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# UNITED STATES
                                                  SECURITIES AND EXCHANGE COMMISSION
                                                        WASHINGTON, D.C. 20549

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# 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, 2007

# OR

# |_| TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
                                                    SECURITIES EXCHANGE ACT OF 1934

# For the transition
period from ____________ to ____________

# Commission file
number: 333-105903

|China Housing & Land Development, Inc.                
|------------------------------------------------------
|(Exact name of registrant as specified in our charter)

|NEVADA                                                         | 20-1334845                           
|-------------------------------------------------------------- | -------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer
 Identification No.)

|6 Youyi Dong Lu, Han Yuan 4 Lou 
Xi'An, Shaanxi Province China 710054
|---------------------------------------------------------------------
|(Address of principal executive offices) (Zip Code)                  

|                                                    
|----------------------------------------------------
|(Registrant's telephone number, including area code)
|86-29-82582632                                      

(Former name, former
address and former fiscal year,                                                      if
changed since last report)

Securities registered
pursuant to Section 12(b) of the Act: none
                                      Securities registered pursuant to Section 12(g) of
the Act:

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|Title of each class                      | Name of each exchange onwhich registered
|---------------------------------------- | ----------------------------------------
|Common Stock, $ .001 par value per share | Not applicable                          

Indicate
by check mark if the registrant is a well-known seasoned  issuer, as defined in Rule 405
of the Securities Act.  Yes [_]   No [X]

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

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [_]

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act.    Large accelerated filer [_]
Accelerated filer [_] Non-accelerated filer [X]

Indicate
 by check mark  whether  the  registrant  is a shell  company  (as defined in Rule 12b-2
of the Exchange Act).  Yes [_]   No [X]

As
of March 20, 2008, the aggregate market value of the registrants common stock held
by non-affiliates of the registrant was $126,595,930 based on the $4.20 as reported on the
OTC Bulletin Board. Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date.

|                                         |                              
|---------------------------------------- | -----------------------------
|Class                                    | Outstanding at March 20, 2008
|Common Stock, $ .001 par value per share | 30,141,887 shares            

# DOCUMENTS INCORPORATED
BY REFERENCE

|         |                              
|-------- | -----------------------------
|Document | Parts Into Which Incorporated
|None     | Not applicable               

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PART I

ITEM 1. BUSINESS

# THE COMPANY

China Housing & Land Development,
Inc. (CHLN, we, our, us, or the Company) was incorporated in the state of Nevada on July
6, 2004, as Pacific Northwest Productions Inc. On April 21, 2006, we entered into and
completed a share purchase agreement with Xian Tsining Housing Development Co., Ltd.
(Tsining ), a corporation formed under the laws of the Peoples Republic of China on
September 7, 1999. Pursuant to the purchase agreement, CHLN acquired all of the issued and
outstanding capital stock of Tsining in exchange for 16,000,000 (post-split) shares of
CHLNs common stock.

Concurrently with the closing of the
purchase agreement and as a condition thereof, CHLN entered into an agreement with Deljit
Bains and Davinder Bains, our executive officers, pursuant to which they each returned
4,000,000 (post-split) shares (8,000,000 shares in total) of CHLN common stock to CHLN for
cancellation. They were not compensated in any way for the cancellation of their shares of
CHLN common stock. Upon completion of the foregoing transactions, CHLN had an aggregate of
20,000,000 shares of common stock issued and outstanding.

As a result of the merger,
Tsinings stockholders own approximately 80 percent of the combined company and the
directors and executive officers of Tsining became the directors and executive officers of
CHLN. Accordingly, the transaction has been accounted for as a reverse acquisition of CHLN
by Tsining resulting in a recapitalization of Tsining rather than as a business
combination. Tsining is deemed to be the purchaser and surviving company for accounting
purposes.

Accordingly, our assets and
liabilities are included in the balance sheet at their historical book values and the
results of operations of Tsining have been presented for the comparative prior period. The
historical cost of the net liabilities of CHLN that were acquired was $432. Pro forma
information is not presented since the financial statements of CHLN are insignificant. In
addition, on May 5, 2006, CHLN changed it name to China Housing & Land Development,
Inc., and the stockholders approved a stock dividend of seven shares for each share held,
which has been accounted for as an eight-to-one forward stock split. All shares and per
share data have been restated retrospectively.

In March 2007, the Company acquired
100 percent equity of Xian New Land Development Co., LTD. The total purchase price
for the acquisition is RMB 270 million, approximately $35 million. Xian New Land
Development Co., LTD (New Land) was originally incorporated in September 2003
in Xian in Shaanxi province, China. In 2006, New Land entered into an agreement with
Baqiao District Government of Xian to develop Baqiao Science & Technology
Industrial Park, a provincial development zone in Shaanxi Province, under which New Land
has the exclusive right to purchase and develop approximately 487 acres in Baqiao Park.

CHLN, through our two wholly owned
subsidiaries, Tsining and New Land, is engaged in the development, construction, and sale
of residential and commercial real estate unour, as well as land development in the
Peoples Republic of China (PRC or China). Tsining has completed a number of
significant real estate development and construction projects in Xian, and is ranked
the number 1 private developer in Xian. Tsining intends to continue investing in
Xian, the Shaanxi province, and potentially in other developing urban markets in
western China. New Land improves and develops land and performs infrastructure projects
for local governments. The infrastructure work can include engineering and installation of
water systems, roads, sewer systems, waterway damns and bridges, and public park
facilities.

As payment for our infrastructure
work, New Land often receives the best land in the development, which CHLN uses to
construct and sell housing, retail business, and office unour.

From 1999 through 2007, CHLNs
sales grew more than 2,980 percent from $2.4 million in 1999 to $73.91 million in 2007
revenue, and net income has grown from a loss in 1999 to more than $16.69 million in 2007.

3

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Our corporate offices are located at
6 Youyi Lu, Han Yuan 4th Floor, Xian, China. Our telephone number at that location
is +86-29-8258-2632.

Industry Overview

Peoples Republic of
China

China has experienced rapid economic
growth in the last 20 years. According to Chinas Department of Commercial Affairs,
Chinas gross domestic product (GDP) achieved an annual growth rate of 10.53 percent
from 2004 to 2007. According to the National Statistics Bureau of China, the GDP of China
in 2007 was RMB 24,661.9 billion, up 11.40 percent over the previous year.

We believe that the primary reasons
behind Chinas strong economic growth are:

| | 1. | A
robust domestic consumer demand resulting from rising consumer confidence and
               higher disposable income,
| | -- | ------------------------------------------------------------------------------------------------------------------------

| | 2. | Increasing
foreign direct investment after entry into the World Trade                Organization,
and
| | -- | ------------------------------------------------------------------------------------------------------

| | 3. | Surging
investments in Chinas real estate and infrastructure, as exhibited
               by a boom in the real property market. We believe that a paradigm shift is
               taking place in China, characterized by major economic and political
               improvements, such as a de-politicization of the Chinese society, emerging
               entrepreneurial startups, growing private businesses, government-owned
               businesses that are being converted into private enterprises, publicly
traded                companies, an emerging unified national market, and Chinas
integration                into the global value chain.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

China Real Estate

Sustainable Structural Long-Term
Growth  Chinas real estate sector is in the early stage of our growth
cycle, supported by rapid GDP growth, rising housing demand, and robust structural changes
similar to those of Japan in the early 1970s and of Hong Kong of early 1980s. Hong
Kongs property market increased in value by 8 times between 1980-1997, or a compound
annual growth rate of about 15 percent, while Japans property boom ran for more than
20 years from early 1970s to the early 1990s. There are many fundamental similarities
among the growth paths of these economies.

Chinas property bull market
begun over five years ago and we expect the structural upward trend that supports growing
demand for Chinas real estate to continue for the next 10 years. The two key
industry drivers for this growth in China are the dramatic migration of people from rural
to urban areas and the rising per-capita disposable income in the cities.

China is in the midst of a rapid
urbanization process. In 2006, there were more than 577 million Chinese living in urban
areas, and they accounted for about 44 percent of total population of about 1.31 billion.
The State Council of China estimated in 2007 that Chinas urban population in 2020
would comprise about 870 million people or about 60 percent of the total population of
1.45 billion.

Another source, the United
Nations report titled State of World Population 2007, states that about 18 million
people in China are expected to migrate from rural to urban areas each year, and that the
urban population would reach about 877 million in the next 10 years.

Regardless of which projection you
prefer, it is reasonable to expect the migration into urban areas to continue, both
because the promise of higher incomes and greater potential wealth attract people into the
cities, and because larger-scale and more efficient agricultural methods demand relatively
fewer people to do the farming.

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With the robust housing demand
created by the structural shift of the migration, the urban real estate market has been
thriving and that trend is expected to continue.

Higher disposable incomes
encourage home ownership Rural dwellers are drawn to cities primarily by the
potential of higher incomes and greater wealth, because urban jobs generally pay higher
wages and salaries.

The National Bureau of Statistics of
China reports on the upward trend of urban and rural per capita disposable income and
living expenditures. This data confirms the economic attractiveness of the migration to
urban areas.

|Annual per capita disposable income and expenses (RMB) |  | 2000 |      | 2001 |  | 2002 |  | 2003 |      | 2004 |  | 2005 | 
|------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- |  | ---- | ---- | ---- |  | ---- | 
|Urban per capita                                       |  |      |      |      |  |      |  |      |      |      |  |      | 
|Disposable income of urban households                  |  |      | 6280 |      |  | 6860 |  |      | 7703 |      |  | 8472 | 
|                                                       |  |     
|Consumption expenditures of urban households           |  |      | 4998 |      |  | 5309 |  |      | 6030 |      |  | 6511 | 
|Net increase in wealth, urban                          |  |      | 1282 |      |  | 1551 |  |      | 1673 |      |  | 1961 | 
|                                                       |  |     
|Rural per capita                                       |  |     
|Disposable income of rural households                  |  |      | 2253 |      |  | 2366 |  |      | 2476 |      |  | 2622 | 
|Living expenditures of rural households                |  |      | 1670 |      |  | 1741 |  |      | 1834 |      |  | 1943 | 
|                                                       |  |     
|Net increase in wealth, rural                          |  |      | 583  |      |  | 625  |  |      | 642  |      |  | 679  | 



China Real Estate: Red Hot but
Still Undervalued  Despite the significant appreciation of property prices in
China in recent years, comparative analysis of fundamental factors indicate prices are
still reasonable.

Studies have shown that a key
underlying growth driver for healthy property market growth is per capita GDP. Recent
International Monetary Fund studies report that Chinas recent property appreciation
is supported by strong personal economic growth. When compared using Price per
capita GDP in the U.S. and India, Chinas property market appears undervalued.
For example, although Shanghai represents the very high end property market in China,
Indias Mumbai (Bombay) has seen real estate prices grow to more than twice those of
Shanghai, even though China has higher economic growth.

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| | 
| | 
| | 

Growth in 2nd-tier 3rd-tier
Markets  As the rapid economic growth in eastern China has created a healthy
environment for the advancement of the coastal real estate property market in recent
years, the ripple effect of economic growth in the second-tier cities should engender
similar catalysts for their respective real estate market growth.

In search of lower costs, an educated
talent pool, and new markets, multinational corporations have begun to branch out of mega
cities like Beijing, Shanghai, and Shenzhen, and into neighboring and inland cities.
Intel, for example, has opened a development center in Chengdu, while the Liberty Mutual
Group, the U.S. insurance giant, has chosen Chongqing for our Chinese headquarters instead
of Beijing or Shanghai. Unilever has relocated our Chinese headquarters from Shanghai to a
neighboring province of Hefei due to our low labor and land costs and strategic location.

The wealth gap is expected to
narrow between the first  and second-tier cities. Rising disposable income in these
cities has lured top luxury goods manufacturers including LVMH Group to expand
aggressively into key second-tier cities. The Chinese government has also been
instrumental in stimulating regional growth by designating certain second-tier regions as
priority zones. These actions are benefitting Xian and the other chosen markets of
the Company.

Riding the second wave of economic
growth in second  tier cities, including Xian, institutional real estate
investors have begun to tap into these undervalued growth markets, increasingly focused on
Central and Western China. These investors also often become our customers and clients.

City of Xian: First Class in
the Second Tier Xians gross domestic product in 2007 grew 14.6
percent, compared to 11.4 percent for all of China. As the ripple effect of economic
growth continues to permeate second-tier cities and create a healthy environment for real
estate development, leading indicators are signaling imminent growth in local property
markets.



6

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Growth factors include the transition
of certain industries to value-added business, especially high-technology and services,
rising per capita GDP, increasing foreign investments, expanding foreign retailing and
hotel presence, and a concerted effort by the local government to create clear strategies,
institute policies, and invest in the necessary infrastructure to create a favorable
investment environment. The city of Xian has demonstrated all of these
characteristics.

| | Transformation
and UrbanizationXian served as the capital of China during 13 dynasties (from
West Zhou in 1066 BC to Tang in 907 AD) and is well-known for our terracotta warriors and
other famous historical landmarks. With our rich heritage, today the citys economic
foundation includes the high-technology, pharmaceutical, military, aerospace, tourism,
and advanced education industries.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Xian
also is being transformed into a high-tech international city that offers a large and
educated work force. Xian boasts the third largest university-educated workforce in
China, making it a hotbed for R&D, high-tech manufacturing, and information
technology solutions.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Xian
has begun to attract well-known high-tech companies, including IBM, Applied Materials,
Micron Technology, and Infineon. Applied Materials, for example, has committed $255
million for Phase I of our R&D center in Xian, a facility that will design and
develop equipment for semiconductor chip manufacturing. Micron Technology has invested
$250 million in Xian for packaging and testing of semiconductor chips.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Furthermore,
Xian has been designated by the Chinese government as one of five China Outsourcing
Bases, giving added credibility as it scales-up IT research and development, production,
outsourcing, and services to duplicate and rival the success of India. Similar to
Bangalore and Hyderabad, the Xian government is carving out a niche in IT
outsourcing by creating the 400,000 square meter Xian Software Park. The Park has
already attracted top software and technology players, including IBM, which is the
governments joint venture partner in creating the software park. Sybase, SPSS,
Nortel, Fujouru, and NEC are already operating in the Park. The Xian government
anticipates that the citys IT outsourcing workforce will grow from the current
50,000 to 200,000 by 2010.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Xian government has a clear master plan for the next ten years to foster economic
transition and urbanization. For example, Xian is now limiting development in the
citys famous historical Gated Wall City (or Inner Ring), which will be revamped
primarily for tourism. The city plans to redirect about 450,000 people from the Inner
Ring to the Second, Third, and Fourth Rings.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | One
of the most ambitious plans is the development of a new satellite city about 8 kilometers
from Xians center in the District of Baqiao. The new urban area is targeting
900,000 middle-to-upper income residents and firms in industries that include R&D,
services, and high-technology, as well as the Chinese headquarters of multinational
corporations. Leveraging our natural resources, the Cha Ba ecological region, and new citys
access to important transportation arteries (five major highways, three railways, and a
pending subway system will connect the airport, Xian inner city, Baqiao, and the
Terracotta Warriors), Baqiao has the potential to duplicate the economic success of
Shanghais Pudong as Xian expands beyond our core geographic region and also
embraces new value-added industries.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | Emerging
To Be An International CityXians government has been proactive in enhancing
our international image with the planned hosting world class events like the Euro-Asia
Economic Forum and the Formula One Powerboat World Championship. The city has also
revamped our tourism infrastructure to increase international travelers and is attracting
large foreign retailers.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November 2007, Xian hosted the Euro-Asia Economic Forum in Baqiao, where high level
delegates from different countries held discussions on economic issues related to energy,
finance, tourism, and other cooperative industries. Baqiao became the permanent venue for
the Euro-Asia Economic Forum. On October 5th, 2007, Xian hosted the
Formula One (F1) Powerboat World Championship on the waterfront of Baqiao close to CHLNs
development site.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | To
attract international tourists, Xian is leveraging our famous historical and
cultural significance. Xian has totally revamped our tourism infrastructure in
various ways including the redevelopment of our famous Terra-cotta theme park and by
inviting the subsidiary of Chinas largest construction company on a RMB20 billion
($2.5 billion) project to build a theme park and implement a residential and commercial
redevelopment project on the grounds of famous Daminggong Palace ruins which was built
1,300 years ago during the Tang Dynasty.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
big box retailers are entering Xian, including Wal-mart, Carrefour of
France and Metro of Germany. The allure of Xians historical mystic and economic
potential has also brought top luxury brands including Louis Vuitton, Gucci, Prada, and
Vesace to Xian.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Attracting
World-class Investors Property markets in nearly all of Chinas major cities have
benefited from capital investment by major international developers, especially those
from Hong Kong. Xian is no exception. Top Hong Kong developer Henderson Land has
signed agreements to develop two residential projects in Xian. Partnering with
Surbana, a unit of Singapores Temasek, Henderson plans to develop a 30,000
residential unit project with a GFA of 16.5 million sq. ft. and a budgeted cost of 5
billion yuan. Henderson will develop 1,200 unour for the second project with an estimated
cost of 1.3 billion yuan. The former project gives Baqiao a vote of confidence as
Henderson Land and Temasek are two of the leading property developers/investors in Asia.
With developments adjacent to CHLNs site, the latter project will benefit the
companys JunJing II residential project, in our view. Furthermore, as CHLNs
land was acquired at substantial lower cost, we expect healthy margins from JunJing II
project when construction is complete.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | Prices
Catching Up To Fundamentals Strong demo-economic factors including emerging high-tech
industries and increasing foreign capital inflow bode well for Xians future growth.
Xian experienced a five year GDP CAGR of 14.6 percent. With average living area
only 157 sq.ft per person in Xian, compared to 268 sq. ft for the nations
average, the Xian government aims to create 1.26 billion sq. ft. of new development
by 2020, creating significant opportunity for property developers. Despite the strong
economic growth and rising housing demand, real estate prices in Xian are less than
half of those in the mega cities like Shanghai, Beijing, and Shenzhen. We expect the
price gap to narrow as foreign investment increases and urbanization accelerates in Xian.
Xian and nearby real estate prices have already began to show meaningful increases
as the citys improving fundamentals justify higher valuations. Although still
substantially below those of the first-tier cities and below that of another major
Central/Northwestern city Chengdu, the real estate prices of Xian have shown
meaningful increases in 2007.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Business

|A. | Completed
Property Development Projects
|-- | ---------------------------------------

We are primarily focused on land
acquisition for the development of residential housing. Over the past several years, the
bulk of our sales were realized from the five projects described below. The completed
projects are in downtown Xian and commanded prices per square foot that were higher than
the regional average. All five projects included secured parking, cable TV, hot water,
heating systems, and access to natural gas.

| | 1)    
   Tsining Mingyuan: 8 East Youyi Road, Xian. The construction area is 473,627
          square feet. Mingyuan is a residential complex consisting of 303 apartments
          ranging from two to four bedrooms and 950 to 1,800 square feet in size.
          Construction commenced in March 1998 and was completed in April 2000. In total,
          the project generated total sales of US$19.98 million with an average price of
          US$42 square foot.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2)                       Lidu
Mingyuan: 25 East Mutoushi, Xian. Located in the prime commercial area           near the
historic Bell Tower. The project covers 1.3 acres, a building area of           86,114
square feet, and 56 apartments ranging from two to four bedrooms. The           project
began in October 2000 and was completed in November 2001. With an           average price
of US$47 per square foot, total sales were US$4.32 million.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3)                     Tsining
Hanyuan: 6 East Youyi Road, Xian. Located in the south of Xian, noted           for our
schools and universities. The project was started in February 2002 and
          completed in December 2003. It is comprised of 238 two and three bedroom
          apartments ranging from 1,140 to 1,800 square feet and covering a total
          construction area of 346,799 square feet. The apartments sold at an average
          price of US$41 per square foot generating total sales of US$14.05 million.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4)                       Tsining
Home IN: 88 North Xingqing Road, Xian. Located near the city center,           the Home
IN project consists of 215 two and three bedroom western-style           apartments
ranging from 1,120 to 1,920 square feet in size. Total construction           area is
248,385 square feet. The project, completed in December 2003, generated           sales
of US$50 per square foot for a total of US$12.65 million in total sales.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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| | 5)
                          Tsining GangWan: 123
Laodong Road, Xian. Less than one mile from the western           hi-tec industrial zone,
GangWen spans three acres and is comprised of eight           buildings with a total
construction area of 510,812 square feet. The project           began in April 2003 and
was completed in December 2004. GangWan has apartments           ranging from one to
three bedrooms and 430 to 1,430 square feet in size. There           are 466 apartments.
Total sales were US$ 18.27 million with an average price of           US$31 per square
foot.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|B. | Projects
Currently Under sale
|-- | -----------------------------

The following are projects under
sales which will contain both residential housing as well as hotel and retail space
available for rent. We have completed both projects in 2006. The sales of first three
projects are contributed to our 2007s revenue:

| | 1)
                           Tsining 24G: 133 Changle
Road, Xian. 24G is an redevelopment of an existing 26           floor building, located
in the center of the most matured and developed           commercial belt of the city.
This upscale development will include secured           parking, cable TV, hot water, air
conditioning, natural gas access, internet           connection, and exercise facilities.
This project was awarded The Most           Investment Potential Award in Xian
city  in 2006, Its target           Customer: White collar workers, small business
owners and traders,           entrepreneurs. Total square footage available for
residential use was           239,173,covering 372 one to three bedroom serviced
apartments ranging from 387           to 1,936 square feet. In addition to the
residential housing, The commercial           area of 24G covers 199,395 square feet,
will house electronic products           retailers, clothing stores, convenience stores
and restaurants in our           ground-level retail space.. The project started
construction in June 2005 and           was completed in June 2006. 24G contributed
US$25.20 million to 2007 revenue.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2)
                           Tsining JunJing Garden I:
369 North Jinhua Road, Xian. Its the first           German style Residential & Commercial
Community in Xian, designed by           the world-famous WSP architect design
house. Its target Customer is local middle           income families. The project has 15
residential apartment buildings consisting           of 1,230 one to five bedroom
apartments, ranging from 505 to 3,787 square feet           in size. The Garden will
feature secured parking, cable TV, hot water, heating           systems, and access to
natural gas. Total square footage available for           residential use was 189,772
JunJing Garden I was also a commercial venture that           will house small businesses
serving the needs of JunJing Garden I residents and           surrounding residential
communities. Total commercial space was 289,100 square           feet, and we expect to
remain 128,273 square feet of commercial space to house a           supermarket and other
retailers generating annual rental income. The project was           completed in
September 2006. JunJing Garden I contributed US$8.96 million to           2007 revenue.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3)
                           Baqiao New Development Zone. On March 9, 2007, we entered into a Shares           Transfer Agreement with the
shareholders of Xian New Land Development Co.,           Ltd. (New Land), pursuant
to which the Registrant has acquired 32,000,000 shares           of New Land,
constituting 100 percent equity ownership of New Land. This           acquisition give
the company to secure an exclusive right to develop and sell           487 acres of land
in a newly designated satellite city of Xian.e, and           represents a major
growth opportunity for the Company. Xian city has           designated Baqiao as a
major resettlement zone where it expects 900,000 middle           to upper income people
to settle into this area. Xian government intends           to generate the similar
type of success that Pudong has done for Shanghai as it           has engendered new
economic dynamics into Shanghai and created a new satellite           city that
supplements the housing demands of a growing Shanghai. The Xian           municipal
government plans to invest 50 billion RMB (over $6 billion) in           infrastructure
in this area. The construction of a large-scale public wetland           park is well
underway that will embellish the natural environment surrounding           Baqiao.
Through New Lands subsidiary we have sold approximately 18.4 acres           of
land to another developer, generate about $24.41 million revenue. This           further
validated our hybrid business strategy. We plan to start co-develop and           self
develop the rest of the land in the coming years.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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| | 4)      
               JunJing Garden II: 38 East Hujiamiao, Xian Set on 18 acres of land. Its
               the first Canadian style residential community with green and
               energy-saving characters, and won National Energy Saving
               Project. Its target Customer: local middle income family. Located
near                JunJing Garden I, this complex will consist of 2,119 one to five
bedroom                apartments. The apartments will offer secured parking, cable TV,
hot water,                heating systems, and access to natural gas. Set on 18 acres,
total square                footage available for sale is expected to be 2,624,557 Square
Footage                ,residential will be 2,520,508 Square Footage and commercial will
be 104,049                Square Footage. The project started construction in July 2007
and plan to be                completed In December 2009. In September, 2007, the Company
began to offer                select club members the opportunity to secure a
purchase right for a                unit in the highly sought after JunJing Garden II
development for an initial                cash payment of 100,000 RMB or approximately
$13,300 USD. As of December 31,                over 310 unour were pre-sold, covering $15
million of revenue, by far, we have                received approximately $4 million in
cash as the deposit, which recorded as                advance from customer. The balance
of payment will be received in 2008.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|C. | PROJECT
DEVELOPMENT PIPELINE
|-- | ----------------------------

We have purchased the additional
parcel of land in Xian in anticipation of beginning development of the following
residential properties. The completion of such projects is subject to adequate financing,
permour, licensing and market conditions:

| | 1)
                           Yijing Garden: 14 Jiangong
Road, Xian. Set on 15 acres of land, Yijing Garden           Located at one of the best
residential area in the city, surrounded by           universities and park. We had got
the certificate for land use in 2004. Its           target Customer: Middle/High income
family. Yijing Garden will consist of 1,500           apartments ranging from two to four
bedrooms. Total square footage will be           2,039,793. Secured parking, cable TV,
hot water, heating systems, and access to           natural gas will be included.
Construction is set to begin in October 2008 and           be completed December 2010.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Customers

Middle income families comprise the
Companys primary residential customer group and represent the fastest growing
segment in Xian as well as China in general. The annual income for the middle-income
family targeted by the Company ranges between RMB100,000 and RMB200,000. Xians per
capita GDP has grown at a 12.7 percent CAGR (reflecting 14.6 percent GDP growth and 1.6
percent annualized population growth) during the past five years with continued growth
anticipated over the next five years with the strengthening of Xians economic
and cultural significance in the Central/Northwest part of China. The middle-market niche
segment partially insulates the company from direct competition with the international and
national developers in Xian that are targeting primarily the high-end market due to
their high cost structure and brand recognition.

# Marketing

The company currently has seven sales
managers and over thirty primarily commission driven direct sales personnel that are
on-site to service prospective clients. It has a marketing campaign that includes
television, radio, billboard, and internet. The company also has membership program (e.g.
Gold and Silver member) where existing and potential customers can pay for
points at a discount that can be redeemed for the purchase of property unour
later on. The program has been very popular and provides good indication of project sales
and creates better cash liquidity for the company. the Company has been focusing on
building brand equity and has hired a third party evaluation company to survey both
existing and potential customers in terms of the companys services, recognition of
our Tsining brand, etc. Every year the company has been rated between 80-85
percent in terms of customer satisfaction.

# Suppliers

The supply of land is controlled by
the government. There are generally three ways in which we acquire land.

11

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| |  | Purchase
by auction held by the Land Consolidation and Rehabilitation           Center;
| | - | ---------------------------------------------------------------------------------------

| |  | Purchase
by auction held by court under bankruptcy proceedings;
| | - | ---------------------------------------------------------------

| |  | Merger
with or acquisition of a state-owned enterprise that controls developable land.
| | - | --------------------------------------------------------------------------------------

All such purchases of land are
required to be reported to and authorized by the Xian Bureau of Land and Natural
Resources.

As for other suppliers of design and
construction services, we typically selects the lowest-cost provider through an open
bidding process. Such service providers are numerous in China and we foresee no
difficulties in securing alternative sources of services as needed.

# Intellectual Property

We currently have no registered
intellectual property.

# Research and Development

We have not had any material research
and development expenses over the past two years. Due to the characteristic of the housing
and land development industry, R&D consists of marketing research. The
funding of all marketing research is expected to come from operating cash flow.

# Governmental and
Environmental Regulation

To date, we have been compliant with
all registrations and requirements for the issuance and maintenance of all licenses
required by the applicable governing authorities in China. These licenses include:

o  Level 1 Qualification
Certificate for Real Estate Development authorized by the Shaanxi Construction
Bureau, effective from December 20, 2006 to December 20, 2009. License No: JianKaiQi
(2006) 603. The housing & land development process is regulated by the Ministry of
Construction and authorized by the local offices of the Ministry. Each development project
must obtain the following licenses:

o  "License for Construction  Area
Planning" and "License for  Construction  Project  Planning",  authorized by Xian Bureau
of Municipal Design;

o  Building Permit
authorized by the Committee of Municipal and Rural Construction;

After construction is complete, the
project must obtain a validation certificate. There are various standards that must be met
to obtain this certificate. These standards are regulated by Local Ministry of
Construction Bureau.

Housing and land development sales
companies are regulated by the Ministry of Land & Natural Resources and authorized by
the local office of the Ministry. Each project also has to be authorized and must obtain a
Commercial License for Housing Sale from the Real Estate Bureau.

# Competition

The real estate development business
in China is organized into four levels under the structure of the Qualification
Certificate for Real Estate Development Enterprise. The starting level is Level 4
(see table below). Dependent upon our registered capital, the number of years of industry
experience, the area of land it has developed and our safety record, a company may climb
the scale to participate in larger projects. However, only one level may be ascended per
year.

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|        |  | Registered Capital
(million) |  | Experience
(years) |          | Developed Area
(square feet) |   | Other |  | Time for
license to
be authorized | 
|------- |  | ---------------------------- |  | ------------------ | -------- | ---------------------------- | - | ----- |  | --------------------------------- | 
|Level 1 |  |                              |  |                    | US$6.25  |                              | 5 |       |  | 3,229,278                         | 
|Level 2 |  |                              |  |                    | US$2.5   |                              | 3 |       |  | 1,614,639                         | 
|Level 3 |  |                              |  |                    | US$1     |                              | 2 |       |  | 538,213                           | 
|Level 4 |  |                              |  |                    | US$0.125 |                              | 1 |       |  | N/A                               | 

On the national level, there are
numerous Level 1 companies that have real estate projects across China (to develop in
multiple regions a Level 1 status is required). There are 79 housing and land development
companies listed on the Shanghai, Shenzhen and Hong Kong Stock Exchanges. However, such
companies usually undertake large scale projects and are unlikely to compete with us for
business as we target small to medium size projects.

We had gained Level 1 status under
the China Ministry of Construction licensing policy in December 20 2006. Typically, the
housing and land development industry is a regional business with mostly local players
competing with us for small to medium size projects.

There are developers of various scale
targeting the Xian real estate market, including pure developers, subsidiaries of
traditional industries and municipal government real estate development companies. In
general we have divided them into three categories: local, national and international. The
national and international developers tend to limit themselves to the high end residential
markets in Xian, targeting annual family income above RMB300,000, whereas the
Company focuses on the middle tier with annual income between Y100,000 and Y250,000.

| | Local
 The local Xian development market is fragmented with close to 350 listed
developers, most of which are of small scale and scope and currently do not have active
development projects. CHLN is one of the three Level I rated developers in Xian.
The other two major local companies are government related and are publicly listed in
Shanghai Stock Exchange. Tande Co. (Tiandiyuan) is considered the largest developer in Xian.
It is a government affiliated company that has been targeting primarily the High-tech
Development Zone. Real estate represents about 70 percent Tandes 2006 revenue,
which totaled RMB914 million (or US$122 million.). Its total net margin was 7.8 percent.
It was able to purchase land at substantial discount in the 1990s through private
negotiation, which is now prohibited due to the new real estate law which requires public
auction of land sales in China. CHLN has not seen any direct competition with Tande as
the Company focuses mainly on the East and South part of Xian whereas Tande targets
primarily the Southwestern part of Xian. Shaanxi International Trust & Investment
Corp (SITIC) is another large local company thats involved in real estate primarily
through investments via SOE property companies. Its total 2006 revenue was RMB143 million
(or US$19 million), with real estate revenues represent about 85 percent of total
revenues and financial services represent the rest. Its overall net margin was about 7
percent in 2006. The Company has not seen direct competition with SITIC. The two
companies have actually cooperated on 24G, in which SITIC was the guarantor for the debt
of the original project and has worked out the debt agreement with the Company to
continue the project. With the new stringent government policy striving to enhance buyers services
and reduce property development speculation, many smaller local developers are finding it
harder and harder to survive when faced with increased regulatory oversight, weakened
ability to borrow, and enhanced international competition. This presents an attractive
opportunity for well financed and managed companies to acquire the ones with attractive
land bank.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | National/regional
 Although fewer in numbers, the larger scale national developers have increased
their presence in Xian, including Greenland, Guangzhou R&F, Gemdale, China
Overseas & Land. Guangzhou R&F has a high end residential development called Xian
R&F City with 1.1million GFA near the Third Ring on the southeast side of the city.
The project has several phases to be constructed over the next 2-3 years and targets high
income families (e.g. over RMB300,000 yearly salary) and comprised of spacious unour that
can be over 170 square meter, with average price over Y5,500/ square meter. China
Overseas & Land (COLI), one of the largest national developers, completed the
development of Classic Palais Ph2 with 1.58 million sq.ft, and is expected to
complete in 2007 a 7.0 million sq.ft GFA project called Qu Jiang. Gemdale, a Shenzhen
based developer, has a high end residential project with land area of 44,254 square meter
in the new vacation district in southeast part of Xian. The project has a
registered capital of Y150million and is comprised primarily of low rises and villas.
Greenland (based in Shanghai) has a mixed-use project north of Xian High-Tech Zone.
It has a total construction area of 1.2 million square meter comprised of 650,000 square
meter mid-high end residential and 550,000 square meter commercial development. Most of
these national players target the higher end markets due to their higher cost base and
better name recognition.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | International
 Top Hong Kong and Singapore developers are discovering Xian. Hong Kongs
Henderson Land and Singapores Temasek are working on a 30,000 unit joint project in
Baqiao, with construction estimated to begin in end of 2007 or early 2008. Henderson also
has a second project adjacent to the Companys JunJing Garden II project. Hutchinson
Whampoa, owned by Hong Kong tycoon Li-kai Shing has a high end residential development
north of Xian High-Tech Zone. Although these brand name Asian developers may
present competition in terms of acquisition of land, over the long run, we believe they
help to bring a higher standard of living and higher real estate valuations to Xians
market.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Employees

As of December 31, 2007, we employed
a total of 61 employees in the following capacities: 5 management, 6 administrative, 28
operational, 8 sales, 6 planning and 8 finance. We believe that we have a good working
relationship with our employees. We are not a party to any collective bargaining
agreements. At present, no significant change in our staffing is expected over the next 12
months. All employees are eligible for incentive-based compensation

Item 1A. RISK FACTORS

The investment in our company has a
high degree of risk. Before you invest you should carefully consider the risks and
uncertainties described below and the other information in this prospectus. If any of the
following risks actually occur, our business, operating results and financial condition
could be harmed and the value of our stock could go down. This means you could lose all or
a part of your investment.

Risks Related to Our
Business

Our home sales and operating revenues
could decline due to macro-economic and other factors outside of our control, such as
changes in consumer confidence and declines in employment levels.

Changes in national and regional
economic conditions, as well as local economic conditions where the Company conducts our
operations and where prospective purchasers of our homes live, may result in more caution
on the part of homebuyers and consequently fewer home purchases. These economic
uncertainties involve, among other things, conditions of supply and demand in local
markets and changes in consumer confidence and income, employment levels, and government
regulations. These risks and uncertainties could periodically have an adverse effect on
consumer demand for and the pricing of our homes, which could cause our operating revenues
to decline. In addition, builders are subject to various risks, many of them outside the
control of the homebuilder including competitive overbuilding, availability and cost of
building lots, materials and labor, adverse weather conditions which can cause delays in
construction schedules, cost overruns, changes in government regulations, and increases in
real estate taxes and other local government fees. A reduction in our revenues could in
turn negatively affect the market price of our securities.

An increase in mortgage interest
rates or unavailability of mortgage financing may reduce consumer demand for the
Companys homes.

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Virtually all purchasers of our homes
finance their acquisitions through lenders providing mortgage financing. A substantial
increase in mortgage interest rates or unavailability of mortgage financing would
adversely affect the ability of prospective homebuyers to obtain the financing they would
need in order to purchase our homes, as well as adversely affect the ability of
prospective move-up homebuyers to sell their current homes. For example, if mortgage
financing became less available, demand for our homes could decline. A reduction in demand
could also have an adverse effect on the pricing of our homes because we and our
competitors may reduce prices in an effort to better compete for home buyers. A reduction
in pricing could result in a decline in revenues and in our margins.

We could experience a reduction in
home sales and revenues or reduced cash flows if we are unable to obtain reasonably priced
financing to support our homebuilding and land development activities.

The real estate development industry
is capital intensive, and development requires significant up-front expenditures to
acquire land and begin development. Accordingly, we incur substantial indebtedness to
finance our homebuilding and land development activities. Although we believe that
internally generated funds and current borrowing capacity will be sufficient to fund our
capital and other expenditures (including land acquisition, development and construction
activities), the amounts available from such sources may not be adequate to meet our
needs. If such sources are not sufficient, we would seek additional capital in the form of
debt or equity financing from a variety of potential sources, including bank financing
and/or securities offerings. The availability of borrowed funds, to be utilized for land
acquisition, development and construction, may be greatly reduced, and the lending
community may require increased amounts of equity to be invested in a project by borrowers
in connection with new loans. The failure to obtain sufficient capital to fund our planned
capital and other expenditures could have a material adverse effect on our business.

We are subject to extensive
government regulation which could cause it to incur significant liabilities or restrict it
business activities.

Regulatory requirements could cause
us to incur significant liabilities and operating expenses and could restrict our business
activities. We are subject to statutes and rules regulating, among other things, certain
developmental matters, building and site design, and matters concerning the protection of
health and the environment. Our operating expenses may be increased by governmental
regulations such as building permit allocation ordinances and other fees and taxes, which
may be imposed to defray the cost of providing certain governmental services and
improvements. Any delay or refusal from government agencies to grant us necessary
licenses, permour and approvals could have an adverse effect on our operations.

We may require additional capital in
the future, which may not be available on favorable terms or at all.

Our future capital requirements will depend
on many factors, including industry and market conditions, our ability to successfully
implement our new branding and marketing initiative and expansion of our production
capabilities. We anticipate that we may need to raise additional funds in order to grow
our business and implement our business strategy. We anticipate that any such additional
funds would be raised through equity or debt financings. In addition, we may enter into a
revolving credit facility or a term loan facility with one or more syndicates of lenders.
Any equity or debt financing, if available at all, may be on terms that are not favorable
to us. Even if we are able to raise capital through equity or debt financings, as to which
there can be no assurance, the interest of existing shareholders in our company may be
diluted, and the securities we issue may have rights, preferences and privileges that are
senior to those of our common stock or may otherwise materially and adversely effect the
holdings or rights of our existing shareholders. If we cannot obtain adequate capital, we
may not be able to fully implement our business strategy, and our business, results of
operations and financial condition would be adversely affected. See also
Managements Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital Resources. In addition, we have and will
continue to raise additional capital through private placements or registered offerings,
in which broker-dealers will be engaged. The activities of such broker-dealers are highly
regulated and we cannot assure that the activities of such broker-dealers will not violate
relevant regulations and generate liabilities despite our expectation otherwise.

15

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We depend on the availability of
additional human resources for future growth.

We are currently experiencing a
period of significant growth in our sales volume. We believe that continued expansion is
essential for us to remain competitive and to capitalize on the growth potential of our
business. Such expansion may place a significant strain on our management and operations
and financial resources. As our operations continue to grow, we will have to continually
improve our management, operational and financial systems, procedures and controls, and
other resources infrastructure, and expand our workforce. There can be no assurance that
our existing or future management, operating and financial systems, procedures and
controls will be adequate to support our operations, or that we will be able to recruit,
retain and motivate our personnel. Further, there can be no assurance that we will be able
to establish, develop or maintain the business relationships beneficial to our operations,
or to do so or to implement any of the above activities in a timely manner. Failure to
manage our growth effectively could have a material adverse effect on our business and the
results of our operations and financial condition.

We may be adversely affected by the
fluctuation in raw material prices and selling prices of our products.

Our projects and the raw materials we
use have experienced significant price fluctuations in the past. There is no assurance
that they will not be subject to future price fluctuations or pricing control. The land
and raw materials we use may experience price volatility caused by events such as market
fluctuations or changes in governmental programs. The market price of land and raw
materials may also experience significant upward adjustment, if, for instance, there is a
material under-supply or over-demand in the market. These price changes may ultimately
result in increases in the selling prices of our products, and may, in turn, adversely
affect our sales volume, revenue and operating profit.

We could be adversely affected by the
occurrence of natural disasters.

From time to time, our developed
sites may experience strong winds, storms, flooding and earth quakes. Natural disasters
could impede operations, damage infrastructure necessary to our constructions and
operations. The occurrence of natural disasters could adversely affect our business, the
results of our operations, prospects and financial condition, even though we currently
have insurance against damages caused by natural disasters, including typhoons, accidents
or similar events.

Intense competition from existing and
new entities may adversely affect our revenues and profitability.

In general, the property development
industry is intensely competitive and highly fragmented. We compete with various
companies. Many of our competitors are more established than we are and have significantly
greater financial, technical, marketing and other resources than we presently possess.
Some of our competitors have greater name recognition and a larger customer base. These
competitors may be able to respond more quickly to new or changing opportunities and
customer requirements and may be able to undertake more extensive promotional activities,
offer more attractive terms to customers, and adopt more aggressive pricing policies. We
intend to create greater awareness for our brand name so that we can successfully compete
with our competitors. We cannot assure you that we will be able to compete effectively or
successfully with current or future competitors or that the competitive pressures we face
will not harm our business.

Our operating subsidiary must comply
with environmental protection laws that could adversely affect our profitability.

We are required to comply with the
environmental protection laws and regulations promulgated by the national and local
governments of the Peoples Republic of China (PRC or China). Some of these
regulations govern the level of fees payable to government entities providing
environmental protection services and the prescribed standards relating to the
constructions. Although our construction technologies allow us to efficiently control the
level of pollution resulting from our construction process, due to the nature of our
business, waste are unavoidably generated in the processes. If we fail to comply with any
of these environmental laws and regulations in the PRC, depending on the types and
seriousness of the violation, we may be subject to, among other things, warning from
relevant authorities, imposition of fines, specific performance and/or criminal liability,
forfeiture of profour made, being ordered to close down our business operations and
suspension of relevant permour.

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Our success depends on our management
team and other key personnel, the loss of any of whom could disrupt our business
operations.

Our future success will depend in
substantial part on the continued service of our senior management, including Mr. Lu
Pingji, our Chairman and Chief Executive Officer, and Mr. Feng Xiaohong, our Chief
Operational Officer. The loss of the services of one or more of our key personnel could
impede implementation of our business plan and result in reduced profitability. We do not
carry key person life or other insurance in respect of any of our officers or employees.
Our future success will also depend on the continued ability to attract, retain and
motivate highly qualified technical sales and marketing customer support. Because of the
rapid growth of the economy in the Peoples Republic of China, competition for
qualified personnel is intense. We cannot guarantee that we will be able to retain our key
personnel or that we will be able to attract, assimilate or retain qualified personnel in
the future.

Risk Relating to the
Residential Property Industry in China

We are heavily dependent on the
performance of the residential property market in China, which is at a relatively early
development stage.

The residential property industry in
the PRC is still in a relatively early stage of development. Although demand for
residential property in the PRC has been growing rapidly in recent years, such growth is
often coupled with volatility in market conditions and fluctuation in property prices. It
is extremely difficult to predict how much and when demand will develop, as many social,
political, economic, legal and other factors, most of which are beyond our control, may
affect the development of the market. The level of uncertainty is increased by the limited
availability of accurate financial and market information as well as the overall low level
of transparency in the PRC, especially in Tier II cities which have lagged in progress in
these aspects when compared to Tier I cities. The lack of a liquid secondary market for
residential property may discourage investors from acquiring new properties. The limited
amount of property mortgage financing available to PRC individuals may further inhibit
demand for residential developments.

We face intense competition from
other real estate developers.

The property industry in the PRC is
highly competitive. In the Tier II cities we focus on, local and regional property
developers are our major competitors, and an increasing number of large state-owned and
private national property developers have started entering these markets. Many of our
competitors, especially the state-owned and private national property developers, are well
capitalized and have greater financial, marketing and other resources than we have. Some
also have larger land banks, greater economies of scale, broader name recognition, a
longer track record and more established relationships in certain markets. In addition,
the PRC governments recent measures designed to reduce land supply further increased
competition for land among property developers.

Competition among property developers
may result in increased costs for the acquisition of land for development, increased costs
for raw materials, shortages of skilled contractors, oversupply of properties, decrease in
property prices in certain parts of the PRC, a slowdown in the rate at which new property
developments will be approved and/or reviewed by the relevant government authorities and
an increase in administrative costs for hiring or retaining qualified personnel, any of
which may adversely affect our business and financial condition. Furthermore, property
developers that are better capitalized than we are may be more competitive in acquiring
land through the auction process. If we cannot respond to changes in market conditions as
promptly and effectively as our competitors, or effectively compete for land acquisition
through the auction systems and acquire other factors of production, our business and
financial condition will be adversely affected.

In addition, risk of property
over-supply is increasing in parts of China, where property investment, trading and
speculation have become overly active. We are exposed to the risk that in the event of
actual or perceived over-supply, property prices may fall drastically, and our revenue and
profitability will be adversely affected.

The PRC government may adopt further
measures to curtail the overheating of the property sector.

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Along with the economic growth in
China, investments in the property sectors have increased significantly in the past few
years. In response to concerns over the scale of the increase in property investments, the
PRC government has introduced policies to curtail property development. We believe the
following regulations, among others, significantly affect the property industry in China.

In May 2006, the Ministry of
Construction, National Development and Reform Commission, or the NDRC, PBOC and other
relevant PRC government authorities jointly issued the Opinions on Adjusting the Housing
Supply Structure and Stabilizing the Property Prices, which introduced measures to limit
resources allocated to the luxury residential market. For instance, the new measures
require that at least 70 percent of a residential project must consist of units with a GFA
of less than 90 square meters per unit, and the minimum amount of down payment was
increased from 20 percent to 30 percent of the purchase price of the underlying property
if it has a unit GFA of 90 square meters or more. In September 2007, PBOC and China
Banking Regulatory Commission issued the Circular on Strengthening the Management of
Commercial Real Estate Credit Facilities, which increased the minimum down payment for any
purchase of second or subsequent residential property to 40 percent of the purchase price
if the purchaser had obtained a bank loan to finance the purchase of his or her first
property.

In July 2006, the Ministry of
Construction, the Ministry of Commerce, NDRC, PBOC, the State Administration for Industry
and Commerce and SAFE issued Opinions on Regulating the Entry and Administration of
Foreign Investment in Real Property Market, which impose significant requirements on
foreign investment in the PRC real estate sector. For instance, these opinions set forth
requirements of registered capital of a foreign invested real property enterprise as well
as thresholds for a foreign invested real property enterprise to borrow domestic or
overseas loans. In addition, since June 2007, a foreign invested real property enterprise
approved by local authorities is required to register such approvals with the Ministry of
Commerce.

The PRC governments restrictive
regulations and measures to curtail the overheating of the property sector could increase
our operating costs in adapting to these regulations and measures, limit our access to
capital resources or even restrict our business operations. We cannot be certain that the
PRC government will not issue additional and more stringent regulations or measures, which
could further slow down property development in China and adversely affect our business
and prospects.

Our sales will be affected if
mortgage financing becomes more costly or otherwise becomes less attractive.

Substantially all purchasers of our
residential properties rely on mortgages to fund their purchases. An increase in interest
rates may significantly increase the cost of mortgage financing, thus affecting the
affordability of residential properties. In 2007, PBOC raised the lending rates five
times. The benchmark lending rate for loans with a term of over five years, which affects
mortgage rates, has been increased to 7.83 percent. The PRC government and commercial
banks may also increase the down payment requirement, impose other conditions or otherwise
change the regulatory framework in a manner that would make mortgage financing unavailable
or unattractive to potential property purchasers. Under current PRC laws and regulations,
purchasers of residential properties generally must pay at least 20 percent of the
purchase price of the properties before they can finance their purchases through
mortgages. In May 2006, the PRC government increased the minimum amount of down payment to
30 percent of the purchase price of the underlying property if such property has a unit
GFA of 90 square meters or more. In September 2007, the minimum down payment for any
purchase of second or subsequent residential property was increased to 40 percent of the
purchase price if the purchaser had obtained a bank loan to finance the purchase of his or
her first property. Moreover, the interest rate for bank loans of such purchase shall not
be less than 110 percent of the PBOC benchmark rate of the same term and category. For
further purchases of properties, there would be upward adjustments on the minimum down
payment and interest rate for any bank loan. In addition, mortgagee banks may not lend to
any individual borrower if the monthly repayment of the anticipated mortgage loan would
exceed 50 percent of the individual borrowers monthly income or if the total debt
service of the individual borrower would exceed 55 percent of such individuals
monthly income. If the availability or attractiveness of mortgage financing is reduced or
limited, many of our prospective customers may not be able to purchase our properties and,
as a result, our business, liquidity and results of operations could be adversely
affected.

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In line with industry practice, we
provide guarantees to PRC banks with respect to loans procured by the purchasers of our
properties for the total amount of mortgage loans. Such guarantees expire upon the
completion of the registration of the mortgage with the relevant mortgage registration
authorities. If there are changes in laws, regulations, policies and practices that would
prohibit property developers from providing guarantees to banks in respect of mortgages
offered to property purchasers and as a result, banks would not accept any alternative
guarantees by third parties, or if no third party is available or willing in the market to
provide such guarantees, it may become more difficult for property purchasers to obtain
mortgages from banks and other financial institutions during sales and pre-sales of our
properties. Such difficulties in financing could result in a substantially lower rate of
sale and pre-sale of our properties, which would adversely affect our cash flow, financial
condition and results of operations. We are not aware of any impending changes in laws,
regulations, policies or practices which will prohibit such practice in China. However,
there can be no assurance that such changes in laws, regulations, policies or practices
will not occur in China in the future.

Risks Related to China

Chinas Economic Policies could
affect our Business.

Substantially all of our assets are
located in the global change on ward China and substantially all of our revenue is derived
from our operations in China. Accordingly, our results of operations and prospects are
subject, to a significant extent, to the economic, political and legal developments in
China.

While 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 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 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 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 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.

Capital outflow policies in China may
hamper our ability to remit income to the United States.

China has adopted currency and
capital transfer regulations. These regulations may require us to comply with complex
regulations for the movement of capital. Although our directors believe that it is
currently in compliance with these regulations, should these regulations or the
interpretation of them by courts or regulatory agencies change; we may not be able to
remit all income earned and proceeds received in connection with our operations or from
the sale of our operating subsidiary to our stockholders.

In addition, there can be no
assurance that we will be able to obtain sufficient foreign exchange to pay dividends or
satisfy other foreign exchange requirements in the future.

It may be difficult to effect service
of process and enforcement of legal judgments upon our company and our officers and
directors because some of them reside outside the United States.

As our operations are presently based
in China and some of our key directors and officers reside outside the United States,
service of process on our key directors and officers may be difficult to effect within the
United States. Also, substantially all of our assets are located outside the United States
and any judgment obtained in the United States against us may not be enforceable outside
the United States. We have appointed Lu Pingji, our Chairman and Chief Executive Officer,
as our agent to receive service of process in any action against our company in the United
States.

19

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If relations between the United
States and China worsen, our stock price may decrease and we may have difficulty accessing
the U.S. capital markets.

At various times during recent years,
the United States and China have had 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 could adversely affect the market price
of our common stock and our ability to access U.S. capital markets.

We may face obstacles from the
communist system in China.

Foreign companies conducting
operations in China face significant political, economic and legal risks. The political
system in China, including a cumbersome bureaucracy, may hinder Western investment.

We may have difficulty establishing
adequate management, legal and financial controls in China.

China historically has not adopted a
Western style of management and financial reporting concepts and practices, modern
banking, computer or other control systems. We may have difficulty in hiring and retaining
a sufficient number of qualified employees to work in China. As a result of these factors,
we may experience difficulty in establishing management, legal and financial controls,
collecting financial data and preparing financial statements, books of account and
corporate records and instituting business practices that meet Western standards.

It will be extremely difficult to
acquire jurisdiction and enforce liabilities against our officers, directors and assets
based in China.

Because the Companys executive
officers and directors, including, the chairman of its board of 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 our officers and
directors by a stockholder or group of stockholders in the United States. Also, because
the majority of our assets are located in China it would also be extremely difficult to
access those assets to satisfy an award entered against it in a United States court.

We may face judicial corruption in
the Peoples Republic of China.

Another obstacle to foreign
investment in the Peoples Republic of China is corruption. There is no assurance
that we will be able to obtain recourse, if desired, through the Peoples Republic of
Chinas poorly developed and sometimes corrupt judicial systems.

Risks Related to Our
Common Stock

There is no assurance of an
established public trading market, which would adversely affect the ability of investors
in our company to sell their securities in the public markets.

Although our common stock trades on
the Over-the-Counter Bulleting Board (the OTCBB), a regular trading market for the
securities may not be sustained in the future. The NASD has enacted recent changes that
limit quotations on the OTCBB to securities of issuers that are current in their reports
filed with the Securities and Exchange Commission. The effect on the OTCBB of these rule
changes and other proposed changes cannot be determined at this time. The OTCBB is an
inter-dealer, Over-The-Counter market that provides significantly less liquidity than the
NASDs automated quotation system (the NASDAQ Stock Market). Quotes for stocks
included on the OTCBB are not listed in the financial sections of newspapers as are those
for The Nasdaq Stock Market. Therefore, prices for securities traded solely on the OTCBB
may be difficult to obtain and holders of common stock may be unable to resell their
securities at or near their original offering price or at any price. Market prices for our
common stock will be influenced by a number of factors, including:

20

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| |  | the
issuance of new equity securities;
| | - | --------------------------------------

| |  | changes
in interest rates;
| | - | --------------------------

| |  | competitive
developments, including announcements by competitors of new products or services or
significant contracts,            acquisitions, strategic partnerships, joint ventures or
capital commitments;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | variations
in quarterly operating results;
| | - | ------------------------------------------

| |  | change
in financial estimates by securities analysts;
| | - | -----------------------------------------------------

| |  | the
depth and liquidity of the market for our common stock;
| | - | -----------------------------------------------------------

| |  | investor
perceptions of our company and the technologies industries generally; and
| | - | ----------------------------------------------------------------------------------

| |  | general
economic and other national conditions.
| | - | -----------------------------------------------

The limited prior public market and
trading market may cause volatility in the market price of our common stock.

Our common stock is currently traded
on a limited basis on the OTCBB under the symbol CHLN. The quotation of our
common stock on the OTCBB does not assure that a meaningful, consistent and liquid trading
market currently exists, and in recent years such market has experienced extreme price and
volume fluctuations that have particularly affected the market prices of many smaller
companies like us. Our common stock is thus subject to volatility. In the absence of an
active trading market:

| |  | investors
may have difficulty buying and selling or obtaining market quotations;
| | - | --------------------------------------------------------------------------------

| |  | market
visibility for our common stock may be limited; and
| | - | ----------------------------------------------------------

| |  | a
lack of visibility for our common stock may have a depressive effect on the market for
our common stock.
| | - | ----------------------------------------------------------------------------------------------------------

Our principal stockholders, current
executive officers and directors own a significant percentage of our company and will be
able to exercise significant influence over our company.

Our executive officers and directors
and principal stockholders together will beneficially own a majority of the total voting
power of our outstanding voting capital stock. These stockholders will be able to
determine the composition of our Board of Directors, will retain the voting power to
approve all matters requiring stockholder approval and will continue to have significant
influence over our affairs. This concentration of ownership could have the effect of
delaying or preventing a change in our control or otherwise discouraging a potential
acquirer from attempting to obtain control of us, which in turn could have a material and
adverse effect on the market price of the common stock or prevent our stockholders from
realizing a premium over the market prices for their shares of common stock. See
Principal Stockholders for information about the ownership of common by our
executive officers, directors and principal stockholders.

We do not anticipate paying dividends
on the Common Stock.

We have never paid dividends on our
common stock and do not anticipate paying dividends in the foreseeable future. Our
directors intend to follow a policy of retaining all of our earnings, if any, to finance
the development and expansion of our business.

Our common stock could be considered
to be a penny stock.

Our common stock could be considered to
be a penny stock if it meets one or more of the definitions in Rules 15g-2
through 15g-6 promulgated under Section 15(g) of the Securities Exchange Act of 1934, as
amended. These include but are not limited to the following: (i) the stock trades at a
price less than $5.00 per share; (ii) it is NOT traded on a recognized
national exchange; (iii) it is NOT quoted on The Nasdaq Stock Market, or even if so, has a
price less than $5.00 per share; or (iv) is issued by a company with net tangible assets
less than $2.0 million, if in business more than a continuous three years, or with average
revenues of less than $6.0 million for the past three years. The principal result or
effect of being designated a penny stock is that securities broker-dealers
cannot recommend the stock but must trade in it on an unsolicited basis.

21

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Broker-dealer requirements may affect
trading and liquidity.

Section 15(g) of the Securities
Exchange Act of 1934, as amended, and Rule 15g-2 promulgated there under by the SEC
require broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny stock for the
investors account.

Potential investors in our common
stock are urged to obtain and read such disclosure carefully before purchasing any shares
that are deemed to be penny stock. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for transactions in
such stocks before selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her financial
situation, investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be reasonably capable
of evaluating the risks of penny stock transactions; (iii) provide the investor with a
written statement setting forth the basis on which the broker-dealer made the
determination in (ii) above; and (iv) receive a signed and dated copy of such statement
from the investor, confirming that it accurately reflects the investors financial
situation, investment experience and investment objectives. Compliance with these
requirements may make it more difficult for holders of our common stock to resell their
shares to third parties or to otherwise dispose of them in the market or otherwise.

Shares eligible for future sale may
adversely affect the market price of our common stock, as the future sale of a substantial
amount of our restricted stock in the public marketplace could reduce the price of our
common stock.

From time to time, certain of our
stockholders may be eligible to sell all or some of their shares of common stock by means
of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated
under the Securities Act (Rule 144), subject to certain limitations. In general, pursuant
to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied
a one-year holding period may, under certain circumstances, sell within any three-month
period a number of securities which does not exceed the greater of 1 percent of the then
outstanding shares of common stock or the average weekly trading volume of the class
during the four calendar weeks prior to such sale. Rule 144 also permour, under certain
circumstances, the sale of securities, without any limitations, by a non-affiliate of our
company that has satisfied a two-year holding period. Any substantial sale of common stock
pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on
the market price of our securities.

ITEM 2.  PROPERTIES

Our principal executive offices are
located at 6 Youyi Dong Lu, Han Yuan 4 Lou, XiAn, Shaanxi Province, China 710054.
This office consists of approximately 2,608.06 square meters which we own.

Our properties are located in Xian,
Shaanxi province in China.

|Name of project    |  | Geographic location |                              | Subsistence area (square meter) | 
|------------------ |  | ------------------- | ---------------------------- | ------------------------------- | 
|Tsining JunJing I  |  |                     | North Jinhua Road Xi'an City |                                 | 
|Tsining 24G        |  |                     | East Erhuan of Xi'an City    |                                 | 
|Tsining JunJing II |  |                     | Dongzhan Road of Xi'an City  |                                 | 
|Yijing Yuan (Land) |  |                     | South Erhuan of Xi'an City   |                                 | 
|Other Projects     |  |                     |                              |                                 | 
|                   |  |                     |                             
|Total              |  |                     |                              |                                 | 
|                   |  |                     |                             

22

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ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become
involved in various lawsuour and legal proceedings, which arise in the ordinary course of
business. However, litigation is subject to inherent uncertainties, and an adverse result
in these or other matters may arise from time to time that may harm business. We are
currently not aware of any such legal proceedings or claims that will have, individually
or in the aggregate, a material adverse affect on business, financial condition or
operating results.

ITEM 4. SUBMISSION OF
MATTERS TO VOTE OF SECURITY HOLDERS

On July 9 2007 , The Board of
Directors of China Housing & Land Development, Inc. has adopted resolutions
authorizing the Adoption of the China Housing & Land Development, Inc. 2007 Stock and
recommended that the stockholders adopt resolutions approving such an action. As of July
9, 2007, we had 30,067,208 shares of common stock outstanding. The common stock is our
only class of securities entitled to vote. Each outstanding share of common stock is
entitled to one vote per share. The affirmative consent of the holders of a majority of
our outstanding common stock is required to approve the action described above in the
absence of a meeting of stockholders. The requisite stockholder approval of the action
described above was obtained by the execution of written consents in favor of such an
action by the holders of approximately 53.2 percent of the issued and outstanding shares
of our common stock, allowing China Housing & Land Development, Inc. to take the
proposed action on.

PART II

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the
Over-The-Counter Bulletin Board system and the National Association of Securities Dealers
(NASD) Electronic Bulletin Board under the symbol CHLN.OB. The following table
sets forth, for the periods indicated, the high and low sale prices for our common stock
as reported by the National Quotation Bureau, Inc.

|Fiscal Year Ended December 31                 |  | High |       | Low | 
|--------------------------------------------- |  | ---- | ----- | --- | 
|2006                                          |  |      |       |     | 
|First Quarter (January 2006 - March 2006)     |  |      | $0.06 |     | 
|Second Quarter (April 2006 - April 20, 2006)  |  |      | $0.24 |     | 
|(April 22 - June 2006)                        |  |      | $4.25 |     | 
|Third Quarter (July 2006 - September 2006)    |  |      | $3.75 |     | 
|Fourth Quarter (October 2006 - December 2006) |  |      | $3.10 |     | 
|                                              |  |     
|2007                                          |  |     
|First Quarter (January 2007 - March 2007)     |  |      | $3.85 |     | 
|Second Quarter (April 2007 - April 20, 2007)  |  |      | $5.20 |     | 
|Third Quarter (July 2007 - September 2007)    |  |      | $5.00 |     | 
|Fourth Quarter (October 2007 - December 2007) |  |      | $8.20 |     | 

On March 18, 2008, the closing price
of our common stock was $4.20.

As of December 31, 2007, there were
approximately 159 holders of record of our common stock, which were not including
shareholders under street name.

RECENT SALES OF
UNREGISTERED SECURITIES.

Private Placement on May
9, 2007

On May 7, 2007, China Housing &
Land Development, Inc. (the Company), entered into securities purchase agreements with
accredited investors, and on May 9, 2007 (the Closing Date), the Company completed the
sale of $25,006,978 of common stock of the Company and common stock purchase warrants. The
securities sold were an aggregate of 9,261,847 shares of Common Stock and 2,778,554
Warrants. Each Warrant is exercisable for a period of five (5) years at an exercise price
of $4.50 per share. Cantor Fitzgerald & Co. acted as the placement agent of the
private placement. All of these securities were sold pursuant to the exemption provided by
Section 4(2) under the Securities Act for a transaction not involving a public offering,
and Regulation D promulgated thereunder.

23

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The Company is obligated to file a
registration statement to register the resale of shares of the common stock issued in the
private placement and the shares of common stock issuable upon exercise of the warrants
granted in the private placement. If the registration statement is not filed within 45
days from the Closing Date, or declared effective within 180 days following the Closing
Date, or if the registration ceases to be effective for more than thirty (30) trading
days, the Company is obligated to pay the investors certain fees per month in the amount
of 1 percent of the principal amount invested.

In connection with the offering, the
Company paid a placement fee of 7 percent of the proceeds in cash.

All of the above offerings and sales were
deemed to be exempt under Regulation of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The offerings
and sales were made to a limited number of persons, all of whom were accredited investors,
business associates of our company or executive officers of our company, and transfer was
restricted by our company in accordance with the requirements of the Securities Act of
1933.

The company filed a registration
statement on Form SB-2 on June 22, 2007 to register the common stock and the common stock
purchase warrants issued in the offerings described above, which became effective on July
5, 2007.

SUBSEQUENT DEVELOPMENTS

On January 28, 2008, China Housing
& Land Development, Inc. (the Company) entered into a Securities Purchase
Agreement (the Agreement) with certain investors (the Investors).
Pursuant to the Agreement, the Company agreed to sell to Investors 5.0% Senior Secured
Convertible Notes,which are convertible into shares of the Companys Common
Stock, for an aggregate purchase price of US$ 20,000,000 and to receive, in consideration
for such purchase, Warrants to acquire additional shares of Common Stock.

The 5% Senior Secured Convertible
Note (the Convertible Note) shall bear interest at a rate of 5% per annum
(computed based on the actual days elapsed in a period of 360 days) of the RMB Notional
Principal Amount, payable quarterly in arrears in lawful money of the United States
(U.S. Dollars) on the first business day of each calendar quarter and on the
Maturity Date, in each case in an amount equal to the amount of such interest as expressed
in RMB multiplied by the US$/RMB Exchange Rate as of the applicable Interest Exchange Rate
Determination Date. The Notes are secured by a first priority, perfected security interest
in certain shares of Common Stock of Lu Pingji, as evidenced by the pledge agreement
(the Pledge Agreement). The Notes are subject to events of default customary
for convertible securities and for a secured financing.

This Convertible Note has been issued
under the terms and provisions of a Securities Purchase Agreement (the Purchase
Agreement), dated as of January 28, 2008, among the Company and the Investors named
on the signature pages thereto. Capitalized terms used herein and not otherwise defined
have the meanings set forth in the Purchase Agreement.

The Warrants grant the Investors the
right to acquire shares of Common Stock at $6.07 per share of Common Stock, subject to
customary anti-dilution adjustments. The Warrants may be exercised to purchase Common
Stock at any time after January 28, 2008 to and including February 28, 2013, the
expiration date of the Warrants.

In connection with this transaction,
the Company and the Investors entered into a registration rights agreement (the
Registration Rights Agreement). Pursuant to the terms and conditions of the
Registration Rights Agreement, the Company has agreed to register within 60 calendar days
after closing shares of Common Stock issuable to the Investors for resale on a Form S-3
Registration Statement to be effective by 90 calendar days or 120 days if the registration
statement is subject to a full review by the U.S. Securities and Exchange Commission. The
Company shall register an amount of Common Stock for resale that equals at least 120% of
the sum of shares issuable upon conversion of the Notes, the exercise of the Warrants and
the payment of interest accrued on the Notes. The registration rights granted under the
Registration Rights Agreement are subject to customary exceptions and qualifications and
compliance with certain registration procedures.

24

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ITEM 6. SELECTED
FINANCIAL DATA

|Summary of operations
(USD in thousands, except the ratio amount) |  |  |  
|----------------------------------------------------------------- |  |  | -
|
|
|Total Revenue                                                     |  |  | $
|Cost of sales                                                     |  |  |  
|Selling, general, and administrative expenses                     |  |  |  
|Income from operations                                            |  |  |  
|Net income                                                        |  |  | $
|Net income per common share                                       |  |  |  
|                                                                  |  |  |  

25

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|Financial data
(in thousands)             |  | 
|----------------------------------------- |  | 
|
|
|Total assets                              |  | 
|Total Shareholder's equity                |  | 
|Basic weighted average shares outstanding |  | 
|Diluted weighted average shares           |  | 

ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# OVERVIEW

# Business

China Housing & Land Development,
Inc. (CHLN, we, our, us, or the Company) was incorporated in the state of Nevada on July
6, 2004, as Pacific Northwest Productions Inc. On April 21, 2006, we entered into and
completed a share purchase agreement with Xian Tsining Housing Development Co., Ltd.
(Tsining), a corporation formed under the laws of the Peoples Republic
of China on September 7, 1999. Pursuant to the purchase agreement, CHLN acquired all of
the issued and outstanding capital stock of Tsining in exchange for 16,000,000
(post-split) shares of CHLNs common stock.

Concurrently with the closing of the
purchase agreement and as a condition thereof, CHLN entered into an agreement with Deljit
Bains and Davinder Bains, its executive officers, pursuant to which they each returned
4,000,000 (post-split) shares (8,000,000 shares in total) of CHLN common stock to CHLN for
cancellation. They were not compensated in any way for the cancellation of their shares of
CHLN common stock. Upon completion of the foregoing transactions, CHLN had an aggregate of
20,000,000 shares of common stock issued and outstanding.

As a result of the merger,
Tsinings stockholders own approximately 80 percent of the combined company and the
directors and executive officers of Tsining became the directors and executive officers of
CHLN. Accordingly, the transaction has been accounted for as a reverse acquisition of CHLN
by Tsining resulting in a recapitalization of Tsining rather than as a business
combination. Tsining is deemed to be the purchaser and surviving company for accounting
purposes.

Accordingly, its assets and
liabilities are included in the balance sheet at their historical book values and the
results of operations of Tsining have been presented for the comparative prior period. The
historical cost of the net liabilities of CHLN that were acquired was $432. Pro forma
information is not presented since the financial statements of CHLN are insignificant. In
addition, on May 5, 2006, CHLN changed it name to China Housing & Land Development,
Inc., and the stockholders approved a stock dividend of seven shares for each share held,
which has been accounted for as an eight-to-one forward stock split. All shares and per
share data have been restated retrospectively.

In March 2007, the Company acquired
100 percent equity of Xian New Land Development Co., LTD. The total purchase price
for the acquisition is RMB 270 million, approximately $35 million. Xian New Land
Development Co., LTD (New Land) was originally incorporated in September 2003
in Xian in Shaanxi province, China. In 2006, New Land entered into an agreement with
Baqiao District Government of Xian to develop Baqiao Science & Technology
Industrial Park, a provincial development zone in Shaanxi Province, under which New Land
has the exclusive right to purchase and develop approximately 487 acres in Baqiao Park.

26

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CHLN, through our two wholly owned
subsidiaries, Tsining and New Land, is engaged in the development, construction, and sale
of residential and commercial real estate units, as well as land development in the
Peoples Republic of China (PRC or China). Tsining has completed a number of
significant real estate development and construction projects in Xian, and is ranked
the number 1 private developer in Xian. Tsining intends to continue investing in
Xian, the Shaanxi province, and potentially in other developing urban markets in
western China. New Land improves and develops land and performs infrastructure projects
for local governments. That infrastructure work can include engineering and installation
of water systems, roads, sewer systems, waterway damns and bridges, and public park
facilities.

As payment for its infrastructure
work, New Land will receive the best land in the development, which CHLN uses to construct
and sell housing, retail business, and office units.

From 1999 through 2007, CHLNs
sales grew 2,980 percent from $2.4 million in 1999 to $73.91 million in 2007 revenue, and
net income has grown from a loss in 1999 to more than $16.69 million in 2007.

Our corporate offices are located at
6 Youyi Lu, Han Yuan 4th Floor, Xian, China. Our telephone number at that location
is +86-29-8258-2632.

# Industry Overview

# Peoples Republic
of China

China has experienced rapid economic
growth in the last 20 years. According to Chinas Department of Commercial Affairs,
Chinas gross domestic product (GDP) achieved an annual growth rate of 10.53 percent
from 2004 to 2007. According to the National Statistics Bureau of China, the GDP of China
in 2007 was RMB 24,661.9 billion, up 11.40 percent over the previous year.

We believe that the primary reasons
behind Chinas strong economic growth are:

| | 1. | A
robust domestic consumer demand resulting from rising consumer confidence and
               higher disposable income,
| | -- | ------------------------------------------------------------------------------------------------------------------------

| | 2. | Increasing
foreign direct investment after Chinas entry into the World                Trade
Organization, and
| | -- | --------------------------------------------------------------------------------------------------------------

| | 3. | Surging
investments in Chinas real estate and infrastructure, as exhibited
               by a boom in the real property market. We believe that a paradigm shift is
               taking place in China, characterized by major economic and political
               improvements, such as a de-politicization of the Chinese society, emerging
               entrepreneurial startups, growing private businesses, government-owned
               businesses that are being converted into private enterprises, publicly
traded                companies, an emerging unified national market, and Chinas
integration                into the global value chain.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# China real estate
industry

Sustainable Structural Long-Term
Growth  Chinas real estate sector is in the early stage of its growth
cycle, supported by rapid GDP growth, rising housing demand, and robust structural changes
similar to those of Japan in the early 1970s and of Hong Kong of early 1980s. Hong
Kongs property market increased in value by 8 times between 1980-1997, or a compound
annual growth rate of about 15 percent, while Japans property boom ran for more than
20 years from early 1970s to the early 1990s. There are many fundamental similarities
among the growth paths of these economies.

Chinas property bull market
begun over five years ago, and we expect the structural upward trend that supports growing
demand for Chinas real estate to continue for the next 10 years. The two key
industry drivers for this growth in China are the dramatic migration of people from rural
to urban areas and the rising per-capita disposable income in the cities.

China is in the midst of a rapid
urbanization process. In 2006, there were more than 577 million Chinese living in urban
areas, and they accounted for about 44 percent of total population of about 1.31 billion.
The State Council of China estimated in 2007 that Chinas urban population in 2020
would comprise about 870 million people or about 60 percent of the total population of
1.45 billion.

27

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Another source, the United
Nations report titled State of World Population 2007, states that about 18
million people in China are expected to migrate from rural to urban areas each year, and
that the urban population would reach about 877 million in the next 10 years.

Regardless of which projection you
prefer, it is reasonable to expect the migration into urban areas to continue, both
because the promise of higher incomes and greater potential wealth attract people into the
cities, and because larger-scale and more efficient agricultural methods demand relatively
fewer people to do the farming.

With the robust housing demand
created by the structural shift of the migration, the urban real estate market has been
thriving and that trend is expected to continue.

Higher disposable incomes
encourage home ownership  Rural dwellers are drawn to cities primarily by the
potential of higher incomes and greater wealth, because urban jobs generally pay higher
wages and salaries.

The National Bureau of Statistics of
China reports on the upward trend of urban and rural per capita disposable income and
living expenditures. This data confirms the economic attractiveness of the migration to
urban areas.

|Annual per capita disposable income and expenses (RMB) |  | 2000 |      | 2001 |  | 2002 |  | 2003 |      | 2004 |  | 2005 | 
|------------------------------------------------------ |  | ---- | ---- | ---- |  | ---- |  | ---- | ---- | ---- |  | ---- | 
|Urban per capita                                       |  |      |      |      |  |      |  |      |      |      |  |      | 
|Disposable income of urban households                  |  |      | 6280 |      |  | 6860 |  |      | 7703 |      |  | 8472 | 
|                                                       |  |     
|Consumption expenditures of urban households           |  |      | 4998 |      |  | 5309 |  |      | 6030 |      |  | 6511 | 
|Net increase in wealth, urban                          |  |      | 1282 |      |  | 1551 |  |      | 1673 |      |  | 1961 | 
|                                                       |  |     
|Rural per capita                                       |  |     
|Disposable income of rural households                  |  |      | 2253 |      |  | 2366 |  |      | 2476 |      |  | 2622 | 
|Living expenditures of rural households                |  |      | 1670 |      |  | 1741 |  |      | 1834 |      |  | 1943 | 
|                                                       |  |     
|Net increase in wealth, rural                          |  |      | 583  |      |  | 625  |  |      | 642  |      |  | 679  | 



China Real Estate: Red Hot but
Still Undervalued  Despite the significant appreciation of property prices in
China in recent years, comparative analysis of fundamental factors indicate prices are
still reasonable.

Studies have shown that a key
underlying growth driver for healthy property market growth is per capita GDP. Recent
International Monetary Fund studies report that Chinas recent property appreciation
is supported by strong personal economic growth. When compared using Price per
capita GDP in the U.S. and India, Chinas property market appears undervalued.
For example, although Shanghai represents the very high end property market in China,
Indias Mumbai (Bombay) has seen real estate prices grow to more than twice those of
Shanghai, even though China has higher economic growth.

28

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| | 
| | 
| | 

Growth in 2nd-tier and 3rd-tier
Markets  As the rapid economic growth in eastern China has created a healthy
environment for the advancement of the coastal real estate property market in recent
years, the ripple effect of economic growth in the second-tier cities should engender
similar catalysts for their respective real estate market growth.

In search of lower costs, an educated
talent pool, and new markets, multinational corporations have begun to branch out of mega
cities like Beijing, Shanghai, and Shenzhen, and into neighboring and inland cities.
Intel, for example, has opened a development center in Chengdu, while the Liberty Mutual
Group, the U.S. insurance giant, has chosen Chongqing for its Chinese headquarters instead
of Beijing or Shanghai. Unilever has relocated its Chinese headquarters from Shanghai to a
neighboring province of Hefei due to its low labor and land costs and strategic location.

The wealth gap is expected to narrow
between the first-tier and second-tier cities. Rising disposable income in these cities
has lured top luxury goods manufacturers, including LVMH Group, to expand aggressively
into key second-tier cities. The Chinese government has also been instrumental in
stimulating regional growth by designating certain second-tier regions as priority zones.
These actions are benefitting Xian and the other chosen markets of the Company.

Riding the second wave of economic
growth in second-tier cities, including Xian, institutional real estate investors
have begun to tap into these undervalued growth markets, increasingly focused on Central
and Western China. These investors also often become our customers and clients.



City of Xian: First Class in
the Second Tier  Xians gross domestic product in 2007 grew 14.6
percent, compared to 11.4 percent for all of China. As the ripple effect of economic
growth continues to permeate second-tier cities and create a healthy environment for real
estate development, leading indicators are signaling imminent growth in local property
markets.

29

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Growth factors include the transition
of certain industries to value-added business, especially high-technology and services,
rising per capita GDP, increasing foreign investments, expanding foreign retailing and
hotel presence, and a concerted effort by the local government to create clear strategies,
institute policies, and invest in the necessary infrastructure to create a favorable
investment environment. The city of Xian has demonstrated all of these
characteristics.

Transformation and
Urbanization Xian served as the capital of China during 13
dynasties (from West Zhou in 1066 BC to Tang in 907 AD) and is well-known for its
terracotta warriors and other famous historical landmarks.

With its rich heritage, today the
citys economic foundation includes the high-technology, pharmaceutical, military,
aerospace, tourism, and advanced education industries.

Xian also is being transformed
into a high-tech international city that offers a large and educated work force.
Xian boasts the third largest university-educated workforce in China, making it a
hotbed for R&D, high-tech manufacturing, and information technology solutions.

Xian has begun to attract
well-known high-tech companies, including IBM, Applied Materials, Micron Technology, and
Infineon. Applied Materials, for example, has committed $255 million for Phase I of its
R&D center in Xian, a facility that will design and develop equipment for
semiconductor chip manufacturing. Micron Technology has invested $250 million in
Xian for packaging and testing of semiconductor chips.

Furthermore, Xian has been
designated by the Chinese government as one of five China Outsourcing Bases, giving added
credibility as it scales-up IT research and development, production, outsourcing, and
services to duplicate and rival the success of India. Similar to Bangalore and Hyderabad,
the Xian government is carving out a niche in IT outsourcing by creating the 400,000
square meter Xian Software Park. The Park has already attracted top software and
technology players, including IBM, which is the governments joint venture partner in
creating the software park. Sybase, SPSS, Nortel, Fujitsu, and NEC are already operating
in the Park. The Xian government anticipates that the citys IT outsourcing
workforce will grow from the current 50,000 to 200,000 by 2010.

The Xian government has a clear
master plan for the next ten years to foster economic transition and urbanization. For
example, Xian is now limiting development within the citys famous historical
Gated Wall City (or Inner Ring), which will be revamped primarily for tourism. The city
plans to redirect about 450,000 people from within the City Wall to the second, third, and
fourth highway rings.

One of the most ambitious plans is
the development of a new satellite city about 8 kilometers from Xians center
in the District of Baqiao. The new urban area is targeting 900,000 middle-to-upper income
residents and firms in industries that include R&D, services, and high-technology, as
well as the Chinese headquarters of multinational corporations. Leveraging its natural
resources, the Cha Ba ecological region, and new citys access to important
transportation arteries (five major highways, three railways, and a pending subway system
will connect the airport, Xian inner city, Baqiao, and the Terracotta Warriors),
Baqiao has the potential to duplicate the economic success of Shanghais Pudong as
Xian expands beyond its core geographic region and also embraces new value-added
industries.

In addition, the concept of
Baqiaos new satellite city is likely to be repeated in other parts of Chinas
western region.

30

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# FORWARD-LOOKING
STATEMENTS

Some of the statements contained in
this Form 10-K that are not historical facts are forward-looking statements
that can be identified by the use of terminology such as estimates, projects, plans,
believes, expects, anticipates, intends, or the negative or other variations of those
words, or by discussions of strategy that involve risks and uncertainties. We urge you to
be cautious of the forward-looking statements, that such statements, which are contained
in this Form 10-K, reflect our current beliefs with respect to future events and involve
known and unknown risks, uncertainties and other factors affecting our operations, market
growth, services, products, and licenses. No assurances can be given regarding the
achievement of future results, as actual results may differ materially as a result of the
risks we face, and actual events may differ from the assumptions underlying the statements
that have been made regarding anticipated events. Factors that may cause actual results,
our performance or achievements, or industry results, to differ materially from those
contemplated by such forward-looking statements include without limitation: our ability to
attract and retain management, and to integrate and maintain technical information and
management information systems; our ability to raise capital when needed and on acceptable
terms and conditions; the intensity of competition; and general economic conditions. All
written and oral forward-looking statements made in connection with this Form 10-K that
are attributable to us or persons acting on our behalf are expressly qualified in their
entirety by these cautionary statements. Given the uncertainties that surround such
statements, you are cautioned not to place undue reliance on such forward-looking
statements.

# CONSOLIDATED OPERATING
RESULTS

# Comparison of years
2007, 2006, and 2005

# Revenues

Total revenues for the year 2007
increased 36.6 percent to $73,912,850 from $54,099,486 in 2006. Total revenues for the
year 2006 increased 65.0 percent to $54,099,486 from $32,785,718 in 2005.

Looking at revenues by our major
projects, Project Tsining-24G revenues in 2007 grew 93.9 percent to $25,198,128 compared
with $12,994,000 in 2006. The increase was due to the block sale of the hotel portion of
one building in 2007. Project Tsining-24G revenues in 2006 grew to $12,994,000 compared
with no revenues for this project in 2005, because the construction was in progress and
revenues are recognized only when all the units are finished.

Project Tsining JunJing I revenues in
2007 declined 77.4 percent to $8,964,783 from $39,649,762 in 2006 due to the absence in
2007 of the 2006 completion and delivery of all the units in nine buildings to all
customers; therefore we recognized all the revenues for the nine buildings in 2006.
Project Tsining JunJing I revenues in 2006 increased 274.1 percent to $39,649,762 from
$10,598,504 in 2005 due to the completion and delivery of all the units in nine buildings
to all customers; therefore we recognized all the revenue for the nine buildings in 2006.

The Baqiao infrastructure
construction project generated revenues of $10,790,610 in 2007 compared with no revenue in
2006, since the project was established in 2007. The revenues were generated from the
completion of one damn, river management, a two kilometer road, and the suburban planning
for the entire Baqiao high-tech industrial park. We did not acquire the company that owned
the Baqiao infrastructure construction project until 2007, so we had no revenues for this
project in 2006 and 2005.

The Baqiao land development project
generated revenues in 2007 of $24,405,717 compared with no revenue in 2006, since the
business also was established in 2007. The revenues were generated by the sale of a
subsidiary that owns the right to use and develop about 18.5 acres of land in the project.
We did not acquire the company that owned the Baqiao land development project until 2007,
so we had no revenues for this project in 2006 and 2005.

Revenues in 2007 for Additional
projects grew 320.6 percent and totaled $4,220,087 compared with $1,003,412 in 2006.
Additional projects principally included small projects. The increase in Additional
projects revenues in 2007 was primarily due to the sale of an occupied
residential-commercial building and the sale of several units in the companys older
projects.

Revenue in 2006 for Additional
projects declined 95.4 percent and totaled $1,003,412 compared with $21,851,533 in 2005.
The decline in Additional projects revenue in 2006 was primarily due the absence of the
Tsining Gang Wan Project that was completed in 2005 for which the revenue was recognized
in that year, the absence of the 2005 sale of final commercial unit at the Tsining Home In
Project in 2005, which permitted the recognition of all the revenue for the project, and
the absence of the 2005 sale of the final commercial unit at the Tsining Ming Yuan Project
in 2005, which permitted the recognition of all the revenue for the project.

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|Revenue by project:
(US$ in millions)   

Projects |  | Year ended
December 31, 2007 |  | Year ended
December 31,
2006 |  | Year ended
December 31,
2005 |   
|-------------------------------------------------- |  | ---------------------------- |  | ---------------------------- |  | ---------------------------- | --
|Tsining 24G                                        |  |                              |  | 25                           |  |                              | 13
|Tsining JunJing I                                  |  |                              |  | 9                            |  |                              | 40
|Baqiao infrastructure construction                 |  |                              |  | 11                           |  |                              |  
|Baqiao land development                            |  |                              |  | 24                           |  |                              |  
|Additional projects                                |  |                              |  | 5                            |  |                              | 1 
|Tsining Gang Wan                                   |  |                              |  |                             |  |                              |  
|Sales of properties                                |  |                              |  | 74                           |  |                              | 54

Other income in 2007 decreased 26.3
percent to $333,525 from $452,312 in 2006 primarily due to the absence in 2007 of a
property clean-up project performed in 2006. Other income in 2006 increased 34.7 percent
to $452,312 from $335,681 in 2005 primarily due to a property clean-up project.

# Cost of sales

2007  The cost of sales
in 2007 increased 17.6 percent to $43,221,757 compared with $36,749,683 in 2006. The
primary sources of the increased cost were the Baqiao infrastructure construction and land
development projects that were new in 2007.

2006  The cost of sales
in 2006 increased 73.0 percent to $36,749,683 compared with $21,236,598 in 2005. The
increase in cost of sales was due primarily to the completion in 2006 of Tsining-24G, a
service apartment and commercial project with higher costs than the residential units
completed and recorded in sales and cost of sales in 2005.

# Gross profit and profit
margin

2007  Gross profit for
2007 was $30,691,093, up 76.9 percent from $17,349,803 in 2006. Gross profit margin
for 2007 was 41.5 percent compared to 32.1 percent in 2006. The increases in gross profit
and gross profit margin were primarily due to the Baqiao land development and
infrastructure construction projects in 2007 that were not part of the company in 2006.

2006  Gross profit for
2006 was $17,349,803, up 50.2 percent from $11,549,120 in 2005. Gross profit margin
for 2006 was 32.1 percent compared to 35.2 percent in 2005. The increase in gross profit
was due primarily to the recognition of the revenue for nine buildings that were completed
and delivered to the customers in the Tsining JunJing I Project in 2006. The decline in
the gross profit margin in 2006 was primarily due to the absence of the 2005 revenue and
costs from commercial units that earned higher gross profit margins than did the
residential units in Tsining JunJing I that were sold in 2006.

# Selling, general, and
administrative expenses

2007  Selling, general,
and administrative expenses for 2007 decreased 8.7 percent to $2,919,360 from $3,197,310
in 2006. The decrease in selling, general, and administrative expenses was due primarily
to the new Enterprise Resources Planning system adopted by the company in 2007 to control
daily expenses.

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2006  Selling, general,
and administrative expenses for 2006 decreased 12.0 percent to $3,197,310 from $3,632,627
in 2005. The decrease was due to the start of the major selling effort that occurred in
2005 for both the new Tsining 24G and the new Tsining JunJing I projects; those selling
efforts were lower in 2006 because the majority of the promotion, marketing, and selling
efforts occurred in 2005.

# Other expenses

2007  Other expenses in
2007 decreased 80.9 percent to $57,416 compared with $301,158 in 2006. The 2007 decline
was primarily due to the 2007 absence of the expenses in 2006 associated with the normal
added finishing in the Tsining JunJing I and Tsining 24G projects desired by the customers
to reach final satisfaction.

2006 
     Other expenses in 2006 increased 190.8 percent to $301,158 compared with
     $103,572 in 2005. The 2006 increase was primarily due to the expenses
     associated with the normal added finishing in the Tsining JunJing I and
     Tsining 24G projects desired by the customers to reach final satisfaction.

# Operating profit and
operating profit margin

2007  Operating profit
in 2007 increased 100.1 percent to $27,714,317 due primarily to higher revenues from the
Baqiao infrastructure construction and land development sales at attractive profit
margins. The profit margin increased to 37.5 percent in 2007, compared with 25.6 percent
in 2006, primarily due to the attractive pricing and low costs associated with the two
Baqiao projects listed above.

2006  Operating profit
in 2006 increased 77.3 percent to $13,851,335 due primarily to the recognition of the
revenue and costs for nine buildings that were completed and delivered to the customers in
the Tsining JunJing I Project in 2006. The absence of the 2005 revenue and costs from
commercial units that earned higher gross profit margins than residential units sold in
2006, plus the absence in 2006 of the 2005 higher selling costs partly increased the
operating profit comparison in 2006. The operating profit margin was 25.6 percent in 2006
compared with 23.8 percent in 2005. The increase in the profit margin was mainly the
result of the absence in 2006 of the aggressive promotion, marketing, and selling expenses
in 2005 that supported the sales efforts for the new Tsining 24G and Tsining JunJing I
projects introduced in 2005.

# Interest expense

2007  Interest expense
in 2007 increased 471.6 percent to $1,652,349 from $289,083 in 2006. The increase in 2007
was due primarily to the financing associated with the purchase of the company that owned
the exclusive right to develop the Baqiao project and perform the related infrastructure
construction.

2006  Interest expense
in 2006 decreased 61.0 percent to $289,083 from $741,880 in 2005. The main reason for the
decrease is lower borrowings in support of the higher working capital required for the
companys introduction of the Tsining 24G and Tsining JunJing I projects in 2005.

# Change in fair value of
warrants

In 2006 and 2007 the company issued
common shares with warrants. The warrants permit the shareholders to buy additional common
shares at the prices specified in the warrant agreements. In 2007, shareholders exercised
a total of 169,147 warrants to buy a total of 74,679 common shares. No warrants were
exercised in 2006.

When a shareholder exercises a
warrant to buy common shares, typically only when the stock price is higher than the
warrant exercise price, the shareholder covers the exercise price and company provides
balance of the value to provide the common shares.

In addition, at year end 2007, the
company was required to estimate the fair value of its remaining warrants outstanding, and
it chose to use the Cox-Ross-Rubinstein Binomial Lattice valuation model to estimate their
fair value.

33

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The $632,296 reported in 2007 as the
Change in fair value of warrants consists of (a) the cost to the company of the common
shares issued as a result of the exercise of warrants in 2007 and (b) the estimated cost
to the company to provide the common shares, assuming that all the warrants will be
exercised sometime in the future. The basis for estimating the cost to provide those
common shares was provided by the valuation model.

There was no loss-change in the fair
value of the warrants in 2006 and no warrants existed in 2005.

# Provision for income
taxes

The effective tax rates for the years 2007,
2006, and 2005 were 34.38 percent, 33.26 percent, and 33.00 percent, respectively. The
slightly upward trend is due primarily to one of the companys operations whose
required structure for owning two subsidiaries creates costs that cannot be used to reduce
the companys tax obligation.

# Net income

2007  Net income for the
year 2007 increased 84.4 percent to $16,686,116 from $9,050,810 for the year 2006. The
increase was primarily due to the 2007 revenue of the two Baqiao projects, partly offset
by the absence of the 2006 sales of the Tsining JunJing I and Tsining 24G projects, the
2007 change in the fair value of the warrants, and the higher interest expense associated
with the Baqiao projects in 2007.

2006  Net income for the
year 2006 increased 91.0 percent to $9,050,810 from $4,737,597 for the year 2006. The
increase was primarily due to the sales of the Tsining JunJing I and Tsining 24G projects.

# Basic and diluted
earnings per share

2007  Basic and diluted
earnings per share were $0.62 in 2007, up 37.8 percent from $0.45 in 2006. The basic and
diluted earnings per share were both $0.62 in 2007 because the warrants were
anti-dilutive. Likewise, the basic and diluted earnings per share were both $0.45 in 2006
for the same reason.

Basic and diluted earnings per share
were based on weighted average shares outstanding of 26,817,388 for 2007 and 20,277,615
for 2006. The 32.3 percent increase in the weighted average shares outstanding was due to
the common shares with warrants issued in 2007.

2006  Basic and diluted
earnings per share were $0.45 for 2006, up 87.5 percent from the $0.24 per share earned in
2005. The basic and diluted earnings per share were both $0.45 in 2006 because the
warrants were anti-dilutive. The increase was due to higher 2006 net income explained
above, divided by 1.4 percent higher weighted average basic shares outstanding in 2006.

2007 and 2006  The number of
basic and diluted shares outstanding used to calculate basic and diluted EPS increased
between 2007 and 2006 due to the common stock with warrants issued in 2007, as well as the
common stock with warrants that were issued in 2006. The number of basic and diluted
shares outstanding used to calculate basic and diluted EPS increased between 2006 and 2005
due to the common shares with warrants issued in 2006.

# Gain on foreign exchange

The company operates in China and
accounts in the Chinese renminbi but reports its financial results in U.S. dollars, based
on the exchange rates of the two currencies. During 2005, 2006, and 2007, the renminbi
appreciated in value against the U.S. dollar, which when translating the operating results
and financial positions at different exchange rates created the accrued gain on foreign
exchange.

34

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# Cash flow discussion

2007
Cash flow from operating activities in 2007 increased 35.75 percent to $8,611,383 from 2006, primarily
due to higher net income from the sale of real estate and profit from the sale of land use rights.

2007 
Cash flow from investing activities in 2007 consumed $25,020,248, up 70.4 percent from 2006, primarily
due to higher expenditures to acquire a company that held the right to develop the Baqiao project, and
the absence of the 2006 purchases of buildings, equipment, and automobiles.

2007  Cash flow from
financing activities in 2007 provided $18,415,997, up 111.8 percent from 2006, primarily
due to the issuance of common stock and warrants, partly offset by payments on loans.

2007 As a result of the
above cash flow changes from operating, investing, and financing activities, the increase
in cash for the year 2007 was 2,007,132 compared with $358,864 in 2006

2006  Cash flow from
operating activities in 2006 increased to $6,343,346 from $(3,177,893) in 2005, primarily
due to higher net income from the sale of real estate, a decrease in advances to
suppliers, and a decrease in liabilities, partly offset by the purchase of real estate and
a decrease in advances from customers.

2006  Cash flow from
investing activities in 2006 consumed $14,680,870, up 1,842.4 percent from 2005, primarily
due to higher expenditures for buildings, equipment, and automobiles, and the payment of
notes receivable.

2006  Cash flow from
financing activities in 2006 provided $8,696,388, up 120.9 percent from 2005, primarily
due to the net cash increases from loans and the issuance of common stock and warrants.

2006 As a result of the
above changes in operating, investing, and financing activities, the net increase in cash
for the year 2006 was $358,864.

# Debt leverage

2007 Total debt
outstanding at year end 2007 was $27,922,125 compared with $29,707,492 at year end 2006.
Net debt outstanding (total debt less cash) at year end 2007 was $25,469,759 compared with
$28,219,588 at year end 2006. The companys net debt as a percent of total capital
(net debt plus shareholders equity) was 27.79 percent at year end 2007 and 59.49
percent at year end 2006. The reduction in net debt leverage was primarily due to the
issuance of common stock and warrants and the net reduction in loans.

Total debt consists of the sum of the
balance sheet lines titled payable to original shareholders, loans payable to New
Lands previous shareholders, loans from employees, and loans payable.

2006  Total debt
outstanding at year end 2006 was $29,707,492 compared with $16,120,000 at year end 2005.
Net debt outstanding (total debt less cash) at year end 2006 was $28,219,588 compared with
$14,433,372 at year end 2005. The companys net debt as a percent of total capital
(net debt plus shareholders equity) was 59.49 percent at year end 2006 and 52.20
percent at year end 2005. The increase in net debt leverage was primarily due to higher
bank borrowings, loans payable to the companys original owner, and loans from
employees, all of which were in support of the Tsining JunJing I and Tsining 24G projects.

# Liquidity and Capital
Resources

Our principal demands for liquidity
are for development of new properties, property acquisitions, and general corporate
purposes.

As of December 31, 2007, we had
$2,452,366 of cash and cash equivalents on hand, an increase of $964,462 compared to
$1,487,904 of cash and cash equivalents on hand as of December 31, 2006.

35

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Financial obligations

As of December 31, 2007, we had total
mortgage indebtedness of $14,120,034 with a weighted average interest rate of 10.30
percent. Future scheduled maturities of mortgages payable were as follows:

| | December
31, 2007 - $5,483,508, for which the new one-year extension is in process;          June
14, 2008 - $3,427,193; and          August 7, 2008 - $5,209,333.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

The mortgage debt is secured by the
assets of the Company.

# Loans payable

Loans payable represent amounts due to
various banks and are due on demand or normally due within one year. These loans generally
can be renewed with the banks when the loans expire.

Most of the obligations of the
company are tied to specific projects. The terms of the loans typically are one to 1.5
years. Loan extensions are determined by mutual agreement when the end of the current term
is reached when both parties can consider the remaining time needed to complete the
project. Most of these loans are payable when the project has been completed and the
residents or businesses take possession.

The following table summarizes the
companys loans payable that were outstanding at December 31, 2007:

|(Millions of dollars)    |  | Balance |   | Interest rate |  | Due date |                                      
|------------------------ |  | ------- | - | ------------- |  | -------- | -------------------------------------
|Commercial Bank Weilai   |  |         | $ | 5.2           |  |          | 11.34%                               
|Commercial Bank Weilai   |  |         | $ | 5.5           |  |          | 9.79%                                
|Xi'an Rural Credit Union |  |         | $ | 3.4           |  |          | 9.527%                               
|                         |  |         |   |              
|Total                    |  |         | $ | 14.1          |  |          | 10.30% weighted average interest rate

The annual interest requirement on
these loans totals about $1.45 million.

The following table summarizes the
amounts and types of the company's obligations and provides the estimated period of
maturity for the financial obligations by class as of December 31, 2007:

|Obligations Due by Period
(Millions of dollars) |  |  1 yr |       | 1-3 yrs |  | 4-5 yrs | 
|----------------------------------------------- |  | ------ | ----- | ------- |  | ------- | 
|Current liabilities                             |  |        |       |         |  |         | 
|Accounts payable                                |  |        | $9.3  |         |  |         | 
|Income and other taxes payable                  |  |        |       |         |  | $22.7   | 
|Other payables                                  |  |        |       |         |  | $3.9    | 
|Advances (deposits) from customers              |  |        |       |         |  | $5.3    | 
|Accrued expenses                                |  |        | $1.9  |         |  |         | 
|                                                |  |       
|Long-term liabilities                           |  |       
|Warranties liabilities                          |  |        |       |         |  |         | 
|Deferred tax                                    |  |        |       |         |  | $15.9   | 
|                                                |  |       
|Long-term debt                                  |  |       
|Loans payable                                   |  |        | $14.1 |         |  |         | 
|Loans payable to New Land's                     |  |       
|previous shareholders                           |  |        |       |         |  | $11.4   | 
|Loans from employees                            |  |        |       |         |  |         | 

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# Cash flow in 2007

Cash flow from operating activities in 2007 increased 35.75 percent to
     $8,611,383 from 2006. Cash flow from investing activities in 2007 consumed
     $24,917,671 million, up 69.7 percent from 2006. Cash flow from financing
     activities in 2007 provided $18,415,997 million, up 111.8 percent from
     2006. As a result of the above cash flow changes from operating, investing,
     and financing activities, the net increase in cash for the year 2007 was
     $2,031,002 compared with $358,864 in 2006.

# Liquidity expectation

The Company believes that the
combination of present capital resources, internally generated funds and unused financing
sources are more than adequate to meet cash requirements for the year 2008.

We intend to meet our liquidity
requirements, including capital expenditures related to the purchase of land for the
development of our future projects, through cash flow provided by operations and
additional funds raised by future financings. Upon acquiring land for future development,
we intend to raise funds to develop our projects by obtaining mortgage financing from
local banking institutions with which we have done business in the past. We believe that
our relationships with these banks are in good standing and that our real estate will
secure the loans needed. We believe that adequate cash flow will be available to fund our
operations.

As part of our funding plan, on March
9, 2007, we entered into a Shares Transfer Agreement with the shareholders of Xian
New Land Development Co., Ltd. (New Land), pursuant to which we have acquired 32,000,000
shares of New Land, constituting 100 percent equity ownership of New Land.

Xian New Land Development Co.,
LTD (New Land) is now in cooperation with Baqiao District Government of Xian City in
developing Baqiao Science & Technology Industrial Park, a provincial development zone
in Shaanxi Province. This acquisition has been completed, and China Housing has the right
to develop and sell 487 acres of property which has been targeted for new residential
developments.

The majority of the Companys
revenues and expenses were denominated primarily in Renminbi (RMB), the
currency of the Peoples Republic of China. There is no assurance that exchange rates
between the RMB and the U.S. Dollar will remain stable. The Company does not engage in
currency hedging. Inflation has not had a material impact on the Companys business.

# Other Events

Beginning in mid September 2007, the
Company started to offer select club members the opportunity for an initial
cash payment of 100,000 RMB or approximately $13,300 USD to secure a purchase right for a
unit in the highly sought after JunJing Garden II development. As of December 31, 2007,
more than 3,396 square feet were pre-sold, covering $18 million of revenue. So far, we
have received approximately $5 million in cash deposits. The remainder of the payments
should occur in the second quarter of 2008. China Housing will use these proceeds for
working capital. Once the units are complete and the title is officially transferred to
the new owner, which is anticipated to occur late next year, these initial transactions
will be recognized as revenue and subsequent profit. The buyers will be responsible for
the approximate balance of $40,000 for each unit at the time of closing and officially
consummate the purchase of the unit. Assuming all units close, the Company will record
related revenue of approximately $14.0 million in 2008. There are risks that certain
pre-sale units may not come into final closings, and if the transactions cannot close in
2008, a portion of the deposits maybe returned to customers. Pre-sales are customary in
China and enable developers to have visibility into sell-through rates, while providing
access to capital to complete projects that augments overall internal rate of return.

On January 1, 2008, Tsining Housing
Development Company Inc., which is one of China Housing and Land Development Inc.s
subsidiary companies, planned to adopt the percentage-of-completion method as its new
revenue recognition method. Prior to January 1, 2008, the company adopted the full accrued
method as the companys revenue recognition method. Under the new revenue recognition
method, the total revenue and net income of 2007 will not be affected.

37

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On January 28, 2008, the company
raised $20 million through the issuance of senior secured convertible notes to
institutional investors. As part of the private placement, the company issued five-year
senior secured convertible notes with an aggregate principal amount of $20 million that
pays cash interest of 5 percent per annum. $9 million of the notes are convertible into
common stock and carry an initial conversion price of $5.57 per share, which can be
increased if certain stock price thresholds are met. Additionally, forced conversion can
also occur at the Companys discretion if certain stock price thresholds are met. The
notes are secured by certain real estate assets and additionally through a pledge of
common shares owned by Mr. Pingji Lu, the Companys Chairman and CEO. Additionally,
investors in the private placement were granted 1,437,467 five-year warrants with a strike
price of $6.07 per common share, which are callable if certain stock price thresholds are
met. Approximately 215,620 of the warrants are available as a management incentive if
certain milestones are met.

# EVALUATION OF DISCLOSURE
CONTROLS AND PROCEDURES

Our
management, including our chief executive officer, or CEO, and our principal financial
officer, or CFO, are responsible for establishing and maintaining our disclosure controls
and procedures (within the meaning of Rule 13a-15(e) of the Exchange Act). These controls
and procedures were designed to ensure that information required to be disclosed in the
reports that we file or submit under the Exchange Act, is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the SEC and that
such information was accumulated and communicated to our management, including our CEO and
CFO, as appropriate to allow timely decisions regarding required disclosure. We evaluated
these disclosure controls and procedures under the supervision of our CEO and CFO as of
December 31, 2007. Based upon that evaluation, our management, including our CEO and CFO,
concluded that our disclosure controls and procedures are effective.

# MANAGEMENTS ANNUAL
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We
performed an evaluation of the effectiveness of our internal control over financial
reporting that is designed by, or under the supervision of, our principal executive and
principal financial officers, 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 GAAP and includes those policies and procedures that:

| |  | pertain
to the  maintenance  of records that in reasonable  detail  accurately and fairly
 reflect the  transactions  and               dispositions of the assets of the Company;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | provide
reasonable  assurance that transactions are recorded as necessary to permit  preparation
of financial  statements               in accordance  with generally  accepted
 accounting  principles,  and that receipts and  expenditures  of the Company are
              being made only in accordance with authorizations of management and
directors of the Company; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | provide
reasonable  assurance regarding  prevention or timely detection of unauthorized
 acquisition,  use or disposition               of the Company's assets that could have a
material effect on the financial statements.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because
of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

Under
the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2007.
Based on such evaluation, our management, including the CEO and CFO, has concluded that
the Companys internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) as of December
31, 2007 is effective. Notwithstanding the foregoing, there can be no assurance that the
Companys internal control over financial reporting will detect or uncover all
failures of persons within the Company to comply with these procedures.

This
annual report does not include an attestation report of our registered public accounting
firm regarding internal control over financial reporting. Managements report was not
subject to attestation by our registered public accounting firm pursuant to temporary
rules of the SEC that permit us to provide only managements report in this annual
report.

38

---



There
were no changes in the Companys internal control over financial reporting that
occurred during the year ended December 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The company is subject to the
following market risks, including but not limit to:

# General Real Estate Risk

There is a risk that the
companys property values could go down due to general economic conditions, a weak
market for real estate generally, or changing supply and demand. The companys
property held for sale value, approximately $13 million at the end of December, 2007, may
change due to market fluctuations. Currently, it is valued at our cost which is
significantly below the market value.

# Risk Relating to
Property Sales

The company may not be able to sell a
property at a particular time for our full value, particularly in a poor market.

# Foreign Currency
Exchange Rate Risk

The company is doing all our business
in P.R. China. All the revenue and profit is denominated in RMB. When RMB depreciates, it
may adversely affect the companys financial performance. Specifically, since the
companys recent $20 million senior convertible note interest payment is denominated
in US dollars, the depreciation of RMB may incur additional cost to our financial cost.
However, the effect would be small.

ITEM 8. NOTES &
CONSOLIDATED FINANCIAL STATEMENTS

39

---



Report of Independent
Registered Public Accounting Firm

To the Shareholders and Board of
Directors of China Housing and Land Development, Inc.

We have audited the accompanying consolidated
balance sheet of China Housing and Land Development, Inc. and subsidiaries (the
Company) as at December 31, 2007 and the related consolidated statements of
income and comprehensive income, shareholders equity and cash flows for the year
then ended. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance
with 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. We are not engaged to
perform an audit of the Companys internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal
control over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as at December 31, 2007 and the results of its operations and its cash flows
for the year then ended in accordance with accounting principles generally accepted in the
United States of America.

The consolidated financial statements
as at December 31, 2006 and for the year then ended were audited by other auditors who
expressed an unqualified opinion on those statements in their report dated March 26, 2007.

|                                  |                                                                     
|--------------------------------- | --------------------------------------------------------------------
|Toronto, Ontario  
March 14, 2008 | Signed: MSCM LLP
Chartered Accountants
Licensed Public Accountants

38

---



# CHINA HOUSING & LAND
DEVELOPMENT, INC. AND SUBSIDIARIES

# Consolidated
Statements of Balance Sheets             As of December 31, 2007 and December 31, 2006

|                                                               | December 31,
2007 |  | December 31,
2006 |            
|-------------------------------------------------------------- | ----------------- |  | ----------------- | -----------
|ASSETS                                                         |                   |  |                   |            
|Cash                                                           |                   |  | $                 | 2,351,015  
|Cash - restricted                                              |                   |  |                   | 101,351    
|Accounts receivable, net of allowance for doubtful             |                   |  |                   |           
|accounts of $94,514 and $79,118, respectively                  |                   |  |                   | 12,107,882 
|Other receivables, prepaid expenses and other assets           |                   |  |                   | 622,759    
|Notes receivable, net                                          |                   |  |                   | 947,918    
|Real estate                                                    |                   | 
|Finished projects                                              |                   |  |                   | 16,130,130 
|Construction in progress                                       |                   |  |                   | 24,856,801 
|                                                               |                   |  |                   |            
|Total real estate held for development or sale                 |                   |  |                   | 40,986,931 
|                                                               |                   |  |                   |            
|Property and equipment, net                                    |                   |  |                   | 5,707,012  
|Asset held for sale                                            |                   |  |                   | 12,910,428 
|Advances to suppliers                                          |                   |  |                   | 2,071,549  
|Deposits on land use rights                                    |                   |  |                   | 29,694,103 
|Intangible asset, net                                          |                   |  |                   | 48,205,697 
|                                                               |                   |  |                   |            
|Total assets                                                   |                   |  | $                 | 155,706,645
|                                                               |                   |  |                   |            
|LIABILITIES                                                    |                   |  |                   |            
|Accounts payable                                               |                   |  | $                 | 9,311,995  
|Advances from customers                                        |                   |  |                   | 5,258,351  
|Accrued expenses                                               |                   |  |                   | 1,903,451  
|Payable to original shareholders                               |                   |  |                   |           
|Loans payable to New Land's previous shareholders              |                   |  |                   | 11,413,229 
|Income and other taxes payable                                 |                   |  |                   | 22,711,981 
|Other payables                                                 |                   |  |                   | 3,881,137  
|Loans from employees                                           |                   |  |                   | 2,388,862  
|Loans payable                                                  |                   |  |                   | 14,120,034 
|Deferred tax                                                   |                   |  |                   | 15,907,880 
|Warrants liability                                             |                   |  |                   | 2,631,991  
|                                                               |                   |  |                   |            
|Total liabilities                                              |                   |  |                   | 89,528,911 
|                                                               |                   |  |                   |            
|SHAREHOLDERS' EQUITY                                           |                   | 
|Common stock: $.001 par value, authorized 100,000,000 shares   |                   |  |                   | 30,142     
|issued and outstanding 30,141,887 and 20,619,223, respectively |                   | 
|Additional paid in capital                                     |                   |  |                   | 28,381,534 
|Statutory reserves                                             |                   |  |                   | 2,885,279  
|Retained earnings                                              |                   |  |                   | 30,365,156 
|Capital contribution receivable                                |                   |  |                   |           
|Accumulated other comprehensive income                         |                   |  |                   | 4,515,623  
|                                                               |                   |  |                   |            
|Total shareholders' equity                                     |                   |  |                   | 66,177,734 
|                                                               |                   |  |                   |            
|                                                               |                   |  |                  
|Total liabilities and shareholders' equity                     |                   |  | $                 | 155,706,645
|                                                               |                   |  |                   |            

See accompany notes to
consolidated financial statements

39

---



# CHINA HOUSING & LAND
DEVELOPMENT, INC. AND SUBSIDIARIES

# CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME                         FOR THE YEARS ENDED
DEMCEMBER 31, 2007, 2006 and 2005

|                                             | 2007 |  | 2006 |            | 2005 |  
|-------------------------------------------- | ---- |  | ---- | ---------- | ---- | -
|REVENUE                                      |      |  |      |            |      |  
|Sales of properties                          |      |  | $    | 73,579,325 |      | $
|Other income                                 |      |  |      | 333,525    |      |  
|                                             |      |  |      |            |      |  
|Total Revenue                                |      |  |      | 73,912,850 |      |  
|                                             |      |  |      |            |      |  
|COSTS AND EXPENSES                           |      | 
|Cost of sales                                |      |  |      | 43,221,757 |      |  
|Selling, general and administrative expenses |      |  |      | 2,919,360  |      |  
|Other expense                                |      |  |      | 57,416     |      |  
|Interest expense                             |      |  |      | 1,652,349  |      |  
|Change in fair value of warrants             |      |  |      | 632,296    |     
|                                             |      |  |      |            |      |  
|Total costs and expense                      |      |  |      | 48,483,178 |      |  
|                                             |      |  |      |            |      |  
|INCOME BEFORE PROVISION FOR INCOME TAXES     |      |  |      | 25,429,672 |      |  
|                                             |      | 
|PROVISION FOR INCOME TAXES                   |      |  |      | 8,743,556  |      |  
|                                             |      |  |      |            |      |  
|NET INCOME                                   |      |  |      | 16,686,116 |      |  
|                                             |      | 
|GAIN ON FOREIGN EXCHANGE                     |      |  |      | 3,617,405  |      |  
|                                             |      |  |      |            |      |  
|COMPREHENSIVE INCOME                         |      |  | $    | 20,303,521 |      | $
|                                             |      |  |      |            |      |  
|WEIGHTED AVERAGE SHARES OUTSTANDING          |      | 
|BASIC                                        |      |  |      | 26,871,388 |      |  
|                                             |      |  |      |            |      |  
|DILUTED                                      |      |  |      | 26,871,388 |      |  
|                                             |      |  |      |            |      |  
|EARNINGS PER SHARE                           |      | 
|BASIC                                        |      |  | $    | 0.62       |      | $
|                                             |      |  |      |            |      |  
|DILUTED                                      |      |  | $    | 0.62       |      | $
|                                             |      |  |      |            |      |  

See accompany notes to
consolidated financial statements

40

---



# CHINA HOUSING & LAND
DEVELOPMENT, INC. AND SUBSIDIARIES

# CONSOLIDATED
STATEMENTS OF CASH FLOWS                   FOR THE YEARS ENDED DECEMBER 31, 2007, 2006
and 2005

|                                                         | 2007 |  | 2006 |             | 2005 |  
|-------------------------------------------------------- | ---- |  | ---- | ----------- | ---- | -
|CASH FLOWS FROM OPERATING ACTIVITIES:                    |      |  |      |             |      |  
|Net income                                               |      |  | $    | 16,686,116  |      | $
|Adjustments to reconcile net income to cash              |      | 
|provided by (used in) operating activities:              |      | 
|Depreciation                                             |      |  |      | 423,932     |      |  
|Gain on disposal of fixed assets                         |      |  |      | (48,347     | )    |  
|Amortization of stock issued for investor relations fees |      |  |      | 131,400     |      |  
|Amortization on intangible assets                        |      |  |      | 1,157,758   |      |  
|Loss on investment                                       |      |  |      |            |      |  
|Change in fair value of warrants                         |      |  |      | 632,296     |      |  
|Non-cash proceeds from sales                             |      |  |      | (10,783,201 | )   
|(Increase) decrease in assets:                           |      | 
|Accounts receivable                                      |      |  |      | (8,463,433  | )    |  
|Real estate                                              |      |  |      | 13,696,294  |      |  
|Advance to suppliers                                     |      |  |      | (1,480,596  | )    |  
|Deposit on land use rights                               |      |  |      | (17,695,934 | )    |  
|Other receivable and deferred charges                    |      |  |      | 658,893     |      |  
|Increase (decrease) in liabilities:                      |      | 
|Accounts payable                                         |      |  |      | 2,556,717   |      |  
|Advances from customers                                  |      |  |      | 2,066,546   |      |  
|Accrued expense                                          |      |  |      | 42,522      |      |  
|Other payable                                            |      |  |      | (1,016,610  | )    |  
|Income and other taxes payable                           |      |  |      | 10,047,030  |      |  
|                                                         |      |  |      |             |      |  
|Net cash provided by (used in) operating activities      |      |  |      | 8,611,383   |      |  
|                                                         |      |  |      |             |      |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                    |      | 
|Change in restricted cash                                |      |  |      | 1,039,410   |      |  
|Purchase of buildings, equipment and automobiles         |      |  |      | (244,355    | )    |  
|Notes receivable collected, net                          |      |  |      | 1,272,541   |      |  
|Proceeds from sale of fixed assets                       |      |  |      |            |      |  
|Proceeds from sale of long term investment               |      |  |      |            |      |  
|Payments to acquire subsidiary, net of cash received     |      |  |      | (27,087,844 | )    |  
|                                                         |      |  |      |             |      |  
|Net cash used in investing activities                    |      |  |      | (25,020,248 | )    |  
|                                                         |      |  |      |             |      |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                    |      | 
|Loan proceeds                                            |      |  |      | 3,944,359   |      |  
|Payments on loans                                        |      |  |      | (14,202,410 | )    |  
|Loans from employees, net                                |      |  |      | 1,226,736   |      |  
|Loans from New Land previous shareholders                |      |  |      | 4,207,315   |      |  
|Proceeds from issuance of common stock and warrants      |      |  |      | 23,239,997  |      |  
|                                                         |      |  |      |             |      |  
|Net cash provided by financing activities                |      |  |      | 18,415,997  |      |  
|                                                         |      |  |      |             |      |  
|INCREASE IN CASH                                         |      |  |      | 2,007,132   |      |  
|                                                         |      | 
|EFFECTS ON FOREIGN CURRENCY EXCHANGE                     |      |  |      | (35,750     | )    |  
|                                                         |      |  |      |             |      |  
|NET INCREASE IN CASH                                     |      |  |      | 1,971,382   |      |  
|                                                         |      | 
|CASH, beginning of period                                |      |  |      | 379,633     |      |  
|                                                         |      |  |      |             |      |  
|CASH, end of period                                      |      |  | $    | 2,351,015   |      | $
|                                                         |      |  |      |             |      |  
|Supplemental disclosure of cash flow information:        |      | 
|Cash paid for interest expense                           |      |  | $    | 1,975,917   |      | $
|                                                         |      |  |      |             |      |  
|Cash paid for income taxes                               |      |  | $    | 384,615     |      | $
|                                                         |      |  |      |             |      |  

See accompany notes to
consolidated financial statements

41

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# CHINA HOUSING & LAND
DEVELOPMENT, INC. AND SUBSIDIARIES

# CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY             FOR THE YEARS ENDED DECEMBER 31, 2007,
2006 and 2005

|                                             | Common Stock |  | Additional
paid-in |            | Statutory |   | Retained |  | Capital
contribution |            | Accumulated
other
comprehensive |   |          
|-------------------------------------------- | ------------ |  | ------------------ | ---------- | --------- | - | -------- |  | -------------------- | ---------- | ------------------------------- | - | ---------
|
|BALANCE, December 31, 2004                   |              |  |                    | 20,000,000 |           | $ | 20,000   |  | $                    | 5,442,798  |                                 | $ | 523,538  
|                                             |              |  |                    |            |           |   |          | 
|Net Income                                   |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|Adjustment to statutory reserve              |              |  |                    |           |           |   |         |  |                      |           |                                 |   | 710,640  
|Foreign currency translation adjustment      |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|                                             |              |  |                    |            |           |   |          |  |                      |            |                                 |   |          
|BALANCE, December 31, 2005                   |              |  |                    | 20,000,000 |           | $ | 20,000   |  | $                    | 5,442,798  |                                 | $ | 1,234,178
|                                             |              |  |                    |            |           |   |          | 
|Common stock issued for cash at $3.25        |              |  |                    | 619,223    |           |   | 619      |  |                      | 1,749,802  |                                 |   |         
|Net Income                                   |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|Adjustment to statutory reserve              |              |  |                    |           |           |   |         |  |                      |           |                                 |   | 915,960  
|Capital contribution receivable              |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|Foreign currency translation adjustment      |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|                                             |              |  |                    |            |           |   |          |  |                      |            |                                 |   |          
|BALANCE, December 31, 2006                   |              |  |                    | 20,619,223 |           | $ | 20,619   |  | $                    | 7,192,600  |                                 | $ | 2,150,138
|                                             |              |  |                    |            |           |   |          | 
|Common stock issued for consulting service   |              |  |                    | 60,000     |           |   | 60       |  |                      | 131,340    |                                 |   |         
|Common Stock and warrants issued at $2.70    |              |  |                    | 9,387,985  |           |   | 9,388    |  |                      | 20,532,623 |                                 |   |         
|Common Stock issued from warrants conversion |              |  |                    | 74,679     |           |   | 75       |  |                      | 524,971    |                                 |   |         
|Net Income                                   |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|Adjustment to statutory reserve              |              |  |                    |           |           |   |         |  |                      |           |                                 |   | 735,141  
|Capital contribution receivable              |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|Foreign currency translation adjustment      |              |  |                    |           |           |   |         |  |                      |           |                                 |   |         
|                                             |              |  |                    |            |           |   |          |  |                      |            |                                 |   |          
|BALANCE, December 31, 2007                   |              |  |                    | 30,141,887 |           | $ | 30,142   |  | $                    | 28,381,534 |                                 | $ | 2,885,279
|                                             |              |  |                    |            |           |   |          |  |                      |            |                                 |   |          
|                                             |              |  |                    |            |           |   |          | 
|                                             |              |  |                    |            |           |   |          | 

See accompany notes to
consolidated financial statements

42

---



# Note 1 
Organization and Basis of Presentation

China Housing & Land Development,
Inc. (the Company) is a Nevada corporation, incorporated on July 6, 2004 under
the name Pacific Northwest Productions Inc. (Pacific). On May 6, 2006, the
Company changed its name to China Housing & Land Development, Inc. The Company,
through its subsidiary Xian Tsining Housing Development Company Inc.
(XTHDC), is engaged in acquisition, development, management, and sale of
commercial and residential real estate properties located primarily in Xian City,
the Peoples Republic of China (PRC or China).

XTHDC was established during May 1992
as a state-owned enterprise, whose former name is Xian New Star Group Real Estate
Development Co. Ltd, and was formerly the logistics department of Lan Zhou Military area
of the Peoples Liberation Army of China. XTHDC was reorganized as a limited
liability company with equity capital invested by management personnel in September 1999.
XTHDC is a Chinese registered limited liability company with a legal structure similar to
a regular corporation and a limited liability company. The Articles of Association provide
for a 54 year term beginning September 7, 1999 with registered capital of approximately
$3,140,000 (RMB26,000,000). On March 28, 2002, the registered capital of XTHDC was
increased to approximately $6,050,000 (RMB50,000,000).

On April 21, 2006, XTHDC entered into
and closed a share purchase agreement with Pacific, a public shell in the United States of
America incorporated in the state of Nevada. Pursuant to the purchase agreement, Pacific
acquired all of the issued and outstanding capital stock of XTHDC in exchange for
16,000,000 (post-split) shares of Pacifics common stock.

Concurrently with the closing of the
purchase agreement and as a condition thereof, Pacific entered into an agreement with
Deljit Bains and Davinder Bains, its executive officers, pursuant to which they each
returned 4,000,000 (post-split) shares (8,000,000 shares in total) of Pacific common stock
to Pacific for cancellation. They were not compensated in any way for the cancellation of
their shares of Pacific common stock. Upon completion of the foregoing transactions,
Pacific had an aggregate of 20,000,000 shares of common stock issued and outstanding.

As a result of the transaction,
XTHDCs stockholders owned approximately 80% of the combined company and the
directors and executive officers of XTHDC became the directors and executive officers of
Pacific. Accordingly, the transaction has been accounted for as a reverse acquisition of
Pacific by XTHDC resulting in a recapitalization of XTHDC. XTHDC was deemed to be the
purchaser and surviving company for accounting purposes. Accordingly, the results of
operations and cash flows of XTHDC for the year ended December 31, 2005 have been
presented for comparative purposes.

43

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# Note 1 
Organization and Basis of Presentation  continued

In addition, on May 5, 2006, Pacific
changed its name to China Housing & Land Development, Inc. and the stockholders
approved a stock dividend of seven shares for each share held, which has been accounted
for as an eight to one forward stock split. All shares and per share data have been
restated retrospectively.

On March 9, 2007, the Company
acquired 100% equity of Xian New Land Development Co., Ltd (New Land).
See note 3 for details of acquisition.

New Land was originally incorporated
in September 2003 in Xian City in Shaanxi province, China. In 2006, New Land entered
into an agreement with the Baqiao District Government of Xian City to develop Baqiao
Science & Technology Industrial Park (Baqiao Park), a provincial
development zone in Shaanxi Province, to establish a joint venture for New Land to develop
and purchase approximately 487 acres in Baqiao Park. The agreement covers the period from
July 2006 to June 2011. New Land is responsible for the installation and maintenance of
all basic infrastructures, including water, electricity, and gas supply, along with
telecommunication and sewer systems. In return, New Land will be given the exclusive right
to obtain 487 acres of land use rights.

On June 19, 2007, New Land
established Xian Hao Tai Housing Development Company Inc. (Hao Tai) for
the purpose of obtaining, developing, and trading land use rights in China. Hao Tais
registered capital is RMB 8.0 million, approximately $1.06 million, and is 100% owned by
New Land. The company received the formal business license from the government in July
2007.

# Note 2  Summary of
Significant Accounting Policies

Principles of
Consolidation and Basis of Presentation

The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, XTHDC, New Land and Hao Tai. All inter-company accounts and transactions
have been eliminated on consolidation. The accompanying consolidated financial statements
have been prepared in conformity with accounting principles generally accepted in the
United States of America.

Use of Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the United
States of America (GAAP) 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
revenues and expenses during the reporting period. Actual results could differ from those
estimates.

44

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# Note 2  Summary of
Significant Accounting Policies  continued

Reporting Currency and
Foreign Currency Translation

As of December 31, 2007, the accounts
of the Company are maintained in their functional currency, the Chinese Yuan Renminbi
(RMB). The reporting currency for the consolidated financial statements is the United
States Dollars (USD) which is in accordance with Statement of Financial Accounts Standards
(SFAS) No. 52, Foreign Currency Translation, with the RMB as the
functional currency. According to SFAS No. 52, all assets and liabilities are translated
at the exchange rate on the balance sheet date, shareholders equity is translated at
the historical rates and the statements of operations and cash flows are translated at the
weighted average exchange rate for the year. The resulting translation adjustments are
reported under other comprehensive income in accordance with SFAS No. 130, Reporting
Comprehensive Income.

Revenue Recognition

Real estate sales are reported in
accordance with the provisions of SFAS No. 66, Accounting for Sales of Real
Estate. Profit from the sales of development properties, less 5% business tax, is
recognized by the full accrual method when the sale is consummated. A sale is not
considered consummated until (1) the parties are bound by the terms of a contract, (2) all
consideration has been exchanged, (3) any permanent financing of which the seller is
responsible has been arranged, (4) all conditions precedent to closing have been
performed, (5) the seller does not have substantial continuing involvement with the
property, and (6) the usual risks and rewards of ownership have been transferred to the
buyer. Sales transactions not meeting all the conditions of the full accrual method are
accounted for using the deposit method of accounting. Under the deposit method, all costs
are capitalized as incurred, and payments received from the buyer are recorded as a
deposit liability. Real estate rental income, less 5% business tax, is recognized on the
straight-line basis over the terms of the tenancy agreements.

For Company financed sales, the
Company recognizes sales based on the full accrual method provided that the buyers
initial and continuing investment is adequate according to SFAS No. 66. The initial
investment is the buyers down-payment less the loan amount provided by the Company.
Interests on these loans are amortized over the terms of the loans.

For land sales, the Company
recognizes the revenue when title of the land is transferred and collectability is
assured.

For the reimbursement on
infrastructure costs, the Company recognizes the income, which is at the fair market value
agreed between the Company and the PRC government, when they enter into a binding
agreement with the government agreeing on the reimbursement.

45

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# Note 2  Summary of
Significant Accounting Policies  continued

Revenue Recognition
 continued

In December of 2007, Hao Tai
incorporated and sold a company to a client inclusive of the land use right trading
activities. The operating income that resulted from this transaction was approximately $14
million.

Real Estate
Capitalization and Cost Allocation

Real estate held for development or
sale consists of residential and commercial units under construction and units completed.
Construction in progress includes costs associated in development and construction of the
Baqiao project

Real estate held for development or
sale are stated at cost or estimated net realizable value, whichever is lower. Costs
include land and land improvements, direct construction costs and development costs,
including predevelopment costs, interest on indebtedness, real estate taxes, insurance,
construction overhead and indirect project costs. Selling and advertising costs are
expensed as incurred. Total estimated costs of multi-unit developments are allocated to
individual units based upon specific identification methods.

Land and land improvement costs
include cost of land use rights, land improvements, interest on indebtedness and real
estate taxes. Appropriate costs are allocated to projects on the basis of acreage,
dwelling units and relative sales value.

Land and land improvements applicable
to condominiums, town homes and single-family homes, are transferred to construction in
progress when construction commences.

If the real estate is determined to
be impaired, it will be written down to its fair market value. Real estate held for
development or sale costs include the cost of land use rights, land development and home
construction costs, engineering costs, insurance costs, wages, real estate taxes, and
interest related to development and construction. All costs are accumulated by specific
projects and allocated to residential and commercial units within the respective projects.
The Company leases the land for the residential unit sites under land use rights with
various terms from the government of the PRC. The Company evaluates the carrying value for
impairment based on the undiscounted future cash flows of the assets. Write-downs of
inventory deemed impaired would be recorded as adjustments to the cost basis. No
impairment loss was incurred or recorded for the year ended December 31, 2007 (2006 
$79,665).

No depreciation is provided for
construction in progress.

46

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# Note 2  Summary of
Significant Accounting Policies  continued

Capitalization of Interest

In accordance with SFAS 34, interest
incurred during construction is capitalized to construction in progress. All other
interest is expensed as incurred.

For the year ended December 31, 2007,
interest incurred by the Company was $3,454,862 (2006  $2,245,021 and 2005 
$1,580,048) and capitalized interest for the same period was $1,904,096 (2006 
$1,975,588 and 2005  $838,168).

Concentration of Risks

The Company sells residential and
commercial units to residents and small business owners and the Company sells land to the
local real estate developers. The Company had four major customers that accounted for
approximately 62% of the Companys sales for the twelve months ended December
31,2007. One of these customers accounted for 84% of accounts receivable as at December
31, 2007. The Company has no major customer that accounts for more than 5% of the
Companys sales for the years ended December 31, 2006 and 2005.

The Company is dependent on
third-party sub-contractors, manufacturers, and distributors for all of construction
services and supply of construction materials. Construction services or products purchased
from the Companys five largest subcontractors/suppliers accounted for 56% of total
services and supplies for the year ended December 31, 2007 (2006  41%).

Accounts payables to these
subcontractors/suppliers amounted to $1,723,020 at December 31, 2007 (2006 
$2,070,834).

The Companys operations are
carried out in the Peoples Republic of China. Accordingly, the Companys
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the Peoples Republic of China and by
the general state of the Peoples Republic of Chinas economy. The
Companys business may be influenced by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things.

Cash and Concentration of
Risk

Cash includes cash on hand and demand
deposits in accounts maintained with state-owned banks within the PRC. Total cash in
state-owned banks at December 31, 2007 amounted to $2,296,766 (2006  $353,762) of
which no deposits are covered by insurance. The Company has not experienced any losses in
such accounts.

47

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# Note 2  Summary of
Significant Accounting Policies  continued

Restricted Cash

The bank grants mortgage loans to
home purchasers and will credit these amounts to the Companys bank account once
title passes. If the houses are not completed and the new home owners have no ownership
documents to secure the loan, the bank will deduct 10% of the home owners loan from
the Companys bank account and transfer that amount to a designated bank account
classified on the balance sheet as restricted cash. Interest earned on the restricted cash
is credited to the Companys normal bank account. The bank will release the
restricted cash after home purchasers have obtained the ownership documents to secure the
mortgage loan. Total restricted cash amounted to $101,351 as of December 31, 2007 (2006
 1,108,271).

Accounts Receivable

Accounts receivable consists of
balances due from customers for the sale of residential and commercial units in the PRC.
The Company provides an allowance for doubtful accounts equal to the estimated
uncollectible amounts. The Companys estimated uncollectible amounts are based on
historical collection experience and a review of the current status of trade accounts
receivable. It is reasonably possible that the Companys estimate of the allowance
for doubtful accounts will change. Accounts receivable are presented net of an allowance
for doubtful accounts of $94,514 at December 31, 2007 (2006  $79,118).

Other Receivables

Other receivables consist of various
cash advances to unrelated companies and individuals with which management of the Company
has business relationships. These amounts are not related to operations of the Company,
are unsecured, non-interest bearing and generally short term in nature. The balance of
other receivables was $749,890 (2006  $1,282,831) as December 31, 2007. Other
receivables are reviewed annually as to whether their carrying value has become impaired.
As of December 31, 2007, the Company has established an allowance for doubtful accounts of
$190,372 (2006  301,920).

48

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# Note 2  Summary of
Significant Accounting Policies  continued

Notes Receivable

The Company finances sales to certain
new homeowners. Financing agreements are signed and the loans are due in 1 to 3 years. The
loans are non-interest bearing, therefore the Company has discounted the carrying amount
of notes receivable at the market mortgage rate. Notes receivable are presented net of
allowance for doubtful accounts.

|                                      | 2007 |  | 2006 |          
|------------------------------------- | ---- |  | ---- | ---------
|
|Notes receivable                      |      |  | $    | 1,036,775
|Less: unamortized interest            |      |  |      | (88,857  
|Less: allowance for doubtful accounts |      |  |      | _        
|                                      |      |  |      |          
|Notes receivable, net                 |      |  | $    | 947,918  
|                                      |      |  |      |          

Advances to Suppliers

Advances to suppliers consist of
amounts paid in advance to contractors and vendors for services and materials. Advances
amounted to $2,071,549 as of December 31, 2007 (2006  $493,570).

Deposits on Land Use
Rights

Deposits on land use rights consist
of deposits held by the government to purchase land use rights in Baqiao Park. Deposits
amounted to $29,694,103 as of December 31, 2007 (2006  $0).

Asset Held for Sale

The Company intends to sell one of
its fixed assets which consist of 14,478 square meters of retail units with net book value
of $12,910,428 as of December 31, 2007. There was no asset held for sale as of December
31, 2006.

49

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# Note 2  Summary of
Significant Accounting Policies  continued

Property and Equipment

Property and equipment are recorded
at cost. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. Depreciation expense for the years ended December 31, 2007, 2006 and
2005 amounted to $423,932, $354,444 and $124,404, respectively, with $343,888 (2006 
$261,463 and 2005  $124,404) recorded in selling, general and administrative
expenses and $80,044 (2006  $92,981, 2005  $0) recorded in other income to
offset rental revenue. Estimated useful lives of the assets are as follows:

|                                       | Estimated Useful Life | 
|-------------------------------------- | --------------------- | 
|
|Head office buildings and improvements |                       | 
|Vehicles                               |                       | 
|Electronic equipment                   |                       | 
|Office furniture                       |                       | 
|Computer software                      |                       | 

Maintenance, repairs and minor
renewals are charged directly to expenses as incurred. Major additions and betterment to
property and equipment are capitalized and depreciated over the remaining useful life of
the assets.

Intangible Asset

Intangible asset relates to the
development right for the 487 acres of land in Baqiao Park obtained from the acquisition
of New Land (see note 3). The intangible asset is considered a definite lived intangible
asset. In accordance with SFAS No. 142, the intangible asset is subject to amortization
over its useful life. The method of amortization selected reflects the pattern in which
the economic benefit of the intangible asset is realized. The amortization is based on the
acreage of land sold or developed and weighted-average expected profit margins. This
method is intended to match the pattern of amortization with the income-generating
capacity of the asset.

As of December 31, 2007, the amount
recorded for its intangible asset was $48,205,697. The Company evaluates its intangible
asset for impairment issues and whenever events or changes in circumstances indicate that
the carrying value of its intangible may not be recoverable from its estimated future cash
flows it records a write-down for this impairment. As of December 31, 2007, the Company
has recorded $1,157,758 (2006  $0 and 2005  $0) of amortization on the
intangible asset and it is included in cost of properties.

50

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# Note 2  Summary of
Significant Accounting Policies  continued

Long-lived Assets

The Company periodically evaluates
the carrying value of long-lived assets to be held and used in accordance with SFAS 144.
SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets carrying amounts. In that event,
a loss is recognized based on the amount by which the carrying amount exceeds the fair
market value of the long-lived assets. Loss on long-lived assets to be disposed of is
determined in a similar manner, except that fair market values are reduced for the cost of
disposal. Based on its review, the Company believes there were no impairments of its
long-lived assets as of December 31, 2007 and 2006.

Fair Value of Financial
Instruments

SFAS No. 107, Disclosures About
Fair Value of Financial Instruments requires disclosure of the fair value of
financial instruments held by the Company. SFAS 107 defines the fair value of financial
instruments as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The Company considers the carrying amount of cash
(including restricted cash), accounts receivable, other receivables, accounts payable,
accrued expenses and other payables to approximate their fair values because of the short
period of time between the origination of such instruments and their expected realization
and their current market rate of interest. Management believes the interest rates on loans
payable to New Lands previous shareholders, loans from employees and loans payable
reflect rates currently available. Thus, the carrying value of these loans approximates
fair value. The notes receivable are non-interest bearing and the Company has discounted
the notes using the current market mortgage rate, thus, the carry value of the notes
receivable approximates fair value.

Accounts Payable

Accounts payable consists of balances
due to subcontractors and suppliers for the purchase of construction services and the
Baqiao government for land use right. Accounts payable amounted to $9,311,995 at December
31, 2007 (2006  $5,324,813).

Advances from Customers

Advances from customers represent
prepayments by customers for home purchases. The Company records such prepayment as
advances from customers when the payments are received. Advances from customers amounted
to $5,258,351 at December 31, 2007 (2006  $2,902,426).

51

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# Note 2  Summary of
Significant Accounting Policies  continued

Other Payables

Other payables consist of various
cash advances from unrelated companies and individuals which management of the Company has
business relationships. These amounts are not related to operations of the Company, are
unsecured, non-interest bearing and short term in nature. Other payables amounted to
$3,881,137 as of December 31, 2007 (2006  $2,572,838).

Advertising Costs

Advertising and sales promotion costs
are expensed as incurred. Advertising expense totaled $781,998, $565,577, $533,021 for the
years ending December 31, 2007, 2006 and 2005, respectively.

Warranty Costs

Generally, the Company provides all
of its customers with a limited (half a year to 5 years) warranty period for defective
workmanship. The Company accrues the estimated warranty costs into the cost of its homes
as a liability after each project is closed based on the Companys historical
experience, which normally is less than 0.2% of total costs of the project. Any excess
amounts are expensed in the period when they occur. Many of the items relating to
workmanship are completed by the existing labor force utilized to construct other new
houses and are therefore already factored into the labor and overhead costs of another
project. Any significant material defects are generally under warranty with the
Companys suppliers. Currently, the Company retains 5% of the total construction
contract from the construction contractors for a period of one year after the completion
of the construction. Such retention amounts will be used to pay for any repair expense
incurred due to defects in the construction. The Company has not historically incurred any
significant litigation requiring additional specific reserves for its product offerings.
As of December 31, 2007 and 2006, the Company accrued $0 and $68,682 as warranty costs,
respectively.

52

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# Note 2  Summary of
Significant Accounting Policies  continued

Income Taxes

The Company utilizes SFAS No. 109,
Accounting for Income Taxes, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequences in future years of differences between the
tax bases of assets and liabilities and their financial reporting amounts at each period
end based on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be
realized. At December 31, 2007 the significant book to tax difference was related to the
intangible asset which has no tax value. There was no significant book to tax differences
for 2006.

The Company adopted the provisions of
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109", (FIN 48), on January 1, 2007.
The Company did not have any material unrecognized tax benefits and there was no effect on
its financial condition or results of operations as a result of implementing FIN 48.

The Company files income tax returns
in the PRC jurisdictions. The Company does not believe there will be any material changes
in its unrecognized tax positions over the next 12 months.

The Companys policy is to
recognize interest and penalties accrued on any unrecognized tax benefits as a component
of general and administrative expense. As of the date of adoption of FIN 48, the Company
did not have any accrued interest or penalties associated with any unrecognized tax rate
differences from the federal statutory rate primarily due to non-deductible expenses,
temporary differences and preferential tax treatment. No assessments on the income taxes
for the 2006 and 2007 have been received by the Company.

Local PRC Income Tax

The subsidiaries of the Company are
governed by the Income Tax Laws of the PRC concerning Chinese registered limited liability
companies. Under the Income Tax Laws of the PRC, Chinese enterprises are generally subject
to an income tax at an effective rate of 33% (30% state income taxes plus 3% local income
taxes) on income reported in the statutory financial statements after appropriate tax
adjustments, unless the enterprise is located in a specially designated region for which
more favorable effective tax rates are applicable. New Land and Hao Tai are entitled to a
refund of 6% of taxes otherwise payable.

53

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# Note 2  Summary of
Significant Accounting Policies  continued

Local PRC Income Tax
 continued

The provision for income taxes at
December 31, 2007 consisted of the following:

|                                         | 2007 |  | 2006 |           | 2005 |  
|---------------------------------------- | ---- |  | ---- | --------- | ---- | -
|
|Provision for China income and local tax |      |  | $    | 9,125,616 |      | $
|                                         |      |  |      |           |     
|Recovery of deferred taxes               |      |  |      | (382,060  | )    |  
|                                         |      |  |      |           |      |  
|Total provision for income taxes         |      |  | $    | 8,743,556 |      | $
|                                         |      |  |      |           |      |  

The following table reconciles the
U.S. statutory rates to the Company's effective tax rate at December 31,

|                                      | 2007 |  | 2006 |      | 2005 |  |     
|------------------------------------- | ---- |  | ---- | ---- | ---- |  | ----
|
|U.S. statutory rates                  |      |  |      | 34%  |      |  | 34% 
|Foreign income not recognized in USA  |      |  |      | (34) |      |  | (34)
|U.S. loss not recognized              |      |  |      | 4    |      |  |    
|Statutory income taxes in China       |      |  |      | 33   |      |  | 33  
|Tax incentive on New Land and Hao Tai |      |  |      | (1)  |      |  |    
|                                      |      |  |      |      |      | 
|Totals                                |      |  |      | 34%  |      |  | 33% 
|                                      |      |  |      |      |      | 

Basic and Diluted
Earnings Per Share

Earning per share is calculated in
accordance with the SFAS No. 128, Earnings per share. SFAS No. 128 superseded
Accounting Principles Board Opinion No.15 (APB 15). Net earning per share for all periods
presented has been restated to reflect the adoption of SFAS No. 128. Basic net earnings
per share is based upon the weighted average number of common shares outstanding. Diluted
net earnings per share is based on the assumption that all dilutive convertible shares and
stock options and warrants were converted or exercised. Dilution is computed by applying
the treasury stock method.

Under this method, options and
warrants are assumed to be exercised at the beginning of the period (or at the time of
issuance, if later), and as if funds obtained thereby were used to purchase common stock
at the average market price during the period.

54

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# Note 2  Summary of
Significant Accounting Policies  continued

Derivative Financial
Instruments

The Company accounts for its warrants
in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activity, and EITF 00-19, Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Companys Own Stock. Because the
warrant agreement provides for cash settlement upon a change in control under certain
circumstances, even if remote, the warrants have been accounted for and classified as a
liability in the consolidated balance sheets. EITF 00-19 also requires the warrants to be
carried on the balance sheet at fair value and to mark to market at each reporting period.
The change in the fair value are reported in the income statement. The fair value of the
warrants is determined using the Cox-Ross-Rubinstein (CRR) Binomial Lattice
Model.

Comprehensive Income

Comprehensive income consists of net
income and foreign currency translation gains and losses affecting shareholders
equity that, under GAAP, are excluded from net income. Gain on foreign exchange
translation totaled $3,561,294, $655,435 and $242,783 for 2007, 2006 and 2005,
respectively.

Statement of Cash Flows

In accordance with SFAS No. 95,
Statement of Cash Flows, cash flows from the Companys operations are
calculated based upon the local currencies. As a result, amounts related to assets and
liabilities reported on the statement of cash flows will not necessarily agree with
changes in the corresponding balances on the balance sheet.

Recent Pronouncements

In September 2006, FASB issued SFAS
157, Fair Value Measurements. This Statement defines fair value, establishes a
framework for measuring fair value in GAAP, and expands disclosures about fair value
measurements. This Statement applies under other accounting pronouncements that require or
permit fair value measurements, the Board having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute. Accordingly, this
Statement does not require any new fair value measurements. However, for some entities,
the application of this Statement will change current practice. This Statement is
effective for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. Management is currently evaluating
the effect of this pronouncement on its consolidated financial statements.

55

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# Note 2  Summary of
Significant Accounting Policies  continued

Recent Pronouncements
 continued

In February 2007, the FASB
issued SFAS No. 159, The Fair Value Option for Financial Assets and Financials
Liabilities  Including an Amendment of FASB Statement No.115". This standard
permits measurement of certain financial assets and financial liabilities at fair value.
If the fair value option is elected, the unrealized gains and losses are reported in
earnings at each reporting date. Generally, the fair value option may be elected on an
instrument-by-instrument basis, as long as it is applied to the instrument in its
entirety. The fair value option election is irrevocable, unless a new election date
occurs. SFAS No. 159 requires prospective application and certain additional presentation
and disclosure requirements. The standard is effective as of the beginning of the fiscal
year that begins after November 15, 2007. The Company is currently evaluating
the provisions of SFAS No. 159 to determine the potential impact, if any, the adoption
will have on the Companys consolidated financial statements.

In December 2007, the FASB issued
SFAS No. 141(R), Business Combinations (SFAS No. 141(R)) which
revised SFAS No. 141, Business Combinations. SFAS No. 141(R) establishes
principles and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any noncontrolling
interest in the acquiree and the goodwill acquired. SFAS No. 141(R) also establishes
disclosure requirements which will enable users to evaluate the nature and financial
effects of the business combination. This standard is effective for fiscal years beginning
after December 15, 2008. As the provisions of SFAS No. 141(R) are applied prospectively,
the impact of this standard cannot be determined until the transactions occur.

In December 2007, the FASB issued
SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements.
SFAS No. 160 establishes accounting and reporting standards for ownership interests in
subsidiaries held by parties other than the parent, the amount of consolidated net income
attributable to the parent and to the noncontrolling interest, changes in a parents
ownership interest and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS No. 160 also establishes reporting requirements that
provide sufficient disclosures that clearly identify and distinguish between the interests
of the parent and the interests of the noncontrolling owners. This standard is effective
for fiscal years beginning after December 15, 2008. The impact of this standard cannot be
determined until the transactions occur.

56

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# Note 3  Acquisition

On March 9, 2007, the Company entered
into a Share Transfer Agreement (the Agreement) to acquire RMB 32 million of
registered and paid-in capital of New Land, representing 100% equity ownership of New
Land. The acquisition was effective on May 31, 2007. The total purchase price for the
acquisition was RMB 270 million, approximately $35.2 million. The total purchase price
included 1) an initial cash payment of RMB 5 million, approximately $0.6 million, payable
within 20 days after the signing of the Agreement, 2) an additional cash payment of RMB 57
million, approximately $7.4 million, within 30 days on receipt of the due diligence report
and 3) a promissory note of the aggregate amount of RMB 208 million, approximately $27.2
million, bearing 10% interest with a maturity of January 30, 2009. As of December 31,
2007, the remaining balance of the above note payable under the Agreement amounted to
$8,717,684 (see note 9).

The Company accounted for the
business combination using the purchase method of accounting pursuant to SFAS No. 141,
Business Combinations. The purchase price was allocated to the identifiable
assets and liabilities assumed based on their estimated fair values.

|                                          | 
|----------------------------------------- | 
|Purchase Price                            | 
|                                          | 
|Value assigned to assets and liabilities: | 
|Assets:                                   | 
|Cash                                      | 
|Other receivables                         | 
|Equipment                                 | 
|Work in progress                          | 
|Prepayment                                | 
|Intangible asset                          | 
|                                          | 
|Liabilities:                              | 
|Accounts payable                          | 
|Other payable                             | 
|Accrued expenses                          | 
|Deferred tax                              | 
|                                          | 
|Total net assets                          | 
|                                          | 

The operations of New Land from June
1 to December 31, 2007 is included in the Companys consolidated financial
statements.

57

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# Note 4 
Supplemental Disclosure of Cash Flow Information

Income taxes paid amounted to
$384,615, $0 and $2,476,096 for the years ended December, 2007, 2006 and 2005,
respectively. Interest paid for the year ended December 31, 2007, 2006 and 2005 amounted
to $1,975,917, $2,147,800 and $170,928, respectively.

Non-cash operating activity included
the transfer of fixed assets as prepayment to one of the Companys contractors at
fair market value for $956,434 in 2007 with a book value of $163,262. In addition, the
revenue of $11,243,231 receivable on the reimbursement of infrastructure from the Baqiao
government will be applied against future purchase of land use rights and is recorded as
deposits on land use rights.

Non-cash financing activities
included the issuance of 60,000 shares of common stock to an investor relations company in
consideration of a one-year consulting service valued at $131,400. In addition, 123,845
warrants were exercised on a non-cash basis resulting in the issuance of 29,377 shares of
common stock.

Non-cash financing activities also
included reclassification of notes receivable from accounts receivable of $947,918 and
paying off $1,691,262 of the loan due to the original shareholders of New Land, using
inventory appraised at fair market value.

# Note 5  Real Estate

The following summarizes the
components of real estate inventories at December 31, 2007 and 2006:

|                                               | 2007 |  | 2006 |           
|---------------------------------------------- | ---- |  | ---- | ----------
|Finished projects                              |      |  | $    | 16,130,130
|Construction in progress                       |      |  |      | 24,856,801
|                                               |      |  |      |           
|Total real estate held for development or sale |      |  | $    | 40,930,819
|                                               |      |  |      |           

# Note 6  Other
Receivables, Prepaid Expenses and Other Assets

Other receivables, prepaid expenses
and other assets consist of the following at December 31, 2007:

|                                    | 2007 |  | 2006 |         
|----------------------------------- | ---- |  | ---- | --------
|Other receivables                   |      |  | $    | 749,890 
|Allowance for bad debts             |      |  |      | (190,372
|Prepaid expenses                    |      |  |      | 63,241  
|                                    |      |  |      |         
|Other receivables, prepaid expenses |      | 
|and other assets                    |      |  | $    | 622,759 
|                                    |      |  |      |         

58

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# Note 7  Property
and Equipment, Net

Property and equipment consist of the
following at December 31, 2007 and 2006:

|                                         | 2007 |  | 2006 |            
|---------------------------------------- | ---- |  | ---- | -----------
|Head office buildings and improvements   |      |  | $    | 1,018,494  
|Income producing properties              |      |  |      | 18,469,840 
|Electronic equipment                     |      |  |      | 195,244    
|Vehicles                                 |      |  |      | 87,740     
|Office furniture                         |      |  |      | 119,960    
|Computer software                        |      |  |      | 48,180     
|                                         |      |  |      |            
|Totals                                   |      |  |      | 19,939,470 
|                                         |      | 
|Accumulated depreciation                 |      |  |      | (1,322,030 
|Net book value of building held for sale |      |  |      | (12,910,428
|                                         |      |  |      |            
|Property and equipment, net              |      |  | $    | 5,707,012  
|                                         |      |  |      |            

# Note 8  Accounts
Receivable

Accounts receivable consist of the
following at December 31, 2007 and 2006:

|                                | 2007 |  | 2006 |           
|------------------------------- | ---- |  | ---- | ----------
|Accounts receivable             |      |  | $    | 12,202,396
|Allowance for doubtful accounts |      |  |      | (94,514   
|                                |      |  |      |           
|Accounts receivable, net        |      |  | $    | 12,107,882
|                                |      |  |      |           

# Note 9  Loans
Payable to New Lands Previous Shareholders

The Company has loans payable to
previous shareholders of New Land that totaled to $11,413,229 at December 31, 2007 (2006
 $0). $8,717,684 of the total relates to the acquisition of New Land (see note 3)
and is due January 2009. The remaining balance pertains to additional loans made by these
shareholders and are due in June 2008. The loans bear interest at 10% per annum.

# Note 10  Loans
from Employees

The Company has borrowed monies from
certain employees to fund the Companys construction projects. The loans bear
interest ranging between 7% and 12% and the principal matures in 2009. At December 31,
2007, loans from employees amounted to $2,388,862 (2006  $1,037,842).

59

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# Note 11  Loans
Payable

Loans payable represent amounts due
to various banks and are due on demand or within one year. These loans generally can be
renewed with the banks when they expire. Loans payable at December 31, 2007 and 2006
consisted of the following:

|                                                       | December 31, 2007 |  | December 31, 2006 |           
|------------------------------------------------------ | ----------------- |  | ----------------- | ----------
|Commercial Bank Weilai Branch                          |                   |  |                   |           
|originally due August 7, 2007 and renewed to  August   |                   | 
|29, 2008, annual interest rate is at 11.34 percent,    |                   | 
|secured by the Company's Xin Xing Gangwan, Xin Xing    |                   | 
|Tower and Ming Yuan projects                           |                   |  | $                 | 5,209,333 
|                                                       |                   | 
|Commercial Bank Weilai Branch                          |                   | 
|originally due December 31, 2007 and renewed to        |                   | 
|December 31, 2008, annual interest is at 9.79          |                   | 
|percent, secured by the Company's 24G project          |                   |  |                   | 5,483,508 
|                                                       |                   | 
|Xi'an Rural Credit union Zao Yuan Rd. Branch,          |                   | 
|Due June 14, 2008, annual interest is at 9.527         |                   | 
|percent, secured by the Company's Jun Jing Yuan I,     |                   | 
|Han Yuan project and Xin Xing Tower Projects           |                   |  |                   | 3,427,193 
|                                                       |                   | 
|Shannxi International Trust Investment Co.             |                   | 
|due on demand, annual interest rate was at 10.08       |                   | 
|percent, secured by 14 units of the Company's Xin Xin  |                   | 
|In House and Harbor projects                           |                   |  |                   |          
|                                                       |                   | 
|Shannxi International Trust Investment Co.             |                   | 
|due September 20, 2007, annual interest rate was at    |                   | 
|10.08 percent, secured by 6 commercial units of the    |                   | 
|Company's Jun Jin Yuan projects                        |                   |  |                   |          
|                                                       |                   | 
|Merchant Bank Xi'an High and New Technology            |                   | 
|Development Zone Branch, due June 27, 2007, annual     |                   | 
|interest rate was at 19.20 percent, secured by the     |                   | 
|Company's Jun Jin Yuan project                         |                   |  |                   |          
|                                                       |                   | 
|Construction Bank Zhuque Road Branch,                  |                   | 
|due May 6, 2007, annual interest rate was at 6.21      |                   | 
|percent, secured by the Company's Jun Jin Yuan project |                   |  |                   |          
|                                                       |                   | 
|Construction Bank Zhuque Road Branch,                  |                   | 
|due July 6, 2007, annual interest rate was at 6.91     |                   |  |                   |          
|percent, secured by the Company's Jun Jin Yuan project |                   | 
|                                                       |                   | 
|Various loans on demand,                               |                   | 
|to unrelated parties, at various interest rates        |                   |  |                   |          
|                                                       |                   |  |                   |           
|Total                                                  |                   |  | $                 | 14,120,034
|                                                       |                   |  |                   |           

60

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# Note 11  Loans
Payable  continued

All loans were borrowed for
construction projects. All interest paid was capitalized and allocated to various
construction projects.

# Note 12  Accrued
Expenses

|                 | 2007 |  | 2006 |          
|---------------- | ---- |  | ---- | ---------
|Accrued expenses |      |  | $    | 362,854  
|Accrued interest |      |  |      | 1,540,597
|                 |      |  |      |          
|Total            |      |  | $    | 1,903,451
|                 |      |  |      |          

# Note 13 
Shareholders Equity

Common stock

On June 28, 2006, the Company entered
into securities purchase agreements with accredited investors and completed the issue of
$1,075,000 of the Companys common stock and common stock purchase warrants. The
securities sold were an aggregate of 330,769 shares of common stock and 99,231 warrants.
Each warrant is exercisable for three years with an initial exercise price of $3.60 per
share. The exercise price was amended to $3.31 per share during 2007. Pursuant to the
terms of the warrants, each investor has contractually agreed to restrict its ability to
exercise the warrants to an amount which would not exceed the difference between the
number of shares of common stock beneficially owned by the holder or issuable upon
exercise of the warrant held by such holder and 9.9% of the outstanding shares of common
stock of the Company. New York Global Securities, Inc. acted as the placement agent of the
transaction. The fair value of the warrants at December 31, 2007 was determined to be
$2.52 using the CRR Binomial Lattice Model with the following assumptions: expected life
 1.47 years; expected volatility  75%, risk fee interest rate  3.20% and
dividend rate  0%.

In connection with the offering, the
Company paid a placement fee of 10% of the proceeds in cash, together with other expenses
in the amount of 3% of the proceeds, in cash. In addition, the placement agent was issued
warrants to purchase 66,154 shares of common stock on the same terms and conditions as the
investors. The fair value of these warrants was determined to be $118,340 on the date they
were issued. They were exercised during the year.

61

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# Note 13 
Shareholders Equity  continued

Common stock 
continued

Pursuant to securities purchase
agreements with accredited investors dated July 7, 2006, the Company received $124,975 and
issued 38,454 shares of common stock and 11,536 warrants. Each warrant is exercisable for
three years at an initial exercise price of $3.60 per share. The exercise price was
amended to $3.31 per share during 2007. The fair value of the warrants at December 31,
2007 was determined to be $2.53 using the CRR Binomial Lattice Model with the following
assumptions: expected life  1.49 years; expected volatility  75%, risk fee
interest rate  3.20% and dividend rate  0%.

In connection with the offering, the
Company paid a placement fee of 10% of the proceeds in cash, together with other expenses
in the amount of 3% of the proceeds, in cash. In addition, the placement agent was issued
warrants to purchase 7,691 shares of common stock on the same terms and conditions as the
investors. The fair value of these warrants was determined to be $13,727 on the date they
were issued. They were exercised during the year.

Pursuant to securities purchase
agreements with accredited investors dated August 21, 2006, the Company received $812,500
and issued 75,000 shares of common stock and 198,845 warrants. Each warrant is exercisable
for three years at $3.60 per share. The fair value of the warrants at December 31, 2007
was determined to be $2.59 per warrant using the CRR Binomial Lattice Model with the
following assumptions: expected life  1.62 years; expected volatility  75%,
risk fee interest rate  3.20% and dividend rate  0%.

In connection with the offering, the
Company paid a placement fee of 10% of the proceeds in cash, together with other expenses
in the amount of 3% of the proceeds, in cash. In addition, the placement agent was issued
warrants to purchase 50,000 shares of common stock on the same terms and conditions as the
investors. The fair value of these warrants was determined to be $94,646 on the date they
were issued. They were exercised during the year.

The Company filed the registration
statement registering the resale of shares of the Companys common stock and those
issuable upon exercise of the warrants on August 21, 2006 and the registration statement
was effective on September 14, 2006.

On January 15, 2007, the Company
issued 60,000 shares of common stock to an investor relations company in consideration for
one year of consulting service through December 31, 2007. The 60,000 shares of common
stock have been recorded at $2.19 per share or $131,400 based on the trading price of the
shares at January 12, 2007. This amount was included in prepaid expenses and is being
amortized over the service period.

62

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# Note 13 
Shareholders Equity  continued

Common stock 
continued

Pursuant to securities purchase
agreements with accredited investors dated May 7, 2007, the Company received $25,006,978
and issued 9,261,847 shares of common stock and 2,778,554 warrants. Each warrant is
exercisable for five years at $4.50 per share. In connection with the offering, the
Company paid a 7% placement fee and $173,689 in legal fees. The fair value of the warrants
at December 31, 2007 was determined to be $0.76 per warrant using the CRR Binomial Lattice
Model with the following assumptions: expected life  4.34 years; expected volatility
 75%, risk fee interest rate  3.35% and dividend rate  0%.

According to Section 4.8, Anti-Dilute
of the Share Purchase Agreements dated June 28, 2006, July 7, 2006 and August 21, 2006,
the Company issued 126,138 shares of common stock and 27,364 warrants; additionally, the
Company reduced the exercise price of all related warrants from $3.60 to $3.31. The fair
value of the warrants at December 31, 2007 was determined to be $2.55 per warrant using
the CRR Binomial Lattice Model with the following assumptions: expected life  1.53
years; expected volatility  75%, risk fee interest rate  3.20% and dividend
rate  0%.

Pursuant to EITF 00-19,
Accounting for Derivative Financial Instruments Indexed to, and Potentially Settle
in, a Companys Own Stock, the warrants contain a provision permitting the
holder to demand payment based on a Black Scholes valuation in certain circumstances.
Therefore, under EITF 00-19 and SFAS No. 133, the Company recorded the warrants as a
liability at their fair value on the date of grant and then marked them to $2,631,991 at
December 31, 2007. The change in fair value of warrants totaled $632,296 (2006  $0
and 2005  $0).

The Company filed the registration
statement registering the resale of shares of the Companys common stock on June 22,
2007 and the registration statement was effective on July 5, 2007.

123,845 warrants having an exercise
price of $3.31 were exercised in July 2007 on a non-cash, basis resulting in the issuance
of 29,377 shares of common stock.

45,302 warrants having an exercise
price of $4.50 were exercised in July 2007 on a cash basis, resulting in the issuance of
45,302 shares of common stock.

63

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# Note 13 
Shareholders Equity  continued

Warrants

Following is a summary of the warrant
activity:

|                  | Warrants Outstanding |  | Warrants Exercisable |           | Weighted Average
Exercise Price | 
|----------------- | -------------------- |  | -------------------- | --------- | ------------------------------- | 
|December 31, 2005 |                      |  |                      |          |                                 | 
|Granted           |                      |  |                      | 309,612   |                                 | 
|                  |                      |  |                      |           |                                 | 
|December 31, 2006 |                      |  |                      | 309,612   |                                 | 
|Granted           |                      |  |                      | 2,805,918 |                                 | 
|Exercised         |                      |  |                      | 169,147   |                                 | 
|                  |                      |  |                      |           |                                 | 
|December 31, 2007 |                      |  |                      | 2,946,383 |                                 | 
|                  |                      |  |                      |           |                                 | 
|                  |                      |  |                     

Following is a summary of the status
of warrants outstanding at December 31,  2007:

|Outstanding Warrants |           | Exercisable Warrants
|-------------------- | --------- | --------------------
|
|                     |           |                     
|$3.31                | 213,131   | 1.53 years          
|$4.50                | 2,733,252 | 4.34 years          

# Note 14  Statutory
Reserves

In accordance with the laws and
regulations of the PRC, a wholly-owned Foreign Invested Enterprises income, after
the payment of the PRC income taxes, shall be allocated to the statutory surplus reserves.
The proportion of allocation for reserve funds is no less than 10 percent of the profit
after tax until the accumulated amount of allocation for statutory surplus reserve funds
reaches 50 percent of the registered capital. Statutory reserves represent restricted
retained earnings.

64

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# Note 14  Statutory
Reserves  continued

Statutory surplus reserves are to be
utilized to offset prior years losses, or to increase its share capital. When a
limited liability company converts its surplus reserves to capital in accordance with a
shareholders resolution, the Company will either distribute new shares in proportion
to the number of shares held by each shareholder, or increase the par value of each share.
Except for the reduction of losses incurred, any other usage should not result in this
reserve balance falling below 25% of the registered capital. Registered capital at
December 31, 2007 is approximately $23.6 million (2006  $5.8 million)

Pursuant to the board of
directors resolution, XTHDC transferred 10% of its net income, as determined in
accordance with the PRC accounting rules and regulations, to a statutory surplus reserve
fund until such reserve balance reaches 50% of the Companys registered capital.

The transfer to this reserve must be
made before distributions of any dividends to shareholders. For the year ended December
31, 2007, the Company appropriated $735,141 (2006  $915,960 and 2005 
$710,640) to this surplus reserve.

# Note 15  Employee
Welfare Plan

Regulations in the PRC require the
Company to contribute to a defined contribution retirement plan for all permanent
employees. The Company established a retirement pension insurance, unemployment insurance,
health insurance and house accumulation fund for the employees during the term they are
employed. For the year ended December 31, 2007, the Company made contributions in the
amount of $51,781 (2006  $13,922 and 2005  $32,571).

# Note 16  Earnings
Per Share

Earnings per share for years ended
December 31, 2007 and 2006 were determined by dividing net income for the years by the
weighted average number of both basic and diluted shares of common stock and common stock
equivalents outstanding.

|                                        | 2007 |  | 2006 |            | 2005 |  
|--------------------------------------- | ---- |  | ---- | ---------- | ---- | -
|Net income for basic earnings per share |      |  |      |            |      |  
|- basic and diluted                     |      |  | $    | 16,686,115 |      | $
|                                        |      | 
|Weighted average shares outstanding     |      | 
|- basic and diluted                     |      |  |      | 26,871,388 |      |  
|                                        |      | 
|Earnings per share                      |      | 
|- basic and diluted                     |      |  | $    | 0.62       |      | $

65

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# Note 16  Earnings
Per Share  continued

The outstanding warrants have an
anti-dilutive effect on the earnings per share and are therefore excluded from the
determination of diluted earnings per share calculation.

# Notes 17  Other
Income

The Company rents certain portions of
its residential and commercial units to individuals and businesses for 1 year terms,
renewed annually.

Rental income and other income and
expenses for the year ended December 31 consisted of the following:

|                                               | 2007 |  | 2006 |         | 2005 |  
|---------------------------------------------- | ---- |  | ---- | ------- | ---- | -
|Interest income                                |      |  | $    | 42,380  |      | $
|Other non-operating income                     |      |  |      | 89,439  |      |  
|Rental income                                  |      |  |      | 153,359 |      |  
|Gain on disposal of fixed assets and inventory |      |  |      | 48,347  |      |  
|                                               |      |  |      |         |      |  
|Total                                          |      |  | $    | 333,525 |      | $
|                                               |      |  |      |         |      |  

# Note 18  Segmented
Information

The Company has one operating
segment, being the real-estate sales and development. All revenue is from customers in PRC
and all of the Companys assets are located in PRC.

# Note 19 
Commitments and Contingencies

The Company leases part of its office
space under long-term, non-cancelable operating lease agreements. The leases expire on
December 31, 2008. The future minimum rental payments required under the operating lease
agreements are $71,816.

Rental expense for 2007, 2006 and
2005 amounted to $79,528, $70,178 and $64,017, respectively.

As of December 31, 2007, the Company
had one land use right with an unpaid balance of approximately $2.4 million. The balance
is not due until the vendor removes the existing building on the land and changes the
zoning status on the land use right certificate.

66

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# Note 20 
Subsequent Events

On January 28, 2008, the company
raised $20 million through the issuance of senior secured convertible notes to
institutional investors. As part of the private placement, the company issued five-year
senior secured convertible notes with an aggregate principal amount of $20 million that
pay cash interest of 5 percent per annum. $9 million of the notes are convertible into
common stock and carry an initial conversion price of $5.57 per share, which can be
increased if certain stock price thresholds are met. Additionally, forced conversion can
also occur at the Companys discretion if certain stock price thresholds are met. The
notes are secured by certain real estate assets and additionally through a pledge of
common shares owned by Mr. Pingji Lu, the Companys Chairman and Chief Executive
Officer. Additionally, investors in the private placement were granted 1,437,467 five-year
warrants with a strike price of $6.07 per common share, which are callable if certain
stock price thresholds are met. Approximately 215,620 warrants are also available as a
management incentive if certain milestones are met.

67

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ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective December 10, 2007, Moore
Stephens Wurth Frazer and Torbet, LLP (MSWFT) resigned as
the independent certified public accounting firm for China Housing &
Land Development, Inc. (the Company).  MSWFTs resignation letter was dated
December 10, 2007.

The audit reports of MSWFT on the
consolidated financial statements of the Company as of and for the year ended December 31,
2006 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting principles.

In
connection with the audour of the Companys consolidated financial statements for
each of the fiscal years ended December 31, 2006 and through December 10, 2007, there
were: (i) no disagreements between the Company and MSWFT on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of MSWFT, would have caused MSWFT
to make reference to the subject matter of the disagreement in their reports on the
Companys financial statements for such years, and (ii) no reportable events within
the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

Effective as of  December 13,
2007 (the Engagement Date), the Company engaged Moore Stephens Cooper Molyneux LLP (New
Auditor) as the Companys new independent registered public accounting
firm. The decision to engage the New Auditor as the Companys
independent registered public accounting firm was approved by the Companys
Board of Directors on December 10, 2007.

During the Companys two most
recent fiscal years ended December 31, 2006 and 2005 and through the date of this current
report, the Company did not consult with the New Auditor on (i) the application of
accounting principles to a specified transaction, either completed or proposed, or the
type of audit opinion that may be rendered on the Companys financial statements, and
the New Auditor did not provide either a written report or oral advice to the Company that
the New Auditor concluded was an important factor considered by the Company in reaching a
decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject
of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related
instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of
Regulation S-K

ITEM 9A. CONTROLS AND
PROCEDURES.

(a)    
          Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the Exchange Act)). Disclosure controls and procedures are the
controls and other procedures that we designed to ensure that we record, process,
summarize and report in a timely manner the information we must disclose in reports that
we file with or submit to the Securities and Exchange Commission under the Exchange Act.
Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of the end of the
period covered by this report.

Disclosure controls and procedures
are controls and procedures that are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Securities Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Securities
and Exchange Commissions rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our principal executive officer and our principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.

(b)    
          Changes in Internal Control over Financial Reporting.

During the year ended December 31,
2007, there was no change in our internal control over financial reporting (as such term
is defined in Rule 13a-15(f)under the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

68

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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.

Executive Officers and
Directors

Below are the names and certain
information regarding our executive officers and directors.

|Name              |  | Age |  | Title | 
|----------------- |  | --- |  | ----- | 
|Mr. Pingji Lu     |  |     |  | 57    | 
|Mr. Xiaohong Feng |  |     |  | 43    | 
|Mr. Genxiang Xiao |  |     |  | 45    | 
|Mr. Edward Meng   |  |     |  | 47    | 
|Mr. Michael Marks |  |     |  | 37    | 
|Mr. Carolina Woo  |  |     |  | 68    | 
|Mr. Gao Suiyi     |  |     |  | 54    | 
|Mr. William Xin   |  |     |  | 41    | 

Officers are elected annually by the
Board of Directors, at the Companys annual meeting, to hold such office until an
officers successor has been duly appointed and qualified, unless an officer sooner
dies, resigns or is removed by the Board.

Background of Executive
Officers and Directors

Lu Pingji, Chairman &
Chief Executive Officer

Mr.
          Lu Pingji, 57, has served as the Chairman of the Board of Directors since
          joining the Company in September 1999. In addition, Mr. Lu was the founder of
          Lanbo Financial Investment Company Group Limited, where he was the Chairman of
          the Board and Chief Executive Officer from our formation in September 2003 until
          its merger with Lanbo Financial Group, Inc., when Mr. Lu served as the
          Chairman of the Board and Chief Executive Officer of Lanbo Financial Group, Inc.
          until December 2005. Prior to that Mr. Lu was the Chairman of the Board and
          Chief Executive Officer of Xian Newstar Real Estate Development Co., Ltd. from
          1998 and previously served as General Manager from 1992. From February 1968 to
          December 1999, Mr. Lu held various positions in the Chinese military, including
          soldier, Director of Barrack Administration, supervisor, and Senior Colonel. Mr.
          Lu is member of the Enterprise Credit Association of Shaanxi Province. Mr. Lu
          graduated from Xian Army College with a major in architectural
          engineering.

Xiao Genxiang, Chief
Administrative Officer & Director

Mr. Xiao Genxiang,
Managing Director & Chief Administrative Officer

Mr.
          Xiao Genxiang, 45, the Chief Administrative Officer of the Company, joined the
          company and became CAO and Board Member in September 1999. In addition, Mr. Xiao
          was a director and Executive Vice President of Lanbo Financial Investment
          Company Group Limited from October 2003 until our merger with Lanbo Financial
          Group, Inc., when Mr. Xiao served as the Executive Vice President, Chief
          Operating Officer and a director of Lanbo Financial Group, Inc. until December
          2005. Prior to that Mr. Xiao was a director and President of Xian Newstar Real
          Estate Development Co., Ltd. from 1999. Mr. Xiao received an M.B.A from
          Xian Jiaotong University in 2001.

Feng Xiaohong, Chief
Operating Officer & Board Member

Mr.
          Feng Xiaohong, 43, has been Chief Operating Officer and a Board Member of the
          Company since joining in January 2003. In addition, Mr. Xiao Feng was a director
          of Lanbo Financial Group, Inc. from November 2004 until December 2005.
          Previously Mr. Feng served as President and a director of Xian Newstar Real
          Estate Development Co., Ltd. from 2003. From June 1996 to December 2002, Mr.
          Feng was general manager and president of Xian Honghua Industry, Inc. He
          is a member of the China Architecture Association, vice-president of Shaanxi
          Province Real Estate Association, and vice director of Xian Decoration
          Association. Mr.Feng received an M.S. of Architecture Science from Xian
          Architecture & Technology University in 1990.

70

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Mr.
          William Xin, Chief Financial Officer

Mr.
          William Xin, 41, has been Chief Financial Officer of the Company since joining
          in January 2008. Mr. Xin has over ten years of experience in finance and
          international executive management operating in a broad range of industries.
          Most recently he was managing partner of Golden Leaf Investment Group, where he
          provided financial consulting, strategic planning, market research and venture
          capital services for multiple Chinese companies. Since 2005, Mr. Xin has served
          as Managing Partner at Golden Leaf Investment Group in New York City where he
          has provided financial consulting, strategic planning, market research and
          venture capital services on a number of projects including a hydropower company,
          a nanotechnology company and two emerging telecommunications companies. From
          2000 through 2005, Mr. Xin was co-founder, chairman and CEO of BChinaB, Inc., a
          vertically-integrated US-based outsourcing company, where he helped companies
          such as Henry Schein, Libbey Inc., Ametek, Inc. Champion Enterprises and Rheem
          Air Conditioners increase profitability by outsourcing their supply chains to
          China. Mr. Xin has been featured in the Wall Street Journal and Crains
          magazine as a China business expert and has spoken on many panels regarding
          China. Mr. Xin earned his Bachelors degree and Master of Business
          Administration degree from Yale University in New Haven, Connecticut

Ms.
          Carolina Woo, Independent Director

Ms.
          Carolina Woo, 68, is currently the owner of CW Group, a consulting firm focused
          in real estate development, planning and design. Ms. Woo is also a member of the
          Board of Trustees of the Rhode Island School of Design. Previously, Ms. Woo
          worked at Skidmore, Owings & Merrill LLP (SOM) beginning in 1969, and
          retired as a partner of the international architecture-engineering office of SOM
          where she served as the President of SOM International Ltd. with overall
          responsibility for SOMs work in China, Hong Kong, Taiwan, and the
          Asia-Pacific region. Ms. Woo received her Masters Degree from
          Columbia University Graduate School of Business and her Bachelors Degree
          in Architecture from the Road Island School of Design.

Mr.
          Michael Marks, Independent Director

Mr.
          Michael Marks, 37, is currently a managing director and principal of Sonnenblick
          Goldman Asia Pacific Limited, a firm that provides advisory services in real
          estate investments. Mr. Marks is also the President and Director of Middle
          Kingdom Alliance Corp., a special purpose acquisition corporation listed on
          Over-the-Counter Bulletin Board. Previously, Mr. Marks served as a director of
          Horwath Asia Pacific from January 2002 to December 2005 and was the Chief
          Executive Officer and Director at B2Gglobe (Pty) Limited from May 2001 to
          December 2002. Mr. Marks received both Bachelors and Masters Degrees
          in Commerce from the University of the Witwatersrand in Johannesburg, South
          Africa in 1994 and 1997, respectively, and also received a Bachelors
          Degree in Psychology from the University of South Africa in 1998. In 1997, Mr.
          Marks qualified as a Chartered Accountant in South Africa, and in 1999 as a
          Fellow of the Association of International Accountants in the United Kingdom.

Mr.
          Suiyin Gao, Independent Director

Mr.
          Suiyin Gao, 54, has over 30 years experience in human resource and management
          consultant area. Mr. Gao is currently the head of the Shaanxi Senior Talent
          Office, which is affiliated with Shaanxi Provincial government and focused on
          corporation management, consultation and human resources services. Mr. Gao is
          the founder and chairman of Shanxi management Member Club, one of the largest
          manager clubs in Shanxi province. Mr. Gao is currently an independent director
          of six enterprises, and also acted as senior consultant for more than twenty
          enterprises. Previously, Mr. Gao worked)government since 1973. In 1998, Mr. Gao
          received his degree in Master of Business Administration from Northwest
          University in China.

Mr.
          Edward Meng, Independent Director

Mr.
          Edward Meng, 47, has more than 10 years of experience managing, leading and
          advising corporations through complex restructurings, international market
          expansion and capital markets transactions. Mr. Meng is currently the Chief
          Financial Officer and director of Navstar Media Holdings, Inc, a U.S. public
          company specializing in TV content productions and advertisement. Prior to
          Navstar, Mr. Meng held executive finance positions with Shell (China) Limited
          and Koch Materials (China) Co., a subsidiary of Koch Industries, Inc. Mr. Meng
          received his degree in Master of Business Administration from Georgetown
          University and Bachelors Degree from Sichuan International Studies
          University in China Mr. Meng is also a Certified Public Accountant.

71

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SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), requires our executive officers,
directors and persons who own more than 10 percent of our common stock to file initial
reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Such
executive officers, directors and over 10 percent stockholders are also required by SEC
rules to furnish us with copies of all such forms they file.

Based solely on our review of the
copies of such forms we have received, or written representations from certain reporting
persons, we believe that, during the year ended December 31, 2005, all executive officers,
directors and over 10 percent stockholders filed on a timely basis all reports required to
be filed by them under Section 16(a) with respect to our common stock, .

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth all
compensation paid in respect of our Chief Executive Officer and those individuals who
received compensation in excess of $100,000 per year (collectively, the Named Executive
Officers) for our last two completed fiscal years.

72

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# SUMMARY COMPENSATION
TABLE

|Name and Principal
Position                                          |  | Year |      | Salary ($) |  | Bonus
($) |        | Stock
Awards
($) |     | Option
Awards
($) |  | Non-Equity
Incentive
Plan
Compen-
sation
($) |  | Nonqualified
Deferred
Compen-
sation
Earnings
($) |     | All Other
 Other    
Compen-   
sation    
  ($) |  | Total
|-------------------------------------------------------------------- |  | ---- | ---- | ---------- |  | --------- | ------ | ---------------- | --- | ----------------- |  | -------------------------------------------- |  | ------------------------------------------------- | --- | ------------------------------------------------ |  | -----
|Lu Pingji                                                            |  |      | 2007 |            |  | $         | 20,108 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Chairman & CEO                                                       |  |      | 2006 |            |  | $         | 17,136 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Xiao Genxiang                                                        |  |      | 2007 |            |  | $         | 12,411 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Chief Administrative                                                 |  |      | 2006 |            |  | $         | 14,051 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Officer and Director                                                 |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Feng Xiaohong                                                        |  |      | 2007 |            |  | $         | 19,624 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Chief Operating Officer &                                            |  |      | 2006 |            |  | $         | 15,596 |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Board Member                                                         |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Wan Yulong                                                           |  |      | 2007 |            |  | $         | 1,853  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Chief Financial OfficerNotes: Working Period (Jan to Feb, 2008)      |  |      | 2006 |            |  | $         | 7,390  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Shi Zhiyong                                                          |  |      | 2007 |            |  | $         | 1,545  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Vice President, Chief Legal Notes: Working Period (Jan to Apr, 2007) |  |      | 2006 |            |  | $         | 8,914  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Counsel and Board Member                                             |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Carolina Woo                                                         |  |      | 2007 |            |  | $         | 3,333  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Independent director of the Board                                    |  |      | 2006 |            |  | $         | N/A    |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Notes:  Working Period (Nov to Dec, 2007)                            |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Edward Meng                                                          |  |      | 2007 |            |  | $         | 5,000  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Independent director of the Board                                    |  |      | 2006 |            |  | $         | N/A    |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Notes:  Working Period (Nov to Dec, 2007)                            |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Michael Marks                                                        |  |      | 2007 |            |  | $         | 2,500  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Independent director of the Board                                    |  |      | 2006 |            |  | $         | N/A    |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Notes:  Working Period (Nov to Dec, 2007)                            |  |     
|                                                                     |  |      |      |            |  |           |        |                  |     |                  
|Gao Suiyin                                                           |  |      | 2007 |            |  | $         | 2,500  |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Independent director of the Board                                    |  |      | 2006 |            |  | $         | N/A    |                  | N/A |                   |  | N/A                                          |  |                                                   | N/A |                                                  |  | N/A  
|Notes:  Working Period (Nov to Dec, 2007)                            |  |     

73

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# SUMMARY COMPENSATION
TABLE

There has been no common stock
authorized for issuance with respect to any equity compensation plan as of the fiscal year
ended December 31, 2007. None of our executive officers received any stock options in the
fiscal year ended December 31, 2007, nor did they exercise any such options in the same
period.

There are no current employment
agreements between any individuals and us.

|Name

(a)                                 |  | Fees Earned

or Paid in
Cash ($)
(b) |     | Stock Awards

($)
(c) |  | Option

Awards
($)
(d) |  | Non-Equity Incentive

Plan Compensation ($)
(e) |     | Nonqualified
Deferred
Compensation
Earnings ($)
(f) |  | All Other

Compensation ($)
(g) |  | Total  
  ($)  (h) |    
|----------------------------------------- |  | ------------------------------------ | --- | --------------------- |  | ---------------------- |  | ----------------------------------------------- | --- | --------------------------------------------------- |  | ------------------------------- |  | ------------------ | ---
|Lu Pingji,                                |  |                                      |     |                       |  |                        |  |                                                 |     |                                                     |  |                                 |  |                    |    
|Chairman & CEO                            |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Xiao Genxiang,                            |  |                                     
|Chief Administrative Officer and Director |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Feng Xiaohong,                            |  |                                     
|Chief Operating Officer & Board Member    |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Shi Zhiyong,                              |  |                                     
|Vice President, Chief Legal               |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|Counsel and Board Member                  |  |                                     
|                                         
|Carolina Woo,                             |  |                                     
|Independent director of the Board         |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Edward Meng,                              |  |                                     
|Independent director of the Board         |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Michael Marks,                            |  |                                     
|Independent director of the Board         |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         
|Gao Suiyin,                               |  |                                     
|Independent director of the Board         |  |                                      | N/A |                       |  | N/A                    |  |                                                 | N/A |                                                     |  | N/A                             |  |                    | N/A
|                                         

74

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ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AN RELATED STOCKHOLDER MATTERS.

The following table sets forth certain
information, as of December 31, 2007, with respect to the beneficial ownership of the
outstanding common stock by (i) any holder of more than five (5 percent) percent; (ii)
each of the Companys executive officers and directors; and (iii) the Companys
directors and executive officers as a group. Except as otherwise indicated, each of the
stockholders listed below has sole voting and investment power over the shares
beneficially owned.

|Name of Beneficial Owner (1)                      |  | Title |                                        | Comon StockBeneficially Owned(2) |  | Percentage of Common  Owned(3) |          
|------------------------------------------------- |  | ----- | -------------------------------------- | -------------------------------- |  | ------------------------------ | ---------
|Mr. Lu Pingji                                     |  |       | Chairman & CEO Significant shareholder |                                  |  |                                | 3,539,500
|                                                  |  |       |                                        |                                 
|Mr. Feng Xiaohong                                 |  |       | Director  & COO                        |                                  |  |                                | 600,000  
|                                                  |  |       |                                        |                                 
|Mr.Xiao Genxiang                                  |  |       | Director  & CAO                        |                                  |  |                                | 465,000  
|                                                  |  |       |                                        |                                 
|Mr William Xin                                    |  |       | CFO                                    |                                  |  |                                | 0        
|                                                  |  |       |                                        |                                 
|Mr. Edward Meng                                   |  |       | Independent Director                   |                                  |  |                                | 0        
|                                                  |  |       |                                        |                                 
|Mr. Michael Marks                                 |  |       | Independent Director                   |                                  |  |                                | 0        
|                                                  |  |       |                                        |                                 
|Mr. Carolina Woo                                  |  |       | Independent Director                   |                                  |  |                                | 0        
|                                                  |  |       |                                        |                                 
|Mr. Gao Suiyi                                     |  |       | Independent Director                   |                                  |  |                                | 0        
|                                                  |  |       |                                        |                                 
|All officers and directors as a group (8 persons) |  |       |                                        |                                  |  |                                | 4,604,500
|                                                  |  |       |                                        |                                 

(1)    
          Except as otherwise indicated, the address of each beneficial owner is c/o Xian
          Tsining Housing Development CO., Ltd., 6 Youyi Dong Lu, Han Yuan 4 Lou,
          XiAn, Shaanxi Province, China 710054.

(2)    
          Applicable percentage ownership is based on 30,141,887 shares of common stock
          outstanding as of February 28, 2008, together with securities exercisable or
          convertible into shares of common stock within 60 days of June 22, 2007 for each
          stockholder. Beneficial ownership is determined in accordance with the rules of
          the Securities and Exchange Commission and generally includes voting or
          investment power with respect to securities. Shares of common stock that are
          currently exercisable or exercisable within 60 days of June 22, 2007 are deemed
          to be beneficially owned by the person holding such securities for the purpose
          of computing the percentage of ownership of such person, but are not treated as
          outstanding for the purpose of computing the percentage ownership of any other
          person.

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We have four directors that are
independent under the independence standards of S-K Item 407(a)(1). They are: Mr. Edward
Meng, Mr. Michael Marks, Ms. Carolina Woo and Mr. Gao Suiyi.

75

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ITEM 14. PRINCIPAL ACCOUNTING FEES
AND SERVICES

During fiscal 2007 and the first
quarter of fiscal 2008 our principal independent auditor was MSCM, LLP. MSCM, LLP
performed the audour for the year ended 2008. Moore Stephens Wurth Frazer and Torbet, LLP
reviewed for the 9 months ended September 30, 2007 and reported on the the companys
financial statements for the year ended December 31, 2006. Kabani reported on the
Companys operating subsidiary Xian Tsining Housing Development Co.,
Ltd.s financial statements for the years ended December 31, 2005 and 2004. Kabani
also reviewed the Registrants financial statements for the three months ended March
31, 2006, the three and six months ended June 30, 2006 and June 30, 2005, and for the
three and nine months ended September 30, 2006 and September 30, 2005.

The audit of our annual financial
statement for this 10-K for the period ended December 31, 2007, respectively, were
performed by our current principal independent auditor MSCM, LLP. The following are the
services provided and the amount billed:

|(a) | AUDIT
FEES
|--- | ----------

The aggregate fees billed or to be
billed for professional services rendered by our principal accountants for the audit of
our annual financial statements for the ended December 31, 2007 was $160,000 and for the
ended December 31, 2006 were $100,000. The reviews for the financial statements included
in our quarterly reports on Form 10-QSB during the fiscal years ended December 31, 2006
and December 31, 2005 were $75,000 and $27,500, respectively, per year.

|(b) | AUDIT-RELATED
FEES
|--- | ------------------

We incurred $2,900 fees for the
fiscal years ended December 31, 2007 and none for 2006 for assurance and related services
by our principal accountant that were reasonably related to the performance of the audit
or review of our financial statements, and not reported under Audit fees above.

|(c) | TAX
FEES
|--- | --------

The aggregate fees billed for
professional services rendered by our principal accountant for tax compliance, tax advice,
preparation and filing of tax returns and tax planning for the fiscal years ended December
31, 2007 and 2006 were $ NIL.

|(d) | ALL
OTHER FEES
|--- | --------------

There were no fees billed in either
of the last fiscal years for products and services provided by the principal accountant,
other than the services reported above.

Our audit committee consists of three
independent directors.

76

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ITEM 15. EXHIBITS AND
REPORTS ON FORM 10-K.

|EXHIBIT NO. | DESCRIPTION OF EXHIBIT
|----------- | ----------------------

|3.1 | Articles
of Incorporation (incorporated by reference to the exhibits           to Registrants Form
SB-2 filed on October 27, 2004)
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|3.2 | Registrant's
By-Laws (incorporated by reference to the exhibits to           Registrants Form SB-2
filed on October 27, 2004)
|--- | -----------------------------------------------------------------------------------------------------------------------------

|10.1 | Securities
Purchase Agreement (incorporated by           reference to the exhibits to Registrant's
Form 8-K filed on January 30, 2007).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Form
of Convertible Note (incorporated by           reference to the exhibits to Registrant's
Form 8-K filed on January 30, 2007).
|---- | ----------------------------------------------------------------------------------------------------------------------------------

|10.3 | Form
of Warrant (incorporated by           reference to the exhibits to Registrant's Form 8-K
filed on January 30, 2007).
|---- | -------------------------------------------------------------------------------------------------------------------------

|10.4 | Form
of Pledge Agreement (incorporated by           reference to the exhibits to Registrant's
Form 8-K filed on January 30, 2007).
|---- | ----------------------------------------------------------------------------------------------------------------------------------

|10.5 | Form
of Registration Rights Agreement (incorporated by           reference to the exhibits to
Registrant's Form 8-K filed on January 30, 2007).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------

|21.1 | List
of subsidiaries.*
|---- | ----------------------

|23.1 | Consent
of Kabani & Company, Inc.
|---- | ---------------------------------

|23.2 | Consent
of Moore Stephens Wurth Frazer and Torbet, LLP.
|---- | -------------------------------------------------------

|23.3 | Consent
of MSCM LLP
|---- | -------------------

|31.1 | Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.*
|---- | --------------------------------------------------------------------------------------------

|31.2 | Certification
of Principal Financial and Accounting Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act.*
|---- | ---------------------------------------------------------------------------------------------------------------

|32.1 | Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.*
|---- | --------------------------------------------------------------------------------------------

|32.2 | Certification
of Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.*
|---- | ---------------------------------------------------------------------------------------------

* Filed herewith

77

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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 our behalf by the undersigned,
thereunto duly authorized.

|                                                                |                                                                                                                                                                                                                                              
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|March 28, 2008 
               
               
March  28, 2008 | CHINA HOUSING AND LAND DEVELOPMENT, INC.
By: /s/ Lu Pingji
    Name: Lu Pingji
    Title: Chief Executive Officer
By: /s/ William Xin    Name: William Xin
    Title: Chief Financial Officer
   (Principal Financial and Accounting Officer)

Pursuant to the requirements of the
Securities Act of 1933, this Form 10-K has been signed by the following persons in the
capacities and on the dates indicated.

|SIGNATURE                                                                                                                                                                                                                                                                                                           | TITLE                                                                                                                                                                                                                                                                                                                                                                                                                                                          | DATE                                                                                                         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------
|
|/s/ Lu Pingji
Lu Pingji
                      /s/ Feng Xiaohong
Feng Xiaohong
                      /s/ Xiao Genxiang
Xiao Genxiang/s/ Mr William Xin
Mr William Xin /s/ Mr. Edward Meng
Mr. Edward Meng/s/ Mr. Michael Marks
Mr. Michael Marks/s/ Mr. Carolina Woo
Mr. Carolina Woo/s/ Mr. Gao Suiyi
Mr. Gao Suiyi | Chairman of the Board & Chief Executive Officer
                                                
Chief Operating Officer and  Director
                                                
Chief Administrative Officer and Director
                                                
CFO
Independent Director                            
Independent Director                            
Independent Director                            
Independent Director | March 28, 2008
March  28, 2008
March 28, 2008
March  28, 2008
March   28, 2008
March 28, 2008
March  28, 2008

78

---