**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-KSB**




**x** **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**




**For
      the fiscal year ended December 31, 2007**




**oTRANSITION
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES**




**EXCHANGE
      ACT OF 1934**




**For
      the transition period from _________ to _________**




**COMMISSION
      FILE NO. 000-52020**





**CLIFFORD
      CHINA ESTATES INC.**


(Formerly
      Elite Artz, Inc.)




**(Name
      of Small Business Issuer in Its Charter)**




NEVADA
            
            331013808(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)




**7/F,
      CHAI WAN INDUSTRIAL CITY, PHASE 2, 70 WING TAI ROAD, CHAI WAN, HONG
      KONG**


**(Address
      of principal executive offices) (Zip Code)**





**Issuer’s
      telephone number:** **(+852)
      2889-0183**




**Securities
      Registered Under Section 12(b) of the Exchange Act:**  **None.**




**Securities
      Registered Under Section 12(g) of the Exchange Act:**  **Common
      Stock, par value $0.001**




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports); and (2) has been subject
      to such filing requirements for the past 90 days.   Yes
x No
o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will 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-KSB or any
      amendment to this Form 10-KSB. o




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




The
      issuer’s revenues for the fiscal year ended December 31, 2007 were $0.




The
      aggregate market value of the registrant’s common stock held by non-affiliates
      as of March 17, 2008 was $12,237,600.




As
      of
      March 31, 2008, the registrant had 50,000,000 shares of common stock ($0.001
      par
      value) issued and outstanding.




Documents
      incorporated by reference: None.





Transitional
      Small Business Disclosure Format (check one):  Yes o No
x








**TABLE
      OF CONTENTS**





**Page****PART
                I**Item
                1.
            
            Description
                of Business
            
            3Item
                1A.
            
            Risk
                Factors
            
            10Item
                2.
            
            Description
                of Property
            
            17Item
                3.
            
            Legal
                Proceedings
            
            18Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            18**PART
                II**Item
                5.
            
            Market
                for Common Equity and Related Stockholder Matters and Small Business
                Issuer Purchases of Equity Securities
            
            19Item
                6.
            
            Management’s
                Discussion and Analysis or Plan of Operation
            
            20Item
                7.
            
            Financial
                Statements
            
            23Item
                8.
            
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            42Item
                8A(T).
            
            Controls
                and Procedures
            
            42Item
                8B.
            
            Other
                Information
            
            44**PART
                III**Item
                9.
            
            Directors
                and Executive Officers, Promoters, Control Persons and Corporate
                Governance; Compliance with Section 16(a) of the Exchange
                Act
            
            45Item
                10.
            
            Executive
                Compensation
            
            47Item
                11.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            47Item
                12.
            
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            49Item
                13.
            
            Exhibits
            
            50Item
                14.
            
            Principal
                Accountant Fees and Services
            
            50










**Forward-Looking
      Statements**




In
      this
      annual report, references to “Clifford China,” “the Company,” “CLCE,” “we,”
“us,” and “our” refer to Clifford China Estates Inc.




This
      annual report contains certain forward-looking statements within the meaning
      of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. These include statements about
      our
      expectations, beliefs, intentions or strategies for the future, which are
      indicated by words or phrases such as “anticipate,” “expect,” “intend,” “plan,”
“will,” “we believe,” “our company believes,” “management believes” and similar
      language. These forward-looking statements are based on our current expectations
      and are subject to certain risks, uncertainties and assumptions, including
      those
      set forth in the discussion under Item 1. “Description of Business” and Item 6.
“Management’s Discussion and Analysis,” including under the heading “Risk
      Factors” under Item 1A. The actual results may differ materially from results
      anticipated in these forward-looking statements. These forward-looking
      statements are based on information currently available to us, and we assume
      no
      obligation to update them. In addition, our historical financial performance
      is
      not necessarily indicative of the results that may be expected in the future
      and
      we believe that such comparisons cannot be relied upon as indicators of future
      performance.




Certain
      financial information included in this annual report has been derived from
      data
      originally prepared in Renminbi (RMB), the currency of the People’s Republic of
      China (“China” or “PRC”) and Hong Kong Dollar (HKD). For purposes of this annual
      report, a conversion rate of US$1.00 to RMB 7.603 and US$ 1.00 to HKD 7.800
      were
      used. There is no assurance that RMB and HKD amounts could have been or could
      be
      converted into US dollars at such rate.




2




**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





HISTORY
      AND RECENT DEVELOPMENTS





Clifford
      China Estates Inc. was originally incorporated under the laws of the State
      of
      Delaware on July 15, 2002 under the name “North American Marketing Corporation”
with authorized capitalization of 50,000,000 shares of common stock with $0.001
      par value. We were originally engaged in the direct marketing of fine quality
      original oil paintings and frame and matted prints by well-known artists as
      well
      as specialty collections to hospitals, corporations, colleges and private
      individuals. On March 25, 2004, we changed our domicile to the State of Nevada
      and changed our name to “Elite Artz, Inc.” (“Elite”) with the addition of
      authorized capitalization of 20,000,000 shares of preferred stock with $0.001
      par value.





On
      February 16, 2007, Elite entered into a Share Exchange Agreement (the “Wishtop
      Grace Agreement”) with Wishtop Group Limited (“Wishtop”), Grace Well Holdings
      Limited (“Grace”), Cheung Kai, the shareholder of Wishtop and Feng Di, the
      shareholder of Grace. The transaction was closed on April 4, 2007 and Elite
      acquired a 100% ownership interest in Wishtop and a 100% ownership interest
      in
      Grace for a consideration of 93,881,200 shares of common stock. As a result
      of
      the transaction, a change of control was effected. Subsequently on June 15,
      2007, Elite, Wishtop, Grace, Cheung Kai and Feng Di, entered into a Rescission
      Agreement and agreed to rescind the Wishtop Grace Agreement. As a result of
      the
      rescission, all issued shares were returned to Elite and all ownership of
      Wishtop and Grace was transferred to the original shareholders.





On
      June
      29, 2007, Elite entered into and completed a Share Exchange Agreement (the
      “Wishtop Agreement”) with Wishtop and Cheung Kai. As a result, Elite acquired a
      100% ownership interest in Wishtop for a consideration of 34,673,200 shares
      of
      common stock. As a result of the transaction, a change of control was effected.
      Subsequently on August 7, 2007, Elite, Wishtop and Cheung Kai entered into
      a
      Rescission Agreement and agreed to rescind the Wishtop Agreement. As a result
      of
      the rescission, all issued shares were returned to Elite and all ownership
      of
      Wishtop was transferred to the original shareholder.




3





On
      October 1, 2007, we entered into and completed an Agreement for Share Exchange
      (the “Clifford Agreement”) with Parkade International Limited, a British Virgin
      Islands holding company (“Parkade”), and Clifford Manufacturing Co. Ltd., the
      sole shareholder of Parkade (“Clifford Manufacturing”). Parkade, through its
      wholly-owned subsidiary Guangzhou City Clifford Development (Panyu) Company
      Limited, a company registered under the laws of the PRC (“Guangzhou City
      Panyu”), owns land use rights on certain real property located at Shawan, Panyu
      which totals approximately 800,000 square feet located in a real estate project
      known as “Clifford Garden” (“Clifford Garden”). At completion, Clifford Garden
      will consist of 24 blocks of high-rise residential buildings with a total
      saleable area of approximately 1,500,000 square feet. Guangzhou City Clifford
      Development (Panyu) Company Limited has been engaged in the preparation of
      the
      development of Clifford Garden since August 2004. Between August 2004 to
      September 2006, Guangzhou City Panyu was primarily focusing on the overall
      design and construction planning. Land formation was completed in May 2007
      and
      construction started in July, 2007. It is estimated that construction will
      be
      completed by October 2008.





Pursuant
      to the terms of the Clifford Agreement, we acquired a 100% ownership interest
      in
      Parkade from Clifford Manufacturing for a total consideration of 43,881,200
      shares of our Common Stock, par value $.001 per share (“Common Stock”) and
      5,000,000 share of Series A Convertible Preferred Stock, par value $.001 per
      share (“Series A Preferred Stock”). Immediately following completion of the
      share exchange, we had a total of 50,000,000 shares of Common Stock issued
      and
      outstanding and 5,000,000 shares of Series A Preferred Stock issued and
      outstanding. Each share of Series A Preferred Stock is initially convertible
      into ten (10) shares of Common Stock at the option of the holder thereof,
      subject to the availability of the common stock, at any time and from time
      to
      time after the original issue date. As a result of the Parkade acquisition,
      we
      are now primarily engaged in the business of real estate development, including
      the development and sale of Clifford Garden.





On
      January 28, 2008, we formed a corporation under the laws of the State of Nevada
      with the name “Clifford China Estates Inc.” (“Merger Sub”) and on January 29,
      2008, we acquired one thousand shares of Merger Sub’s common stock for cash. As
      such, Merger Sub became our wholly-owned subsidiary.




On
      January 31, 2008, Merger Sub was merged with and into us. As a result of the
      merger, our name was changed to “Clifford China Estates Inc.” Prior to the
      merger, Merger Sub had no liabilities and nominal assets and, as a result of
      the
      merger, the separate existence of Merger Sub then ceased. Clifford China Estates
      Inc. was the surviving corporation in the merger and, except for the name change
      provided for in the Agreement and Plan of Merger, there was no change in our
      directors, officers, capital structure or the business.




BUSINESS
      OVERVIEW





*Principal
      products and their markets*





Our
      major
      business is residential community and estate development in the PRC. We mainly
      develop middle to high-end residential communities and estates composed of
      a mix
      of housing units such as villas and apartments in high-rise residential
      buildings on land on which we have acquired land use rights. We acquire land
      from the Chinese government through auction or direct negotiation. In addition
      to residential units, we also develop commercial areas for shops, car-parks
      and
      recreational and community facilities in our projects.





Our
      targeted customers are mainly individuals from the region where our projects
      are
      located, individuals from Hong Kong and foreign companies having offices in
      such
      region. These customers usually purchase our residential units as
      accommodations, vacation homes, investments or housing for
      employees.





*Distribution
      methods of products*





We
      have a
      dedicated sales team of 9 people as of March 17, 2008. The number of employees
      in the sales team will be subject to change as we approach the sales date of
      Clifford Garden. Our sales personnel are familiar with our property
      projects and relevant government regulations, overall market situation and
      local
      property market. Depending on specific projects, we may utilize different
      marketing approaches, including TV and radio commercials, newspaper
      advertisements, outdoor billboards and direct marketing to specific segments
      of
      the population. We not only have marketing campaigns locally in mainland China,
      but also spend resources to market our products in Hong Kong, where many people
      are familiar with the Clifford Group, an affiliate, and its
      products.




4





*Current
      project*





We
      are
      currently developing one property project named “Clifford Garden.” Clifford
      Garden consists of 24 blocks of high-rise residential buildings located at
      Shawan Town, Panyu District of Guangzhou City, Guangdong Province, PRC. The
      total site area of Clifford Garden is approximately 79,800 square meters. The
      total saleable area of residential and commercial units of Clifford Garden
      is
      141,740 square meters and 6,680 square meters respectively. At completion,
      Clifford Garden will have 1,347 residential units, 41 stores and 1,055 parking
      spaces.





Construction
      of Clifford Garden (including the landscaping), began in May 2007 and is
      expected to be completed by October 2008 with a clubhouse expected to be
      completed at the same time. Substantially all of our construction work is
      performed by subcontractors. Subcontractors typically are retained for a
      specific project pursuant to a contract that obligates the subcontractor to
      complete construction at an agreed-upon price. Agreements with the
      subcontractors and suppliers we use generally are negotiated for each project.
      We compete with other residential construction companies for qualified
      subcontractors, raw materials and lots in the markets where we operate. Although
      substantially all of the work on our current project is being performed by
      two
      specific contractors and their subcontractors, the Company does not believe
      that
      continuation of such work is dependent on the services of such contractors
      because the Company has relationships with many reputable contractors. We employ
      construction superintendents to monitor properties under construction,
      participate in major design and building decisions, coordinate the activities
      of
      subcontractors and suppliers, and review the work of subcontractors for quality
      and cost controls and monitor compliance with zoning and building
      codes.





The
      first
      phase of sales will begin in May 2008 and include approximately 300 residential
      units. Pre-sale permit for these first phase units will be obtained by mid-April
      and that for the remaining units is expected to be obtained by the end of June
      2008. The sales schedule of the remaining units will largely follow the timing
      of the pre-sale permit. However, if there are reasons to believe that there
      will
      be substantially stronger demand and higher housing prices in the near future,
      we may save some units for sale later.





We
      have
      not identified any future projects yet, however, we are working on proposals
      for
      projects that are suitable to us and will utilize our competitive
      advantages.





*Competition
      and our strategies*





The
      real
      estate industry in China is highly competitive. Competitive factors include
      the
      size of land reserves and the geographical location, the types of properties
      offered, recognition by customers, brand creditworthiness, price and design
      qualities. Our existing competitors include major domestic state-owned and
      private property developers in China, and property developers from Hong Kong
      and
      elsewhere in Asia. A number of our competitors have greater financial,
      marketing, land and other resources than we have, as well as greater economies
      of scale and more established relationships in certain markets. We believe
      our
      principal competitors in the regions in which we operate include:





·
            Country
                Garden Holdings Company Limited, a major integrated property developer
                based in Guangdong, PRC. Its integrated business includes construction,
                fitting, project development, property management. It has similar
                products
                including, but not limited to, apartment buildings. It has a strong
                presence in Guangdong where we are based and one of the largest land
                banks
                amongst mainland real estate
                developers.




5





·
            China
                Vanke Co., Ltd., a leading real estate developer in China. It was
                founded
                in 1984 and has built up its scale of operation and market capitalization
                to one of the largest amongst mainland China developers. China Vanke
                owns
                a piece of land next to our Clifford Garden project and has started
                construction. However, Clifford Garden will be on sale before the
                completion of the China Vanke project.





·
            Agile
                Property Holdings Limited, a Guangdong-based major developer. It
                owns a
                diversified property portfolio in many major cities all over China.
                In the
                first half of 2007, its total land bank grew more than 50%. It is
                also
                aggressively growing other businesses including hotels. Its strong
                presence and reputation in our home territory makes it a strong competitor
                of ours.





Our
      business strategy is to develop housing projects in developing cities which
      have
      increasing demand for high-quality housing, such as Huadu and Zhaoqing of
      Guangdong Province. We will either purchase land for development, or acquire
      housing projects from local governments for the development of large-scale
      community residential projects on barren land, which is low in
      cost.





Our
      company’s current strategy aims to develop properties from raw land or acquired
      projects, and sell finished products to our customers. At this time, we do
      not
      invest in any real estate assets primarily for possible capital gain or rental
      income. However,
      we may plan to do so in the future depending on market
      situation.





Our
      management has experience in developing large-scale residential communities.
      Our
      CEO, Mr. Clifford Lun Kee Pang, is also the founder, CEO and majority
      shareholder of Clifford Group. With over 19 years of experience and presence
      in
      Guangdong Province, Clifford Group is one of the earliest developers in the
      region. Clifford Group has developed a number of residential communities in
      Guangdong Province including Clifford Bayview and Clifford Estates, which is
      one
      of the largest private residential communities in China. Clifford Bayview and
      Clifford Estates have combined population of more than 100,000 and approximately
      40,000 housing units. Clifford Estates not only consists of housing units,
      but
      also hospital and clinic, schools, private bus services, restaurants, a club
      house, household service centers, a hotel and a service apartment. The Company
      believes that management’s relationship and experience with Clifford Group, will
      enhance the Company’s reputation.





*Sources
      and availability of raw materials and principal suppliers*





Generally,
      the construction materials used in our operations, which include, among other
      things, concrete, steel and tiles are readily available from numerous sources.
      Building materials are typically purchased by our construction subcontractors
      while some interior materials are procured by us. We typically do not maintain
      significant inventories of construction materials, except for work in progress
      materials for properties under construction. We do not foresee any issue with
      the sources and availability of raw materials needed for our projects and we
      are
      not dependent on any principal suppliers. We typically negotiate different
      contract terms for different projects depending on various factors such as
      the
      size of purchase, degree of tailoring for our purpose, etc.





*Dependence
      on major customers*





The
      Company’s business is not dependent on any one or a few major customers. The
      Company targets at a broad range of customers in its business.





*Intellectual
      property*





The
      Company does not own or license any patents, trademarks or other intellectual
      property.





*Governmental
      regulations, licenses and approvals*





Real
      estate developers in China must obtain a formal qualification
      certificate **** from
      the
      Ministry of Construction of the People’s Republic of China in order to carry out
      property development activities. According to the Provisions on Administration
      of Qualification of Real Estate Developers, newly established developers must
      first apply for a temporary qualification certificate, which can be renewed
      for
      a maximum of two additional one-year periods, by which time a formal
      qualification certificate must have been issued. Before commencing business
      operations, companies engaged in property management, construction, fitting
      and/or decoration are required to obtain qualification certifications in
      accordance with the Measures on Administration of Qualification of Property
      Management Enterprises and the Provisions on Administration of Qualification
      of
      Construction Enterprises. Real estate developers in China are required to
      produce a valid qualification certificate when they apply for a pre-sale
      permit.




6





As
      of
      December 31, 2007, we were in compliance in all material respects with the
      relevant Chinese legal requirements relating to China’s property sector,
      including those mandating the possession of valid business licenses and the
      relevant qualification certificates, such as real estate developer qualification
      certificates and construction enterprise qualification certificates. We are
      also
      in compliance in all material respects with the relevant local regulations.
      By
      mid-April, we will have acquired the necessary pre-sale permits for
      approximately 300 units of Clifford Garden that will be on sale in May
      2008.





*Research
      and development activities*





The
      Company has not made any expenditure on research and development activities
      during its last two fiscal years.





*Environmental
      and safety matters*





We
      are
      subject to China’s environmental laws and regulations as well as environmental
      regulations promulgated by local governments. As required by China’s laws and
      regulations, each project developed by a property developer is required to
      undergo an environmental assessment, and an environmental impact assessment
      report is required to be submitted to the relevant government authorities for
      approval before commencement of construction. When there is a material change
      in
      respect of the construction site, scale or nature of a given project, a new
      environmental impact assessment report must be submitted for approval. During
      the course of construction, property developers and construction companies
      must
      take measures to prevent air pollution, noise emissions and water and waste
      discharge.





In
      addition, China’s environmental laws and regulations provide that if a
      construction project includes environmental facilities (including engineering
      projects, devices, monitors and other facilities that are constructed or
      equipped in order to prevent pollution and protect the environment), such
      facilities will have to pass an inspection by the environmental authorities
      and
      an approval must be obtained before the environmental facilities can commence
      operations. If a construction project does not include any environmental
      facilities, no such approval is required.





We
      believe that our operations are in compliance with currently applicable Chinese
      national and local environmental and safety laws and regulations in all material
      respects. Compliance with these environmental and safety laws and regulations
      does not impose a material burden on our operation or our finances.





*Employees*





As
      of
      March 17, 2008, we had a total of 34 employees in 3 departments, including
      Sales, Engineering, and Accounting & Finance. All of them are full time
      employees. We believe we have a good working relationship with our
      employees.





MARKET
      OVERVIEW





*Overview
      of China’s economy*





China’s
      economy has grown significantly since the Chinese government introduced economic
      reforms in the late 1970s. China’s accession to the World Trade Organization in
      2001 has further accelerated the reform of its economy. China’s GDP has
      increased from approximately RMB 7,118 billion in 1996 to approximately RMB
      18,387 billion in 2005 at a compound annual growth rate, or CAGR, of
      approximately 11.1%. In 2006, China’s GDP grew approximately 11.1% to
      approximately RMB 21,087 billion. Table 1 below sets out selected economic
      statistics for China from 2002 to 2006.




7





2002
            
            2003
            
            2004
            
            2005
            
            2006Nominal
                GDP (RMB in billion)
            
            
            12,033
            
            
            13,582
            
            
            15,988
            
            
            18,387
            
            
            21,087Real
                GDP Growth Rate (%)
            
            
            9.1
            
            
            10.0
            
            
            10.1
            
            
            10.4
            
            
            11.1Per
                Capita GDP (RMB)
            
            
            9,398
            
            
            10,542
            
            
            12,336
            
            
            14,103
            
            
            16,084Fixed
                Assets Investment (RMB in billion)
            
            
            4,350
            
            
            5,557
            
            
            7,048
            
            
            8,877
            
            
            11,000


*Source:
        National Bureau of Statistics of China*
  Table
          1
          Selected economic statistics for China from 2002 to 2006


It
      is
      generally believed that China’s economic growth will continue. The International
      Monetary Fund (“IMF”) has estimated that the real GDP in China will grow at an
      annual growth rate of 11.2% and 10.5% in 2007 and 2008, respectively, which
      will
      out-perform most of the other major economies in the world. Table 2 illustrates
      the forecast growth rate of real GDP in some of the other major economies in
      the
      world by the IMF.





2006
            
            2007F
            
            2008FChina
            
            
            11.1
            %
            
            11.2
            %
            
            10.5
            %India
            
            
            9.7
            %
            
            9.0
            %
            
            8.4
            %Russia
            
            
            6.7
            %
            
            7.0
            %
            
            6.8
            %Brazil
            
            
            3.7
            %
            
            4.4
            %
            
            4.2
            %United
                States
            
            
            3.3
            %
            
            2.0
            %
            
            2.8
            %Germany
            
            
            2.8
            %
            
            2.6
            %
            
            2.4
            %Japan
            
            
            2.2
            %
            
            2.6
            %
            
            2.0
            %


*Source:
        IMF - World Economics Outlook, July 2007*
  Table
        2
        Forecast growth rate of real GDP for BRIC and some developed
        countries


*China’s
      property market*





Real
      estate reforms in China did not commence until the 1990s, prior to which its
      real estate development industry was part of the nation’s planned economy. In
      the 1990s, China’s real estate and housing sector began its transition to a
      market-based system.





The
      real
      estate reforms, together with the economic growth of China, an increase in
      disposable income, emergence of the mortgage lending market and an increase
      in
      the urbanization rate, are key factors in sustaining the growth of China’s real
      estate market. Government housing reforms continue to encourage private
      ownership of property and it is expected that the proportion of urban residents
      who own their private properties will continue to increase.




Table
      3
      below sets out selected data relating to China’s urbanization and disposable
      income of urban households in China for the periods indicated.





2002
            
            2003
            
            2004
            
            2005
            
            2006Total
                population (million)
            
            
            1,284.5
            
            
            1,292.3
            
            
            1,299.9
            
            
            1,307.6
            
            
            1,314.5Urban
                population (million)
            
            
            502.1
            
            
            523.8
            
            
            542.8
            
            
            562.1
            
            
            577.1Urbanization
                rate (%)
            
            
            39.1
            
            
            40.5
            
            
            41.8
            
            
            43.0
            
            
            43.9Per
                capita disposable income of urban households (RMB)
            
            
            7,703
            
            
            8,472
            
            
            9,422
            
            
            10,493
            
            
            11,760




*Source:
        National Bureau of Statistics of China*
  Table
        3
        China’s urbanization and disposable income of urban
        household
  8
  Real
        estate prices in China increased substantially from 1998 to 2006, with the
        average price of residential properties in China increasing from approximately
        RMB 2,092 per square meter in 2002 to approximately RMB 3,119 per square
        meter
        in 2006, while the average price for commodity properties in the same period
        increased from approximately RMB 2,250 per square meter in 2002 to approximately
        RMB 3,367 per square meter in 2006.





In
      addition, total investment in real estate development of residential properties
      in China increased from RMB 522.8 billion in 2002 to RMB 1,363.8 billion in
      2006. The table below sets out selected data relating to the property market
      in
      China for the periods indicated.




2002
            
            2003
            
            2004
            
            2005
            
            2006Investment
                in real estate development in residential properties(RMB
                in billions)
            
            
            522.8
            
            
            677.7
            
            
            883.7
            
            
            1,086.1
            
            
            1,363.8Total
                GFA sold (sq. m. in millions)
            
            
            268.1
            
            
            337.2
            
            
            382.3
            
            
            554.9
            
            
            618.6GFA
                of residential properties sold (sq. m. in millions)
            
            
            237.0
            
            
            297.8
            
            
            338.2
            
            
            495.9
            
            
            554.2Average
                price of commodity properties (RMB per sq. m)
            
            
            2,250
            
            
            2,359
            
            
            2,778
            
            
            3,168
            
            
            3,367Average
                price of residential properties (RMB per sq. m)
            
            
            2,092
            
            
            2,197
            
            
            2,608
            
            
            2,937
            
            
            3,119




*Source:
        National Bureau of Statistics of China*




Table
        4
        Investment in real estate development in residential properties


Note:
      GFA
      stands for gross floor area. It is the total floor area contained within a
      building including the horizontal area of external walls.





The
      upward trend in China’s real estate industry is evidenced by the growth of
      revenue from the sale of properties in China. According to the China Statistical
      Yearbook 2007, the total revenue from real estate development in China increased
      from approximately RMB 707.8 billion in 2002 to approximately RMB 1,804.7
      billion in 2006. During the same period, total GFA sold increased from
      approximately 268,082,900 square meters in 2002 to approximately 618,570,700
      square meters in 2006.





Housing
      mortgages also indicate the upward trend of the industry. According to CEIC
      Data
      Company Limited, a database vendor based in Hong Kong, the aggregate balance
      of
      outstanding mortgage loans for residential properties in the PRC grew from
      approximately RMB 560 billion in 2001 to approximately RMB 1,840.0 billion
      in
      2005.





*The
      property market in Guangzhou*





Guangzhou
      is the capital city of Guangdong Province. It covers a total area of
      approximately 7,434 square kilometers and had a population of approximately
      7.6
      million as of December 31, 2006. It is the third largest city in China in terms
      of GDP, and the largest city in southern China. Guangzhou is approximately
      two
      hours away from Hong Kong and Shenzhen by train.




9





The
      growth in the economy and population of Guangzhou has generated an increase
      in
      housing demand in the city. From 1996 to 2006, the population of Guangzhou
      has
      increased by more than 1.0 million, representing an increase of approximately
      15.2%. The table below sets out selected economic statistics for Guangzhou
      for
      the years indicated.




2002
            
            2003
            
            2004
            
            2005
            
            2006Nominal
                GDP (RMB in billions)
            
            
            320.4
            
            
            375.9
            
            
            445.1
            
            
            515.4
            
            
            607.4Per
                capita GDP (RMB)
            
            
            32,339
            
            
            38,398
            
            
            45,906
            
            
            53,809
            
            
            63,100Per
                capita GDP growth rate (%)
            
            
            13.8
            
            
            16.6
            
            
            16.2
            
            
            14.3
            
            
            14.3Year-end
                registered population (million)
            
            
            7.2
            
            
            7.3
            
            
            7.4
            
            
            7.5
            
            
            7.6Per
                capita disposable income (RMB)
            
            
            13,380
            
            
            15,003
            
            
            16,884
            
            
            18,287
            
            
            19,851


*Source:
        Guangzhou Bureau of Statistics; National Bureau of Statistics of
        China*


Table
        5
        Selected economic statistics for Guangzhou from 2002 to
        2006





Residential
      real estate investments in Guangzhou have increased over the years. Total real
      estate investments in the city amounted to approximately RMB 55.7 billion in
      2006, representing an increase of approximately 9.6% over 2005. GFA of completed
      residential developments in Guangzhou in 2006 was approximately 7.7 million
      square meters, representing a decrease of approximately 3.8% over 2005. In
      2006,
      total residential GFA sold in Guangzhou amounted to approximately 11.6 million
      square meters, representing an increase of approximately 2.7% over 2005. The
      average price of total residential GFA sold in Guangzhou in 2006 reached RMB
      6,152 per square meter, representing an increase of approximately 22.0% over
      2005.




2002
            
            2003
            
            2004
            
            2005
            
            2006Real
                estate investment (RMB in billions)
            
            
            42.6
            
            
            42.0
            
            
            44.1
            
            
            50.8
            
            
            55.7GFA
                of residential properties completed (million square
                meters)
            
            
            8.7
            
            
            9.0
            
            
            7.4
            
            
            8.0
            
            
            7.7GFA
                of residential properties sold (million square meters)
            
            
            6.6
            
            
            7.6
            
            
            8.1
            
            
            11.3
            
            
            11.6Sales
                revenue from residential properties (RMB in billions)
            
            
            26.5
            
            
            30.2
            
            
            35.1
            
            
            57.0
            
            
            71.1Average
                price of residential properties (RMB/square meter)
            
            
            3,995
            
            
            3,999
            
            
            4,356
            
            
            5,041
            
            
            6,152




*Source:
        Guangzhou Bureau of Statistics; National Bureau of Statistics of
        China*


Table
        6
        Selected data of property market in Guangzhou





AVAILABLE
      INFORMATION





We
      file
      annual, quarterly and other reports with the Securities and Exchange Commission
      (“SEC”). Copies of our reports, including exhibits may be examined at the office
      of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington,
      D.C. 20549, through the EDGAR database at www.sec.gov; or may be obtained from
      this office on payment of the usual fees for reproduction. The public may obtain
      information on the operation of the Public Reference Room by calling the SEC
      at
      1-800-SEC-0300.





**ITEM
      1A.**  **RISK
      FACTORS**





In
      addition to the other information contained in this annual report, our business
      is subject to the following risks which should be considered carefully in
      evaluating our company and our projects. The following factors, among others,
      may have a material adverse effect on our business, financial condition,
      liquidity, results or operations or prospects, financial or otherwise. Reference
      to this cautionary statement in the context of a forward-looking statement
      or
      statements shall be deemed to be a statement that any one or more of the
      following factors may cause actual results to differ materially from those
      in
      such forward-looking statement or statements.




10





***Risk
      related to the People’s Republic of China***





**China’s
      economic policies could adversely affect our business.**





Substantially
      all of our assets are located in the PRC and substantially all of our revenue
      will be derived from our operations in PRC. Accordingly, the results of our
      operations and prospects are subject, to a significant extent, to the economic,
      political and legal developments in the PRC.





While
      the
      PRC’s economy has experienced significant growth in the past twenty years, such
      growth has been uneven, both geographically and among various sectors of the
      economy. The Chinese government has implemented various measures to encourage
      economic growth and guide the allocation of resources. Some of these measures
      benefit the overall economy of the PRC, but they may also have a negative effect
      on our business. For example, government control over capital investments or
      changes in tax regulations may adversely affect our operations and financial
      situation.





The
      PRC’s
      economy has been changing from a state planned economy to a more market-oriented
      economy. In recent years, the Chinese government has implemented measures
      emphasizing the utilization of market forces for economic reform and the
      reduction of state ownership of productive assets, and the establishment of
      corporate governance in business enterprises. However, a substantial portion
      of
      productive assets in the PRC are still owned by the Chinese government. In
      addition, the Chinese government continues to play a significant role in
      regulating industry development by imposing industrial policies. It also
      exercises significant control over the PRC’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.





**Future
      inflation in China may inhibit our ability to conduct business in
      China.**





In
      recent
      years, the Chinese economy has experienced periods of rapid expansion and high
      rates of inflation. During the past ten years, the rate of inflation in China
      has been as high as 20.7% and as low as 2.2%. These factors have led to the
      adoption by the PRC government, from time to time, of various corrective
      measures designed to restrict the availability of credit or regulate growth
      and
      contain inflation. While inflation has been more moderate since 1995, high
      inflation may in the future cause the PRC government to impose controls on
      credit or prices, or to take other action, which could inhibit economic activity
      in China, and thereby harm our business.





**Capital
      outflow policies in the People’s Republic of China may hamper our ability to
      remit income to the United States.**





The
      PRC
      has adopted currency and capital transfer regulations. These regulations may
      require us to comply with complex regulations for the movement of capital.
      Although we believe that we are 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.





**Most
      of our assets are located in China, any dividends or proceeds from liquidation
      are subject to the approval of the relevant Chinese government
      agencies.**





Our
      assets are predominantly located inside China. Under the laws governing foreign
      invested enterprises in China, dividend distribution and liquidation are allowed
      but subject to special procedures under the relevant laws and rules. Any
      dividend payment will be subject to the decision of the board of directors
      and
      subject to foreign exchange rules governing such repatriation. Any liquidation
      is subject to both the relevant government agency’s approval and supervision as
      well the foreign exchange control. This may generate additional risk for our
      investors in case of dividend payment or liquidation.




11





**Fluctuations
      in the value of the RMB could materially affect our financial condition and
      results of operations.**





Although
      we do not import goods into or export goods out of the PRC directly, fluctuation
      of the RMB may indirectly affect our financial situation by affecting the volume
      of cross- border money flow. The value of the RMB fluctuates and is subject
      to
      changes in the PRC’s political and economic conditions. Since 1994, the
      conversion of the RMB into foreign currencies, including U.S. dollars, has
      been
      based on rates set by the People’s Bank of China. Recently, the RMB has
      appreciated against the U.S. dollar and the trend may continue.





**We
      may have difficulty establishing adequate management, legal and financial
      controls in the PRC.**





The
      PRC
      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 the PRC. 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 the
      PRC.**





Our
      assets, officers and directors are located in the PRC. As a result, it may
      be
      difficult to effect service of process within the United States and enforce
      judgment of the U.S. courts obtained against us and our executive officers
      and
      directors.





**The
      recent nature and uncertain application of many PRC laws applicable to us create
      an uncertain environment for business operations and they could have a negative
      effect on us.**





The
      PRC
      legal system is a civil law system. Unlike the common law system, the civil
      law
      system is based on written statutes in which decided legal cases have little
      value as precedents. In 1979, the PRC government began to promulgate a
      comprehensive system of laws and has since introduced many laws and regulations
      to provide general guidance on economic and business practices in China and
      to
      regulate foreign investment. Progress has been made in the promulgation of
      laws
      and regulations dealing with economic matters such as corporate organization
      and
      governance, foreign investment, commerce, taxation and trade. The promulgation
      of new laws, changes of existing laws and the abrogation of local regulations
      by
      national laws could have a negative impact on our business and business
      prospects. In addition, as these laws, regulations and legal requirements are
      relatively recent, their interpretation and enforcement involve significant
      uncertainty.





***Risk
      related to the property sector in China***





**The
      real estate industry in the PRC is still at an early stage, and the property
      market and related infrastructure and mechanisms have not been fully
      developed.**





Private
      ownership of property in the PRC is still in a relatively early stage of
      development. Although demand for private residential property in the PRC,
      particularly in Guangdong Province, 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.




12




The
      lack
      of a liquid secondary market for residential real estate may discourage
      investors from acquiring new properties. The limited amount of property mortgage
      financing available to PRC individuals, compounded by the lack of security
      of
      legal title and enforceability of property rights, may further inhibit demand
      for residential developments. In addition, risk of property over-supply is
      increasing in parts of China, where property investment, trading and speculation
      have become overly active. In the event of actual or perceived over-supply,
      property prices may fall drastically, and our revenue and profitability will
      be
      adversely affected.





**The
      restrictive measures adopted from time to time by the PRC Government to curtail
      the overheating of the real estate market could slow down the industry’s rate of
      growth.**





The
      PRC
      Government’s restrictive measures to control the industry’s rate of growth could
      limit our access to capital resources, reduce market demand and increase our
      operating costs. The PRC Government may adopt additional and more stringent
      measures in the future, which could further slow the development of the industry
      and adversely affect our business operations.





***Risks
      related to our business***





**We
      are heavily dependent on the performance of the property market in the
      PRC.**





Our
      business and prospects depend on the performance of the PRC property market.
      Any
      housing market downturn in China generally or in the regions where we have
      property developments could adversely affect our business, results of operations
      and financial condition. Demand for private residential properties in the PRC,
      particularly in Guangdong Province, has been growing rapidly in recent years,
      but such growth is often coupled with volatility in market conditions and
      fluctuations in property prices. We cannot assure you that property development
      and investment activities will continue at past levels or that we will be able
      to benefit from the future growth in the property market in Guangdong Province
      or the PRC. Any adverse developments in national and local economic conditions
      as measured by such factors as employment levels, job growth, consumer
      confidence, interest rates and population growth in Guangdong Province,
      particularly in the places where our projects are located, may reduce demand
      and
      depress prices for our products and services and would have a material adverse
      effect on our results of operations and financial condition.





**Increasing
      competition in the PRC, particularly in Guangdong Province, may adversely affect
      our business and financial condition.**





In
      recent
      years, a large number of property developers have undertaken property
      development and investment projects in Guangdong Province and elsewhere in
      the
      PRC. Our major competitors include large national and regional property
      developers and overseas developers (including a number of leading Hong Kong
      property developers), some of which may have better track records and greater
      financial and other resources than us. In addition, we also compete with small
      local homebuilders.





The
      intensity of the competition among property developers in Guangdong Province
      and
      other parts in the PRC for land, financing, raw materials and skilled management
      and labor resources may result in increased cost for land acquisition, a
      decrease in property prices and a slowdown in the rate at which new property
      developments will be approved and/or reviewed by the relevant government
      authorities. An oversupply of properties available for sale could also depress
      the prices of the commodity properties we sell. Any of the above may adversely
      affect our business and financial position. In addition, the real estate market
      in Guangdong Province and elsewhere in the PRC is rapidly changing. If we cannot
      respond to changes in market conditions in Guangdong Province or elsewhere
      or
      changes in customer preferences more swiftly or more effectively than our
      competitors, our business, results of operations and financial condition could
      be adversely affected.





**We
      may not have adequate funding resources to finance land acquisitions or property
      developments, or to service our financing obligations.**





The
      property development business is capital intensive. We finance our property
      developments primarily through a combination of internal funding, borrowings
      from banks and pre-sales and sales proceeds. Further, purchasers who should
      pay
      the purchase price in full may not make timely payments and this may affect
      our
      cashflow position. There is no guarantee that we will have sufficient cash
      flow
      available for land acquisitions or property developments or that we will be
      able
      to achieve sufficient pre-sales and sales to fund land acquisitions or property
      developments. In addition, we cannot assure you that we will be able to secure
      external financing on terms acceptable to us or at all.




13





Our
      ability to arrange adequate financing for land acquisitions or property
      developments on terms that will allow us to earn reasonable returns depends
      on a
      number of factors that are beyond our control. The PRC Government has in recent
      years taken a variety of policy initiatives in the financial sector to further
      tighten lending procedures for real estate developers.





**We
      may not be able to obtain a sufficient number of sites or retain sites suitable
      for property developments.**





We
      derive
      the majority of our revenue from the sale of properties that we have developed.
      This revenue stream is dependent on our ability to complete and sell our
      property developments. To maintain or grow our business in the future, we will
      be required to replenish our land reserve with suitable sites for developments.
      Our ability to identify and acquire a sufficient number of suitable sites is
      subject to a number of factors that are beyond our control.





The
      PRC
      Government controls substantially all of the country’s land supply and regulates
      the means by which real estate developers, including us, obtain land sites
      for
      property developments. As a result, the PRC Government’s land supply policies
      affect our ability to acquire land use rights for sites we identify and the
      costs of any acquisition. If we are unable to obtain additional land sites
      for
      development at prices that allow us to achieve reasonable returns, the viability
      or growth of our business may not be sustainable.





Under
      PRC
      law, if a developer fails to develop land in accordance with the terms of a
      land
      grant contract (including those relating to the payment of fees, the designated
      use of the land and the time for commencement and completion of the
      development), the relevant government authorities may issue a warning to or
      impose a penalty on the developer or confiscate the land. We cannot assure
      you
      that circumstances leading to confiscated of land or delays in the completion
      of
      a property development will not arise in the future. If our land is confiscated,
      we will be unable to continue our property development on the confiscated land
      or recover the costs incurred in the initial acquisition of the confiscated
      land
      or recover development costs and other costs incurred up to the date of
      confiscation. In addition, in the event that the government exercises its
      authority to confiscate any land use rights that have been legally granted
      to
      us, we may not be compensated for the full market value of the
      land.





**Our
      business and results of operations may be adversely affected if we fail to
      obtain, or there are material delays in obtaining, the requisite governmental
      approvals for a significant number of our property
      developments.**





The
      real
      estate industry in the PRC is heavily regulated by the PRC government.
      Developers must comply with a variety of legal and regulatory requirements,
      as
      well as the policies and procedures established by local authorities to
      implement such laws and regulations. To undertake and complete a property
      development, a real estate developer must obtain permits, licenses, certificates
      and other approvals from the relevant administrative authorities at various
      stages of the property development, including land use rights documents,
      planning permits, construction permits, pre-sale permits and certificates or
      confirmations of completion and acceptance. Each approval is dependent on the
      satisfaction of a set of conditions.




We
      have
      not experienced any material delays in obtaining such governmental approvals
      in
      respect of our property developments that would have a material adverse effect
      on our business or results of operations. However, we cannot assure you that
      we
      will not encounter significant problems in satisfying the conditions to the
      approvals, or that we will be able to adapt ourselves to new laws, regulations
      or policies that may come into effect from time to time with respect to the
      real
      estate industry in general or the particular processes related to the granting
      of the approvals. There may also be delays on the part of the administrative
      bodies in reviewing our applications and granting approvals. If we fail to
      obtain, or experience material delays in obtaining, the requisite governmental
      approvals, the schedule of development and sale of our developments could be
      substantially disrupted, resulting in a material adverse effect on our business,
      financial condition and results of operations.




14





**We
      face significant property development risks before we realize any benefits
      from
      a development.**





Property
      developments typically require substantial capital outlays during the
      construction periods, and it may take months or years before positive cash
      flows, if any, can be generated by presales of properties to be completed or
      sales of completed properties. The time and costs required to complete a
      property development may increase substantially due to many factors beyond
      our
      control, including the shortage, or increased cost of material, equipment,
      technical skills and labor, adverse weather conditions, natural disasters,
      labor
      disputes, disputes with contractors, accidents, changes in government priorities
      and policies, changes in market conditions, delays in obtaining the requisite
      licenses, permits and approvals from the relevant authorities and other
      unforeseeable problems and circumstances. Any of these factors, singly or in
      aggregate, may lead to a delay in, or the failure of, the completion of a
      property development and result in costs substantially exceeding those
      originally budgeted. Failure to complete a property development according to
      its
      original plan, if at all, may have an adverse effect on our reputation and
      could
      give rise to potential liabilities. As a result, our returns on investments,
      if
      any, might not be timely recognized or might be lower than originally
      expected.





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





A
      majority of 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 reducing the attractiveness of mortgages as
      a
      source of financing for property purchases and adversely impacting the
      affordability of residential properties. In addition, the PRC Government and
      commercial banks may also increase the downpayment requirements, impose other
      conditions or otherwise change the regulatory framework in a manner that would
      make mortgage financing unavailable or unattractive to potential property
      purchasers. The China Banking Regulatory Commission issued a regulation on
      September 2, 2004 to limit mortgage loans on properties to 80% of the sales
      price of the underlying properties. Further, on March 17, 2005, The People’s
      Bank of China set the minimum property mortgage loan rates at 0.9 times the
      corresponding benchmark lending rates and further changed to 0.85 times on
      August 19, 2006. In addition, monthly mortgage payment is limited to 50% of
      an
      individual borrower’s monthly income and monthly debt service payments are
      limited to 55% of such individual borrower’s monthly income. If the availability
      or attractiveness of mortgage financing is further reduced or limited, many
      of
      our prospective customers may not be able to purchase our properties. As a
      result, our business, financial condition and results of operations could be
      materially and adversely affected.





**Any
      non-compliant GFA of our uncompleted and future property developments will
      be
      subject to governmental approval and additional payments.**





The
      local
      government authorities inspect property developments after their completion
      and
      issue Construction of Properties and Municipal Infrastructure Completed
      Construction Works Certified Reports if the developments are in compliance
      with
      the relevant laws and regulations. If the total constructed GFA of a property
      development exceeds the GFA originally authorized in the relevant land grant
      contracts or construction permit, or if the completed property contains built-up
      areas that do not conform with the plan authorized by the construction permit,
      the property developer may be required to pay additional amounts or take
      corrective actions with respect to such non-compliant GFA before a Construction
      of Properties and Municipal Infrastructure Completed Construction Works
      Certified Report can be issued to the property development. We cannot assure
      you
      that local government authorities will not find the total constructed GFA of
      our
      existing projects under development or any future property developments to
      exceed the relevant authorized GFA upon completion.




15





**The
      relevant PRC tax authorities may challenge the basis on which we calculate
      our
      Land Appreciation Tax (LAT) obligations.**





Under
      PRC
      tax laws and regulations, our PRC subsidiaries are subject to LAT, which is
      collected by local tax authorities. All income from the sale or transfer of
      land
      use rights relating to state-owned land, buildings and their attached facilities
      in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of
      the
      appreciation value as defined by the relevant tax laws. Certain exemptions
      are
      available for the sale of ordinary standard residential houses if the
      appreciation values do not exceed 20% of the total deductible items as defined
      in the relevant tax laws. Sales of commercial properties are not eligible for
      such exemption.





Local
      provincial tax authorities can formulate their own implementation rules
      according to the notice and local situations. In the event that the
      implementation rules promulgated in the cities in which our projects are located
      require us to settle all the unpaid LAT, our cash flow may be adversely
      affected.





**Potential
      liability for environmental problems could result in substantial
      costs.**





We
      are
      subject to a variety of laws and regulations concerning the protection of health
      and the environment including Regulation on Environmental Protection of
      Construction Projects and Regulation of Guangdong Province on Environmental
      Protection of Construction Projects. The particular environmental laws and
      regulations that apply to any given development site vary greatly according
      to
      the site’s location and environmental condition, the present and former uses of
      the site and the nature of the adjoining properties. Environmental laws and
      conditions may result in delays, may cause us to incur substantial compliance
      and other costs and can prohibit or severely restrict project development
      activity in environmentally-sensitive regions or areas.





The
      PRC
      national and local environmental regulations provide that if a construction
      project includes environmental facilities, such facilities will have to pass
      the
      inspection of the environmental authorities and an approval must be obtained
      before the environment facilities can start to operate. If a construction
      project does not include any environmental facilities, no such approval is
      required. As advised by the Company’s PRC legal advisor, the Company’s business
      is of a nature that does not required to construct environmental facilities,
      therefore, no approval from the environmental authorities is necessary. However,
      we cannot assure you that the environmental authorities will not find it
      necessary for us to construct environmental facilities in the future. In such
      event, our business may be affected.





Also,
      as
      required by PRC law, each project developed by a property developer is required
      to undergo an environmental assessment, and an environmental impact assessment
      report is required to be submitted to the relevant government authorities for
      approval before commencement of construction. If such requirement is not
      complied with, the local environmental authority may issue orders to suspend
      construction of the project until the environmental impact assessment report
      is
      submitted and approved by the local environmental authority and may impose
      a
      fine of an amount between RMB50,000 and RMB200,000 on us in respect of such
      project. In the event that a suspension of construction and/or a fine is
      imposed, our financial conditions may be adversely affected.





Although
      the environmental investigations conducted by local environmental authorities
      to
      date have not revealed any environmental liability that we believe would have
      a
      material adverse effect on our business, financial condition or results of
      operations, it is possible that these investigations did not reveal all
      environmental liabilities and that there are material environmental liabilities
      of which we are unaware. We cannot assure you that a future environmental
      investigation will not reveal material environmental liability. Also, we cannot
      assure you that the PRC government will not change the existing laws and
      regulations or impose additional or stricter laws or regulations, with which
      the
      compliance may cause us to incur significant capital expenditure. In addition,
      there is no assurance that we can comply with any such laws and
      regulations.




16





**Our
      success depends significantly on the continued services of our senior management
      team and other key personnel.**





Our
      future success depends significantly upon the continuing services of the members
      of our senior management team, in particular our CEO and director, Clifford
      L.K.
      Pang and our director, Lai Hung Man, who have extensive experience in the real
      estate industry in the PRC. Mr. Pang is responsible for the formulation of
      development strategies, making decisions on investment projects and setting
      the
      direction of the operations and overall business management of the Company.
      Miss
      Man specializes in the overall planning of sales and marketing of projects
      and
      business management of the Company. If one or more of our senior executives
      or
      other personnel are unable or unwilling to continue in their present positions,
      we may be unable to replace them easily or at all, and our business may be
      disrupted and our financial condition and results of operations may be
      materially adversely affected.





In
      addition, we depend on the continued service of our executive officers and
      other
      skilled managerial and technical personnel. Competition for senior management
      and key personnel is intense, and the pool of qualified candidates is very
      limited. Our business could be adversely affected if we lose the services of
      our
      senior executives or key personnel without suitable replacements or if any
      member of our senior management team or any of our other key personnel joins
      a
      competitor or forms a competing business. Further, as we expect our business
      to
      continue to grow, we will need to recruit and train additional qualified
      personnel. If we fail to attract and retain qualified personnel, our business
      and prospects may be adversely affected.





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





We
      are
      currently developing one property project named “Clifford Garden”. Clifford
      Garden consists of 24 blocks of high-rise residential buildings located in
      Shawan Town, Panyu District of Guangzhou City, Guangdong Province, PRC. The
      total sire area of Clifford Garden is approximately 79,800 square meters. The
      total saleable area of residential and commercial units of Clifford Garden
      is
      141,740 square meters and 6,680 square meters respectively. At completion,
      Clifford Garden will have 1,347 residential units, 41 stores and 1,055 parking
      spaces.





Construction
      of Clifford Garden (including the landscaping) began in May 2007 and is expected
      to be completed by October 2008, with a clubhouse expected to be completed
      at
      the same time. Substantially all of our construction work is performed by
      subcontractors. Subcontractors typically are retained for a specific project
      pursuant to a contract that obligates the subcontractor to complete construction
      at an agreed-upon price. Agreements with the subcontractors and suppliers we
      use
      generally are negotiated for each project. We compete with other residential
      construction companies for qualified subcontractors, raw materials and lots
      in
      the markets where we operate. Although substantially all of the work on our
      current project is being performed by two specific contractors and their
      subcontractors, the Company does not believe that continuation of such work
      is
      dependent on the services of such contractors because the Company has
      relationships with many reputable contractors. We employ construction
      superintendents to monitor properties under construction, participate in major
      design and building decisions, coordinate the activities of subcontractors
      and
      suppliers, and review the work of subcontractors for quality and cost controls
      and monitor compliance with zoning and building codes.





Material
      loss and liability insurance have been purchased for the entire construction
      period pursuant to government requirements and industrial practice. We believe
      that our insurance coverage is adequate.





The
      first
      phase of sales will begin in May 2008 and include approximately 300 residential
      units. Pre-sale permit for these first phase units will be obtained by mid-April
      and the permit for the remaining units is expected to be obtained by the
      end of June 2008. The sales schedule of the remaining units will largely follow
      the timing of the pre-sale permit. However, if there are reasons to believe
      that
      there will be substantially stronger demand and higher housing prices in the
      near future, we may save some units for sale later.




17





We
      also
      own 13 residential property units in Guangdong Province in China:





Number
                of Units
            
            Address
            
            Leased/Owned13
            
            
            Unit
                103, 104, 203, 204, 303, 304, 403, 404, 503, 504, 603, 604, 704,
                Hejing
                Hua Yuan, Shawan, Panyu District, Guangzhou City, Guangdong Province,
                PRC
            
            
            Owned





The
      above
      residential property units are staff quarters for our employees’ use. These
      units are ready to be used and we have assigned them to our
      employees.





Our
      principal executive office is registered at 7/F, Chai Wan Industrial City,
      Phase
      2, 70 Wing Tai Road, Chai Wan, Hong Kong. It is an office owned by the Clifford
      Group, our affiliated company. The physical space provided to us is minimal
      and
      we mainly use the office address for our registered address purpose. The fair
      rental value of this office is immaterial. Management believes that the
      current space is adequate for our needs for the foreseeable future.





Our
      company’s current strategy aims to develop properties from raw land or acquired
      projects, and sell finished products to our customers. At this time, we do
      not
      invest in any real estate assets primarily for possible capital gain or rental
      income. However,
      we may plan to do so in the future depending on market
      situation.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





We
      are
      currently not involved in any litigation that we believe could have a material
      adverse effect on our financial condition or results of operations. There is
      no
      action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      or, to the knowledge of the executive officers of our company or any of our
      subsidiaries, threatened against or affecting our company, our common stock,
      any
      of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers
      or directors in their capacities as such, in which an adverse decision could
      have a material adverse effect.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





On
      January 31, 2008, the Board of Directors of the Company as well as the holders
      of a majority of the outstanding shares of the Company’s common and preferred
      stock approved by written consent, the amendment of the Company’s Articles of
      Incorporation to increase the number of authorized shares of the capital stock
      of the Company to 225,000,000 shares, of which 200,000,000 shares were to be
      designated as common stock and 25,000,000 shares were to be designated as
      preferred stock (the “Charter Amendment”). On March 12, 2008, the Company mailed
      to its stockholders, an Information Statement disclosing the approval of the
      Charter Amendment. The Company shall be permitted to file an amendment to its
      Articles of Incorporation reflecting the Charter Amendment 20 days after the
      mailing of the Information Statement.




18


**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES**





SAFE
      HARBOR FOR FORWARD-LOOKING STATEMENTS





When
      used
      in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,”
“estimate,” “project,” “intend,” and similar expressions are intended to
      identify forward-looking statements within the meaning of Section 27a of the
      Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934
      regarding events, conditions, and financial trends that may affect the Clifford
      China Estates’ future plans of operations, business strategy, operating results,
      and financial position. Persons reviewing this report are cautioned that any
      forward-looking statements are not guarantees of future performance and are
      subject to risks and uncertainties and that actual results may differ materially
      from those included within the forward-looking statements as a result of various
      factors. Such factors are discussed further below and include general economic
      factors and conditions that may directly or indirectly impact our financial
      condition or results of operations.





MARKET
      INFORMATION





From
      July
      19, 2006 to March 7, 2008, our common stock was quoted on the National
      Association of Securities Dealers (NASD) OTC Bulletin Board (“OTCBB”) under the
      symbol “ELRZ.” Since March 7, 2008, our common stock has been quoted on the
      OTBCC under the symbol “CLCE”. From July 19, 2006, to February 15, 2007, there
      was no trading activity. ****





The
      aggregate market value of our common equity held by non-affiliates based upon
      the average bid and asked price of such common equity on March 17, 2008 as
      reported by OTCBB was approximately $12,237,600.





Trading
      in our Common Stock has been limited and sporadic. The following table shows
      the
      range of high and low bid quotations reported by OTCBB in each fiscal quarter
      from July 1, 2006 to March 17, 2008. The OTCBB quotations reflect inter-dealer
      prices without retail mark-up, mark-down or commission and may not represent
      actual transactions. On March 17, 2008, the closing bid price of our common
      stock was $2.00. The OTCBB quotations below reflect inter-dealer prices, without
      retail mark-up, mark-down or commission, and may not represent actual
      transactions.





Fiscal
                Year
            
            Period
            
            High
            
            Low2006
            
            Third
                Quarter (beginning July 19, 2006)
            
            No
                Trading Activity
            
            No
                Trading ActivityFourth
                Quarter
            
            No
                Trading Activity
            
            No
                Trading Activity2007
            
            First
                Quarter
            
            1.50
            
            9.00Second
                Quarter
            
            9.00
            
            9.00Third
                Quarter
            
            9.00
            
            9.00Fourth
                Quarter
            
            6.00
            
            2.002008
            
            First
                Quarter (through March 17 2008)
            
            6.00
            
            2.00





As
      of
      March 7, 2008, the Company has 50,000,000 shares of common stock and 5,000,000
      shares of Series A Preferred Stock issued and outstanding. Each share of Series
      A Preferred Stock is initially convertible into ten (10) shares of Common Stock
      at the option of the holders, subject to the availability of the Common Stock,
      at any time and from time to time after the original issue date.




19





HOLDERS





As
      of
      March 7, 2008, we had approximately 47 holders of record of our Common
      Stock.





DIVIDENDS





We
      have
      never paid dividends on our Common Stock. The Board of Directors presently
      intends to retain future earnings, if any, to provide funds for use in the
      operation and expansion of our business. Any declaration and payment of
      dividends in the future, of which there can be no assurance, will be determined
      by our Board of Directors in light of conditions then existing, including our
      earnings, financial condition, capital requirements and other factors. There
      are
      presently no dividends accrued or owing with respect to our outstanding stock.
      No assurance can be given that dividends will ever be declared or paid on our
      common stock in the future.





RECENT
      SALES OF UNREGISTERED SECURITIES





On
      October 1, 2007, we entered into and completed an Agreement for Share Exchange
      with Clifford Manufacturing, the sole owner of Parkade International Limited
      pursuant to which we acquired 100% of the equity of Parkade. In consideration
      for the acquisition of the shares of Parkade, we issued to Clifford
      Manufacturing, a total of 43,881,200 shares of our Common Stock and 5,000,000
      shares of our Series A Preferred Stock . The
      issuance of the shares of Common Stock and shares of Series A Preferred Stock
      were issued pursuant to Regulation S in a transaction that was exempt from
      registration under the Securities Act of 1933, as amended.





SECURITIES
      AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS





None.





PURCHASES
      OF EQUITY SECURITIES





None.





**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





This
      report contains forward-looking statements within the meaning of the federal
      securities laws. These include statements about our expectations, beliefs,
      intentions or strategies for the future, which we indicate by words or phrases
      such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “CLCE
      believes,” “management believes” and similar language. The forward-looking
      statements are based on the current expectations of CLCE and are subject to
      certain risks, uncertainties and assumptions, including those set forth in
      the
      discussion under “Description of Business” and “Management’s Discussion and
      Analysis or Plan of Operation”. The actual results may differ materially from
      results anticipated in these forward-looking statements. We base the
      forward-looking statements on information currently available to us, and we
      assume no obligation to update them.





CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES





Our
      financial statements and related public financial information are based on
      the
      application of accounting principles generally accepted in the United States
      (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and
      subjective interpretations of accounting principles that have an impact on
      the
      assets, liabilities, revenues and expenses amounts reported. These estimates
      can
      also affect supplemental information contained in our external disclosures
      including information regarding contingencies, risk and financial condition.
      We
      believe our use of estimates and underlying accounting assumptions adhere to
      US
      GAAP and are consistently and conservatively applied. We base our estimates
      on
      historical experience and on various other assumptions that we believe to be
      reasonable under the circumstances. Actual results may differ materially from
      these estimates under different assumptions or conditions. We continue to
      monitor significant estimates made during the preparation of our financial
      statements.




20




Our
      significant accounting policies are summarized in Note 3 to our financial
      statements. **** While
      all
      these significant accounting policies impact its financial condition and results
      of operations, we view certain of these policies as critical. Policies
      determined to be critical are those policies that have the most significant
      impact on our consolidated financial statements and require management to use
      a
      greater degree of judgment and estimates. Actual results may differ from those
      estimates. Our management believes that given current facts and circumstances,
      it is unlikely that applying any other reasonable judgments or estimate
      methodologies would cause an adverse effect on our consolidated results of
      operations, financial position or liquidity for the periods presented in this
      report.





PLAN
      OF
      OPERATION


We
        believe that our available cash and cash equivalents of as of December 31,
        2007,
        along with the expected proceeds from our operations, will provide adequate
        liquidity to fund our operations through at least the next twelve months.
        On
        August 3, 2007, one of our subsidiaries entered into a banking facility for
        a
        bank loan of $19,204,389 for financing the construction projects. As of December
        31, 2007, no drawings were made on the banking facility. However, we may
        raise
        additional funds in the next twelve months for continuing expansion of the
        Company.
 
 We
        do not
        plan to perform any product research and development in the next twelve
        months.
 
 We
        also
        do not expect any purchase or sale of plant and significant
        equipment.
 
 We
        do not
        expect significant changes in the number of employees. However, the number
        of
        employees in our sales and marketing department may slightly increase as
        we
        approach the sales date of Clifford Garden.


RESULTS
      OF OPERATIONS





Revenues
      and cost of sales





Our
      revenues in 2006 of $230,769 represented consultancy fees received for services
      rendered for placing advertisements for certain affiliated companies. In 2007,
      the Company ceased to provide such services and did not have any sales from
      Clifford Garden as the project was still under construction.





Operating
      expenses





*Selling
      and marketing*





In
      2006,
      there was no need for selling and marketing expenses in providing the
      consultancy services. In 2007, we had ceased to provide consultancy services
      and
      there were no selling and marketing expenses for Clifford Garden as the project
      was still under construction.





*General
      and administrative*





**Salary
      and related cost** .
      Salary
      and related cost for 2007 decreased by approximately $29,000 or 21% to $108,000
      from $137,000 for 2006. This decrease was attributable to the transfer of
      certain staff from us to our affiliated companies, resulting in a reduction
      of
      our headcount.




21





**Legal
      and other professional fee** .
      Legal
      and professional fees increased by approximately $52,000 or 100% in 2007. The
      increase was mainly due to the payments to our legal and other professional
      advisers for the preparation work on becoming a public company. There were
      no
      such expenses in 2006.




**Donation** .
      Donation increased by approximately $41,000 or 100% for 2007. The donation
      was
      to the Charity Board of Panyu, Guangdong ,China. There was no donation in
      2006.





**Stamp
      duty** .
      Stamp
      duty increased by approximately $14,000 for 2007. This was attributable to
      the
      stamp duty paid on construction contracts in 2007 and the increase in share
      capital of Guangzhou City Clifford Development (Panyu) Company Limited. No
      stamp
      duty was paid in 2006.





Income
      (loss) before tax





As
      a
      result of the above changes, the income before tax went from a profit of
      approximately $85,734 in 2006 to a profit of approximately $209,685 in
      2007.





Liquidity
      and Capital Resources




We
      have
      financed our growth and cash needs to date primarily with temporary loans from
      affiliated companies. The following sets out our cash position and cash flow
      of
      the years ended 2006 and 2007:





**December
                31,**
              **2007**
            
            **December
                31,**
              **2006**Cash
                and cash equivalents
            
            
            5,282,725
            
            
            3,251,774Working
                capital (deficit)
            
            
            1,367,303
            
            
            (34,482
            )




Cash
      Flow




**Year
                Ended December 31****2007**
            
            **2006**Net
                cash (used in) operating activities
            
            $
            (13,551,084
            )
            $
            (207,396
            )Net
                cash (used in) investing activities
            
            $
            (1,810
            )
            $
            (106,948
            )Net
                cash provided by financing activities
            
            $
            15,553,167
            
            $
            3,343,192Net
                increase in cash and cash equivalents
            
            $
            2,000,273
            
            $
            3,028,848




*Cash
      flows from operating activities*




Net
      cash
      used in operating activities was $13,551,084 for the year ended December 31,
      2007, an increase of $13,343,688 **** from
      $207,396 for the same period in 2006. The increase was mainly due to an increase
      of construction in progress for the Clifford Garden project.




*Cash
      flows from investing activities*





Net
      cash
      used in investing activities for the year ended December 31, 2007 was $1,810,
      a
      decrease of $105,138 from $106,948 in the same period of 2006. The decrease
      was
      mainly due to the fact that there was an increase in an ownership interest
      in a
      subsidiary in 2006 while there was no such increase in 2007.




*Cash
      flows from financing activities*




22




Net
      cash
      provided by financing activities for the year ended December 31, 2007 was
      $15,553,167 as compared to $3,343,192 in 2006. The increase was mainly
      attributable to a net increase in payables to associated companies,
      decrease in receivables from associated companies and increase in an amount
      due
      to a director.





We
      believe that our available cash and cash equivalents of as of December 31,
      2007,
      along with the expected proceeds from our operations, will provide adequate
      liquidity to fund our operations through at least the next twelve months. On
      August 3, 2007, one of our subsidiaries entered into a banking facility for
      a
      bank loan of $19,204,389 for financing the construction projects. As of December
      31, 2007, no drawings were made on the banking facility.





OFF-BALANCE
      SHEET ARRANGEMENTS




We
      do not
      have any off-balance sheet arrangements as defined by rules recently enacted
      by
      the Financial Accounting Standards Board, and accordingly, no such arrangements
      are likely to have a current or future effect on our financial position,
      revenues or expenses, results of operations, liquidity, capital expenditures
      or
      capital resources.





INFLATION





The
      Company's business, as well as the real estate industry in general, is affected
      by a number of economic factors including inflation. Inflation already
      had an impact and may continue to affect our major construction and
      development costs in the foreseeable future. The ability of the Company to
      pass
      on product cost increases in the form of increased sales prices is dependant
      upon market conditions. Such price increases might reduce the number of people
      who are able to afford the homes offered by the Company. However, it is our
      management’s objective to control our cost structure to mitigate the effect of
      inflation. Also, inflationary trends also affect interest rates, therefore
      a portion of our finance costs may increase.





CURRENCY
      EXCHANGE FLUCTUATIONS





All
      of
      our revenues and a majority of the expenses were denominated primarily in
      Renminbi (“RMB”), the currency of China and Hong Kong Dollar (“HKD”), the
      currency of Hong Kong. There can be no assurance that RMB-to-U.S. dollar
      exchange rates and HKD-to-U.S. dollar exchange rates will remain stable. A
      devaluation of RMB or HKD relative to the U.S. dollar would adversely affect
      our
      business, financial condition and results of operations. We do not engage in
      currency hedging.





**ITEM
      7.**  **FINANCIAL
      STATEMENTS**




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Stockholders


Clifford
      China Estates Inc.





We
      have
      audited the accompanying consolidated balance sheet of Clifford China Estates
      Inc. and subsidiaries as of December 31, 2007, and the related consolidated
      statements of income and comprehensive income, changes in stockholders’ equity
      and cash flows for each of the two years in the period ended December 31, 2007.
      These financial statements are the responsibility of the Company's management.
      Our responsibility is to express an opinion on these financial statements based
      on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. 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 audits provide a
      reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Clifford China Estates
      Inc.
      and subsidiaries at December 31, 2007, and the results of their operations
      and
      their cash flows for each of the two years in the period ended December 31,
      2007
      in conformity with accounting principles generally accepted in the United States
      of America.






GHP
      Horwath, P.C.


Denver,
      Colorado





March
      31,
      2008




23




**CLIFFORD
      CHINA ESTATES INC.**


**(Formerly
      ELITE ARTZ, INC.)**


**CONSOLIDATED
      BALANCE SHEET**


**ASSETS**
              
              **December
                  31,**
                **2007**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              5,282,725Receivables
                  from associated companies
              
              
              486Construction
                  in progress - real estate for resale
              
              
              21,848,349Prepayments
                  and other receivables
              
              
              457,698Total
                  current assets
              
              
              27,589,258PROPERTY
                  AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
              
              
              153,056**TOTAL
                  ASSETS**
              
              $
              27,742,314**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              2,680,137Payables
                  to associated companies
              
              
              17,616,038Accrued
                  expenses
              
              
              91,659Deferred
                  tax liability
              
              
              127,357Due
                  to director
              
              
              5,706,764Total
                  liabilities (all current)
              
              
              26,221,955**STOCKHOLDERS’
                  EQUITY**Preferred
                  stock 5,000,000 shares authorized, issued and outstanding at $0.001
                  par
                  value
              
              
              5,000Common
                  stock: 50,000,000 shares authorized, issued and outstanding at
                  $0.001 par
                  value
              
              
              50,000Additional
                  paid in capital
              
              
              4,188,355Accumulated
                  deficit
              
              
              (3,077,576
              )Accumulated
                  other comprehensive income
              
              
              354,580**TOTAL
                  STOCKHOLDERS’ EQUITY**
              
              
              1,520,359**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              27,742,314






**See
      accompanying notes to the consolidated financial
      statements**




24





**CLIFFORD
      CHINA ESTATES INC.**


**(Formerly
      ELITE ARTZ, INC.)**


**CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**


**For
                  the years ended**
                **December
                  31,****2007**
              
              **2006**REVENUES
                  (RELATED PARTY)
              
              $
              -
              
              $
              230,769COST
                  OF REVENUE (RELATED PARTY)
              
              
              -
              
              
              -GROSS
                  (LOSS) PROFIT
              
              
              -
              
              
              230,769EXPENSESGeneral
                  and administrative
              
              
              323,472
              
              
              163,500(LOSS)
                  INCOME FROM OPERATIONS
              
              
              (323,472
              )
              
              67,269OTHER
                  INCOMEInterest
                  Income
              
              
              23,730
              
              
              16,901Exchange
                  gain
              
              
              509,427
              
              
              -Other
              
              
              -
              
              
              1,564INCOME
                  BEFORE INCOME TAXES
              
              
              209,685
              
              
              85,734PROVISION
                  FOR INCOME TAX
              
              
              127,357
              
              
              -NET
                  INCOME
              
              
              82,328
              
              
              85,734FOREIGN
                  CURRENCY TRANSLATION
              
              
              42,187
              
              
              168,597COMPREHENSIVE
                  INCOME
              
              $
              124,515
              
              $
              254,331Earnings
                  per common share, basic and diluted
              
              $
              *
              
              $
              .03Weighted
                  average number of common shares outstanding, basic and
                  diluted
              
              
              50,000,000
              
              
              3,000,000





*
      Less
      than $.01 per share




**See
      accompanying notes to the consolidated financial
      statements**




25




**CLIFFORD
          CHINA ESTATES INC.**
 **(Formerly
          ELITE ARTZ, INC.)**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**
 **For
          the years ended December 31, 2007 and 2006**


**Accumulated****Additional**
              
              
              
              **Other****Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Paid
                  in**
              
              **Accumulated**
              
              **Comprehensive****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **capital**
              
              **Deficit**
              
              **Income**
              
              **Total**As
                  at December 31, 2005
              
              
              -
              
              $
              -
              
              
              -
              
              $
              3,000,000
              
              $
              -
              
              $
              (3,245,638
              )
              $
              143,796
              
              $
              (101,842
              )Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              85,734
              
              
              -
              
              
              85,734Foreign
                  currency translation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              168,597
              
              
              168,597As
                  at December 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              3,000,000
              
              
              -
              
              
              (3,159,904
              )
              
              312,393
              
              
              152,489Effect
                  of retroactive adjustment for reverse merger
              
              
              5,000,000
              
              
              5,000
              
              
              50,000,000
              
              
              (2,950,000
              )
              
              2,927,789
              
              
              -
              
              
              -
              
              
              17,211Imputed
                  interest on related party payables/ receivables
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,260,566
              
              
              -
              
              
              -
              
              
              1,260,566Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              82,328
              
              
              -
              
              
              82,328Foreign
                  currency translation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              42,187
              
              
              42,187As
                  at December 31, 2007
              
              
              5,000,000
              
              $
              5,000
              
              
              50,000,000
              
              $
              50,000
              
              $
              4,188,355
              
              $
              (3,077,576
              )
              $
              354,580
              
              $
              1,520,359




**See
      accompanying notes to the consolidated financial
      statements**




26




**CLIFFORD
      CHINA ESTATES INC.**


**(Formerly
      ELITE ARTZ, INC.)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


For the years ended
                December
                  31,2007
              
              2006**Cash
                  flows from operating activities**Net
                  income
              
              $
              82,328
              
              $
              85,734Adjustments
                  to reconcile net income to netcash
                  used in operating activities:Depreciation
              
              
              13,931
              
              
              12,475Reduction
                  of provision for retirement benefits for employees
              
              
              (40,641
              )
              
              (1,538
              )Changes
                  in operating assets and liabilities:Additions
                  to construction in progress
              
              
              (16,043,715
              )
              
              (305,725
              )Increase
                  in deferred tax liability
              
              
              127,357
              
              
              -Increase
                  in prepayments and other receivables
              
              
              (457,698
              )
              
              -Increase
                  in accounts payable
              
              
              2,677,746
              
              
              1,530Increase
                  in accrued expenses
              
              
              89,608
              
              
              128Net
                  cash used in operating activities
              
              
              (13,551,084
              )
              
              (207,396
              )**Cash
                  flows from investing activities**Increase
                  in ownership interest in a subsidiary
              
              
              -
              
              
              (106,203
              )Purchase
                  of property and equipment
              
              
              (1,810
              )
              
              (745
              )Net
                  cash used in investing activities
              
              
              (1,810
              )
              
              (106,948
              )**Cash
                  flows from financing activities**Decrease
                  (increase) in receivables from associated companies
              
              
              5,187,554
              
              
              (4,750,421
              )Increase
                  in payables to associated companies
              
              
              4,858,108
              
              
              7,971,976Increase
                  in due to a director
              
              
              5,524,716
              
              
              121,637Effect
                  of retroactive adjustment for reverse merger
              
              
              (17,211
              )
              
              -Net
                  cash provided by financing activities
              
              
              15,553,167
              
              
              3,343,192Net
                  increase in cash and cash equivalents
              
              
              2,000,273
              
              
              3,028,848Cash
                  and cash equivalents - beginning of year
              
              
              3,251,774
              
              
              60,243Effect
                  of foreign exchange rate changes
              
              
              30,678
              
              
              162,683Cash
                  and cash equivalents - end of year
              
              $
              5,282,725
              
              $
              3,251,774Supplemental
                disclosure of cash flow information:Imputed
                interest capitalized in construction in
                progress on related party payables/receivables
              
              $
              1,260,566
              
              $
              -




**See
      accompanying notes to the consolidated financial
      statements**




27




**CLIFFORD
      CHINA ESTATES INC.**


**(Formerly
      ELITE ARTZ, INC.)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007 and 2006**




**NOTE
      1 - ORGANIZATION AND PRINCIPAL ACTIVITIES**





The
      Company was incorporated under the laws of the State of Delaware on July 15,
      2002 with authorized common stock of 50,000,000 shares at $0.001 par value
      with
      the name "North American Marketing Corporation". On March 25, 2004, the Company
      changed the domicile to the state of Nevada in connection with a name change
      to
      "Elite Artz, Inc." and the addition of authorized preferred stock of 20,000,000
      shares with a par value of $0.001.





Parkade
      International Limited (“Parkade”) was incorporated on February 16, 1993 under
      the laws of the British Virgin Islands. Parkade engages in consultant services
      on placement of advertisement programs in Hong Kong for a company owned by
      Clifford Manufacturing.





On
      October 1, 2007, Elite Artz, Inc. (the “Elite Artz”), an US public shell
      company, entered into and completed an Agreement for Share Exchange (the
“Agreement”) with Parkade and Clifford Manufacturing Co. Ltd. (“Clifford
      Manufacturing”), the sole shareholder of Parkade. Pursuant to the terms of the
      Agreement, Elite Artz acquired 100% ownership interest in Parkade from Clifford
      Manufacturing. Consideration paid by the Company to Clifford Manufacturing
      was 43,881,200 shares of Elite Artz’ common stock and 5,000,000 shares of Elite
      Artz’ preferred stock (the “Acquisition”). After the completion of the
      transaction, Parkade became a wholly owned subsidiary of Elite Artz. Immediately
      following completion of the share exchange transaction through the issuance
      of
      the Exchange shares, Elite Artz has 50,000,000 shares of its common stock issued
      and outstanding and 5,000,000 share of its preferred stock issued and
      outstanding. Each share of preferred stock shall be initially convertible into
      ten (10) shares of common stock at the option of the holders, subject to the
      availability of the common stock, at any time after the original issue date.





For
      accounting purposes, the acquisition of Parkade by Elite Artz has been recorded
      as a reverse acquisition of a public shell and recapitalization of Parkade
      based
      on the factors demonstrating that Parkade represents the accounting acquirer.
      The acquisition is equivalent to the issuance of stock by Parkade for the net
      monetary assets (which were not significant) of Elite Artz. The share holder
      of
      Parkade received approximately 88% of the post Acquisition common stock of
      Elite
      Artz. In addition, the post-Acquisition company (the “Company”) management
      personnel and the board of the Company previously hold such positions with
      Parkade.





Through
      its wholly-owned subsidiary, Guangzhou City Clifford Development (Panyu) Company
      Limited (“Panyu”), a company established under the laws of the People’s Republic
      of China (the “PRC”), the Company also owns a real estate project known as
      Clifford Garden (“Clifford Garden”) located at Shawan, Panyu (a city in
      Guangdong province, the PRC). Clifford Garden occupies a piece of land of
      approximately 800,000 square feet and will consist of 24 blocks of high-rise
      residential buildings with a total saleable area of approximately 1,500,000
      square feet after the completion of construction.




28




Clifford
      Manufacturing, was incorporated on July 14, 1989 under the laws of the British
      Virgin Islands. Clifford Manufacturing engages in subleasing of Hong Kong based
      industrial properties that are owned by an associated company of Clifford
      Manufacturing.





Clifford
      Manufacturing also controls other companies whose operations are related to
      the
      Company. Revenue of Parkade for the years ended December 31, 2006 and 2007
      was
      all attributable to an affiliated company owned by Clifford Manufacturing.
      Beginning in 2007, the Company ceased providing service to the affiliated
      company and therefore no longer generated revenue. As of December 31, 2007
      and
      2006, the Company also has receivables and payables to and from other companies
      under common control.





**NOTE
      2 - PRINCIPLES OF CONSOLIDATION**





The
      consolidated financial statements of the Company have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America and include the accounts of the Company and its
      subsidiaries.





All
      material inter-company accounts and transactions have been eliminated in
      consolidation.





**NOTE
      3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




(a)
            Economic
                and Political Risk





Under
      PRC
      law, if a developer fails to develop land in accordance with the terms of a
      land
      grant contract (including those relating to the payment of fees, the designated
      use of the land and the time for commencement and completion of the
      development), the relevant government authorities may issue a warning to or
      impose a penalty on the developer or confiscate the land. Panyu cannot assure
      that circumstances leading to confiscated of land or delays in the completion
      of
      a property development will not arise in the future. If Panyu’s land is
      confiscated, Panyu will be unable to continue the property development on the
      confiscated land or recover the costs incurred in the initial acquisition of
      the
      confiscated land or recover development costs and other costs incurred up to
      the
      date of confiscation. In addition, in the event that the government exercises
      its authority to confiscate any land use rights that have been legally granted
      to Panyu, Panyu may not be compensated for the full market value of the
      land.





The
      Company’s major operations are conducted in the PRC. Accordingly, the political,
      economic, and legal environment in the PRC, as well as the general state of
      the
      PRC’s economy may influence the Company’s business, financial condition, and
      results of operations.




29





The
      Company’s major operations in the PRC are subject to special considerations and
      significant risks not typically associated with companies in North America
      and
      Western Europe. These include risks associated with, among others, the
      political, economic, and legal environment. The Company’s results may be
      adversely affected by changes in governmental policies with respect to laws
      and
      regulations, anti-inflationary measures, and rates and methods of taxation,
      among other things, of the PRC.





(b)
            Cash
                and Cash Equivalents





The
      Company considers all highly liquid investments purchased with original
      maturities of three months or less to be cash equivalents. The Company maintains
      bank accounts in Hong Kong and China.





(c)
            Construction
                in Progress - Real Estate for
                Resale





Construction
      in progress of real estate for resale consists of expenditures for land
      development including set-up cost, infrastructure cost, construction cost and
      indirect cost. Expenditures for land development are capitalized and are
      allocated to development projects by the specific identification method.
      Construction in progress is stated at the lower of cost or net realizable value.
      During 2007, the Company had only one construction project in progress and
      no
      sales transactions related to sales of real estate.




(d)
            Property
                and Equipment





Property
      and equipment are carried at cost less accumulated depreciation and impairment.
      The cost of maintenance and repairs is charged to income as incurred, whereas
      significant renewals and betterments are capitalized. The cost and the related
      accumulated depreciation of assets sold or otherwise retired are eliminated
      from
      the accounts and any gain or loss is included in the statement of
      income.





(e)
            Depreciation





The
      Company provides for depreciation of property and equipment principally by
      use
      of the straight-line method for financial reporting purposes. Property and
      equipment are depreciated over the following estimated useful
      lives:





Residential
                apartment properties
            
            
            20
                yearsComputer
                equipment and other equipment
            
            
            5
                years





The
      Company maintains 10% of the cost of residential apartment properties and
      computer equipment and other equipment as residual values.





Depreciation
      expense for the years ended December 31, 2007 and 2006 amounted to $13,931
      and
      $12,475, respectively.





(f)
            Accounting
                for the Impairment of Long-Lived
                Assets




30





The
      long-lived assets held and used by the Company are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      assets may not be recoverable. It is reasonably possible that these assets
      could
      become impaired as a result of technology or other industry changes.
      Determination of recoverability of assets to be held and used is made by
      comparing the carrying amount of an asset to future net undiscounted cash flows
      to be generated by the assets. If such assets are considered to be impaired,
      the
      impairment to be recognized is measured by the amount by which the carrying
      amount of the assets exceeds the fair value of the assets. Assets to be disposed
      of are reported at the lower of the carrying amount or fair value less costs
      to
      sell. There were no impairments of long-lived assets for the years ended
      December 31, 2007 and 2006.





(g)
            Income
                Tax





The
      Company has adopted the provisions of Statement of Financial Accounting
      Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” (“SFAS 109”) which
      incorporates the use of the asset and liability approach of accounting for
      income taxes. The Company allows for recognition of deferred tax benefits in
      future years. Under the asset and liability approach, deferred taxes are
      provided for the net tax effects of temporary differences between the carrying
      amounts of assets and liabilities for financial reporting purposes and the
      amounts used for income tax purposes. A valuation allowance is provided for
      deferred tax assets if it is more likely than not these items will either expire
      before the Company is able to realize their benefits, or that future realization
      is uncertain.




31





In
      accordance with the relevant tax laws and regulations of the PRC and Hong Kong,
      the corporation income tax rate is 33% and 17.5% respectively. The Company
      recognize certain income and expenses that do not conform to the timing and
      conditions allowed by the PRC tax authorities. The Company incurred no income
      tax expense or benefit for the years ended December 31, 2007 and
      2006.





According
      to “Accounting for Uncertainty in Income Taxes”-- an interpretation of FASB
      Statement No. 109. (“FIN 48”), it clarifies the accounting for uncertainty in
      income taxes recognized in an enterprise's financial statements in accordance
      with SFAS No. 109, and prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return. This interpretation
      also
      provides guidance on derecognition, classification, interest and penalties,
      accounting in interim periods, disclosure, and transition. This interpretation
      is effective for fiscal years beginning after December 15, 2006. The Company
      does not expect that the adoption of these accounting pronouncements will have
      any material impact on its financial statements.




(h)
            Fair
                Value of Financial Instruments





The
      carrying amounts of financial instruments such as cash and accounts payable
      approximate their fair value because of the short maturities of these
      instruments. The fair value of receivables from associated companies and
      payables to associated companies are not practical to estimate based upon the
      related party nature of the underlying transactions.





(i)
            Revenue
                Recognition





Revenue
      represents the invoiced value of consulting services provided to one affiliated
      company. Revenue is recognized when all of the services agreed to with this
      affiliated company have been rendered and they confirmed receipt of such
      services.





During
      the year, no real estate sales are recorded as the real estate project is not
      yet completed. The real estate project is expected to be completed during the
      year ended December 31, 2008. Real estate sales will be reported in accordance
      with the provisions of Statement of Financial Accounting Standard No. 66,
      "Accounting for Sales of Real Estate". Revenue
      from sale of residential properties is recognized when relevant units and spaces
      are available for occupancy and delivered to buyers with appropriate title
      documents. 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.




32





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





(j)
      Deferred Revenue





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




(k)
      Real
      Estate Project Costs





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





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





(l)
      Capitalized Interest Costs





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





Subsequent
      to completion of a real estate project, interest expense is allocated to
      inventoried real estate project costs and interest expense.





(m)
      Land
      Usage Right





All
      land
      belongs to the State in the PRC. Enterprises and individuals can pay the State
      a
      fee to obtain a right to use a piece of land for commercial or residential
      purposes for a period of 50 years or 70 years, respectively. The right of land
      usage can be sold, purchased, and exchange in the market.





(n)
            Earnings
                Per Share





Basic
      earnings per share is computed by dividing net income available to common
      shareholders by the weighted-average number of common shares outstanding during
      the period. Diluted earnings per share is computed similar to basic earnings
      per
      share except that the denominator is increased to include the number of
      additional common shares that would have been outstanding if the potential
      common shares had been issued and if the additional common shares were dilutive.
      As of December 31, 2007 and 2006, there were no dilutive securities
      outstanding.




33





(o)
            Use
                of Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States 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 may differ from those estimates.





(p)
            Retirement
                Benefits





The
      PRC
      mandates companies to contribute funds into the national retirement system,
      which benefits qualified employees based on where they were born within the
      country. The Company pays the required payment of qualified employees of the
      Company as a payroll tax expense. Very few employees in the Company fall under
      the mandatory conditions requiring the Company to pay as a payroll tax expense
      into the retirement system of the PRC.





Hong
      Kong
      requires companies to operate a mandatory provident fund plan, which is
      available to all employees in Hong Kong. Both the Company and the employees
      are
      required to contribute 5% (subject to a maximum amount of $256) per month of
      the
      employees’ relevant income. Contributions from the Company are 100% vested in
      the employees as soon as they are paid to the plan. Contributions to the plan
      are expensed in the statement of income as they become payable in accordance
      with the rules of the plan. The assets of the plan are held separately from
      those of the Company and managed by independent professional fund managers.
      In
      addition to the mandatory provident fund plan that is required by the Hong
      Kong
      government, the Company also provided additional retirement benefits for a
      certain employee, which was calculated based on 66.7% of monthly salary of
      the
      individual employee up to a maximum of $1,923 per month multiplied by the number
      of years of employment. The liability associated with such additional retirement
      benefits has been recorded as a long term liability as of December 31, 2006.
      Such liability was assumed by a related party in 2007 as a result of
      transferring the employee to the related party.




34




(q)
            Comprehensive
                Income





Comprehensive
      income is defined to include all changes in equity except those resulting from
      investments by owners and distributions to owners. Among other disclosures,
      all
      items that are required to be recognized under current accounting standards
      as
      components of comprehensive income are required to be reported in a financial
      statement that is presented with the same prominence as other financial
      statements. Comprehensive income includes net income and the foreign currency
      translation gain, net of tax.





(r)
            Foreign
                Currency Translation





The
      accompanying consolidated financial statements are presented in United States
      dollars. The functional currency of Panyu is the Chinese Renminbi (“RMB”) while
      for Parkade it is Hong Kong Dollar (“HKD”). Capital accounts of the consolidated
      financial statements are translated into United States dollars from RMB and
      HKD
      at their historical exchange rates when the capital transactions occurred.
      Loan
      from a director is translated into United States dollars from RMB at its
      historical rate in accordance with the term of the loan agreement between the
      director and Panyu. Assets and liabilities are translated at the exchange rates
      as of the balance sheet date. Income and expenditures are translated at the
      average exchange rate during the year. The translation rates are as
      follows:





2007
            
            2006Year
                end RMB : $ exchange rate
            
            
            7.290
            
            
            7.836Average
                yearly RMB : $ exchange rate
            
            
            7.603
            
            
            7.944Year
                end HKD : $ exchange rate
            
            
            7.800
            
            
            7.800Average
                yearly HKD : $ exchange rate
            
            
            7.800
            
            
            7.800




On
      July
      21, 2005, the PRC changed its foreign currency exchange policy from a fixed
      RMB/US$ exchange rate into a flexible rate under the control of the PRC
      government.





The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US
      dollars at the rates used in translation.





(s)
            Recent
                Accounting Pronouncements





Below
      is
      a listing of recent accounting pronouncements and their effect on the Company's
      financial statements.





Statement
      No. 157





“Fair
      Value Measurements” (“SFAS 157”)





This
      statement does not require any new fair value measurements but provides guidance
      on how to measure fair value and clarifies the definition of fair value under
      accounting principles generally accepted in the United States of America. The
      statement also requires new disclosures about the extent to which fair value
      measurements in financial statements are based on quoted market prices,
      market-corroborated inputs, or unobservable inputs that are based on
      management's judgments and estimates. The statement is effective for fiscal
      years beginning after November 15, 2007. In November 2007, the FASB announced
      that it would defer the effective date of SFAS 157 for one year for all
      non-financial assets and liabilities except those that are recognized or
      disclosed in the financial statements on a recurring basis.




35





Statement
      No. 159





“The
      Fair
      Value Option for Financial Assets and Financial Liabilities-Including an
      amendment of FASB Statement No. 115 (“SFAS 115”)”





This
      statement permits entities to choose to measure eligible items at fair value
      at
      specified election dates. The statement is effective as of the beginning of
      an
      entity's first fiscal year that begins after November 15, 2007 although early
      adoption is permitted provided that an entity also adopts SFAS 157. The Company
      does not expect that the adoption of this accounting pronouncement will have
      any
      material impact on its financial statements.





Statement
      No. 141R





“Business
      Combinations” (“SFAS 141 (Revised 2007)”)





In
      December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
      Combinations”. The objective of this statement will significantly change the
      accounting for business combinations. Under Statement 141R, an acquiring entity
      will be required to recognize all the assets acquired and liabilities assumed
      in
      a transaction at the acquisition date fair value with limited exceptions.
      Statement 141 applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. We expect SFAS No. 141R will
      have an impact on accounting for business combinations once adopted but the
      effect is dependent upon acquisitions at that time. We are still assessing
      the
      impact of SFAS No. 141R.





Statement
      No. 160





“Noncontrolling
      Interests in Consolidated Financial Statements-An Amendment of ARB No. 51"
      (“SFAS 160)”





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements-An Amendment of ARB No. 51". The objective
      of
      this statement is to establish new accounting and reporting standards for the
      Noncontrolling interest in a subsidiary and for the deconsolidation of a
      subsidiary. Statement 160 is effective for fiscal years, and interim periods
      within those fiscal years, beginning on or after December 15, 2008. We have
      not
      completed our evaluation of the potential impact, if any, of the adoption of
      SFAS No. 160 on our consolidated financial position, results of operations
      and
      cash flows.




36




**NOTE
      4 - RECEIVABLES FROM ASSOCIATED COMPANIES**





Receivables
      from associated companies consist of receivables from other subsidiaries of
      Clifford Manufacturing. Such receivables represent advances from the Company
      to
      these associated companies and are non interest bearing with no fixed repayment
      terms.




**As
                  of January 1, 2006**
              
              Advances
                  during the year ended December 31, 2006
              
              Repayments
                  during the year ended December 31, 2006
              
              **As
                  of December 31, 2006**
              
              Advances
                  during the year ended December 31, 2007
              
              Repayments
                  during the year ended December 31, 2007
              
              **As
                  of December 31, 2007**Fartake
                  Investment Ltd.
              
              $
              -
              
              $
              765,974
              
              $
              -
              
              $
              **765,974**
              
              $
              -
              
              $
              (765,699
              )
              $
              **275**Guangzhou
                  City Huadu Clifford Development Ltd.
              
              
              **-**
              
              
              4,083,494
              
              
              
              
              
              **4,083,494**
              
              
              
              
              
              (4,083,494
              )
              
              **-**Clifford
                  Real Estate Agency Ltd.
              
              
              **437,619**
              
              
              230,769
              
              
              (329,816
              )
              
              **338,572**
              
              
              
              
              
              (338,572
              )
              
              **-**Guangzhou
                  City Huadu Clifford Estate Ltd.
              
              
              **-**
              
              
              -
              
              
              -
              
              
              **-**
              
              
              211
              
              
              -
              
              
              **211**$
              437,619
              
              $
              5,080,237
              
              $
              (329,816
              )
              $
              **5,188,040**
              
              $
              211
              
              $
              (5,187,765
              )
              $
              **486**


**NOTE
      5 - CONSTRUCTION IN PROGRESS - REAL ESTATE FOR RESALE**





Construction
      in progress - real estate for resale consists of expenditures for land
      development including set-up cost, infrastructure cost, construction cost and
      indirect cost stated at cost. Land use right is stated at the lower of cost
      or
      net realizable value.





Construction
      in progress - real estate for resale as of December 31, 2007 is summarized
      as
      follows:


As
                  of
                December
                  31,
                2007Cost
                  of land use rights
              
              $
              3,089,411Set-up
                  costs
              
              
              2,984,240Infrastructure
                  costs
              
              
              1,233,659Construction
                  costs
              
              
              14,510,139Indirect
                  costs
              
              
              30,900Total
              
              $
              21,848,349


**NOTE
      6 - PROPERTY AND EQUIPMENT**





Property
      consists of 13 residential apartment units located in China that Panyu purchased
      in 1996. All the residential apartment units are used for the Company’s quarters
      for its workers for its construction project.





Equipment
      consists primarily of office computer equipment and other
      equipment.




37




Property
      and equipment


As
                of
              December
                31,
              2007At
                cost:Residential
                apartment properties
            
            $
            301,818Computer
                equipment
            
            
            2,811Other
                equipment
            
            
            398305,027Less:
                Accumulated depreciationResidential
                apartment properties
            
            
            150,999Computer
                equipment
            
            
            881Other
                equipment
            
            
            91151,971Property
                and equipment, net
            
            $
            153,056





Depreciation
      expense for the years ended December 31, 2007 and 2006 was $13,931 and $12,475,
      respectively.





**NOTE
      7 - PAYABLES TO ASSOCIATED COMPANIES**





Payables
      to associated companies consist of amounts owed by the Company, which represent
      advances from other subsidiaries of Clifford Manufacturing. During the years
      ended December 31, 2007 and 2006, the net increase / (decrease) in all payables
      to associated companies represents advances from these companies, payments
      on
      behalf of the Company, and the repayments of advances owed by the Company.
      The
      advances from the associated companies are mainly used for the Company’s
      construction projects in China. These liabilities are not secured by any of
      the
      Company’s assets, are non interest bearing and have no fixed repayment terms but
      are expected to be repaid to the companies during 2008. The breakdown of
      payables to associated companies as of December 31, 2007 are summarized as
      follows:




**As
                        of January 1, 2006**
                    
                    
                    Advances
                        during the year ended December 31, 2006
                    
                    
                    Repayments
                        during the year ended December 31, 2006
                    
                    
                    **As
                        of December 31, 2006**
                    
                    
                    Advances
                        during the year ended December 31, 2007
                    
                    
                    Repayments
                        during the year ended December 31, 2007
                    
                    
                    **As
                        of December 31, 2007**Clifford
                        Investment Co Ltd
                    
                    **$**
                    **4,654,746**
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    **4,654,746**
                    
                    $
                    -
                    
                    $
                    (139,672
                    )
                    $
                    **4,515,074**Lafe
                        Enterprises Limited
                    
                    
                    **69,748**
                    
                    
                    -
                    
                    
                    (69,748
                    )
                    
                    **-**
                    
                    
                    -
                    
                    
                    -
                    
                    
                    **-**Guangzhou
                        Clifford Property Management Co.
                    
                    
                    **-**
                    
                    
                    1,658,920
                    
                    
                    -
                    
                    
                    **1,658,920**
                    
                    
                    124,374
                    
                    
                    -
                    
                    
                    **1,783,294**Guangzhou
                        City Guanwan Property Ltd.
                    
                    
                    **-**
                    
                    
                    1,658,920
                    
                    
                    -
                    
                    
                    **1,658,920**
                    
                    
                    124,374
                    
                    
                    -
                    
                    
                    **1,783,294**Foshan
                        Clifford Property (Nanhoi) Ltd.
                    
                    
                    **-**
                    
                    
                    4,466,322
                    
                    
                    -
                    
                    
                    **4,466,322**
                    
                    
                    6,099,778
                    
                    
                    (7,548,218
                    )
                    
                    **3,017,882**Foshan
                        Clifford Estates (Nanhoi) Ltd.
                    
                    
                    **-**
                    
                    
                    -
                    
                    
                    -
                    
                    
                    **-**
                    
                    
                    1,371,765
                    
                    
                    -
                    
                    
                    **1,371,765**Guangzhou
                        City Panyu Clifford Estate Ltd
                    
                    
                    **61,460**
                    
                    
                    257,562
                    
                    
                    -
                    
                    
                    **319,022**
                    
                    
                    4,139,888
                    
                    
                    -
                    
                    
                    **4,458,910**Guangzhou
                        City Huadu Clifford Development Ltd
                    
                    
                    **-**
                    
                    
                    -
                    
                    
                    -
                    
                    
                    **-**
                    
                    
                    685,819
                    
                    
                    -
                    
                    
                    **685,819****$**
                    **4,785,954**
                    
                    $
                    8,041,724
                    
                    $
                    (69,748
                    )
                    $
                    **12,757,930**
                    
                    $
                    12,545,998
                    
                    $
                    (7,687,890
                    )
                    $
                    **17,616,038**
  38
  **NOTE
              8 - PREFERRED STOCK**
 
 Our
              Series A preferred stock has the following characteristics:
 
 (a)
              Voting
 
 The
              Preferred Stock shall have voting rights equal in all aspects to the
              number of
              Common Stock represented by such Preferred Stock on an as converted
              basis and
              shall be entitled to vote on any and all matters brought to a vote
              of
              shareholders of Common Stock and all matters brought to a vote of shareholders
              of Preferred Stock.
 
 (b)
              Dividends
 
 No
              dividends shall be payable with respect to the Preferred Stock. No
              dividends
              shall be payable with respect to the Common Stock while the Preferred
              Stock is
              outstanding. The Common Stock shall not be redeemed while the Preferred
              Stock is
              outstanding.
 
 (c)
              Liquidation Preference
 
 Upon
              any
              liquidation, dissolution or winding-up of the Corporation, whether
              voluntary or
              involuntary, the Holders shall be entitled to receive out of the assets
              of the
              Corporation, whether such assets are capital or surplus, for each share
              of
              Preferred Stock an amount equal to the original purchase price paid
              per share
              before any distribution or payment shall be made to the Holders of
              any Junior
              Securities, and if the assets of the Corporation shall be insufficient
              to pay in
              full such amounts, then the entire assets to be distributed to the
              Holders shall
              be distributed among the Holders ratably in accordance with the respective
              amounts that would be payable on such shares if all amounts payable
              thereon were
              paid in full.
 
 (d)
              Conversion
 
 Each
              share of Preferred Stock shall be initially convertible into ten shares
              of
              Common Stock at the option of the Holders, subject to the availability
              of Common
              Shares, at any time and from time to time from and after the Original
              Issue
              Date.


**NOTE 9-
      INCOME TAX AND DEFERRED TAX ASSETS**





(a)
      Corporation Income Tax (“CIT”)





In
      accordance with the relevant tax laws and regulations of Hong Kong and the
      PRC,
      the statutory CIT rates are 17.5% for Hong Kong and 33% in the PRC. The CIT
      rates applicable to the Company and its subsidiary for the years ended December
      31, 2007 and 2006 were as follows:





No
      provision for Hong Kong profits tax has been made as the Company has no
      assessable profits for the years ended December 31, 2007 and 2006. Provision
      for
      PRC Enterprise Income Tax was provided at the applicable statutory CIT rate
      (2006:$nil).





Reconciliation
      of taxation for each year with the accounting income:


For
                  years ended
                December
                  31,2007
              
              2006Income
                  before tax
              
              $
              209,685
              
              $
              85,734Tax
                  at the PRC profits tax rate of 33% in 2007 and 2006
              
              $
              69,196
              
              $
              28,292Tax
                  effect of non-taxable income
              
              
              -
              
              
              (72,076
              )Utilization
                  of previously unrecognized tax loss
              
              
              -
              
              
              (15,297
              )Tax
                  effect of different tax rates
              
              
              (40,754
              )
              
              (13,549
              )Tax
                  effect of tax losses not recognized
              
              
              98,915
              
              
              72,630Taxation
                  for the year
              
              $
              127,357
              
              $
              -





(b)
      Value
      Added Tax (“VAT”)


39




There
      is
      no VAT under current tax laws in Hong Kong.





In
      accordance with the current tax laws in the PRC, the VAT rate for export sales
      is 0% and domestic sales is 17%. VAT is levied at 17% on the invoiced value
      of
      sales and is payable by the purchaser. The Company is required to remit the
      VAT
      it collects to the tax authority, but may offset this tax liability from the
      VAT
      for the taxes that it has paid on eligible purchases. There was no VAT
      receivable or payable balance at December 31, 2007 and 2006.





(c)
      Deferred Tax Assets and Liabilities





As
      of
      December 31, 2007, Panyu has a net operating loss of approximate $66,178
      eligible to be carried forward from 2008 to 2011. Under the PRC tax regulations
      Panyu is entitled to claim back its tax loss for up to prior 5 years of
      operations. No deferred tax asset was recorded in Panyu to reflect such tax
      loss
      because the PRC tax regulations change frequently and it is uncertain whether
      such deferred tax asset can be realized in subsequent years. As of December
      31, 2007, Panyu recorded a gain on the foreign currency translation of a loan
      by
      Panyu. In accordance with the current tax laws of the PRC, the Company is
      required to pay PRC tax on the translation gain. Accordingly, the estimated
      tax
      liability was recorded as the deferred tax liabilities of Panyu as of December
      31, 2007.




As
      of
      December 31, 2007, Parkade has no deferred tax asset can be realized in
      subsequent years.





**NOTE 10
      - RELATED PARTY TRANSACTIONS**





Payables
      to associated companies consist of advances from these companies and payments
      on
      behalf of the Company by the respective companies. During the years ended
      December 31, 2007 and 2006, all movements of payables to associated companies
      consist of advances from these companies, payments on behalf of the Company,
      and
      the repayments of advances from the associated companies by the Company. The
      balances are unsecured and non interest bearing with no fixed payment terms,
      but
      are expected to be repaid to the companies during 2008.





Due
      to
      director consists of advances from a director and payments on behalf of the
      Company by the director. The amounts are unsecured and non interest bearing
      with
      no fixed payment terms, but are expected to be repaid to the director during
      2008.





The
      Company has signed a project management contract for the period from January
      2007 to December 2008 for the development of Clifford Garden with Richpro
      International Limited, a company owned by Clifford L.K. Pang at a cost equal
      to
      5% of total construction cost of Clifford Garden, which the Company believes
      is
      equivalent to a project management agreement it may receive from an unaffiliated
      third party. During the years ended December 31, 2007 and 2006, the Company
      paid
      a management fee amounting to $499,155 and $nil respectively, to Richpro
      International Limited.





The
      Company has signed a consultancy agreement for the period from October 2007
      to
      September 2009 for the sales and marketing planning and execution of Clifford
      Garden development project with Abroad Trading Limited, a company owned by
      Clifford L.K. Pang at a cost equal to 2% of total sales of Clifford Garden,
      which the Company believes is equivalent to a similar consultancy agreement
      it
      may receive from an unaffiliated third party. Since there were no sales and
      marketing activities during the year ended December 31, 2007 and 2006, no
      payment was paid to Abroad Trading Limited.




40





During
      the years ended December 31, 2007 and 2006, Parkade uses the office address
      of a
      related company for its registered address purpose. The registered address
      is
      provided free of charge for both years. The fair value of registered address
      is
      estimated to be $385 per annum.





**NOTE
      11 - CONTINGENCIES AND COMMITMENTS**





In
      conjunction with the real estate project, Clifford Gardens, that is located
      in
      Shawan, Panyu, Panyu committed to the Bureau of the Planning Office of Guangzhou
      City, PRC to construct certain educational facilities and public utility
      facilities associated with Clifford Gardens in accordance with the relevant
      regulations in the PRC.





Commitments
      for educational facilities and public utility facilities were approximately
      $37
      million at December 31, 2007.





On
      August
      3, 2007, Panyu entered into a banking facility with Bank of China for a bank
      loan of $19,204,389 for financing its construction projects. As of December
      31,
      2007, no drawings were made on the facility by Panyu.





**NOTE
      12 - SUBSEQUENT EVENTS**





On
      January 28, 2008, the Company formed a corporation under the laws of the State
      of Nevada called Clifford China Estates Inc. ("Merger Sub") and on January
      29,
      2008, the Company acquired one thousand shares of Merger Sub's common stock
      for
      cash. As such, Merger Sub became the Company’s wholly-owned subsidiary.




On
      January 31, 2008, the Company’s name was changed to "Clifford China Estates
      Inc." from Elite Artz, Inc.





On
      January 31, 2008, the Board of Directors of the Company as well as the holders
      of a majority of the outstanding shares of the Company’s common and preferred
      stock approved by written consent, the amendment of the Company’s Articles of
      Incorporation to increase the number of authorized shares of the capital stock
      of the Company to 225,000,000 shares, of which 200,000,000 shares were to be
      designated as common stock and 25,000,000 shares were to be designated as
      preferred stock (the “Charter Amendment”). On March 12, 2008, the Company mailed
      to its stockholders, an Information Statement disclosing the approval of the
      Charter Amendment. The Company shall be permitted to file an amendment to its
      Articles of Incorporation reflecting the Charter Amendment 20 days after the
      mailing of the Information Statement.




41




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





On
      January 9, 2008, we dismissed our principal independent accountants, Madsen
      & Associates CPA Inc. (“Madsen”). The decision to dismiss Madsen as our
      principal independent accountant was approved by our Board of Directors on
      January 9, 2008. Madsen’s report on our financial statements for the fiscal
      years ended December 31, 2005 and 2006 and the period July 15, 2002 to December
      31, 2006 contained no adverse opinion or disclaimer of opinion, nor was it
      qualified or modified as to uncertainty, audit scope or accounting
      principles.





During
      the period from January 1, 2005 through the date of Madsen’s dismissal, there
      were no disagreements with Madsen on any matter of accounting principles or
      practices, financial statement disclosure, or auditing scope or procedure,
      which
      disagreements, if not resolved to the satisfaction of Madsen, would have caused
      Madsen to make reference to the subject matter of the disagreements in
      connection with its report on the financial statements for such period. None
      of
      the “reportable events” described under Item 304(a)(1)(iv) of Regulation S-B
      occurred within the period from July 15, 2002 through December 31, 2006 or
      through the date of this report.





We
      provided Madsen with a copy of the foregoing disclosures, and Madsen furnished
      a
      letter addressed to the Securities and Exchange Commission stating that it
      agrees with the statements made by us.





On
      January 9, 2008, we engaged GHP Horwath, P.C. (“Horwath”) as our new principal
      independent accountants, effective immediately upon the dismissal of Madsen.
      The
      decision to engage Horwath as our principal independent accountants was approved
      by our Board of Directors on January 9, 2008. During the period from July 15,
      2002 through December 31, 2006, and through the date of the Madsen’s engagement,
      we did not consult with Horwath regarding any of the matters or events set
      forth
      in Item 304(a)(2)(i) and (ii) of Regulation S-B.





**ITEM
      8A(T). CONTROLS AND PROCEDURES**


DISCLOSURE
        CONTROLS AND PROCEDURES
 
 The
        Chief
        Executive Officer and Chief Financial Officer conducted an evaluation of
        the
        effectiveness of the design and operation of our disclosure controls and
        procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
        of
        1934, as amended (the Exchange Act)) as of the end of the period covered
        by this
        report. Based on that evaluation, the Chief Executive Officer and Chief
        Financial Officer concluded that our disclosure controls and procedures were
        not
        effective as of the end of the period covered by this report to ensure that
        information required to be disclosed in the reports that we file or submit
        under
        the Exchange Act is accumulated and communicated to our management, including
        our Chief Executive Officer and Chief Financial Officer, as appropriate to
        allow
        timely decisions regarding required disclosures. The reasons that our Chief
        Executive Officer and Chief Financial Officer arrived at this conclusion
        are:
 
 ·
              *Our
                  inability to complete the Management’s Annual Report on Internal Control
                  over Financial Reporting*.
                  For the reasons described below under “Internal Control over Financial
                  Reporting,” our management’s assessment of our internal controls over
                  financial reporting was substantially delayed and is not complete
                  as of
                  the date of this annual report. Because we were not able to complete
                  this
                  report within the time period prescribed and include such report
                  in this
                  annual report on Form 10-KSB, our management is not able to make
                  a
                  determination at this time that our disclosure controls and procedures
                  were effective as of the end of the period covered by this
                  report.
 
 ·
              *Our
                  independent registered public accounting firm has reported a material
                  weakness in our disclosure controls and
                  procedures.*
 In
          light
          of the foregoing, we are working diligently with our Board of Directors
          and
          outside advisors to design and implement more formal disclosure controls and
          procedures to ensure that such procedures are effective.
 
 Notwithstanding
          the conclusion that our disclosure controls and procedures were not effective
          as
          of the end of the period covered by this report, the Chief Executive Officer
          and
          the Chief Financial Officer believe that the financial statements and other
          information contained in this annual report present fairly, in all material
          respects, our business, financial condition and results of operations.


42


INTERNAL
          CONTROL OVER FINANCIAL REPORTING
 
 *Management’s
          Annual Report on Internal Control over Financial Reporting*
 
 Our
          management is responsible for establishing and maintaining adequate internal
          control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
          under the Exchange Act. Our internal control over financial reporting is
          designed to provide reasonable assurance regarding the reliability of financial
          reporting and the preparation of financial statements for external purposes
          in
          accordance with generally accepted accounting principles. Our internal
          control
          over financial reporting includes those policies and procedures that (1)
          pertain
          to the maintenance of records that, in reasonable detail, accurately and
          fairly
          reflect the transactions and dispositions of our assets, (2) provide reasonable
          assurance that transactions are recorded as necessary to permit preparation
          of
          financial statements in accordance with generally accepted accounting
          principles, and that our receipts and expenditures are being made only
          in
          accordance with authorizations of our management and directors; and (3)
          provide
          reasonable assurance regarding prevention or timely detection of unauthorized
          acquisition, use or disposition of our assets that could have a material
          effect
          on the consolidated financial statements.
 
 Until
          after the reverse merger with Elite Artz in October 2007, we did not know
          that
          would be required to assess and evaluate our internal controls over financial
          reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002
          (“SOX
          404”) as of the end of the period covered by this annual report on Form 10-KSB.
          Because we did not have an accurate understanding of when compliance with
          SOX
          404 was required, we have not fully implemented SOX 404 as of today. In
          addition, we devoted substantial time and resources to be in compliance
          with the
          reporting requirement for the reverse merger, which further delayed our
          ability
          to document, assess and evaluate our internal controls over financial reporting.
          For the foregoing reasons, management’s assessment of the effectiveness of our
          internal control over financial reporting has been substantially delayed
          and is
          not complete.
 
 Management
          is committed to take appropriate steps to implement compliance with SOX
          404 and
          is in the process of hiring an independent consulting firm to document,
          identify
          any deficiencies or material weaknesses, evaluate and implement recommended
          changes and test our internal control over financial reporting. In making
          our
          assessment of internal control over financial reporting, management is
          using the
          criteria established in the “Internal Control - Integrated Framework” issued by
          the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
          Because our evaluation of internal control over financial reporting is
          not yet
          complete, we cannot assure you that we will not discover additional material
          weaknesses; however management will work with the independent consulting
          firm
          and work towards compliance with SOX 404 as of December 31, 2008.
 
 This
          annual report does not include an attestation report of our independent
          registered public accounting firm regarding internal control over financial
          reporting. Management’s report was not subject to attestation by our independent
          registered public accounting firm pursuant to temporary rules of the Securities
          and Exchange Commission that permit us to provide only management’s report in
          this annual report. However, in connection with its audit of our financial
          statements, our independent registered public accounting firm reported
          material
          weaknesses in our internal controls over our ability to produce financial
          statements free from material misstatements. Those material weaknesses
          are:
 
 ·
                Absence
                    of documented controls over related party
                    transactions;
 
 ·
                Lack
                    of timely identification, research and resolution of accounting
                    issues;
 
 ·
                Lack
                    of technical accounting expertise among senior financial staff
                    regarding
                    US GAAP and the requirements of the PCAOB, and regarding preparation
                    of
                    financial statements; and
 
 ·
                Lack
                    of proper application of accrual based accounting principles
                    required
                    under US GAAP.
  
 43





CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING





There
      were no changes in internal controls over financial reporting that occurred
      during 2007 that have materially affected, or are reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.





**ITEM
      8B.****OTHER
      INFORMATION**





None.




44




**PART
      III**





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT**





The
      table
      below sets forth the names and ages of our directors and executive officers
      as
      of March 17, 2008.





**Name**
            
            **Age**
            
            **Title**Clifford
                LK, Pang
            
            67
            
            Chief
                Executive Officer, Chief Financial Officer and
                DirectorLai
                Hung, Man
            
            48
            
            DirectorDerek
                W. Sun
            
            30
            
            Chief
                Operating Officer





BIOGRAPHIES
      OF OFFICERS AND DIRECTORS





**Clifford
      LK, Pang** ,
      67, has
      served as the Chief Executive Officer, Chief Financial Officer and a
      director of the Company since December 4, 2007. Mr. Pang has over 20 years
      of
      experience in property development and marketing. In 1989, Mr. Pang found the
      Clifford Group and has been its CEO since then. Clifford Group has developed
      a
      number of residential communities in Guangdong Province of China including
      Clifford Bayview and Clifford Estates which is one of the largest private
      residential communities in China. Clifford Bayview and Clifford Estates have
      combined population of more than 100,000 and approximately 40,000 housing units.
      Clifford Estates not only consists of housing units, but also hospital and
      clinic, schools, private bus services, restaurants, club house, household
      service centers, hotel and service apartments. Mr. Pang graduated from the
      Indiana Institute of Technology, USA with a major in Civil Engineering in 1963.
      In 1965, he obtained a master degree of Engineering from the McGill University
      in Montreal, Canada. Mr. Pang is also a Member of National Committee of the
      Chinese People’s Political Consultative Conference of China.





**Lai
      Hung, Man** ,
      48, has
      served as a director of the Company since December 4, 2007. Ms. Man has over
      20
      years of experiences in sales and marketing of large-scale residential
      communities in China. Since 1989, Ms. Man has been the Director of Sales and
      Marketing of Clifford Group and was in charge of sales of a number of
      residential communities in Guangdong Province of China including Clifford
      Bayview and Clifford Estates, a $3 billion real property project. Clifford
      Estates is one of the largest private residential communities in China
      consisting of hospital and clinic, schools, private bus services, restaurants,
      club house, household service centers, hotel and service apartments. Clifford
      Bayview and Clifford Estates have combined population of more than 100,000
      and
      approximately 40,000 housing units. Ms. Man graduated from the Chinese
      University of Hong Kong with a major in Business Administration in 1982. Ms.
      Man
      is the wife of Mr. Pang.





**Derek
      W. Sun** ,
      30, has
      served as the Chief Operating Officer of the Company since January 28, 2008.
      Mr.
      Sun has over ten years of experience in business development, consulting and
      management. From 2003 to January 2008, Mr. Sun was a junior engagement
      manager/senior associate at McKinsey & Company in Hong Kong where he
      developed business strategies and operations with a focus on companies located
      in Greater China. From 2002 to 2003, he was an Assistant Vice President of
      Best
      E-Solutions Limited. While at Best E-Solutions Limited, Mr. Sun led the business
      development effort and managed software development projects. From 1999 to
      2002,
      he was a Senior Consultant at Tigris Consulting Corporation where he designed
      and developed various applications to optimize business performance. From 1997
      to 1998, he was an assistant manager of a Chinese company, responsible for
      its
      internal operations and corporate strategy. Mr. Sun received a BS in operations
      research from Columbia University in 1999.





On
      January 4, 2008, the Company’s Board of Directors accepted the resignation of
      David Oman as a director of the Company. There were no disagreements between
      Mr.
      Oman and the Company that resulted in his resignation .





On
      December 4, 2007, the Company’s Board of Directors accepted the resignation of
      Lau Hing Bun as the Company’s CEO and a director of the Company. There were no
      disagreements between Mr. Lau and the Company that resulted in his
      resignation.




45





On
      July
      18, 2007, the Company’s Board of Directors accepted the resignation of Wong Nga
      Leung as the Company’s CEO and a director, and appointed Lau Hing Bun to serve
      as the Company’s CEO and a director. There were no disagreements between Mr.
      Leung and the Company that resulted in his resignation.





Our
      executive officers are appointed annually by the Board of Directors. Our
      directors serve one year terms until their successors are elected. The executive
      officers serve terms of one year or until their death, resignation or removal
      by
      the Board of Directors. In addition, there were no arrangements or understanding
      between any executive officer and any other person pursuant to which any person
      was selected as an executive officer.





FAMILY
      RELATIONSHIPS





There
      are
      no family relationships between any of directors or executive officers except
      that Ms. Man is the wife of Mr. Pang.





INDEMNIFICATION
      OF DIRECTORS AND OFFICERS





The
      articles of incorporation of the Company limit the liability of directors to
      the
      maximum extent permitted by Nevada law. This limitation of liability is subject
      to exceptions including intentional misconduct, obtaining an improper personal
      benefit and abdication or reckless disregard of director duties. The articles
      of
      incorporation and bylaws of the Company provide that we may indemnify its
      directors, officer, employees and other agents to the fullest extent permitted
      by law. The bylaws also permit us to secure insurance on behalf of any officer,
      director, employee or other agent for any liability arising out of his or her
      actions in such capacity, regardless of whether the bylaws would permit
      indemnification. We currently do not have such an insurance policy.





Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted for our directors, officers and controlling 1934 persons pursuant
      to the foregoing provisions, or otherwise, The Company has been advised that
      in
      the opinion of the Securities and Exchange Commission such indemnification
      is
      against public policy as expressed in the Securities Act and is, therefore,
      unenforceable.





AUDIT
      COMMITTEE





We
      have
      not established an audit committees of the Board of Directors. Currently, our
      entire Board of Directors serves as our audit committee. We do not currently
      have a financial expert on our Board of Directors.





NO
      OTHER
      COMMITTEES





We
      have
      not established compensation, nominating executive or any other committees
      of
      the Board of Directors.





CODE
      OF
      ETHICS





We
      have
      adopted a Code of Business Conduct and Ethics (the “Code”) that applies to our
      directors and employees, including our principal executive officer, principal
      financial officer, principal accounting officer and controller, or persons
      performing similar functions. In addition, we intend to promptly disclose
      (i) the nature of any amendment to the policy that applies to our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions and (ii) the nature of
      any waiver, including an implicit waiver, from a provision of the policy that
      is
      granted to one of these specified individuals, the name of such person who
      is
      granted the waiver and the date of the waiver on our website in the future.
      The
      Code was filed as Exhibit 14 to our annual report on Form 10-KSB for the year
      ended December 31, 2005 and has been incorporated by reference into this annaul
      report. A written copy of the Code will be provided upon request at no charge
      by
      writing to our Chief Operating Officer, Clifford China Estates Inc., 7/F, Chai
      Wan Industrial City, Phase 2, 70 Wing Tai Road, Chai Wan, Hong
      Kong.




46





CHANGES
      IN DIRECTOR NOMINATION PROCESS FOR STOCKHOLDERS





None.





COMPLIANCE
      WITH SECTION 16 (A) OF THE EXCHANGE ACT





Based
      solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
      pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934 during
      our
      most recent fiscal year and Forms 5 and amendments thereto furnished to us
      with
      respect to our most recent fiscal year, none of our current officers,
      directors and owners of 10% or more of our outstanding shares have not filed
      Forms 3, 4 and 5 on a timely basis as required by Section 16(a) of the
      Securities Exchange Act of 1934, as amended.


We
        are
        aware of the following transaction with respect to Mr. Clifford Pang, our
        Chief
        Executive Officer, Chief Financial Officer and director:
 
 ·
              On
                  October 1, 2007, Mr. Pang acquired beneficial ownership of 43,881,200
                  shares of our Common Stock (representing 87.6% of our outstanding
                  Common
                  Stock) in connection with the consummation of the Share
                  Exchange.





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





Our
      current executive officers and directors received no compensation from the
      Company for the fiscal year ended December 31, 2007. None of our executives
      or
      directors served as executives or directors for the fiscal year ended December
      21, 2006. No director or executive officer of the Company received any
      compensation from the Company for the fiscal year ended December 31, 2007 or
      December 31, 2006.





Currently,
      our directors are not compensated for serving on the Board of Directors. We
      currently have no employment agreements with any of our executive officers,
      nor
      any compensatory plan or arrangements resulting from the resignation, retirement
      or any other termination of any of our executive officers, from a change in
      control, or from a change in any executive officer’s responsibilities following
      a change in control other than the following.





On
      January 28, 2008, we appointed Mr. Derek W. Sun as Chief Operating Officer.
      We
      entered into an indefinite written employment agreement with Mr. Sun dated
      the
      same day. The agreement remains in effect until terminated by either party.
      Mr.
      Sun shall be entitled to a base salary of HK$100,000 per month with an annual
      bonus equivalent to one month’s basic salary and an annual special bonus of
      HK$300,000. Mr. Sun shall also be entitled to annual salary adjustment, medical
      insurance and a pension plan administered under the Mandatory Provident
      Fund. The Mandatory Provident Fund is a compulsory savings/retirement scheme
      for
      the residents of Hong Kong. Most employees and employers are required to
      contribute monthly to retirement funds provided by government approved
      private organizations. Contributions are based on a percentage of an employee’s
      salary. The contribution vests fully with the employee immediately upon payment
      into the funds. The employment agreement with Mr. Sun also sets out other
      benefits such as annual leave, business trip entitlement and allowance,
      etc.





Mr.
      Sun
      is subject to an indefinite confidentiality agreement with respect to any of
      the
      trade secrets or other confidential information of or relating to us. Mr. Sun
      is
      also subject to a non-competition agreement for a one-year period following
      the
      termination of his employment.





We
      maintain no stock option plan or other equity compensation plan for our
      directors, executive officers or employees.





**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





The
      following table sets forth as of March 7, 2008, certain information regarding
      the beneficial ownership of our Common Stock and Series A Preferred Stock,
      which
      are our two outstanding classes of voting securities, by each person known
      to us
      to own beneficially more than 5% of our Common Stock and/or our Series A
      Preferred Stock, each of our directors, each of our named executive officers,
      and all executive officers and directors as a group. Under the SEC rules,
      beneficial ownership includes any shares as to which the individual has the
      sole
      or shared voting power or investment power. In addition, beneficial ownership
      includes any shares that the individual has the right to acquire within 60
      days.
      Unless otherwise indicated, each person listed below has sole investment and
      voting power (or shares such powers with his or her spouse).




47




**Name
                and Address of Beneficial Owner**
            
            **Number
                of Shares of Common Stock Beneficially Owned)**
            
            **Percent
                of Class(1)**
            
            **Number
                of Shares of Series A Preferred Stock Beneficially
                Owned**
            
            **Percent
                of Class(2)**Clifford
                L.K. Pang, Chief Executive Officer and Director
              c/o
                Clifford China Estates Inc., 7/F, Chai Wan Industrial City, Phase
                2, 70
                Wing Tai Road, Chai Wan, Hong Kong
            
            
            90,000,000(3
            )
            
            90.00
            %
            
            4,611,880
            
            
            92.22
            %Lai
                Hung Man, Director
              c/o
                Clifford China Estates Inc., 7/F, Chai Wan Industrial City, Phase
                2, 70
                Wing Tai Road, Chai Wan, Hong Kong
            
            
            0
            
            
            0
            
            
            0
            
            
            0Derek
                W. Sun, Chief Operating Officer
              c/o
                Clifford China Estates Inc., 71F Chai Wan Industrial City, Phase
                2, 70
                Wing Tai Road, Chai Wan, Hong Kong
            
            
            0
            
            
            0
            
            
            0
            
            
            0Sze
                Tang Li
              SFlat
                G, 8/FL Tower 3
              The
                Waterfront 1 Austin Rd,West
                TST,Hong
                Kong
            
            
            4,392,000(4
            )
            
            8.78
            %
            
            0
            
            
            0Total
                Held by Directors and Executive Officers (three
                individuals)
            
            
            90,000,000
            
            
            90.00
            %
            
            4,611,880
            
            
            92.22
            %





(1)
            Based
                on a total of 50,000,000 shares of Common Stock outstanding on March
                7,
                2008.





(2)
            Based
                on a total of 5,000,000 shares of Series A Preferred Stock outstanding
                as
                of March 7, 2008.





(3)
            Includes
                (i) 43,881,200 shares of Common Stock and 2,111,880 shares of Series
                A
                Convertible Preferred Stock, par value $0.001 per share (“Series A
                Preferred Stock”), each share of which is initially convertible into ten
                (10) shares of Common Stock, owned by Billion Express International
                Limited and (ii) 2,500,000 shares of Series A Preferred Stock, each
                share
                of which is initially convertible into ten (10) shares of Common
                Stock,
                owned by Profit Garden International Limited. Mr. Clifford L.K. Pang
                is
                the sole owner of Billion Express International Limited and Profit
                Garden
                International Limited. The shares of Series A Preferred Stock are
                convertible at any time at the option of the holder thereof, subject
                to
                the availability of a sufficient number of authorized shares of Common
                Stock for issuance upon such conversion. The Company anticipates
                that a
                sufficient number of shares of Common Stock shall be available within
                60
                days of March 7, 2008 in order to permit the holders of Series A
                Preferred
                Stock to convert such shares of Series A Preferred Stock into shares
                of
                Common Stock at their option.




(4)
            Of
                the 4,392,000 shares beneficially owned by Sze Tang Li, (i) 2,368,800
                of
                such shares are held by IPacific Asset Management Limited, of which
                Mr Li
                is the sole owner, (ii) 823,200 of such shares are held by IBroader
                Development Limited, of which Mr Li is the sole owner and (iii) 600,000
                of
                such shares are held by Lap Woon Wong, the wife of Mr Li.




48




**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**




There
      has
      not been since January 1, 2007 nor is there currently pending any transaction
      or
      series of similar transactions to which we were or are to be a party in which
      the amount involved exceeded $120,000 and in which any director, executive
      officer, holder of more than 5% of our common stock or any member of the
      immediate family of any of these persons had or will have a direct or indirect
      material interest other than the following.





On
      October 1, 2007, we entered into and completed an Agreement for Share Exchange
      with Clifford Manufacturing, the sole owner of Parkade International Limited
      pursuant to which we acquired 100% of the equity of Parkade. In consideration
      for the acquisition of the shares of Parkade, we issued to Clifford
      Manufacturing, a total of 43,881,200 shares of our Common Stock and 5,000,000
      shares of our Series A Preferred Stock. Mr. Pang, our current Chief Executive
      Officer and a director of the Company was the sole shareholder of Clifford
      Manufacturing.





The
      Company has signed a project management contract for the period from January
      2007 to December 2008 for the development of Clifford Garden with Richpro
      International Limited, a company owned by Clifford L.K. Pang at a cost equal
      to
      5% of total construction cost of Clifford Garden, which the Company believes
      is
      equivalent to a similar project management agreement it may receive
      from an unaffiliated third party.




The
      Company has signed a consultancy agreement for the period from October 2007
      to
      September 2009 for the sales and marketing planning and execution of Clifford
      Garden development project with Abroad Trading Limited, a company owned by
      Clifford L.K. Pang at a cost equal to 2% of total sales of Clifford Garden,
      which the Company believes is equivalent to a similar consultancy
      agreement it may receive from an unaffiliated third party.





Prior
      to
      the Parkade transaction, one of our shareholders Mr. Sze Tang Li beneficially
      owned 61.97% of the outstanding Common Stock of our predecessor, Elite Artz,
      Inc. According to the terms of the Agreement for Share Exchange, Mr. Li and
      other shareholders of Elite Artz retained the same number of shares in Elite
      Artz after the Parkade transaction. As a result of the Parkade transaction
      and
      the issue of 43,881,200 shares of Common Stock to Clifford Manufacturing, Mr.
      Sze Tang Li currently beneficially owns 8.78% of our outstanding Common Stock.





Mr.
      Sze
      Tang Li, is the controlling shareholder of as well as an officer of First Asia
      International Capital Markets Limited ("First Asia"). Prior to the Parkade
      transaction on September 12, 2007, Parkade entered into a Consultancy Agreement
      (the "Consultancy Agreement") with First Asia, pursuant to which First Asia
      agreed to provide advice and services to Parkade in connection with Parkade
      achieving its goals of listing on the American Stock Exchange (with the long
      term goal of listing on the New York Stock Exchange) and raising capital. In
      return, Parkade agreed to pay First Asia a total fee of US$800,000, of which
      US$600,000 was in exchange for the ownership of Elite Artz and US$200,000 was
      for First Asia's consulting fee. Also, an additional sum of US$140,000 would
      be
      payable for auditing fees (US$100,000), legal fees (US$20,000) and appraisal
      fees (US$20,000), which would be paid directly to the appropriate professional
      service firms by Clifford Manufacturing. As of March 27, 2008, Clifford
      Manufacturing has paid First Asia a total of US$700,000, which consists of
      the
      US$600,000 fee for the ownership of Elite Artz and a payment of US$100,000
      as
      the first installment of First Asia's consulting fee. The remaining US$100,000
      balance for the consulting fee to First Asia will become due 5 days after our
      successful listing on the American Exchange and will also be paid by Clifford
      Manufacturing. Clifford Manufacturing currently intends to seek reimbursement
      from us for any part of the fees paid or payable above.





In
      addition to the Consultancy Agreement, on September 12, 2007, Parkade also
      entered into a Capital Raising Consultancy Agreement (the "Capital Raising
      Agreement") with First Asia. Pursuant to the Capital Raising Agreement, First
      Asia would be the exclusive financial adviser in connection with Parkade's
      capital raising after the Parkade transaction for a period of 210 days from
      the
      date of the agreement, which period could be extended for no longer than 90
      days. In return, First Asia would receive 10% of the gross proceeds of all
      capital raised in the form of cash as consulting and placement fee and another
      10% of the gross proceeds of all capital raised in the form of stock options
      as
      service fee. As of March 26, 2008, no capital has been raised under the Capital
      Raising Agreement and we have not made any payment to First Asia
      pursuant **** to
      such
      agreement.




49




The
      Company does not currently have any independent directors. ****





**ITEM
      13.**  **EXHIBITS**





The
      following exhibits are included as part of this report:




2.1
            
            Agreement
                for Share Exchange dated October 1, 2007 by and among Elite Artz,
                Inc.,
                Parkade International Limited and Clifford Manufacturing Co. Ltd
                (1)2.2
            
            Agreement
                and Plan of Merger dated as of January 29, 2008 by and between Elite
                Artz,
                Inc. and Clifford China Estates Inc. (2)3.1
            
            Articles
                of Incorporation of the Company (3)3.2
            
            By-Laws
                of the Company (4)3.3
            
            Certificate
                of Designation of Preferences and Rights With Respect to Series A
                Preferred Stock (5)14.1
            
            Code
                of Ethics (6)31.1
            
            Sarbanes
                Oxley Section 302 Certification of Chief Executive Officer and Chief
                Financial Officer32.1
            
            Sarbanes
                Oxley Section 906 Certification of Chief Executive Officer and Chief
                Financial Officer





(1)
      Incorporated by reference to the Company’s Form 8-K dated October 1,
      2007.


(2)
      Incorporated by reference to the Company’s Form 8-K dated January 31,
      2008.


(3)
      Incorporated by reference to the Company’s Registration Statement on Form SB-2
      filed on December 27, 2004.


(4)
      Incorporated by Reference to the Company’s Registration Statement on Form SB-2
      filed on December 27, 2004.


(5)
      Incorporated by reference to the Company’s Form 10-QSB for its fiscal quarter
      ended September 30, 2007.


(6)
      Incorporated by reference to the Company’s Annual Report on Form 10K-SB for the
      year ended December 31, 2005.




**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





With
      respect to the
      fiscal year ended December 31, 2006 and 2007, the aggregate audit fees
      billed by our independent registered public accounting firm, GHP Horwath PC,
      for
      professional services were as follows :




**Fiscal
                Year**
            
            **Audit**
            
            **Other
                audit**
              **related**
            
            **Tax**
            
            **All
                other**2007
            
            $
            100,000
            (1)
            
            —
            
            
            —
            
            
            —2006
            
            $
            90,000
            (2)
            
            —
            
            
            —
            
            
            —





(1)
      The
      fee was billed in 2008.


(2)
      The
      fee was for services rendered to Parkade.




**Audit
      Fees**





This
      category includes aggregate fees billed by our independent auditors for the
      audit of our annual financial statements on Form 10-KSB for our fiscal year
      ended December 31, 2007, audit or management’s assessment and effectiveness of
      internal controls over financial reporting.





**Audit
      Related Fees**





This
      category consists of services by our independent auditors that are reasonably
      related to the performance of the audit or review of our financial statements
      and are not reported above under Audit Fees. This category includes accounting
      consultations on transaction and proposed transaction related
      matters.





50




**Tax
      Fees**





This
      category consists of professional services rendered for tax compliance and
      preparation of our corporate tax returns and other tax advice.





**All
      Other Fees**





There
      are
      no other fees to disclose.





During
      the fiscal years ended December 31, 2006 and 2007, the aggregate audit fees
      billed by our former independent registered public accounting firm, K.W.Lam
      & Company, for professional services provided to Parkade prior to the
      Share Exchange were as follows:




**Fiscal
                Year**
            
            **Audit**
            
            **Other
                audit related**
            
            **Tax**
            
            **All
                other**2006
            
            $
            2,051
            
            $
            —
            
            
            —
            
            
            —2007
            
            $
            2,051
            
            $
            —
            
            
            —
            
            
            —





**Audit
      Fees**





This
      category includes aggregate fees billed by our independent auditors for the
      audit of our annual financial statements on Form 10-KSB, audit or management’s
      assessment and effectiveness of internal controls over financial reporting,
      review of financial statements included in our quarterly reports on Form 10-QSB
      and services that are normally provided by the auditor in connection with
      statutory and regulatory filings for those fiscal years.





**Audit
      Related Fees**





This
      category consists of services by our independent auditors that are reasonably
      related to the performance of the audit or review of our financial statements
      and are not reported above under Audit Fees. This category includes accounting
      consultations on transaction and proposed transaction related
      matters.





**Tax
      Fees**





This
      category consists of professional services rendered for tax compliance and
      preparation of our corporate tax returns and other tax advice.





**All
      Other Fees**





There
      are
      no other fees to disclose.





All
      of
      the fees paid to for the fiscal years ended December 31, 2006 and 2007,
      described above were pre-approved by the Board of Directors.




**Policy
      on Pre-Approval of Services Performed by Independent Registered Public
      Accounting Firm**




The
      Board
      of Director’s policy is to pre-approve all audit and permissible non-audit
      services provided by the independent auditors. These services may include audit
      services, audit-related services, tax services and other services. The audit
      committee may also pre-approve particular services on a case-by-case
      basis.


51


**SIGNATURES**





In
      accordance with Section 13 or 15(a) of the Exchange Act, the Registrant has
      caused this Report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized on the 31st day of March, 2008.




**Clifford
                China Estate Inc.**By:
            /s/
                Clifford L.K. PangClifford
                L.K. Pang
              Chief
                Executive Officer, Chief Financial Officer and
                Director
              (Principal
                Executive, Accounting and
                Financial Officer)




In
      accordance with the Exchange Act, this Report has been signed by the following
      persons on behalf of the Registrant in the capacities and on the dates
      indicated.




Date:
                March 31, 2008
            
            /s/
                Clifford L.K. PangClifford
                L.K. Pang
              Chief
                Executive Officer, Chief Financial Officer and Director
              (Principal
                Executive, Accounting and Financial
                Officer)




Date:
                March 31, 2008
            
            /s/
                Derek W. SunDerek
                W. Sun
              Chief
                Operating Officer




Date:
                March 31, 2008
            
            /s/
                Lai Hung ManLai
                Hung Man
              Director




52