosure  -  an  amendment


                                      F-18
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Stock-based  compensation  (Continued)

     of  SFAS Statement No. 123, "Accounting for Stock Based Compensation" which
     provides  alternative methods for accounting for a change by registrants to
     the  fair  value  method  of  accounting  for  stock-based  compensation.
     Additionally,  SFAS  148  amends the disclosure requirements of SFAS 123 to
     require  disclosure  in  the significant accounting policy footnote of both
     annual  and  interim  financial  statements of the method of accounting for
     stock  based-compensation  and  the  related pro forma disclosures when the
     intrinsic value method continues to be used. The statement is effective for
     fiscal  years  beginning  after  December  15,  2002,  and  disclosures are
     effective  for  the first fiscal quarter beginning after December 15, 2002.
     There was no stock based compensation for the years ended December 31, 2003
     and  2002.

     Earnings  per  share

     Basic earnings per share is computed by dividing income available to common
     shareholders  by  the  weighted-average number of common shares outstanding
     during  the period. Diluted earnings per share is computed similar to basic
     earnings  per share except that the denominator is increased to include the
     number  of additional common shares that would have been outstanding if the
     potential  common  shares  have  been  issued  and if the additional common
     shares  were  dilutive.  There are no differences between basic and diluted
     EPS  as of December 31, 2003 and 2002 as the effect would be anti-dilutive.


                                      F-19
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Comprehensive  income

     SFAS No. 130, Reporting Comprehensive Income, established standards for the
     reporting  and  display  of  comprehensive  income,  its  components  and
     accumulated balances in a full set of general purpose financial statements.
     SFAS  No. 130 defines comprehensive income to include all changes in equity
     except  those  resulting  from  investments  by owners and distributions to
     owners.  Among other disclosures, SFAS No. 130 requires that all items that
     are  required  to  be  recognized  under  current  accounting  standards as
     components  of  comprehensive  income  be reported in a financial statement
     that  is  presented with the same prominence as other financial statements.
     The  Company's  only  current  component of comprehensive income is foreign
     currency  translation  adjustment.

     Employee's  Benefits

     Mandatory  contributions  are  made  to the Government's health, retirement
     benefit and unemployment schemes at the statutory rates in force during the
     period,  based  on  gross  salary  payments.  The cost of these payments is
     charged to the statement of income in the same period as the related salary
     cost.

     Segment  reporting

     The  Company  only  operates  in  one  business  segment,  the  real estate
     activities.


                                      F-20
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Recent  Accounting  Pronouncements

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments  and  Hedging  Activities". SFAS No. 149 amends and
     clarifies  financial  accounting  and reporting for derivative instruments,
     including  certain  derivative  instruments  embedded  in  other  contracts
     (collectively  referred to as derivatives) and for hedging activities under
     SFAS  No.  133,  "Accounting  for  Derivative  Instruments  and  Hedging
     Activities".  The  changes  in  SFAS No. 149 improve financial reporting by
     requiring  that  contracts with comparable characteristics be accounted for
     similarly.  This  statement  is  effective  for  contracts  entered into or
     modified  after  June  30, 2003 and all of its provisions should be applied
     prospectively.

     In  May  2003,  the  FASB  issued  SFAS  No.  150,  "Accounting For Certain
     Financial Instruments with Characteristics of both Liabilities and Equity".
     SFAS  No. 150 changes the accounting for certain financial instruments with
     characteristics  of  both  liabilities  and  equity  that,  under  previous
     pronouncements,  issuers  could  account  for as equity. The new accounting
     guidance  contained  in  SFAS  No.  150  requires that those instruments be
     classified  as  liabilities  in  the  balance  sheet.


                                      F-21
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Recent  Accounting  Pronouncements  (Continued)

     SFAS  No.  150  affects  the  issuer's  accounting  for  three  types  of
     freestanding  financial  instruments.  One  type  is mandatorily redeemable
     shares,  which the issuing company is obligated to buy back in exchange for
     cash  or  other  assets.  A  second  type  includes put options and forward
     purchase  contracts,  which involves instruments that do or may require the
     issuer to buy back some of its shares in exchange for cash or other assets.
     The  third  type  of  instruments  that  are liabilities under this SFAS is
     obligations that can be settled with shares, the monetary value of which is
     fixed,  tied  solely or predominantly to a variable such as a market index,
     or varies inversely with the value of the issuers' shares.SFAS No. 150 does
     not  apply  to  features  embedded  in a financial instrument that is not a
     derivative  in  its  entirety.

     Most  of  the  provisions of Statement 150 are consistent with the existing
     definition  of  liabilities  in FASB Concepts Statement No. 6, "Elements of
     Financial Statements". The remaining provisions of this SFAS are consistent
     with  the  FASB's  proposal  to revise that definition to encompass certain
     obligations  that  a reporting entity can or must settle by issuing its own
     shares. This SFAS shall be effective for financial instruments entered into
     or  modified  after  May  31,  2003 and otherwise shall be effective at the
     beginning of the first interim period beginning after June 15, 2003, except
     for mandatorily redeemable financial instruments of a non-public entity, as
     to  which the effective date is for fiscal periods beginning after December
     15,  2004.


                                      F-22
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Recent  Accounting  Pronouncements  (Continued)

     In  January  2003,  and  as  revised  in  December  2003,  the  FASB issued
     Interpretation  No.  46,  "Consolidation  of  Variable  Interest  Entities"
     "Interpretation No. 46"), an interpretation of Accounting Research Bulletin
     ("ARB") No. 51", "Consolidated Financial Statements". Interpretation No. 46
     addresses  consolidation  by  business  enterprises  of  variable  interest
     entities,  which have one or both of the following characteristics: (i) the
     equity investment at risk is not sufficient to permit the entity to finance
     its  activities without additional subordinated support from other parties,
     which  is provided through another interest that will absorb some or all of
     the  expected  losses  of the entity; (ii) the equity investors lack one or
     more  of the following essential characteristics of a controlling financial
     interest:  the  direct  or  indirect  ability  to  make decisions about the
     entity's  activities  through  voting  rights  or  similar  rights;  or the
     obligation to absorb the expected losses of the entity if they occur, which
     makes  it  possible  for the entity to finance its activities; the right to
     receive the expected residual returns of the entity if they occur, which is
     the  compensation  for  the  risk  of  absorbing  the  expected  losses.

     Interpretation  No.  46,  as revised, also requires expanded disclosures by
     the  primary  beneficiary (as defined) of a variable interest entity and by
     an  enterprise  that  holds  a  significant variable interest in a variable
     interest  entity  but  is  not  the  primary  beneficiary.


                                      F-23
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Recent  Accounting  Pronouncements  (Continued)

     Interpretation  No.  46,  as  revised, applies to small business issuers no
     later  than  the end of the first reporting period that ends after December
     15,  2004.  This  effective  date  includes  those  entities  to  which
     Interpretation  No.  46  had previously been applied. However, prior to the
     required  application  of  Interpretation No. 46, a public entity that is a
     small  business  issuer shall apply Interpretation No. 46 to those entities
     that  are considered to be special-purpose entities no later than as of the
     end  of  the  first  reporting  period  that  ends after December 15, 2003.

     Interpretation No. 46 may be applied prospectively with a cumulative-effect
     adjustment  as  of  the  date  on which it is first applied or by restating
     previously  issued  financial  statements  for  one  or  more  years with a
     cumulative-effect  adjustment  as  of  the  beginning  of  the  first  year
     restated.

     In  June 2003, the FASB issued an Exposure Draft for proposed SFAS entitled
     "Qualifying  Special Purpose Entities ("QSPE") and Isolation of Transferred
     Assets",  an amendment of SFAS No. 140 ("The Exposure Draft"). The Exposure
     Draft  is  a  proposal  that  is  subject to change and as such, is not yet
     authoritative.  If  the  proposal  is  enacted in its current form, it will
     amend  and  clarify  SFAS  140. The Exposure Draft would prohibit an entity
     from  being  a


                                      F-24
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

4.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

     Recent  Accounting  Pronouncements  (Continued)

     QSPE  if it enters into an agreement that obliged a transferor of financial
     assets,  its  affiliates, or its agents to deliver additional cash or other
     assets  to  fulfill  the special-purposes entity's obligation to beneficial
     interest  holders.

     Management  does  not expect these recent pronouncements to have a material
     impact  on  the  Company's  consolidated  financial  position or results of
     operations.

5.   REAL  ESTATE  RENTAL PROPERTY AND REAL ESTATE HELD FOR DEVELOPMENT AND SALE

     As  of  December  31,  2003  real  estate  consists  of  the  following:

<TABLE>
<CAPTION>
                                        Rental         Held for
                                       Property          Sale
                                     -------------  --------------
<S>                                  <C>            <C>
     Cost                            $  17,770,815  $    3,788,362
     Less: Accumulated depreciation
             and amortization            1,428,326               -
     Impairment                          9,661,409       1,184,776
                                     -------------  --------------
     Net value                       $   6,681,080  $    2,603,586
                                     =============  ==============
</TABLE>

     Depreciation expenses relating to the real estate rental activities for the
     years  ended  December  31, 2003 and 2002 amounted to $355,403 and $565,670
     (unaudited),  respectively.


                                      F-25
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

5.   REAL  ESTATE  RENTAL PROPERTY AND REAL ESTATE HELD FOR DEVELOPMENT AND SALE
     (CONTINUED)

     The real estate is located in Shenyang, the People's Republic of China. The
     3rd  floor of Podium A with a net book value of $903,879 (net of $3,499,392
     impairment  provision)  has  been  pledged  to secure bank loans from China
     Merchant  Bank granted to HAITONG. In addition, Unit 2588 of Tower A with a
     net  book  value  of $57,798 has been pledged to secure the loan from China
     Construction  Bank.  (see  note  9).

6.   DUE  FROM  RELATED  COMPANIES

     The  Company  is  conducting  business  with a related company in which the
     Company's  president  and  majority  shareholder  has a direct and indirect
     ownership interest. The related company, Huayang Industry (Shenyang) Group,
     Ltd.,  manages  property  rental  and sales activities for the Company. The
     related  company  received  sales  in the amount of $388,144 and paid other
     taxes  in the amount of $240,129 on behalf of the Company while the Company
     received  cash arising from previous sales in the amount of $1,190,293 from
     the  related  company and paid operating expenses in the amount of $103,012
     on  behalf  of  the  related  company  in  2003.

     As  of  December  31, 2002, the Company had determined that it was unlikely
     that the receivable in the amount of $11,702,980 (unaudited) would be fully
     paid  and  therefore  provided  an  allowance  in  the amount of $9,171,084
     (unaudited).  As of December 31, 2003, the net balance due from the related
     company amounted to $2,505,987 against which the related company has signed
     and  executed  a  promissory note for an amount of $2,532,000 dated January
     30th,  2004  in  favor  of the Company. The promissory note is repayable by
     installments  as  follows:


                                      F-26
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

6.   DUE  FROM  RELATED  COMPANIES  (CONTINUED)

<TABLE>
<CAPTION>
     Period                   Installment payment schedule of principal
     -----------------------  -----------------------------------------
<S>                           <C>
     Year 2004                Monthly installment of $24,000 each
     Year 2005                Quarterly installment of $121,000 each
     Year 2006                Quarterly installment of $181,000 each
     First three quarters of  Quarterly installment of $266,000 each
     year 2007
     Fourth quarter of year   Final payment of $238,000
     2007
</TABLE>

     The  promissory  note  bears 5.5% interest rate per annum. In addition, the
     promissory note is secured by a security agreement dated January 30th, 2004
     executed  by the related company for the benefit of the Company whereby the
     related  company  grants  and conveys to the Company a security interest in
     all  of  its  fixed  and  current  assets  which  it  owns.


7.   PROPERTY,  PLANT,  AND  EQUIPMENT

     Property,  plant,  and equipment consisted of the following at December 31,
     2003:

<TABLE>
<CAPTION>
<S>                                     <C>
       Leasehold improvements           $ 1,464,677
       Equipment                            142,233
       Less:  Accumulated depreciation     (354,001)
                                        ------------
                                        $ 1,252,909
                                        ============
</TABLE>

     Depreciation  expense  relating  to  property, plant, and equipment for the
     years  ended  December  31,  2003  and 2002 amounted to $48,080 and $93,302
     (unaudited),  respectively.


                                      F-27
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

8.   INCOME  TAXES

     The  Company's  loss before income taxes was comprised of the following for
     the  years  ended  December  31,  2003  and  2002:

<TABLE>
<CAPTION>
                                    2003            2002
                                -------------  --------------
                                                 (unaudited)
<S>                             <C>            <C>
       United States            $   (135,153)  $  (2,735,920)
       PRC                       (10,746,327)     (6,113,385)
                                -------------  --------------

                                $(10,881,480)  $  (8,849,305)
                                =============  ==============
</TABLE>

     Taxes  are  calculated  on a separate entity basis because consolidation is
     not  allowed  for tax purposes in the PRC. Any tax benefit arising from the
     operating  losses  in  the  United  States  of America is fully offset by a
     valuation  allowance.

     It is management's intention to reinvest all the income attributable to the
     Company  earned  by  its  operations  outside the United States of America.
     Accordingly,  no  United States of America corporate income taxes have been
     provided  in  these  consolidated  financial  statements,  companies  with
     operations  in  the PRC may be subject to PRC income tax. The PRC statutory
     income  tax  rate  for  the  company  is  33%. There are no income taxes on
     capital  gains.

     The  provision  for  income  taxes differs from the amounts computed at the
     statutory  rates  as  follows  at  December  31:


                                      F-28
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

8.   INCOME  TAXES  (CONTINUED)

<TABLE>
<CAPTION>
                                               2003           2002
                                          --------------  -------------
                                                           (unaudited)
<S>                                       <C>             <C>
     PRC income taxes at statutory rates  $  (3,546,288)  $ (2,938,624)
        Reconciling items:
            Permanent differences               113,025        383,275
            Temporary differences             3,433,263      2,555,349
                                          --------------  -------------
                                                      -              -
                                          ==============  =============
</TABLE>

     The  Company's  deferred  tax  assets  at  December  31  are:

<TABLE>
<CAPTION>
                                               2003
                                           -------------
<S>                                        <C>
     TAX ASSETS
         Bad debt provision                $  3,035,007
         Property and equipment                 471,348
         Impairment losses on Real estate     3,579,241
         Net Operating loss                   1,019,018
         Valuation allowance                 (8,104,614)
                                           -------------
                                                      -
                                           =============
</TABLE>


                                      F-29
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

9.   BANK  LOANS

     Bank loans consist of the following as of December 31, 2003:

          Loan  from  China  Construction  Bank,  originally
          due  December  28,  2001,  monthly  interest
          only  payments  at  6.44%  per  annum,  secured  by
          Unit  2588  of  Tower  A  with  a  carrying  value
          of  $57,798  (See  Note  5)  and  guaranteed
          by  HAITONG                                              $  205,396

          Loan  from  China  Merchant  Bank,  originally
          due  August  30,  2001,  quarterly  interest
          only  payments  at  6.44%  per  annum,  secured  by
          3rd  floor  of  Podium  A  with  a  carrying  value
          of  $903,879  (See  Note  5)  and  guaranteed
          by  HAITONG                                               3,093,020
                                                                   ----------
                                                                   $3,298,416
                                                                   ==========

     The  above  bank  loans  are currently in default and management is working
with  the  respective  banks  to  extend  the  repayment  terms  or sell certain
properties to offset the loan balance with the proceeds.  According to the terms
in  of the loan agreements, the banks have the right to impose default interests
at  a  daily  rate  of  0.021%.


                                      F-30
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES


10.  OTHER  TAXES  PAYABLE

     The  Company  is required to pay Business Tax (5%) and Land Value Added Tax
     (1%)  on certain real estate sales. The Company is required to pay Business
     Tax  (5%)  and  Real  Estate  Tax  (12%)  on  rental  income.

     Generally,  the taxes have been collected by the management company. Should
     the management company fail to pay the taxes to the local government taxing
     authority,  the  Company  would  be liable for these taxes. The Company has
     recorded  a  liability  for  these  taxes in the amount of $2,342,249 as of
     December  31,  2003.


11.  PAYABLE  TO  RELATED  PARTIES

     The  Company  entered  into  an  agreement  with  Huayang  International
     Investment,  Ltd('HIIL')  in 1997. HIIL is 50% owned by Wan Jun Gao and the
     remaining  50%  is  owned  by Mr. Gao's brother. The Company has recorded a
     liability  for  HIIL  in  the amount of $1,710,772 as of December 31, 2003.
     Shenyang  Huayuan  Property  Management  Co.,  Ltd('Huayuan') is a minority
     shareholder  of  the  Company.  The  Company  has  recorded a liability for
     Huayuan  in  the  amount  of  $50,000  as  of  December  31,  2003.


                                      F-31
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES


12.  INVESTMENT  IN  AFFILIATES

     In  September  2002, the Company disposed of its 20% equity interest in the
     Hotel Group, and agreed to apply the selling price directly as a payment to
     certain  debts  owed  to  a  related  party.  Through  September  2002, the
     Company's  share  of  the loss in the Hotel Group was $821,778 (unaudited).
     The  effect  of  the  disposal  of  the  Hotel  Group appears in the income
     statement  as  follows:

<TABLE>
<CAPTION>
                                                (unaudited)
<S>                                            <C>
     Proceeds from the disposal of investment  $ 13,076,990
     Costs of investment                        (12,794,561)
     Waiver of accrued interest                  (2,667,773)
     Reversal of deferred interest
     from the Hotel Group                           521,202
                                               -------------

       Loss on sales of investment             $ (1,864,142)
                                               =============
</TABLE>


13.  EXTRAORDINARY  ITEM

     In  April 2002, the Company reached agreement with banks to settle loans in
     the  amount  of  $13,951,807 (unaudited) and accrued interest of $3,402,160
     (unaudited).  The  Company has transferred title to certain office space in
     full  satisfaction  of  the  loans  due  to  banks.  As  a  result of these
     transactions,  the  Company  recorded  a  gain  of  $2,791,537 (unaudited).


                                      F-32
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

14.  CURRENT  VULNERABILITY  DUE  TO  CERTAIN  CONCENTRATIONS

     The  Company's  operations  are  conducted  in  the  PRC.  Accordingly, the
     Company's  business,  financial  condition and results of operations may be
     influenced  by  the  political, economic and legal environments in the PRC,
     and  by  the  general  state  of  the  PRC's  economy.

     The  Company's  operations in the PRC are subject to special considerations
     and  significant  risks  not  typically  associated with companies in North
     America  and  Western  Europe.  These  include risks associated with, among
     other  things,  the  political, economic and legal environments and foreign
     currency  exchange.  The  Company's  results  may  be adversely affected by
     changes  in  the political and social conditions in the PRC, and by changes
     in  governmental  policies  with  respect  to  laws  and  regulations,
     anti-inflationary  measures, currency conversion and remittance abroad, and
     rates  and  methods  of  taxation,  among  other  things.

     The  real  estate  and  hospitality  industries  in the PRC are affected by
     various  economic  and political factors that are beyond the control of the
     Company.


                                      F-33
<PAGE>
               HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 2003


NOTES

15.  RENTAL  INCOME

     The  Company  receives  rental  income  from  leasing  retail,  office  and
     residential  building  space  under  operating  leases.

     The  Company  also leases office space to companies that are related to the
     majority shareholder and president of HIHI. During the years ended December
     31, 2003 and 2002, the Company received $388,144 and $71,030 (unaudited) in
     rental  income  from  these  companies.

     Future  minimum  rentals,  under  non-cancelable  operating  leases  to  be
     received over the next five years net of 5% business tax as of December 31,
     2003  are  as  follows:

<TABLE>
<CAPTION>
     YEARS ENDING
     DECEMBER 31,       AMOUNT
<S>                   <C>
     2004             $  146,700
     2005                112,737
     2006                 45,231
     2007                 34,433
     2008                 34,433
     THEREAFTER         857,950
                       ---------
                      $1,231,484
                      ==========
</TABLE>


                                      F-34
<PAGE>