UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/AAmendment No. 1 x
     Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934for the fiscal year ended December 31, 2007, or ̈
     Transition report pursuant to section 13 or 15(d) of the Securities Exchange act of 1934for the transition period from        to  Commission File No.
0-23015 GREAT CHINA
INTERNATIONAL HOLDINGS, INC. (Exact name of small business issuer as specified in its
charter) Nevada
     
     87-0450232(State or Other Jurisdiction of
Incorporation or Organization)
     
     (IRS Employer Identification No.) C Site 25-26F Presidential Building, No. 69 Heping North Street Heping District, Shenyang 110003, Peoples Republic of China (Address of Principal Executive Offices) Registrant's Telephone Number: 0086-24-22813888 ____________ Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Common Stock, Par Value $0.001 ____________ Indicate by check mark if registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities   Act.   Yes x   No ̈ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
    Yes x   No ̈ 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 ̈ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
     contained herein, and will not 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-K or any amendment to this Form
     10-K.   ̈ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
     non-accelerated filer, or a smaller reporting company.   ̈  Large accelerated filer   ̈  Accelerated filer
       x  Non-accelerated filer   ̈  Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange
     Act).   ̈   Nox The aggregate market value of voting stock held by non-affiliates on June 30, 2007, based on the average bid and
asked prices on the last trading day prior to such date, was $44,099,872.  As of March 31, 2008, the Registrant
had outstanding 11,759,966 shares of common stock, par value $0.001. Documents incorporated by reference: None.




CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS This annual report on Form 10-K may contain certain forward-looking statements
as such term is defined by the Securities and Exchange Commission in its rules,
regulations and releases, which represent the Companys expectations or beliefs,
including but not limited to, statements concerning the Companys operations, economic
performance, financial condition, growth and acquisition strategies, investments, and
future operational plans.  For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.  Without
limiting the generality of the foregoing, words such as may, will, expect, believe, anticipate, intent, could, estimate, might, plan, predict or
continue or the negative or other variations thereof or comparable terminology are
intended to identify forward-looking statements.  This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from the future results,
performance or achievements expressed or implied by any forward-looking statements. This annual report contains forward-looking statements,
many assuming that the Company resolves its outstanding debt obligations and is able to
continue as a going concern, including statements regarding, among other things, (a)
negotiating settlement of our outstanding debt obligations, (b) our plans for developing
or participating in the development of real estate projects, (c) our opportunities for
participating in new real estate projects, (d) our growth strategies, (e) anticipated
trends in our industry, (f) our future financing plans, (g) our anticipated need for
working capital, (h) the impact of governmental regulation of the real estate industry in
China, and (i) the availability of labor and materials for project development.  These
statements may be found under Item 1. Business, Item 2. Properties and Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations, as
well as in this annual report generally.  Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks discussed under Item 1A. Risk Factors and
matters described in this annual report generally.  In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements contained in
this annual report will in fact occur. Given these risks and uncertainties, readers are cautioned
not to place undue reliance on our forward-looking statements. 2




EXPLANATORY NOTE The purpose
of this Amendment No. 1 on Form 10-K/A is to respond to comments received by Great China
International Holdings, Inc., from the Securities and Exchange Commissions Division of
Corporation Finance in a letter dated June 29, 2008 regarding our previously filed Annual
Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and
Exchange Commission on April 15, 2008 (Original Form 10-K).  Item 7.  "Management's Discussion and Analysis
of Financial Condition and Results of Operations," beginning on page 4 of this Amendment, is revised to correct
figures under the caption "Liquidity and Capital Resources."  The Consolidated Financial Statements beginning
on page F-1 of this Amendment are amended as follows: l
     The  Statement  of Cash  Flows has been  revised  to record to  reconciling  items of gain on  settlement  of debt and loss on
              terminated projects to non-cash items.l
     New Note 8 Payable to Disposed  Subsidiary   Restated  has been added to disclose the terms of a loan payable to Loyal Best
     Property Development Limited, a subsidiary that was disposed of in December 2007 (Loyal Best).l
     New Note 9 [Former Note 8]  Short-Term  Loans, has been revised to add  disclosure of term and interest  rates on short-term
              loans.l
     New Note 12 [Former Note 11] Gain on Sale of Subsidiary  Restated has been revised to add proforma  information  on results
              of operations with respect to Loyal Best, the subsidiary acquired and disposed of in 2007.l
     New Note 18  Restatement  has been added to disclose  information on the restatement of the  Consolidated  Statement of Cash
              Flows and Notes to Consolidated Financial Statements.  As required
by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications
by our Principal Executive Officer and Principal Financial and Accounting Officer are
being filed as exhibits to this Amendment No. 1 on Form 10-K/A. There are no
other  changes to the  Original  Form 10-K other than those  outlined  above.  Except as
 required  to reflect the changes noted above,  this Amendment No. 1 on Form 10-K/A does
not attempt to modify or update any other  disclosures set forth in our Original Form
10-K.  Furthermore,  this  Amendment No. 1 on Form 10-K/A does not purport to provide a
general  update or discussion of any other developments  of Great China  International
 subsequent  to the filing of the Original  Form 10-K.  Accordingly,  this  Amendment No.
1 should be read in conjunction with the Original Form 10-K and our filings made with the
Securities and Exchange  Commission  subsequent to the date of the Original Form 10-K. 3




ITEM 7.      MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS History and Development of Great China International
Holdings Great China
International is a comprehensive real estate company with principal activities in real
estate investment, development, sales and management.  We conduct all our operation in
the Peoples Republic of China through our direct and indirect wholly owned subsidiaries; Shenyang Maryland
International Industry Company Limited, Shenyang Yindu Property Company Limited, Shenyang
Xinchao Property Company Limited, and Silverstrand International Holdings Company Limited. Business Overview Great China Holdings
engages in the development and sale of high quality private residential properties and
commercial buildings for lease in the City of Shenyang, China. Shenyang Maryland, our
indirect wholly-owned subsidiary, was one of the first private property developers and
retailers in China. For the year ended December 31, 2007, the proceeds from the sales of
properties constituted 45% of the total revenue from operations, with the remaining
revenue consisting primarily of rental income. For the year ended December 31, 2006, the
proceeds from the sales of properties constituted 56.57% of the total revenue. Development activity
typically consists of locating and acquiring ownership and property rights to real
property, arranging for project financing, managing project planning and construction,
and implementing sales and leasing of the finished realty. We may obtain/purchase land
use rights from the following sources: (i) purchases from factories which have relocated;
(ii) redevelopment of older areas; and (iii) government public tenders or auctions.
Overall management of all projects developed by us is undertaken by special project teams
from our company. The special project teams oversee and monitor the various stages of the
project development process to ensure the timely completion and construction of high
quality properties. Completed Projects Great China Holdings
has five completed real estate projects located in the city of Shenyang in which it has
been selling and/or leasing units: 
     President Building comprises three blocks of commercial buildings, including two commercial towers,
              situated in Shenyang City, Heping North Street, which is the financial district of Shenyang.  While
              the original intention was to sell a majority of the office buildings, management subsequently
              decided to retain most of the properties for leasing purposes.  The buildings maintain a high
              occupancy rate with tenants that are primarily international companies, 25 of which are Fortune 500
              companies.  Great China Holdings head office is situated on the 25th and 26th Floors of President
              Building.  4





     Chenglong Garden, situated in Shenyang Huanggu District, comprises 12 blocks of modern apartments
              consisting of 865 residential apartments, a number of retail shops and ancillary facilities
              including basement car parking facilities and parks.  As of December 31, 2007, 853 units had been
              sold, and 12 residential units and 3197.78 square meters of commercial space remained available for
              sale and lease.
     Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units, 326
              of which had been sold as of December 31, 2007.
     Peacock Garden is situated in Shenyang City, Heping North Street, is in the commercial district of
              Shenyang and is comprised of 197 low-density residential apartments, 194 of which had been sold as
              of December 31, 2007.
     The Maryland Building consists of 12,858 square meters of commercial space. New/Proposed Projects Xi Ta Project. In
December 2005, we, through our subsidiaries Silverstrand and Shenyang Maryland
International, acquired Shenyang Xinchao Property Company and Shenyang Yindu Property
Company, which together held 100% of the rights granted for a mixed-use development
located in the Heping District of Shenyang known as the Xita Urban Reconstruction Project
the Xita Project confirmation letter issued by the Heping District Government in 2004.
The confirmation letter, as subsequently amended, contemplated a 99,000 square meter
project located in the Xi Ta area in the city of Shenyang. Under the confirmation letter
we paid a land transfer fee of RMB 33,228,480. Shenyang Heping District Investment
Promotion Bureau, which is the agency overseeing development of the Xi Ta area decided to
expand the project and, as a consequence of the expansion, reached an agreement with us
to reacquire the land use rights for the Xita Project in exchange for refunding the land
transfer fee of RMB 33,228,480 (approximately $4,437,397), and reimbursing us for amounts
expended on the development in the amount of RMB 12,345,180 (approximately $1,646,024).
In July 2007, the local government approvals and procedures were completed for
transferring the land use rights back to the local government and we received reimbursement of the land transfer fee of
RMB 33,228,480.  We received the remaining RMB 12,345,180 in August 2007.  We incurred a
net loss on the terminated Xi Ta Project of $1,504,604. 5




Chessboard Mountain.
Our subsidiary, Shenyang Jitian Property Company Limited, was established on February
22, 2006 for a new project development known as Chessboard Mountain Residential project
located in the Chessboard Mountain International Tourism Development District in Shenyang
City. In February 2006, Shenyang Jitian Property Company was confirmed as the highest
bidder in a public auction for the Chessboard Mountain Residential project. The total
purchase price for the 420,317 square meters land use rights was approximately $56.7
million, which was obtained through bank financing. In December 2006, we completed the
sale of Shenyang Jitian Property Company to two unrelated companies in exchange for a
total cash payment of $1,399,970 (the amount of our invested capital in Shenyang Jitian
Property Company) and assumption of all bank debt incurred in connection with the
acquisition of the Chessboard Mountain Residential project. In connection with the sale,
Great Chinas subsidiary, Shengyang Maryland International Industry Company Limited,
entered into a Land Consolidation and Development Agreement with respect to the
Chessboard Mountain Residential Project. Under the development agreement, Shenyang
Maryland was engaged to arrange for necessary permitting, site preparation and
installation of development infrastructure. As the developer/contractor, the contract
provides for Shenyang Maryland to be paid a total of approximately RMB 104 million ($13.3
million) in staged amounts upon completion of different aspects of the development work
provided for by the agreement. As of December 31, 2007, Shenyang Maryland had been paid
a total of approximately RMB53.98 million ($7.4 million) under the development agreement. Loyal Best. On August
7, 2007, Silverstrand completed the acquisition of all of the issued share capital of
Loyal Best Property Development Limited (Loyal Best), a Hong Kong limited company.
Loyal Best was the sole owner of an entity called Shenyang Loyal Best Hunnan Property
Development Limited (Shenyang Loyal Best), a wholly owned foreign enterprise that is a
party to a Confirmation Letter of Auction with respect to a parcel of land located at the
center area of Hunnan New Zone in the city of Shenyang, China (the LB Project).
Silverstrand paid US$4,010,000 to acquire the share capital of Loyal Best and paid and an
additional US$20,500,000 to satisfy all director loan notes issued by Loyal Best, which
funds were used to make Shenyang Loyal Bests land transfer fee payment on the project of
US$20,000,000. In September 2007, Shenyang Loyal Best closed funding under a bridge loan
agreement with Shenyang Huahai International Investment Co., Ltd. (Shenyang Huahai)
whereby Shenyang Huahai loaned RMB 450,000,000, or approximately US$60 million, to
Shenyang Loyal Best for use in connection with development of the LB Project. In
December 2007, Silverstrand completed the sale of all of the share capital of Loyal Best
to an unrelated third party in exchange for cash consideration of 360 million Chinese
yuan (approximately US$48.7 million) and the assumption by the purchaser of the loan from
Shenyang Huahai for development of the LB Project. Of the cash sales price, Silverstrand
had received $18 million by December 31, 2007. The balance of approximately $30.7
million was reflected on our year-end financial statements as a receivable and was
received by us as of the end of March 2008. In connection with the sale of Loyal Best,
we agreed to pay a finders fee to an unrelated third party of approximately $8.9 million. Junhui Development
Agreement. In November 2007, our indirect subsidiary, Shenyang Xinchao Property Co.,
Ltd. (Xinchao), entered into a joint development agreement with Beijing Century Junhui
Investment Ltd. (Junhui), an unrelated third party, pursuant to which each of Xinchao
and Junhui agreed to invest RMB 40 million (approximately $US5.4 million) as share
capital in a newly-formed entity whose purpose shall be to jointly develop a commercial
and residential project in Nanjing Street, Heping District, Shenyang, China. Subsequent
to entering into the joint development agreement, Junhui and Xinchao were unsuccessful in
obtaining the property for the project and, in accordance with the terms of the joint
development agreement, the amount of Xinchaos investment was refunded. Results of Operations Comparison of
operations for the year ended December 31, 2007 with the year ended December 31, 2006: The Company incurred
net income of $24,325,722 for the year ended December 31, 2007 compared to a net loss of
$3,746,802 for 2006, representing an increase of $28,072,523 or 749% year on year. The
majority of this income resulted from income (gain) from discontinued operations, which
was $23,885,783 for 2007, as compared to a loss of $32,163 for 2006.  Great China
International incurred a loss from operations for the year ended December 31, 2007 of
$5,894,965, as compared to a loss of $1,707,993 for the year ended December 31, 2006, an
increase of $4,186,972 Sales revenues
decreased by $2,826,961 or 39% year-on-year to $4,378,993 for the year ended December 31,
2007 compared to 2006 of $7,205,954. Rental and management fee income decreased by
$235,704 or 4% to $5,296,635 during the year ended December 31, 2007 from $5,532,339 for
the comparable period in 2006. These changes are mainly attributable to the decreased
sales volume of the remaining building units. 6




Cost of properties
sold decreased by $728,142 or 11% during the year ended December 31, 2007, as compared to
the corresponding period in 2006. This was primarily attributable to the decrease in the
number of units sold as described above. Operating and selling
expenses decreased by $1,410,531 or 77% to $414,179 for the year ended December 31, 2007
as compared to $1,824,710 for the year ended December 31, 2006. The decrease is demanded
for business development. General and
administrative expenses increased by $2,970,921 or 77% to $6,831,838 during the year
ended December 31, 2007 compared to $3,860,917 for the year ended December 31, 2006. The
increase is due the bad debt provision accrued for other receivables from Su Zhong
Construction of $3,628,085 during the year and also a reduction in consulting fee of
$411,263. Total depreciation
expense increased by $292,057 or 14% to $2,343,721 for the year ended December 31, 2007,
compared to $2,051,664 for the corresponding period in 2006, since the growth of fixed
assets held by the company for business expansion. Other income increased
$9,628,531 or 759% to $10,897,060 in 2007 from $1,268,529 in 2006 due primarily to
several non-routine transactions, such as the land leveling income of $1,929,041, gain on
settlement of debt of China Great Wall Asset Management Corporation totaling $11,115,201
as well as loss on terminated project of $1,504,604. Interest and financing
costs decreased by $227,828 to $3,047,347 for the year ended December 31, 2007, as
compared to $3,275,175 for the year ended December 31, 2006. The decrease was primarily
due to subsequent repayments of outstanding loans. On July 30, 2007,
Great China International, through its subsidiary Shenyang Maryland, entered into an
agreement to repurchase and effectively settle overdue debt in the amount of $23,166,667
and outstanding interest payable of $439,014, which amounts had been purchased from the
original lender by an unrelated third party.  We purchased the debt for total
consideration of $7,581,333, resulting in gain on settlement of debt of $11,115,201. In addition to the
foregoing, we realized a net extraordinary gain from the disposition of our interest in
our indirect subsidiary, Loyal Best Property Development Limited, during 2007 in the
amount of $23,947,054. This gain was the primary contributor to our net income for the
year in the amount of $24,325,722, compared to a net loss of $(3,746,802) in 2006. Comparison of
operations for the year ended December 31, 2006 with the year ended December 31, 2005: Great China
International incurred a net loss of $(3,746,802) for the year ended December 31, 2006
compared to a net income of $80,394 for 2005, representing a decrease of $3,827,196
year-on-year. Components of sales and expenses resulting in this increase in net loss are
discussed below. Sales revenues
decreased by $13,626,892 or 65% year-on-year to $7,205,954 for the year ended December
31, 2006 compared to 2005 of $20,832,846. Rental and management fee income decreased by
$158,923 or 3% to $5,532,339 during the year ended December 31, 2006 from $5,691,262 for
the comparable period in 2005. These changes are mainly attributable to: 
     Significant decrease in sales of Chenglong Garden by $14,244,921 or 77%;
     Decreases in gross floor area sold by 25,071 square meters year-on-year to 11,146 square meters for the
              year ended December 31, 2006 compared to 36,217 square meters in 2005;
     The number of units sold decreased by 131 units or 71% year-on-year to 54 units for the year ended
              December 31, 2006 compared to 185 units in 2005;
     Decreases in rental income by $93,807 or 2%;
     Decreases in building management income by $65,117 or 4%; and
     No new development projects were introduced during 2006. Cost of properties
sold decreased by $12,056,804 or 64% during the year ended December 31, 2006, as compared
to the corresponding period in 2005. This was primarily attributable to a 69% decrease in
the gross floor area sold as described above. Operating and selling
expenses increased by $1,339,397 or 276% to $1,824,710 for the year ended December 31,
2006 as compared to $485,313 for the year ended December 31, 2005. The increase is mainly
due to an increase in land appreciation tax charged on Qiyun New Village, Peacock Garden,
and Maryland Building of $629,151, and on Chenglong Garden of $835,065. 7




General and
administrative expenses increased by $1,248,130 or 48% to $3,860,917 during the year
ended December 31, 2006 compared to $2,612,787 for the year ended December 31, 2005. The
increase is due to an increase in travel and entertainment expenses of $207,221, an
increase in legal and professional fees of $380,627 and recognition of $513,835 in
compensation expense related to stock options issued to management. Depreciation expense
decreased by $20,768 or 1% to $2,051,664 for the year ended December 31, 2006, compared
to $2,030,896 for the corresponding period in 2005. Other income increased
to $1,268,529 in 2006 from none in  2005 due primarily to revenues earned under a service
contract with the acquirers of Jitian of $1,148,624. Interest and financing
costs increased by $760,711 to $3,275,175 for the year ended December 31, 2006, as
compared to $2,514,464 for the year ended December 31, 2005. The increase was primarily
due to loan closing costs of $750,447 incurred during 2006. Liquidity and Capital Resources <R>Net cash flows
provided by operating activities for the years ended December 31, 2007, 2006 and 2005
were $50,420,001, $4,517,894, and $4,903,230 respectively. The substantial increase in
2007 was attributable to a significant increase in net income, due primarily to a gain on
disposition of a subsidiary and a gain upon settlement of debt, an a correspondingly
large increase in other payables and accrued expenses.</R> <R>Net cash flows used in
investing activities for the year ended December 31, 2007, was $28,288,291 compared to
$7,391,802 and $7,191,560 for the years ended December 31, 2006 and 2005.  This
significant change in 2007 is primarily attributable to the net effect of the following: 
     a decrease in construction in progress of $8,126,213 during the year, resulting from the fact that we
         currently have no construction in progress;
     a net increase in property and equipment of $7,354,196, resulting primarily from a vehicle purchase,
         the decoration expense for the Presidential Building and the repurchase of properties on the 16th floor
         of the Presidential Building; and
     an aggregate of $30,701,958 used in investing activities from discontinued operations.</R> <R>Net cash flows used in
financing activities for the year ended December 31, 2007, was $15,107,074 compared to
net cash used by financing activities of $6,521,760 for the year ended December 31, 2006.
 Net cash flows provided by financing activities for the year ended December 31, 2005 was
$12,178,034, provided primarily from borrowings.  The significant difference between the
years ended December 31, 2007 and 2006 was primarily attributable to payment and
settlement of overdue debt.  On July 30, 2007, Great China International, through its
subsidiary Shenyang Maryland, entered into an agreement to repurchase and effectively
settle overdue debt in the amount of $23,166,667 and outstanding interest payable of
$439,014, which amounts had been purchased from the original lender by an unrelated third
party.  We purchased the debt for total consideration of $7,581,333, resulting in gain on
settlement of debt of $11,115,201.</R> As of December 31,
2007, current liabilities exceeded current assets by $19,710,593, as compared to
$51,178,976 as of December 31, 2006. The working capital deficit as of December 31, 2007
was incurred primarily due to accounts payable and accrued expense of $14,338,903, other payables related
to disposal of subsidiary of $19,392,951 and taxes payable of $8,552,316.  Cash and equivalents were $10,044,579 at
December 31, 2007, compared to $1,769,744 at December 31, 2006, an increase of
$8,274,835, or 468%. Outlook For 2008 In 2007, the Company
amassed capital reserves related to the Chess Board Mountain project, the sale of Loyal
Best and loan restructuring.  With these reserves, our management intends to continue to
seek potential opportunities in real estate development and investments.  Meanwhile,
management believes that the Company will continue to achieve revenue from the sales of
properties, through land leveling fees associated with completion of the Chessboard
Mountain project, and from leasing revenues from the President Building. 8




Contractual Obligations The following table is
a summary of Great China Internationals contractual obligations as of December 31, 2007: Total

     Less thanone year

     1-3 Years

     ThereafterShort-Term Debt
     
     
     $
        25,231,297
        

     $
        25,231,297
        

     $
        --
        

     $
        --Long-Term Debt
     5,486,968
        

     --
        

     5,486,968
        

     --Amounts due to related parties
     --
        
     --
        
     --
        
     --Construction commitments
        
        
     
        --
        
     --
        
     --
        
     --Total Contractual Cash Obligations
     $30,718,265
        
     $25,231,297
        
     $5,486,968
        
     $-- Critical Accounting Policies The financial
statements are prepared in accordance with accounting principles generally accepted in
the United States of America and the following is a summary of significant accounting
policies: Principles of Consolidation All
significant inter-company transactions and balances within the Company are eliminated
in consolidation. Cash and equivalents The Company
considers all highly liquid debt instruments purchased with maturity period of three
months or less to be cash equivalents. The carrying amounts reported in the
accompanying consolidated balance sheet for cash and cash equivalents approximate
their fair value. Substantially all of the Companys cash is held in the PRC and is
not protected by FDIC or any other form of insurance. Accounts receivable- Provision is
made against accounts receivable to the extent which they are considered to be
doubtful. Accounts receivable in the balance sheet is stated net of such provision. Allowance for Doubtful Accounts-
The Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and other receivable
and analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. As of December 31, 2007 and 2006, the Company
reserved $5,174,895 and $1,443,476 respectively. Advances from buyers Advances from
buyers represents prepayments from buyers on properties on which sales revenues have
not yet been recognized for financial reporting purposes. Properties held for sale The
Company capitalizes as properties held for sale, the direct construction and
development costs, property taxes, interest incurred on costs related to land
under development and other related costs (i.e. engineering, surveying, landscaping,
etc.) until the property reaches its intended use. At December 31, 2007 and 2006,
properties held for sale amounted to $7,696,437 and $10,620,550 respectively. Property and equipment Property
and equipment is being depreciated over the estimated useful lives of the related
assets. Depreciation is computed on the straight-line basis over useful lives.Repairs
and maintenance costs are normally charged to the statement of operations in the year
in which they are incurred. In situations where it can be clearly demonstrated that
the expenditure has resulted in an increase in the future economic benefits expected
to be obtained from the use of the asset, the expenditure is capitalized as an
additional cost of the asset. Property and equipment are evaluated
 annually for any impairment in value.  Where the  recoverable  amount of any property
and equipment is determined to have declined below its carrying  amount,  the carrying
 amount is reduced to reflect the decline in value.  There were no property and
 equipment  impairments  recognized  during the years ended December 31, 2007, 2006 and
2005. Construction-in-progress Properties
currently under development are accounted for as construction-in-progress.
Construction-in-progress is recorded at acquisition cost, including land rights cost,
development expenditure, professional fees and the interest expenses capitalized
during the course of construction for the purpose of financing the project. Upon
completion and readiness for use of the project, the cost of
construction-in-progress is to be transferred to properties held for 9




sale.  Construction-In-Progress  is
valued at the lower of cost or market.  Management  evaluates the market value of its
properties on a quarterly  basis by comparing  selling prices of its properties with
those of other  equivalent  properties in the vicinity offered by other  developers
 reduced by  anticipated  selling costs and associated  taxes.  In the case of
 construction  in progress,  management  takes into  consideration  the estimated cost to
complete the project when making the lower of cost or market calculation. Revenue Recognition Real estate sales Real estate sales are reported in
accordance  with the  provisions of SFAS No. 66,  Accounting  for Sales of Real Estate.
 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 (1) the parties are bound by the terms of a contract,
 (2) all consideration has been exchanged,  (3) any permanent financing of which the
seller is responsible  has been arranged,  (4) all conditions  precedent to closing have
been  performed,  (5) the seller  does not have  substantial  continuing  involvement
 with the  property,  and (6) 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. For land sales,  the Company
 recognizes the revenue when title of the land  development  right is transferred and
collectability is assured. For the  reimbursement on
 infrastructure  costs, the Company  recognizes the  income(loss),  which is at the fair
market value agreed  between the Company and the PRC  government,  when they enter into a
binding  agreement  with the government agreeing on the reimbursement. Real Estate
Capitalization and Cost Allocation Real estate held for  development or
sale consists of  residential  and commercial  units under  construction  and units
 completed.  Construction in progress  includes costs associated in development and
construction of the Xita project Real estate held for  development  or
sale is stated at cost or  estimated  net  realizable  value,  whichever  is lower.
 Costs include land and land  improvements,  direct  construction  costs and development
 costs,  including predevelopment costs, interest on indebtedness,  real estate taxes,
insurance,  construction overhead and indirect project  costs.  Selling and  advertising
 costs are expensed as incurred.  Total  estimated  costs of  multi-unit developments are
allocated to individual units based upon specific identification methods. If the real estate is  determined to
be impaired,  it will be written down to its fair market  value.  Real estate held for
development or sale costs include the cost of land use rights,  land  development  and
home  construction costs,  engineering  costs,  insurance  costs,  wages,  real estate
taxes, and interest related to development and construction.  All costs are accumulated
by specific  projects and allocated to residential  and commercial  units within the
respective  projects.  The Company leases the land for the residential unit sites under
land use rights with various terms from the government of the PRC. The Company  evaluates
the carrying value for impairment  based on the  undiscounted  future cash flows of the
assets.  Write-downs of inventory deemed impaired would be recorded as adjustments to the
cost basis. No depreciation is provided for
construction in progress. Capitalization of
Interest In accordance  with SFAS 34,  interest
 incurred  during  construction is capitalized to construction in progress. All other
 interest is expensed as incurred.  During the year ended  December  31, 2007,  the
Company did not have any construction therefore no interest was capitalized. Other income Other income consists of land leveling
 income,  which was one-time  service  performed which was requested by our customers and
gain on settlement of debt.  These  revenues are  recognized  when the services have been
 performed and the settled amount has been paid in accordance with the terms of the
agreement. Foreign currencies- The Companys
principal country of operations is in The Peoples Republic of China. The financial
position and results of operations of the Company are determined using the local
currency (Renminbior Yuan) as the 10




functional
 currency.  The results of operations  denominated in foreign currency are translated at
the average rate of exchange  during the  reporting  period.  Assets and  liabilities  of
the Company have been translated  at year- end exchange  rates,  while  revenues and
expenses have been  translated at average  exchange rates in effect  during  the year.
 Resulting  cumulative  translation  adjustments  have been  recorded  as other
comprehensive  income  (loss)  as a  separate  component  of  stockholders'  equity.
 Equity  denominated  in  the functional  currency is translated at the  historical  rate
of exchange at the time of capital  contribution.  All translation  adjustments
 resulting from the translation of the financial  statements into the reporting  currency
(US Dollars) are dealt with as an exchange fluctuation reserve in shareholders equity. Earnings
Per Share Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted-average number of
common shares and dilutive potential common shares outstanding during the period. Fair
value of financial instruments The carrying amounts of certain financial
instruments, including cash, accounts receivable, commercial notes receivable, other
receivables, accounts payable, commercial notes payable, accrued expenses, and other
payables approximate their fair values as at December 31, 2007 and 2006, because of the
relatively short-term maturity of these instruments. Use
of estimates The preparation of financial statements in accordance with generally
accepted accounting principles require management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Stock-based
compensation In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based
Payment (SFAS 123R), which requires the measurement of all employee
share-based payments to employees, including grants of employee stock options, using a
fair-value-based method and the recording of such expense in the consolidated
statements of operations. In March 2005, the SEC issued Staff Accounting Bulletin No. 107
(SAB 107) regarding the SECs interpretation of SFAS 123R and the valuation of
share-based payments for public companies. The Company has adopted SFAS 123R and
related FASB Staff Positions (FSPs) as of January 01, 2006 and recognizes
stock-based compensation expense using the modified prospective method. Concentrations
of business and credit risk Financial instruments that potentially subject the
Company to concentrations of credit risk are cash, accounts receivable and other
receivables arising from its normal business activities. The Company places its cash
in what it believes to be credit-worthy financial institutions. The Company has a
diversified customer base, most of which are in China. The Company controls
credit risk related to accounts receivable through credit approvals, credit limits
and monitoring procedures. The Company routinely assesses the financial strength of
its customers and, based upon factors surrounding the credit risk, establishes an
allowance, if required, for uncollectible accounts and, as a consequence, believes
that its accounts receivable credit risk exposure beyond such allowance is limited. Recent
accounting pronouncements In
September 2006,  FASB issued SFAS 157 Fair Value  Measurements.  This Statement
 defines fair value, establishes a framework for measuring fair value in generally
accepted  accounting  principles (GAAP), and expands disclosures  about fair value
 measurements.  This Statement  applies under other accounting  pronouncements  that
require  or  permit  fair  value  measurements,   the  Board  having  previously
 concluded  in  those  accounting pronouncements  that fair value is the  relevant
 measurement  attribute.  Accordingly,  this  Statement  does not require any new fair
value  measurements.  However,  for some  entities,  the  application  of this Statement
will change current  practice.  This Statement is effective for financial  statements
issued for fiscal years beginning after November 15, 2007, and interim  periods  within
those fiscal years.  The management is currently  evaluating the effect of this
pronouncement on financial statements. In
September  2006,  FASB issued SFAS 158  Employers  Accounting for Defined  Benefit
Pension and Other Postretirement  Plans-an  amendment  of FASB  Statements  No. 87, 88,
106,  and 132(R)  This  Statement  improves financial  reporting by requiring  an
employer to  recognize  the over funded or under funded  status of a defined benefit
 postretirement  plan (other than a  multiemployer  plan) as an asset or  liability  in
its  statement  of financial  position and to recognize  changes in that funded status in
the year in which the changes occur through comprehensive   income  of  a  business
 entity  or  changes  in  unrestricted  net  assets  of  a  not-for-profit organization.
 This  Statement  also improves  financial  reporting by requiring an employer to measure
the funded status of a plan as of the date of its year-end  statement  of financial
 position,  with limited  exceptions.  An employer  with  publicly  traded  equity
 securities  is required to initially  recognize  the funded  status of a defined
 benefit  postretirement  plan and to provide the  required  disclosures  as of the end
of the fiscal year ending after December 15, 11




2006.
An employer  without  publicly  traded equity  securities is required to recognize the
funded status of a defined benefit  postretirement plan and to provide the required
 disclosures as of the end of the fiscal year ending after June 15, 2007.  However,  an
employer without publicly traded equity securities is required to disclose  the
 following  information  in the notes to financial  statements  for a fiscal year ending
after  December  15, 2006,  but before June 16, 2007,  unless it has applied the
 recognition  provisions  of this Statement in preparing those financial  statements:
 (a) a brief  description of the provisions of this Statement; (b) the date that adoption
is required;  and (c) the date the employer plans to adopt the  recognition  provisions
of this Statement,  if earlier.  The requirement to measure plan assets and benefit
 obligations as of the date of the  employers  fiscal  year-end  statement  of
 financial  position is  effective  for fiscal years ending after December  15,  2008.
 The  management  is  currently  evaluating  the effect of this  pronouncement  on
 financial statements. In
February  2007,  FASB issued FASB  Statement No. 159, The Fair Value Option for
 Financial  Assets and Financial  Liabilities.  FAS 159 is effective for fiscal years
beginning  after November 15, 2007.  Early adoption is permitted subject to specific
requirements outlined in the new Statement.  Therefore,  calendar-year  companies may be
able to adopt  FAS 159 for  their  first  quarter  2007  financial  statements.  The new
 Statement  allows entities to choose,  at specified  election dates, to measure
 eligible  financial  assets and liabilities at fair value that are not  otherwise
 required to be measured at fair value.  If a company  elects the fair value  option for
an eligible  item,  changes in that item's fair value in  subsequent  reporting  periods
must be recognized in current earnings.  FAS 159 also establishes  presentation and
disclosure  requirements designed to draw comparison between entities that elect
different  measurement  attributes for similar assets and liabilities.  The management is
currently evaluating the effect of this pronouncement on financial statements. In
December  2007, the FASB issued SFAS No. 160,  Noncontrolling  Interests in
 Consolidated  Financial Statements.   This  Statement  amends  ARB  51  to  establish
  accounting  and  reporting   standards  for  the noncontrolling  (minority)  interest
in a subsidiary and for the  deconsolidation  of a subsidiary.  It clarifies that a
noncontrolling  interest in a subsidiary is an ownership  interest in the consolidated
 entity that should be reported as equity in the  consolidated  financial  statements.
 SFAS No. 160 is effective  for the  Companys fiscal year beginning  October 1, 2009.
 Management is currently  evaluating the effect of this  pronouncement on financial
statements. In
March 2008, the FASB issued FASB Statement No. 161,  Disclosures  about  Derivative
 Instruments  and Hedging  Activities.  The new standard is intended to improve
 financial  reporting about derivative  instruments and hedging activities by requiring
 enhanced  disclosures to enable investors to better understand their effects on an
 entitys  financial  position,  financial  performance,  and cash flows.  It is
 effective  for  financial statements  issued  for  fiscal  years and  interim  periods
 beginning  after  November  15,  2008,  with  early application  encouraged.  The new
 standard  also  improves  transparency  about  the  location  and  amounts  of
derivative  instruments in an entitys financial statements;  how derivative instruments
and related hedged items are  accounted  for under  Statement  133; and how  derivative
 instruments  and related  hedged items affect its financial  position,  financial
 performance,  and cash flows.  Management is currently  evaluating the effect of this
pronouncement on financial statements. In
December 2007,  the FASB issued SFAS No. 141(R),  Business  Combinations.  This
Statement  replaces SFAS No. 141, Business  Combinations.  This Statement retains the
fundamental  requirements in Statement 141 that the acquisition  method of accounting
 (which  Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination.  This Statement also
establishes principles and  requirements  for how the acquirer:  a) recognizes  and
measures in its financial  statements the identifiable  assets acquired,  the liabilities
 assumed,  and any  noncontrolling  interest in the acquiree;  b) recognizes and measures
the goodwill  acquired in the business  combination or a gain from a bargain purchase and
c) determines  what  information  to disclose to enable users of the financial
 statements to evaluate the nature and  financial  effects of the  business  combination.
 SFAS No.  141(R)  will apply  prospectively  to  business combinations  for which the
 acquisition  date is on or after  Companys  fiscal year beginning  October 1, 2009.
While the Company has not yet evaluated  this  statement  for the impact,  if any, that
SFAS No. 141(R) will have on its  consolidated  financial  statements,  the  Company
 will be  required  to  expense  costs  related to any acquisitions  after September 30,
2009. The management is currently  evaluating the effect of this  pronouncement on
financial statements. 12






SIGNATURE Pursuant to
the  requirements  of Section 13 of the Securities  Exchange Act of 1934, the registrant
has duly caused this Amendment No. 1 to the Annual Report on Form 10-K to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  as of the 26th day of
August 2008. GREAT CHINA INTERNATIONAL HOLDINGS, INC. By:
     
     /s/ Jiang PengJiang Peng, Chairman of the Board(Principal Executive Officer)   13




INDEX TO FINANCIAL STATEMENTS Consolidated Financial Statements Great China International Holdings, Inc. Page Report of Independent
Registered Public Accounting
Firm...........................................................................................................F-2 Report of Independent
Registered Public Accounting
Firm...........................................................................................................F-3 Consolidated Balance
Sheet...........................................................................................................
.................................................F-4 Consolidated Statements
of
Operations..........................................................................................................................................F-6 Consolidated Statements
of Stockholders Equity..........................................................................................................................F-7 Consolidated Statements
of Cash
Flows.........................................................................................................................................F-8 Notes to the
Consolidated Financial
Statements.............................................................................................................................F-9 F-1




Report of Independent Registered Public
Accounting Firm Board of Directors and
Stockholders of Great China International Holding, Inc. and subsidiaries, We
have  audited  the  accompanying  consolidated  balance  sheet of  Great  China
 International  Holdings,  Inc.  and subsidiaries,  (a Nevada  corporation) as of
December 31, 2007, and the related  consolidated  statements of operation, stockholders'
 equity,  and cash flows for the year ended December 31, 2007. These  consolidated
 financial  statements are the responsibility of the Company's  management.  Our
responsibility is to express an opinion on these consolidated financial statements based
on our audit. The consolidated  financial statements of Great China International
 Holdings, Inc. and  subsidiaries  as of December 31, 2006 and 2005 were  audited by
other  auditors  whose report dated April 10, 2008, expressed an unqualified opinion on
those statements. We
conducted  our audit in accordance  with the  standards of the Public  Company
 Accounting  Oversight  Board (United States).  Those standards require that we plan and
perform the audits 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 financial
 statements.  An audit also includes  assessing the accounting  principles  used  and
 significant  estimates  made  by  management,  as  well as  evaluating  the  overall
consolidated financial statement presentation. We believe that our audit provide a
reasonable basis for our opinion. In
our opinion, the consolidated  financial statements referred to above present fairly, in
all material respects,  the consolidated  financial  position of Great China
 International  Holdings,  Inc. and  subsidiaries,  as of December 31, 2007, and the
consolidated  results of their operations and their  consolidated  cash flows for the
year ended December 31, 2007, in conformity with U.S. generally accepted accounting
principles. As discussed in Note 18,
the consolidated financial statements for the year ended December 31, 2007 have been restated. /s/ Kabani & Company,
Inc.Certified Public Accountants Los Angeles, California
February 27, 2008, except for Note 8, 12 and 18, which are as of August 21, 2008. F-2




Report of Independent Registered Public
Accounting Firm We
have  audited  the  accompanying  consolidated  balance  sheet of Great  China
 International  Holdings,  Inc. as of December 31,  2006 and the related consolidated
statements of operations,  stockholders equity, and cash flows for the years  ended
 December 31,  2006  and  2005.  These  financial  statements  are  the  responsibility
 of the  Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit. We
conducted  our audit in accordance  with the  standards of the Public  Company
 Accounting  Oversight  Board (United States).  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.  The Company is not required to
have, nor were we engaged to perform,  an audit of its internal  control over financial
 reporting.  Our audit included  consideration of internal  control over  financial
 reporting as a basis for designing  audit  procedures  that are  appropriate  in the
circumstances,  but not for the  purpose of  expressing  an  opinion on the
 effectiveness  of the  Companys  internal control over financial  reporting.
 Accordingly,  we express no such opinion.  An audit also includes  examining,  on a test
basis,  evidence supporting the amounts and disclosures in the consolidated  financial
 statements,  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 provides a reasonable basis for our opinion. In
our opinion, the financial  statements referred to above present fairly, in all material
respects,  the consolidated financial  position  of Great  China  International
 Holdings,  Inc.  as of  December 31,  2006 and the  results of its consolidated
 operations and its consolidated cash flows for the years ended December 31,  2006 and
2005, in conformity with accounting principles generally accepted in the United States of
America. As
discussed in Note 2 to the financial  statements the financial  statements  have been
restated for the correction of errors related to construction costs and the allocation of
common area costs. The
accompanying  financial  statements have been prepared  assuming that the Company will
continue as a going concern. The  Company  had a working  capital  deficit of
 $51,178,976  and was in default  on  $35,962,914  of bank loans as of December 31,
 2006.  These  matters  raise  substantial  doubt  about the ability of the Company to
continue as a going concern.  The  financial  statements  do not  include  any
 adjustments  that  might  result  from the  outcome of this uncertainty. /s/ Murrell, Hall,
McIntosh & Co., PLLP Oklahoma City, Oklahoma
April 10, 2007 F-3




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                              CONSOLIDATED BALANCE SHEETS
                                               DECEMBER 31, 2007 AND 2006 2007
     
     2006ASSETSCurrent assets:Cash and equivalents
        
        
     $
        10,044,579
        
     
     $
        1,769,744Accounts receivable, net
     325,058
        
     
     1,454,164Receivable on disposal of subsidiaries
     30,701,957
        
     
     --Other receivable, net
     1,070,863
        
     
     2,731,463Properties held for resale
     7,696,437
        
     
     10,620,550Prepaid expenses
     --
        
     
     86,617Total current assets
     49,838,893
        
     
     16,662,538Property and equipment, net
     50,632,336
        
     
     43,894,578Construction in progress
     --
        
     
     9,372,189Total assets
     $100,471,229
        
     
     $69,929,305LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Short-term loans
     $25,231,297
        
     
     $51,308,184Accounts payable and accrued expenses
     8,615,415
        
     
     8,113,187Other payable
     5,723,489
        
     
     3,209,289Payable to disposed subsidiaries
     10,494,449
        
     
     --Commission payable
     8,898,502
        
     
     --Advances from buyers
     2,034,019
        
     
     3,004,011Amounts due to related companies
     --
        
     
     695,002Taxes payable
     8,552,316
        
     
     1,083,765Current portion of long-term debt
     --
        
     
     428,076Total current liabilities
     69,549,487
        
     
     67,841,514Long term debt, net of current portion shown above
     5,486,968
        
     
     1,999,465Total liabilities
     75,036,455
        
     
     69,840,979Stockholders' equity:Common stock, $.001 par value 50,000,000 shares authorized,11,759,966 issued and outstandingat December 31, 2007 and 11,782,036 at December 31,2006
     11,760
        
     
     11,783Additional paid in capital
     4,562,855
        
     
     4,542,308Statutory reserve
     638,128
        
     
     --Other comprehensive income
     1,468,546
        
     
     468,344Retained earning /(accumulated deficit)
     18,753,485
        
     
     (4,934,109
        )Total stockholders' equity
     25,434,773
        
     
     88,326Total liabilities and stockholders' equity
     $100,471,229
        
     
     $69,929,305 The accompanying notes are integral part of these consolidated financial statements. F-4




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                         FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 2007
        
     2006
        
     2005RevenuesReal estate sales
        
        
     $
        4,378,993
        
     
     $
        7,205,954
        
     
     $
        20,832,846Rental and management fee income
     5,296,635
        
     
     5,532,339
        
     
     5,691,262Total revenues
        
     9,675,627
        
     
     12,738,293
        
     
     26,524,108Cost of revenues
     5,980,853
        
     
     6,708,995
        
     
     18,765,799Gross profit
        
        
     
        3,694,774
        
     
     
        6,029,298
        
     
     
        7,758,309ExpensesOperating and selling expenses
     414,179
        
     
     1,824,710
        
     
     485,313Administrative expenses
     6,831,838
        
     
     3,860,917
        
     
     2,612,787Depreciation and amortization
     2,343,721
        
     
     2,051,664
        
     
     2,030,896Total expenses
     9,589,739
        
     
     7,737,291
        
     
     5,128,996Income (loss) from operations
     (5,894,965
        )
     
     (1,707,993
        )
     
     2,629,313Other income (expense)Land leveling income, net
     1,929,041
        
     
     --
        
     
     --Gain on settlement of debt
     11,115,201
        
     
     --
        
     
     --Loss on terminated project
     (1,504,604
        )
     
     --
        
     
     --Other income (expense)
     (642,577
        )
     
     1,268,529
        
     
     --Interest and finance costs
     (3,047,347
        )
     
     (3,275,175
        )
     
     (2,514,464
        )Total other income (expense)
     7,849,714
        
     
     (2,006,646
        )
     
     (2,514,464
        )Income (loss) before income taxes
     1,954,749
        
     
     (3,714,639
        )
     
     114,849Provision for income taxes
     1,514,810
        
     
     --
        
     
     34,455Net income (loss) from continuing operations
        
        
     439,939
        
     
     (3,714,639
        )
     
     80,394Discontinued operationsLoss from operations of subsidiary
        
     (61,271
        )
     
     (603,395
        )
     
     --Gain from disposal of subsidiary
     23,947,054
        
     
     571,232
        
     
     --Income (loss) from discontinued operations
     23,885,783
        
     
     (32,163
        )
     
     --Net income (loss)
     24,325,722
        
     
     (3,746,802
        )
     
     80,394Other comprehensive income:Foreign currency translation adjustment
     1,000,202
        
     
     268,605
        
     
     187,662Net comprehensive income (loss)
     $25,325,923
        
     
     $(3,478,197
        )
     
     $268,056Net income (loss) per share from continuing operationsBasic & diluted
        
        
     $0.04
        
     
     $(0.32
        )
     
     $0.01Net income (loss) per share from discontinued operationsBasic & diluted
        
     $2.03
        
     
     $(0.00
        )
     
     $--Net income (loss) per shareBasic & diluted
     $2.07
        
     
     $(0.33
        )
     
     $0.01Weighted average number of shares outstanding:Basic & diluted
     11,759,966
        
     
     11,439,751
        
     
     10,777,436 The accompanying notes are integral part of these consolidated financial
statements. F-5




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                              STATEMENTS OF CONDENSED CONSOLIDATED STOCKHOLDERS' EQUITY
                                FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 Common Stock
     Additional
     AccumulatedOther Comprehensive
     Statutory
     Retained Earnings/
     Total Shareholder'sShares
     Amount
     Paid in Capital
     Income
     Reserve
     (Accumulated Deficit)
     EquityBalance, December 31, 2005
     
     
     
        11,097,466
        

     $
        11,098
        

     $
        1,550,878
        

     $
        199,739
        

     $
        --
        

     $
        (1,187,307
        )

     $
        574,408Employee stock options
     --
        

     --
        

     513,835
        

     --
        

     --
        

     --
        

     513,835Net loss for the year ended December 31, 2006
     --
        

     --
        

     --
        

     --
        

     --
        

     (3,746,802
        )

     (3,746,802
        )Share issuance
     684,570
        

     685
        

     2,777,595
        

     --
        

     --
        

     --
        

     2,778,280Share issuance costs
     --
        

     --
        

     (300,000
        )

     --
        

     --
        

     --
        

     (300,000
        )Exchange gain
     --
        

     --
        

     --
        

     268,605
        

     --
        

     --
        

     268,605Balance, December 31, 2006
     11,782,036
        

     11,783
        

     4,542,308
        

     468,344
        

     --
        

     (4,934,109
        )

     88,326Reconciliation of stock
     (22,070
        )

     (23
        )

     23
        

     --
        

     --
        

     --
        

     --Stock option to non-employee director
     --
        

     --
        

     20,524
        

     --
        

     --
        

     --
        

     20,524Transfer to Statutory reserve
     --
        

     --
        

     --
        

     --
        

     638,128
        

     (638,128
        )

     --Net loss for the year ended December 31, 2007
     --
        

     --
        

     --
        

     --
        

     --
        

     24,325,722
        

     24,325,722Change in exchange rate fluctuation reserve
     --
        

     --
        

     --
        

     1,000,202
        

     --
        

     --
        

     1,000,20211,759,966
        

     $11,760
        

     $4,562,855
        

     $1,468,546
        

     $638,128
        

     $18,753,485
        

     $25,434,773 The accompanying notes are integral part of these
consolidated financial statements. F-6




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 2007
        
     2006
        
     2005Cash flows from operating activities:Net income (loss)
        
        
     $
        24,325,722
        
                
     $
        (3,746,802
        )
        
     $
        80,394Adjustments to reconcile net income (loss) to operating activities -Depreciation and amortization
        
        
     
       2,343,721
        

     
        2,051,664
        

     
        2,030,896Loss on terminated project - restated in 2007
        
        
     
       1,504,604
        

     
        --
        

     
        --Gain on settlement of debt - restated in 2007
        
        
     
       (11,115,201
        )

     
        --
        

     
        --(Reduction in) Provision for doubtful accounts
     3,731,419
        

     (335,421
        )

     380,917Non-cash stock compensation expense
     20,524
        

     513,835
        

     --Loan closing costs
     --
        

     723,612
        

     --(Increase)/decrease in assets:Restricted cash
     --
        

     482,548
        

     313,790Accounts receivable and other receivable
     1,916,364
        

     (600,796
        )

     (107,552
        )Other receivable
     (3,135,764
        )

     810,702
        

     --Advances to suppliers
     --
        

     --
        

     (1,967,923
        )Prepaid expenses
     778,975
        

     1,236,771
        

     --Amounts due from related parties
     --
        

     --
        

     (2,658,985
        )Properties held for resale
     3,540,825
        

     3,945,587
        

     19,970,035Increase/(decrease) in liabilities:Accounts payable and other payables and accrued expenses
     24,358,712
        

     (532,399
        )

     (3,204,643
        )Deposits held
     --
        

     (87,443
        )

     --Advances from buyers
     (91,924
        )

     186,455
        

     (10,461,701
        )Income and other taxes payable
     2,242,023
        

     428,996
        

     528,002Net cash provided by operating activities from continuing operations
        
        
     
        50,420,001
        

     
        5,077,309
        

     
        4,903,230Net cash provided by/(used in) operating activities from discontinued operations
     --
        

     (559,415
        )

     --Net cash provided by operating activities
     50,420,001
        

     4,517,894
        

     4,903,230Cash flows from investing activities:Construction in progress - restated in 2007
     8,126,213
        

     (6,466,661
        )

     (2,905,528
        )Purchases of property & equipment
     (7,354,196
        )

     (1,042,194
        )

     (4,286,032
        )Sale of property & equipment
     1,641,649
        

     117,053
        

     --Net cash provided by/(used in) investing activities from continuing operations
     2,413,667
        

     (7,391,802
        )

     (7,191,560
        )Net cash used in investing activities from discontinued operations
     (30,701,958
        )

     --
        

     --Net cash used in investing activities
        
        
          
        (28,288,291
        )

     
        (7,391,802
        )

     
        (7,191,560
        )Cash flows from financing activities:Loan proceeds
     --
        

     76,835,664
        

     15,219,295Loan repayments - restated in 2007
     (14,676,812
        )

     (87,664,216
        )

     (1,744,565
        )Advances from (to) directors and affiliated companies
        
        
     
        (430,262
        )

     
        1,828,512
        

        
        --Dividends
     --
        

     --
        

     (1,133,510
        )Proceeds from stock issuance, net of offering costs
     --
        

     2,478,280
        

     (163,186
        )Net cash used in financing activities from continuing operations
     (15,107,074
        )

     (6,521,760
        )

     12,178,034Net cash used in financing activities from discontinued operations
     --
        

     --
        

     --Net cash provided by (used in) financing activities
     (15,107,074
        )

     (6,521,760
        )

     12,178,034Effect of exchange differences
     1,250,198
        

     268,605
        

     187,662Net increase (decrease) in cash and cash equivalents
     8,274,835
        

     (9,127,063
        )

     10,077,366Cash and cash equivalents, beginning of period
     $1,769,744
        

     $10,896,807
        

     $819,441Cash and cash equivalents, end of period
     $10,044,579
        

     $1,769,744
        

     $10,896,807Supplemental disclosures of cash flow information:Interest paid
     $2,382,280
        

     $3,275,175
        

     $1,880,670Income taxes
        
        
     $521,211
        

     $--
        

     $607,457Supplemental disclosures of non- cash investing and financing activities:Transfer of properties held for sale to property & equipment
     $430,691
        

     $249,129
        

     $3,671,990 The accompanying notes are integral part of these consolidated financial statements. F-7




GREAT
CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER
31, 2007 1.
Description
of business  Nature of organization Great China International Holdings,  Inc., (the Company )
was incorporated in the State of Nevada on December 4, 1987, under the      name of
Quantus Capital,  Inc., and in 1992, it changed its name to Red Horse Entertainment
 Corporation.  Effective July 5, 2005,      the Company  completed the  acquisition of
 Silverstrand  International  Holdings  Limited  (Silverstrand),  a Hong Kong limited
     liability company,  by issuing 10,102,333 shares of its common voting stock to the
former stockholders of Silverstrand in exchange      for all of the capital stock of
Silverstrand.  For financial  reporting purposes the acquisition was treated as a
recapitalization      of  Silverstrand.  On September 15, 2005, the Company changed its
name to Great China  International  Holdings,  Inc. Prior to its      acquisition of
Silverstrand, the Company was not engaged in active business operations. Silverstrand was incorporated on September 30, 2004 in
Hong Kong Special  Administrative Region, in the Peoples Republic of China      (PRC)
with an authorized capital of $12,820,513 divided into 100 million ordinary shares of par
value $0.12 per share. During October of 2004,  Silverstrand  acquired all of the
outstanding  capital of Shenyang Maryland  International  Industry Co.,      Limited
(Shenyang Maryland) for $5,000,000, payable to its former owners as follows: 
     Jiang Fang as to $4,350,000;
     Jiang Peng as to $500,000; and,
     Pay $50,000 to each of Duan Jing Shi, Li Guang Hua and Wang Li Rong This transaction was treated as a recapitalization  of
Shenyang Maryland for financial  reporting purposes and the excess purchase      was
treated as dividends to shareholders. On November 23, 2004 the Ministry of Commerce and Business
Registration issued a business  registration  certificate approving the
     reclassification of Shenyang Maryland as a wholly owned foreign enterprise. Pursuant to several  agreements  dated December 8, 2005
and December 28, 2005, the Company,  through its  subsidiaries,  agreed to      acquire
in 2006 a 100  percent  interest  in the land use rights for the Xita  Project.  First,
 pursuant  to a sale and  purchase      agreement dated December 8, 2005,  subsequently
amended on December 28, 2005, the Company acquired,  through Shenyang Maryland, 70
     percent of the equity interest in Shenyang Xinchao Development Co. Limited  (Xinchao),
 a Sino-Foreign joint venture corporation      that owns approximately 66 percent of the
land use rights of the Xita Project,  from Shenyang Yunfeng Real Estate Development Co.,
     Limited  (Yunfeng).  The Company acquired the remaining 30 percent equity interest
in Xinchao through Silverstrand from Sapphire      Corporation Limited on December 28,
2005. The remaining  approximately  34 percent  interest in the
land use rights of the Xita Project is held by Shenyang  Yindu  Property      Co.,
Limited  (Yindu),  also a Sino-Foreign  joint venture.  Pursuant to agreements dated
December 28, 2005,  Shenyang  Maryland      acquired 70 percent  interest in Yindu from
 Yungfeng,  and  Silverstrand  acquired  30 percent  interest in Yindu from  Sapphire.
     Following the closing of these  transactions,  the Company holds,  through its
subsidiaries,  100 percent interest in the land use      rights comprising the Xita
Project. Shenyang Xinchao Property Company Limited  (Xinchao) was
registered on August 16, 2005 in Shenyang,  Liaoning  Province,  in the      PRC with a
registered  capital of $12,330,456 (RMB  100,000,000) and a defined period of existence
of 11 years to August 15, 2016.      Shenyang Yindu Property Company Limited  (Yindu)
was registered on August 16, 2005 in Shenyang,  Liaoning  Province,  in the PRC      with
a registered capital of $6,615,228 (RMB 50,000,000) and a defined period of existence of
11 years to August 15,  2016.Xinchao      and Yindu were  formed to develop a certain
 tract of property  located in the Heping  District of  Shenyang,  and will  feature a
     construction  area of almost 500,000  square meters with a linear site area of
 approximately  101,000  square  meters.  The local      government of Heping District of
Shenyang  received back the land use rights of F-8




the
Xita project because of new developing plan of      the district.  Heping  District
 refunded the land usage right paid by Xinchao and  reimbursed  the  development  cost
incurred by      Xinchao. Shenyang
Jitian Property Company Limited (Jitian) was registered on February 22, 2006 in
Shenyang Liaoning Province,  in the PRC      with a registered  capital of $616,523
 (Rmb.5,000,000)  and a defined  period of  existence of 15 years to February 22, 2021.
 On      March 7, 2006, the registered  capital  increased to  $20,000,000  from
$616,523.  Jitian was formed to develop a certain tract of      property located in
Chessboard Mountain Tourism Development District of Shenyang, China. In
December,  2006,  Silverstrand completed an agreement for the sale of all of the
outstanding equity interest in Shenyang Jitian      Property Company, Ltd., (Jitian). Under
the agreement  Beijing Capital Land Limited and Reco Ziyang Pte Limited purchased Jitian
from Silverstrand in exchange for a      total cash payment of $1,399,970 and assumption
of all bank debt incurred by Jitian in connection  with the  acquisition of Galaxy
     Bay, which will result in a release of guaranties provided by Shenyang Maryland. On
August 7, 2007, the Company  completed the  acquisition  of all of the issued share
capital of Loyal Best Property  Development      Limited (Loyal Best), a Hong Kong
limited company, from Gentle Knight Limited (GKL). Loyal
Best is the sole owner of an entity called Shenyang Loyal Best Hunnan Property
 Development Limited (Shenyang Loyal Best),      a wholly owned foreign enterprise that
is a party to a Confirmation  Letter of Auction with respect to a parcel of land located
at      the center area of Hunnan New Zone in the city of Shenyang,  China (the Project).
 Immediately  after  acquisition,  the Company      decided to sell Loyal Best at a gain. The
Company,  through its  wholly-owned  subsidiary -  Silverstrand,  transferred  100% of
the issued share  capital of Loyal Best      Property  Development Limited to Celebrities
 Realestate  Development Group Co., Ltd. in exchange for the payment of approximately
     $48.70  million(360  million Chinese yuan).  The transaction was closed on December
15, 2007. As of December 31, 2007, the Company      received $18 million out of the total
$48.70  million.  Subsequently  in April 2008,  the Company  received the remaining
 balance      amounting to $30.70 million on disposal of subsidiary. The
Company engages in the development  and sale of high quality real estate  properties and
developed  residential and commercial      properties includes Maryland building,
 President buildings, Qiyuan new village, Peacock Garden, and Chenglong Garden. The
Company      also  engages in rental of  commercial  buildings  in the City of Shenyang,
 China.  Shenyang  Maryland,  the  Companys  indirect      wholly-owned subsidiary,  was
one of the first private property developers and retailers in China. For the year ended
December 31,      2007,  the  proceeds  from the sales of  properties  constituted  45%
percent of the total  revenue,  with the  remaining  revenue      consisting  primarily
 of rental  income.  For the year  ended  December  31,  2006,  the  proceeds  from the
sales of  properties      constituted 57 percent of the total revenue,  with the
remaining revenue consisting primarily of rental income. For the year ended      December
31, 2005,  the proceeds  from the sales of properties  constituted  79 percent of the
total  revenue,  with the remaining      revenues consisting primarily of rental income. 2.
Summary
of significant accounting policies The
accompanying  consolidated financial statements have been prepared in conformity with
accounting principles generally accepted      in the United  States of America.  The
Companys  functional  currency is the Chinese  Renminbi  (CNY);  however the
 accompanying      consolidated financial statements have been translated and presented
in United States Dollars ($) on the basis set forth below. The
following is a summary of significant accounting policies: Principles
of Consolidation All significant inter-company transactions and balances within
the Company are eliminated in consolidation. Cash
and equivalents The Company considers all highly liquid debt instruments purchased
with maturity period of three months or less to be cash equivalents. The carrying
amounts reported in the accompanying consolidated balance sheet for cash and cash
equivalents approximate their fair value. Substantially all of the Companys cash
is held in the PRC and is not protected by FDIC or any other form of insurance. F-9




Accounts
receivable- Provision is made against accounts receivable to the extent which they
are considered to be doubtful. Accounts receivable in the balance sheet is stated
net of such provision. Allowance
for Doubtful Accounts The Company maintains reserves for potential credit losses on
accounts receivable. Management reviews the composition of accounts receivable
and other receivable and analyzes historical bad debts, customer concentrations,
customer credit worthiness, current economic trends and changes in customer
payment patterns to evaluate the adequacy of these reserves. As of December 31,
2007 and 2006, the Company reserved $5,174,895 and $1,443,476 respectively. Advances
from buyers Advances from buyers represents prepayments from buyers on properties on
which sales revenues have not yet been recognized for financial reporting purposes. Properties
held for sale The Company capitalizes as properties held for sale, the direct
construction and development costs, property taxes, interest incurred on
costs related to land under development and other related costs (i.e. engineering,
surveying, landscaping, etc.) until the property reaches its intended use. At
December 31, 2007 and 2006, properties held for sale amounted to $7,696,437 and
$10,620,550 respectively. Property
and equipment Property and equipment is being depreciated over the estimated
useful lives of the related assets. Depreciation is computed on the straight-line
basis over useful lives as follows: Building and land use rights
     8-26 yearsLeasehold improvements
     20 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixtures
     5 years As
of December 31, 2007 Property, Plant & Equipment consist of the following: Building
     
     $
     58,605,918Automobile
     
     
     1,115,768Office equipment & furnitures
     
     
     948,066Other
     
     
     10,93060,680,682Accumulated depreciation
     
     
     (10,048,346)Property and equipment, net
     
     $
     50,632,336 Depreciation
 expense for the years  ended  December  31,  2007,  2006 and 2005  totaled  $2,343,721,
 $2,051,664  and  $2,030,896      respectively. Repairs
and  maintenance  costs are normally  charged to the statement of  operations  in the
year in which they are incurred.  In      situations where it can be clearly
 demonstrated  that the expenditure has resulted in an increase in the future economic
benefits      expected to be obtained from the use of the asset, the expenditure is
capitalized as an additional cost of the asset. Property
and equipment are  evaluated  annually for any  impairment  in value.  Where the
 recoverable  amount of any property and      equipment is determined  to have  declined
 below its carrying  amount,  the carrying  amount is reduced to reflect the decline in
     value. There were no property and equipment impairments recognized during the years
ended December 31, 2007, 2006 and 2005. As
of  December  31, 2007 fixed  assets  totaling  $37,279,344  have been  pledged as
 securities  to various  banks in respect of      borrowings totaling $30,233,196 and
mortgage loans of $485,069. Construction-in-progress Properties currently under development are accounted for as
construction-in-progress. Construction-in-progress is recorded at acquisition
cost, including land rights cost, development expenditure, professional fees and
the interest expenses capitalized during the course of construction for the purpose of
financing the project. Upon completion and readiness for use of the project, the
cost of construction-in-progress is to be transferred to properties held for sale. F-10




Construction-In-Progress
 is valued at the lower of cost or market.  Management  evaluates the market value of its
properties on a      quarterly basis by comparing  selling prices of its properties with
those of other  equivalent  properties in the vicinity offered      by other  developers
 reduced by  anticipated  selling  costs and  associated  taxes.  In the case of
 construction  in  progress,      management  takes  into  consideration  the  estimated
 cost to  complete  the  project  when  making  the lower of cost or market
     calculation. As
of December 31, 2007 and 2006, the Company had construction-in-progress amounting $0 and
$9,372,189 respectively. Revenue
Recognition Real
estate sales Real
estate sales are reported in accordance  with the provisions of SFAS No. 66,  Accounting
 for Sales of Real Estate.  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  (1) the  parties  are
 bound  by the  terms  of a  contract,  (2) all      consideration  has been  exchanged,
 (3) any permanent  financing of which the seller is responsible  has been  arranged,
 (4) all      conditions  precedent to closing have been performed,  (5) the seller does
not have  substantial  continuing  involvement with the      property,  and (6) 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. For
land sales, the Company  recognizes the revenue when title of the land development right
is transferred and  collectability is      assured. For
the reimbursement on infrastructure  costs, the Company recognizes the income(loss),
 which is at the fair market value agreed      between  the  Company  and the PRC
 government,  when they enter into a binding  agreement  with the  government  agreeing
 on the      reimbursement. Real
Estate Capitalization and Cost Allocation Real
estate held for  development or sale consists of residential and commercial  units under
 construction  and units  completed.      Construction in progress includes costs
associated in development and construction of the Xita project Real
estate held for development or sale is stated at cost or estimated net realizable  value,
 whichever is lower.  Costs include      land and land  improvements,  direct
 construction  costs and  development  costs,  including  predevelopment  costs,
 interest on      indebtedness,  real estate taxes,  insurance,  construction overhead
and indirect project costs. Selling and advertising costs are      expensed as incurred.
 Total  estimated  costs of multi-unit  developments  are allocated to individual  units
based upon specific      identification methods. If
the real  estate is  determined  to be  impaired,  it will be written  down to its fair
 market  value.  Real  estate  held for      development or sale costs include the cost
of land use rights,  land development and home construction  costs,  engineering costs,
     insurance costs,  wages,  real estate taxes, and interest  related to development
and  construction.  All costs are accumulated by      specific  projects and allocated to
residential and commercial units within the respective  projects.  The Company leases the
land      for the residential unit sites under land use rights with various terms from
the government of the PRC. The Company  evaluates the      carrying value for impairment
based on the undiscounted future cash flows of the assets.  Write-downs of inventory
deemed impaired      would be recorded as adjustments to the cost basis. No
depreciation is provided for construction in progress. Capitalization
of Interest In
accordance with SFAS 34, interest incurred during  construction is capitalized to
construction in progress.  All other interest      is expensed as incurred.  During the
year ended December 31, 2007, the Company did not have any construction therefore no
interest      was capitalized. F-11




Other
income Other
income consists of land leveling income,  which was one-time service performed which was
requested by our customers and gain      on settlement of debt.  These revenues are
 recognized  when the services have been performed and the settled amount has been paid
     in accordance with the terms of the agreement. Foreign
currencies- The Companys principal country of operations is in The Peoples
Republic of China. The financial position and results of operations of the
Company are determined using the local currency (Renminbi or Yuan)
as the functional currency. The results of operations denominated in foreign
currency are translated at the average rate of exchange during the reporting
period. Assets
and  liabilities  of the Company have been  translated at year- end exchange  rates,
 while revenues and expenses have been      translated at average exchange rates in
effect during the year.  Resulting cumulative  translation  adjustments have been
recorded      as other comprehensive income (loss) as a separate component of
stockholders' equity. Equity
 denominated  in the  functional  currency  is  translated  at the  historical  rate of
 exchange  at the  time of  capital      contribution.  All translation  adjustments
resulting from the translation of the financial statements into the reporting currency
     (US Dollars) are dealt with as an exchange fluctuation reserve in
shareholders equity. Earnings
Per Share Basic earnings per share is computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted-average number of
common shares and dilutive potential common shares outstanding during the period. As
of December 31, 2007 and 2006, there were no outstanding  securities or other contracts
to issue common stock, such as options,      warrants or conversion  rights,  which would
have a dilutive effect on earnings per share as the effect of options  outstanding at
     that time was anti- dilutive. Fair
value of financial instruments The carrying amounts of certain financial
instruments, including cash, accounts receivable, commercial notes receivable,
other receivables, accounts payable, commercial notes payable, accrued expenses, and
other payables approximate their fair values as at December 31, 2007 and 2006,
because of the relatively short-term maturity of these instruments. Use
of estimates The preparation of financial statements in accordance with generally
accepted accounting principles require management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Stock-based
compensation In December 2004, the FASB issued SFAS No. 123 (revised 2004),
Share-Based Payment (SFAS 123R), which requires the
measurement of all employee share-based payments to employees, including grants of
employee stock options, using a fair-value-based method and the recording of such
expense in the consolidated statements of operations. In March 2005, the SEC
issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the SECs
interpretation of SFAS 123R and the valuation of share-based payments for
public companies. The Company has adopted SFAS 123R and related FASB Staff Positions
(FSPs) as of January 01, 2006 and recognizes stock-based compensation
expense using the modified prospective method. Concentrations
of business and credit risk Financial instruments that potentially subject the
Company to concentrations of credit risk are cash, accounts receivable and other
receivables arising from its normal business activities. The Company places its
cash in what it believes to be credit-worthy financial institutions. The Company has
a diversified customer base, most of which are in China. The
 Company  controls  credit risk  related to  accounts  receivable  through  credit
 approvals,  credit  limits and  monitoring      procedures.  The Company routinely
assesses the financial strength of its customers and, based upon factors surrounding the
credit      risk,  establishes  an  allowance,  if required,  for  uncollectible
 accounts and, as a  consequence,  believes that its accounts      receivable credit risk
exposure beyond such allowance is limited. Recent
accounting pronouncements In September 2006, FASB issued SFAS 157 Fair Value
Measurements. This Statement defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement applies under
other accounting pronouncements that require or permit fair value measurements, F-12




the
Board having previously concluded in those accounting pronouncements that fair value is
the relevant      measurement attribute.  Accordingly, this Statement does not require
any new fair value measurements.  However, for some entities,      the application of
this Statement will change current  practice.  This Statement is effective for financial
 statements issued for      fiscal years  beginning  after  November 15, 2007,  and
interim  periods  within those fiscal years.  The  management is currently
     evaluating the effect of this pronouncement on financial statements. In
September  2006, FASB issued SFAS 158 Employers  Accounting for Defined  Benefit
 Pension and Other  Postretirement  Plans  an      amendment of FASB  Statements No. 87,
88, 106, and 132(R) This Statement  improves  financial  reporting by requiring an
employer      to recognize the over funded or under funded status of a defined benefit
 postretirement  plan (other than a  multiemployer  plan)      as an asset or liability
in its  statement of  financial  position and to recognize  changes in that funded
 status in the year in      which  the  changes  occur  through  comprehensive  income of
a  business  entity  or  changes  in  unrestricted  net  assets of a      not-for-profit
 organization.  This  Statement  also improves  financial  reporting by requiring an
employer to measure the funded      status of a plan as of the date of its year-end
 statement of  financial  position,  with  limited  exceptions.  An employer  with
     publicly traded equity securities is required to initially  recognize the funded
status of a defined benefit  postretirement  plan      and to provide the required
 disclosures  as of the end of the fiscal year ending after  December  15, 2006.  An
employer  without      publicly  traded equity  securities is required to recognize the
funded  status of a defined  benefit  postretirement  plan and to      provide the
 required  disclosures  as of the end of the fiscal year ending  after June 15,  2007.
 However,  an employer  without      publicly  traded equity  securities is required to
disclose the following  information in the notes to financial  statements for a
     fiscal year ending after December 15, 2006,  but before June 16, 2007,  unless it
has applied the  recognition  provisions of this      Statement in preparing those
financial statements: a.     A brief description of the provisions of this Statement b.     The date that adoption is required c.     The date the employer plans to adopt the recognition provisions of this Statement,
if earlier. The
 requirement  to measure plan assets and benefit  obligations as of the date of the
employers  fiscal  year-end  statement of      financial  position is effective
 for fiscal years ending after  December 15, 2008.  The  management is currently
 evaluating  the      effect of this pronouncement on financial statements. In
February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial
 Assets and Financial  Liabilities.  FAS      159 is  effective  for fiscal  years
 beginning  after  November  15,  2007.  Early  adoption  is  permitted  subject to
 specific      requirements  outlined  in the new  Statement.  Therefore,  calendar-year
 companies  may be able to adopt FAS 159 for their first      quarter 2007 financial
statements. The
new Statement allows entities to choose, at specified  election dates, to measure
eligible financial assets and liabilities at      fair value that are not  otherwise
 required  to be  measured  at fair  value.  If a company  elects the fair value  option
for an      eligible item, changes in that item's fair value in subsequent  reporting
periods must be recognized in current earnings.  FAS 159      also  establishes
 presentation  and disclosure  requirements  designed to draw comparison  between
 entities that elect different      measurement  attributes  for  similar  assets  and
 liabilities.  The  management  is  currently  evaluating  the  effect  of this
     pronouncement on financial statements. In
December 2007, the FASB issued SFAS No. 160, Noncontrolling  Interests in
Consolidated Financial Statements.  This Statement      amends ARB 51 to establish
 accounting and reporting  standards for the  noncontrolling  (minority)  interest in a
subsidiary and      for the  deconsolidation  of a subsidiary.  It clarifies that a
noncontrolling  interest in a subsidiary is an ownership interest      in the
 consolidated  entity  that  should be  reported  as equity in the  consolidated
 financial  statements.  SFAS No.  160 is      effective  for the  Companys  fiscal
year  beginning  October 1, 2009.  Management  is currently  evaluating  the effect of
this      pronouncement on financial statements. In
March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
 Instruments and Hedging Activities.  The new      standard is intended to improve
financial  reporting about derivative  instruments and hedging  activities by requiring
 enhanced      disclosures to enable investors to better  understand their effects on an
entitys  financial  position,  financial  performance,      and cash flows. It is
effective for financial  statements  issued for fiscal years and interim  periods
 beginning after November      15, 2008,  with early  application  encouraged.  The new
standard  also improves  transparency  about the location and amounts of      derivative
 instruments in an entitys financial  statements;  how derivative  instruments and
related hedged items are accounted      for under  Statement  133; and how  derivative
 instruments  and related  hedged items affect its financial F-13




position,
 financial performance, and cash flows. Management is currently evaluating the effect of
this pronouncement on financial statements. In
December 2007, the FASB issued SFAS No.  141(R),  Business  Combinations.
 This  Statement  replaces SFAS No. 141,  Business      Combinations.  This Statement
 retains the fundamental  requirements  in Statement 141 that the acquisition  method of
accounting      (which Statement 141 called the purchase  method) be used for all
business  combinations and for an acquirer to be identified for      each business
 combination.  This Statement also establishes  principles and requirements for how the
acquirer: a) recognizes and      measures in its financial statements the identifiable
assets acquired,  the liabilities assumed, and any noncontrolling  interest      in the
acquiree;  b) recognizes and measures the goodwill acquired in the business  combination
or a gain from a bargain purchase      and c) determines what  information to disclose to
enable users of the financial  statements to evaluate the nature and financial
     effects  of the  business  combination.  SFAS No.  141(R)  will  apply
 prospectively  to  business  combinations  for  which the      acquisition  date is on
or after Companys  fiscal year beginning  October 1, 2009.  While the Company has
not yet evaluated this      statement for the impact, if any, that SFAS No. 141(R) will
have on its consolidated  financial  statements,  the Company will be      required to
expense costs related to any  acquisitions  after  September 30, 2009.  The  management
is currently  evaluating  the      effect of this pronouncement on financial statements. Corrections
 of Errors  Two  significant  errors were  identified  during the quarter ended
June 30, 2006,  both of which will be      recorded as adjustments to the appropriate
prior accounting periods as required by SFAS 154. The
first error  involved  the  inaccurate  estimation  of  construction  costs on
 previously  completed  construction  projects.      Construction costs were
underestimated by $9,653,828 as detailed below: Peacock Garden
     $
     170,121Chenglong Garden
     
     1,564,231President Building
     
     7,919,476Total
     $
     9,653,828 Of
this balance $2,565,718  represented additional cost on units which had previously been
sold, $2,446,610 of which were on units      sold in prior fiscal years.  In addition,
 the  remaining  balance of $7,088,110  should have been  capitalized,  resulting in the
     understatement  of  depreciation  expense in the amount of $745,157 of which
 $594,041 was related to periods  prior to January 1,      2006. The
second error was the recording of common area costs on the President  Building in the
amount of $2,640,066 in properties  held      for resale rather than  allocating  the
costs to the usable space.  Correction  of this error  resulted in a charge  against
prior      years earnings in the amount of $432,492 and increased depreciation
expense in the current year of $104,420. The
 cumulative  effect of the  correction of the above two errors was a reduction in
earnings of $661,469 and  $582,525,  for the      years ended  December 31, 2005 and
2004,  respectively.  Basic and diluted  earnings per share was  decreased by $0.06 for
both of      the years ended December 31, 2005 and 2004. Retained
earnings as of December 31, 2004 was reduced by $2,229,149 related to the corrections of
these prior errors. These
 changes had no effect on income taxes as the Company had losses  during the years ended
 December 31, 2006 and 2005 and due      to net operating loss carry  forwards.  As of
December 31, 2006 the Company had a net deferred asset of  approximately  $1,000,000
     related to net  operating  loss carry  forwards of Enterprise  Income Taxes in the
PRC as of December 31, 2006.  This deferred tax      asset was subject to a 100%
valuation allowance at December 31, 2006. The
Company has amended the December 31, 2005 Form 10-KSB to reflect the correction of these
errors  retrospectively.  The Company      is in the  process of  amending  the
 September  30,  2005 Form  10-QSB,  the March 31,  2006 Form 10-QSB and the Form 8-K/A
dated      September 30, 2005 to reflect the correction of these errors retrospectively. Reclassifications
  Certain amounts in the 2006 financial  statements have been reclassified to
conform to the 2007 presentation.      These reclassifications had on effect on
previously reported results of operations or retained earnings. F-14




3.
Receivable
on disposal of subsidiaries  The
amount of receivable on disposal of  subsidiaries  as of December 31, 2007 and 2006 are
 $30,701,957 and $0 for the year ended      December 31, 2007 and 2006  respectively.
 The  receivable  balance was non interest  bearing,  unsecured  and due on demand.  The
     Company subsequently received the entire balance on disposal of subsidiary amounting to
$30,701,957 as of March 31, 2008. 4.
Properties
held for resale  Properties
held for resale at December 31, 2007 and 2006 by project is as follows: 2007
     2006Qiyun New Village
     
     
     $
        1,595,366
        

     $
        1,795,644Peacock Garden
        
        
     
        231,244
        

     
        312,584Chenglong Garden
        
        
     
        5,250,960
        

     
        7,712,615President Building
        
        
     
        204,801
        

     
        412,167Maryland Building
        
        
     
        251,358
        

     
        234,322Others
        
        
     
        162,708
        

     
        153,218Total
        
        
     $
        7,696,437
        

     $
        10,620,550 As
of December 31, 2007 and 2006, the carrying values of stock of properties of $484,764 and
$10,605,909     have been pledged as      security for the Companys bank loans and
mortgage loans. The
Company introduced a Five-year Trial  Accommodation  Scheme (the Scheme)
to attract potential buyers when initial sales at      the project did not meet
 expectations.  Under the Scheme,  property buyers were required to pay a 10% refundable
deposit based on      the sale  price of the  property  or  $6,039  (RMB50,000)  and
 another  20%,  based on the sale  price of the  property  which is      non-refundable,
 over 5 years by monthly  installments,  totaling  30%  throughout  the trial  period.
 The  remaining  70% of the      consideration  shall be due and payable  immediately
after the trial period when the property buyers exercise their option whether      or not
to complete the purchase.  If the buyer chooses not to buy the property,  the 10%
refundable deposit or $6,039 (RMB 50,000)      will be refunded to the buyers (less any
unpaid  rental due) and monthly  installments  received over the 5-year trial period will
     have been recognized as rental income in the year in which they arose. As of
December 31, 2007,  $733,774 worth of properties held      for sale in Qiyun New  Village
 were  occupied by  individuals  who agreed to buy the  properties  without  fully
 having paid the      purchase consideration. $196,103 was advance from buyers for the
Scheme as of December 31, 2007. 5.
Amounts
due to related parties  The
amounts due to directors and related parties at December 31, 2007 and 2006 are as follows: 2007
     2006Amounts due to directorsFrank Jiang Fang
        
        
     $
        --
        

     $
        (418,708
        )Amounts due to other related partiesGong Wang Fu
        
        
     
        --
        

     
        (276,294
        )Amounts due to affiliates, net
        
        
     $
        --
        

     $
        (695,002
        ) Amounts
due to Frank Jiang Fang were unsecured, had no interest, and due on demand. The amount
due to Frank Jiang Fang was paid      in 2007. Amounts
due to Gong Wang Fu was adjusted against rent payment in the year 2007. F-15




6.
Accounts
payable and accrued expenses  Accounts
payable and accrued expenses comprised of following as of December 31, 2007 and 2006: 2007
        
     2006Accounts payable
     
     
     $
        6,090,281
        

     $
        6,544,877Payroll and welfare payable
        
        
     
        71,090
        

     
        38,424Interest and other accrued expenses
        
        
     
        2,454,043
        

     
        1,529,886Total
     $8,615,414
        

     $8,113,187 7.
Tax
payables  Tax
payables consist of the following as of December 31, 2007 and 2006: 2007

     2006Income tax payable
     
     
     $
        5,944,954
        

     $
        --Business tax
        
        
     
        519,634
        
        
     517,796Land VAT payable
     2,069,781
        

     773,462Other levies
     17,947
        

     (207,493
        )Total
     $8,552,316
        

     $1,083,765 8.
Payable to disposed subsidiary - restated  The Company has a loan payable to a disposed subsidiary, Loyal
Best Property Development Limited, amounting  to $10,494,449 as of December 31, 2007.  The loan was unsecured
with 12.024% per annum interest rate and due on demand. Subsequently, the Company paid $9,774,086 to Loyal Best and had a
balance due as of June 30, 2008 in the amount of $720,363. 9.
Short-term
loans  The short-term loans consist of the following as of
December 31, 2007 and 2006: Nature
     Due on
     Interest rate Annum

     12-30-2007Bank loan  in default
     
     
     
        12-31-2004
        
     
        7.56
        %
     
     $
        7,544,582Bank loan  in default
     12-21-2005
        
     9.7929
        %
     
     2,386,831Bank loan
     10-23-2008
        
     10.206
        %
     
     14,814,815Various datesMortgage loans
     till 6-12-2023
        
     4.2
        %
     
     485,069Total
        
        

        
        

        
        

     $25,231,297  F-16




Nature
     Due on
     Interest rate Annum

     12-30-2006Loans from Banks  in default
     
     
     
        12-31-2005
        
     
        9.7929
        %
     
     $
        2,225,06312-04-2003
        
     7.722
        %
     
     2,557,54512-30-2004
        
     6.0534
        %
     
     8,961,63613,744,244Loans from bank - due within 12 months
     11-05-2007
        
     7.254
        %
     
     15,345,270Bank loans purchased by asset management company
     12-04-2002
        
     7.722
        %
     
     479,53907-20-2003
        
     7.722
        %
     
     7,672,63509-07-2003
        
     7.722
        %
     
     8,951,40704-17-2004
        
     7.137
        %
     
     5,115,08922,218,670Total current loans payable
        
        

        
        

        
        

     $51,308,184  The
Company acted as an agent and borrowed  mortgage loans  amounting  $485,069 as of
December 31, 2007 under its employees  name      using  properties  held by the
Company.  All mortgage  loans were cleared till March 31, 2008 and the pledged assets
were released      too. On
June 22, 2006 the Company  entered  into a  settlement  agreement  with a bank with
 respect to  $8,230,453  ($7,544,582  as of      December  31, 2007) of past due notes.
 In  accordance  with the terms of this  settlement  agreement,  $1,228,163  loan
 interest      accrued as of December 31, 2007 may be waived if the Company repays the
loan principle per the installments  schedule. The Company      is required to pay back
the loan principal in a three step installments  started with the first payment amounting
 $685,871 due on      December 20, 2007 according to the agreement.  The Company paid the
first  installment on time as of December 31, 2007.  Assets of      the Company are
pledged against these bank loans. Subsequently
in February 4th, 2008, the Company paid off $2,386,831 bank loan which was in default as
of December 31, 2007. As
of December 31, 2007, 2006 and 2005, the Company incurred  interest  expense  amounting
 $3,103,715,  $2,397,927 and $2,502,092      respectively. The
Company had defaulted loans amounting to  $23,166,667  with due dates in 2003 and 2004.
 The  defaulted  loans  borrowed  from      Industrial  and  Commercial  Bank of China
were assigned to a third party.  The Company  entered into an agreement  with the third
     party on July 30, 2007 to buy back the loans for  $7,581,333 . As of September  30,
2007,  the total  consideration  of $7,581,333      was fully paid.  According to the
agreement,  the outstanding  interest payable associated with the non-performing  loan
amounting      to $439,014 was also forgiven as of December 31, 2007. The assets pledged
with the loan were released  before the year ended 2007.      As of December 31, 2007,
the Company realized gain on settlement of debt amounted to $11,115,201. F-17




10.
Long-term
debts  secured  2007
        
     2006Long term debts:Bank loans
        
     $5,486,968
        
        
     $--Mortgage loans
     --
        

     2,427,541Less: Current portion oflong-term debts
        
        

        --
        

     (428,076
        )Long-term debts
        
        
     $
        5,486,968
        

     $1,999,465 On
June 18, 2007 the Company  obtained a loan from a bank for $5,486,968 at an interest rate
of 8.775% before  September 15, 2007       and 9.711% after  September  15, 2007,  and is
due on June 12, 2009.  The loan is secured by fixed assets and land use rights the
      Company owned. Maturities
of long-term debt including mortgage loans for each of the next five years and thereafter
are as follows: Amount2008
     $
     --2009
     
     5,486,968Total
     $
     5,486,968  11.
Statutory
Reserve  In
 accordance  with the Chinese  Company  Law,  the Company has  established  a policy to
reserve 10% of its annual net income as      statutory reserve. The Company reserved
$638,128 and $0 for the years ended December 31, 2007 and 2006 respectively. 12.
Gain
on disposal of subsidiary - restated  1).
Disposal of Loyal Best Property Development Limited  On
August 7, 2007, the Company  completed the  acquisition  of all of the issued share
capital of Loyal Best Property  Development      Limited (Loyal  Best),  a
Hong Kong limited  company,  from Gentle Knight Limited  (GKL).  Loyal Best
was the sole owner of an      entity called Shenyang Loyal Best Hunnan Property
 Development  Limited (Shenyang Loyal Best), a wholly owned foreign
enterprise      that was a party to a  Confirmation  Letter of Auction  with  respect to
a parcel of land located at the center area of Hunnan New      Zone in the city of
 Shenyang,  China (the  Project).  Shenyang  Loyal Best paid a land  transfer
fee of  US$20,000,000  for the      Project. The acquisition was closed on August 7, 2007. The
consideration of acquisition comprised as follow: AmountConsideration paid for the acquisition
     $
     4,010,000Net assets of Loyal Best at acquisition
     
     (451,556
     )Goodwill on acquisition
     
     4,461,556  The following un-audited pro forma consolidated financial information for the period through disposal
(November 30, 2007), as presented below, reflects the results of operations of the Company assuming the
acquisition of Loyal Best occurred on January 1, 2007. These pro forma results have been prepared for
information purposes only and do not purport to be indicative of what operating results would have been
had the acquisition actually taken place on January 1, 2007, and may not be indicative of future
operating results. F-18




January 1, 2007 to November 30, 2007Net Revenues
     
     
     $
        9,675,627Operating income(5,956,884
        )Net Income
     $378,667Earnings/(loss) per share - basic & diluted
     $0.03  Immediately
after acquisition,  the Company decided to sell Loyal Best at a gain. The Company,
through its wholly-owned subsidiary      - Silverstrand,  transferred 100% of the issued
share capital of Loyal Best Property Development Limited to Celebrities Realestate
     Development  Group Co., Ltd. in exchange for the payment of approximately  $48.70
million.  The transaction was closed on November      30, 2007. As of December 31, 2007,
the Company  received $18 million out of the total $48.34  million.  Subsequently,  the
Company      received $30.70 million from sale of Loyal Best. As
of December 31, 2007,  the Company had a payable to disposed  subsidiaries  amounting to
 $10,494,449  and  commission  payable      amounting to $8,898,502 which was related to
disposal of subsidiaries. Following
is the detail information for gain on disposal of Loyal Best: AmountDisposal consideration
     
     
     $
        48,701,957Goodwill on acquisition
     (4,461,556
        )Net assets of Loyal Best at disposal
     (5,694,446
        )Commission fee and others
        
        
     
        (9,549,580
        )Total cost of investment at disposal
        
        
     
        (19,705,582
        )Gain on disposal of Loyal Best
     $28,996,375Income tax
     (5,049,321
        )Gain on disposal of Loyal Best, net
     $23,947,054Loss on discontinued operations
     $(61,271
        )Exchange difference on discontinued operations
     $(242,162
        )  2)
Disposal of Shenyang Jitian Property, Ltd.  In
December,  2006,  Silverstrand  completed  an  agreement  for the sale of all of the
 outstanding  interest in Shenyang  Jitian      Property Company, Ltd., (Jitian). Under
the agreement  Beijing Capital Land Limited and Reco Ziyang Pte Limited purchased Jitian
from Silverstrand in exchange for a      total cash payment of $1,399,970 and assumption
of all bank debt incurred by Jitian in connection  with the  acquisition of Galaxy
     Bay, which will result in a release of guaranties provided by Shenyang Maryland
International. The
components of the loss from discontinued operations are presented below: F-19




Period EndedNovember 16, 2006Administrative expenses
     
     
     $
        69,805Operating and selling expenses
     538,667Loss from operations
     (608,472
        )Other expenseInterest and finance costs
     (5,076
        )Loss from discontinued operations
     $(603,395 )Construction in progress
     $75,612,783Other current assets
     3,159,170Long term debt
     (76,726,343
        )Other current liabilities
     (1,216,872
        )Net assets sold
     828,738Sales proceeds
     1,399,970Gain from disposal of subsidiary
     $571,232 13.
Loss
on Termination Project  On
July 20, 2007, Xinchao and Yindu ceased  development on Xi Ta project and disposed off
the associated assets.  Shenyang Heping       District Investment Promotion Bureau of
local government,  the agency overseeing  development of the Xi Ta area, is expanding the
      project and, as a consequence of the  expansion,  reached an agreement with the
Company to re-acquire the land use rights for the       Xita Project in exchange for
refunding the land transfer fee of $4,437,397 and  reimbursing  the Company for amounts
 expended on       the development in the amount of $1,646,024.  On July 20, 2007, the
local government  approvals and procedures were completed for       transferring  the
land use rights back to the local  government and the Company  received  reimbursement of
the land transfer fee       and the amount expended on the  development in August 2007.
As of December 31, 2007, the Company had loss on termination  project       amounted to
$1,504,604. 14.
Stock
Options  On
January 31, 2007,  the Company  issued a  non-incentive  stock option for 10,000  shares
to a  non-employee  director  with an       exercise  price of $4.65 that will  expire on
January 31,  2009.  The options  vested and became  exercisable  over a term of two
      years. Compensation expense as of December 31, 2007 related to the outstanding
stock options was $20,524. Risk-free interest rate
     2.00%Expected life of the options
     2 yearExpected volatility
     83.76%Expected dividend yield
     0 %  Options
outstanding at December 31, 2007 and related weighted average price and intrinsic value
is as follows: ExercisePrices
     
     TotalOptionsOutstanding
     
     WeightedAverageRemainingLife(Years)
     
     TotalWeightedAverageExercise Price
     
     OptionsExercisable
     
     WeightedAverageExercise Price
     
     AggegrateIntrinsicValue$
     4.65
     
     
     
     10,000
     
     
     
     0.54
     
     
     $
     4.65
     
     
     
     4,583
     
     
     $
     4.65
     
     
     
     -- F-20




On
March 3, 2006 the Company issued to its Chief  Executive  Officer  options to purchase
 572,491 shares of its common stock at a      purchase price of $6 per share. The options
vest in five equal installments  beginning with the date of issuance in March 2006 and
     the following four anniversary  dates.  The options are exercisable  over a term of
five years from the date of vesting.  In March      2007 the Chief Executive Officer left
the Company and agreed to surrender all the vested option shares. On
March 15, 2006 the Company issued to an employee  options to purchase 245,350 shares of
its common stock at a purchase price of      $6.00 per share.  The options vest in five
equal  increments  beginning  with the date of issuance in March 2006 and the following
     four  anniversary  dates.  The options are  exercisable  over a term of five years
from the date of vesting.  In November 2006 the      employee left the Company and during
2007 agreed to surrender all the vested options shares. On
May 18, 2006 the Company  issued to its Chief  Financial  Officer  options to purchase
 10,000  shares of its common stock at a      purchase price of $11.00 per share.  The
options vest  immediately upon issuance and are exercisable over the one year period from
     the date of issuance.  The Chief Financial Officer subsequently left the Company and
has surrendered all options that were issued. On
October 1, 2006 the Company issued to an employee  options to purchase 10,000 shares of
its common stock at a purchase price of      $7.00 per share.  The options  vest in one
year from the date of issuance  and are  exercisable  over the one year period from the
     date of issuance.  These options were subsequently surrendered in February 2007. Expected volatility
     25%Weighted-average volatility
     25%Expected dividends
     0%Expected term (in years)
     1 to 5 yearsRisk-free rate
     4.5% A
summary of option activity as of December 31, 2007, and changes during the years then
ended is presented below: Options
     SharesOutstanding at January 1, 2007
     173,568Granted
     10,000Exercised
     --Forfeited or expired
     173,568Outstanding at December 31, 2007
     10,000Exercisable at December 31, 2007
     4,583  15.
Income
Tax  The
Company is registered in the State of Nevada and has operations in primarily three tax
 jurisdictions  the Peoples  Republic      of China, Hong Kong and the United
States. For operation in the US, the Company has incurred net accumulated  operating
losses for      income tax purposes The Company  believes that it is more likely than not
that these net accumulated  operating losses will not be      utilized in the future.
 Therefore, the Company has provided full valuation allowance for the deferred tax assets
arising from the      losses at these locations as of December 31, 2007. Accordingly, the
Company has no net deferred tax assets. The
provision for income taxes from  continuing  operations on income  consists of the
following for the years ended  December 31,      2007 and 2006: F-21




2007
     2006US current income tax expense (benefit)
     --
     --Federal
     $              
              --
     $              
              --State
     --
     --HK current income tax expense
     --
     --PRC current income tax expense
     1,514,810
     --Total provision for income tax
     $       1,514,810
     $       
                     -- There
was also income tax expense amounting $5,049,321 calculated at 17.5% of gain on disposal
of subsidiaries as of December 31,      2007, which has been net of gain on disposal of
subsidiaries. The
following is a reconciliation of the provision for income taxes at the U.S. federal
income tax rate to the income taxes      reflected in the Statement of Operations: 2007
     2006Tax expense (credit) at statutory rate - federal
     34%
     34%State tax expense net of federal tax
     6%
     6%Changes in valuation allowance
     (40%)
     (40%)Foreign income tax - HK
     0%
     0%Foreign income tax - PRC
     30%
     30%Tax expense at actual rate
     30%
     30% United
States of America As
of December  31,  2007,  the Company in the United  States had  approximately  $159,995
in net  operating  loss carry  forwards      available to offset future taxable income.
 Federal net operating  losses can generally be carried forward 20 years.  The deferred
     tax assets for the United States  entities at December 31, 2007  consists  mainly of
net  operating  loss carry  forwards and were      fully reserved as the management
believes it is more likely than not that these assets will not be realized in the future. The
following  table sets forth the  significant  components of the net deferred tax assets
for operation in the US as of December      31, 2007 and 2006. 2007
     2006Net operation loss (gain) carry forward
     $           (278,840)
     $        605,302Total deferred tax assets
     121,111
     31,099Less: valuation allowance
     (121,111)
     (31,099)Net deferred tax assets
     $           
      --
     $           
      --  16.
Other
comprehensive income  Balances
of related after-tax components comprising accumulated other comprehensive income (loss),
included in stockholders     equity, at December 31, 2007 are as follows: Foreign Currency  Translation  AdjustmentBalance at December 31, 2006
     
     
     $
        468,344Change for 2006
        
        
     
        1,000,202Balance at December 31, 2007
     $
        1,468,546  F-22




17.
Segment
Information Statement
of Financial  Accounting  Standards  No. 131 ("SFAS  131"),  "Disclosure  About  Segments
of an  Enterprise  and Related      Information" requires use of the "management
approach" model for segment reporting.  The management approach model is based on the
     way a company's  management  organizes  segments  within the company for making
 operating  decisions and  assessing  performance.      Reportable segments are based on
products and services,  geography, legal structure,  management structure, or any other
manner in      which management disaggregates a company. During
the years ended  December 31, 2007 and 2006,  the Company is organized  into two main
business  segments:  (1) Property for      sale,  (2) Rental  income and (3) Income of
management  fee of commercial  buildings. F-23




The
following  table  presents a summary of      operating information and certain year-end
balance sheet information for the years ended December 31, 2007 and 2006: Years ended December 312007
               
     2006Revenues from unafiliated customers:Selling of properties
        
        
     $4,378,993
        
     
     $7,205,954Rental income
     3,733,241
        
     
     3,835,538Management fee
     1,563,394
        
     
     1,696,801Consolidated
     $9,675,627
        
     
     $12,738,293Operating income (loss):Selling of properties
     $708,291
        
     
     $(964,434
        )Rental income
     518,957
        
     
     1,867,492Management fee
     (23,969
        )
     
     64,836Corporation (1)
     (7,098,244
        )
     
     (2,675,887
        )Consolidated
     $(5,894,965
        )
     
     $(1,707,993
        )Net income (loss) before taxes:Selling of properties
     $2,637,332
        
     
     $(964,434
        )Rental income
     518,957
        
     
     1,867,492Management fee
     (23,969
        )
     
     163,823Corporation (1)
     (1,177,571
        )
     
     (4,781,520
        )Consolidated
     $1,954,749
        
     
     $(3,714,639
        )Identifiable assets:Selling of properties
     $5,350,282
        
     
     $8,283,595Rental & management fee
     49,953,769
        
     
     39,026,429Corporation (1)
     45,167,178
        
     
     22,619,281Consolidated
     $100,471,229
        
     
     $69,929,305Depreciation and amortization:Selling of properties
     $--
        
     
     $--Rental & management fee
     2,325,938
        
     
     1,836,374Corporation (1)
     17,703
        
     
     215,290Consolidated
     $2,343,721
        
     
     $2,051,664Capital expenditures:Selling of properties
     $79,187
        
     
     $--Rental & management fee
     5,765,432
        
     
     69,275Corporation (1)
     4,878,509
        
     
     972,919Consolidated
     $10,723,128
        
     
     $1,042,194 (1).
Unallocated loss from Operating income (loss) and Net income (loss) before taxes are
primarily related to general         corporate expenses. F-24




18.
Restatement Subsequent to the issuance of the Company's  financial
 statements  for the years ended  December 31,      2007 and 2006, the Company
 determined  that certain  presentations  in the financial  statements had      not been
 accounted for properly in the Company's  financial  statements.  Specifically,  the
Company      did not present the pro forma  information  for the subsidiary  acquired
 during the year.  Also, the      consolidated  statement  of cash flow as of December
31, 2007 was not present  properly.  The Company      decided to restate the financial
statements for the year ended December 31, 2007. CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2007(Restated)
     (Reported)Cash flows from operating activities:Adjustments to reconcile net income (loss) to operating activities -Loss on terminated project - restated
     1,504,604
        
     --Gain on settlement of debt  restated
     (11,115,201
        )
     --Net cash provided by operating activities from continuing operations
     50,420,001
        
     60,030,598Net cash provided by operating activities
     50,420,001
        
     60,030,598Cash flows from investing activities:Construction in progress  restated
     8,126,213
        
     9,630,817Net cash provided by/(used in) investing activities from continuingoperations2,413,667
        
     3,918,271Net cash used in investing activities
     (28,288,291
        )
     (26,783,687
        )Cash flows from financing activities:Loan repayments - restated
     (14,676,812
        )
     (25,792,012
        )Net cash used in financing activities from continuing operations
     (15,107,074
        )
     (26,222,274
        )Net cash provided by (used in) financing activities
     (15,107,074
        )
     (26,222,274
        ) F-24