<PAGE>
    As filed with the Securities and Exchange Commission on February 7, 1996

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------


                           FORM 10-Q QUARTERLY REPORT
                         PURSUANT TO SECTION 13 OR 15(D)
                                     OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                                     FOR THE
                         PERIOD ENDED SEPTEMBER 30, 1995

                             ----------------------


                         HENG FAI CHINA INDUSTRIES, INC.

             (Exact name of Registrant as specified in its charter)

         Delaware                      0-7619               93-063633
(State or other jurisdiction        (Commission           (IRS Employer
of incorporation or organization)    File Number)      Identification Number)

               650 West Georgia Street, Suite 588, P.O. Box 11586
                         Vancouver, B.C. CANADA V6B 4N8
                                 (604) 685-8318
   (Address and telephone number of Registrant's principal executive offices)

                             ----------------------


Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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      [ ]

As of January 31, 1996, there were 10,899,542 shares of common stock of Heng Fai
China Industries, Inc. outstanding.


<PAGE>

<TABLE>
<CAPTION>

                         HENG FAI CHINA INDUSTRIES, INC.

                                    FORM 10-Q

                                     FOR THE

                        QUARTER ENDED SEPTEMBER 30, 1995

                                      INDEX

PART I.  FINANCIAL INFORMATION                                                                          PAGE

<S>            <C>                                                                                         <C>
Item 1.        Financial Statements.........................................................               1
               
               Condensed Consolidated Balance Sheets as at
               September 30, 1995 and December 31, 1994.....................................               2

               Condensed Consolidated Statements of Operations for the nine
               and three months ended September 30, 1995 and 1994...........................               3

               Condensed Consolidated Statements of Cash Flows for the nine
               months ended September 30, 1995 and 1994.....................................               4
 
               Notes to Condensed Consolidated Financial Statements.........................               5

Item 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations..........................................              11


PART II.  OTHER INFORMATION

Item 1.        Legal Proceedings............................................................              14

Item 2.        Changes in Securities........................................................              14

Item 3.        Defaults Upon Senior Securities..............................................              14

Item 4.        Submission of Matters to a Vote of Securityholders...........................              14

Item 5.        Other Information............................................................              14

Item 6.        Exhibits and Reports on Form 8-K.............................................              14

Signature Page..............................................................................       Last Page

</TABLE>





                                        i


<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                  The   following   financial   statements  of  Heng  Fai  China
Industries, Inc. (the "Company") are provided herewith:

                  (a)      Condensed Consolidated Balance Sheets as at September
                           30, 1995 and December 31, 1994;

                  (b)      Condensed  consolidated  Statements of Operations for
                           each of the nine months ended  September 30, 1995 and
                           September 30, 1994 and each of the three months ended
                           September 30, 1995 and September 30, 1994;

                  (c)      Condensed  Consolidated  Statements of Cash Flows for
                           each of the nine months ended  September 30, 1995 and
                           September 30, 1994; and

                  (d)      Notes  to  the   Condensed   Consolidated   Financial
                           Statements.




                                       1

<PAGE>
<TABLE>
<CAPTION>


                         HENG FAI CHINA INDUSTRIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                             (United States Dollars)

                                                    Notes              As at                      As at
                                                    -----              -----                      -----
                                                                    September 30, 1995          December 31, 1994
                                                                    ------------------          -----------------
<S>                                                   <C>                   <C>                        <C>  
 CURRENT ASSETS
     Cash                                                                       49,016                   $191,731
     Trading securities                               4                        502,847
     Accounts receivable                                                        25,130                      2,231
     Prepaid and other current assets                                          134,613                      2,024
     Inventories                                      2                         90,978                         --
                                                                             ---------                 ----------
                                                                               802,584                    195,986

FIXED ASSETS, net                                     5                      1,003,772                    933,710

DEFERRED EXPENDITURE                                  6                      1,087,425                         --
                                                                             ---------                 ----------
                                                                            $2,893,781                 $1,129,696
                                                                            ==========                 ==========

CURRENT LIABILITIES
     Accounts payable                                                           96,691                    $20,545
     Margin loan payable                              8                        253,891                         --
     Interest payable                                                           30,912                     19,733
     Security deposits payable                                                  10,402                     11,071
     Other payable                                                             203,651                         --
     Unearned rent                                                                  --                     12,053
     Due to related parties                                                     16,687                     32,617
     Current portion of mortgage                                                15,382                     14,785
                                                                             ---------                 ----------
                                                                               627,616                    110,804
LONG-TERM LIABILITIES
     Mortgages payable                                                         995,453                    971,611
     Deferred exchange gains                                                        --                     50,153
                                                             
                                                                             1,623,069                  1,132,568
                                                                             ---------                 ----------
DEFICIENCY IN ASSETS
     Preferred stock, $10 par value,
         500,000 shares authorized,
         none issued                                                                --                         --
     Share capital, $.01 par value,
         30,000,000 shares authorized,
         10,819,542 and 10,384,542
         shares issued and outstanding                7                        108,195                    103,845
     Contributed surplus                                                     2,596,422                    193,296
     Deficit                                                               (1,433,905)                  (300,013)
                                                                             ---------                 ----------
                                                                             1,270,712                    (2,872)
                                                                             ---------                 ----------
                                                                            $2,893,781                 $1,129,696
                                                                            ==========                 ==========
</TABLE>

See accompanying notes to the Condensed Consolidated Financial Statements.

                                       2

<PAGE>
<TABLE>
<CAPTION>


                         HENG FAI CHINA INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                             (United States Dollars)

                                                 Nine                  Nine                Three                 Three
                                                Months                Months               Months                Months
                                                Ended                 Ended                Ended                 Ended
                                            September 30,         September 30,        September 30,         September 30,
                               Notes             1995                  1994                 1995                  1994
                              ---------    -----------------     -----------------    -----------------     -----------------
<S>                              <C>              <C>                   <C>                    <C>                  <C>
Revenues
     Rental income                                  270,332              $333,171              $98,836              $171,459
     Sales of cement                                148,141                    --               92,921                    --
     Investment income                                6,793                 4,781                1,503                 2,325
     Foreign exchange
         gain (loss)                               (34,002)                    --             (41,492)                    --
                                                   --------               -------              -------               -------
                                                    391,264               337,952              151,768               173,784
                                                   --------               -------              -------               -------
Expenses
     Cost of cement sales                           127,281                    --               77,919                    --
     Amortization and
         depreciation                                44,570                30,000               20,959                11,812
     Legal and
         professional
    expenses                                         54,287                11,926               12,706                11,754
     Consulting fees             6                1,004,175                    --              726,250                    --
     Interest expenses                               73,814                92,096               27,784                47,718
     Land lease                                      61,078                82,500               20,983                42,645
     Real estate
         management
    fees                                             12,253                15,900                3,269                 8,291
     Adjustments of
         trading securities
         to fair value           4                    7,805                    --                7,805                    --
     Other administrative
         expenses                                   139,893               142,704               54,145                92,803
                                                   --------               -------              -------               -------
                                                  1,525,156               375,126              951,820               215,023
                                                   --------               -------              -------               -------

Net income (loss)                               (1,133,892)             $(37,174)           $(800,052)             $(41,239)
                                                ===========             =========           ==========             =========

Net income (loss) per
     common share                                    $(.11)                $(.13)               $(.08)                $(.14)
                                                     ======                ======               ======                ======

Weighted average common
     shares outstanding                          10,766,428               289,193           10,445,207               289,193
                                                 ==========               =======           ==========               =======

</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                         HENG FAI CHINA INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (United States Dollars)

                                                                           Nine                  Nine
                                                                          Months                Months
                                                                          Ended                  Ended
                                                                      September 30,          September 30,
                                                         Notes             1995                  1994
                                                        --------    -------------------    ------------------
<S>                                                        <C>             <C>                     <C>                            
CASH FLOW FROM OPERATING ACTIVITIES
     Net (loss)                                                            (1,133,892)             $(37,174)
     Adjustments to reconcile loss to net cash
         used for operating activities:
           Depreciation and amortization                                        44,570                30,000
           Consulting fees paid in common stock            6                 1,004,175                    --
           Changes in working capital components:
             Trading securities                                              (502,847)
             Accounts receivable                                              (22,737)                78,740
             Prepaid                                                         (132,589)                    --
             Inventories                                                      (90,978)                    --
             Accounts payable                                                   76,146                    --
             Interest payable                                                   11,179                    --
             Security deposits payable                                           (669)                    --
             Other payable                                                     203,651                    --
                                                                                                          --
             Exchange adjustments                                               18,693                    --
                                                                             ---------               -------
Net cash used in (generated from) operating activities                       (525,298)                71,566
                                                                             ---------               -------

CASH FLOW FROM INVESTING ACTIVITIES
     Purchase of fixed assets                                                (130,939)                    --
                                                                             ---------               -------
Net cash used in investing activities                                        (130,939)                    --
                                                                             ---------               -------

CASH FLOW FROM FINANCING ACTIVITIES
     Issue of shares                                                           300,000               161,220
     Margin loan payable                                                       253,891                    --
     Repayment of mortgage                                                    (24,439)              (15,932)
     Advances (repayment) of related
         party advances                                                       (15,930)              (69,983)
                                                                             ---------               -------
Net cash provided by financing activities                                      513,522                75,305
                                                                             ---------               -------

Net increase (decrease) in cash and cash equivalents                         (142,715)               146,871

Cash and cash equivalents:
     Beginning of the period                                                   191,731                 7,954
                                                                             ---------               -------
     End of the period                                                          49,016               154,825
                                                                              =========              =======

ANALYSIS OF THE BALANCES OF CASH AND
     CASH EQUIVALENTS
     Bank Balances and Cash                                                     49,016               154,825
                                                                                ------               -------
                                                                                49,016              $145,825
                                                                                ======              ========
</TABLE>

See accompanying notes to the Condensed Consolidated Financial Statements.

                                       4
<PAGE>

                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


1.       BASIS OF PRESENTATION

                  In June 1994, Heng Fai China  Industries,  Inc., then known as
         Alpine  International  Corporation  ("Alpine")  entered into a business
         combination with Vancouver Hong Kong Properties,  Ltd. ("Vancouver Hong
         Kong"),  which owns and operates a residential rental property in North
         Vancouver,  British Columbia.  The business combination resulted in the
         shareholders of Vancouver Hong Kong being issued  10,357,700  shares of
         Alpine's common stock and 10,357,700 common stock purchase warrants. As
         a part of the business combination, a company related to Vancouver Hong
         Kong agreed to subscribe for 1,500,000  shares of Alpine's common stock
         and  1,500,000  common  stock  purchase  warrants  for an  aggregate of
         US$120,000  in cash.  The business  combination  was accounted for as a
         reverse  acquisition whereby the purchase method of accounting has been
         used with Vancouver Hong Kong being the accounting parent. Accordingly,
         results of operations for periods prior to the reverse  acquisition are
         those of Vancouver  Hong Kong,  and the results of Alpine's  operations
         are included only from the date of such reverse acquisition. Subsequent
         to the business  combination,  the name of the legal parent  Alpine was
         changed to Heng Fai China Industries,  Inc. (hereinafter referred to as
         "HFCI" as the context may require).

                  The condensed  consolidated  financial  statements include the
         accounts of HFCI and its wholly-owned subsidiaries  (collectively,  the
         "Company").  The condensed  consolidated  financial statements included
         herein have been prepared by the Company,  without  audit,  pursuant to
         the rules and  regulations of the  Securities and Exchange  Commission.
         Certain  information  and  footnote  disclosures  normally  included in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles have been condensed or omitted  pursuant to such
         rules  and   regulations,   although  the  Company  believes  that  the
         disclosures  are  adequate  to  make  the  information   presented  not
         misleading.  The condensed  consolidated  financial  statements and the
         notes  thereto  should  be read in  conjunction  with the  consolidated
         financial  statements  included in the Company's  Annual Report on Form
         10-K for the year ended December 31, 1994.

                  In  the  opinion  of  the  management  of  the  Company,   the
         accompanying  unaudited  condensed  consolidated  financial  statements
         contain  all  necessary  adjustments  to present  fairly the  financial
         position,  the  results of  operations  and cash flows for the  periods
         reported. All adjustments are a normal recurring nature.

                  The results of operations  for the nine months periods are not
         necessarily indicative of the results to be expected for the full year.

                                       5
<PAGE>
                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


2.       SIGNIFICANT ACCOUNTING POLICIES

                  Inventories  - Inventories  relating to the  Company's  cement
         operations are stated at the lower of cost (determined on the first-in,
         first-out  method)  or  market.   Inventories  at  September  30,  1995
         represent cement raw materials.

                  Trading securities - Equity securities  purchased  principally
         for the purpose of resale are classified as trading  securities and are
         measured at fair value,  with  unrealized  gains and losses included in
         earnings. Fair values are determined based on quoted prices.

                  Translation  of foreign  currency - The  Company's  functional
         currency  is  the  Canadian   dollars  (C$).   Consolidated   financial
         statements  are  stated in United  States  dollars  (US$)  which is the
         reporting currency of the Company.  Assets,  liabilities,  revenues and
         expenses  denominated in other  currencies are translated into Canadian
         dollars at  current  exchange  rates.  Gains and  losses  arising  from
         foreign currency  transactions are included in income.  The translation
         of the C$ amounts  into US$  amounts,  for the purposes of reporting in
         US$, is, with respect to assets and liabilities,  based on the exchange
         rate in effect at the date of the balance sheet (C$1.3507 to US$1.00 at
         September 30, 1995) and,  with respect to revenues and expenses,  based
         on the average exchange rate during the period (C$1.3500 to US$1.00 for
         the nine months ended September 30, 1995). Changes in the exchange rate
         between  the C$ and  the  US$  have  not had a  significant  effect  on
         financial condition or the results of operations.

3.       ACQUISITIONS

                  On January 9, 1995,  HFCI  acquired  from the  chairman of its
         board of directors  100% of the common stock of Heng Fai China and Asia
         Industries,  Limited  ("Asia") in exchange  for nominal  consideration.
         Asia's only assets,  owned by its wholly-owned  subsidiaries,  Heng Fai
         China Industries  Limited ("China") and Heng Fai Light Products Limited
         ("Light"),  were  options to acquire  operating  or lease  interests in
         three cement manufacturing  operations located in the People's Republic
         of China ("PRC"), as follows:

                  A.       Light, through its newly formed subsidiary,  Cangzhou
                           Citizen  Cement  Product Co.,  Ltd.  ("Citizen")  may
                           acquire   the  use,   for  a  period  of  five  years
                           commencing  January 1, 1995, of a production  line at
                           the Hebei Cangzhou City Chemical  Corporation Factory
                           (the  "Cangzhou  Factory").  Citizen may exercise its
                           option  to lease  the  existing  facilities  for five
                           years  at a  nominal  rental,  by  expending  RMB$1.2
                           million    (US$144,000)    on   the   expansion   and
                           modernization of the Cangzhou Factory plant.
 
                                      6

<PAGE>
                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


                  B.       China has the  option to  acquire  an  interest  in a
                           joint  venture,  the Cangzhou  Jiuhe Cement Co., Ltd.
                           ("Jiuhe"),   which  would  acquire  the  use  of  the
                           existing  facilities of the Qingxian  Cement  Factory
                           for 30 years.  In exchange  for  contributing  RMB$17
                           million   (US$2,043,000)   for  the   expansion   and
                           modernization of the existing factory, China would be
                           entitled to 100% of the profits of the joint  venture
                           until it recovers its  contribution,  and  thereafter
                           70% of the profits of the joint venture.  The control
                           of  Jiuhe  would  be  shared  by  China  and  the PRC
                           government, which would contribute a 30 year lease on
                           the existing facilities for its interest.  The assets
                           of  the  joint   venture  would  revert  to  the  PRC
                           government at the termination of the joint venture.

                  C.       China has the  option to  acquire  an  interest  in a
                           joint  venture,  the Hebei Iron Lion Cement Co., Ltd.
                           ("Hebei"),   which  would  acquire  the  use  of  the
                           existing   facilities  of  the  Hebei  Cangzhou  Area
                           Construction  Materials  Factory  for  30  years.  In
                           exchange    for    contributing     RMB$70    million
                           (US$8,190,000) for the expansion and modernization of
                           the existing factory, China would be entitled to 100%
                           of the profits of the joint venture until it recovers
                           its  contribution,  and thereafter 52% of the profits
                           of the joint  venture.  The control of Hebei would be
                           shared by China and the PRC  government,  which would
                           contribute a 30 year lease on the existing facilities
                           for its  interest.  The  assets of the joint  venture
                           would revert to the PRC government at the termination
                           of the joint venture.

                           China and Light  acquired the  foregoing  options for
                  nominal consideration and, as a result, no financial statement
                  recognition is accorded to the unexercised options.

                           On April 17,  1995,  China  exercised  its  option to
                  acquire,  through  Citizen,  the  use  for  five  years  of  a
                  production line at the Cangzhou Factory. Through September 30,
                  1995, the Company had expended approximately  RMB$1,090,000 on
                  the  expansion  and  modernization  of  the  factory.   As  at
                  September  30,  1995,   the  Company  had  not,   through  its
                  wholly-owned  subsidiaries,  exercised  its  option to acquire
                  interests in Jiuhe and Hebei and such options had expired.

                                       7
<PAGE>
<TABLE>
<CAPTION>

                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


4.       TRADING SECURITIES 

 
   
                                                                                                   September 30, 1995
                                                                              --------------------------------------
                                                                                          Cost           Fair Value
<S>                                                                                   <C>                  <C>     
           7,492,000 shares of common stock issued by Keng
                Fong Sin Kee Construction and Investment Company
                Limited, listed in the Stock Exchange of Hong Kong                    $481,774             $467,032
                                                                  
           774,000 shares of common stock issued by Shun Cheong
                Holdings Company Limited, listed in the Stock Exchange of
                Hong Kong                                                               28,878               35,815
                                                                                        ------               ------
                                                                                      $510,652             $502,847
                                                                                       =======              =======
</TABLE>

                  The  Company had  acquired  the  trading  securities  for cash
         financed partially by the Company's internal resources and partially by
         a margin loan (See Note 8).

                  In July, 1995, the Company acquired 7,100,000 warrants of Keng
         Fong Sin Kee Construction and Investment  Company Limited ("Keng Fong")
         in the stock market.  These  Warrants  were  converted  into  7,100,000
         common stock of Keng Fong and the Company  acquired  additional  common
         stock of Keng Fong  during the third  quarter of fiscal 1995 making the
         total  number  of  common  stock  held in hand  to be  7,492,000  as at
         September 30, 1995.  The  shareholding  represents  3.0 per cent of the
         total outstanding common stock of Keng Fong.

                  In July,  1995, the Company  acquired the common stock of Shun
         Cheong  Holdings  Limited  ("Shun  Cheong") in the stock market.  As at
         September  30,  1995,  the Company  held  774,000  common stock of Shun
         Cheong which  represents 0.3 per cent of the total  outstanding  common
         stock of Shun Cheong.

                  The common  stock of Keng Fong and Shun Cheong are not subject
         to any contractual or statutory resale  restrictions and any portion of
         these stock can be  reasonably  expected to qualify for sale within one
         year.  The  trading   securities  are  measured  at  fair  value,  with
         unrealized gains and losses included in earnings.

                                       8

<PAGE>
<TABLE>
<CAPTION>

                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


5.       PROPERTY AND EQUIPMENT

                                                                                        September 30, 1995
                                                              ---------------------------------------------------------------
                                                                                           Accumulated
                                                                                          Depreciation
                                                                                               and                 Net Book
                                                                     Cost                  Amortization              Value
                                                              -------------------       -------------------    ------------------
<S>                                                                     <C>                   <C>                   <C>     
           Residential Rental Property
                Building                                                $748,669              $286,224              $462,445
                Leasehold improvement                                    601,932               184,997               416,935
           Cement factory leasehold improvements                         130,939                 6,547               124,392
                                                                      ----------              --------             ---------      

                                                                      $1,481,540              $477,768            $1,003,772
                                                                      ==========              ========            ==========

                                                                                        December 31, 1994
                                                              ---------------------------------------------------------------
                                                                                           Accumulated
                                                                                           Depreciation
                                                                                               and                 Net Book
                                                                     Cost                  Amortization              Value
                                                              -------------------       -------------------    ------------------

           Building                                                     $748,669              $257,654              $491,015
           Leasehold improvement                                         601,932               159,237               442,695
                                                                      ----------              --------             ---------      

                                                                      $1,350,601              $416,891              $933,710
                                                                      ==========              ========              ========
</TABLE>


6.       DEFERRED EXPENDITURE

                  In June 1995,  HFCI entered into a consulting  agreement  with
         previously  unaffiliated  parties pursuant to which it receives various
         investor  relations and financial  advisory  services.  The  consulting
         agreement  has a term of 12  months,  subject  to  earlier  termination
         thereof or renewal for subsequent periods. Pursuant to the terms of the
         agreement,  the Company:  (a) in June 1995, issued to the consultant an
         aggregate of 260,000 shares of its common stock and (b) is obligated to
         issue to the  consultant  20,000  shares of its common stock each month
         during the term of the agreement.

                  The value  attributable  to the 260,000  shares  issued to the
         consultant pursuant to the consulting agreement,  $1,510,600,  has been
         capitalized  and is  being  amortized  over  the 12  month  term of the
         consulting  agreement.  The value  attributable to the shares of common
         stock being issued on a monthly  basis is being  charged to expenses as
         such shares of common stock are issued.

                                       9
<PAGE>
<TABLE>
<CAPTION>

                         HENG FAI CHINA INDUSTRIES, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (United States Dollars)


7.       SHARE CAPITAL

                  The  changes in share  capital  during the nine  months  ended
September 30, 1995 were as follows:


                                                                      Common Shares
                                                    ----------------------------------------------
                                                              Number of                                         Contributed
                                                                Shares                   Amount                   Surplus
                                                    ---------------------    ---------------------     ---------------------

<S>                                                           <C>                        <C>                       <C>     
           Balance, December 31, 1994                         10,384,542                 $103,845                  $193,296

           Private Placement                                      75,000                      750                   299,250

           Consulting Agreement (Note 5)                         360,000                    3,600                 2,103,876
                                                              ----------                 --------                ----------

           Balance, September 30, 1995                        10,819,542                 $108,195                $2,596,422
                                                              ==========                 ========                ==========
</TABLE>

                  As of September  30,  1995,  there were  outstanding  warrants
         exercisable to purchase  296,443 shares of common stock, at an exercise
         price of $3.20 per share through September 2, 1999.


8.       MARGIN LOAN PAYABLE

                  The  margin   loan   payable  is  to  a  third  party  and  is
         collateralized  by the  Company's  trading  securities  with a carrying
         value of US$502,847. The loan is repayable on demand and bears interest
         at 12.5 per cent. per annum.


                                       10

<PAGE>


Item 2.     Management's  Discussion  and  Analysis of Financial  Condition  and
            Results of Operations

Background

         Heng  Fai  China  Industries,   Inc.  (the  "Company")  was  originally
organized on March 24, 1958 as Time Saver Markets,  Inc. pursuant to the laws of
the State of California. On October 29, 1973, Alpine International  Corporation,
a private  Oregon  corporation  merged  with and into Time Saver  Markets,  Inc.
Subsequent  thereto,  Time  Saver  Markets,  Inc.  changed  its  name to  Alpine
International  Corporation.  In August 1994,  Alpine  International  Corporation
changed its name to Alpine Merger Corporation ("Alpine-California") after having
entered  into a  merger  agreement  with a  Delaware  corporation  named  Alpine
International  Corporation  ("Alpine-Delaware") which was formed for the purpose
of  facilitating  the  reincorporation  of  Alpine-California  in the  State  of
Delaware  through  a  merger  with and into  Alpine-Delaware.  Subsequently,  in
November 1994,  Alpine-Delaware  changed its name to Heng Fai China  Industries,
Inc.  Alpine-California  and  Alpine-Delaware  may be  collectively  referred to
hereinafter as "Alpine".

         Alpine conducted no significant  operations between April 1992, when it
emerged from reorganization  under Chapter 11 of Title II of the U.S. Bankruptcy
Code, and June 1994,  when it acquired  Vancouver Hong Kong  Properties  Limited
("Vancouver  Hong Kong")  which owns an apartment  building in North  Vancouver,
British Columbia. In connection  therewith,  Alpine obtained equity financing of
US$120,000 in exchange for the issuance of 1,500,000  shares of its common stock
and 1,500,000 common stock purchase  warrants  exercisable  through September 2,
1999. See Note 1 of the Notes to the condensed Consolidated Financial Statements
included elsewhere herein.

         Throughout the remainder of fiscal 1994, the Company's  operations were
limited to the  operation  of the real estate  acquired  through  the  Company's
acquisition of Vancouver  Hong Kong. In January 1995,  the Company  acquired its
wholly-owned  subsidiary,  Heng Fai China & Asia Industries Limited ("Asia"),  a
company   incorporated  in  Hong  Kong,   along  with  Asia's  two  wholly-owned
subsidiaries,  Heng Fai China  Industries  Limited  ("China") and Heng Fai Light
Products Limited  ("Light").  China and Light were incorporated in Hong Kong and
the Peoples' Republic of China ("PRC"),  respectively.  China and Light (through
its wholly-owned subsidiary, Cangzhou Citizen Cement Product Co., Ltd., referred
to hereinafter as "Citizen")  have the rights to acquire direct or joint venture
operating  lease  interests for three cement  factories in the Hebei province of
the PRC: (i) the Hebei Cangzhou City Chemical Corporation Factory (the "Cangzhou
Factory");  (ii) the Qingxian Cement Factory (the "Qingxian Factory"); and (iii)
the Hebei Cangzhou Area  Construction  Materials  Factory (the "Hebei Factory").
See  Note 3 of the  Notes to the  Condensed  Consolidated  Financial  Statements
included elsewhere herein.

         On April 17, 1995,  Light  (through  Citizen)  exercised  its option to
lease the Cangzhou  Factory.  The Company is currently  making the expansion and
modernization  expenditures  required to  exercise  pursuant to the terms of the
agreement  governing  the lease option.  The Cangzhou  Factory had suspended its
operations  during  April and June 1995 to prepare  the lease of the  production
line.  Operations were resumed in late June 1995 and expansion and modernization
work had been undergone.  As at September 30, 1995, the Company, had not through
its  wholly-owned  subsidiaries,  exercised  its option to acquire  interests in
Jiuhe  and  Hebei  and  such  options  had expired.

                                       11

<PAGE>
Results of Operations

         The Company  generates  revenue  through  the leasing of the  apartment
building in North  Vancouver,  British Columbia and the sale of cement products.
In the nine month period ended September 30, 1995,  approximately  63.57% of the
Company's  total revenue was derived from the leasing of the apartment  building
while 35.60% was contributed by the sale of cement products.

         There  were  no  significant  changes  in  the  revenues  and  expenses
attributable  to the operation of Vancouver  Hong Kong's real estate between the
third quarter of fiscal 1995 and the comparable periods of fiscal 1994.

         Revenues  and  expenses  for  Citizen's  cement  operations   represent
operations from April 17, 1995. As previously  discussed,  Citizen's  facilities
were undergoing expansion and modernization, and the operations during the third
quarter of fiscal 1995 were started to increase.

         Legal  and  professional  fees,  and  other  administrative   expenses,
increased  significantly  during the third quarter of fiscal 1995. The increased
expenses  resulted  from  personnel  added  during 1995 to establish a Hong Kong
office to support the Company's  activities in the PRC.  Continued  increases in
the Company's investigation and acquisition of business opportunities in the PRC
are expected, and will result in additional increases in legal, professional and
administrative expenses.

         In June 1995, the Company entered into a consulting  agreement pursuant
to which it receives investor relations and financial  advisory  services.  As a
result,  the Company  recorded  consulting  expenses of US$1,004,175  during the
third  quarter  of  fiscal  1995.  See  Note 6 of  the  Notes  to the  Condensed
Consolidated Financial Statements included elsewhere herein.

         In  July  1995,  the  Company,  through  its  wholly  owned  subsidiary
incorporated in Hong Kong,  started to purchase equity  securities listed in the
Stock  Exchange  of Hong Kong  Limited and held  principally  for the purpose of
selling. The purchase of the trading securities were financed partially from the
cash  generated  from the  placement  of the  Company's  shares in June 1995 and
partially  from the margin loan.  During the third  quarter of fiscal 1995,  the
income generated from the securities  investments were US$3,262.  However, as at
September  30, 1995,  the fair value of these trading  securities  are different
from  their  historical  costs.  Adjustments  for the net  unrealized  losses of
US$7,805 had been included in the third quarters' Statement of Operations.



                                       12

<PAGE>

Liquidity and Capital Resources

         To date,  the Company has financed  its  operations  primarily  through
private placements of its common stock, short term borrowings and cash flow from
operations. As at September 30, 1995, the Company had cash of US$49,016 together
with margin loan payable and other payable amounting to total US$554,233.

         The  Company  had net cash  outflow of  approximately  US$525,298  from
operating  activities during the third quarter of fiscal 1995 as compared to net
cash inflow of US$71,566  during the third  quarter of fiscal 1994.  The outflow
was mainly  attributable  to the  purchase  of trading  securities  in the third
quarter.  The Company financed the net loss, and capital additions,  through the
private  placement of shares of its common stock for cash  proceeds of $300,000.
The  proceeds  from  that  private  placement  are also  being  used to fund the
expenditures   incurred  by  Citizen  in  connection   with  the  expansion  and
modernization of the Cangzhou Factory described above.


                                       13
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings

                  The  Company  is  not  a  party  to  any  pending  or  ongoing
                  litigation.

Item 2.           Changes in Securities

                  There have been no changes in the  securities  of the  Company
                  required to be disclosed pursuant to this item.

Item 3.           Defaults upon Senior Securities

                  There  has  been  no  material  default  with  respect  to any
                  indebtedness  of the Company  required to be  disclosed  to be
                  disclosed pursuant to this item.

Item 4.           Submission of Matters to a Vote of Securityholders

                  There   have  been  no   matters   submitted   to  a  vote  of
                  securityholders  during the nine months  ended  September  30,
                  1995.

Item 5.           Other Information

                  Not Applicable.

Item 6.           Exhibits and Reports on Form 8-K

         (a)      Exhibits: None.

         (b)      Reports on Form 8-K: None.


                                       14
<PAGE>



                                   SIGNATURES




         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                            HENG FAI CHINA INDUSTRIES, INC.




Dated:                                      By: /s/  Robert H. Trapp
                                               ------------------------------
                                                     Robert H. Trapp
                                                   Secretary and Treasurer