UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K 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




TABLE OF CONTENTS ITEM NUMBER AND CAPTION
     
     Page Part I1.
     Business
     41A.
     Risk Factors
     91B.
     Unresolved Staff Comments
     122.
     Properties
     123.
     Legal Proceedings
     154.
     Submission of Matters to a Vote of Security Holders
     15Part II5.
     Market for Registrants Common Equity, Related Stockholder Matters
     15and Issuer Purchases of Equity Securities6.
     Selected Financial Data
     167.
     Managements Discussion and Analysis of Financial Condition and Results of Operations
     167A.
     Quantitative and Qualitative Disclosures About Market Risk
     248.
     Financial Statements and Supplementary Data
     259.
     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     259A(T).
     Controls and Procedures
     269B.
     Other Information
     27Part III10.
     Directors, Executive Officers and Corporate Governance
     2711.
     Executive Compensation
     2912.
     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
     3013.
     Certain Relationships and Related Transactions, and Director Independence
     3114.
     Principal Accountant Fees and Services
     3215.
     Exhibits and Financial Statement Schedules
        32  3




PART I ITEM 1. BUSINESS General Great China
International Holdings, Inc. (the Company, we, or Great China Holdings), through
its various indirect subsidiaries, is engaged in commercial and residential real estate
investment, development, sales and management in the city of Shenyang, Liaoning Province,
in the Peoples Republic of China (PRC). Amounts for 2007 expressed in U.S. dollars are
based on a conversion rate of $1.00 for 7.29 Renminbi (RMB) at December 31, 2007, and
amounts expressed in U.S. dollars for prior periods are based on conversion rates then in
effect. 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. (from Red Horse
Entertainment Corporation).  The Company was incorporated in the state of Nevada on
December 4, 1987. Silverstrand
was incorporated on September 30, 2004 in Hong Kong Special Administrative Region, PRC,
and is the holding company of Shenyang Maryland International Industry Company Limited
(formerly: Shenyang Malilan Audio Equipment Company, Limited) (Shenyang Maryland).
Shenyang Maryland was originally registered as a limited liability Sino-foreign joint
investment enterprise on December 15, 1989, in Shenyang, Liaoning Province, PRC. In
October 2004, Silverstrand acquired all of the registered equity of Shenyang Maryland,
and this transfer and the reclassification of Shenyang Maryland as a wholly
foreign-owned enterprise (WFOE) was approved in November 2004 by the Liaoning
Provincial Bureau of Foreign Trade and Economic Cooperation. This approval was
subsequently registered, and a business registration certificate (No. 111103721 (1-1))
was issued to Shenyang Maryland as a WFOE in April 2005 by the Shenyang Municipal
Administration of Industry and Commerce. Business Overview The Company
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, 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% 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. The Company 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 the Company is
undertaken by special project teams from the 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.
     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. 4





     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. 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. 5




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. City of Shenyang Shenyang is a city of
approximately 7.2 million people in Liaoning Province, located in northeastern China
(Manchuria), approximately 435 miles northwest of Beijing and approximately 171 miles
northeast of North Korea. The largest city in northeast China, Shenyang is the economic,
cultural, transportation and trade center of northeastern China, there being eight
industrial cities within a 150-kilometer radius of Shenyang. Shenyangs Taoxian
International Airport is the largest airport in northeast China, and the city also has
developed railway and expressway networks.  Shenyang is comprised of the following
districts: (i) Heping District, better known as Downtown; (ii) Shenhe District, just
east of Downtown; (iii) Huanggu District, situated directly north of Downtown; (iv)
Dadong District, located northeast of Downtown; (v) Tiexi District; (vi) Yuhong District;
(vii) Dongling District; (viii) Shujiatun District; (ix) Hunnan New District; and (x)
Shenbei New District.        Shenyang is rich in industrial resources. Manufactures
include heavy machinery, tractors, motor vehicles, cables, machine tools (Shenyang has
one of the largest machine-tool plants in China), transformers, textiles, chemicals,
paper products, medicines, and cement. Copper, zinc, and lead are also smelted in the
city. Shenyang is also the seat of Liaoning University, Northeastern University, China
Medical University, Shenyang Conservatory of Music, and numerous other specialized
institutes.  From 2001 to 2007, the GDP of Shenyang was continuously increasing with 2
digits in 5 years. In 2007, the GDP in Shenyang increased by 17.7%, which is 5.4% higher
than the national GDP. The foreign investment was USD $5 billion. Shenyang has
experienced rapid renovation in urbanization since the PRC Central Government launched
the Developing the North East Policy in 2003, and priority was given to Shenyang in the
Policy. Shenyang urbanization has led to rapid and steady development in both residential
construction and consumption, indicating the likelihood that the Shenyang real estate
market will continue to develop and expand. Various Shenyang governmental policies aimed
at implementing law and regulations and developing a business law framework have
attracted both domestic and overseas investors to invest in Shenyang. In 2007, consumer
spending in Shenyang reached RMB 122.9 billion, an increase of 17.2 percent over the
prior year, which was the highest growth rate in the past 10 years.  We believe this
indicates Shenyang is a growing urban area with a consumer base that can sustain robust
residential and commercial real estate development. Shenyang Real Estate Market Prior to 1998, housing
was allocated to state employees as a kind of staff welfare. In March 1998, the then
Prime Minister, Mr. Zhu Rong Ji, announced the abolishment of state-allocated housing
commencing from mid-1998. During an ensuing phase of transition from state-provided to
privately-owned housing for state employees, eligible state employees were provided cash
subsidies to purchase their own housing. The subsidies also served to increase the
purchasing power of Shenyang residents for residential properties, and hence have
promoted trading of residential properties and the development of the real estate market
in Shenyang. The housing reforms
not only attracted substantial influx of capital but have also stabilized the real estate
market in Shenyang. Certain measures were implemented to stimulate trading in residential
properties. As an example, household registration through acquisition of houses or
apartments has allowed expatriates to become an additional source of demand for
residential properties in Shenyang. Another factor that
has affected the real estate market in Shenyang has been the resettlement of displaced
residents who had been affected by the urbanization of dilapidated buildings in the city.
In accordance with an urbanization plan, the Shenyang Municipal Government announced its
intention to complete urban renewal projects in areas where illegal structures had been
previously erected on state land and in old rundown residential areas. These displaced
residents are expected to account for 130,000 family units in need of either leased or
owned new housing. 6




The real estate market
in Shenyang has also been affected by the introduction of investment property buyers who
purchase residential properties as part of their investment portfolio for rental and
capital gain. The number of investment property buyers in the PRC has continued to
increase in recent years. Large property investment enterprises/groups, which have
achieved high returns on investments, became active in such fast growing cities in China
as Shenyang, Shanghai, Shenzhen and Wenzhou. The current healthy growth experienced in
the Shenyang real estate market, rapid urbanization and the improvement in its
position/status in the country have increased the property developers confidence in
investing in Shenyang. Property investors have also shown great confidence in the future
development prospects of the real estate market in Shenyang, as evidenced by their
increased property investments, and their continued participation and significance in
Shenyang real estate market should continue to be felt in the future. As property
investment allows high returns (recurring rental and capital appreciation), lower risk
profile, unaffected by inflationary pressure and high marketability, it will become
investors preferred choice of investment. The investment property buyers entry into the
real estate market will also boost property prices and value. These factors coupled
with Shenyangs expanding economy resulted in a total investment of RMB 53.8 billion in
Shenyang real estate in 2007, an increase of 35.6 percent over the prior year.  Further,
3.0826 million square meters of residential housing was sold in 2007 and the total sale
price was RMB 133.12, which was 43.5% higher than the previous year. Governmental regulation Chinese Real Estate Law Over the past five
years, the majority of Chinas urban dwellers have changed their housing situation for
apartments provided by their work units at a pittance to housing that they have had to
buy and pay to maintain (through homeowners associations that hire state supervised
management companies). There are some estimates that 80% of urban Chinese now own their
own homes. But China has no legal concept of condominium and no statute that defines the
rights of these millions of homeowners. In 1998, China created
the basic building block of a market economy in real estate - a transferable ownership
interest. This interest, called the granted land use right - is not 100% ownership as
we know it in the West. There are no air rights or underground rights, and the State
retains all the mineral resources and the right to access them. The period of the
interest is limited to a fixed term - varying from 40 to 70 years, depending upon the
character of the right - and the use to which the property must be put is specified as
part of the grant. The granted land use right is transferable, mortgageable, leaseable,
and usually can be subdivided. Further, it theoretically is renewable, but there will be
a fee and since these land ownership rights are new there is no experience yet with
renewals. Chinese anti-speculation rules provide that one cannot acquire or hold property
just to ride the market; the property must be put to productive use within a set time
of acquisition of the land use right - usually two years, or face penalties and
ultimately forfeiture of the right. For the development of
a new commercial real estate project, the developer must first obtain granted land use
rights. Land use rights can be granted through bidding, auction and listing. The
developer then enters into a land use right grant contract with the relevant government
authority. The granted land use right can be transferred, leased, or mortgaged. The
transferor and transferee must enter into a land use right transfer contract and file the
executed contract with the appropriate government bureau, which will then issue a new
land use certificate in the name of the transferee. In May 2002, the Ministry of Land and
Resources issued a regulation regarding the land use right transfer. Whereas in the past,
private parties were able to transfer land use rights by mutual agreement, this practice
was prohibited by the new regulation. Under the new scheme, any procurement of land for
business purposes can only be effected through bidding, auction and listing on an
authorized exchange floor. The long term value of
Chinese land rights are still quite uncertain, and such rights are not the kind of secure
investment that would lead a lender, as might happen in American, to rely primarily on
the land value and look beyond the individual ability of a borrower to repay the debt.
Chinese banks, for example, rarely make construction loans because in theory they cannot
lend more than the value of the land that is their security at the time of the loan. The
Chinese deal with this problem by signing prelease or prepurchase contracts whereby
the buyer of the finished unit or property pays all of the consideration before the
building is commenced. Effectively the buyers finance the sellers construction. Buyers
borrow the money from the banks under arrangements which later will morph into mortgage
loans when there is something to which the mortgage can attach. Usually the developer
must deposit the purchase proceeds in the bank and the bank monitors the expenditures. Before a presale
method can be legally adopted, the developer of the project must have obtained (i) a land
use right certificate, (ii) a planning permit for construction use of land, (iii) a
planning permit for the construction project, (iv) a certificate of commencement of
construction, and (v) a permit for presale of commercial housing. 7




Mortgages In 1993 the Central
Government allowed state-owned banks to provide mortgage facilities to property buyers.
In accordance with the banking regulations announced in 1998 the maximum loan repayment
period was 20 years, and maximum mortgage loan amount was 70 percent of the purchased
property price. In 1999, banking regulations were amended to extend the maximum loan
repayment period to 30 years and increase the maximum mortgage loan amount to 80 percent
of the purchased property price. As further incentives, state-owned banks were allowed to
increase the mortgage loan facilities by an additional 15 percent (maximum of 92 percent
of the purchased property price). The provision of mortgage facilities to property buyers
is considered to have created increasing demand for properties in the PRC. In accordance with
market practice in the PRC, the Company is required to provide guaranties (during the
development phase) to the banks of mortgages offered to the property buyers until
submission of the buyers real estate ownership certificates and certificates of other
interests in the property unit by the relevant property buyers to the mortgagee bank. In
the experience of the Company, such guaranty periods normally last for up to 6 months. If
a property buyer defaults under the loan and the Company is required, during the guaranty
period, to repay all debt owed by the defaulting property buyer to the mortgagee bank,
the mortgagee bank will assign its rights under the loan and the mortgage to the Company
and, subject to registration, the Company will have full recourse to the property. In
line with industry practice, the Company does not conduct independent credit checks on
the property buyers, but relies instead on the credit checks conducted by the mortgagee
banks. For financial reporting purposes, the sale of a property unit is not recognized
until title has passed and the Company is released from its loan guaranty on the unit. Wholly-Owned Foreign
Enterprises A wholly foreign-owned
enterprise (WFOE) is an entity 100 percent owned by a foreign investor or investors. An
apparent advantage of a WFOE is that it can enjoy exclusive management control of its
business activities and have autonomy in its operation without too much external
interference. The original WFOE
regulations only permitted WFOEs in certain limited sectors and required that the foreign
party either provided advanced technology or that at least 50% of the production could be
exported. These conditions were relaxed over time as more WFOEs were permitted in
increasingly broader sectors of the economy. In accordance with the PRC Wholly
Foreign-owned Enterprise Law as amended in 2001 and the Industrial Catalogue Guiding
Foreign Investments (2004) (the 2004 Catalogue), the export requirement is no longer
permitted and WFOEs are now much more common, except in certain restricted or prohibited sectors
as provided in the 2004 Catalogue. With respect to Chinas
real estate industry, the market has been gradually opened to WFOEs since Chinas entry
into the World Trade Organization. Pursuant to the 2004 Catalogue, WFOEs are permitted to
engage in the development, construction and management of ordinary residential houses
while they, with limited exceptions, are restricted to participate in the development of
high standard real estate projects. One of the most
important issues covered in the project documentation is the business scope of the WOFE.
Business scope is narrowly defined for all businesses in China and the WOFE can only
conduct business within its approved business scope, which ultimately appears on the
business license. Any amendments to the business scope require further application and
approval. Shenyang Marylands business scope, is defined to include general real estate
development, sales, leasing and property management. Sales and Marketing The Company must apply
to the relevant government authorities for pre-sale permits before commencing pre-sales
of its properties under construction. Such permits will only be issued when, amongst
other things, (i) the land premium has been fully paid; (ii) the land use rights
certificates, the construction works planning permit and the construction project
building permit et cetera have been obtained; (iii) the construction works of the
properties have been completed up to the stipulated standard; (iv) the progress and the
expected completion date of the construction work have been ascertained; (v) the
construction plans for the affiliated facilities have been confirmed; (vi) the pre-sale
fund escrow agreement has been signed with a professional real estates funding
supervisory body; (vii) the covenants of use of the properties have been formulated; and,
(viii) an initial property management services contract has been signed with a property
management company. The Companys main
customers are PRC individual buyers of residential properties. The Company does not have
any dominant buyer as the Company targets the mass residential property market. The
Company advertises in newspapers, magazines and outdoor advertising billboards and
participates in various real estate exhibitions. The Company also sets up on-site
reception centers to display information relating to the relevant project and off-site
promotional centers in areas frequented by targeted customers in circumstances where
on-site reception centers may not be suitable. 8




Competition In recent years, a
number of property developers had entered and commenced property development and other
project investments in Shenyang and other major cities of China lured by the healthy
profit margin that could be had from sales of residential properties. These include
overseas property developers (including sizeable leading property developers from Hong
Kong), local property developers in Shenyang as well as those from other major cities in
China. Competition among the property developers in Shenyang, Shanghai, Beijing,
Guangzhou and other major cities of China has become very intense and this may possibly
lead to an escalation in the cost of acquiring land use rights for development. On the
other hand, in certain other parts of China, there appears to be a surplus of supply of
properties and the related local government in those areas has started administrative
measures to slow down the approval process of the new property development projects. Employees The Company currently
has 177 employees, 25 of whom are engaged in property development activities, 10 of whom
are engaged in administration activities, and 142 of whom are engaged in property
management activities. Further Information and Reports We are required to
file with the Securities and Exchange Commission annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports of certain events on Form 8-K, and proxy and
information statements disseminated to stockholders in connection with meeting of
stockholders and other stockholder actions.  Copies of these and any other materials we
file with the Commission may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1580  100 F Street, N.E., Washington,
D.C. 20549.  Copies of all or any part of our filings may be obtained from the Public
Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, upon payment
of the prescribed fees.  The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.  The Companys filings with the
Commission are also available through its web site at http://www.sec.gov. ITEM 1A.     RISK FACTORS The following is a
discussion of risks we believe to be significant with respect to our business,
operations, financial condition and other matters pertaining to an investment in our
common stock. It is not possible to anticipate or predict every risk that may, in the
future, prove to have a significant affect on the Company. Additional risks, including
those that are currently not known to us or that we currently deem immaterial, may also
impair our business operations. Risks Related to Our Business We will continue to be
dependent on bank loans to finance our projects and, therefore, our ability to operate
and develop our business is dependent on our ability to deal with loans we now carry and
obtain additional financing as needed. The development of
high quality residential and commercial projects requires substantial funds.  We have
relied on bank financing to acquire real estate for development and to fund operations.
 At December 31, 2007, we owed an aggregate of approximately $25.2 million in bank loans
that mature within the subsequent 12 months. We also owed approximately $5.48 million in
long-term bank loans. All of our assets and
operations depend on the performance of the Shenyang market for residential and
commercial real estate, so that low demand for or supply of residential or commercial
units in this limited geographic market would likely diminish the price or lease rates
for our real estate projects and have a negative impact on our results of operations. All of Great China
Holdings property projects are situated in Shenyang City, Liaoning Province, PRC, and
consequently, it depends on the continuing economic stability and growth of this area to
support the demand for its residential and commercial real estate.  Should economic
conditions deteriorate, the demand for residential and commercial units could decline.
 On the other hand, continued economic stability or growth in Shenyang could attract
other real estate development companies so that the supply of residential and commercial
real estate would increase to levels well above the demand.  The occurrence of either of
these circumstances would likely result in downward pressure on pricing for units held
for sale or lease, which would adversely affect our results of operations. 9




Our reliance on
independent contractors in providing various services for our operations could affect our
operations adversely if these services become unavailable. Great China Holdings
engages independent third party contractors, through open tenders, to provide various
services including construction, piling and foundation, building and fitting-out work,
interior decoration and installation of elevators and other building systems.  Great
China Holdings practice is to select reputable independent third party contractors with
positive track records and supervise the construction progress. However, there is no
assurance that the services rendered by any of these independent contractors will always
be satisfactory or match the targeted quality level required by Great China Holdings,
which could increase project costs to the extent remediation is required.  Independent
contractors may experience cost over-runs, financial difficulties, or difficulty in
obtaining the labor and materials necessary for the assigned construction work, which
could result completion delays and/ or additional costs of completing projects for Great
China Holdings. Any of these events factors could adversely affect the Companys revenues
and reputation. Our real estate
development business is subject to increasing competition, which may affect sales or lead
to higher costs. In recent years, a
number of property developers had entered and commenced property development and other
project investments in Shenyang and other major cities of China.  These include overseas
property developers (including property developers from Hong Kong), local property
developers in Shenyang as well as those from other major cities in China.  Competition
among the property developers in Shenyang, Shanghai, Beijing, Guangzhou and other major
cities of China has become very intense and this may possibly lead to an escalation in
the cost of acquiring land use rights for development.  Furthermore, as competition
increases it should be expected that the demand for the services of independent
contractors who design and build our projects will increase, which could increase the
cost of those services and/ or make it more difficult for us to schedule those services
when needed thereby delaying the completion of our projects and increase carrying costs.
Finally, as more real estate is developed by other developers, purchasers and lessees
will have more products to choose from, which will likely result in downward pressure on
prices and lease rates for our residential and commercial properties.  These competitive
pressures will likely affect our pricing and operational decisions in the future and our
results of operations. Risks related to
property development may cause project expenses to increase substantially. Property developments
usually require substantial capital outlay during the construction phase and it may take
many months or possibly years before positive cash flows can be generated through
pre-sales or sales of the completed property developments.  The time and the costs
incurred in completing a property development can be increased by many factors including,
but not limited to, shortages of materials, equipment, technical skills and labor,
adverse weather conditions, natural disasters, labor disputes, disputes with contractors
and sub-contractors, accidents, changes in government priorities and policies, changes in
market conditions, delays in obtaining the requisite licenses for the construction site,
permits and approvals from the relevant authorities and other problems and circumstances.
 Any of these factors may lead to delays in the completion of a property development and
result in costs exceeding those originally budgeted as well as losses of revenues. In
addition, any failure to complete a property development according to its original
planned specifications or schedule may give rise to potential liabilities, and returns
may accordingly be lower than originally expected. The practice of
pre-selling projects may expose Great China Holdings to substantial liabilities. The existing common
practices by property developers to pre-sell properties (while still under construction)
in China involves certain risks.  For example, we may fail to complete a property
development that may have been fully or partially pre-sold, which would leave us liable
to purchasers of pre-sold units for losses suffered by them without adequate resources to
pay the liability if funds have been used on the project. In addition, if a pre-sold
property development is not completed on time, the purchasers of pre-sold units may be
entitled to compensation for late delivery.  If the delay extends beyond a certain
period, the purchasers may be entitled to terminate the pre-sale agreement and pursue a
claim for damages that exceeds the amount paid and out ability to recoup the resulting
liability from future sales. Risks Related to Doing
Business in China There are inherent
risks in conducting all of our business in China, which makes it difficult to predict
future prospects and operations with any certainty. All of our assets are
located in the PRC and all of our revenue is sourced from the PRC.  Accordingly, Great
China Holdings result of operations, financial position and prospects are subject to a
significant degree to the economic, political 10




and legal stability and development of the PRC.  The
economy of PRC differs from the economies of most developed countries in many respects,
including level of government involvement, level of development, growth rate, control of
foreign exchange, banking system, and allocation of resources.  The PRC economy has been
transitioning from a planned economy to a more market-oriented economy. Although Great
China Holdings believes these reforms will have a positive effect on its overall and
long-term development, it cannot predict whether or not changes in Chinas political,
economic, and social conditions, laws, regulations, and policies will have any adverse
effect on its current or future business, results of operations and financial condition. Specifically, in the
PRC the concept of property ownership by private individuals is a relatively new
development, so there is a lack of a well-developed market, well-established industry
practices, and well-defined body of law that can serve to provide certainty or
predictability with respect to future prospects or operations.  For example, we rely on
the current system of pre-sale mortgage financing to provide the capital necessary to
design and build our projects.  A change in that system that affects the availability,
timing, or amount of capital obtained would likely have a significant adverse affect on
our ability to successfully develop our projects. Fluctuations in
exchange rates of the Renminbi could adversely affect the value of stock ownership in
Great China Holdings. For over 10 years the
official exchange rate for the conversion of Renminbi to US dollars was unofficially
pegged at US$1 to RMB8.28.  In July 2005, the Peoples Bank of China, the countrys
central bank, began a new policy of calculating the Renminbis value against the US
dollar using a weighted average of the prices given by major banks.  The highest and
lowest offers are excluded from the calculation.  As a result of this change the RBM has
appreciated against the US dollar so that the exchange rate was US$1 to RMB 7.29 at
December 31, 2007. It should be expected that currency exchange fluctuations will occur
in the future as a result of circumstances beyond our control, such as the level of trade
deficit or equalization between the US and the PRC, global economic conditions, global
currency markets, and other factors.  All of our revenue is generated in the PRC in
Renminbi, so that during periods that the US dollar is worth more in relation to the
value of the Renminbi, the total revenue and results of operations of Great China
Holdings reported in US dollars in the financial statements we publish in the US will be
less.  Consequently, fluctuations in exchange rates could adversely affect the US dollar
value of our results of operations and the perceived value of Great China Holdings in the
public market. Uncertainty relating
to the existing law and regulations in the PRC may restrict the level of legal
protections to foreign investors, which could have a chilling effect on obtaining capital
to fund our operations. The PRC currently
operates under a civil law system that relies heavily on written statutes, and decisions
made by the courts are not binding precedents, but for guidance only.  The legal system
in the PRC cannot provide the investors with the same level of protection as in the US.
 Great China Holdings is governed by the law and regulations generally applicable to
local enterprises.  These laws and regulations were recently introduced and remain
experimental in nature and subject to changes and refinements.  Interpretation,
implementation and enforcement of the existing law and regulations can be uncertain and
unpredictable and therefore have restrictions on legal protections on foreign investors. It will be extremely
difficult to acquire jurisdiction and enforce liabilities against our assets based in The
Peoples Republic of China. Because the majority
of our assets are located in The Peoples Republic of China, it would also be very
difficult to access those assets to satisfy an award entered against Great China Holdings
in a U.S. court. Risks Related to Our
Common Stock A single person holds
voting control of Great China Holdings, so an investor will not have a meaningful voice
in the selection of management or on any other matter affecting the future of Great China
Holdings. Frank Jiang, an
officer and director, holds a majority of the issued and outstanding common stock of
Great China Holdings.  He alone can elect the entire board of directors and approve any
other matter that may be submitted to the stockholders for approval.  Consequently, the
vote represented by common stock held by our other stockholders is not meaningful.
 Holders of our common stock are dependent on the judgment and decisions of Mr. Jiang in
selecting directors and approving other corporate actions, and the abilities of
management employed by the directors to successfully operate and grow our business. 11




Because our common
stock is traded on the OTC Bulletin Board, your ability to sell your shares in the
secondary trading market may be limited. Our common stock
currently is traded on the over-the-counter market on the OTC Bulletin Board.  The OTC
Bulletin Board is an inter-dealer, over-the-counter market that provides significantly
less liquidity than national or regional exchanges.  Securities traded on the OTC
Bulletin Board are usually thinly traded, highly volatile, have fewer market makers and
are not followed by analysts.  Consequently, the liquidity of our common stock is
impaired, not only in the number of shares that are bought and sold, but also through
delays in the timing of transactions, and lack of coverage by security analysts and the
news media.  As a result, prices for shares of our common stock may be lower than might
otherwise prevail if our common stock was quoted or traded on a national securities
exchange. You may have
difficulty selling our shares if they are deemed a penny stock. Since our common stock
is not currently listed on an exchange, and trading in our common stock is subject to the
requirements of certain rules promulgated under the Securities Exchange Act of 1934,
which require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as a penny stock (generally, any non-exchange listed equity
security that has a market price of less than $5.00 per share, subject to certain
exceptions).  Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated therewith
and impose various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally defined as
an investor with a net worth in excess of $1,000,000 or annual income exceeding $200,000
individually or $300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser and have
received the purchasers written consent to the transaction prior to the sale.  The
broker-dealer also must disclose the commissions payable to the broker-dealer, current
bid and offer quotations for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealers presumed
control over the market. Such information must be provided to the customer orally or in
writing before or with the written confirmation of trade sent to the customer. Monthly
statements must be sent disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks.  The additional
burdens imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in our common stock, which could severely limit the market
liquidity of the common stock and the ability of holders of the common stock to sell
their shares. ITEM 1B.     UNRESOLVED STAFF COMMENTS None. ITEM 2.     PROPERTIES General As of December 31,
2007, the Company, through Shenyang Maryland, had five real estate projects located in
the city of Shenyang in which it either was selling and/or leasing. 
     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.
     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. 12





     The Maryland Building consists of 12,858 square meters, of which 11,310 have been sold and other
           remaining 1,548 square meters are held for leasing purposes.  PresidentBuilding
     PeacockGarden
     ChenglongGarden
     MarylandBuilding
     QiyunNew VillageConstruction date
        .................................................
      June 1999
     April 1999
     June 2000
     June 1997
     April 1996Construction completion date
        ..............................
        Dec 2002
     Nov 2000
     Oct 2002
     Nov 1998
     Nov 1997Permission for pre-sale/sales
        ..............................
        Feb 2001
     April 1999
     June 2001
     Dec 1997
     July 1997Date of first sales
        .................................................
             May 1999
     May 1999
     Sept 2001
     Nov 1997
     May 1997 The following table
set forth information about the Companys various projects: Sales Revenue Mix 2006
     2007%
     $
     %
     $Properties sales:Qiyun New Village
        ......................................................................................
   20.4
        
 
     2,600,996
        
 
     5.0
        
 
     487,694Peacock Garden
      ............................................................................................
      
2.4
        
 
     309,283
        
 
     (6.6
        )
 
     (637,368
        )President Building
        ......................................................................................
        
                 --
        
 
     
        --
        
 
     
        7.0
        
 
     
        674,750Chenglong Garden Phases I & II
        ..................................................................
             
        33.7
        
 
     
        4,295,675
        
 
     
        39.8
        
 
     
        3,853,91756.5
        
 
     
        7,205,954
        
 
     
        45.2
        
 
     
        4,378,993Rental income
        
        
        30.1
        
 
     
        3,835,538
        
 
     
        38.6
        
 
     
        3,733,241Building management income:
        
             --
        
 
     --
        
 
     --
        
 
     --President Building Management Center
        ......................................................
         
        13.4
        
 
     1,696,801
        
 
     16.2
        
 
     1,564,394100.0
        
 
     
        12,738,293
        
 
     
        100.0
        
 
     
        9,675,627 The President Building The Companys
President Building, which was completed in 2002, consists of three blocks of commercial
towers, each built according to international construction standards, situated in
Shenyang City, Heping North Street in the financial district of Shenyang. The project
occupies an area of 8,126 square meters on a total construction area of 77,000 square
meters, and represents an investment by the Company of RMB 582 million (approximately
US$71.8 million). While the Companys 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 who are
mostly international companies, 25 of which are Fortune 500 companies. The Companys head
office is situated on the 25th and 26th Floors of President Building. When the President
Building was built, it was one of the few commercial buildings in Shenyang which was
positioned as premium commercial building. Over the years, a number of commercial
buildings were built to fulfill an increasing demand. The President Building maintains
its competitiveness mainly with its precious location at the financial center of
Shenyang. Tenants satisfaction is closely monitored and maintained through surveys and
regular networking meetings.  Jones Lane LaSalle, as the property management consultant
to the President Building, advising on the day-to-day operations of the building, helps
to build up the prestige of the building as a brand name commercial building in Shenyang.
 Though minor renovations are ongoing in the Building, we anticipate no major renovations
in the near future. The aggregate
occupancy rate for the two towers at the end of 2006 and 2007 was 94% and 98%,
respectively, ranked among the highest in Shenyang.  The tenants as a whole are engaged
in a variety of businesses, including real estate, foreign trade, investment, insurance,
e-commerce, media, advertisement, and heath care. In June 2007, Shenyang
Maryland closed funding under a loan agreement with Shenyang City Commercial Bank
(Holdings) Co., Ltd. (Zhongshan Branch) (the Bank) whereby the Bank agreed to loan RMB
40,000,000, or approximately US$5,486,968, to Shenyang Maryland for use in connection
with renovation of the President Building, repurchase of assets 13




from the Industrial and Commercial Bank of China and other
purposes.  The principal amount of the loan bore interest at 8.775% until September 15,
2007 and 9.711% thereafter; the principal amount of the loan, along with any accrued
interest, is due on June 12, 2009. The loan agreement provides that Shenyang Maryland
must notify the Bank of certain material changes in its business that may occur during
the term of the loan agreement, provides for penalties in the event of various events of
default, and also provides that the amount of the Loan is secured by a pledge of property
owned by Shenyang Maryland, including part of the President Building, as security for
payment of the loan. The total area of the
President Building owned by the Company is 59,811 square meters, and the mortgaged area
is 50,055.64 square meters. The realty tax for the President Building is 12% of the total
rental income, and the total realty tax for the year 2007 is RMB 4,147,167 (approximately
US$ 568,884). The mortgage details for the President Building are as follows: Lender(bank)

     Amount of loanRMB:ten thousand)

     Guaranty(President Building)

     MortgagedAreaBank of China Zhongshan Branch
     
     5,500
     
     Block C, 5th-12th floor
     
     8949.68Block C, 20th-23rd floor
     
     4389.72Agriculture Bank of China Binhe Branch
     
     1,740
     
     Block C, 24th-26th floor
     
     3292.29Block A, 1st-4th floor (axle 1-7)
     
     6349.20Block A, 8th-9th floor
     
     2195.72Commercial Bank of China Zhongshan Branch
     
     14,800
     
     Block A, 11th 14th floor
     
     4380.76Block A, 17th-26th floor
     
     10925.20Block B, 3rd-4th floor, (axle 7-11)
     
     1891.06Block C, 13th  19th Floor
     
     7682.01Total mortgaged area
     
     
     
     
     
     50055.64 Chenglong Garden Chenglong Garden,
 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. The project is situated
near Beiling Park, schools and Hymall and Megamart. Approximately 95% of the area
comprising Chenglong Garden had been sold as of December 31, 2007. Qiyun New Village Qiyun New Village is
situated along the Nanyun Riverside and consists of 347 residential units. Qiyun New
Village was introduced to the real estate market in 1999. The Company introduced a Five-year
Trial Accommodation Scheme (the Scheme) to attract potential buyers.  Under the
Scheme, property buyers are required to pay a refundable deposit totalling $6,039
(RMB50,000), and pay a 30% deposit based on the sales price of the property over 5 years
in monthly installments throughout the trial period.  (The initial $6,039 payment is
included in the 30% deposit; however, this amount is refundable, whereas the balance of
the payments is not.)  The remaining 70% of the consideration is due and payable
immediately after the trial period when the property buyers must exercise their option
whether or not to complete the purchase. If the buyer chooses not to buy the property,
only the $6,039 initial deposit will be refunded to the buyer, and the remainder of the
deposit amount is retained and recognized as rental income in the year in which such
payments arose.  Fifteen units were still under the Scheme as of December 31, 2007; of
these, 10 participants of the Scheme agreed to purchase the unit, and sales revenues for
their units were recognized during the year ended December 31, 2007. The Maryland Building The Maryland Building
is 12,858 square meters in size of which 11,310 square meters have been sold and other
remaining 1,548 square meters are held for leasing purposes. 14




Property Management Shenyang Maryland has
entered into a consulting agreement with Jones Lang Lasalle with respect to the
management of the President Building. Pursuant to this agreement, Shenyang Maryland will
manage the day-to-day operations of the building, but Jones Lang Lasalle will provide
advice on how to carry out these management operations. ITEM 3.     LEGAL
PROCEEDINGS The Company is the
subject of certain legal matters that it considers incidental to its business activities.
It is the opinion of management that the ultimate disposition of these matters will not
have a material impact on the financial position, liquidity or results of operations of
the Company. ITEM 4.     SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was
submitted to a shareholder vote during the quarter ended December 31, 2007. PART II ITEM 5.
     MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY             SECURITIES Market Information The common stock of
Great China Holdings trades in the over-the-counter market under the symbol GCIH.  The
following table sets forth for the respective periods indicated the prices of the common
stock in the over-the-counter market, as reported and summarized on the OTC Bulletin
Board. Such prices are based on inter-dealer bid and ask prices, without markup,
markdown, commissions, or adjustments and may not represent actual transactions. Calendar Quarter Ended
     
     High Bid ($)
     
     Low Bid ($)March 31, 2006............................................................................................................
     
     9.00
     
     5.50June 30, 2006...............................................................................................................
     
     14.98
     
     7.00September 30, 2006.....................................................................................................
     
     12.70
     
     3.50December 31, 2006.....................................................................................................
     
     4.90
     
     2.50March 31, 2007...........................................................................................................
     
     5.40
     
     3.90June 30, 2007..............................................................................................................
     
     4.00
     
     2.20September 30, 2007....................................................................................................
     
     3.80
     
     2.75December 31, 2007.....................................................................................................
     
     2.50
     
     0.76 Dividends We did not make any
distributions to shareholders in 2007 or 2006.  Our present intention is to retain any
earnings for use in our business activities, so it is not expected that any dividends on
the common stock will be declared and paid in the foreseeable future. Security Holders At March 15, 2008,
there were approximately 202 holders of record of our common stock. 15




Equity Compensation Plans (c)Number of securities(a)
     
     remaining available forNumber of securities to be
     (b)
     future issuances underissued upon exercise of
     Weighted average exercise
     equity compensation plansoutstanding options,
     price of options, warrants
     (excluding securitiesPlan Category
     warrants and rights
     and rights
     reflected in column (a))Equity compensation plans
     None
     N/A
     Noneapproved by stockholdersEquity compensation plans not
     10,000
     $ 4.65
     N/Aapproved by stockholders Repurchases of common stock There were no
repurchases of equity securities by Great China International in the fourth quarter of
2007. ITEM 6.     SELECTED
FINANCIAL DATA The following tables
set forth selected financial data for each of the years in the five-year period ended
December 31, 2007.  The consolidated statement of operations data and balance sheet data
are derived from the audited Consolidated Financial Statements of Great China
International and its predecessors.  The following selected financial data should be read
in conjunction with Managements Discussion and Analysis of Financial Condition and
Results of Operations and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this report. Consolidated Statement of Operations Data (in thousands): Year Ended December 31, 2007
     2006
     2005
     2004
     2003Revenues
     
     
     $
        9,676
        
     $
        12,738
        
     $
        26,524
        
     $
        29,671
        
     $
        30,285Net income (loss) from continuing operations
     $439
        
     $(3,715
        )
     $80
        
     $(597
        )
     $1,620Net income (loss) per share, basic and diluted
     $2.07
        
     $(0.33
        )
     $0.01
        
     $(0.06
        )
     $0.15 Consolidated Balance Sheet Data (in thousands): December 31, 2007
     2006
     2005
     2004
     2003Total assets
     
     
     $100,471
        
     $69,929
        
     $79,420
        
     $79,844
        
     $95,773Long-term obligations
     $5,487
        
     $1,999
        
     $3,266
        
     $18,369
        
     $51,754Cash dividends per common share
     $-0-
        
     $-0-
        
     $-0-
        
     $-0-
        
     $-0- 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 16




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.
     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 17




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. 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. 18




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. 19




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 Net cash flows
provided by operating activities for the years ended December 31, 2007, 2006 and 2005
were $60,030,597, $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. Net cash flows used in
investing activities for the year ended December 31, 2007, was $26,783,687 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 $9,630,817 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. Net cash flows used in
financing activities for the year ended December 31, 2007, was $26,222,274 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. 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. 20




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 21




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 22




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, 23




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. ITEM 7A.     QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As
an underpinning industry in China, real estate has developed into a crucial pulling force
to the all-round growth of national economy with its long-term continuous speedy growth
and positive momentum of both production and marketing thrive which have attracted
extensive attention both in the domestic and from overseas. A lot of problems and risks
arose with the real estate prosperity due to its over speedy development: 24




The
national land is fully controlled by the government, and its price keeps rising in
accordance with the supply-demand relationship, which resulted in the over-fast increase
of the investment in real estate and the capital pressure. Meanwhile, the adjustment of
lending rate increased the risk and pressure of capital operation. The
contradictions of real estate market structure in some regions emerged, among which the
contradiction of commodity houses supply structure is conspicuous. One hand, some
large-area residences, high rises and premium projects emerged in endlessly, but they are
unsuitable for sale; on the other hand, normal-sized commodity houses and economic and
functional houses targeting the low and medium wages earners in the urban area are in
short supply. The housing price still rises faster in some cities, the construction of
living houses safeguard system lags behind in other cities, which resulted in the in
harmony between supply and demand. So the order of real estate market is to be further
standardized. There
still exist the phenomena of false advertisements, contract fraud and illegal actions in
agent service and logistic administration, which are to be kept within limits in effect.
It should not only rely on the self-restriction of real estate enterprises to address all
these problems. The credit standing system of real estate market is to be perfected. The
operation, supervision and control systems of real estate market are to be further
improved. ITEM 8.     FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA Great
China Internationals financial statements appear at the end of this report beginning
with the Index to Financial Statements on page F-1, following page 36. ITEM 9.
     CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On
June 1, 2007, the Companys certifying accountant, Murrell, Hall, McIntosh & Co PLLP (MHM)
resigned as the Companys independent auditor.  The resignation was due to business
reasons and was not due to any disagreement between the Accountant and the Company and
its management. The
Companys management represents as follows: (a)     
     There have been no disputes between management and MHM, and the MHMs report
contained no adverse opinion or disclaimer of opinion, and was not qualified or modified
as to audit scope, accounting principles, or uncertainties, except for the issue of going
concern, for the fiscal years or any later interim period through the date of
resignation.  In the auditors' report for the fiscal years ended December 31, 2006 and
2005, the last two years for which the auditor issued a report, the auditor expressed
doubts about the Company's ability to continue as a going concern. (b)     
     During the Company's two most recent fiscal years and any subsequent interim period
through the date of resignation, there were no disagreements with MHM on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or
procedure. (c)     
     MHM expressed no disagreement or difference of opinion regarding any reportable
event as that term is defined in Item 304(a)(1)(v) of Regulation S-K, including but not
limited to: (i)     MHM has not advised the Company
that the internal controls necessary for the          registrant to develop reliable
financial statements do not exist, except for as disclosed in Item 3 of          the
Companys Form 10-Q filed on November 16, 2006 for the period ended September 30, 2006; (ii)     MHM has not advised the Company
that information has come to its attention that has          led it to no longer be able
to rely on management's representations, or that has made it unwilling to          be
associated with the financial statements prepared by management; (iii)     MHM has not advised the Company
of the need to expand significantly the scope of its          audit, or notified the
Company that information has come to MHM's attention that if further
         investigated may (A) materially impact the fairness or reliability of either: a
previously issued audit          report or the underlying financial statements, or the
financial statements issued or to be issued          covering the fiscal period(s)
subsequent to the date of the most recent financial statements covered by          an
audit report (including information that may prevent it from rendering an unqualified
audit report          on those financial statements), or (B) cause it to be unwilling to
rely on management's representations          or be associated with the Company's
financial statements, and due to MHM's resignation (due to 25




audit          scope limitations or otherwise) or
dismissal, or for any other reason, MHM did not so expand the scope          of its audit
or conduct such further investigation; (iv)     MHM has not advised the Company
that information has come to its attention that it has          concluded materially
impacts the fairness or reliability of either (A) a previously issued audit report
         or the underlying financial statements, or (B) the financial statements issued
or to be issued covering          the fiscal period(s) subsequent to the date of the most
recent financial statements covered by an audit          report (including information
that, unless resolved to MHM's satisfaction, would prevent it from          rendering an
unqualified audit report on those financial statements), and due to the MHM's
resignation,          or for any other reason, the issue has not been resolved to MHM's
satisfaction prior to its resignation. On August 9, 2007, the
Company engaged Henny Wee & Co. (HWC), ass its independent accountant.  On October 22,
2007, HWC resigned as the Companys independent auditor, so HWC served as the Companys
certifying accountant for just over two months.  During that limited period of service,
there were no disputes between the Companys management and HWC, and HWC did not issue
any audit report on the Companys financial statements because it did not conduct any
audit of the financial statements of the Company.  Furthermore, during the brief period
of service there were no disagreements with HWC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which, if not
resolved to HWCs satisfaction, would have caused it to make reference to the subject
matter of the disagreement(s) in connection with any report it might have issued on the
financial statements of the Company, and there were no reportable events described in
Item 304(a)(1)(v) of Regulation S-K. On October 22, 2007,
the board of directors of the Company approved the engagement of Kabani & Company, Inc.,
as its new independent accountant.  During the two most recent fiscal years and through
the October 22, 2007, neither the Company nor any one on behalf of the Company had
consulted with Kabani & Company, Inc., regarding the application of accounting principles
to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered on the Companys financial statements, or any other matters or
reportable events required to be disclosed under Items 304(a)(2)(i) or (ii) of Regulation
S-K. ITEM 9A(T).     CONTROLS
AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure
controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are
designed to ensure that information that would be required to be disclosed in Exchange
Act reports is recorded, processed, summarized and reported within the time period
specified in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including to the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As required by Rule 13a-15 under the Exchange Act, under the supervision and
with the participation of our management, including our Chief Executive Officer and our
Chief Financial Officer, we evaluated the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2007. Based on that evaluation,
our management concluded that our disclosure controls and procedures were effective as of
December 31, 2007. Managements Annual Report on Internal Control Over
Financial Reporting Our management is
responsible for establishing and maintaining adequate internal control over financial
reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Our internal control over financial reporting is designed to
provide reasonable assurance regarding the (i) effectiveness and efficiency of
operations, (ii) reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles, and (iii) compliance with applicable laws and regulations. Our internal
controls framework is based on the criteria set forth in the Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Due to inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.  Projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may deteriorate. 26




During the fourth
quarter of 2007, Great China Holdings hired outside consultants to assist us in
performing a top-down risk assessment, documenting in detail the existing controls and
creating certain new controls. This action was not an indication any significant
deficiencies or material weaknesses of internal controls, but part of the Companys
ongoing strategy regarding improvement of operational efficiency and effectiveness.  As a
result of this review, management believes that our internal controls over financial
reporting are effective. Attestation Report This annual report
does not include an attestation report of the Companys registered public accounting firm
regarding internal control over financial reporting.  Managements report was not subject
to attestation by the Companys registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only
managements report in this annual report. Changes in Internal
Controls There have been no
changes in the Companys internal control over financial reporting during the period
ended December 31, 2007 that have materially affected, or are reasonably likely to
materially affect, the Companys internal controls over financial reporting. ITEM 9B.      OTHER
INFORMATION None. PART III ITEM 10.     DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and officers Set forth in the table
below are the names, ages and positions of our current directors and executive officers.
 None of our directors or executive officers has any family relationship to any other
director or executive officer. Name
     Age
     Position
     SinceFrank Jiang
     53
     Chairman of the Board of Directors and Chief Executive Officer
     2005Wang Li Rong
     45
     Director and Chief Financial Officer
     2005Duan Jing Shi
     56
     Director
     2005Wang Jian Guo
     34
     Director
     2006Raymond Reed Baker
     32
     Director
     2008 Chen Jin Rong was a
director as of December 31, 2007, but resigned as a director on April 2, 2008 due to
personal reasons. All executive officers
are elected by the board and hold office until their successors are duly elected and
qualified.  Each director is elected by the stockholders and serves until resignation or
election of a successor by the stockholders. Biographies The following is
information on the business experience of each of the new officers. Frank Jiang has served
for the past five years as the Chairman and a Director of Silverstrand International and
its subsidiary, Shenyang Maryland International Industry Company Limited. Mr. Jiang was
the founder of Shenyang Maryland International Industry Company Limited.  Upon the
resignation of Deng Zhi Ren as Chief Executive Officer effect on March 5, 2007, Mr. Jiang
assumed the position of Chief Executive Officer of Great China Holdings. 27




Wang Li Rong has
served as a Director of Silverstrand International and its subsidiary, Shenyang Maryland
International Industry Company Limited since 1995.  Ms. Wang manages finance and
accounting for Silverstrand International. Duan Jing Shi has
served as a Director of Silverstrand International and its subsidiary, Shenyang Maryland
International Industry, since January 2002, and has responsibility for real property
development.  For over two years prior to January 2002 he served as President of Shenyang
Normal University. Wang Jian Guo is an
architect and has been employed as Technology Director of Shenyang Jinmao Building Real
Estate Co., Ltd., in Shenyang, China, since October 2005.  From July 2005 to October 2005
he was self-employed as an architect, and for a year prior to July 2005 he was employed
as Design Director of Shenyang Vanke Real Estate Development Co., Ltd., in Shenyang,
China.  From May 2003 to June 2004 Mr. Wang was engaged as the Planning Director of
Shanghai Jingce Duyi Space and Real Estate Research Institute Co., Ltd.  Prior to May
2003, Mr. Wang was pursuing doctoral program studies in architectural design theory at
Tongji University, Architecture and City Planning College, which he began after earning
his Masters Degree in Architecture Design and Theory at Shenyang Architecture
Engineering College in April 2002. Raymond Reed Baker is
a Managing Director with The One World Investment Group and has lived in China since
2004.  He began his career with PricewaterhouseCoopers LLP, serving in the Transition
Services practice and specializing in financial due diligence.  Mr. Baker is a Certified
Public Accountant in the state of Pennsylvania, has a B.S. in Accounting from The
Pennsylvania State University and an MBA from Hong Kong University. Audit Committee;
Financial Expert The Board of
directors has not established an audit committee, so the entire Board of Directors
performs the functions associated with an audit committee, including, evaluating
financial reporting matters, monitoring internal controls, compliance with internal
financial polices, and engaging the registered independent accounting firm to audit the
financial statements of Great China Holdings.  The Board of Directors has determined that
Chen Jin Rong is an audit committee financial expert within the meaning of Item
407(d)(5) of Regulation S-K.  Further, the Board has determined that Ms. Chen is independent under
the standard set forth in Rule 4350(d) of the NASDAQ Marketplace Rules. Director Nominations The Board of Directors
has not made any changes to the procedures by which security holders may recommend nominees
to our Board of Directors. Code of Ethics Great China Holdings
has adopted a Code of Ethics applicable to its chief executive officer and chief
financial officer, a copy of which will be provided to any person, free of charge, upon
request.  A request for a copy of the Code of Ethics should be in writing and sent to Ms.
Zou Liang, Great China International Holdings, Inc., C Site 25-26F President Building,
No. 69 Heping North Street, Heping District, Shenyang 110003, The Peoples Republic of
China. Compliance with Section
16(a) of the Exchange Act Section 16(a) of the
Securities Exchange Act of 1934 requires executive officers and directors, and persons
who beneficially own more than 10% of Great China Internationals common stock, to file
initial reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission. Executive officers, directors and greater than 10% beneficial owners
are required by Securities and Exchange Commission regulations to furnish Great China
International with copies of all Section 16(a) forms they file. Based solely on Great
China Internationals review of copies of such reports and representations from Great
China Internationals executive officers and directors, and greater than ten-percent
beneficial owners, Great China International believes that its executive officers and
directors complied with all Section 16(a) filing requirements during the fiscal year
ended December 31, 2007, except for the following:  Frank Jiang reported on a Form 5
filed February 14, 2008, seven separate purchases of Great China International common
stock in 2006 and 2007 by his spouse that were not reported earlier on five Form 4s that
should have been filed based on the timing of the transactions; and, Wang Jian Guo
reported on a Form 5 filed February 14, 2008, the receipt in January 2007 of an option to
purchase 10,000 shares of Great China International common stock that was not reported
earlier on Form 4. 28




ITEM 11.      EXECUTIVE
COMPENSATION Compensation Discussion
and Analysis Our Board of Directors
makes all evaluations and decisions regarding executive and board compensation. To date
Great China International has not established any policies, goals, or other processes for
setting compensation for its executive officers and directors because of pre-existing
employment and compensation arrangements that Great China International has not chosen to
revisit or modify.  Historically Great China International has negotiated employment
arrangements with executive officers on an individual basis.  However, the current
employment contract with the Chief Executive Officer expired at the end of 2007, so the
Board of Directors is now evaluating the terms of employment and compensation for 2008
and subsequent periods.  Great China has not established any long-term benefit or stock
plans for its officers, directors or employees.  In the past options to purchase common
stock of the Company have been granted to executive officers on an individually
negotiated basis.  If the Board of Directors considers later in 2008 the development of a
more comprehensive approach to compensation, it may consider adopting long-term benefit
and stock plans for executive officers. Summary Compensation
Table Name and Principal Position
     Year
     Salary($)
     OptionAwards($) (1)
     All OtherCompensation($)
     Total($)Frank Jiang
     2007
     111,111
     --
     --
     111,111President and CEO
     2006
     12,000
     --
     --
     12,0002005
     28,600
     --
     --
     28,600Wang Li Rong, CFO
     2007
     16,049
     --
     --
     16,0492006
     --
     --
     --
     --2005
     --
     --
     --
     -- (1)     The dollar
values shown reflect the compensation cost of the awards, before reflecting forfeitures,
over the requisite service period, as described in SFAS 123R.  The assumptions we used in
valuing these awards are described in Note 13 to our Consolidated Financial Statements
included in this Form 10-K. Discussion of Summary
Compensation Table Shenyang Maryland
entered into a standard form employment agreement with Frank Jiang, the term of which
runs from January 1, 2003 to December 31, 2007, which provided for annual compensation of
$28,600, but does not contain any unusual severance or early termination provisions.
 During the fiscal year ended December 31, 2007, Mr. Jiangs annual compensation was
adjusted to $137,174. Shenyang Maryland
entered into a standard form employment agreement with Wang Li Rong, the term of which
ran from January 1, 2007 to December 31, 2007, which provided for annual compensation of
$17,833, but did not contain any unusual severance or early termination provisions.
 Subsequent to year-end, the Board of Directors authorized an increase from February 2008
in the annual salaries of Mr. Frank Jiang and Ms. Wang Li Rong, to 2,000,000 RMB and
190,000 RMB, respectively. Grants of Plan Based
Awards There were no grants
of plan-based awards to our named executive officers during the year ended December 31,
2007. Outstanding Equity
Awards There are no
outstanding equity awards held by our named executive officers at December 31, 2007. Option Exercises and
Stock Vested None of the named
executive officers exercised any options in 2007. 29




Pension Benefits Great China
International does not maintain any plan providing for the payment of benefits at,
following, or in connection with retirement. Nonqualified Defined
Contribution and Other Nonqualified Deferred Compensation Great China
International does not maintain any nonqualified defined contribution or other
nonqualified deferred compensation plans. Potential Payments upon
Change in Control Great China
International does not have any severance or other payment arrangements that are
triggered by a change in control. Director Compensation
Table Mr. Wang Jianguo as a
non-employee director receives a monthly director fee of $833.  Each non-employee
director serving on January 31 of each year beginning in 2007 receives an option to
purchase 10,000 shares of Great China International common stock exercisable over a term
of two years with an exercise price equal to 90% of the average of the closing bid prices
for Great China International common stock over the 10 trading days prior to the date the
options are issued. The following table
summarizes the compensation paid to our directors who are not executive officers for the
year ended December 31, 2007. Name
     Fees Earned orPaid in Cash ($)
     OptionAwards($) (1)
     All OtherCompensation($)
     Total($)Duan Jing Shi (2)
     18,518
     --
     --
     18,518Chen Jin Rong (3)
     9,996
     --
     --
     9,996Wang Jian Guo
     9,996
     20,524
     --
     30,520  (1)
     Pursuant to the terms of her employment agreement, the Company granted 10,000 two-year options on
          January 31, 2007 to Wang Jianguo at an exercise price of $4.65 per share on January 31, 2007. The
          dollar value shown reflects the compensation cost of the awards, before reflecting forfeitures, over
          the requisite service period, as described in SFAS 123R.  The assumptions we used in valuing these
          awards are described in Note 13 to our Consolidated Financial Statements included in this Form 10-K.(2)
     Dunag Jing Shi does not receive monthly director fees.  He is employed full-time in administrative
          capacities by subsidiaries of Great China International, and the amount shown in the table is the
          salary paid to him during 2007.(3)
     Chen Jinrong resigned as a director on April 2, 2008 due to personal reasons, resulting in cancellation
          of her options. Raymond Reed Baker
became a director in March 2008.  In the course of his service as a director, Mr. Baker
will assist Great China International with financing and budgeting issues, along with
matters that arise in the course of Great China Internationals business operations.
 Great China International agreed to pay to Mr. Baker a monthly fee of RMB 10,000
(approximately US $1,408). ITEM 12.      SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table
sets forth as of March 31, 2007, the number and percentage of the outstanding shares of
common stock which, according to the information supplied to Great China International,
were beneficially owned by (i) each person who is currently a director, (ii) each
executive officer, (iii) all current directors and executive officers as a group, and
(iv) each person who, to our knowledge, is the beneficial owner of more than 5% of the
outstanding common stock.  The 30




address of each person
listed is C Site 25-26F President Building, No. 69 Heping North Street, Heping District,
Shenyang 110003, Peoples Republic of China. Name and Address
     Number ofShares
     Percent ofClassFrank JiangC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     8,245,447(1)
     70.1Duan Jing ShiC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     91,024
     0.77Wang Jian GuoC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     20,000(2)
     0.17Wang Li RongC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     91,024
     0.77Raymond Reed BakerC Site 25-26F President BuildingNo. 69 Heping North Street, Heping DistrictShenyang 110003, Peoples Republic of China
     -0-
     -0-All executive officers and directors as a group (5 persons)
     8,447,495
     71.83  (1)   Includes 67,000
shares held indirectly by Mr. Jiangs wife. (2)   Consists of options granted in January
2007 and January 2008. ITEM 13.      CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Director Independence The Board of Directors
has determined that Wang Jian Guo is independent under the definition set forth in Rule
4200(a)(15) of the NASDAQ Marketplace Rules. Great China
International has not adopted any policy regarding review of transactions with related
persons beyond what is provided for in the Nevada Revised Statutes pertaining to
corporations.  The statutes provide that no contract or transaction between Great China
International and one or more of its directors or officers, or between Great China
International and any other corporation, firm, association, or other organization in
which one or more of its directors or officers are directors or officers or are
financially interested, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of the Board
of Directors or committee that authorizes or approves the contract or transaction, or
because their votes are counted for such purpose, provided that: 
     the material facts as to his, her, or their relationship or interest and as to the contract or
            transaction are disclosed or are known to the Board of Directors or the committee and noted in the
            minutes, and the Board of Directors or committee, in good faith, authorizes the contract or
            transaction in good faith by the affirmative vote of a majority of disinterested directors, even
            though the disinterested directors are less than a quorum;
     the material facts as to his, her, or their relationship or interest and as to the contract or
            transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract
            or transaction is specifically approved 31




or ratified in good faith by the majority of shares entitled
            to vote, counting the votes of the common or interested directors or officers; or
     the contract or transaction is fair as to Great China International as of the time it is authorized or
            approved. ITEM 14.      PRINCIPAL
ACCOUNTANT FEES AND SERVICES Great China
International paid or accrued the following fees in each of the prior two fiscal years to
its principal accountant: Year endedDecember 31,2007
        
     Year endedDecember 3120061. Audit fees
     
     
     US$
        113,560
        

     US$
        88,9502. Audit-related fees
     19,733
        

     20,6053. Tax fees
     6,560
        

     2,4894. All other fees
        
        
     
        
        

     
        --Totals.......................................................................................................
        ...
        ...
     US$
        139,853
        

     US$
        112,044 Great China
International has no formal audit committee. However, as defined in Sarbanes-Oxley Act of
2002, the entire Board of Directors is Great China Internationals de facto audit
committee. In discharging its
oversight responsibility as to the audit process, the Board obtained from the independent
auditors a formal written statement describing all relationships between the auditors and
Great China International that might bear on the auditors independence as required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees.  The Board discussed with the auditors any relationships that may impact
their objectivity and independence, including fees for non-audit services, and satisfied
itself as to the auditors independence.  The Board also discussed with management, the
internal auditors, if any, and Great China Internationals independent auditors the
quality and adequacy of Great China Internationals internal controls. The Board reviewed
with the independent auditors their management letter on internal controls, if one was
issued by Great China Internationals auditors. The Board discussed
and reviewed with the independent auditors all matters required to be discussed by
auditing standards generally accepted in the United States of America, including those
described in Statement on Auditing Standards No. 61, as amended, Communication with
Audit Committees. The Board reviewed the
audited consolidated financial statements of Great China International as of and for the
years ended December 31, 2007, 2006 and 2005, with management and the independent
auditors.  Management has the sole ultimate responsibility for the preparation of Great
China Internationals financial statements and the independent auditors have the
responsibility for their examination of those statements. Based on the
above-mentioned review and discussions with the independent auditors and management, the
Board of Directors approved Great China Internationals audited financial statements and
recommended that they be included in its Annual Report on Form 10-K for the year ended
December 31, 2007, for filing with the Securities and Exchange Commission. ITEM 15.      EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES The following
documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K: Exhibit No.

     Title of Document3.1

     Articles of Incorporation (1)3.2

     Articles of Amendment effective September 15, 2005 (2)3.3

     Bylaws (1)  32




10.1
     Stock Exchange Agreement dated March 8, 2005 by and among the Company, Silverstrand International Holdings
             Limited, Frank Jiang, Jiang Peng, Duan Jing Shi, Li Guang Hua and Wang Li Rong (3)10.2
     Convertible Note dated March 5, 2005 issued to Wayne M. Rogers (3)10.3
     Convertible Note dated March 5, 2005 issued to Jack M. Gertino (3)10.4
     Stock Right Transfer Agreement dated October 18, 2004 among Silverstrand International Holdings Limited and each
             of Frank Jiang, Jiang Peng, Duan Jing Shi, Li Guang Hua and Wang Li Rong (2)10.5
     Sales and Purchase Contract dated December 8, 2005 between Shenyang Yunfeng Real Estate Development Co. Ltd. and
             Shenyang Maryland International Industry Co. Ltd. (2)10.6
     Amendment dated December 28, 2005 to Sales and Purchase Contract dated December 8, 2005 between Shenyang Yunfeng
             Real Estate Development Co. Ltd. and Shenyang Maryland International Industry Co. Ltd. (2)10.7
     Sales and Purchase Contract dated December 28, 2005 between Silverstrand International Holdings Limited and
             I.R.E. Corporation Limited (Ref. No. HT-2005-12003) (2)10.8
     Sales and Purchase Contract dated December 28, 2005 between Silverstrand International Holdings Limited and
             I.R.E. Corporation Limited (Ref. No: HT-2005-12004) (2)10.9
     Sales and Purchase Contract dated December 28, 2005 between Shenyang Maryland International Industry Co. Ltd.
             and Shenyang Yunfeng Real Estate Development Co. Ltd. (2)10.10
     Form of Executive Employment Agreement with Shenyang Maryland International Industrial Co. Ltd. (2)10.11
     Property Management Agreement dated March 18, 2004 with respect to the President Building between Shenyang
             Maryland International Industry Co., Ltd. and Jones Lang Lasalle (2)10.12
     Development Agreement dated April 26, 2004 between The Peoples Government of Heping District, Shenyang, China
             and Shenyang Maryland International Industrial Co., Ltd. (2)10.13
     Employment Agreement with Deng Zhiren (4)10.14
     Form of option issued to Deng Zhi Ren and Tang Yee Kwan (4)10.15
     Form of Regulation S Subscription Agreement February 2006 (2)10.16
     Form of Registration Rights Agreement February 2006 (2)10.17
     Loan Agreement dated July 3, 2006 between Shenyang City Commercial Bank and Shenyang Jitian Property Co.,
             Ltd.(5)10.18
     Loan Guarantee Agreement dated July 3, 2006 between Shenyang City Commercial Bank, Shenyang Maryland
             International Industry Co., Ltd., and Shenyang Jitian Property Co. (5)10.19
     Pledge (Mortgage) Agreement dated July 3, 2006 between Shenyang City Commercial Bank and Shenyang Jitian
             Property Co., Ltd. (5)10.20
     Creditors Right Transfer Agreement dated effective May 18, 2006 between Hainan Hexing Industry Co., Ltd. and
             Shenyang Jitian Property Co., Ltd. (5)10.21
     Loan Agreement dated for reference June 28, 2006 between Shenyang City Commercial Bank and Shenyang Jitian
             Property Co., Ltd. (6)10.22
     Loan Guarantee Agreement dated for reference June 28, 2006 among Shenyang City Commercial Bank, Shenyang
             Maryland International Industry Co., Ltd., and Shenyang Jitian Property Co., Ltd. (6)10.23
     Pledge (Mortgage) Agreement dated for reference June 28, 2006 among Shenyang City Commercial Bank, Shenyang
             Maryland International Industry Co., Ltd., and Shenyang Jitian Property Co., Ltd. (6)10.24
     Form of Employment Agreement between Great China International Holdings, Inc. and
             Danny Sui Keung Chau (7)10.25
     Equity Transfer Agreement dated November 20, 2006 between Silverstrand International Holdings Company Limited
             and each of Beijing Capital Land Limited and Reco Ziyang Pte Limited(8) 33


10.26
     Land Consolidation and Development Agreement between Shenyang Jitian Property Company Limited and Shengyang
             Maryland International Industry Company Limited (8)10.27
     Letter of Intent dated May 31, 2007 among Silverstrand International Holdings Limited, Gentle Knight Limited and
             Loyal Best Property Development Limited (10)10.28
     Loan Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and Shenyang City
             Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.29
     Loan Pledge Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and
             Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (11)10.30
     Compensation Agreement dated June 24, 2007 between Shenyang Heping District Investment Promotion Bureau and
             Shenyang Maryland International Industry Co., Ltd. (12)10.31
     Loan Agreement dated September 28, 2007 with Shenyang Huahai International Investment Co., Ltd. (13)10.32
     Letter of Intent dated October 30, 2007 between Silverstrand International Holdings Limited and Celebrities
             Realestate Development Group Co., Ltd. (14)10.33
     Letter of Guarantee given November 3, 2007 by Shenyang Maryland International Industry Co., Ltd. to Celebrities
             Realestate Development Group Co., Ltd. (14)10.34
     Investment Medium Contract dated 25 October 2007 between Silverstrand International Holdings Limited and Hong
             Kong Top Might Investments Co., Ltd. (14)10.35
     Definitive Agreement dated November 20, 2007 by an among Silverstrand International Holdings Limited, Zhang Yu
             and Shenyang Maryland International Industry Co., Ltd. (15)10.36
     Letter of Guarantee given November 20, 2007 by Celebrities Realestate Development Group Co., Ltd. to
             Silverstrand International Holdings Limited (15)10.37
     Joint Development Agreement executed on November 20, 2007 and dated for reference November 16, 2007 between
             Shenyang Xinchao Property Co., Ltd. and Beijing Century Junhui Investment Ltd. (15)14.1
     Code of Ethics (2)21.1
     List of Subsidiaries (2)31.1
     Certification of Chief Executive Officer31.2
     Certification of Chief Financial Officer32.1
     Certifications of Chief Executive Officer and Chief Financial Officer _____________________________________________ (1)
     These exhibits are incorporated herein by this reference to our registration statement on Form 10-SB,
      filed with the Securities and Exchange Commission on August 21, 1997.(2)
     These exhibits are incorporated herein by this reference to our Annual Report on Form 10-KSB for the year
      ended December 31, 2005, filed with the Securities and Exchange Commission on April 17, 2006.(3)
     These exhibits are incorporated herein by this reference to our Annual Report on Form 10-KSB for the year
      ended December 31, 2004, filed with the Securities and Exchange Commission on March 25, 2005.(4)
     These exhibits are incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on March 6, 2006.(5)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on July 11, 2006.(6)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on July 26, 2006.(7)
     This exhibit is incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on October 10, 2006.(8)
     These exhibits are incorporated herein by this reference to our Current Report on Form 8-K filed with the
      Securities and Exchange Commission on December 11, 2006.(9)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K/A filed
      with the Securities and Exchange Commission on March 28, 2006.(10)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on June 6, 2007. 34


(11)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on June 25, 2007.(12)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on July 25, 2007.(13)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on October 1, 2007.(14)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on November 9, 2007.(15)
     This exhibit is incorporated herein by this reference to the Companys Current Report on Form 8-K filed
      with the Securities and Exchange Commission on November 27, 2007. 35




SIGNATURES In
accordance with the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. GREAT CHINA INTERNATIONAL HOLDINGS, INC. Date: April 14, 2008
        
     By:
     
     /s/ Frank JiangFrank Jiang, Chief Executive Officer(Principal Executive Officer)   Date: April 14, 2008
     
     By:
     
     /s/ Wang Li RongWang Li Rong, Chief Financial Officer(Principal Financial and Accounting Officer) In accordance with the
Exchange Act, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. Date: April 14, 2008
     
     By:
     
     /s/ Frank JiangFrank Jiang, Director    Date: April 14, 2008
     
     By:
     
     /s/ Wang Jian GuoWang Jian Guo, Director    Date: April 14, 2008
     
     By:
     
     /s/ Duan JingshiDuan Jingshi, Director    Date: April 14, 2008
     
     By:
     
     /s/ Wang Li RongWang Li Rong, Director    Date: April 14, 2008
     
     By:
     
     /s/ Raymond Reed BakerRaymond Reed Baker, Director 36




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. /s/ Kabani & Company,
Inc.Certified Public Accountants Los Angeles, California
February 27, 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 2006, respectively
     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 Weighted average number
of shares for dilutive securities has not been taken since the effect of dilutive
      securities is anti-dilutive 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
        

     
        2,030,896(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
        
        
     
        60,030,598
        

     
        5,077,309
        

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

     (559,415
        )

     --Net cash provided by operating activities
     60,030,598
        

     4,517,894
        

     4,903,230Cash flows from investing activities:Construction in progress
     9,630,817
        

     (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
     3,918,271
        

     (7,391,802
        )

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

     --
        

     --Net cash used in investing activities
        
        
          
        (26,783,687
        )

     
        (7,391,802
        )

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

     76,835,664
        

     15,219,295Loan repayments
     (25,792,012
        )

     (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
     (26,222,274
        )

     (6,521,760
        )

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

     --
        

     --Net cash provided by (used in) financing activities
     (26,222,274
        )

     (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.
Short-term
loans  2007
        
     2006Loans from Banks  In default
        
        
     $
        9,931,413
        

     $
        13,744,244Loans from bank  due within 12 months
        
        
     14,814,815
        

     15,345,270Mortgage loans
     485,069
        

     --Bank loans purchased by asset management company
        
        
     
        --
        

     
        22,218,670Total current loans payable
        
        
     $
        25,231,297
        

     $
        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. F-16




The
Company had a default loan  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. 9.
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  10.
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. 11.
Gain
on disposal of subsidiary  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 of acquisition
     $
     4,010,000Net assets of Loyal Best at acquisition
     
     451,556
     )Goodwill on acquisition
     
     4,461,556  F-17




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 of discontinued operations
     $(61,271
        )  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: 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 F-18




12.
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. 13.
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
     
     
     
     -- 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. F-19




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  14.
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: 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
     $       
                     -- F-20




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
     $           
      --
     $           
      --  15.
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  16.
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-21




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-22