U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB


(Mark One)

      |X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
            ACT OF 1934

      For the fiscal year ended December 31, 2001

                                       or

      |_|   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
    incorporation or organization)              Identification Number)

         386 Qing Nian Avenue
            Shenyang, China
    (Address of principal executive                     110003
               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)

<PAGE>

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 |X| No |_|

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. |X|

The registrant's revenues for its most recent fiscal year, ending December 31,
2001, were $5,647,723.

As of March 27, 2002, the aggregate market value of the $0.02 Par Value
Common Stock held by non-affiliates of the registrant was approximately
$585,315 based on the closing sale 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 March
27, 2002, was 7,500,807.

Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|

<PAGE>

                      HUAYANG INTERNATIONAL HOLDINGS, INC.

                                      INDEX

PART I.

Item 1.  Business
Item 2.  Properties
Item 3.  Legal Proceedings
Item 4.  Submission of Matters to a Vote of Security Holders

PART II.

Item 5.  Market for Registrant's Common Equity and Related
Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
Item 7.  Financial Statements
Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

PART III.

Item 9.  Directors and Executive Officers of the Registrant
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K

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<PAGE>

                                     PART I.

Item 1. 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 of Financial Condition and Results of Operations - General."

      Huayang International Holdings, Inc. (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 a 163,000
meter hotel, apartment and office complex in Shenyang, the People's Republic of
China. The Company's current activities include the development of a 163,000
square meter hotel and business property in Shenyang, China.

STRUCTURE OF THE COMPANY

      We conduct our business through our 95% owned subsidiary Shenyang Haitong
House Properties Development, Ltd ("Haitong"), and the following joint ventures
in which the Company holds a 20% stake: 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").

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.

      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%, 20%, 20% and 20% investments in Haitong, Hotel, Business
Center and Garage, respectively, 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 Trust. At the date of acquisition, PCC changed its name to Huayang
International Holdings, Inc. Our shares were formerly traded on the OTC Bulletin
Board under the symbol "HIHI" and commenced trading on January 24, 1996. The
trading prices ranged between $0.25 and $4.375 per share. On December 15, 1999,
the Company 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". The trading prices
from January 10, 2002 to March 27, 2002 ranged between $0.15 and $0.60 per
share.


                                       4
<PAGE>

BUSINESS

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

      The building consists of two towers and two podiums. Haitong owns Tower
A and Podium A, while Hotel Group owns Tower B and Podium B of the building.

      Tower A is a 22-story construction with 330 office units, 220 business
apartments, and 66 penthouse apartments, totaling approximately 56,410 square
meters. Podium A is a six-story construction totaling approximately 26,912
square meters, with approximately 22,000 square meters of commercial space for
lease. As of December 31, 2001, 396 units of Tower A totaling approximately
33,951 square meters (60% of the total area of Tower A) had been sold,
generated approximately US$27 million in gross revenues, and 178 Tower A units
totaling approximately 17,142 square meters (30% of total area of Tower A)
had been leased, generating US$2.8 million in annual gross revenues.
Approximately 1,015 square meters of commercial space in Podium A had been
leased, generating US$0.4 million in annual revenues.

      Tower B and Podium B of the building totaling approximately 80,012 square
meters will be operated by Sheraton Overseas Management Corporation and Hotel
Group together as Sheraton Shenyang Lido Hotel. The luxury business hotel has
533 rooms/suites and 90 luxury apartments. When the operations commenced, the
hotel is expected to generate revenues from room charges, restaurants and
bars, recreation facilities, business facilities and car park. The service
facilities in the hotel will serve the entire building.

      However, as of March 27, 2002, the hotel has not yet commenced
operation and we are not certain when it will open. The opening date for
the hotel is determined by the majority shareholder of the Hotel and
Sheraton management, subject to government approval. Further, there can be
no assurance that when the hotel opens the expected occupancy and room
rate can be attained.

      The Commercial Towers are 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 leads to 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 area under 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 an aquarium
are also located nearby.

                                       5
<PAGE>

      The total cost for the project is budgeted at US$170 million, of which
approximately US$70 million was used to fund the development of Tower A and
Podium A, and approximately US$100 million was used pay the costs of developing
the Sheraton Hotel.

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 will 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 will 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 will
rehabilitate properties when the expected returns justify the costs of
rehabilitation. We will 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 which 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 who may provide equity or expertise in a variety of real
estate ventures.

2) Financing Policies

      We will seek to 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

                                       6
<PAGE>

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

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

      The Company intends to make annual reports to its shareholders which
provides updated information about its operations as well as financial
statements certified by independent public accountants.

      Our policies with respect to these activities may be reviewed and
Modified from time to time by our directors without notice to or vote of the
stockholders.

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.


                                       7
<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
will provide office space, luxury residential units, retail space,
entertainment functions, convention and exhibition functions as well as
five-star hotels.

      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 we are. The Sheraton hotel
will compete directly with other business hotels in Shenyang, such as the JW
Marriott Hotel and Shenyang Inter-Continental Hotel.

JOINT VENTURES

      In order to enhance the efficiency of the operation of the Commercial
Towers, we entered into several joint ventures to operate various aspects of the
Commercial Towers.

      Hotel: Hotel is developing a 54,862 square meter, 623 room luxury business
hotel in Tower B of the Commercial Towers. We are a 20% stakeholder in the Hotel
project. The Hotel will be managed by Sheraton Hotels, a subsidiary of Starwood
Hotels & Resorts Trust.

      As of December 31, 2001 the total construction costs of Tower B and Podium
B totaled approximately US$100 million, of which approximately US$41 million
had been paid with the balance to be paid by the principal shareholder, Yick Ho,
Ltd., a wholly owned subsidiary of Cheung Kong (Holdings) Limited, a Hong Kong
based corporation listed in Hong Kong Stock Exchange. The Hotel Group is
expected to generate revenues from room tariffs and other services.

      Business Center: Business Center owns and operates a 19,285 square
meter business center occupying the five story podium of Tower B. The Business
Center will operate business and conference facilities as well as entertainment
facilities. We are a 20% stakeholder in the Business Center project. The Company
expects the Business Center to generate revenues from conference services.

      Garage: Garage owns and operates a 5,865 square meter parking facility in
support of the Hotel and Business Center. The facility occupies two basement
levels of Tower B. We are a 20% stakeholder in the Garage project. The Garage
is expected to generate revenues from its parking facilities.



                                       8
<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.

PROJECT STATUS

      Tower A has been completed. There are 330 office units, 220 business
apartment units and 66 penthouse apartment units in Tower A, totaling
approximately 56,410 square meters. As of December 31, 2001, approximately
33,951 square meters of floor space had been sold and approximately 17,142
square meters had been leased.

      Podium A has also been completed and we expect it to begin full operations
when the Hotel is opened. Of the 22,000 square meters of available floor space,
approximately 1,015 square meters has been leased. Our major tenants are
Agriculture Bank of China which has leased 1,000 square meters of the ground
floor area.

      The construction of Hotel is completed. However, the Hotel has not yet
commenced operations as of March 27, 2002 and we are not certain when it will
open. The opening date for the hotel is determined by the majority shareholder
of the Hotel and Sheraton management, subject to government approval.

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 its development projects. We believe that we are in
compliance with all laws, rules and regulations applicable to its 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 2001, the Company had 21 employees, all of which are
salaried. No employee group is covered under a collective bargaining agreement.
We believe our relationship with our employees is good.

Item 2. Properties

      Our headquarters consists of a 1,818 square meter leased facility in
Podium A of the Commercial Towers, located at No. 386 Qingnian Street, Heping
District, Shenyang, China 110003. We own the building in which the office is
located.

                                       9
<PAGE>

      We have engaged in the development of real estate properties in the Heping
District of Shenyang, China, specifically the Huayang International Mansion. The
real estate projects in which we hold an interest consist of the following:

      1)    Haitong;
      2)    Hotel;
      3)    Business Center; and
      4)    Garage.

HAITONG

      We own 95% of Haitong. The Haitong project consists of a 26,912 square
meter Podium and a 56,410 square meter Tower, divided into office and
residential units. The Tower was completed in 1999, and the Podium was
completed in 2001. The total cost of developing Haitong was approximately
US$70 million. These costs were paid through a combination of bank loans and
mortgages, guranteed by Haitong and secured by its assets, and capital
contributions and loans from shareholders. We currently have bank loans
totaling US$17,268,635 outstanding which are secured by a mortgage on the
property. The annual interest rates on these bank loans range from 6.44% to
7.11%.

HOTEL, BUSINESS CENTER AND GARAGE (COLLECTIVELY REFERRED TO AS THE "HOTEL
GROUP")

      We own 20% of the Hotel Group. The Hotel Group includes a 54,862
square meter, 623 room luxury business hotel in Tower B, a 19,285 square
meter business center in Podium B, and a 5,865 square meter garage in the
basement of the Commercial Towers. The Hotel Group will be managed by
Sheraton, a subsidiary of Starwood, as the Sheraton Shenyang Lido Hotel.
Construction on the Hotel is completed but the hotel has not commenced
operations. Total construction costs of the Hotel Group were
approximately US$100 million, including the costs of developing the
Business Center and Garage.

HUAYANG INTERNATIONAL MANSION

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

      The building consists of two towers and two podiums. Haitong owns Tower
A and Podium A, while Hotel Group owns Tower B and Podium B of the building.

      Tower A is a 22-story construction with 330 office units, 220 business
apartments, and 66 penthouse apartments, totaling approximately 56,410 square
meters. Podium A is a six-story construction totaling approximately 26,912
square meters, with approximately 22,000 square meters of commercial space for
lease. As of December 31, 2001, 396 units of Tower A totaling approximately

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<PAGE>

33,951 square meters (60% of the total area of Tower A) had been sold,
generated approximately US$27 million in gross revenues, and 178 Tower A units
totaling approximately 17,142 square meters (30% of total area of Tower A)
had been leased, generating US$2.8 million in annual gross revenues.
Approximately 1,015 square meters of commercial space in Podium A had been
leased, generating US$0.4 million in annual revenues.

      Tower B and Podium B of the building totaling approximately 80,012 square
meters will be operated by Sheraton Overseas Management Corporation and Hotel
Group together as Sheraton Shenyang Lido Hotel. The luxury business hotel has
533 rooms/suites and 90 luxury apartments. When the operations commenced, the
hotel is expected to generate revenues from room charges, restaurants and
bars, recreation facilities, business facilities and car park. The service
facilities in the hotel will serve the entire building.

      However, as of March 27, 2002, the hotel has not yet commenced
operation and we are not certain when it will open. The opening date for
the hotel is determined by the majority shareholder of the Hotel and
Sheraton management, subject to government approval. Further, there can
be no assurance that when the hotel opens the expected occupancy and
room rate can be attained.

      The Commercial Towers are 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 leads to 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 area under 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 an aquarium
are also located nearby.

      The total cost for the project is budgeted at US$170 million, of which
approximately US$70 million was used to fund the development of Tower A and
Podium A, and approximately US$100 million was used to pay the costs of
developing the Sheraton Hotel.

Item 3. Legal Proceedings

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

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

      No matters were submitted to a vote of shareholders during the fiscal year
ended December 31, 2001.




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PART II.

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 "HIHI". Prior to December 15, 1999, our shares had been traded on the
OTC Bulletin Board under the symbol "HIHI" and since January 24, 1996. The
trading prices ranged between $0.25 and $4.375 per share. On December 15,
1999, the Company 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. The Company filed Form 10SB and met all
the requirements to comply the Eligibility Rule in 2001 and was relisted on
January 10, 2002. The trading prices from January 10, 2002 to March 27, 2002
ranged between $0.15 and $0.60.

      As of March 27, 2002, there were approximately 270 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.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

GENERAL

      The following discussion of the financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and related notes thereto. The following discussion contains certain
forward-looking statements that involve risk and uncertainties. Our actual
results could differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, risks
and uncertainties related to the need for additional funds, the rapid growth of
the operations and our ability to operate profitably after the initial growth
period is completed.

RESULTS OF OPERATIONS

      Revenues for the fiscal year ended December 31, 2001 were $5,647,723,
decreased 12.57% from $6,459,496 over the fiscal year ended December 31, 2000.
This decrease was primarily attributable to a 38.83% decrease in revenues from
real estate sales, offset in part by a 12.32% increase in real estate rental
income. For the fiscal year ended December 31, 2001, revenues from real estate
sales decreased to $1,833,499 from $2,997,293, while revenues from real estate
rental increased to $3,210,042 from $2,858,022 over the same period of 2000.
These changes reflect the fact that we are close to completing the sale of our
real estate property held for sale, and real estate rental income and other
operating income will gradually become our major revenue source. We expect
further decline in total revenues as our major revenue source shifts from


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property sales to rental income. As of December 31, 2001, the remaining real
estate property held for sale and net real estate property were $2,285,143
and $32,513,101, respectively, compared to $5,674,648 and $30,979,816 a year
ago. Interest income was $604,182 for the fiscal year ended December 31,
2001, compared to $604,181 for the fiscal year ended December 31, 2000.

      Total costs and expenses were $3,955,043 in the fiscal year ended
December 31, 2001, up from $3,382,179 in the fiscal year ended December 31,
2000, an increase of 16.94%. For the fiscal year ended December 31, 2001,
cost of real estate sold dropped 37.69% to $1,320,633 from $2,119,286,
while real estate operating expenses increased 812.63% to $376,635 from
$41,269 over the same period of 2000. Depreciation expense increased 154.93%
to $851,842 from $334,145 and interest expense increased 91.76% to
$1,293,885 from $674,749 for the fiscal year ended December 31, 2001 over
the same period of 2000. Other operating expenses for the fiscal year ended
December 31, 2001 decreased 47.33% to $112,048 from $212,730 of the same
period of 2000. The changes in cost of real estate sold and real estate
operating expenses were the result of increased renting activities and
reduced selling activities. The increases in depreciation expenses and the
interest expenses were primarily due to the status change for Podium A from
non-operating to operating status, when all the interest and depreciation
costs were expensed. The drop in other operating expenses was the result
of reduced filing activities compared with the previous year when the
Company started filing its Form 10SB with the Commission.

Although the construction of the Hotel has been completed, and the Hotel
was scheduled to open in 2002, the Hotel has not commenced operations as
of March 27, 2002. The Company's major partner in the Hotel which
controls 70% of the Hotel Group did not give indications as to when
the Hotel will open. Although the Hotel Group has not yet commenced
operations and has not generated any revenues as of March 27, 2002,
according to Financial Accounting Standards no. 67, all carrying costs,
including interest, have been charged to expense when incurred and
depreciation expense has been provided, which caused the Hotel Group to
recognize a loss of $8,655,324 in 2001.  As a 20% equity owner, the
Company also recognized its share of this loss and booked a loss from
investment in affiliates.  The Company's shares of this loss were
$1,731,045, or $0.23 per share for the year ended December 31, 2001.
The Company will continue to recognize such loss in future. Unless the
Hotel will open and commence operations soon, such recognized loss
would continue to have very negative effect on the Company's book
value of equity and bottom lines.

For the fiscal year ended December 31, 2001, net income before taxes and
minority interest, after the loss from investment in the Hotel Group, was
$4,238, down 99.85% from $2,803,717 over the same period of 2000.
Provisions for income taxes decreased 31.74% from $1,375,954 in 2000 to
$939,232 in 2001.

In fiscal year 2001, the Company incurred $959,110, or $0.13 per share, in net
loss, compared to $1,359,295, or $0.18 per share, in net profit in 2000.
This change was primarily due to the mixed effect of the recognized loss from
investment in the Hotel Group and the increased real estate rental income.

                                       13
<PAGE>

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,
2001, our cash balance was very low. Our past operations were supported by
related companies which from time to time lend 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 a result of future cash payments required to retire bank loans and
debts owed to its related companies, management believes that it will be
necessary to secure additional financing to sustain our operations and to
fund our anticipated growth.

      We do not have any material commitments for capital expenditures for the
year ending December 31, 2001.

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

      As of the date hereof, we have consolidated indebtedness that is
substantial in relation to our stockholders equity. As of December 31, 2001,
we had total bank debt of $17,268,635. We also owed $15,287,772 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 its 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 the Commercial Towers. As of
December 31, 2001, our lenders held an aggregate of $17,268,635 of liens
against the Commercial Towers as security for bank loans of the same amount.
If we are unable to meet the terms of our bank loans, resulting in default
under such bank loans, the lenders may elect to declare all amounts
outstanding under the loans to be immediately due and payable and foreclose
on the Commercial Towers, which would have a material adverse effect on us.



                                       14
<PAGE>

      The Company and China Construction Bank have signed an agreement to
settle a loan of $4,923,552 and accrued interest.  China Construction
Bank has agreed to accept ownership of certain office space in Tower A as
payment for the outstanding loan and accrued interest. The Company and
China Construction Bank are currently having an appraisal performed on
the office space to determine its value.  Once the valuation has been
completed and both parties agree upon the value, title of the office space
will be transferred to China Construction Bank in full satisfaction of the
obligation.  The remaining loans due to China Construction Bank and China
Merchant Bank in the amount of $5,104,565 were past due as of December 31,
2001 and the Company is currently in negotiations with these banks to
settle these loan obligations. If we are unable to settle these bank loan
obligations, the lenders may elect to declare all amounts outstanding under
the loans to be immediately due and payable and foreclose on the Commercial
Towers, which would have a material adverse effect on us.


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 foreign exchange rates will have a material effect on
our 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 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, 2001 was immaterial. 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 foreign exchange rates will have a material
effect on our financial statements. The RMB exchange rates, however, are fixed
by the Chinese government, and a change in the exchange rate by the PRC could
have a material adverse effect on our financial statements.

      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, 2001 and has no plans to do so within the next twelve months.

                                       15
<PAGE>

Item 7. Financial Statements

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements

                                       16
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Huayang International Holdings, Inc.
  and Subsidiary

We have audited the accompanying consolidated balance sheets of Huayang
International Holdings, Inc. and subsidiary as of December 31, 2001 and 2000,
and the related consolidated statements of income and comprehensive income,
changes in shareholders' equity and cash flows for the years 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 audits.

We conducted our audits 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 financial statement
presentation. We believe that our audits provide 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 Huayang
International Holdings, Inc. and subsidiary as of December 31, 2001 and
2000, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in
the United States of America.

                                    /s/ Moore Stephens Frazer and Torbet, LLP

                                    Certified Public Accountants
                                    Walnut, California

March 02, 2002

                                       17
<PAGE>

<TABLE>
HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2000
<CAPTION>
ASSETS
                                                          2001            2000
                                                      ------------    ------------
<S>                                                   <C>             <C>
ASSETS:

  Real estate rental property, net of
    accumulated depreciation of $1,348,515
    in 2001 and $555,647 in 2000                      $ 32,513,101    $ 30,979,816
  Real estate held for development and sale              2,285,143       5,674,648
  Cash                                                         253             851
  Accounts receivable, net of allowance of
    $134,432 at December 31, 2001                          761,553          -
  Due from related companies                            15,674,533      10,087,408
  Investment in affiliates                              13,616,339      15,343,007
  Property and equipment, net                            1,387,965       1,482,376
  Deferred tax assets                                      544,668          -
  Other assets                                              -               67,927
                                                      ------------    ------------
         Total assets                                 $ 66,783,555    $ 63,636,033
                                                      ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:

  Accounts payable and accrued liabilities            $  7,131,131    $  4,384,485
  Bank loans                                            17,268,635      17,286,367
  Due to related companies                              15,287,772      15,266,821
  Income taxes payable                                   2,773,238       1,993,187
  Deferred income taxes payable                            758,097         337,145
  Deferred interest income                                 521,202         370,158
                                                      ------------    ------------
         Total liabilities                              43,740,075      39,638,163
                                                      ------------    ------------
MINORITY INTEREST                                        1,116,125       1,092,009
                                                      ------------    ------------
SHAREHOLDERS' EQUITY:
  Common Stock, $0.02 par value, authorized
    50,000,000 shares, 7,500,807 shares issued
    and outstanding                                        150,016         150,016
  Paid-in capital                                       18,296,291      18,296,291
  Accumulated other comprehensive income                    17,347          36,743
  Retained earnings                                      3,463,701       4,422,811
                                                      ------------    ------------
         Total shareholders' equity                     21,927,355      22,905,861
                                                      ------------    ------------
         Total liabilities and shareholders' equity   $ 66,783,555    $ 63,636,033
                                                      ============    ============
</TABLE>
      The accompanying notes are an integral part of this statement.

                                       18
<PAGE>
<TABLE>
HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
  AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<CAPTION>
                                                           2001            2000
                                                      ------------    ------------
<S>                                                   <C>             <C>
REVENUES:
  Real estate sales                                   $  1,833,499    $  2,997,293
  Real estate rental income                              3,210,042       2,858,022
  Interest income                                          604,182         604,181
                                                      ------------    ------------
    Total revenues                                       5,647,723       6,459,496
                                                      ------------    ------------
COSTS AND EXPENSES:
  Cost of real estate sold                               1,320,633       2,119,286
  Real estate operating expenses                           376,635          41,269
  Depreciation                                             851,842         334,145
  Interest expense                                       1,293,885         674,749
  Other operating expenses                                 112,048         212,730
                                                      ------------    ------------
    Total costs and expenses                             3,955,043       3,382,179
                                                      ------------    ------------
OTHER INCOME                                                42,603          -
                                                      ------------    ------------
LOSS FROM INVESTMENT IN AFFILIATES                       1,731,045         273,600
                                                      ------------    ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST             4,238       2,803,717

PROVISION FOR INCOME TAXES                                 939,232       1,375,954
                                                      ------------    ------------
(LOSS) INCOME BEFORE MINORITY INTEREST                    (934,994)      1,427,763

MINORITY INTEREST                                          (24,116)        (68,468)
                                                      ------------    ------------
NET (LOSS) INCOME                                         (959,110)      1,359,295

OTHER COMPREHENSIVE (LOSS) INCOME
  Foreign currency translation adjustments                 (19,396)          5,483
                                                      ------------    ------------
COMPREHENSIVE (LOSS) INCOME                           $   (978,506)   $  1,364,778
                                                      ============    ============
NET (LOSS) INCOME PER SHARE (basic and diluted)       $      (0.13)   $       0.18
                                                      ============    ============
</TABLE>
     The accompanying notes are an integral part of this statement.



                                       19
<PAGE>

<TABLE>
HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<CAPTION>
                                                                      Accumulated
                                                                         other
                      Number     Common      Paid-in      Retained    comprehensive
                    of shares     stock      capital      earnings       income      Totals
                    ---------   --------   -----------   ----------     -------   -----------
<S>                 <C>         <C>        <C>           <C>            <C>       <C>

BALANCE,
January 1, 2000     7,500,807   $150,016   $18,296,291   $3,063,516     $31,260   $21,541,083

  Net income                                              1,359,295                 1,359,295
  Foreign currency
    translation
    adjustments                                                           5,483         5,483
                    ---------   --------   -----------   ----------     -------   -----------
BALANCE,
December 31, 2000   7,500,807    150,016    18,296,291    4,422,811      36,743    22,905,861

  Net loss                                                 (959,110)                 (959,110)
  Foreign currency
    translation
    adjustments                                                         (19,396)      (19,396)
                    ---------    --------   -----------   ----------    -------   -----------
BALANCE,
December 31, 2001   7,500,807    $150,016   $18,296,291   $3,463,701    $17,347   $21,927,355
                    =========    ========   ===========   ==========    =======   ===========
</TABLE>
      The accompanying notes are an integral part of this statement.

                                       20
<PAGE>
<TABLE>
HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<CAPTION>
                                                        2001           2000
                                                    -----------    -----------
<S>                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income                                 $  (959,110)   $ 1,359,295
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Gain on sales of real estate                     (512,866)      (878,007)
      Net cash proceeds from sales of real estate     1,833,499      2,997,293
      Real estate development costs                    (237,877)    (1,735,093)
      Depreciation                                      851,842        334,145
      Interest income from investment affiliates       (755,228)      (755,228)
      Loss from investment in affiliates              1,731,045        273,600
      Deferred income taxes                            (123,716)       169,449
      Change in investment in affiliates due to
        currency translation                             (4,377)        (1,832)
      Increase in accounts receivable                  (761,553)         -
      Decrease in other assets                           67,927         94,296
      Increase in accounts payable and accrued
        liabilities                                   2,746,646        845,825
      Increase in deferred interest income              151,044        151,045
      Increase in income taxes payable                  780,051        845,775
      (Decrease) increase in comprehensive income       (19,396)         5,483
                                                    -----------    -----------
        Net cash provided by operating activities     4,787,931      3,706,046
                                                    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                     (1,699)       (12,945)
                                                    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments to short term bank loans                     -             (9,358)
  Advance made to related companies                  (4,810,946)    (3,885,009)
  Increase in minority interest                          24,116         68,208
                                                    -----------    -----------
        Net cash used in financing activities        (4,786,830)    (3,826,159)
                                                    -----------    -----------
NET DECREASE IN CASH                                       (598)      (133,058)

CASH, beginning of year                                     851        133,909
                                                    -----------    -----------
CASH, end of year                                   $       253    $       851
                                                    ===========    ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid (net of interest capitalized of $0
    and $563,268 in 2001 and 2000, respectively)    $     2,491    $   454,469
                                                    ===========    ===========
  Income taxes paid                                 $     -        $     -
                                                    ===========    ===========
SUPPLEMENTAL NON-CASH INVESTING ACTIVITIES:
  Transfer from real estate rental property to
    property and equipment                          $     -        $ 1,384,844
                                                    ===========    ===========
</TABLE>
     The accompanying notes are an integral part of this statement.

                                       21
<PAGE>

HUAYANG INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of significant accounting policies

The reporting entity

      The financial statements of Huayang International Holdings, Inc. and
Subsidiary (HIHI) reflect the activities and financial transactions of its
subsidiary Shenyang Haitong House Properties Development Ltd. (HAITONG). HIHI
has a 95% ownership interest in HAITONG. HIHI also has a less than majority
ownership interest in three other companies, Changyang International Hotel
(Shenyang) Co. Ltd. (HOTEL), Changyuan (Shenyang) Park Ltd. (GARAGE) and
Changhua (Shenyang) Business Co. Ltd. (BUSINESS CENTER) collectively referred to
as HOTEL GROUP.

      HIHI is incorporated under the laws of the State of Nevada in the United
States. HAITONG, HOTEL, GARAGE and BUSINESS CENTER are incorporated under the
laws of the People's Republic of China (PRC).

Principles of consolidation

      The consolidated financial statements of HIHI include its subsidiary
HAITONG. All significant inter-company accounts and transactions have been
eliminated in the consolidation. HIHI accounts for its investment in HOTEL GROUP
under the equity method.

Nature of operations and concentration of risk

      HAITONG is in the business of developing a mixed-use (commercial and
residential) building in Shenyang City Nanhu Scientific and Technological
Development Zone, Liaoning province, People's Republic of China. Next to this
building is a hotel complex under development by HOTEL. Both buildings are on
top of a podium and a garage, which are under development by HAITONG, BUSINESS
CENTER and GARAGE.

      The real estate market and hospitality industries in the PRC are affected
by various economic and political factors that are beyond the control of HIHI.
The ultimate sales of development properties of HAITONG, in the opinion of
management, will exceed the costs incurred plus the costs to complete the
development.

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.

                                       22
<PAGE>

Real estate rental property

      Real estate rental property is stated at cost. 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 and amounted to
$794,042 and $224,169 for the years ended December 31, 2001 and 2000,
respectively.

Property and equipment

      Land use rights, building, furniture, fixtures, equipment and automobiles
are recorded at cost. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets, which range from 5 to 50 years.

      Improvements, equipment and vehicles as of December 31 consisted of the
following:

                                        2001              2000

Improvements                        $1,469,064        $1,469,064
Equipment                              302,818           303,102
Vehicles                                -                343,186
                                    ----------        ----------
      Totals                         1,771,882         2,115,352

Less accumulated depreciation          383,917           632,976
                                    ----------        ----------
      Totals                        $1,387,965        $1,482,376
                                    ==========        ==========

      The cost and related accumulated depreciation of assets sold or otherwise
retired are eliminated from the accounts and any gain or loss is included in the
statement of income. The cost of maintenance and repairs is charged to income as
incurred, whereas significant renewals and betterments are capitalized.
Depreciation expense for the years ended December 31, 2001 and 2000 amounted to
$57,800 and $109,976, respectively.

      HIHI acquired land use rights from The People's Republic of China for a
period of fifty years. The costs of the rights have been capitalized to the real
estate development projects and once the constructed assets are ready for their
intended use, the land use rights are amortized over the remaining useful life.

      Long-term assets of the Company are reviewed annually as to whether their
carrying value has become impaired, pursuant to the guidelines established in
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" (SFAS
121). The Company considers assets to be impaired if the carrying value exceeds
the future projected cash flows from related operations. The Company also
re-evaluates the periods of amortization to determine whether subsequent events
and circumstances warrant revised estimates of useful lives. As of December 31,
2001, the Company expects these assets to be fully recoverable.

                                       23
<PAGE>

Cash and concentration of risks

      For purposes of the statement of cash flows, HIHI considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

      Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. All cash in state-owned
banks are not covered by insurance. HIHI has not experienced any losses in such
accounts and believes it is not exposed to any significant risks on cash in bank
deposit accounts. Uninsured balances were approximately $253 and $851 as of
December 31, 2001 and 2000, respectively.

Fair value of financial instruments

      HIHI's financial instruments include cash and cash equivalents, accounts
payable and bank loans. Management has estimated that the carrying amount
approximates fair value.

Foreign currency translation and transactions

      The reporting currency of the Company is United States dollar.  The
Company's foreign subsidiary uses its local currency, Renminbi, as its
functional currency. Results of operations and cash flows are translated at
average exchange rates during the period, and assets and liabilities are
translated at end of period exchange rates. Translation adjustments resulting
from this process are included in accumulated other comprehensive income in
the statement of shareholders' equity.

      Transaction gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the
functional currency, are included in the results of operations as incurred,
except for the transactions attributable to the development of the project,
which are included in the development costs.  These amounts are not material
to the financial statements.

Revenue recognition

      Real estate sales are reported in accordance with the provisions of
Statement of Financial Accounting Standards No. 66. Profit from the sales of
development properties, less 5% business tax, 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 5% business tax, is recognized on the straight-line basis over the terms of
the tenancy agreements.

                                       24
<PAGE>

Earnings per share

      HIHI adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS 128). SFAS 128 requires the presentation of earnings
per share (EPS) as Basic EPS and Diluted EPS. There are no differences between
Basic and Diluted EPS at December 31, 2001 and 2000.

Capitalized Interest

      HIHI follows the policy of capitalizing interest as a component of
building construction costs. Total interest expensed for the years ended
December 31, 2001 and 2000 amounted to $1,293,885 and $674,749, respectively.
Total interest expense capitalized as part of the construction costs for the
years ended December 31, 2001 and 2000 amounted to $-0- and $563,268,
respectively.

Income taxes

      HIHI adopted Statement of Financial Accountant Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of
deferred income tax liabilities and assets for the expected future tax
consequences of temporary differences between income tax basis and financial
reporting basis of assets and liabilities. Provision for income taxes consist of
taxes currently due plus deferred taxes. The deferred tax assets and liabilities
consisted the following at December 31:


                                         2001              2000
 Expenses deducted for financial
  Statement purposes and not for
  China Income taxes                  $ 282,811         $   -
 Depreciation                           261,857
                                      ---------         ---------
       Total deferred tax assets        544,668             -
                                      =========         =========
 Interest income, net of expenses       515,549           337,145
 Land appreciation tax                  242,548             -
                                      ---------         ---------
       Total deferred taxes payable   $ 758,097         $ 337,145
                                      =========         =========

      The operations of HAITONG and HOTEL are subject to the income tax laws of
the People's Republic of China but not subject to the U.S. income tax except for
repatriated dividends.

      Under the Sino-U.S. bilateral tax treaty, the Chinese government is
allowed to withhold tax on interest from HOTEL to HIHI with a maximum
withholding rate not to exceed 10.00%. A credit is then allowed for income tax
paid to China by a resident or citizen of the United States. A provision of
$75,523 and $75,523 has been included in the provision for Chinese Income Taxes
for the years ended December 31, 2001 and 2000, respectively, with a
corresponding credit of $75,523 and $75,523 was used to offset the current
income tax provision for the United States.

                                       25
<PAGE>

      The provision for United States Income Taxes has been made at the
prevailing rates as prescribed by the Internal Revenue Code.

      Provision for China Income Tax has been made at the prevailing rate of
taxation of 33% on the estimated assessable profit for the period after
utilization of losses brought forward from previous year. Provision for China
Real Estate Tax has been made at the prevailing rate of taxation of 12% on the
rental income for the period. As of December 31, the provision for income
taxes consisted of the following:

                                                    2001        2000

Provision for United States Income Tax          $  117,984  $  108,926
Provision for China Income Tax                     843,112     906,015
Provision for China Real Estate Tax                523,219     361,013
Deferred tax benefit                              (545,083)
                                                ----------  ----------
      Totals                                    $  939,232  $1,375,954
                                                ==========  ==========

      The following table reconciles the U.S. statutory rate to the Company's
effective tax rate:
                                          2001        2000

U.S. Statutory rates                       34%         34%
Foreign income not recognized in U.S.     (34)        (29)
China Income taxes                      9,818          32
China Real Estate taxes                12,346          12
                                       ------      ------
Effective tax rate                     22,164%         49%
                                       ======      ======
Accounts receivable

      The accounts receivable amount of $761,553 at December 31, 2001
represent amounts due from customers for real estate sales and rental
activities, net of allowance of $134,432.

Use of estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Management believes that the estimates
utilized in preparing its financial statements are reasonable and prudent.
Actual results could differ from these estimates.

                                       26
<PAGE>

New Authoritative Pronouncements

      The Financial Accounting Standards Board has issued SFAS No. 141,
"Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets".  These statements will change the accounting for business
combinations, goodwill and other intangible assets in two significant ways.
First, SFAS 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001.  Use of the
pooling-of-interests method will be prohibited.  Second, SFAS 142 changes
the accounting for goodwill from an amortization method to impairment only
method.  Accordingly, amortization of goodwill, including goodwill recorded
in past business combinations, will cease upon adoption of that statement,
which for companies with calendar year ends, will be January 1, 2002.
Certain other intangible assets with indefinite lives are subject to the same
rule.

      The Company has adopted SFAS No. 141 during the year ending December
31, 2001 and there have been no business combinations since the time of
adoption.

      The Company has adopted SFAS No. 142 during the year ending December
31, 2002 and there is not material effect on the Company's consolidated
financial statements.

      The Financial Accounting Standards Board has issued SFAS No. 143,
"Accounting for Asset Retirement Obligations".  This Statement requires that
the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made.  The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset.  This Statement is
effective for financial statements issued for fiscal years beginning after
June 15, 2002.  The Company expects that the adoption of this Statement will
not have a material affect on its consolidated financial statements.

      The Financial Accounting Standards Board has also issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets".  This
Statement requires that one accounting model be used for long-live assets to
be disposed of by sale, whether previously held and used or newly acquired,
and broadens the presentation of discontinued operations to include more
disposal transactions.  That accounting model retains the requirement of FASB
No. 121 to measure a long-lived asset classified as held for sale at the lower
of its carrying amount or fair value less cost to sell and to cease
depreciation (amortization).  This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years.

      The Company has adopted SFAS No. 144 during the year ending December
31, 2002 and there has been no material affect on its consolidated financial
statements.

                                       27
<PAGE>

Note 2 - Shareholders' equity

      HIHI has the following common shares as of December 31:

                                  2001              2000

Authorized                    50,000,000        50,000,000
Issued and outstanding         7,500,807         7,500,807
Par value                     $     0.02        $     0.02


      HHI is also authorized to issue preferred stock with a par value of $.02.
The Board of Directors is authorized to establish the series, fix and determine
the rights, preferences and limitations of the preferred stock. As of December
31, 2000 and 1999, there were no preferred stocks issued and outstanding,
respectively.

Note 3 - Real estate

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

                                             2001              2000

Real estate rental property, net          $32,513,101       $30,979,816
Real estate held for development and sale   2,285,143         5,674,648
                                          -----------       -----------
        Totals                            $34,798,244       $36,654,464
                                          ===========       ===========

      The real estate is located in Shenyang, the People's Republic of China.
Certain of these properties have been pledged to secure bank loans granted to
HAITONG as more fully described in note 6.

Note 4 - Investment in Affiliates

      Investments in which the Company owns a 20% interest are accounted for
using the equity method. These investments collectively referred to as HOTEL
GROUP consists of following as of December 31:

                                        2001              2000

Share of net assets                 $ 5,224,939       $ 6,951,607
Advances made                         8,391,400         8,391,400
                                    -----------       -----------
        Totals                      $13,616,339       $15,343,007
                                    ===========       ===========

                                       28
<PAGE>

                              Place of          Ownership         Principal
Name                          incorporation     interest          activity

Changyang International Hotel The People's      20%               Hotel
  (Shenyang) Co. Ltd. (Hotel) Republic of China                   operation

Changhua (Shenyang)           The People's      20%               Business
  Business Co., Ltd.          Republic of China                   center,
  (Business Center)                                               commercial
                                                                  retail

Changyuan (Shenyang)          The People's      20%               Car parking
   Park Co., Ltd.             Republic of China
  (Garage)

      Shown below is summarized financial information relative to the
investments at December 31:

December 31, 2001

                                      BUSINESS
                        HOTEL         CENTER       GARAGE      TOTAL

Balance Sheet
  Assets                $63,025,021  $38,959,893  $24,110,106  $126,095,020
  Liabilities            57,720,763   29,056,025   13,193,082    99,969,870
				-----------	 -----------  -----------  ------------
  Equity                  5,304,258    9,903,868   10,917,024    26,125,150
  Other shareholders'
     equity               4,243,516    7,923,096    8,733,599    20,900,211
				-----------	 -----------  -----------  ------------
HIHI, equity            $ 1,060,742  $ 1,980,772  $ 2,183,425  $  5,224,939
				===========  ===========  ============ ============
Revenue                 $    -       $    -       $    -       $     -
General expense           5,393,675    2,119,706    1,141,943     8,655,324
				-----------	 -----------  -----------  ------------
Net loss                $(5,393,675) $(2,119,706) $(1,141,943) $ (8,655,324)
				===========  ===========  ============ ============
HIHI share of loss      $(1,078,715) $  (423,941) $  (228,389) $ (1,731,045)
				===========  ===========  ============ ============

                                       29
<PAGE>

December 31, 2000
                                      BUSINESS
                        HOTEL         CENTER       GARAGE      TOTAL

Balance Sheet
  Assets                $55,711,269  $32,487,369  $19,226,508  $107,425,146
  Liabilities            45,006,291   20,453,063    7,156,028    72,615,382
				-----------	 -----------  -----------  ------------
  Equity                 10,704,978   12,034,306   12,070,480    34,809,764
  Other shareholders'
     equity               8,572,025    9,629,291    9,656,841    27,858,157
				-----------	 -----------  -----------  ------------
HIHI, equity            $ 2,132,953  $ 2,405,015  $ 2,413,639     6,951,607
				===========  ===========  ============ ============
Revenue                 $    -       $    -       $    -       $    -
General expenses          1,367,986                               1,367,986
				-----------	 -----------  -----------  ------------
Net loss                $(1,367,986)                             (1,367,986)
				===========  ===========  ============ ============
HIHI share of loss      $  (273,600)
				===========  ===========  ============ ============

      As of December 31, 2001 and 2000, interest income has been accrued
on advances made to the Hotel Group; interest receivable amounted to
$2,605,985 and $1,850,757, respectively.  Interest is being accrued at
the annual rate of 9.00% and is payable once the Hotel opens for
operations. Management evaluated their reserve at the end of 2001 and
management believes the interest receivable will be collectable within
the next year.  As of December 31, 2001 and 2000, the reserve amounted to
$240,304 and $240,304, respectively.

      In accordance with Accounting Principles Board Opinion No. 18,
"The Equity Method of Accounting for Investments in Common Stock", 20%
of the interest income earned on these advances has been deferred until
paid.  Total deferred interest income amounted to $521,202 and $370,158
as of December 31, 2001 and 2000, respectively.

Note 5 - Due from/to related companies

      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 purchases building materials for various projects. In
addition, the company has been handling property rental and sales activities for
HAITONG. As of December 31, 2001 and 2000, the balance due from the related
company amounted to $11,603,239 and $8,476,955, respectively.

      HIHI has entered into an agreement in 1997 with a related company to
advance funds in the form of purchased materials. The agreement states that HIHI
can postpone principal payments for three years starting from the initial
shipment without incurring any interest charges. HIHI has the option to pay off
the debt in cash or common stock of HIHI. As of December 31, 2001 and 2000, the
total amount of debt under this agreement amounted to $14,787,763.

                                       30
<PAGE>

      HAITONG has entered into an agreement with a property management company
owned by HIHI's majority shareholder to manage and maintain one of the
buildings, podiums and garages.

Note 6 - Bank loans

      The bank loans bear interest ranging from 6.44% to 7.11% annually and are
secured by real estate (see note 3) owned by HAITONG and a corporate guarantee
given by a related company.

      As of December 31, bank loans consist of the following:

                                            2001          2000

Loan from China Construction Bank, due
  December 29, 2000, monthly interest
  only payments at 7.02% per annum,
  secured by properties and guaranteed
  by HAITONG                               $ 4,923,552   $ 4,925,166
Loan from China Construction Bank, due
  December 28, 2000, monthly interest
  only payments at 6.44% per annum,
  secured by properties and guaranteed
  by HAITONG                               $ 1,810,129   $ 1,810,723
Loan from China Construction Bank, due
  December 28, 2001, monthly interest
  only payments at 6.44% per annum,
  secured by properties and guaranteed
  by HAITONG                               $   205,148   $   205,215
Loan from China Merchant Bank, due
  August 30, 2001, quarterly interest
  only payments at 6.44% per annum,
  secured by properties and guaranteed
  by HAITONG                               $ 2,292,831   $ 2,293,581
Loan from China Merchant Bank, due
  August 30, 2001, quarterly interest
  only payments at 6.44% per annum,
  secured by properties and guaranteed
  by HAITONG                               $   796,457   $   808,790
Loan from Housing Fund Management
  Center, due December 31, 2002,
  quarterly interest only payments at
  6.93% per annum, secured by
  properties and guaranteed by HAITONG     $ 3,620,259   $ 3,621,446
Loan from Housing Fund Management
  Center, due December 31, 2002,
  quarterly interest only payments at
  7.11% per annum, secured by
  properties and guaranteed by HAITONG     $ 3,620,259   $ 3,621,446
                                           -----------   -----------
                          Totals           $17,268,635   $17,286,367
                                           ===========   ===========

                                       31
<PAGE>

      Principal repayment requirements of all bank loans based on existing terms
at December 31, 2001 are as follows:

    YEAR ENDING         PRINCIPAL
    DECEMBER 31         REPAYMENT

      2002             $17,268,635

      Total interest expense for the years ended December 31, 2001 and
2000 amounted to $1,293,885 and $1,238,017, respectively.

      The Company and China Construction Bank have signed an agreement
to settle the loan of $4,923,552 and accrued interest.  China
Construction Bank has agreed to accept ownership of certain office space
in Tower A as payment for the outstanding loan and accrued interest.
The Company and China Construction Bank are currently having an appraisal
performed on the office space to determine its value.  Once the valuation
has been completed and both parties agree upon the value, title of the
office space will be transferred to China Construction Bank in full
satisfaction of the obligation.  The remaining loans due to China
Construction Bank and China Merchant Bank were past due as of December 31,
2001 and the Company is currently in negotiations with these banks to
settle these loan obligations.

Note 7 - Segment reporting

      In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131). SFAS No. 131 requires the
Company to disclose information used by management to evaluate its individual
business segments. As the Company currently is engaged in only one business
segment, no additional disclosures are required. The Company's net investment in
and the operating results of its various real estate activities may be derived
directly from the accompanying consolidated financial statements.

Note 8 - 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 year ended
December 31, 2001, the Company received $647,451 in rental income from
these companies.




                                       32
<PAGE>



      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, 2001 are as follows:

YEARS ENDING
DECEMBER 31,    AMOUNT
2002          $1,996,000
2003             159,000
2004              34,000
2005              21,000
2006               4,000
THEREAFTER         -

Note 9 - Supplemental non-cash investing activities

In November, 2000, the Company decided the 6th floor of the rental properties
would be used as its offices, therefore, the related cost of $1,456,007, net
of accumulated depreciation of $71,163 was transferred from the real estate
rental property to property and equipment.

Note 10 - Contingency

      During the year ended December 31, 2001, the Company had let the
property insurance lapse.  As of December 31, 2001, the Company had no
property insurance in place.  However the Company has plans to obtain
property insurance during the year ending December 31, 2002.


                                       33
<PAGE>

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

      We have not changed accountants in the last three fiscal years, and there
is no disagreement with its accountants concerning accounting and financial
disclosure.

                                       34
<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.

            NAME                    AGE   POSITION
            ----                    ---   --------
            Mr. Gao WanJun          46    Chairman, President and Chief
                                          Executive Officer
            Ms. Wang YuFei          31    Secretary, Chief Financial Officer
                                          and Director
            Mr. Wang Shaohua        43    Director of the Company and Deputy
                                          General Manager of Haitong
            Mr. Yu Yingtian         36    Director of the Company and Principal
                                          Accounting Manager of Haitong
            Mr. Yin Liangpei        59    Independent Director
            Ms. Wang Yunfen         59    Independent Director

      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. 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.

      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.

                                       35
<PAGE>

      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.

                                       36
<PAGE>

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

      The following table sets forth as of March 27, 2002 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.

NAME AND ADDRESS OF BENEFICAL OWNER (1)                     COMMON STOCK
---------------------------------------           ---------------------------
                                                    NUMBER         PERCENTAGE
                                                  ---------        ----------
Gao Wanjun                                        6,000,000 (2)      80.0%
Huayang International Trust                       6,000,000 (2)      80.0%
All Officers and Directors as a Group             6,000,000 (2)      80.0%

(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 110003.

(2) Includes 6,000,000 shares 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.

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 purchases building materials for various projects. In
addition, the company has been handling property rental and sales activities for
HAITONG. As of December 31, 2001 and 2000, the balance due from the related
company amounted to $11,603,239 and $8,476,955, respectively.

      On September 30, 1997, Haitong entered into a management contract with
Huayang Real Estate Management (Shenyang) Co., Ltd. ("HREM"), of which Ms. Wan
XiaoLuan (Mr. Gao's wife and a former Director of the Company) is Chairman and
the controlling shareholder, appointing HREM as the property management company
for properties in Tower A. In China, property management fees are regulated and
approved by the government. The contract did not specify amount of management
fees, but required HREM to obtain government approval for such fees. Currently,
the fee is $1.645 per square meter, which includes elevator maintenance and
heating charges. Terms of the agreement were made on an arms-length basis.

                                       37
<PAGE>

      On October 28, 1997, we entered into a Purchase Agreement ("Supply
Agreement") with Huayang International Investment, Ltd. ("HIIL"). Liao Ning Hua
Shang Certified Public Accountants ("LNHS"), an independent public accounting
firm in the People's Republic of China, has inspected the physical condition of
the supplies and appraised the value of supplies purchased under the Supply
Agreement. According to the Appraiser Report by LNHS, the total value of the
supplies and cash advance we received under the Supply Agreement was
approximately $14.8 million. The $14.8 million represents approximately $14.6
million of the historical cost of the supplies and building materials purchased
by Huayang International Investment on behalf of Huayang International Holdings,
Inc. and $0.2 million in cash advances we received from HIIL. These supplies,
building materials and equipment (elevators, etc.) were used in the construction
of the office building. These costs were capitalized as part of the construction
costs of the "Real estate rental property and Real estate held for development
and sale". To date, we have not paid for any of the supplies we have purchased
under the Supply Agreement. Under the Supply Agreement, we are not incurring any
interest expenses for up to three years after the receipt of the invoices for
supplies. We have the choice to pay the purchase price for the supplies in cash
or in Common Stock. HIIL entered into this agreement to support our operations.
HIIL is 50% owned by Gao Wan Jun who is also our majority shareholder with an
approximate 80% ownership interest. Mr. Gao Wanjun's brother, Mr. Gao Wanfeug,
also owns 50% of HIIL.

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

   EXHIBIT 21, LIST OF SUBSIDIARIES, has been filed previously with the
Commission.

(b) Reports on Form 8-K

      The Company did not file any reports on Form 8-K during the period covered
by this report.

                                       38
<PAGE>


                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.

DATE:  March 30, 2001               Huayang International Holdings, Inc.


                                    /s/ Gao WanJun
                                    ------------------------------------
                                    Name: Gao WanJun
                                    Title:  Chairman, President and
                                    Chief Executive Officer


                                    /s/ Wang Yufei
                                    ------------------------------------
                                    Name: Wang Yufei
                                    Title:  Secretary, Chief Financial
                                    Officer and Director


                                    /s/ Wang Shaohua
                                    ------------------------------------
                                    Name: Wang Shaohua
                                    Title:  Director


                                    /s/ Yu Yintian
                                    ------------------------------------
                                    Name: Yu Yingtian
                                    Title: Director


                                    /s/ Yin Liangpei
                                    ------------------------------------
                                    Name: Yin Liangpei
                                    Title: Director


                                    /s/ Wang Yunfen
                                    ------------------------------------
                                    Name: Wang Yunfen
                                    Title: Director


                                       39
<PAGE>