UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





FORM
10-K





x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
fiscal year ended DECEMBER 31,
2008





o  TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





Commission
file number 000-50637





CHINA
PROPERTIES DEVELOPMENTS, INC.


(Exact
Name of Registrant as Specified in Its Charter)





Colorado
                (State
      or other jurisdiction
                of
      incorporation or organization)
              84-1595829
                (I.R.S.
      Employer
                Identification
      Number)





89
Chang’an Middle Rd.


Yangming
International Tower, Flrs. 26/27


Xi’an,
China


(Address
of principal executive offices) (zip code)





Registrant’s
telephone number, including area code:86 29
85257560





Securities
registered pursuant to Section 12(b) of the Exchange Act:None





Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes o         No  x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.


Yes o         No  x





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  o





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.   o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definition of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):




Large
      accelerated filer
              o
              Accelerated
      filer
              oNon-accelerated
      filer
              o
              Smaller
      reporting company
              x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).


Yes o         No  x





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant (15,538,825 shares) as of June 30, 2008, the
last business day of the registrant’s most recently completed second fiscal
quarter, was approximately $20,000,000.  The number of shares
outstanding of the Common Stock ($.001 par value) of the registrant as of the
close of business on March 31, 2009was
19,050,825.





Documents
Incorporated by Reference:  None









CHINA
PROPERTIES DEVELOPMENTS, INC.





TABLE OF CONTENTS








PagePART IItem 1.
                                  Description of Business
                                  3Item 1A.
                                  Risk Factors
                                  9Item 1B.
                                  Unresolved Staff Comments
                                  13Item 2.
                                  Properties
                                  13Item 3.
                                  Legal Proceedings
                                  13Item 4.
                                  Submission of Matters to a Vote of Security
      Holders
                                  13PART IIItem 5.
                                  Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                                  13Item 6.
                                  Selected Financial Data
                                  14Item 7.
                                  Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                                  14Item 7A.
                                  Quantitative and Qualitative Disclosures About Market
      Risk
                                  18Item 8.
                                  Financial Statements and Supplementary Data
                                  18Item 9.
                                  Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure
                                  18Item 9A(T).
                                  Controls and Procedures
                                  18Item 9B.
                                  Other Information
                                  19PART IIIItem 10.
                                  Directors, Executive Officers and Corporate
      Governance
                                  19Item 11.
                                  Executive Compensation
                                  21Item 12.
                                  Security Ownership of Certain Beneficial Owners and Management
      and Related
                                    Stockholder Matters
                                  22Item 13.
                                  Certain Relationships and Related Transactions, and Director
      Independence
                                  23Item 14.
                                  Principal Accountant Fees and Services
                                  23PART IVItem 15.
                                  Exhibits and Financial Statement Schedules
                                  24Signatures
                                  26





2
 Table of Contents


Forward-Looking
Statements




This
report contains certain forward-looking statements and information relating to
the Company that are based on the beliefs and assumptions made by the Company’s
management as well as information currently available to the
management.  When used in this document, the words “anticipate”,
“believe”, “estimate”, and “expect” and similar expressions, are intended to
identify forward-looking statements.  Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions.  Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated or expected.  Certain of these risks
and uncertainties are discussed in this report in Part I, Item 1A “Risk
Factors”.  The Company does not intend to update these forward-looking
statements.








PART I





Item 1.      
Business.


Introduction




China
Properties Developments, Inc. (“we”, “us”, “our”, the “Company” or “CPD”) was
incorporated in the State of Colorado on June 15, 2001 under the name Bangla
Property Management, Inc. (“Bangla”).  In October 2005, and pursuant
to an Amended and Restated Agreement and Plan of Merger dated August 17, 2005,
Bangla acquired Wollaston Industrial Limited (“Wollaston”), the owner of 90.28%
equity interests of Xi’an Jiahui Real Estate Co., Ltd (“Jiahui”), by the
issuance of 10 million shares of common stock to Wollaston’s
shareholders.  Bangla’s name was subsequently changed to China
Properties Developments, Inc. to better reflect the business nature of the
Company.




Prior to
the acquisition of Wollaston, the principal business of the Company was real
estate property management.  Contemporaneously with acquisition of
Wollaston, the Company transferred all of the common stock of Bangla Properties
Inc., the Company’s then subsidiary which held all of the Company’s assets prior
to the acquisition of Wollaston, to Shawn Erickson, the Company’s then
President.  As a result of the Wollaston acquisition, we are now primarily
engaged in the business of real estate development, including sale and lease of
real estate in Xi’an City, Shanxi Province, People’s Republic of China
(“PRC”).   Our primary business objective has been to pursue the
practice of dividing our completed development projects into discrete units and
selling them to third party buyers to generate development income.  In
addition, we have and will retain portions of our completed projects to earn
recurring leasing income.




Wollaston
was incorporated on April 21, 2004 in the British Virgin
Islands.   As mentioned above, Wollaston owns 90.28% of its
subsidiary, Jiahui, formed under the Company Law of the People’s Republic of
China.  Jiahui is a sino-foreign joint venture company formed on December
17, 1996 by Xi’an Xiangrui Real Estate Co. Ltd (Xiangrui) and American JHL
Industrial Limited (JHL) in Xi’an, China.  Since Jiahui is
approximately 90% owned by a foreign entity, it is considered as a foreign joint
venture company in PRC.




On June
23, 2008, and through Jiahui, our 90.28% owned subsidiary, we entered into a
series of agreements effective as of June 1, 2008 with Shaanxi Xinyuan Real
Estate Co. Ltd., a corporation organized under the laws of the PRC (“Shaanxi”),
which we believe gives us effective control over its business.  Shaanxi's
results of operations are included in the consolidated statement of operations
of the Company.





Our
Current Projects





Through our ownership interest in
Jiahui, we currently hold a majority interest in following two
buildings:





Jiahui Office Building




The
Jiahui Office Building (the “Jiahui Building”) is a 15-story commercial office
building.  Construction commenced in 1998.  The majority of
construction was concluded in December 1999 with finished tenant
improvements.   This property has been available for occupancy
since June 30, 2000.  The first to fourth floors are leased to a
related party, the Hantang Bookstore.  The 5th floor, west section of
the 14th floor, the 15th floor, and the underground parking garage in the Jiahui
Building are held for rental activities.  All of these spaces are
recorded as fixed assets, and depreciation has been provided since July 1,
2000.  The remaining space in the Jiahui Building has been sold or
placed in service as rental property.


3
 Table of Contents


Yangming International Tower




The
Yangming International Tower (“Yangming”) is a multi-functional 27-story
building with mostly commercial usage.  The Company occupied the top
two floors (26th and 27th floors) as its administrative offices.  The
25th
floor is under contract with an affiliate, Yangming Soho Commercial
Flat.  Commencing as of January 1, 2008, the Company has added the
24th
floor to the space operating commercial flat.  The 24th through
27th
floor has been classified as fixed assets and depreciation have been provided
according to the time they became fixed assets.  The second and third
floors are leased to a related party, the Hantang Bookstore.  The
remaining space in Yangming is for sale to the public.




The
Yangming is a high-end building covering 516,668 sq. ft. We commenced the
construction of Yangming in May 2002 and ceased major construction in October
2005 at which time the building was ready for occupancy.  Unlike other
ordinary office/apartment buildings in Xi’an, the Yangming International Tower
is protected by a full range of hi-tech security and electronic networking
system. Residents, tenants, or clients of this building have access to a
multi-function club located on the fifth floor. The facilities in this club
include a large conference room, greenhouse, pool room, fitness room,
entertainment center, and a game room.





Shaanxi
Xinyuan Real Estate Co. Ltd.




On June
23, 2008, through our 90.28% owned subsidiary, Jiahui, we entered into a series
of agreements effective as of June 1, 2008 with Shaanxi Xinyuan Real Estate Co.
Ltd. (“Shaanxi”), a corporation organized under the laws of the People’s
Republic of China (“PRC”), which we believe gives us effective control over the
business of Shaanxi.  Shaanxi is 84.0% owned by Shaanxi Jiahui Group
which is majority owned by by Ping’an Wu and his family, and 16.0% owned by
Shuzhen
Yang.  Ping’an Wu is the Company’s Chairman, Chief Executive
Officer, President and a director.




Contemporaneously
with the execution of the series of agreements with Shaanxi, the Company also
entered into a Termination Agreement with Shaanxi pursuant to which the parties
agreed to terminate and abandon the Securities Subscription Agreement entered
into on June 13, 2007 pursuant to which the Company had agreed to subscribe for
and purchase new treasury shares of Shaanxi for RMB 230,000,000 (which was
estimated to be approximately US$30 million at the current currency exchange
rate which was subject to change), and Shaanxi had agreed to issue the shares to
the Company, such that the Company would own 90% of the issued and outstanding
share capital of Shaanxi after the purchase had been completed.




Our
relationship with Shaanxi and its stockholders are now governed by a series of
contractual arrangements entered into on June 23, 2008 between Jiahui and
Shaanxi.  The parties have agreed that each of the agreements shall be
deemed effective as of June 1, 2008.  Through these contractual
arrangements, we will, among other things, provide Shaanxi consulting and other
general business operation services and we will have the ability to
substantially influence Shaanxi’s daily operations and financial affairs,
appoint their senior executives and approve all matters requiring stockholder
approval.  As a result of these contractual arrangements, which enable
us to control Shaanxi, we will be considered the primary beneficiary of
Shaanxi.  Accordingly, we expect to consolidate the results, assets
and liabilities of Shaanxi in our financial statements.  We believe
each of the contractual arrangements and the rights and obligations of the
parties thereto are enforceable and valid in accordance with the laws of the
PRC.  Such contractual arrangements which we entered into are as
follows:





Exclusive Consulting Services
Agreement




Pursuant to the exclusive Consulting
Services Agreement, Jiahui will provide consulting services to Shaanxi in
relation to its current and proposed operations including, but not limited to,
services with respect to Shaanxi’s general business operation, human resources
and business development.  Shaanxi shall not accept any similar
services from any third party without the consent of Jiahui.  In
consideration of the services provided, Jiahui shall receive a consulting
services fee each quarter equal to all of Shaanxi’s net after tax income for
such quarter.  In addition, Jiahui shall be the sole and exclusive
owner of all rights, title, interests and intellectual property rights arising
from the performance of the exclusive consulting agreement.





Business Operations
Agreement




Pursuant to the Business Operations
Agreement, Jiahui has the right to recommend director candidates and appoint the
senior executives of Shaanxi, and approve any transactions that may materially
affect the assets, business, employment, obligations, rights or the operations
of Shaanxi.


4
 Table of Contents


Option Agreement




Pursuant to the Option Agreement,
Jiahui was granted an exclusive option to purchase from the shareholders of
Shaanxi all of their equity interests in Shaanxi at the lowest
price permitted by PRC laws applicable at the time of exercise of such option
right.  Jiahui was granted the option right immediately after the
execution of the Option Agreement, and such option right cannot be revoked or
amended during the term of the Agreement. Jiahui may exercise part or full
option anytime during the term of the Option Agreement.  The Option
Agreement has a term of 10 years.





Share Pledge Agreement




Pursuant to the Share PledgeAgreement,the shareholders of Shaanxipledged 100% of their equity
interest inShaanxitoJuahuitoensure that Shaanxi will perform its
obligations under the Consulting Services Agreement and the various other
related agreements by and between Juahui and Shaanxi, and in order to provide an
additional mechanism for Juahui to enforce its rights to collect the consulting
services fees from Shaanxi





Proxy Agreement




Pursuant to the Proxy Agreement, the
shareholders ofShaanxihavegranted to Jiahui a proxy to vote all
of shares in Shaanxi for the maximum period of time permitted by
law.




Shaanxi
is the developer of the Yan-Ta Shopping Mall project in Xi’an,
China.  Comprising a large urban park, a high-end shopping mall and
entertainment facilities, The Yan-Ta Shopping Mall is listed as one of The City
of Xi’an’s Key Projects for 2005/06. The park, already under way, will occupy 12
acres. Below ground, a three-story shopping mall will provide 1,291,670 square
feet of retail and commercial space plus 2,000 parking
spaces.  Designed to complement the unique characteristics of Xi’an’s
historic and geographic features, the park will provide space for walking,
exercising and large-scale gatherings. The northern part of the park will have
an open performance platform; a large fountain will dominate the middle of the
expanse; and the southern section will be plant and flower
gardens.  Fountains and waterfalls with displays operated with
advanced technology will be scattered throughout. Well designed lighting will
keep the city night alive. This square is expected to be a landmark in Xi’an’s
southern area and will be known to as a luxurious place for shopping, work and
leisure.  Phase I construction of this project has been
completed.  The entire project is planned to be carried out in four
phases.  Approximately 23% of the phase one mall space has been
sold.  The units sold are under contract with the Company to manage
the rental of these spaces.  The rest of the space has been rented or
is available for rent as of December 2008.




The
Yan-Ta Shopping Mall project is expected to draw tourists visiting Xi’an and
residents from primarily three southern districts -- Yan-Ta, Qu-Jiang, and Xi
Gao Xin.  There are a total of 9 districts that constitute
Xi’an.  The total population of these three districts is estimated to
be in the vicinity of 3 million.  As home to numerous institutions of
higher learning such as the prestigious Xi’an Jiaotong University, Northwest
University of Political Science and Law, Xi’an Music Institute, and Xi’an Arts
Institute, Yan-Ta District is known nationally as a cultural and academic
center.  There are over 200,000 college students and nearly 10,000
educators who live in or commute into the area.   In 2004 Yan-Ta
led all nine districts in attracting foreign investments.





Phase I of Shopping Mall




Construction under Phase I commenced in
2004 and was completed in 2007.  Occupancy began in October
2007.  Total construction area is approximately 32,945 square
meters.  The intended use will be a mix of (i) leisure, entertainment,
and dining and food services (50%), (ii) movie cinema (20%), (iii) book and
electronic retailers (20%), and (iv) clothing and accessories retailers
(10%).





Phase II of Shopping Mall




With
planned construction area of 75,765 square meters (815,528 sq ft), Phase II will
be significantly greater than Phase I in scope and investment
amount.  Development of Phase II is now scheduled to commence during
2009 with occupancy scheduled for completion in 2011.




Shaanxi
controls the land for the project through a 50-year lease granted by the
government.  The total costs of the land acquisition are
$35,176,125.




Management
believes that the foregoing transaction with Shaanxi is on terms at least as
favorable as could
have been obtained from an unrelated third party.


5
 Table of Contents




Our
Business Strategies




Our
business strategies include the following aspects:




Concentrate on a
Few Carefully Selected Geographic Markets -The Company’s current market
focus includes Xi’an and the surrounding areas where the Company is one of the
leading owners and developers. CPD selects markets and sub-markets where tenants
have demonstrated a preference for high-quality office buildings, retail centers
and residential communities and other facilities.




Concentrate on
Activities Where High Barriers to Entry/Exist - The Company focuses its
development expertise on those markets where the lack of available sites and the
difficulty of receiving the necessary government approvals for development and
the necessary financing constitute high barriers to the creation of new supply,
and where skill, financial strength and diligence are required to successfully
develop, finance and manage high-quality properties.




Leverage the
Skills of our Management Team -CPD takes on complex, technically
challenging projects, leveraging the skills of its management team to
successfully develop, acquire or reposition properties which other organizations
may not have the capacity or resources to pursue.




Become the
Landlord of Choice -CPD concentrates on high-quality real estate
designed to meet the demands of today’s tenants who require sophisticated
telecommunications and related infrastructure and support services, and to
manage those facilities so as to become the landlord of choice for both existing
and prospective clients.




Opportunistically
Acquire Assets -The Company will seek to acquire assets which increase
the Company’s penetration in the markets where it has chosen to concentrate and
which exhibit an opportunity to improve or sustain returns through property
development.





Future
Projects




We are actively and aggressively
pursuing other real estate opportunities within Xi’an and its surrounding
areas.  Currently there are three specific projects that are in
various stages of negotiations and planning, in addition to the Yan-Ta
Project.




The Great Tang Hibiscus
Garden




The Great
Tang Hibiscus Garden (the “Garden”) is a 164-acre amusement and cultural park
that uses the Tang Dynasty for its theme.  The Garden is located in
Yan-Ta District that was constructed by the district for an investment cost of
$149 million (RMB 1.19 billion).  The park has eight attractions
(total construction area of over 600,000 square feet) including a hotel and a
banquet hall.  The theme park was opened in 2005 and has experienced
very strong park attendance. The Garden expects to generate net income of US$19
million in its first year of operation.   CPD is currently under
discussions with the district government to acquire the theme park and the
surrounding land of approximately 160 acres for a purchase price of US$250
million.





Garden Villa




The
Company has secured an option from the Yan-Ta district government to acquire a
site to develop the Garden Villa property for a projected total cost of $17.5
million (RMB 140 million).  Garden Villa lies within the Yan-Ta
District and is a short walk from Yan-Ta Shopping Plaza. The project covers 10
acres with a planned 538,196 square feet of living space. A 18-floor apartment
tower will have over 350 two and three bedroom residential units, with the first
two floors of the tower designed for retail and commercial use. Subject of
funding, development is anticipated to commence in early 2007 with occupancy
scheduled for mid 2009.





Bali Village





With a total anticipated investment
cost of $43.75 million (RMB 350 million), Bali Village is a project that the
Company intends to develop on a land site over which it has a purchase option
with the district government.  Bali Village encompasses both sides of
Chang’an Road and is situated directly south of the Yan-Ta.  The Bali
Village project covers 4.7 acres for residential development with over 1.2
million sq ft of constructed space. The




6
 Table of Contents


1,100
unit project will be developed in three phases: each phase will have two
freestanding towers with 18 stories. Each tower has two floors of retail space
and one floor of underground parking with a capacity for 500 cars.




The
City of Xi’an




Xi’an has a land area of 9,983 square
kilometers. The city’s population has grown rapidly since the beginning of the
decade, increasing from 6.9 million in 2000 to 7.4 million by
2005.  Xi’an ranks Xi’an’s regional economy produced US$15.9 billion
worth of gross domestic product in 2005 as compared to slightly over US$8
billion in 2000 (15% compounded annual growth rate).  Per capita
disposable income has grown in parallel with economic
production.  Urban resident per capita disposable income grew from
slightly less than US$ 800 in 2000 to over US$1,200.




Xi’an is located at the jointing area
of the middle and western areas of China and the transportation hub linking
southwest, middle and eastern China. It is also the largest central city along
the Euro-Asian Land transportation network - Longhai-Lanxin section, and plays
an important strategic role in the economic layout of the country. This
strategic location has made Xi’an the largest distribution centre in the
northwest China.




Compared with other urban centers in
China, Xi’an has competitive advantages in five sectors: (i) high technologies
due to the unusually large number of private and public universities, behind
only Beijing and Shanghai, (ii) equipment manufacturing, (iii) service, (iv)
cultural and (v) tourism.




In recent years, Xi’an has witnessed
significant growth in activities in supply and demand in its real estate
sector.  In 2004, over 161 million sq ft (11.4%  year on
year increase) were constructed of which 22.5 million sq ft (9.8% increase) were
in commercial spaces.




Xi’an is known for its historical and
cultural importance.  It served as the capital city for thirteen
dynasties -- Xizhou, Qin, Xihan, Xin, Donghan, Xijin, Qianzhao, Qianqin, Houqin,
Xiwei, Beizhou, Sui and Tang.  From the 11th century
BC to 9th century
AD, Xi’an was the political, economic and cultural centre of
China.  Because of its rich, ancient history, Xi’an has become one of
the nation’s most important tourist destinations (over 21 million visitors in
2004). Perhaps the most famous tourist attraction in Xi’an is the nearby tomb of
Emperor Qin Shi Huang, who in 221 BC united China under a single
kingdom.  Near his tomb, archaeologists discovered burial pits with
tens of thousands of clay statutes of soldiers and horses (Terra-Cotta Army).
Since the discovery in early ‘90s, the site has become a world-famous attraction
visited by thousands of visitors each year.




After the establishment of the People’s
Republic of China, Xi’an rapidly became an important city for national defense
industries, scientific research and higher education.  Xi’an has been
the capital city of Shaanxi Province since 1954 and is now categorized as a
sub-provincial city under which there are nine districts including Yanta, Xi Gao
Xin, and QuJiang Districts.




The
Real Estate Industry in China




China
Index Research Institute said that with the recent macroeconomic adjustments and
controls made by the government, the annual growth rate of the country’s real
estate industry will be no less than 10 percent over the next 15 years.
According to the Institute, China’s real estate industry will pass through three
stages of development before 2020: the first phase (1993-2000) saw the industry
growing at an annual rate of 13 percent; the second phase (2000-2010) is
experiencing an annual growth rate of 14 percent; and the third phase
(2010-2020) should see an annual growth rate of about 10 percent.




The
average price of residential land in major cities in 2004 was 1,166 Yuan per
square meter, an increase of 8.94 percent as compared to 2003, 6.08 percent
higher than that of land for multi-purpose use, and 6.67 percent higher than
that of land for commercial use. It is estimated that the price of residential
land will continue to rise until 2010. It is estimated that by 2010, the average
land area allocated for residential construction will reach 28 square meters per
capita, and total residential demand will be as high as 535 million to 927
million square meters, which equates to an enormous development potential for
the industry.




At
present, foreign capital accounts for 12 percent to 15 percent of all investment
in the Chinese real estate industry. Right through to 2010,foreign investment in
real estate will continue to increase, dividing market share among foreign
investors, state-owned enterprises and established domestic developers, leaving
less room for medium-sized and small non-governmental interests.


7
 Table of Contents




If Beijing is the
political heart of China, Xi’an is its historical center. The capitalof
13dynasties, the city
holds an unparalleled place in the nation’s history and culture.
World-famous as the home of the life-sized terra cotta warriors unearthed from
the tomb of the first Qin emperor, today Xi’an is a modern metropolis bustling
with commerce, trade, tourism, science, technology, manufacturing and
education.





PRC
Real Estate Laws and Regulations




Real estate developers may secure land
from the city government by obtaining exploitation and utilization rights over
land through public tendering. The maximum term for such leasehold interest
ranges from 40 to 70 years depending on the purpose of use.  Leasehold
interests obtained legally may be transferred, leased, and mortgaged during the
leasehold period.  Joint venture companies such as Jiahui and Shananxi
(post-acquisition) may participate in auctions to obtain land for development
purposes.




Similar to real estate purchasers in
western countries, Chinese buyers obtain financing from local lending
institutions with mortgage instruments.  Lenders’ security interests
are perfected by a recording with the relevant authorities.  The deed
to the title is held by the lender.  Foreclosures are implemented
through judicial foreclosure.




Foreign
Exchange Regulations




Under China’s existing foreign exchange
regulations, payments of current account items, including profit distributions,
interest payments and expenditures from trade, may be made in foreign currencies
without government approval, except for certain procedural requirements. The
Chinese government may, however, at its discretion, restrict access in the
future to foreign currencies for current account transactions and prohibit the
Company from converting its RMB revenue into foreign currencies.  In
addition, conversion of RMB for most capital account items, including direct
investments, is subject to government approval in China, and companies are
required to open and maintain separate foreign exchange accounts for capital
account items.




Competition




We face significant competition from
other owners, operators and developers of residential and office properties. Our
properties face competition from similar properties in the same
markets.  Such competition may affect our ability to attract and
retain tenants or buyers and reduce the rates and rents we are able to charge or
the purchase prices for individual apartments.  These competing
properties may have vacancy rates higher than our properties, which may result
in their owners being willing to lower rates or rent space at lower rental rates
than us or in their owners providing greater tenant improvement allowances or
other leasing concessions. This combination of circumstances could reduce our
revenues.   In addition, the real estate business in
China is highly competitive.  We compete with a large number of
companies and individuals, and many of them have significantly greater financial
and other resources than we have which may make it difficult for us to
successfully compete.





Employees





We
currently employ 20 individuals on a full-time basis.  We believe that
relations with our employees are good.




Available
Information


We file with or submit to the SEC
annual, quarterly and current periodic reports, proxy statements and other
information meeting the informational requirements of the Exchange Act. You may
inspect and copy these reports, proxy statements and other information, as well
as the registration statement and related exhibits and schedules, at the Public
Reference Room of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet website that contains reports, proxy and information
statements and other information filed electronically by us with the SEC which
are available on the SEC’s website at http://www.sec.gov. Copies of these
reports, proxy and information statements and other information may be obtained,
after paying a duplicating fee, by electronic request at the following e-mail
address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section,
100 F Street, N.E., Washington, D.C. 20549.








8
 Table of Contents




Item
1A.       Risk Factors.




In addition to other
information and financial data set forth elsewhere in this report, the
following risk factors should be considered carefully in evaluating the
Company.





Business and Financial
Risks




IF WE ARE
UNABLE TO GENERATE SUFFICIENT CASH FROM OPERATIONS OR OTHER SOURCES, WE MAY FIND
IT NECESSARY TO CURTAIL OUR DEVELOPMENT ACTIVITIES.  Significant
capital resources will be required to fund our development expenditures. Our
performance continues to be dependent on future cash flows from real estate
sales and rental income, and there can be no assurance that we will generate
sufficient cash flow or otherwise obtain sufficient funds from other sources to
meet the expected development plans for our properties.




WE ARE
VULNERABLE TO CONCENTRATION RISKS BECAUSE OUR OPERATIONS ARE CURRENTLY ALMOST
EXCLUSIVE TO THE XI’AN, PRC MARKET.  Our real estate activities are
almost entirely located in Xi’an, China. Because of our geographic concentration
and limited number of projects, our operations are more vulnerable to local
economic downturns and adverse project-specific risks than those of larger, more
diversified companies.




OUR
RESULTS OF OPERATIONS AND FINANCIAL CONDITION ARE GREATLY AFFECTED BY THE
PERFORMANCE OF THE REAL ESTATE INDUSTRY.  Our real estate activities
are subject to numerous factors beyond our control, including local real estate
market conditions (both where our properties are located and in areas where our
potential customers reside), substantial existing and potential competition,
general national, regional and local economic conditions, fluctuations in
interest rates and mortgage availability and changes in demographic conditions.
 Real estate markets have historically been subject to strong periodic
cycles driven by numerous factors beyond the control of market
participants.




Real
estate investments often cannot easily be converted into cash and market values
may be adversely affected by these economic circumstances, market fundamentals,
competition and demographic conditions. Because of the effect these factors have
on real estate values, it is difficult to predict with certainty the level of
future sales or sales prices that will be realized for individual
assets.




Our real
estate operations are also dependent upon the availability and cost of mortgage
financing for potential customers, to the extent they finance their purchases,
and for buyers of the potential customers’ existing residences.




UNFAVORABLE
CHANGES IN MARKET AND ECONOMIC CONDITIONS COULD HURT OCCUPANCY OR RENTAL RATES.
Market and economic conditions may significantly affect rental rates. Occupancy
and rental rates in our market, in turn, may significantly affect our
profitability and our ability to satisfy our financial obligations. The risks
that may affect conditions in our market include the following:





-        the
economic climate, which may be adversely impacted by industry slowdowns and
other factors;


-        local
conditions, such as oversupply of office and residential space and the demand
for officeand residential space;


-        the
inability or unwillingness of tenants to pay their current rent or rent
increases; and


-        competition
from other available office and residential buildings and changes in market
rentalrates.





OUR
OPERATIONS ARE SUBJECT TO NATURAL RISKS. Our performance may be adversely
affected by weather conditions that delay development or damage
property.




DEPENDENCE
ON NATURAL RESOURCES AND CONSTRUCTION MATERIALS IN CHINA.  The major
materials of the real estate industry are land and construction
materials. Land supply is strictly controlled by the Chinese
government.  The continuing land consumption by the real estate
industry in China will make it continually difficult for real estate
developers to obtain land which may possibly lead to substantial increase
of land price, which will in turn increase the development
costs.  In addition, although the costs of some construction
materials have declined in recent years, the price of new materials due to
the implementation of environmental laws may still increase. The dependence
on land and construction materials makes our operating results
unpredictable.




DEPENDENCE
ON KEY EMPLOYEES.  Our operations have been to date, and will continue
to be, substantially dependent on the continued services of our executive
officers and other key personnel,  who generally


9
 Table of Contents


have
extensive experience in the real estate industry and have been employed by us
for substantial  periods of time. The loss of the services of our
executive officers and other any key employees, or the failure to
attract and retain other qualified and experienced personnel on acceptable
terms, could have an adverse effect on our business and results of
operations.




THE
PEOPLE’S REPUBLIC OF CHINA’S ECONOMIC POLICIES COULD AFFECT OUR
BUSINESS. Substantially all of our assets are located in the People’s
Republic of China and substantially all of our revenue is derived from our
operations in The People’s Republic of China. Accordingly, our results of
operations and prospects are subject, to a significant extent, to the
economic, political and legal developments in the People’s Republic of
China.




While the
People’s Republic of China’s economy has experienced significant growth in
the past twenty years, such growth has been uneven, both geographically and
among various sectors of the economy. The Chinese government has
implemented various measures to encourage economic growth and guide
the allocation of resources. Some of these measures benefit the overall
economy of the People’s Republic of China, but they may also have a
negative effect on us. For example, operating results and financial
condition may be adversely affected by the government control over capital
investments or changes in tax regulations.




The
economy of the People’s Republic of China has been changing from a planned
economy to a more market-oriented economy. In recent years the
Chinese government has implemented measures emphasizing the utilization of
market forces for economic reform and the reduction of state ownership of
productive assets, and the establishment of corporate governance in
business enterprises; however, a substantial portion of productive assets
in the People’s Republic of China are still owned by the Chinese
government. In addition, the Chinese government continues to play a
significant role in regulating industry development by imposing industrial
policies. It also exercises significant control over the People’s Republic
of China’s economic growth through the allocation of resources, the control
of payment of foreign currency- denominated obligations, the setting of
monetary policy and the provision of preferential treatment to particular
industries or companies.




PRODUCT
STRUCTURE RISK.   Our current products are quality
residential and office buildings located mainly in the central district of
Xi’an.  The target clients are high income city
dwellers.  Due to the change of the
real  property market structure in the city, the client group is
gradually shifting from high income class to medium
income  white-collar workers.  As a result, requirements of
clients may change and they may be more sensitive to price.  This may
force us to adjust our  development  strategy and our future
success  may depend to a large extent on the successful
implementation of new strategies.





BECAUSE REAL ESTATE INVESTMENTS ARE
ILLIQUID, WE MAY NOT BE ABLE TO SELL OUR PROPERTY WHEN DESIRED.  Real
estate investments such as our properties generally cannot be  sold
quickly. We may not be able to sell our property when we desire in response to
economic or other conditions.





LAND AGREEMENTS MAY CONSTRAIN US FROM
BEING ABLE TO SELL OUR PROPERTIES AT A TIME WHEN IT WOULD BE IN THE BEST
INTEREST OF SHAREHOLDERS TO DO SO.   As is the case throughout
China, we do not own the land upon which our properties are located. Rather, the
land is subject to various land use permits granted by the Chinese government.
Any sale of our property would require prior consent of the government, which
may make it difficult or impossible to sell our property at the time we want to
do so.




A DECLINE
IN ECONOMIC ACTIVITY IN XI’AN, IN CHINA, OR IN THE FAR EAST IN GENERAL COULD
REDUCE OUR REVENUES.  If there is a decline in economic activity in
Xi’an, in China, or in the Far East in general, our residential and office
building occupancy or rental rates could be reduced, which would reduce our
revenues.





OUR PROPERTIES FACE SIGNIFICANT
COMPETITION WHICH COULD REDUCE OUR REVENUES; MANY COMPETITORS ARE LARGER AND
FINANCIALLY STRONGER THAN US.  We face significant competition from
other owners, operators and developers of residential and office properties. Our
properties face competition from similar properties in the same
markets.  Such competition may affect our ability to attract and
retain tenants or buyers and reduce the rates and rents we are able to charge or
the purchase prices for individual apartments.  These competing
properties may have vacancy rates higher than our properties, which may result
in their owners being willing to lower rates or rent space at lower rental rates
than us or in their owners providing greater tenant improvement allowances or
other leasing concessions. This combination of circumstances could reduce our
revenues.    In addition, the real estate business in
China is highly competitive.  We compete with a large number of
companies and individuals, and many of them have significantly greater financial
and other resources than we have which may make it difficult for us to
successfully compete.


10
 Table of Contents




TENANT
DELINQUENCIES, BANKRUPTCIES OR INSOLVENCIES COULD REDUCE OUR
REVENUES.  The bankruptcy or insolvency or other failure to pay of our
tenants is likely to adversely affect the income produced by our properties. If
a tenant defaults, we may experience delays and incur substantial costs in
enforcing our rights as landlord. It is highly unlikely that a bankrupt or
insolvent tenant would pay in full amounts it owes us under a lease. Without
regard to the manner in which the lease termination occurs, we are likely to
incur additional costs in the form of tenant improvements and leasing
commissions in our efforts to lease the space to a new tenant. In these cases,
our revenues may be reduced.




PRODUCT
LIABILITY RISKS.  Liability could arise from claims by residents in
the buildings developed by us if there is any defect in the buildings or
accidents.  To date, we have not experienced any problems associated with
claims by residents and purchasers. Although we carry the conventional
insurance coverage for liabilities, no assurance  can be given
that it will be adequate  to protect us or that the insurance
coverage will continue to be available to us on reasonable terms.




A
TERRORIST ACT COULD REDUCE OUR REVENUES.   Depending upon its
magnitude, a terrorist act could severely damage our properties or otherwise
cause a loss of tenants or other economic downturn in the Xi’an area, which
could reduce our revenues. We do not maintain terrorism insurance for our
properties or the resulting business interruption.




IF
RELATIONS BETWEEN THE UNITED STATES AND CHINA WORSEN, INVESTORS MAY BE UNWILLING
TO HOLD OR BUY OUR STOCK AND OUR STOCK PRICE MAY DECREASE.  At various
times during recent years, the United States and China have had significant
disagreements over political and economic issues. Controversies may arise in the
future between these two countries. Any political or trade controversies between
the United States and China, whether or not directly related to our business,
could reduce the price of our common stock.




A LACK OF
ADEQUATE REMEDIES AND IMPARTIALITY UNDER THE CHINESE LEGAL SYSTEM MAY MAKE IT
IMPOSSIBLE TO ENFORCE THE AGREEMENTS TO WHICH WE ARE A PARTY AND THUS REDUCE OUR
REVENUES.  We periodically enter into agreements governed by Chinese
law. Our revenues could be reduced if these agreements are not respected. In the
event of a dispute, enforcement of these agreements in China could be extremely
difficult.  Unlike the United States, China has a civil law system
based on written statutes in which judicial decisions have little precedential
value. The Chinese government has enacted some laws and regulations dealing with
matters such as corporate organization and governance, foreign investment,
commerce, taxation and trade. However, the government’s experience in
implementing, interpreting and enforcing these recently enacted laws and
regulations is limited, and our ability to enforce commercial claims or to
resolve commercial disputes is uncertain. Furthermore, enforcement of the laws
and regulations may be subject to the exercise of considerable discretion by
agencies of the Chinese government, and forces unrelated to the legal merits of
a particular matter or dispute may influence their determination. These
uncertainties could limit the protections that are available to us and reduce
our revenues.




IT WILL
BE EXTREMELY DIFFICULT TO ACQUIRE JURISDICTION AND ENFORCE LIABILITIES AGAINST
OUR OFFICERS, DIRECTORS AND ASSETS BASED IN THE PEOPLE’S REPUBLIC OF
CHINA.  Because the Company’s executive officers and directors are
Chinese citizens it may be difficult, if not impossible, to acquire jurisdiction
over these persons in the event a lawsuit is initiated against us and/or its
officers and directors by a stockholder or group of stockholders in the United
States. Also, because our assets are located in the People’s Republic of China
it would also be extremely difficult to access those assets to satisfy an award
entered against it in a United States court.





Risks Related To Our Common
Stock




WE DO NOT
INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.  We have never
declared or paid a dividend on our common stock. We intend to retain earnings,
if any, for use in the operation and expansion of our business and, therefore,
do not anticipate paying any dividends in the foreseeable future.




THE
TRADING PRICE OF OUR COMMON STOCK MAY BE VOLATILE.  The trading price
of our shares has, from time to time, fluctuated widely and in the future may be
subject to similar fluctuations. The trading price may be affected by a number
of factors including the risk factors set forth in this report as well as our
operating results, financial condition, announcements of innovations or new
products by us or our competitors, general conditions in the market place, and
other events or factors. Although there are certain registered broker dealers
currently make a market in our common stock, we cannot assure you that any of
these firms will continue to


11
 Table of Contents


serve as
market makers or have the financial capability to stabilize or support our
common stock. A reduction in the number of market makers or the financial
capability of any of these market makers could also result in a decrease in the
trading volume of and price of our shares. In recent years, broad stock market
indices, in general, and the securities of technology companies, in particular,
have experienced substantial price fluctuations. Such broad market fluctuations
may adversely affect the future trading price of our common stock.




OUR STOCK
PRICE MAY EXPERIENCE VOLATILITY.  The market price of the common
stock, which currently is listed in the OTC Bulletin Board, has, in the past,
fluctuated over time and may in the future be volatile.  The Company
believes that there are a small number of market makers that make a market in
the Company’s common stock.  The actions of any of these market makers
could substantially impact the volatility of the Company’s common
stock.




POTENTIAL
FUTURE SALES PURSUANT TO RULE 144.  Many of the shares of Common Stock
presently held by management and others are “restricted securities” as that term
is defined in Rule 144, promulgated under the Securities Act.  Under
Rule 144, a person (or persons whose shares are aggregated) who has satisfied a
certain holding period, may, under certain circumstances sell such shares or a
portion of such shares.  Effective as of February 15, 2008, the
holding period for the resale of restricted securities of reporting companies
was shortened from one year to six months.  Additionally, the SEC
substantially simplified Rule 144 compliance for non-affiliates by allowing
non-affiliates of reporting companies to freely resell restricted securities
after satisfying a six-month holding period (subject only to the Rule 144(c)
public information requirement until the securities have been held for one year)
and by allowing non-affiliates of non-reporting companies to freely resell
restricted securities after satisfying a 12-month holding period. Such
holding periods have already been satisfied in many
instances.  Therefore, actual sales or the prospect of sales of such
shares under Rule 144 in the future may depress the prices of the Company’s
securities.




OUR
COMMON STOCK IS A PENNY STOCK. Our Common Stock is classified as a penny stock,
which is traded on the OTCBB.  As a result, an investor may find it
more difficult to dispose of or obtain accurate quotations as to the price of
the shares of the Common Stock.  In addition, the “penny stock” rules
adopted by the Securities and Exchange Commission subject the sale of the shares
of the Common Stock to certain regulations which impose sales practice
requirements on broker-dealers.  For example, broker-dealers selling
such securities must, prior to effecting the transaction, provide their
customers with a document that discloses the risks of investing in such
securities. Furthermore, if the person purchasing the securities is someone
other than an accredited investor or an established customer of the
broker-dealer, the broker-dealer must also approve the potential customer’s
account by obtaining information concerning the customer’s financial situation,
investment experience and investment objectives.  The broker-dealer
must also make a determination whether the transaction is suitable for the
customer and whether the customer has sufficient knowledge and experience in
financial matters to be reasonably expected to be capable of evaluating the risk
of transactions in such securities. Accordingly, the Commission’s rules may
result in the limitation of the number of potential purchasers of the shares of
the Common Stock.  In addition, the additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in the Common Stock, which could severely limit the market of the
Company’s Common Stock.




LIMITATIONS
OF THE OTCBB CAN HINDER COMPLETION OF TRADES.  Trades and quotations
on the OTCBB involve a manual process that may delay order processing. Price
fluctuations during a delay can result in the failure of a limit order to
execute or cause execution of a market order at a price significantly different
from the price prevailing when an order was entered.  Consequently,
one may be unable to trade in the Company’s Common Stock at optimum
prices.




THE OTCBB
IS VULNERABLE TO MARKET FRAUD.   OTCBB securities are frequent
targets of fraud or market manipulation, both because of their generally low
prices and because OTCBB reporting requirements are less stringent than those of
the stock exchanges or NASDAQ.




INCREASED
DEALER COMPENSATION COULD ADVERSELY AFFECT STOCK PRICE.  OTCBB
dealers’ spreads (the difference between the bid and ask prices) may be large,
causing higher purchase prices and less sale proceeds for
investors.




Except as
required by the Federal Securities Law, the Company does not undertake any
obligation to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this Form 10-KSB or for any
other reason.


12
 Table of Contents


Item 1B.       Unresolved Staff
Comments.




We are a smaller reporting
company as defined by Rule 12b-2 of the Securities Exchange Act of 1934
and are not required to provide the information under this
item.




Item 2.       Properties.




Since November 2005, we
have maintained our executive offices on the top two floors (26th and 27th
floors) of the Yangming International Tower (Yangming), which is owned
by Jiahui, our 90.28% subsidiary.   The building is located at 89
Chang’an Middle Road, Xi’an, China.  Management believes that the
current space is adequate for our needs for the foreseeable
future.


Item 3.       Legal
Proceedings.
  There are no
material pending legal proceedings to which the Company is a party or to which
any of its property is subject.




Item
4.       Submission
of Matters to a Vote of Security
Holders.
  No matter was
submitted during the fourth quarter of the fiscal year covered by this report to
a vote of security holders.






PART II


Item 5.       Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
  Market
Information
  The
Company’s Common Stock is presently being traded in the over-the-counter market
under the symbol “CPDV” and is listed on the OTC Bulletin Board.  For
the periods indicated, the following table sets forth the high and low sales
prices per share of our common stock.  These prices represent
inter-dealer quotations without retail markup, markdown, or commission and may
not necessarily represent actual transactions.




Year
      ended December 31, 2007:
                      
                      High
                      
                      
                      LowJan.
      1, 2007 to March 31, 2007
                      
                      $
                      1.08
                      
                      
                      $
                      0.90April
      l, 2007 to June 30, 2007
                      
                      $
                      1.85
                      
                      
                      $
                      1.10July
      1, 2007 to Sept. 30, 2007
                      
                      $
                      3.45
                      
                      
                      $
                      1.30Oct.
      1, 2007 to Dec. 31, 2007
                      
                      $
                      2.25
                      
                      
                      $
                      1.30




Year
      ended December 31, 2008:
                          
                          High
                          
                          
                          LowJan.
      1, 2008 to March 31, 2008
                          
                          $
                          3.10
                          
                          
                          $
                          2.04April
      l, 2008 to June 30, 2008
                          
                          $
                          3.05
                          
                          
                          $
                          1.30July
      1, 2008 to Sept. 30, 2008
                          
                          $
                          1.10
                          
                          
                          $
                          1.10Oct.
      1, 2008 to Dec. 31, 2008
                          
                          $
                          1.10
                          
                          
                          $
                          0.30




Holders




As of
March 31, 2009, there were approximately 390 stockholders of record of the
Company’s Common Stock.  This does not reflect persons or entities
that hold their stock in nominee or “street name”.


13
 Table of Contents




Dividends





We have
not declared any dividends to date. We have no present intention of paying any
cash dividends on our common stock in the foreseeable future, as we intend to
use earnings, if any, to generate growth. The payment by us of dividends, if
any, in the future, rests within the discretion of our Board of Directors and
will depend, among other things, upon our earnings, our capital requirements and
our financial condition, as well as other relevant factors. There are no
restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends.





Recent
Sales of Unregistered Securities





We sold
the following equity securities during the fiscal year ended December 31, 2008
that were not registered under the Securities Act of 1933, as amended (the
“Securities Act”): None.




Item
6.       Selected Financial
Data.




We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





Item
7.       Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
  The
following discussion should be read in conjunction with the audited consolidated
financial statements and the notes thereto appearing elsewhere in this report
and is qualified in its entirety by the foregoing.





Executive
Overview




China
Properties Developments, Inc. (“we”, “us”, “our” or the “Company”) was
incorporated in the State of Colorado on September 15, 2001 under the name
Bangla Property Management, Inc. (“Bangla”).  In October 2005, and
pursuant to an Amended and Restated Agreement and Plan of Merger dated August
17, 2005, Bangla acquired Wollaston Industrial Limited (“Wollaston”), the owner
of 90.28% equity interests of Xi’an Jiahui Real Estate Co., Ltd (“Jiahui”), by
the issuance of 10 million shares of common stock to Wollaston’s
shareholders.  Bangla’s name was subsequently changed to China
Properties Developments, Inc. to better reflect the business nature of the
Company.




Prior to
the acquisition of Wollaston, the principal business of the Company was real
estate property management.  Contemporaneously with acquisition of
Wollaston, the Company transferred all of the common stock of Bangla Properties
Inc., the Company’s then subsidiary which held all of the Company’s assets prior
to the acquisition of Wollaston, to Shawn Erickson, the Company’s then
President.  As a result of the Wollaston acquisition, we are now
primarily engaged in the business of real estate development, including sale and
lease of real estate in Xi’an City, Shaanxi Province, People’s Republic of China
(“PRC”). Our primary business objective has been to pursue the practice of
dividing our completed development projects into discrete units and selling them
to third party buyers to generate development income.  In addition, we
have and will retain portions of our completed projects to earn recurring
leasing income.




Wollaston
was incorporated on April 21, 2004 in the British Virgin
Islands.   As mentioned above, Wollaston owns 90.28% of its
subsidiary, Jiahui, formed under the Company Law of the People’s Republic of
China.  Jiahui is a sino-foreign joint venture company formed on December
17, 1996 by Xi’an Xiangrui Real Estate Co. Ltd (Xiangrui) and American JHL
Industrial Limited (JHL) in Xi’an, China.  Since Jiahui is approximately
90% owned by a foreign entity, it is considered as a foreign joint venture
company in PRC.




On June
23, 2008, and through Jiahui, our 90.28% owned subsidiary, we entered into a
series of agreements effective as of June 1, 2008 with Shaanxi Xinyuan Real
Estate Co. Ltd., a corporation organized under the laws of the PRC (“Shaanxi”),
which we believe gives us effective control over its business.  Shaanxi's
results of operations are included in the consolidated statement of operations
of the Company.





Results
of Operations




Revenues were $29,308,000
for the year ended December 31, 2008 compared to revenues of $2,408,000 for the
year ended December 31, 2007. The increase in revenues is


14
 Table of Contents




primarily
due to Shaanxi’s revenues being included in our results of operations for the
year ended December 31, 2008, resulting from the series of agreements entered
into with Shaanxi in June 2008.  With the completion in October 2007 of
Phase I of Shaanxi’s Yan-Ta shoping mall (see “Operations Outlook” below),
delivery of pre-sold spaces was able to take effect and revenues were recognized
in the year ended December 31, 2008.




Gross
profit, defined as sales less cost of sales, was $18,442,000 for the year ended
December 31, 2008 compared to $722,000 for the year ended December 31,
2007.  Cost of sales consists of costs such as construction and labor
costs.  Cost of sales were $10,866,000 for the year ended December 31,
2008 compared to $1,686,000 for the year ended December 31, 2007 which change
was primarily due to Shaanxi’s results being included in the statements of the
Company for the year ended December 31, 2008.  We also achieved rental
income of $3,327,000 for the year ended December 31, 2008 compared to rental
income of $375,000 for the year ended December 31, 2007.




Our
operating expenses were $3,707,000 for the year ended December 31, 2008 compared
to $944,000 for the year ended December 31, 2007.  Operating expenses
increased primarily as a result of an increase in general and administrative
expenses which were $1,152,000 for the year ended December 31, 2008 compared to
$302,000 for the year ended December 31, 2007, as well as an increase in sales
taxes which were $1,859,000 for the year ended December 31, 2008 which increased
primarily due to a substantial increase in sales of condominium units and office
space, compared to sales taxes of $339,000 for the year ended December 31,
2007. Legal and professional fees decreased by $102,000 for the year ended
December 31, 2008 compared to the prior year.  Selling expenses
increased by $264,000 for the year ended December 31, 2008 compared to the year
ended December 31, 2007.  Depreciation expense charged to operations
was $387,000 for 2008 compared to $236,000 for 2007.




Operating
income was $15,412,000 for the year ended December 31, 2008 compared to
operating income of $153,000 for the year ended December 31, 2007. Such change
was primarily due to the increase achieved in revenues from the sale of building
space.




Investment
and interest income totaled $44,000 for the year ended December 31, 2008
compared to $42,000 in interest income for 2007.  There was no
investment income in 2007.  For the year ended December 31, 2008, such
investment and interest income was offset by interest expenses of $2,614,000 and
late delivery penalties of $105,000.  Interest expenses were $298,000
and late delivery penalties were $39,000 in the prior year.




We
achieved comprehensive income of $9,716,000 for the year ended December 31, 2008
compared to a comprehensive loss of $35,000 for the year ended December 31,
2007.  The increase in comprehensive income for 2008 is primarily due
to an increase in revenues from the sale of building space offset by an
increases in cost of sales and operating expenses.





Operations
Outlook




During
the next twelve months, we intend to continue to make efforts to sell and lease
the remaining spaces of Yangming International Tower.   In
addition, and as mentioned above, on June 23, 2008, we entered into a series of
agreements effective as of June 1, 2008 with Shaanxi Xinyuan Real Estate Co.
Ltd. (“Shaanxi”), a corporation organized under the laws of the PRC, which we
believe gives us effective control over the business of
Shaanxi.  Shaanxi is 84.0% owned by Shaanxi Jiahui Group which is
majority owned by by Ping’an Wu and his family, and 16.0% owned by Shuzhen
Yang.  Ping’an Wu is the Company’s Chairman, Chief Executive Officer,
President and a director.





Contemporaneously
with the execution of the series of agreements with Shaanxi, the Company also
entered into a Termination Agreement with Shaanxi pursuant to which the parties
agreed to terminate and abandon the Securities Subscription Agreement entered
into on June 13, 2007 pursuant to which the Company had agreed to subscribe for
and purchase new treasury shares of Shaanxi for RMB 230,000,000 (which was
estimated to be approximately US$30 million at the current currency exchange
rate which was subject to change), and Shaanxi had agreed to issue the shares to
the Company, such that the Company would own 90% of the issued and outstanding
share capital of Shaanxi after the purchase had been completed.





Our
relationship with Shaanxi and its stockholders are now governed by a series of
contractual arrangements entered into on June 23, 2008 between Jiahui and
Shaanxi.  The parties have agreed that each of the agreements shall
be deemed effective as of June 1, 2008.  Through these
contractual arrangements, we will, among other things, provide Shaanxi
consulting and other general business operation services and we will have the
ability to substantially influence Shaanxi’s daily operations and financial
affairs, appoint their senior executives and


15
 Table of Contents




approve
all matters requiring stockholder approval.  As a result of these
contractual arrangements, which enable us to control Shaanxi, we will be
considered the primary beneficiary of Shaanxi.  We believe each of the
contractual arrangements and the rights and obligations of the parties thereto
are enforceable and valid in accordance with the laws of the PRC.




Shaanxi
is the developer of the Yan-Ta Shopping Mall project in Xi’an,
China.  Comprising a large urban park, a high-end shopping mall and
entertainment facilities, The Yan-Ta Shopping Mall is listed as one of The City
of Xi’an’s Key Projects for 2005/06. The park, already under way, will occupy 12
acres. Below ground, a three-story shopping mall will provide 1,291,670 square
feet of retail and commercial space plus 2,000 parking
spaces.  Designed to complement the unique characteristics of Xi’an’s
historic and geographic features, the park will provide space for walking,
exercising and large-scale gatherings. The northern part of the park will have
an open performance platform; a large fountain will dominate the middle of the
expanse; and the southern section will be plant and flower
gardens.  Fountains and waterfalls with displays operated with
advanced technology will be scattered throughout. Well designed lighting will
keep the city night alive. This square is expected to be a landmark in Xi’an’s
southern area and will be known to as a luxurious place for shopping, work and
leisure.  Development of Phase I of Yan-Ta Shopping Mall commenced in
2004 and occupancy began upon completion in October 2007. Development of Phase
II is now scheduled to commence during 2009 with occupancy scheduled for
completion in 2011.




We
believe that the foregoing transaction with Shaanxi is on terms at least as
favorable as could have been obtained from an unrelated third
party.




We are
also actively and aggressively pursuing other real estate opportunities within
Xi’an and its surrounding areas.  Currently there are three specific
projects that are in various stages of negotiations and planning, in addition to
the Yan-Ta Project being undertaken by Shaanxi.





We cannot
predict with certainty what revenues we can expect during the next twelve
months, although we believe that we probably will have enough revenue, when
added to our cash on hand, to pay our operating expenses, including our debt
service, for the next twelve months.  In addition, there can be no
assurance that any of our current or future projects will be a commercial
success.  However, significant capital resources will be required to
fund our development expenditures.  Since our performance continues to
be dependent on future cash flows from real estate sales and rental income,
there can be no assurance that we will generate sufficient cash flow or
otherwise obtain sufficient funds from other sources to meet the expected
development plans for our properties.  We anticipate that we will seek
to raise additional capital to expand our operations, although we cannot
guarantee that we will be able to raise that capital on terms acceptable to us
or at all.





Liquidity
and Capital Resources




On
December 31, 2008, we had working capital of $3,865,000 and stockholders’ equity of
$19,168,000.  Also, at December 31, 2008, we had cash of $582,000,
total assets of $65,541,000 and total liabilities of $46,373,000.  On
December 31, 2007, we had a working capital deficit of $5,531,000 and
stockholders’ equity of $830,000.  Also, at December 31, 2007, we had
cash of $476,000, total assets of $24,801,000 and total liabilities of
$23,971,000.




A
substantial portion of our total liabilities consists of short-term and
long-term bank loans and mortgages, and other amounts due to related
parties.  At December 31, 2008, we had short-term bank loans of
$15,567,000 and amounts due to related parties of $13,139,000, mortgages payable
of $1,723,000 and notes payable of $4,669,000.  At December 31, 2007,
we had short-term bank loans of $4,980,000 and amounts due to related parties of
$9,768,000, and mortgages payable of $2,425,000 and no long-term notes
payable.




Net cash
used by operating activities was $4,070,000 for the year ended December 31,
2008, which was primarily the result of net income of $9,553,000, decreases in
prepaid expense of $1,575,000, decrease in inventory of $5,424,000, increase in
other current liabilities of $3,265,000, offset by a decrease in deferred
revenue of $24,000,000.  Net cash used by operating activities was
$1,715,000 for the year ended December 31, 2007, which was primarily the result
of a net loss of $143,000, together with a decrease in prepaid expenses of
$145,000, decreases in accounts payable of $1,229,000, and a decrease in
deferred revenue of $203,000.




For the
years ended December 31, 2008, there was net cash used by investing activities
of $4,565,000 compared to net cash from investing activities of $3,483,000 for
the year ended December 31, 2007.   For the year ended December
31, 2008, net cash provided by financing activities was $7,507,000 compared to
net cash used by financing activities of $962,000 for the year ended December
31, 2007.


16
 Table of Contents




As
mentioned above, we believe that we have sufficient revenue, when added to our
cash on hand, to pay our operating expenses for the next twelve
months.  However, significant capital resources will be required to
fund our development expenditures.  We anticipate that we will seek to
raise additional capital to expand our operations, although we cannot guarantee
that we will be able to raise that capital on terms acceptable to us or at
all.





Other
Information - Certain Relationships and Related Transactions





To date,
several related party transactions have taken place, in addition to the
transactions described above with Shaanxi.  We believe
that  any transactions between us and our officers, directors,
principal stockholders, affiliates or advisors have been or will be on terms no
less favorable to us than those reasonably obtainable from third
parties.    As of December 31, 2008, there were advances to
officers and employees outstanding of $1,085,000, and loans due from other
related parties of $13,478,000.  As of December 31, 2008, there was
$13,139,000 due to related parties.   As of December 31, 2007,
there were advances to officers and employees outstanding of $188,000, and loans
due from other related parties of $1,951,000.  As of December 31,
2007, there was $9,768,000 due to related parties.   Loans from
and to related parties represent temporally short-term loans from/to affiliates,
which are majority owned and controlled by directors of the
Company.  These loans are unsecured, non-interest bearing and have no
fixed terms of repayment, therefore, deemed payable on demand.





We lease
office and retail space to an affiliate, Shaanxi Jiahui Hantang Book Publishing
Co., Ltd., which is majority owned and controlled by directors of the
Company.   The lease period is from January 1, 2003 to December
31, 2012.  The rent is $209,000 (based upon the average exchange rate
of the RMB for 2008) per year and the rent is payable
semi-annually.





We lease
the 24th and
25th floor
of the Yangming Building to a related party, Yangming Soho Commercial Flat,
which is majority owned and controlled by directors of the
Company.   There is no lease and no rental income has been
collected from this related party.  The Company estimates that annual
rent, using current rental values, would be approximately $62,000 (based upon
the average exchange rate of the RMB for 2008).





Recent
Accounting Pronouncements




The
following is disclosure regarding recent accounting pronouncements and their
effect or potential effect on the Company’s financial statements.




In May
2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement
No. 154 “Accounting Changes and Error Corrections – a replacement of APB Opinion
No. 20 and FASB Statement No. 3”. This statement replaces APB Opinion No. 20
“Accounting Changes” and FASB Statement No. 3 “Reporting Accounting Changes in
Interim Financial Statements”, and changes the requirements for the accounting
for and reporting of a change in accounting principle.  It applies to
all voluntary changes in accounting principle and to changes required by an
accounting pronouncement which does not include specific transition provisions.
FASB No. 154 requires retrospective application to prior periods’ financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change.




When it
is impracticable to determine the period-specific effects of an accounting
change on one or more individual prior periods presented, this statements
requires that the new accounting principle be applied to the balances of assets
and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a
corresponding  adjustment  be  made  to  the  opening  balance  of  retained
earnings  for  that period rather than being reported in an
income statement. When it is impracticable to determine the cumulative effect of
applying a change in accounting principle to all prior periods, this statement
requires that the new accounting principle be applied as if it were adopted
prospectively from the earliest date applicable.  We adopted this
Statement and retrospectively restated our results of operation, financial
position, and statement of cash flows in 2005.




In
December 2006, the FASB issued SFAS No. 123R “Share-Based Payment.” This
Standard addresses the accounting for transactions in which a company receives
employee services in exchange for (a) equity instruments of the company or (b)
liabilities that are based on the fair value of the company's equity instruments
or that may be settled by the issuance of such equity
instruments.  This Standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board
Opinion  No. 25, “Accounting for Stock Issued to Employees,” and
requires that such transactions be accounted for using a


17
 Table of Contents


fair-value-based
method. The Standard is effective for periods beginning after June 15,
2006.  The adoption of the statement had no impact on the Company's
results of operation or financial position.





Off-Balance
Sheet Arrangements





We are not currently a party to, or
otherwise involved with, any off-balance sheet arrangements that have or are
reasonably likely to have a current or future material effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.


Item
7A.       Quantitative and Qualitative Disclosures
About Market Risk.





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.





Item 8.       Financial Statements
and Supplementary Data.
  See the
Financial Statements annexed to this report.




Item 9.       Changes in and Disagreements
with Accountants  on Accounting and Financial
Disclosure.





None.





Item 9A(T).       Controls and
Procedures.




Under the
supervision and with the participation of our management, including the Chief
Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period
covered by this report.  Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that, as of December 31,
2008, these disclosure controls and procedures were effective to ensure that all
information required to  be disclosed by us in the reports that we
file or submit under the Exchange Act is: (i) recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rule and
forms; and (ii) accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.




There
have been no material changes in internal control over financial reporting that
occurred during the fourth fiscal quarter that have materially affected, or are
reasonably likely to materially affect the Company’s internal control over
financial reporting.





Management’s
Annual Report on Internal Control over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  Internal control over financial
reporting is a process designed by, or under the supervision of, the Chief
Executive Officer and Chief Financial Officer and effected by our Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.




Our evaluation of internal control over financial reporting includes
using the COSO framework, an integrated framework for the evaluation of internal
controls issued by the Committee of Sponsoring Organizations of the Treadway
Commission, to identify the risks and control objectives related to the
evaluation of our control environment.




Based on our
evaluation under the
frameworks described above, our management has concluded that our
internal control over financial reporting was effective as of December 31,
2008.




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 requirements 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.





18
 Table of Contents




Item 9B.       Other
Information.





Not
applicable.




PART III





Item 10.       Directors, Executive
Officers, Promoters, Control Persons and Corporate Governance; Compliance with
Section 16(a) of the Exchange Act.


Set forth below are our present
directors and executive officers.  Note that there are no other
persons who have been nominated or chosen to become directors nor are there any
other persons who have been chosen to become executive
officers.  There are no arrangements or understandings between any of
the directors, officers and other persons pursuant to which such person was
selected as a director or an officer.  Directors are elected to serve
until the next annual meeting of stockholders and until their successors have
been elected and have qualified.  Officers serve at the discretion of
the Board of Directors.





Present
      Position
                                Has
      Served asName
                                Age
                                and
      Offices
                                Director
      SincePing’an
      Wu
                                51
                                Chairman,
      Chief Executive Officer
                                2005President,
      DirectorShuo
      (Steven) Lou
                                47
                                Chief
      Financial Officer,
                                2005Chief
      Accounting Officer,Executive
      Vice President, DirectorYingming
      Wang
                                45
                                Chief
      Operating Officer,
                                2005Vice
      President, DirectorXingguo
      Wang
                                43
                                Director
                                2005Mingchuan
      Ren
                                48
                                Director
                                2006Qianfei
      Yuan
                                43
                                Director
                                2006Shouguo
      Zhao
                                44
                                Director
                                2008




PING’AN
WU was born in January, 1958 in Shaanxi Province of China. He is United States
permanent resident.  He was a manager at Chunlin No.5 Brick Factory in
Xi’an from 1984-1987. He was the founder of Xi’an Qi An Advanced Ceramic
Ornament Materials Co., Ltd., a ceramic factory and served as the CEO from
1987-1990. He founded Xi’an Qi An Group Company and serviced as the CEO from
1990-1997. He founded Shaanxi Jiahui Group in 1997 and has been the Chairman of
China Properties Developments Inc. through present. Mr. Wu is a Certified
Economist in China.  Mr. Wu and his family have a home in Washington
State and his children attend the University of Washington.




SHUO
(STEVEN) LOU was born in October, 1961 in Hangzhou, China, and is currently a
citizen of the United States of America. He received an MBA in Management
Information System from North Carolina State University, North Carolina, USA and
an MA in Economics and Statistics from Xiamen University, Xiamen, China. He also
received a BSc in Mathematics from Zhejiang Normal University. He worked as a
financial analyst at the Bank of China’s Hangzhou Branch from 1983-1984. He then
worked as a financial analyst at the Central Bank of China’s Hangzhou Branch
from 1984-1985. He taught business classes at Hangzhou University, School of
Business and Economics from 1988-1990. He was an executive at Shuka Industrial,
Inc. in New Jersey from 1994-1996. He worked at Wachovia Securities, Inc.
(f.k.a. Prudential Securities, Inc.) in Seattle, Washington, as a financial
advisor & quantum portfolio manager from 1997-2004. He has been a Director
and the Chief Financial Officer of China Properties Developments Inc. from 2004
through present.




YINGMING
WANG was born in July, 1963 in Gansu Province, China. He received an LL.B from
Northwest University, School of Politics Science and Law in Xi’an, China. He
then worked at the same university as an instructor in law from 1987 to 1993. He
worked with Shaanxi Province Legal Department as a legal counsel
from


19
 Table of Contents


1993 to
1997. He has been the Chief Operating Officer of China Properties Developments
Inc. from November 1997. He has been a Director of China Properties Developments
Inc. from 2004 through present.




XINGGUO
WANG was born in February 1965 in Shandong Province, China and he is currently a
US citizen. He received an MA in International Economics from Nan Kai
University, Tianjing, China. He worked at Zhejiang Securities Co., Ltd as a
deputy general manager of the investment banking department from 1992-1994. He
worked with Ameda C. G Inc as a vice-president from 1994-1996. He was the
president of Great Ocean International Ltd from 1996 to 2000.  He was
the Vice President of Waitex International Ltd from 2000-2002. He was the Vice
President of Bright Orient (Holding) Ltd. July 2003 to present. He has been a
Director of China Properties Developments Inc. from 2004 through
present.




MINGCHUAN
REN is currently Honorary Professor at both Norwegian School of Management (BI)
(since 2006) and at the School of Business, HongKong Unversity (since July
2001).  Mr. Ren is also currently Associate Professor with the
Department of Accounting and Finance, at Fudan University, Shainghai, China. Mr.
Ren has held this position since Octover 2000. Previously Mr. Ren, from March
2004 to May 2004, was International Faculty Fellow at Sloan School,
Massachusetts Institute of Technology (MIT, US) and from January 2002 to June
2002, he was International Faculty Fellow.  From November 1992 to
December 1993, Mr. Ren was Visiting Scholar, Dept. of Accounting and Finance,
Hull University (Sponsored by a scholarship from Zhejiang
University).  From August 1988 to September 1992, Mr. Ren was a
lecturer and course leader for the Accounting, Dept. of Management, Zhejiang
University of Technology and from August 1982 to August 1985, he was assistant
lecturer.  Mr. Ren, who resides in Shanghai, China, was a participant
in the August 2006 Program in Case Method and Participant-Centered Learning, at
Harvard Business School, Harvard University (US).  Mr. Ren earned his
Ph.D in accounting, Dept. of Accounting and Finance, from Hull University (UK)
in December 1994. Mr. Ren’s Ph.D was sponsored by the British award for overseas
research students; Edward scholarship of Leeds University; and the departmental
scholarship of Hull University. From September 1985 to July 1988, Mr. Ren
attended Xiamen University and completed his MA in accounting, Dept. of
Accountancy.  In July 1982 Mr. Ren received his BA in accounting from
the Dept. of Accounting and Finance, Anhui Institute of Finance &
Trade.




QIANFEI
YUAN is currently (since April 2003) Manager of Corporation Administration, at
the Shenzhen Airport Industry Corporation Co., Ltd., Shenzhen,
Guangdong.  From August 2001 to April 2003, Mr. Yuan was President of
Shanghai Chengfei Aerospace Equipment Co., Ltd., Shanghai.  From May
2001 to August 2001, Mr. Yuan was Manager of Statistics at China Petrol Airport
Co., Ltd. Shenzhen Branch Shenzhen, Guangdong.  From June 2000 to
April 2001, Mr. Yuan was Manager of Assets Management at Shenzhen Airport
Industry Corporation Co., Ltd., Shenzhen, Guangdong.  From June 1999
to May 2000 Mr. Yuan was Manager of Accounting Department at Shenzhen Chengxiang
Industrial Co. Ltd., Shenzhen, Guangdong.  Mr Yuan was employed as
Deputy Manager of Accounting Department, from January 1997 to May 1999 at
Shenzhen Airport Industry Corporation Co., Ltd. Shenzhen,
Guangdong.  Mr. Yuan was Deputy Manager of Auditing Department from
October 1996 to January 1997 at Shenzhen Airport Industry Corporation Co., Ltd.,
Shenzhen, Guangdong.  Previously, Mr. Yuan was Lecturer of Management
Department, from July 1988 to October 1996 at Zhejiang University, Business
Administration College, Hangzhou, Zhejiang.  Mr. Yuan resides in
Shenzhen, Guangdong, China. He received his MA in Statistics, Economics from the
Xiamen University, Xiamen, Fujian Province in 1988.  In 1985, Mr. Yuan
received his BSc in Mechanics from the Nanchang University, Nanchang, Jiangxi
Province.




SHOUGUO
ZHAO holds several positions with Northwest University in Xi’an.  He
is Deputy Dean, School of Economics and Management, Professor, Economy
Department; Doctoral Supervisor; Director of the Institute of Enterprise
Development; and, Vice President of Academic Degree Evaluation Committee in
Economics.  Dr. Zhao’s research fields include: financial investment;
modern corporate system and development strategy; and, regional economic
development strategy.  Dr Zhao has published more than 100 academic papers
in publications such asWorld of
Management , and three works includingStudy on Enterprise
Property Right System.  He has won five provincial and
ministerial scientific research achievements awards. Dr. Zhao earned his Ph.D.
from Northwest University in Xi’an.  Mr. Zhao is a member of the
Shaanxi Decision-making Consultation Committee; is an executive member of the
Ninth Executive Committee of Federation of Industry and Commerce; and, is the
adjunct professor, Law School, Northwest University.  Dr. Zhao is
also an independent director of the following organizations: Shaanxi Qin
Mountain Cement (Group) Co., Ltd.; Xi’an Minsheng Group Co., Ltd.; and, Xi’an
Tourism (Group) Co., Ltd..  Dr. Zhao is a consultant for Shaanxi Listed
Companies Association.




None of
the directors and officers is related to any other director or officer of the
Company.




To the
knowledge of the Company, none of the officers or directors has been personally
involved in any bankruptcy or insolvency proceedings. To the knowledge of the
Company, none of the directors or officers have been convicted in any criminal
proceedings (excluding traffic violations and other minor offenses) or are the
subject


20
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of a
criminal proceeding which is presently pending, nor have such persons been the
subject of any order, judgment, or decree of any court of competent
jurisdiction, permanently or temporarily enjoining them from acting as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliated person, director or insurance company, or from engaging in or
continuing in any conduct or practice in connection with any such activity or in
connection with the purchase or sale of any security, nor were any of such
persons the subject of a federal or state authority barring or suspending, for
more than 60 days, the right of such person to be engaged in any such activity,
which order has not been reversed or suspended.





Board
Advisor




HOWARD LI
is the founder, Chairman & CEO of Waitex International Co., Ltd., Prime Time
International, Inc. and Fortune USA, Inc., which began operations in 1981 in New
York City. Mr. Li also is the founder and sole owner of a conglomerate of
multinational companies involving logistics, information technology, real estate
development, global trading and retail stores. “Crain’s” magazine has ranked
Waitex Group of Companies as one of the top 200 privately held companies in
years 2002-2005 in the greater New York Area.Mr. Li is very dedicated to the
Asian American business community, and his deep rooted knowledge of both Chinese
and American business methods make him a highly sought after advisor on Asian /
Western economy. In 2005, Howard Li was the first Asian American in twenty-three
years to Chair the National Minority Enterprise Development (MED) Week 2005
Conference Steering Committee, supported by the Minority Business Development
Agency at the US Department of Commerce and also served as Co-Chairman from 2002
to 2004. In addition, he is director of the United Way of New York City, one of
the largest volunteer-directed organizations, and is chairman of the US-Chinese
Chamber of Commerce. He has been a Board Advisor of China Properties
Developments Inc. from 2004 through present. And in January 2006, President
George W. Bush appointed Howard H. Li to serve as a member of the President’s
Advisory Commission on Asian Americans and Pacific Islanders.




Audit
Committee Financial Expert





We do not
have an audit committee financial expert, as such term is defined in Item 401(e)
of Regulation S-B, serving on our audit committee because we have no audit
committee and are not required to have an audit committee because we are not a
listed security.





Compliance
with Section 16(a) of the Exchange Act




Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than ten percent of the
Company’s Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes of ownership of Common Stock
of the Company.  Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.




Based
solely on the Company’s review of such forms received by it, or written
representations from certain of such persons, the Company believes that, with
respect to the year ended December 31, 2008, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with except Shouguo Zhao has failed to file
his initial statement of beneficial ownership.





Code
of Ethics





We have
adopted a Code of Ethics and Business Conduct that applies to our Chief
Executive Officer and Chief Financial Officer, which was filed as Exhibit 14.1
to our annual report on Form 10-KSB for the fiscal year ended December 31,
2005.  Upon request, we will provide to any person without charge a
copy of our Code of Ethics. Any such request should be made to Attn: Secretary,
China Properties Developments, Inc., 89 Chang’an Middle Road, Yangming
International Tower, Flrs. 26/27, Xi’an, China.





Item 11.       Executive
Compensation.




The
following summary compensation tables set forth information concerning the
annual and long-term compensation for services in all capacities to the Company
for the years ended December 31, 2008 and December 31, 2007, of those persons
who were, at December 31, 2008 (i) the chief executive officer and (ii) the
other most highly compensated executive officers of the Company, whose annual
base salary and bonus compensation was in excess of $100,000 (the named
executive officers):





21
 Table of Contents


Summary
Compensation Table





Name
      and Principal Position
                                                          
                                                          Year
                                                          
                                                          Salary
                                                            ($)
                                                          
                                                          
                                                          Bonus
                                                            ($)
                                                          
                                                          
                                                          Stock
      Awards
                                                            ($)
                                                          
                                                          
                                                          Option
      Awards
                                                            ($)
                                                          
                                                          
                                                          Non-Equity
      Incentive Plan Compensation
                                                            ($)
                                                          
                                                          
                                                          Nonqualified
                                                            Deferred
      Compensation
                                                            Earnings
      ($)
                                                          
                                                          
                                                          All
      Other Compensation
                                                            ($)
                                                          
                                                          
                                                          TotalPing’an
      Wu, Chief Executive Officer and President
                                                          
                                                          2008
                                                          
                                                          $
                                                          18,000
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          18,0002007
                                                          
                                                          
                                                          15,075
                                                          
                                                          
                                                          
                                                          120,076
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          135,151Shuo
      (Steven) Lou, CFO and Exec VP
                                                          
                                                          2008
                                                          
                                                          $
                                                          9,000
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          9,0002007
                                                          
                                                          
                                                          7,538
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          7,538Yingming
      Wang,COO
      and VP
                                                          
                                                          2008
                                                          
                                                          $
                                                          4,523
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          0
                                                          
                                                          
                                                          $
                                                          4,5232007
                                                          
                                                          
                                                          4,523
                                                          
                                                          
                                                          
                                                          117,122
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          0
                                                          
                                                          
                                                          
                                                          121,645





Outstanding
Equity Awards at Fiscal Year-End




Our named executive officers in the
Summary Compensation Table have not been granted any stock options or other
stock awards to date.





Compensation
of Directors





At the present time, directors receive
no cash compensation for serving on the Board of Directors.  Directors are
reimbursed for their reasonable out-of-pocket expenses incurred in connection
with their duties.





Employment
Agreements





None of our officers and key employees
are presently bound by employment agreements.  We do not have any
termination or change in control arrangements with any of our named executive
officers.





Item 12.       Security Ownership of
Certain Beneficial Owners and Management  and Related Stockholder
Matters.




The
following table sets forth, as of March 31, 2009, certain information with
regard to the record and beneficial ownership of the Company’s Common Stock by
(i) each stockholder owning of record or beneficially 5% or more of the
Company’s Common Stock, (ii) each director of the Company, (iii) the Company’s
Chief Executive Officer and other executive officers named in the Summary
Compensation Table under “Executive Compensation”,  and (iv) all
officers and directors of the Company as a group:




Amount
      and Nature
                                            PercentName
      of Beneficial Owner
                                            of
      Beneficial Ownership
                                            of
      ClassPing’an
      Wu*
                                            2,712,000
                                            14.3%Shuo
      (Steven)
      Lou*
                                            300,000
                                            1.6%Yingming
      Wang*
                                            300,000
                                            1.6%Xingguo
      Wang*
                                            200,000
                                            1.1%Rong
      Wu*
                                            1,533,000
                                            8.1%Lin
      Wu*
                                            1,534,000
                                            8.1%Zhendong
      Wu*
                                            1,533,000
                                            8.1%Mingchuan
      Ren*
                                            -0-
                                            -Qianfei
      Yuan*
                                            -0-
                                            -Shouguo
      Zhao*
                                            -0-
                                            -All
      Executive Officers andDirectors
      as a Group (7 persons)
                                            3,512,000
                                            18.5%_________________________





*
              The
      address for each is 89 Chang’an Middle Road, Yangming International Tower,
      26 and 27th
      floors, Xi’an, China.


22
 Table of Contents




Item 13.       Certain Relationships and
Related Transactions, and Director Independence.





To date,
several related party transactions have taken place, in addition to the
transactions described above with Shaanxi.  We believe
that  any transactions between us and our officers, directors,
principal stockholders, affiliates or advisors have been or will be on terms no
less favorable to us than those reasonably obtainable from third
parties.    As of December 31, 2008, there were advances to
officers and employees outstanding of $1,085,000, and loans due from other
related parties of $13,478,000.  As of December 31, 2008, there was
$13,139,000 due to related parties.   As of December 31, 2007,
there were advances to officers and employees outstanding of $188,000, and loans
due from other related parties of $1,951,000.  As of December 31,
2007, there was $9,768,000 due to related parties.  Such advances to
officers and advance to employees are advances to officers and employees who are
working on projects on behalf of the Company.  After the work is
finished, they will submit expense reports with supporting documents to the
accounting department. Then, the expenses are debited into the relevant accounts
and the advances are credited out.  Loans from and to related parties
represent temporally short-term loans from/to affiliates, which are majority
owned and controlled by directors of the Company.  These loans are
unsecured, non-interest bearing and have no fixed terms of repayment, therefore,
deemed payable on demand.   Amounts due to officers are
temporally short-term loans from our officers to finance the Company’s operation
due to lack of cash resources.





We lease
office and retail space to an affiliate, Shaanxi Jiahui Hantang Book Publishing
Co., Ltd., which is majority owned and controlled by directors of the
Company.   The lease period is from January 1, 2003 to December
31, 2012.  The rent is $209,000 (based upon the average exchange rate
of the RMB for 2008) per year and the rent is payable
semi-annually.





We lease
the 24th and
25th floor
of the Yangming Building to a related party, Yangming Soho Commercial Flat,
which is majority owned and controlled by directors of the
Company.   There is no lease and no rental income has been
collected from this related party.  The Company estimates that annual
rent, using current rental values, would be approximately $62,000 (based upon
the average exchange rate of the RMB for 2008).





Director
Independence




Our board of directors currently
consists of six members.  They are Ping’an Wu (our Chairman and Chief
Executive Officer), Shuo (Steven) Lou (our Chief Financial Officer and Executive
Vice President), Yingming Wang (our Chief Operating Officer and Vice President),
Xingguo Wang, Mingchuan Ren, Qianfei Yuan and Shouguo Zhao.  We have
determined that Xingguo Wang, Mingchuan Ren, Qianfei Yuan and Shouguo Zhao are
independent directors using the definition of independence set forth in in
Nasdaq Marketplace Rule 4200(a)(15).





Item 14.       Principal Accountant Fees
and Services.





The following is a summary of the fees
billed to us by the principal accountants to the Company for professional
services rendered for the fiscal years ended December 31, 2008 and December 31,
2007:




Fee
      Category
                        
                        2008
      Fees
                        
                        
                        2007
      FeesAudit
      Fees
                        
                        $
                        65,500
                        
                        
                        $
                        53,500Audit
      Related Fees
                        
                        $
                        0
                        
                        
                        $
                        0Tax
      Fees
                        
                        $
                        0
                        
                        
                        $
                        0All
      Other Fees
                        
                        $
                        0
                        
                        
                        $
                        0Total
      Fees
                        
                        $
                        65,500
                        
                        
                        $
                        53,500
  Audit
Fees.  Consists of fees billed for professional  services
rendered for the
audit  of  our   financial   statements  and  review  of  interim
consolidated  financial  statements  included in
quarterly  reports and services
that  are  normally  provided  by the
principal accountants
in  connection  with  statutory  and
regulatory filings or engagements.
  Audit
Related Fees. Consists of fees billed for assurance and related services that
are reasonably related to the performance of the audit or review of our
consolidated financial statements and are not reported under “Audit
Fees”.


23
 Table of Contents


Tax Fees.  Consists of fees
billed for professional services for tax compliance, tax advice and tax
planning.  These services include preparation of federal and state
income tax returns.





All
Other  Fees.  Consists of fees for product and services
other than the services reported above.





Pre-Approval Policies and
Procedures





Prior to engaging its accountants to
perform a particular service, the Company’s Board of Directors obtains an
estimate for the service to be performed. All of the services described above
were approved by the Board of Directors in accordance with its
procedures.








PART IV





Item 15.       Exhibits and Financial
Statement Schedules.




The
following documents are filed as part of this report:




(1)          
Financial Statements




Financial Statements are
annexed to this report.




(2)           Financial
Statement Schedules




No
financial statement schedules are included because such schedules are not
applicable, are not required, or because required information is included in the
financial statements or notes thereto.




(3)           Exhibits


Incorporated
      byExhibit
      No.
                      Name
      of Exhibit
                      
                      Reference
      to3.1
                      Certificate
      of Incorporation
                      
                      Exhibit
      3.1 (1)3.2
                      Bylaws
                      
                      Exhibit
      3.2 (1)10.1
                      Amended
      and Restated Agreement and Plan of Merger dated August 17, 2005 by and
      among Bangla  Property Management, Inc., China Property Holding,
      Inc. and Wollaston Industrial Limited
                      
                      Exhibit
      10.1 (2)10.2
                      Share
      Purchase Agreement dated October 14, 2005 between Shawn Erickson and
      Bangla Property Management, Inc.
                      
                      Exhibit
      99.5 (3)10.3
                      Purchase
      Agreement made February 16, 2006 by and among China Properties
      Developments Inc.,  Shaanxi Xinyuan Real Estate Co. Ltd.,
      and  certain Selling Shareholders
                      
                      Exhibit
      10.2 (4)10.4
                      Letter
      Agreement to Convert Debt to Shares from Dongguan Plastic Cement Factory
      Guangdong,  Dated March 10, 2006
                      
                      Exhibit
      10.1 (5)10.5
                      Letter
      Agreement to Convert Debt to Shares from  Shaanxi Ruize
      Industrial Co., Ltd., dated March 10, 2006
                      
                      Exhibit
      10.2 (5)10.6
                      Termination
      Agreement dated June 13, 2007 between China Properties Developments Inc.
      and  Shaanxi Xinyuan Real Estate Co. Ltd.
                      
                      Exhibit
      10.1 (6)10.7
                      Securities
      Subscription Agreement dated June 13, 2007 between China Properties
      Developments Inc. and  Shaanxi Xinyuan Real Estate Co.
      Ltd.
                      
                      Exhibit
      10.2 (6)10.8
                      Termination
      Agreement dated June 23, 2008 between China Properties Developments Inc.
      and Shaanxi Xinyuan Real Estate Co. Ltd.
                      
                      Exhibit
      10.1 (7)
   24
 Table of Contents
 10.9
                      Consulting
      Services Agreement dated June 23,  2008 between Xian Jiahui Real
      Estate Co., Ltd. and Shaanxi Xinyuan Real Estate Co.
      Ltd.
                      
                      Exhibit
      10.2 (7)10.10
                      Business
      Operations Agreement dated June 23, 2008 between Xian Jiahui Real Estate
      Co., Ltd. and Shaanxi Xinyuan Real Estate Co. Ltd.
                      
                      Exhibit
      10.3 (7)10.11
                      Option
      Agreement dated June 23, 2008 between Xian Jiahui Real Estate Co., Ltd.,
      Shaanxi Xinyuan Real Estate Co. Ltd., and the Shareholders of Shaanxi
      Xinyuan Real Estate Co. Ltd.
                      
                      Exhibit
      10.4 (7)10.12
                      Equity
      Pledge Agreement dated June 23, 2008 between Xian Jiahui Real Estate Co.,
      Ltd. and the shareholders of Shaanxi Xinyuan Real Estate Co.
      Ltd.
                      
                      Exhibit
      10.5 (7)10.13
                      Voting
      Rights Proxy Agreement dated  June 23, 2008 between Xian Jiahui
      Real Estate Co., Ltd. and Shaanxi Xinyuan  Real Estate Co.
      Ltd.
                      
                      Exhibit
      10.6 (7)14.1
                      Code
      of Ethics
                      
                      Exhibit
      14.1 (8)31.1
                      Certification of Chief Executive Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14
      of the Exchange Act)
                      
                      *31.2
                      Certification of Principal Financial Officer
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14
      and 15d-14 of the Exchange Act)
                      
                      *32.1
                      Certification pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
                      
                      *
 ____________________




*           Filed
herewith.




(1)
            Filed
      as an exhibit to the Company’s Registration Statement on Form SB-2, filed
      February 13, 2003, and incorporated by reference
  herein.





(2)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K/A filed on
      August 30, 2005, and incorporated by reference
  herein.





(3)
            Filed
      as an exhibit to the Company’s Schedule 14A filed on September 23, 2005,
      and incorporated by reference
herein.





(4)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K filed on
      February 21, 2006, and incorporated by reference
  herein.





(5)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K filed on March
      15, 2006, and incorporated by reference
herein.





(6)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K filed on June
      19, 2007, and incorporated by reference
herein.





(7)
            Filed
      as an exhibit to the Company’s Current Report on Form 8-K filed on June
      25, 2008, and incorporated by reference
herein.





(8)
            Filed
      as an exhibit to the Company’s Annual Report on Form 10-KSB for the year
      ended December 31, 2005, and incorporated by reference
    herein.





25
 Table of Contents




SIGNATURES




Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




CHINA
      PROPERTIES DEVELOPMENTS, INC.
                (Registrant)By
              /s/
      Ping’an WuPing’an
      Wu, President, Chief Executive OfficerDate
              April
      15, 2009






Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant, and in the
capacities and on the dates indicated:




Signature
                                                                        
                                                                        Title
                                                                        
                                                                        Date/s/
      Ping’an Wu
                                                                        
                                                                        Chairman,
      Chief Executive Officer
                                                                        
                                                                        04/15/2009Ping’an
      Wu
                                                                        
                                                                        President
      and Director(Principal
      Executive Officer)/s/
      Shuo (Steven) Lou
                                                                        
                                                                        Chief
      Financial Officer, Chief Accounting
                                                                        
                                                                        04/15/2009Shuo
      (Steven) Lou
                                                                        
                                                                        Officer,
      Executive Vice Presidentand
      Director (Principal Financial Officer)/s/
      Yingming Wang
                                                                        
                                                                        Chief
      Operating Officer,
                                                                        
                                                                        04/15/2009Yingming
      Wang
                                                                        
                                                                        Vice
      President and Director/s/
      Xingguo Wang
                                                                        
                                                                        Director
                                                                        
                                                                        04/15/2009Xingguo
      Wang/s/
      Mingchuan Ren
                                                                        
                                                                        Director
                                                                        
                                                                        04/15/2009Mingchuan
      Ren/s/
      Qianfei Yuan
                                                                        
                                                                        Director
                                                                        
                                                                        04/15/2009Qianfei
      Yuan











26
 Table of Contents




Certified
Public Accountants
 Valuation
Analysts
   INDEPENDENT
AUDIT'S REPORT
  Board of
Directors
 China
Properties Developments, Inc.
 Xian,
China
  We have
audited the accompanying balance sheets of China Properties Developments, Inc.
as of December 31, 2008 and 2007 and the related statements of operations,
Change in stockholders' equity and cash flows for each of the years then ended.
These financial statements are the responsible of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
  We
conducted our audits 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 financial
statements are free of material misstatement. 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 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 provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Properties Developments, Inc.
as of December 31, 2008 and 2007, and the results of its operations and its cash
flows for each of the year then ended in conformity with accounting principles
generally accepted in the United States of America.
  
  Hanlin
Moss, P.S.
 Certified
Public Accountants
 Seattle,
Washington
 April 13,
2009












1411
Fourth Avenue, Suite 410 Seattle, Washington 98101 (206) 623-3200 fax (206)
623-3222
 www.hanlinmoss.com


F -
1
 Table of Contents





CHINA
      PROPERTIES DEVELOPMENTS, INC.CONSOLIDATED
      BALANCE SHEETSAS
      OF December 31, 2008 AND 2007ASSETS(in
      '000 USD)
                                                                                  
                                                                                  2008
                                                                                  
                                                                                  
                                                                                  2007CURRENT
      ASSETS:Cash
      and cash equivalents
                                                                                  
                                                                                  $
                                                                                  582
                                                                                  
                                                                                  
                                                                                  $
                                                                                  476Accounts
      receivable
                                                                                  
                                                                                  
                                                                                  747
                                                                                  
                                                                                  
                                                                                  
                                                                                  55Prepaid
      expenses
                                                                                  
                                                                                  
                                                                                  80
                                                                                  
                                                                                  
                                                                                  
                                                                                  145Inventory
      – real estate project costs (Note 4)
                                                                                  
                                                                                  
                                                                                  26,928
                                                                                  
                                                                                  
                                                                                  
                                                                                  13,211Advances
      to officers (Note 3)
                                                                                  
                                                                                  
                                                                                  1,046
                                                                                  
                                                                                  
                                                                                  
                                                                                  184Advances
      to employees (Note 3)
                                                                                  
                                                                                  
                                                                                  39
                                                                                  
                                                                                  
                                                                                  
                                                                                  4Other
      receivable
                                                                                  
                                                                                  
                                                                                  1,055
                                                                                  
                                                                                  
                                                                                  
                                                                                  125Loans
      to related parties (Note 3)
                                                                                  
                                                                                  
                                                                                  13,478
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,951Total
      Current Assets
                                                                                  
                                                                                  
                                                                                  43,955
                                                                                  
                                                                                  
                                                                                  
                                                                                  16,151LONG-TERM
      INVESTMENT (Note
      7)
                                                                                  
                                                                                  
                                                                                  591
                                                                                  
                                                                                  
                                                                                  
                                                                                  390PROPERTY AND EQUIPMENT
      (Note 5)
                                                                                  
                                                                                  
                                                                                  20,058
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,423OTHER
      ASSETS:Intangible
      assets
                                                                                  
                                                                                  
                                                                                  122
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Restricted
      cash
                                                                                  
                                                                                  
                                                                                  688
                                                                                  
                                                                                  
                                                                                  
                                                                                  746Security
      deposit
                                                                                  
                                                                                  
                                                                                  128
                                                                                  
                                                                                  
                                                                                  
                                                                                  91938
                                                                                  
                                                                                  
                                                                                  
                                                                                  837$
                                                                                  65,541
                                                                                  
                                                                                  
                                                                                  $
                                                                                  24,801LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Bank
      loans (Note 7)
                                                                                  
                                                                                  $
                                                                                  15,567
                                                                                  
                                                                                  
                                                                                  $
                                                                                  4,980Accounts
      payable and accrued expenses
                                                                                  
                                                                                  
                                                                                  4,521
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,871Deferred
      revenue
                                                                                  
                                                                                  
                                                                                  1,342
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,513Taxes
      payable
                                                                                  
                                                                                  
                                                                                  4,157
                                                                                  
                                                                                  
                                                                                  
                                                                                  305Bank
      loan interest payable
                                                                                  
                                                                                  
                                                                                  688
                                                                                  
                                                                                  
                                                                                  
                                                                                  255Due
      to related parties (Note 3)
                                                                                  
                                                                                  
                                                                                  13,139
                                                                                  
                                                                                  
                                                                                  
                                                                                  9,768Due
      to officers (Note 3)
                                                                                  
                                                                                  
                                                                                  1
                                                                                  
                                                                                  
                                                                                  
                                                                                  449Due
      to employees
                                                                                  
                                                                                  
                                                                                  8
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Customer
      security deposit
                                                                                  
                                                                                  
                                                                                  558
                                                                                  
                                                                                  
                                                                                  
                                                                                  405Current
      portion of mortgages payable
                                                                                  
                                                                                  
                                                                                  109
                                                                                  
                                                                                  
                                                                                  
                                                                                  136Total
      Current Liabilities
                                                                                  
                                                                                  
                                                                                  40,090
                                                                                  
                                                                                  
                                                                                  
                                                                                  21,682LONG-TERM
      LIABILITIES:Mortgages
      payable (Note 9)
                                                                                  
                                                                                  
                                                                                  1,723
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,425Notes
      payable (Note 9)
                                                                                  
                                                                                  
                                                                                  4,669
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Current
      portion of mortgages payable
                                                                                  
                                                                                  
                                                                                  (109
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (136
                                                                                  )6,283
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,289STOCKHOLDERS’
      EQUITY:Common
      stock, no par value, 100,000,000 shares authorized; 19,050,825 shares
      issued and outstanding
                                                                                  
                                                                                  
                                                                                  273
                                                                                  
                                                                                  
                                                                                  
                                                                                  273Common
      stock, no par value, 100,000 shares authorized; 10,000 shares issued and
      outstanding
                                                                                  
                                                                                  
                                                                                  6,193Additional
      paid-in capital
                                                                                  
                                                                                  
                                                                                  8,673
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,230Retained
      earnings (deficit)
                                                                                  
                                                                                  
                                                                                  3,134
                                                                                  
                                                                                  
                                                                                  
                                                                                  (5,623
                                                                                  )Accumulated
      other comprehensive income
                                                                                  
                                                                                  
                                                                                  895
                                                                                  
                                                                                  
                                                                                  
                                                                                  (50
                                                                                  )19,168
                                                                                  
                                                                                  
                                                                                  
                                                                                  830$
                                                                                  65,541
                                                                                  
                                                                                  
                                                                                  $
                                                                                  24,801


See
accountant's audit report


F -
2
 Table of Contents




CHINA
      PROPERTIES DEVELOPMENTS, INC.CONSOLIDATED
      STATEMENT OF OPERATIONSFOR
      THE TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007(in
      '000 USD)2008
                                                                
                                                                
                                                                2007SALES:Revenues
      from sale of building space
                                                                
                                                                $
                                                                29,308
                                                                
                                                                
                                                                $
                                                                2,408Cost
      of sales
                                                                
                                                                
                                                                10,866
                                                                
                                                                
                                                                
                                                                1,686Gross
      profit from selling of space
                                                                
                                                                
                                                                18,442
                                                                
                                                                
                                                                
                                                                722Rental
      income
                                                                
                                                                
                                                                3,327
                                                                
                                                                
                                                                
                                                                375Less:
      Rental sharing expenses
                                                                
                                                                
                                                                2,650
                                                                
                                                                
                                                                
                                                                -Gross
      profit from rental activities
                                                                
                                                                
                                                                677
                                                                
                                                                
                                                                
                                                                37519,119
                                                                
                                                                
                                                                
                                                                1,097OPERATING
      EXPENSES:Bad
      debt expense (recovery)
                                                                
                                                                
                                                                (41
                                                                )
                                                                
                                                                
                                                                (122
                                                                )Depreciation
                                                                
                                                                
                                                                387
                                                                
                                                                
                                                                
                                                                236Legal
      and professional fees
                                                                
                                                                
                                                                81
                                                                
                                                                
                                                                
                                                                183Other
      general and administrative expenses
                                                                
                                                                
                                                                1,152
                                                                
                                                                
                                                                
                                                                302Sales
      taxes
                                                                
                                                                
                                                                1,859
                                                                
                                                                
                                                                
                                                                339Selling
      expenses
                                                                
                                                                
                                                                270
                                                                
                                                                
                                                                
                                                                63,707
                                                                
                                                                
                                                                
                                                                944Operating
      Income (loss)
                                                                
                                                                
                                                                15,412
                                                                
                                                                
                                                                
                                                                153OTHER
      INCOME (EXPENSE):Investment
      Income
                                                                
                                                                
                                                                39
                                                                
                                                                
                                                                
                                                                -Interest
      income
                                                                
                                                                
                                                                5
                                                                
                                                                
                                                                
                                                                42Interest
      expenses
                                                                
                                                                
                                                                (2,614
                                                                )
                                                                
                                                                
                                                                (298
                                                                )Late
      delivery penalties
                                                                
                                                                
                                                                (105
                                                                )
                                                                
                                                                
                                                                (39
                                                                )Total
      Other Income (Expense)
                                                                
                                                                
                                                                (2,675
                                                                )
                                                                
                                                                
                                                                (295
                                                                )Net
      Income (Loss) Before Taxes
                                                                
                                                                
                                                                12,737
                                                                
                                                                
                                                                
                                                                (142
                                                                )PROVISION
      FOR TAXES
                                                                
                                                                
                                                                3,184
                                                                
                                                                
                                                                
                                                                -Net
      Income (Loss)
                                                                
                                                                
                                                                9,553
                                                                
                                                                
                                                                
                                                                (142
                                                                )OTHER
      COMPREHENSIVE INCOME (LOSS):Effects
      of foreign currency conversion
                                                                
                                                                
                                                                163
                                                                
                                                                
                                                                
                                                                107Comprehensive
      Income (Loss)
                                                                
                                                                $
                                                                9,716
                                                                
                                                                
                                                                $
                                                                (35
                                                                )












See
accountant's audit report





F -
3
 Table of Contents





CHINA
      PROPERTIES DEVELOPMENTS, INC.CONSOLIDATED
      STATEMENT OF CASH FLOWSTWELVE
      MONTHS ENDED DECEMBER 31, 2008 AND 2007(in
      '000 USD)2,008
                                                                
                                                                
                                                                
                                                                2,007CASH
      FROM OPERATING ACTIVITIES:Net
      income (loss)
                                                                
                                                                $
                                                                9,553
                                                                
                                                                
                                                                $
                                                                (143
                                                                )Depreciation
                                                                
                                                                
                                                                797
                                                                
                                                                
                                                                
                                                                236Changes
      in operating assets and liabilities –(Increase)
      decrease in accounts receivable
                                                                
                                                                
                                                                (689
                                                                )
                                                                
                                                                
                                                                (55
                                                                )(Increase)
      decrease in prepaid expense
                                                                
                                                                
                                                                1,575
                                                                
                                                                
                                                                
                                                                (145
                                                                )(Increase)
      decrease in advances to officers and employees
                                                                
                                                                
                                                                (316
                                                                )
                                                                
                                                                
                                                                (67
                                                                )(Increase)
      decrease in inventory
                                                                
                                                                
                                                                5,424
                                                                
                                                                
                                                                
                                                                22(Increase)
      decrease in other current assets
                                                                
                                                                
                                                                (930
                                                                )
                                                                
                                                                
                                                                (22
                                                                )(Decrease)
      in accounts payable
                                                                
                                                                
                                                                1,337
                                                                
                                                                
                                                                
                                                                (1,229
                                                                )(Decrease)
      increase in other current liabilities
                                                                
                                                                
                                                                3,265
                                                                
                                                                
                                                                
                                                                (110
                                                                )(Decrease)
      in deferred revenue
                                                                
                                                                
                                                                (24,086
                                                                )
                                                                
                                                                
                                                                (203
                                                                )Net
      cash (used) by operating activities
                                                                
                                                                
                                                                (4,070
                                                                )
                                                                
                                                                
                                                                (1,715
                                                                )CASH
      FROM INVESTING ACTIVITIES:Loans
      from related parties
                                                                
                                                                
                                                                (4,907
                                                                )
                                                                
                                                                
                                                                3,292Decrease
      in security deposits
                                                                
                                                                
                                                                341
                                                                
                                                                
                                                                
                                                                191Net
      cash (used) by investing activities
                                                                
                                                                
                                                                (4,565
                                                                )
                                                                
                                                                
                                                                3,483CASH
      FROM FINANCING ACTIVITIES:Loans
      to realated parties
                                                                
                                                                
                                                                7,100
                                                                
                                                                
                                                                
                                                                (757
                                                                )Decrease
      in restricted cash to secure loans
                                                                
                                                                
                                                                275
                                                                
                                                                
                                                                
                                                                5,128Proceeds
      from (repayment of) short-term bank loans
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                
                                                                (5,513
                                                                )Proceeds
      from (repayment of) other short-term loans
                                                                
                                                                
                                                                10,588
                                                                
                                                                
                                                                
                                                                4,723(Repayment
      of) notes payable
                                                                
                                                                
                                                                (9,314
                                                                )
                                                                
                                                                
                                                                (4,474
                                                                )(Repayments)
      of mortgage debt
                                                                
                                                                
                                                                (702
                                                                )
                                                                
                                                                
                                                                (86
                                                                )(Repayments)
      / Loans from officers and employees
                                                                
                                                                
                                                                (440
                                                                )
                                                                
                                                                
                                                                17Net
      cash provided by financing activities
                                                                
                                                                
                                                                7,507
                                                                
                                                                
                                                                
                                                                (962
                                                                )Increase
      (decrease) in cash
                                                                
                                                                
                                                                (1,128
                                                                )
                                                                
                                                                
                                                                806Other
      effects of exchange rates on cash
                                                                
                                                                
                                                                121
                                                                
                                                                
                                                                
                                                                (386
                                                                )(1,007
                                                                )
                                                                
                                                                
                                                                420Cash
      at beginning of period
                                                                
                                                                
                                                                1,589
                                                                
                                                                
                                                                
                                                                57Cash
      at end of period
                                                                
                                                                $
                                                                582
                                                                
                                                                
                                                                $
                                                                477Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for –Interest
                                                                
                                                                
                                                                2,614
                                                                
                                                                
                                                                
                                                                374,603Income
      taxes
                                                                
                                                                
                                                                256
                                                                
                                                                
                                                                
                                                                -










See
accountant's audit report





F -
4
 Table of Contents





CHINA
      PROPERTIES DEVELOPMENTS, INC.CONSOLIDATED
      STATEMENT OF CHANGESIN
      SHAREHOLDERS' EQUITY(in
      '000 USD)Common
      Stock Par ValueCommon
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Capital
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Additional
                                                                                                                                    Paid-in
                                                                                                                                    Capital
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Retained
      Earnings
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Accumulated
      Other Comprehensive Income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  TotalsBalance
      at January 1, 2007
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  19,011
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  190
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,230
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (5,481
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (157
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  782-Common
      Stock issued for compensation of services rendered
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  40
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  83
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  83Net
      Income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (143
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (143
                                                                                                                                  )-Accumulated
      effects on foreign currency conversion
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  107
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  107Balance
      at December 31, 2007
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  19,051
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  273
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,230
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (5,624
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (50
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  829Change
      due to business combination
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,193
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,443
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (794
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  783
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  8,625Net
      Income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  9,553
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  9,553Accumulated
      effects on foreign currency conversion
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  163
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  163Balance
      at December 31, 2008
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  19,051
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,466
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  8,673
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,134
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  895
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  19,169














See
accountant's audit report





F -
5
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




Note
1 – Organization and Operations




China
Properties Developments, Inc. (the "Company") was incorporated in the State of
Colorado on June 15, 2001.   The Company presently engages in the
business of real estate development, including sale and lease of real estate in
Xi'an City, Shaanxi Province, People's Republic of China ("PRC").





At
December 31, 2008, the Company’s operations include the consolidated operations
of Wollaston Industrial Limited, Xian Jiahui Real Estate Co., Ltd., and Xin Yuan
Real Estate Co., Ltd.





Wollaston
was incorporated on April 21, 2005 in British Virgin Islands (“BVI”) under the
International Business Companies Act, as a limited liability corporation.
Wollaston owns 90.28% of Jiahui, which was established in Xi’an City, Shaanxi
Province, PRC on December 17, 1996 under the Company Law of the
PRC.  Jiahui engages in the business of real estate development,
including sale and lease of real estate.





In
addition, the accounts and operations in these financial statements include
those of Xin Yuan Real Estate Co., Ltd, as required by FIN 46R and as issued by
the Financial Accounting Standards Board.





On June
28, 2008, the Company, through its 90.28% owned subsidiary, Xi’an Jiahui Real
Estate Co., Ltd (“Jiahui”), entered into a series of agreements with Shaanxi Xin
Yuan Real Estate Co. Ltd. (“Xin Yuan”), a corporation organized under the laws
of the People’s Republic of China, which renders the Company effective control
over the business of Xin Yuan.  The agreements were effective on June
1, 2008.  Therefore, Xin Yuan’s results of operations are included in
the consolidated statement of operations of the Company.





At
December 31, 2007, the financial statements do not include the accounts of Xin
Yuan Real Estate Co., Ltd.




Note
2 – Significant Accounting Policies





A.
            Economic
      and Political Risks




The
Company faces a number of risks and challenges since its assets are located in
Xi'an City, PRC, and its revenues are derived from its operations
therein.  The PRC is a developing country





F -
6
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007





with an
early stage market economic system, overshadowed by the state.  Its
political and economic systems are very different from the more developed
countries and are in a state of change.  The PRC also faces many
social, economic and political challenges that may produce major shocks and
instabilities and even crises, in both its domestic arena and in its
relationships with other countries, including the United States.  Such
shocks, instabilities and crises may in turn significantly and negatively affect
the Company's performance.





B.
            Basis
      of Presentation




The
accompanying financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US
GAAP").  This basis of accounting differs from that used in the
statutory accounts of the Company, which are prepared in accordance with the
"Accounting Principles of China” ("PRC GAAP").  Certain accounting
principles, which are required by US GAAP, are not applicable in the PRC
GAAP.  The difference between PRC GAAP accounts of the Company and its
US GAAP financial statements is immaterial.





The
Company maintains its books and records in PRC currency "Renminbi" ("RMB"),
which is determined as the functional currency.  Assets and liabilities of
the Company are translated at the prevailing exchange rate at each year end.
Contributed capital accounts are translated using the historical rate of
exchange when capital is injected. Income statement accounts are translated at
the average rate of exchange at the end of each calendar quarter during the
year. Translation adjustments arising from the use of different exchange rates
from period to period are included in the accumulated other comprehensive
income account shown in shareholders' equity. Gains and losses resulting
from foreign currency transactions are included in operations.





C.
            Use
      of Estimates




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





D.
            Cash
      and Cash Equivalents




For
purpose of the statements of cash flows, cash and cash equivalents include cash
on hand, deposits in banks with maturities of three months or less, and all
highly liquid investments with original maturities of three months or
less.





F -
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 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




E.
            Fair
      Value of Financial Instruments




The
carrying value of financial instruments including cash and cash equivalents,
receivables, accounts payable and accrued expenses, approximates their fair
value at December 31, 2008 due to the relatively short-term nature of these
instruments.





F.
            Valuation
      of Long-Lived Assets




The
Company periodically analyzes its long-lived assets for potential impairment,
assessing the appropriateness of lives and recoverability of unamortized
balances through measurement of undiscounted operating cash flows on a basis
consistent with accounting principles generally accepted in the United States of
America.





G.
            Real
      Estate Projects




The
Company currently holds a majority interest in the following two building
projects:





Jiahui Office
Building


Jiahui
Office Building (“Jiahui Building”) is a 15-story commercial office
building.  Construction commenced in 1998.  The majority of
construction was concluded in December 1999 with finished tenant
improvements.   This property has been available for occupancy
since June 30, 2000.





The first
to fourth floors are leased to a related party, the Hantang
Bookstore.  The 5th floor, west section of the 14th floor, the 15th
floor, and the underground parking garage in the Jiahui Building are held for
rental activities.  All of these spaces are recorded as fixed assets,
and depreciation has been provided since July 1, 2000.





The
remaining space in the Jiahui Building has been sold or placed in service as
rental property.





Yangming International
Tower


Yangming
International Tower (“Yangming”) is a multi-functional 27-story building with
mostly commercial usage.





The
Company occupied the top two floors (26th and 27th floors) as its administrative
offices.  The 25th floor
is under contract with an affiliate, Yangming Soho Commercial Flat. 
Beginning from January 1, 2008, the Company has added the 24th floor
to the space





F -
8
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007





operating
commercial flat.  The 24th through
27th
floor has been classified as fixed assets and depreciation have been provided
according to the time they became fixed assets.





The
second and third floors are leased to a related party, the Hantang
Bookstore.





The
remaining space in Yangming is for sale to the public.





Xin Tian Di
Mall


Xin Tian
Di Mall is a three level multifunctional shopping center.  The Company
has finished phase one construction of this project.  The entire
project is planned to be carried out in four phases.  Approximately
twenty-three percent of the phase one mall space has been sold.  The
units sold are under contract with the Company to manage the rental of these
spaces.  The rest of the space has been rented or is available for
rent as of December 2008.





H.
            Real
      Estate Project Costs




Costs
directly identifiable with real estate projects and incurred before and during
construction is capitalized into “project costs,” These project costs consist of
the cost of land-usage-right, preconstruction costs, construction costs, and
capitalized interest costs.  Costs subsequent to the completions of
construction are usually of minor amounts and are expensed as
incurred.  Capitalized costs are allocated to such portions of the
project the Company uses for its operations, rental activities, as well as the
portions held for sale.  Allocation of costs is based on a
cost-per-square-meter method.





Costs
allocated to operations and rental activities are recorded as fixed assets;
depreciation commences when projects change from non-operating to
operating.





Costs
associated with portions which are held for sale remain in project costs
inventory until relevant spaces are sold.





·
            Land Usage
      Right





All land
belongs to the State in the PRC.  Enterprises and individuals can pay
the State a fee to obtain a right to use a piece of land for commercial or
residential purposes for a period of 50 years or 70 years,
respectively.  The right of land usage can be
sold, purchased, and exchange in the market.  The Company obtained the
right to use the piece of land at which Jiahui Building is located for a period
of 50 years, from 1999 to 2045, and the piece of land on which Yangming is
located for a period of 70 years from 2003 to 2073.  The right
of





F -
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 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007





land
usage period for the mall is 50 years from 2005 to 2054. The cost of any land
usage rights are added to the cost of each real estate project, which is then
amortized over 40 years, using the straight-line method.





·
            Capitalized Interest
      Costs





Interest
cost incurred are capitalized during the term of real estate projects, which
normally begins when payments are made for land usage rights, and ends when the
real estate project is substantially completed and held available for
occupation.





Subsequent
to completion of a real estate project, interest expenses are charged to
Statement of Operations.




I.
            Revenue
      Recognition




The
Company derives its revenue from rental and sales of spaces. Revenue from sales
of condominium units and office spaces are recognized when relevant units and
spaces are available for occupancy and delivered to buyers with appropriate
title documents. The Company rents unit spaces under various arrangements with
related and unrelated parties. Expiration of such rents varied from 2 to 20
years. The Company is required to pay property taxes and maintenance. Rental
revenues are recognized in accordance with provisions of the various
leases.




Revenue
Recognition:  Sale of Space




In China,
the company is allowed to promote and sell the space when the construction
permits are granted by the government.  Therefore, pre-selling of the
spaces started simultaneously with the construction.  The funds from
pre-selling are recorded by the company as deferred revenue.




In the
meanwhile, the company secured financing from banks to carry out the
construction.  The interest expenses during the construction years
were capitalized as the cost of construction.




Revenue
is recognized when:


a)
              the
      construction has been completed, andb)
              the
      unit is in good condition outlined in the sales contract,
      andc)
              the
      title has been transferred to the owner evidenced by the change of
      official title on the space from the company to the
      buyer








Revenue
Recognition:  Rental Income




In
2007 and prior, the rental income was from the leased space in Xi’an Jia Hui
building and Yangming Building.  The corresponding expenses (sales
taxes, depreciation and any administrative expenses) were not separately stated
on the income statement.







F -
10
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




In 2008,
the rental income consists of:





Description
                          Amount
      ($,000)
                          Nature
      of the income
                          Cost
      of RentalRental
      – Xi’an Jia Hui
                          1,013
                          Lease
      of spaceRental
      – Xin Tian Di Mall
                          1,981
                          Lease
      of space and profit sharing
                          Small
      repairs and supplies directly related to rentalRental
      – Xin Tian Di Mall
                          1,935
                          Lease
      of space on the space sold but under management contract with the
      owners
                          a)
      The guaranteed rents to the space owners; b) small repairs and supplies
      directly related to these spacesRental
      – Xin Yuan
                          380
                          Lease
      of space
                          a)
      Depreciation of the rental space; b) real estate tax and small repairs and
      supplies directly related to these
spaces





J.
            Deferred
      Revenue




Deposits
and advance proceeds from pre-sales of condominium units and office spaces are
recorded as deferred revenue until such time when such units and/or spaces are
available for occupation and delivered to buyers.





K.
            Income
      Taxes




Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates in the US and the PRC, which are expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered
or settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.





The
Company calculates its current and deferred tax provision based estimates and
assumptions that could differ from the actual results reflected in the income
tax returns filed in subsequent years. Adjustments based on filed returns are
records when identified.





F -
11
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




L.
            Property,
      Plant and Equipment




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





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





Depreciation
is calculated on a straight-line basis over the estimated useful life of the
assets.  The depreciable life of each asset category applied
is:





Vehicles
                5
      yearsMachines
      and equipment
                5
      yearsOffice
      equipment
                5
      yearsOffice
      furniture
                3-5
      yearsBuildings
                40
      years





M.
            Intangible
      Assets




The
Company (Xin Yuan Real Estate Co., Ltd.) incurred start-up costs which have been
capitalized.  These costs are being amortized over 60 months,
beginning from October 2007.





N.
            Employee
      Benefits




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





O.
            Earnings
      (Loss) Per Share




The
Company reports earnings per share in accordance with the provisions of SFAS No.
128, “Earnings Per Share.” SFAS No. 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share.  Basic earnings (loss) per
share are computed by dividing income (loss) available to common shareholders by
the weighted-average number of common shares outstanding during the
period.  Diluted earnings per share is computed similar to basic
earnings per share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were
dilutive.  There are no potentially dilutive securities for the twelve
months ending December 31, 2008 and 2007.





F -
12
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




The
earnings per share for the public company (excluding Xin Yuan) is





Description
                  2008
                  2007Weighted
      average shares outstanding
                  19,050,825
      shares
                  19,050,825
      sharesBasic
      and fully diluted earnings (loss) per share
                  0.026
                  (0.002)




Note
3 – Related Party Transaction




A.
            Advances
      to Officers and Employees




“Advance
to officers” and “Advance to employee” are advances to officers and employees
who are working on projects on behalf of the Company.  After the work
is finished, they will submit expense reports with supporting documents to the
accounting department. Then, the expenses are debited into the relevant expense
accounts and the advances are credited out. Cash flows from these activities are
classified into operating activities.  The total advance to officers
was $1,046K and $184K, as of December 31, 2008 and 2007, respectively. The total
advance to employees was $39K and $4K as of December 31, 2008 and 2007,
respectively.





B.
            Loans
      to Related Parties




“Loans to
related parties” and “Due to related parties” represent temporary short-term
loans from/to affiliates, which are majority owned and controlled by directors
of the Company.  These loans are unsecured, non-interest bearing and
have no fixed terms of repayment, therefore, deemed payable on
demand.  The total loans to related parties were $13,478K and $1,951K
as of December 31, 2008 and 2007, respectively. The total borrowing from related
parties was $13,139K and $9,768K as of December 31, 2008 and 2007,
respectively.





C.
            Due
      To Officers




“Due to
officers” are temporary short-term loans from our officers to finance the
Company’s operation due to lack of cash resources.  Cash flows from these
activities are classified as cash flows from financing activates.  The
total borrowing from officers was $1K and $449K as of December 31, 2008 and
2007, respectively.





F -
13
 Table of Contents
 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




D.
            Leases




·
              The
      Company leases office and retail space to an affiliate, Shaanxi Jiahui
      Hantang Book Publishing Co., Ltd., which is majority owned and controlled
      by directors of the Company.  The lease period is from January
      1, 2003 to December 31, 2012.  The rent is $209K (based upon the
      average exchange rate of the RMB for 2008) per year and the rent is
      payable semi-annually.





·
              At
      December 31, 2008, the Company leases the 24th
      and 25th floor of the Yangming Building to a related party, Yangming Soho
      Commercial Flat, which is majority owned and controlled by directors of
      the Company.  There is no lease and no rental income has been
      collected from this related party.  The Company estimates that
      annual rent, using current rental values, would be approximately$62K
      (based upon the average exchange rate of the RMB for
      2008).




Note
4 – Inventoried Real Estate Project Costs




The
Company is carrying prepaid real estate project costs,
which consist of the costs of the unsold portion of the real estate project
described above.  In 2008, no interest expense has been
capitalized.




Note
5 – Property and Equipment




Property,
plant and equipment consist of the following as of December 31:





Description
                  
                  2008
                  
                  
                  2007($,000)Vehicles
                  
                  $
                  743
                  
                  
                  $
                  359Office
      equipment
                  
                  
                  128
                  
                  
                  
                  20Office
      furniture
                  
                  
                  35
                  
                  
                  
                  8Jiahui
      Building
                  
                  
                  7,023
                  
                  
                  
                  6,582Yangming
      Building
                  
                  
                  3,006
                  
                  
                  
                  2,112Xin
      TianDi Building
                  
                  
                  11,596
                  
                  
                  
                  0Others
                  
                  
                  56
                  
                  
                  
                  022,585
                  
                  
                  
                  9,081Less:
      Accumulated depreciation
                  
                  
                  2,529
                  
                  
                  
                  1,657$
                  20,058
                  
                  
                  $
                  7,424








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PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




Note
6 – Intangibles


Capitalized
intangible assets include start-up costs for Xin Yuan. Total amortization
expense was $9K in 2008.





Note
7 – Long-Term Investment




Long-term
investments include:





($,000)
                                    
                                    2008Equity
      interest of 40% ownership in Shaanxi Le Zhan Management Co., a related
      party through common ownership, acquired in 2004, stated at cost, which
      Management believes approximates fair value.
                                    
                                    $
                                    175Investment
      in 300,000 shares of Yan Tan Bank, a state owned bank in Xi’an China. The
      shares are transferable in accordance with the laws of the PRC. The
      investment is carried at cost which approximates fair value. Dividend
      income on these shares is recorded when received. The Company may sell the
      shares back to the bank at the net book value per share.  The
      balance of this investment changes on the balance sheet in accord with
      periodic fluctuations of the RMB.
                                    
                                    
                                    416$
                                    591





Note
8 – Short-Term Debt




Short-term
debt at December 31, 2008 consisted of two bank loans:




2008($,000
                                    )A.
      Short-term notes payable – Deng Jia Po Credit Cooperatives.  This
      note has interest payable quarterly at 8.06% per annum, principal due
      December 29, 2008 without penalty.  It is secured by the Yangming
      building.
                                    
                                    $
                                    2,028





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PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007








B.
      Short-term notes payable – Qujiang Credit Cooperatives This note has
      interest payable quarterly at 8.06% per annum, principal due December 29,
      2008.  It is secured by the unsold portion of Jia Hui
      building.
                
                
                3,064C.
      Short-term notes payable – Tumen Branch of Commercial Bank  This note
      has interest payable quarterly at 7.875% per annum, principal due
      September 28, 2009.
                
                
                10,213D.
      Short-term notes payable – Nung Tsun Branch of Cooperatives  This
      note has interest payable quarterly at 13.9% per annum, principal due
      December 19, 2009
                
                
                262Total
                
                $
                15,567





As of
December 31, 2008, management is engaged in negotiation with the banks to renew
the loans.  Management is attempting to obtain better interest terms
with the renewal.  Overdue interest payable was $ 675K at December 31,
2008.  Management indicates that it expects to successfully complete a
renewal of the loans at an interest rate not to exceed the prior
terms.





Note
9 – Long-Term Debt




Long-term
debt consisted of the Mortgages Payable and Notes Payable as of December
31:





Mortgages
Payable




($,000)
                                  
                                  2008
                                  
                                  
                                  2007There
      are 30 mortgages against 30 units in the Yangming International
      Tower.  At December 31, 2008 the principle of each mortgage
      range from a low of $25to a high of $145 (an average mortgage of $56K). These
      mortgages have minimum payments due, and are usually paid off when the
      units are sold.  The average mortgage bears interest at 6.69%
      per annum, and varies in term from 4 to 27 years
                                    
                                    There
      are 47 mortgages against 47 units in the Yangming International
      Tower.  At December 31, 2007, the principle of each mortgage ranged
      from a low of $25K to a high of $151K (an average mortgage of $53K). The
      average mortgage interest was at 6.66% per annum, and varied in term from
      6 to 28 years
                                  
                                  $
                                  1,723
                                  
                                  
                                  $
                                  2,425Less
      current portion
                                  
                                  
                                  109
                                  
                                  
                                  
                                  136$
                                  1,614
                                  
                                  
                                  $
                                  2,288








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 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




Notes
Payable





($,000)
                                                              
                                                              2008
                                                              
                                                              TermsQujiang
      Branch of Credit Cooperative
                                                              
                                                              $
                                                              1,153
                                                              
                                                              8.64%
      per annum.  Interests payable on maturity.  Maturity
      of this debt on December 28, 2008San
      Yao Branch
                                                              
                                                              $
                                                              2,203
                                                              
                                                              Interest
      at 8.64% per annum. Interest payment only until
      maturity.  Maturity of this debt on  January 13,
      2009Chang
      Yan Bao Branch of Credit Cooperative
                                                              
                                                              $
                                                              1,313
                                                              
                                                              Interest
      at 8.64% per annum.  Interest payment only until
      maturity.  Maturity of this debt on December 28,
      2008Total
      long-term debt, net of current portion
                                                              
                                                              $
                                                              4,669




Note
10 - Foreign Currency Translation




The
functional currency of the Company is the Chinese Renminbi (“RMB”). Transactions
denominated in currencies other than RMB are translated into United States
dollars using year end exchange rates as to assets and liabilities and average
exchange rates as to revenues and expenses. Capital accounts are translated at
their historical exchange rates when the capital transaction occurred. Net gains
and losses resulting from foreign currency exchange translations are included in
the statements of operations and stockholder’s equity as accumulated other comprehensive
income.





Prior to
July 21, 2006, translation of amounts from RMB into United States dollars
("US$") has been made at the single rate of exchange of US$1.00:RMB8.277. 
No representation is made that RMB amounts could have been or could be,
converted into US dollars at that rate.  On January 1, 1994, the PRC
government introduced a single rate of exchange, quoted daily by the People's
Bank of China (the "Unified Exchange Rate").  The quotation of the exchange
rates does not imply free convertibility of RMB to other foreign
currencies.  All foreign exchange transactions continue to take place
either through the Bank of China or other banks authorized to buy and sell
foreign currencies at the exchange rates quoted by the People's Bank of
China. Approval of foreign currency payments by the Bank of China or other
institutions requires submission of a payment application form together with
supplier's invoices, shipping documents and signed
contracts.





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PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




On July
21, 2006, the People's Bank of China, China's central bank, announced that,
beginning on July 21, 2006, China implemented a regulated, managed floating
exchange rate system based on market supply and demand and with reference to a
package of currencies.  RMB will no longer be pegged to the US dollar and
the RMB exchange rate structure will be subject to some
fluctuation.





The
People's Bank of China announces the closing price of a foreign currency, such
as the US dollar against the RMB, in the inter-bank foreign exchange market
after the closing of the market on each working day, and will make it the
central parity for the trading against the RMB on the following working
day.  The exchange rate of the US dollar against the RMB was adjusted
to 8.11 RMB per US dollar on July 21, 2005.





The daily
trading price of the US dollar against the RMB in the inter-bank foreign
exchange market will be allowed to float within a band of 0.3 percent around the
central parity published by the People's Bank of China, while the trading prices
of the non-US dollar currencies against the RMB will be allowed to move within a
certain band announced by the People's Bank of China.





The
People's Bank of China makes adjustment of the RMB exchange rate band when
necessary, according to market developments as well as economic and financial
situations. The People's Bank of China is responsible for stabilizing and
adapting the RMB exchange rate.





Translation
adjustments resulting from the “managed floating exchange” process are included
in the accumulated
comprehensive income (loss) account in the consolidated statement of
shareholders’ equity and amounted to $895K and $(50K) as of
December 31, 2008 and 2007, respectively. The balance sheet amounts with
the exception of equity at December 31,2008 were translated at 6.8542 RMB to
$1.00 USD as compared to 7.2946 RMB at December 31, 2007. The equity accounts
were stated at their historical rate. The average translation rate of 6.85322
RMB for the twelve months ended December 31,2008 was applied to income statement
accounts as compared to 7.6058 RMB for the year ended December 31,
2007.




Note
11 - Recent Accounting Pronouncements




In May
2006, the Financial Accounting Standards Board ("FASB") issued FASB Statement
No. 154 “Accounting Changes and Error Corrections – a replacement of APB Opinion
No. 20 and FASB Statement No. 3".  This statement replaces APB Opinion
No. 20 "Accounting Changes" and FASB Statement No. 3 "Reporting Accounting
Changes in Interim Financial Statements", and changes the requirements for the
accounting for and reporting of a change in accounting principle.  It
applies to all voluntary changes in accounting principle and to changes required
by an accounting pronouncement which does not include specific transition
provisions.  FASB No. 154 requires retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change.




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PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007


When it
is impracticable to determine the period-specific effects of an accounting
change on one or more individual prior periods presented, this statements
requires that the new accounting principle be applied to the balances of assets
and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be
made to the opening balance of retained earnings for that period rather than
being reported in an income statement.  When it is impracticable to
determine the cumulative effect of applying a change in accounting principle to
all prior periods, this statement requires that the new accounting principle be
applied as if it were adopted prospectively from the earliest date
applicable.  We adopted this Statement and retrospectively restate our
results of operation, financial position, and statement of cash flows in
2005.





In
December 2006, the FASB issued SFAS No. 123R "Share-Based Payment." This
Standard addresses the accounting for transactions in which a company receives
employee services in exchange for (a) equity instruments of the company or (b)
liabilities that are based on the fair value of the company's equity instruments
or that may be settled by the issuance of such equity instruments. This Standard
eliminates the ability to account for share-based compensation transactions
using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," and requires that such transactions be accounted for using a
fair-value-based method. The Standard is effective for periods beginning after
June 15, 2006.  The adoption of the statement had no impact on the
Company's results of operation or financial position.




Note
12 – Business Combination




On June
23, 2008, China Properties Developments, Inc. (“CPD”), through its 90.28% owned
subsidiary, Xi’an Jiahui Real Estate Co., Ltd (“Jiahui”) entered into a series
of agreements affective June 1, 2008 with Shaanxi XinYuan Real Estate Co., Ltd
(“Xin Yuan”, which gives effective control over the business of Xin
Yuan.  The agreements between Jiahui and Xin Yuan provide
for:




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 CHINA
PROPERTIES DEVELOPMENTS, INC.
 NOTES
TO FINANCIAL STATEMENTS
  December
31, 2008 and 2007




·
            The
      consulting services for development, sales, lease and operations of the
      remaining portions of the Xin Tian Di Shopping Mall.  This is to
      include assistance with all personnel recruiting and management issues,
      business development.  The consulting agreement gives Jiahui
      ownership of any developed intellectual property, and Xin Yuan pledges its
      equity interests to secure all consulting fees.  In addition,
      Xin Yuan agrees not to issue or redeem any equity or debt securities, or
      to pay any dividends or any other form of return of capital to Xin Yuan
      shareholders.  Xin Yuan may not make any capital improvements to
      its property without the approval of Jiahui.  Jiahui’s fees for
      the consulting services shall be the net income of Xin
    Yuan.


·
            The
      business operations of Xin Yuan have been turned over to directors
      recommended by Jiahui, and Jiahui has agreed to provide lending guarantees
      to Xin Yuan as needed.


·
            Xin
      Yuan’s shareholders have pledged personally that their interests in Xin
      Yuan shall be subordinated to the agreement for consulting services, and
      to individually guarantee the Xin Yuan shall pay any and all consulting
      fees earned by Jiahui under the consulting
  contract.


·
            Granting
      of voting rights of the shareholders of Xin Yuan to
  Jiahui.





The
agreements do not merge the entities.  All stock ownership that
existed prior to the agreements continues without change.  For this
reason, the business combination is not accounted for as a Business Combination as
contemplated under SFAS 141.























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