UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB


(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT
                OF 1934





For
      the
      quarterly period ended March 31, 2007





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ________________ to _______________





000-51429


(Commission
      file number)





CHINA
      HOUSING & LAND DEVELOPMENT, INC.


(Exact
      name of small business issuer as specified in its charter)





Nevada
            20-1334845(State
                or other jurisdiction
            (IRS
                Employerof
                incorporation or organization)
            Identification
                No.)





6
      Youyi
      Dong Lu, Han Yuan 4 Lou


Xi'An,
      Shaanxi Province


China
      710054


(Address
      of principal executive offices)





86-029-82582632


(Issuer's
      telephone number)





N/A


(Former
      name, former address and former fiscal year,


if
      changed since last report)





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





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





State
      the
      number of shares outstanding of each of the issuer's classes of
      common


equity,
      as of the latest practicable date: As of May 11, 2007 -29,941,070


shares
      of
      common stock








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







CHINA
      HOUSING & LAND DEVELOPMENT, INC.


Index




Page
              NumberPART
                I.
            
            FINANCIAL
                INFORMATIONItem
                1.
            
            Financial
                StatementsConsolidated
                Balance Sheets as of March 31, 2007 (unaudited) and December 31,
                2006
            2Consolidated
                Statements of Income and Other Comprehensive Income for the three
                month
                periods ended March 31, 2007 and 2006 (unaudited)
            3Consolidated
                Statements of Cash Flows for the three month periods ended March
                31, 2007
                and 2006 (unaudited)
            4Notes
                to Consolidated Financial Statements (unaudited)
            5Item
                2.
            
            Management's
                Discussion and Analysis or Plan of Operations
            22Item
                3.
            
            Controls
                and Procedures
            24PART
                II.
            
            OTHER
                INFORMATIONItem
                1.
            
            Legal
                Proceedings
            25Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            25Item
                3.
            
            Defaults
                Upon Senior Securities
            25Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            21Item
                5.
            
            Other
                Information
            25Item
                6.
            
            Exhibits
            25SIGNATURES
            
            
            26EX-31.1
                (Certifications required under Section 302 of the Sarbanes-Oxley
                Act of
                2002)EX-31.2
                (Certifications required under Section 302 of the Sarbanes-Oxley
                Act of
                2002)EX-32.1
                (Certifications required under Section 906 of the Sarbanes-Oxley
                Act of
                2002)EX-32.2
                (Certifications required under Section 906 of the Sarbanes-Oxley
                Act of
                2002)










PART
      I.
      FINANCIAL INFORMATION


CHINA
                  HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARYCONSOLIDATED
                  BALANCE SHEETSAS
                  OF MARCH 31, 2007 AND DECEMBER 31,
                  2006
  March
                  31,
              
              December
                  31,2007
              
              2006(Unaudited)ASSETSCash
              
              $
              257,187
              
              $
              379,633Cash
                  - restricted
              
              
              1,222,618
              
              
              1,108,271Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of $79,920 and 79,118, respectively
              
              
              2,618,833
              
              
              3,070,516Notes
                  receivable, net
              
              
              2,128,304
              
              
              2,127,271Real
                  estateFinished
                  projects
              
              
              31,788,383
              
              
              37,247,436Construction
                  in progress
              
              
              10,549,075
              
              
              9,730,650Total
                  real estate held for development or sale
              
              
              42,337,458
              
              
              46,978,086Property
                  and equipment, net
              
              
              17,708,994
              
              
              17,701,896Advance
                  to suppliers
              
              
              5,247,003
              
              
              493,570Receivables,
                  deferred charges and other assets
              
              
              1,140,707
              
              
              986,039Total
                  assets
              
              $
              72,661,104
              
              $
              72,845,282LIABILITIESAccounts
                  payable
              
              $
              5,550,820
              
              $
              5,324,815Advances
                  from customers
              
              
              2,015,250
              
              
              2,902,426Accrued
                  expenses
              
              
              1,481,171
              
              
              1,738,584Payable
                  to original shareholders
              
              
              5,462,798
              
              
              5,462,798Income
                  and other taxes payable
              
              
              11,835,787
              
              
              11,386,169Other
                  payables
              
              
              1,857,590
              
              
              2,572,838Loans
                  from employees
              
              
              1,441,142
              
              
              1,037,842Loans
                  payable
              
              
              22,626,329
              
              
              23,206,852Total
                  liabilities
              
              
              52,270,887
              
              
              53,632,324SHAREHOLDERS'
                  EQUITYCommon
                  stock: $.001 par value, authorized 100,000,000 sharesissued
                  and outstanding 20,679,223 and 20,619,223, respectively
              
              
              20,679
              
              
              20,619Additional
                  paid in capital
              
              
              7,323,940
              
              
              7,192,600Statutory
                  reserves
              
              
              2,234,124
              
              
              2,150,138Retained
                  earnings
              
              
              15,122,697
              
              
              14,414,181Capital
                  contribution receivable
              
              
              (5,462,798
              )
              
              (5,462,798
              )Accumulated
                  other comprehensive income
              
              
              1,151,575
              
              
              898,218Total
                  shareholders' equity
              
              
              20,390,217
              
              
              19,212,958Total
                  liabilities and shareholders' equity
              
              $
              72,661,104
              
              $
              72,845,282




2


CHINA
                  HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARYCONSOLIDATED
                  STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
                  THE THREE MONTHS ENDED MARCH 31, 2007 AND
                  2006
  2007
              
              2006(Unaudited)
              
              (Unaudited)REVENUESale
                  of properties
              
              $
              8,045,576
              
              $
              16,978,251Other
                  income
              
              
              150,621
              
              
              18,572Total
                  revenue
              
              
              8,196,197
              
              
              16,996,823COSTS
                  AND EXPENSESCost
                  of properties sold
              
              
              6,251,458
              
              
              11,507,106Selling,
                  general and administrative expenses
              
              
              498,079
              
              
              623,240Other
                  expense
              
              
              32,619
              
              
              72,414Interest
                  expense
              
              
              207,876
              
              
              21,783Total
                  costs and expense
              
              
              6,990,032
              
              
              12,224,543INCOME
                  BEFORE PROVISION FOR INCOME TAXES
              
              
              1,206,165
              
              
              4,772,280PROVISION
                  FOR INCOME TAXES
              
              
              413,663
              
              
              1,553,878NET
                  INCOME
              
              
              792,502
              
              
              3,218,402GAIN
                  ON FOREIGN EXCHANGE
              
              
              253,357
              
              
              98,750OTHER
                  COMPREHENSIVE INCOME
              
              $
              1,045,859
              
              $
              3,317,152WEIGHTED
                  AVERAGE SHARES OUTSTANDINGBASIC
                  AND DILUTED
              
              
              20,669,223
              
              
              20,277,615EARNINGS
                  PER SHAREBASIC
                  AND DILUTED
              
              $
              0.04
              
              $
              0.16




3




CHINA
                  HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARYCONSOLIDATED
                    STATEMENTS OF CASH FLOWSFOR
                  THE THREE MONTHS ENDED MARCH 31, 2007 AND
                  2006


2007
              
              2006(Unaudited)
              
              (Unaudited)CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              792,502
              
              $
              3,218,402Adjustments
                  to reconcile net income to cashprovided
                  by (used in) operating activities:Allowance
                  for bad debt
              
              
              512,654
              
              
              635,722Depreciation
              
              
              169,861
              
              
              31,554Gain
                  on disposal of fixed assets and inventory
              
              
              472
              
              
              -Amortization
                  of stock issued for investor relations fees(Increase)
                  decrease in assets:
              
              
              32,850
              
              
              -Accounts
                  receivable
              
              
              401,374
              
              
              51,930Real
                  estate
              
              
              5,097,643
              
              
              (5,883,384
              )Advance
                  to suppliers
              
              
              (4,691,540
              )
              
              6,026,822Other
                  receivable and deferred charges
              
              
              (388,692
              )
              
              (391,140
              )Increase
                  (decrease) in liabilities:Accounts
                  payable
              
              
              170,026
              
              
              2,232,169Advances
                  from customers
              
              
              (913,140
              )
              
              (14,032,170
              )Accrued
                  expense
              
              
              (274,003
              )
              
              48,133Other
                  payable
              
              
              (734,292
              )
              
              79,857Income
                  and other taxes payable
              
              
              332,894
              
              
              2,307,021Net
                  cash provided by (used in) operating activities
              
              
              508,609
              
              
              (5,675,084
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Change
                  in restricted cash
              
              
              (102,718
              )
              
              570,789Purchase
                  of buildings, equipment and automobiles
              
              
              (1,891
              )
              
              (319,744
              )Notes
                  receivable funded
              
              
              (108,838
              )
              
              -Net
                  cash used in (provided by) investing activities
              
              
              (213,447
              )
              
              251,045CASH
                  FLOWS FROM FINANCING ACTIVITIES:Loan
                  proceeds
              
              
              645,050
              
              
              5,741,650Payments
                  on loans
              
              
              (1,457,813
              )
              
              -Loans
                  from employees
              
              
              391,290
              
              
              -Net
                  cash (used in) provided by financing activities
              
              
              (421,473
              )
              
              5,741,650(DECREASE)
                  INCREASE IN CASH
              
              
              (126,311
              )
              
              317,611EFFECTS
                  ON FOREIGN CURRENCY EXCHANGE
              
              
              3,865
              
              
              1,530CASH,
                  beginning of period
              
              
              379,633
              
              
              30,746CASH,
                  end of period
              
              $
              257,187
              
              $
              349,887




4


CHINA
        HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
        31,
        2007
 (UNAUDITED)
  **Note
        1 - Organization and basis of presentation**
 
 Organization
 
 China
        Housing & Land Development, Inc (the “Company”) is a Nevada corporation,
        incorporated on July 6, 2004 under the name Pacific Northwest Productions
        Inc.
        On May 6, 2006, the Company changed its name to China Housing & Land
        Development Inc. The Company, through its subsidiary Xian Tsining Housing
        Development Company Inc. (XTHDC), is engaged in acquisition, development,
        management, and sale of commercial and residential real estate properties
        located primarily in Xi'an city, the People’s Republic of China
        (PRC).
 
 XTHDC
        was
        established during May 1992 as a state-owned enterprise, whose former name
        is
        Xian New Star Group Real Estate Development Co. Ltd, and was formerly the
        logistics department of Lan Zhou Military area of the People's Liberation
        Army
        of China. The Company was reorganized as a limited liability company with
        equity
        capital invested by management personnel in September 1999. The Company is
        a
        Chinese registered limited liability company with a legal structure similar
        to a
        regular corporation and a limited liability company. The Articles of Association
        provide for a 54 year term beginning September 7, 1999 with registered capital
        of approximately $3,140,000 (RMB26,000,000). On March 28, 2002, the registered
        capital of Tsining was increased to approximately $6,050,000 (RMB50,000,000).
 
 On
        April
        21, 2006, XTHDC entered into and closed a share purchase agreement with Pacific
        Northwest Productions, Inc. (“Pacific”), a public shell in the United States of
        Americaincorporated
        in the state of Nevada.
        Pursuant to the purchase agreement, Pacific acquired all of the issued and
        outstanding capital stock of XTHDC in exchange for 16,000,000 (post-split)
        shares of Pacific’s common stock.
 
 Concurrently
        with the closing of the purchase agreement and as a condition thereof, Pacific
        entered into an agreement with Deljit Bains and Davinder Bains, its executive
        officers, pursuant to which they each returned 4,000,000 (post-split) shares
        (8,000,000 shares in total) of Pacific common stock to Pacific for cancellation.
        They were not compensated in any way for the cancellation of their shares
        of
        Pacific common stock. Upon completion of the foregoing transactions, Pacific
        had
        an aggregate of 20,000,000 shares of common stock issued and outstanding.
 
 As
        a
        result of the merger, XTHDC’s stockholders own approximately 80% of the combined
        company and the directors and executive officers of XTHDC became the directors
        and executive officers of Pacific. Accordingly, the transaction has been
        accounted for as a reverse acquisition of Pacific by XTHDC resulting in a
        recapitalization of XTHDC. XTHDC is deemed to be the purchaser and surviving
        company for accounting purposes. Accordingly, its assets and liabilities
        are
        included in the balance sheet at their historical book values and the results
        of
        operations of XTHDC have been presented for the comparative prior period.
 
 In
        addition, on May 5, 2006, Pacific changed its name to China Housing & Land
        Development, Inc. (hereafter referred to as the “Company”) and the stockholders
        approved a stock dividend of seven shares for each share held, which has
        been
        accounted for as an eight to one forward stock split. All shares and per
        share
        data have been restated retrospectively.
  5
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 **Note
        2 - Acquisition**
 
 On
        March
        9, 2007, the Company entered into a Shares Transfer Agreement (the Agreement)
        to
        acquire 32 million shares of Xi'an New Land Development Co., Ltd. (New Land),
        representing 100% equity ownership of New Land. The total purchase price
        for the
        acquisition is 270 million RMB, approximately $34 million, which is subject
        to
        change. The total purchase price includes 1) an initial cash payment of 5
        million RMB, approximately $610,000, payable within 20 days after the signing
        of
        the Agreement, 2) an additional cash payment of 57 million RMB, approximately
        $7.2 million, payable within 30 days after the Company receives a satisfactory
        audit report of New Land, and 3) a promissory note of the aggregate amount
        of
        208 million RMB, approximately $26.2 million, bearing 10% interest with a
        maturity date of January
        30, 2009.
 
 As
        of
        March 31, 2007, the transaction had not closed; as such, the financial data
        of
        New Land is not included in the accompanying financial statements.
 
 **Note
        3 - Summary of significant accounting policies**
 
 Principles
        of consolidation and basis of presentation
 
 The
        accompanying consolidated financial statements include the accounts of China
        Housing & Land Development, Inc. and its wholly owned subsidiary, XTHDC. All
        material inter-company accounts and transactions have been eliminated in
        consolidation. The accompanying consolidated financial statements have been
        prepared in conformity with accounting principles generally accepted in the
        United States of America.
  Use
        of
        estimates
  The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates.
 
 Foreign
        currency translation
 
 As
        of
        March 31, 2007, the accounts of the Company are maintained in their functional
        currency the Chinese Yuan Renminbi (RMB). The reporting currency for the
        consolidated financial statements is the United States Dollars (USD). In
        accordance with Statement of Financial Accounts Standards ("SFAS") No. 52,
        "Foreign Currency Translation," all assets and liabilities were translated
        at
        the exchange rate on the balance sheet date, stockholder's equity are translated
        at the historical rates and statement of operations are translated at the
        weighted average exchange rate for the period. Cash flows are also translated
        at
        the weighted average exchange rate for the year; therefore, amounts reported
        on
        the statement of cash flows will not necessarily agree with changes in the
        corresponding balances on the balance sheet.
  6
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 The
        resulting translation adjustments are reported under other comprehensive
        income
        in accordance with SFAS No. 130, "Reporting Comprehensive Income."
 
 Revenue
        recognition
 
 Real
        estate sales are reported in accordance with the provisions of Statement
        of
        Financial Accounting Standard No. 66, “Accounting for Sales of Real Estate”.
        Profit from the sales of development properties, less 5% business tax, is
        recognized by the full accrual method when the sale is consummated. A sale
        is
        not considered consummated until (1) the parties are bound by the terms of
        a
        contract, (2) all consideration has been exchanged, (3) any permanent financing
        of which the seller is responsible has been arranged, (4) all conditions
        precedent to closing have been performed, (5) the seller does not have
        substantial continuing involvement with the property, and (6) the usual risks
        and rewards of ownership have been transferred to the buyer. Sales transactions
        not meeting all the conditions of the full accrual method are accounted for
        using the deposit method of accounting. Under the deposit method, all costs
        are
        capitalized as incurred, and payments received from the buyer are recorded
        as a
        deposit liability. Real estate rental income, less 5% business tax, is
        recognized on the straight-line basis over the terms of the tenancy
        agreements.
  For
        Company financed sales, the Company 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. The initial investment is the buyer’s
        down-payment less the loan amount provided by the Company. Interest on these
        loans is amortized over the terms of the loans.
  Real
        estate capitalization and cost allocation
  Residential
        properties completed or under construction are stated at cost or estimated
        net
        realizable value, whichever is lower. Costs include land and land improvements,
        direct construction costs and development costs, including predevelopment
        costs,
        interest on indebtedness, real estate taxes, insurance, construction overhead
        and indirect project costs. Selling and advertising costs are expensed as
        incurred. Total estimated costs of multi-unit developments are allocated
        to
        individual units based upon specific identification methods.
  Land
        and
        improvement costs include land, land improvements, interest on indebtedness
        and
        real estate taxes. Appropriate costs are allocated to projects on the basis
        of
        acreage, dwelling units and relative sales value. Land held for development
        and
        improvements are stated at cost or estimated net realizable value, whichever
        is
        lower.
  Land
        and
        land improvements applicable to condominiums, town homes and single-family
        homes, are transferred to construction in progress when construction
        commences.
 
 Capitalization
        of interest
 
 Interest
        incurred during construction is capitalized into construction in progress.
        All
        other interest is expensed as incurred.
  7
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 For
        the
        three months ended March 31, 2007, interest incurred by the Company was $531,103
        and capitalized interest for the same period was $323,227. For the three
        months
        ended March 31, 2006, interest incurred by the Company was $706,649 and
        capitalized interest for the same period was $684,866.
 
 Concentrations
 
 The
        Company sells residential and commercial units to residents and small business
        owners. The Company had one major customer that accounted for approximately
        47%
        of the Company’s sales for the three months ended March 31, 2007 and accounts
        receivable for this customer at March 31, 2007 amounted to $1,199,408. There
        was
        no major customer that accounted for over 5% of the Company’s sales for the
        three months ended March 31, 2006.
  The
        Company is dependent on third-party sub-contractors, manufacturers, and
        distributors for all of construction services and supply of construction
        materials. Construction services or products purchased from the Company’s five
        largest subcontractors/suppliers accounted for 16% and 41% of the Company’s
        purchases for the three months ended March 31, 2007 and 2006, respectively.
        Accounts payables to these subcontractors/suppliers amounted to $1,260,133
        and
        $2,574,122 at March 31, 2007 and 2006, respectively.
 
 The
        Company's operations are carried out in the People's Republic of China.
        Accordingly, the Company's business, financial condition and results of
        operations may be influenced by the political, economic and legal environments
        in the People's Republic of China, by the general state of the People's Republic
        of China’s economy. The Company's business may be influenced by changes in
        governmental policies with respect to laws and regulations, anti-inflationary
        measures, currency conversion and remittance abroad, and rates and methods
        of
        taxation, among other things.
 
 Cash
        and concentration of risk
 
 Cash
        includes cash on hand and demand deposits in accounts maintained with
        state-owned banks within the PRC. Total cash in state-owned banks at March
        31,
        2007 and December 31, 2006 amounted to $233,483 and $353,762, respectively,
        of
        which no deposits are covered by insurance. The Company has not experienced
        any
        losses in such accounts and believes it is not exposed to any risks on its
        cash
        in bank accounts.
 
 Restricted
        cash
  The
        bank
        grants mortgage loans to home purchasers and will credit these amounts to
        the
        Company's bank account once title passes. If the houses are not completed
        and
        the new home owners have no ownership documents to secure the loan, the bank
        will deduct 10% of the home owner’s loan from the Company's bank account and
        transfer that amount to a designated bank account classified on the balance
        sheet as restricted cash. Interest earned on the restricted cash is credited
        to
        the Company's normal bank account. The bank will release the restricted cash
        after home purchasers have obtained the ownership documents to secure the
        mortgage loan. Total restricted cash amounted to $1,222,618 and $1,108,271
        as of
        March 31, 2007 and December 31, 2006, respectively.
  8
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 Accounts
        receivable-trade
 
 Accounts
        receivable-trade consists of balances due from customers for the sale of
        residential and commercial units in the PRC. The Company provides an allowance
        for doubtful accounts equal to the estimated uncollectible amounts. The
        Company’s estimated uncollectible amounts are based on historical collection
        experience and a review of the current status of trade accounts receivable.
        It
        is reasonably possible that the Company’s estimate of the allowance for doubtful
        accounts will change. Accounts receivable are presented net of an allowance
        for
        doubtful accounts of $2,618,833 and $3,070,516 at March 31, 2007 and December
        31, 2006, respectively.
 
 Notes
        receivable
 
 The
        Company finances sales to certain new home owners. Financing agreements are
        signed and the loans are due in 1 to 3 years. The loans are non-interest
        bearing, therefore the Company has calculated imputed interest and discounted
        the carrying amount of notes receivable. Notes receivable are presented net
        of
        unamortized interest and allowance for doubtful accounts.
 
 March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Notes
                  receivable
              
              $
              2,290,142
              
              $
              2,290,378Less:
                  unamortized interest
              
              
              (32,139
              )
              
              (34,710
              )Less:
                  allowance for doubtful accounts
              
              
              (129,699
              )
              
              (128,397
              )Notes
                  receivable, net
              
              $
              2,128,304
              
              $
              2,127,271
 
 Other
        receivables
 
 Other
        receivables consist of various cash advances to unrelated companies and
        individuals which the management of the Company have business relationships.
        These amounts are not related to operations of the Company, are unsecured,
        non-interest bearing and generally are short term in nature. The balances
        of
        other receivables were $1,291,299 and $1,282,831 as of March 31, 2007 and
        December 31, 2006, respectively. Other receivables are reviewed annually
        as to
        whether their carrying value has become impaired. The Company has established
        an
        allowance for doubtful accounts of $304,981 and $301,920 as of March 31,
        2007
        and December 31, 2006, respectively
 
 Advances
        to suppliers
 
 Advances
        to suppliers consist of amounts paid in advance to contractors and vendors
        for
        services and materials that have not been performed or received and generally
        relate to the development and construction of residential units in the PRC.
        Advances amounted to $5,247,003 and $493,570 as of March 31, 2007 and December
        31, 2006, respectively.
  9
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 Real
        estate inventory (Inventory or Inventories)
 
 Real
        estate inventories represent real estate held for development or sale and
        consist of residential and commercial units under construction and units
        completed. Inventories are stated at the lower of cost or net realizable
        value.
        If the inventory is determined to be impaired, it will be written down to
        its
        fair market value. Inventory costs include land use right, land development
        and
        home construction costs, engineering costs, insurance costs, wages, real
        estate
        taxes, and interest related to development and construction. All costs are
        accumulated by specific projects and allocated to residential and commercial
        units within the respective projects. The Company leases the land for the
        residential unit sites under land use rights with various terms from the
        government of the PRC. The Company evaluates the carrying value for impairment
        based on the undiscounted future cash flows of the assets. Write-downs of
        inventory deemed to be impaired would be recorded as adjustments to the cost
        basis. No Impairment loss was incurred or recorded for the three months ended
        March 31, 2007 and 2006.
 
 No
        depreciation is provided for construction in progress. Construction overhead
        and
        selling expenses are expensed as incurred.
 
 Property
        and equipment
 
 Property
        and equipment are recorded at cost. Depreciation is computed using the
        straight-line method over the estimated useful lives of the assets. Depreciation
        expense for the three months ended March 31, 2007 and 2006 amounted to $169,861
        and $31,554, respectively. Estimated useful lives of the assets are as
        follows:
 
 Estimated
                  Useful LifeBuildings
              
              
              30
                  yearsVehicles
              
              
              6
                  yearsElectronic
                  equipment
              
              
              5
                  yearsOffice
                  furniture
              
              
              5
                  years
  Maintenance,
        repairs and minor renewals are charged directly to expenses as incurred.
        Major
        additions and betterment to property and equipment are capitalized.
 
 Long-lived
        assets
  Effective
        January 1, 2002, the Company adopted Statement of Financial Accounting Standards
        No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
        ("SFAS
        144"), which addresses financial accounting and reporting for the impairment
        or
        disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for
        the
        Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
        Of,"
        and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
        the Results of Operations for a Disposal of a Segment of a Business." The
        Company periodically evaluates the carrying value of long-lived assets to
        be
        held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
        to be recorded on long-lived assets used in operations when indicators of
        impairment are present and the undiscounted cash flows estimated to be generated
        by those assets are less than the assets' carrying amounts. In that event,
        a
        loss is recognized based on the amount by which the carrying amount exceeds
        the
        fair market value of the long-lived assets. Loss on long-lived assets to
        be
        disposed of is determined in a similar manner, except that fair market values
        are reduced for the cost of disposal. Based on its review, the Company believes
        there were no impairment of its long-lived assets as of March 31,
        2007.
  10
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 Fair
        value of financial instruments
 
 Statement
        of Financial Accounting Standards No. 107, “Disclosures About Fair Value of
        Financial Instruments” requires disclosure of the fair value of financial
        instruments held by the Company. SFAS 107 defines the fair value of financial
        instruments as the amount at which the instrument could be exchanged in a
        current transaction between willing parties. The Company considers the carrying
        amount of cash, accounts receivable, other receivables, accounts payable,
        accrued liabilities and other payables to approximate their fair values because
        of the short period of time between the origination of such instruments and
        their expected realization and their current market rate of interest. Management
        believes the interest rate on notes reflect rates currently available. Thus,
        the
        carrying value of loans payable approximates fair value.
 
 Advances
        from customers
 
 Advances from
        customers represent prepayments by customers for home purchases. The Company
        records these prepayments as advances from customers when the payments are
        received. Advances from customers amounted to $2,015,250 and $2,902,426 at
        March
        31, 2007 and December 31, 2006, respectively.
 
 Accounts
        payable
 
 Accounts
        payable consists of balances due to subcontractors and suppliers. Accounts
        payable amounted to $5,550,820 and $5,324,815 at March 31, 2007 and December
        31,
        2006, respectively.
 
 Other
        payables
 
 Other
        payables consist of various cash advances from unrelated companies and
        individuals which management of the Company have business relationships.
        These
        amounts are not related to operations of the Company, are unsecured,
        non-interest bearing and generally are short term in nature. Other payables
        amounted to $1,857,590 and $2,572,838 as of March 31, 2007 and
        December 31,
        2006, repectively .
 
 Advertising
        costs
 
 Advertising
        and sales promotion costs are expensed as incurred. Advertising expense totaled
        $62,891 and $163,033 for the three months ended March 31, 2007 and 2006
        respectively.
  11
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 Warranty
        costs
 
 Generally,
        the Company provides all of its customers with a limited (half a year to
        5
        years) warranty period for defective workmanship.
 
 The Company
        accrues estimated warranty costs into the cost of its homes as a liability
        after
        each project is closed based on the Company's historical experience, which
        normally is less than 0.2% of total cost of the project. Any excess amounts
        are
        expensed in the period when they occur. Many of the items relating to
        workmanship are completed by the existing labor force utilized to construct
        other new houses and are therefore already factored into the labor and overhead
        costs of another project. Any significant material defects are generally
        under
        warranty with the Company's suppliers. Currently, the Company retains 5%
        of the
        total construction contract from the construction contractors for a period
        of
        one year after the completion of the construction. Such retention amounts
        will
        be used to pay for any repair expense incurred due to defects in the
        construction. The Company has not historically incurred any significant
        litigation requiring additional specific reserves for its product offerings.
        As
        of March 31, 2007 and December 31,2006, the Company has accrued $68,682 as
        warranty costs.
 
 Income
        taxes
 
 The
        Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
        the
        recognition of deferred tax assets and liabilities for the expected future
        tax
        consequences of events that have been included in the financial statements
        or
        tax returns. Under this method, deferred income taxes are recognized for
        the tax
        consequences in future years of differences between the tax bases of assets
        and
        liabilities and their financial reporting amounts at each period end based
        on
        enacted tax laws and statutory tax rates applicable to the periods in which
        the
        differences are expected to affect taxable income. Valuation allowances are
        established, when necessary, to reduce deferred tax assets to the amount
        expected to be realized. At March 31, 2007 and 2006, there was no significant
        book to tax differences.
 
 The
        Company adopted FASB Interpretation 48, “Accounting for Uncertainty in Income
        Taxes” (“FIN 48”), as of January 1, 2007. A tax position is recognized as a
        benefit only if it is “more likely than not” that the tax position would be
        sustained in a tax examination, with a tax examination being presumed to
        occur.
        The amount recognized is the largest amount of tax benefit that is greater
        than
        50% likely of being realized on examination. For tax positions not meeting
        the
“more likely than not” test, no tax benefit is recorded. The adoption had no
        affect on the Company’s financial statements.
  12
  CHINA
            HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
              TO
              CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
              31,
              2007
 (UNAUDITED)
 Local
        PRC income tax
 
 The
        Company is governed by the Income Tax Law of the PRC concerning Chinese
        registered limited liability companies. Under the Income Tax Laws of the
        PRC,
        Chinese enterprises are generally subject to an income tax at an effective
        rate
        of 33% (30% state income taxes plus 3% local income taxes) on income reported
        in
        the statutory financial statements after appropriate tax adjustments, unless
        the
        enterprise is located in a specially designated region for which more favorable
        effective tax rates are applicable. The provision for income taxes at March
        31
        consisted of the following:
  2007
              
              2006(Unaudited)
              
              (Unaudited)Provision
                  for China income and local tax
              
              $
              413,663
              
              $
              1,553,878Deferred
                  taxes
              
              
              -
              
              
              -Total
                  provision for income taxes
              
              $
              413,663
              
              $
              1,553,878
 
 The
        following table reconciles the U.S. statutory rates to the Company’s effective
        tax rate at March 31,
 
 2007
              
              2006U.S.
                  statutory rates
              
              
              34.0
              %
              
              34.0
              %Foreign
                  income not recognized in USA
              
              
              (34.0
              )
              
              (34.0
              )China
                  income taxes
              
              
              33.0
              
              
              33.0Totals
              
              
              33.0
              %
              
              33.0
              %
  Beginning
        January 1, 2008, the new Enterprise Income Tax (“EIT”) law will replace the
        existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises
        (“FIEs”). The new standard EIT rate of 25% will replace the 33% rate currently
        applicable to both DES and FIEs. The two years tax exemption, three years
        50%
        tax reduction tax holiday for production-oriented FIEs will be eliminated.
        The
        Company is currently evaluating the effect of the new EIT law will have on
        its
        financial position.
 
 Sales
        and additional taxes
 
 In
        June
        2006, the Emerging Issues Task Force (EITF) reached a consensus on EITF No.
        06-3, How Taxes Collected from Customers and Remitted to Governmental
        Authorities Should Be Presented in the Income Statement (EITF No. 06-3).
        EITF
        No. 06-3 permits that such taxes may be presented on either a gross basis
        or a
        net basis as long as that presentation is used consistently. The adoption
        of
        EITF No. 06-3 on January 1, 2007 did not impact our consolidated financial
        statements. We present the taxes within the scope of EITF No. 06-3 on a net
        basis.
 
 All
        sales
        recognized are subject to sales and additional taxes of 5.61% and are payable
        to
        local government. This amount is included in cost of properties sold. Sales
        and
        additional taxes incurred for the three months ended March 31, 2007 and 2006
        were $451,357 and $952,480, respectively.
 
 Basic
        and diluted earning per share
  Earning
        per share is calculated in accordance with the Statement of Financial Accounting
        Standards No. 128 (“SFAS No. 128”), “Earnings per share”. SFAS No. 128
        superseded Accounting Principles Board Opinion No.15 (APB 15). Net earning
        per
        share for all periods presented has been restated to reflect the adoption
        of
        SFAS No. 128. Basic net earning per share is based upon the weighted average
        number of common shares outstanding. Diluted net earning per share is based
        on
        the assumption that all dilutive convertible shares and stock options were
        converted or exercised. Dilution is computed by applying the treasury stock
        method.
  13
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
  Under
        this method, options and warrants are assumed to be exercised at the beginning
        of the period (or at the time of issuance, if later), and as if funds obtained
        thereby were used to purchase common stock at the average market price during
        the period.
  At
        March
        31, 2007, the Company had 309,612 outstanding warrants. The average stock
        price
        for the three months ended March 31, 2007 was less than the exercise price
        of
        the warrants; therefore, the warrants are not factored into the diluted earning
        per share calculation as they are anti-dilutive.
 
 Stock-based
        compensation
 
 The
        Company records stock-based compensation pursuant to Statement of Financial
        Accounting Standards No. 123 (revised 2004), "Share-Based Payments,"
        ("FAS123R"), which established standards for the accounting for transactions
        in
        which an entity exchange its equity instruments for goods or services. This
        statement requires companies to measure the cost of services received in
        exchange for an award of equity instruments based on the grant-date fair
        value
        of the award. The cost will be recognized over the period of services
        rendered.
 
 Comprehensive
        income
 
 Comprehensive
        income consists of net income and foreign currency translation gains and
        losses
        affecting shareholders’ equity that, under generally accepted accounting
        principles, are excluded from net income. Gain on foreign exchange translation
        totaled $253,357 and $98,750 for the three months ended March 31, 2007 and
        2006,
        respectively.
  Statement
        of cash flows
  In
        accordance with Statement of Financial Accounting Standards No. 95, "Statement
        of Cash Flows," cash flows from the Company's operations is calculated based
        upon the local currencies. As a result, amounts related to assets and
        liabilities reported on the statement of cash flows will not necessarily
        agree
        with changes in the corresponding balances on the balance sheet.
 
 Recent
        pronouncements
  In
        September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles (GAAP), and expands disclosures
        about
        fair value measurements. This Statement applies under other accounting
        pronouncements that require or permit fair value measurements, the Board
        having
        previously concluded in those accounting pronouncements that fair value is
        the
        relevant measurement attribute. Accordingly, this Statement does not require
        any
        new fair value measurements. However, for some entities, the application
        of this
        Statement will change current practice. This Statement is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years. The management is currently
        evaluating the effect of this pronouncement on its financial
        statements **.**
  14
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
  In
        February 2007, the Financial Accounting Standards Board (‘‘FASB’’) issued
        Statement of Financial Accounting Standards (‘‘SFAS’’) No. 159, The Fair Value
        Option for Financial Assets and Financials Liabilities — Including an Amendment
        of FASB Statement No. 115. This standard permits measurement of certain
        financial assets and financial liabilities at fair value. If the fair value
        option is elected, the unrealized gains and losses are reported in earnings
        at
        each reporting date. Generally, the fair value option may be elected on an
        instrument-by-instrument basis, as long as it is applied to the instrument
        in
        its entirety. The fair value option election is irrevocable, unless a new
        election date occurs. SFAS No. 159 requires prospective application and also
        establishes certain additional presentation and disclosure requirements.
        The
        standard is effective as of the beginning of the fiscal year that begins
        after
        November 15, 2007. The Company is currently evaluating the provisions
        of SFAS No. 159 to determine the potential impact, if any, the adoption will
        have on the Company’s financial statements.
 
 **Note
        4 - Supplemental disclosure of cash flow information**
 
 Income
        taxes paid amounted to $0 and $0 for the three months ended March 31, 2007
        and
        2006, respectively. Interest paid for the three months ended March 31, 2007
        and
        2006 amounted to $531,103 and $706,649, respectively.
 
 Noncash
        financing transactions included 60,000 shares of common stock issued to an
        investor relations company in consideration of a one year consulting service
        valued at $131,400.
 
 **Note
        5 - Real estate inventories**
 
 The
        following summarizes the components of real estate inventories as of March
        31,
        2007 and December 31, 2006:
 
 March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Finished
                  projects
              
              $
              31,788,383
              
              $
              37,247,436Construction
                  in progress
              
              
              10,549,075
              
              
              9,730,650Total
                  real estate held for development or sale
              
              $
              42,337,458
              
              $
              46,978,086
  **Note
        6 - Receivables, deferred charges and other assets**
 
 Receivables,
        deferred charges and other assets consist of the following as of March 31,
        2007
        and December 31, 2006:
 
 March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Other
                  receivable
              
              $
              1,291,299
              
              $
              1,282,831Allowance
                  for doubtful Accounts
              
              
              (304,981
              )
              
              (301,920
              )Prepaid
                  expenses
              
              
              154,389
              
              
              5,128Receivables,
                  deferred charges and other assets
              
              $
              1,140,707
              
              $
              986,039
  15
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
  **Note
        7 - Property and equipment, net**
 
 Property
        and equipment consist of the following as of March 31, 2007 and December
        31,
        2006:
 
 March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Buildings
                  and improvements
              
              $
              18,440,651
              
              $
              18,255,045Machinery
                  and equipment
              
              
              119,693
              
              
              117,081Transportation
                  equipment
              
              
              50,171
              
              
              55,598Furniture
                  and fixture
              
              
              96,469
              
              
              95,519Totals
              
              
              18,706,984
              
              
              18,523,243Accumulated
                  depreciation
              
              
              (997,990
              )
              
              (821,347
              )Property
                  and equipment, net
              
              $
              17,708,994
              
              $
              17,701,896
  **Note
        8 - Accounts receivable**
 
 Accounts
        receivable consist of the following as of March 31, 2007 and December 31,
        2006:
 
 March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Accounts
                  receivable
              
              $
              2,698,253
              
              $
              3,149,634Allowance
                      for doubtfulaccounts
              
              
              (79,920
              )
              
              (79,118
              )Accounts
                  receivable, net
              
              $
              2,618,333
              
              $
              3,070,516
  **Note** **9
        -** **Loans from employees**
 
 The
        Company has borrowed monies from certain employees to fund the Company’s
        construction projects. The loans bear interest ranging from 7% to 12% and
        the
        principal matures within one to three years. Loans from employees amounted
        to
        $1,441,142 and $1,037,842 as of March 31, 2007 and December 31, 2006,
        respectively.
  16
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
  **Note
        10 - Loans payable**
 
 Loans
        payable represent amounts due to various banks and are due on demand or normally
        within one year. These loans generally can be renewed with the banks when
        expired. Loans payable consisted of the following as of March
        31, 2007 and December 31, 2006:
  March
                  31, 2007
              
              December
                  31, 2006(Unaudited)Commercial
                  Bank Weilai Branch due August 7, 2007, annual interest rate is
                  at 9.945%,
                  secured by the Company's Xin Xin Gangwan, Xin Xin Tower and Ming
                  Yuan
                  Projects
              
              $
              5,180,000
              
              $
              5,128,000Shannxi
                  International Trust Investment Co., due on demand, annual interest
                  is at
                  10.80%,secured by 14 units of the Company's Xin Xin In House and
                  Harbor
                  projects
              
              
              2,201,502
              
              
              2,564,000Shannxi
                  International Trust Investment Co., due September 20, 2007, annual
                  interest is at 10.80%, secured by six commercial units of the Company's
                  Jun Jin Yuan project
              
              
              508,935
              
              
              503,826Merchant
                  bank Xi'an high and new technology development zone branch, due
                  June 27,
                  2007annual interest is at 19.20%, secured by the Company's Jun
                  Jin Yuan
                  project
              
              
              407,925
              
              
              403,830Construction
                  Bank Zhuque Road Branch,due May 6, 2007, annual interest is at
                  6.21%,secured by the Company's Jun Jin Yuan project
              
              
              3,501,684
              
              
              4,107,528Construction
                  Bank Zhuque Road Branch,due July 6, 2007, annual interest is at
                  6.91%,secured by the Company's Jun Jin Yuan project
              
              
              2,680,653
              
              
              2,564,000Commercial
                  Bank Weilai Branch,due December 31, 2007, annual interest is at
                  9.79%,
                  secured by the Company's 24G project
              
              
              6,345,506
              
              
              6,410,000Various
                  loans on demand,to unrelated parties, at various interest
                  rate
              
              
              1,800,124
              
              
              1,525,668Total
              
              $
              22,626,329
              
              $
              23,206,852
  All
        loans
        were borrowed for construction projects. Interest paid was capitalized during
        the periods of construction and allocated to various construction projects.
        When
        the projects are completed, interest incurred from these loans is
        expensed.
 
 **Note
        11 - Shareholders’ equity**
  Common
        stock
  On
        June
        28, 2006, the Company entered into securities purchase agreements with
        accredited investors and completed the sale of $1,075,000 of the Company’s
        common stock and common stock purchase warrants. The securities sold were
        an
        aggregate of 330,769 shares of common stock and 99,231 warrants. Each warrant
        is
        exercisable for a period of three years at an exercise price of $3.60 per
        share.
        Pursuant to the terms of the warrant, each investor has contractually agreed
        to
        restrict its ability to exercise the warrants to an amount which would not
        exceed the difference between the number of shares of common stock beneficially
        owned by the holder or issuable upon exercise of the warrant held by such
        holder
        and 9.9% of the outstanding shares of common stock of the Company. New York
        Global Securities, Inc. acted as the placement agent of the transaction.
        See
        note 15 for the effect of anti-dilution provisions which was triggered as
        a
        result of the May 7, 2007 equity offering.
  17
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
  In
        connection with the offering, the Company paid a placement fee of 10% of
        the
        proceeds in cash, together with other expenses in the amount of 3% of the
        proceeds, in cash. In addition, the placement agent was issued warrants to
        purchase 66,154 shares of common stock on the same terms and conditions as
        the
        investors.
  On
        July
        7, 2006, the Company entered into securities purchase agreements with accredited
        investors and completed the sale of $124,975 of the Company’s common stock and
        common stock purchase warrants. The securities sold were an aggregate of
        38,454
        shares of common stock and 11,536 warrants. Each warrant is exercisable for
        a
        period of three years at an exercise price of $3.60 per share. Pursuant to
        the
        terms of the warrant, each investor has contractually agreed to restrict
        its
        ability to exercise the warrants to an amount which would not exceed the
        difference between the number of shares of common stock beneficially owned
        by
        the holder or issuable upon exercise of the warrant held by such holder and
        9.9%
        of the outstanding shares of common stock of the Company. New York Global
        Securities, Inc. acted as the placement agent of the transaction. See note
        15
        for the effect of anti-dilution provisions which was triggered as a result
        of
        the May 7, 2007 equity offering.
  In
        connection with the offering, the Company paid a placement fee of 10% of
        the
        proceeds in cash, together with other expenses in the amount of 3% of the
        proceeds, in cash. In addition, the placement agent was issued warrants to
        purchases 7,691 shares of common stock on the same terms and conditions as
        the
        investors.
  On
        August
        21, 2006, the Company entered into securities purchase agreements with
        accredited investors and completed the sale of $812,500 of the Company’s common
        stock and common stock purchase warrants. The securities sold were an aggregate
        of 250,000 shares of common stock and 75,000 warrants. Each warrant is
        exercisable for a period of three years at an exercise price of $3.60 per
        share.
        Pursuant to the terms of the warrant, each investor has contractually agreed
        to
        restrict its ability to exercise the warrants to an amount which would not
        exceed the difference between the number of shares of common stock beneficially
        owned by the holder or issuable upon exercise of the warrant held by such
        holder
        and 9.9% of the outstanding shares of common stock of the Company. New York
        Global Securities, Inc. acted as the placement agent of the transaction.
        See
        note 15 for the effect of anti-dilution provisions which was triggered as
        a
        result of the May 7, 2007 equity offering.
  The
        Company has filed the registration statement registering the resale of shares
        of
        the Company's Common Stock and those issuable upon exercise of the Warrants
        on
        August 21, 2006 and the registration statement was effective on September
        14,
        2006.
  In
        connection with the offering, the Company paid a placement fee of 10% of
        the
        proceeds in cash, together with non-accountable expenses in the amount of
        3% of
        the proceeds, in cash. In addition, the placement agent was issued warrants
        to
        purchase 50,000 shares of common stock on the same terms and conditions as
        the
        investors.
  18
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 On
        January 15, 2007, the Company issued 60,000 shares of common stock to an
        investor relations company in consideration for one year of consulting service
        through December 31, 2007. The 60,000 shares of common stock have been recorded
        at $2.19 per share or $131,400 based on the trading price of the shares at
        January 12, 2007.
 
 Warrants
 
 Following
        is a summary of the warrant activity:
 
 Warrants
                outstanding
              
              Weighted
                  Average ExercisePrice
              
              Aggregate
                Intrinsic
                  ValueOutstanding,
                  December 31, 2006
              
              
              -
              
              $
              -
              
              $
              -Granted
              
              
              309,612
              
              
              3.60
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Outstanding,
                  March 31, 2007
              
              
              309,612
              
              $
              3.60
              
              $
              -
 
 Following
        is a summary of the status of warrants outstanding at March 31,
        2007:
  Outstanding
                  Warrants
              
              
              
              Exercisable
                  WarrantsExercise
                Price
              
              Number
              
              Average
                  Remaining
                Contractual
                  Life
              
              Average
                  Price
              
              Number$
              3.60
              
              
              309,612
              
              
              2.31
              
              $
              3.60
              
              
              309,612
 
 Statutory
        reserves
 
 In
        accordance with the laws and regulations of the PRC, a wholly-owned
        Foreign Invested Enterprises’ income, after the payment of the PRC income taxes,
        shall be allocated to the statutory surplus reserves, the proportion of
        allocation for reserve funds is no less than 10 percent of the profit after
        tax
        until the accumulated amount of allocation for statutory surplus reserve
        funds
        reaches 50 percent of the registered capital. Statutory reserves represent
        restricted retained earnings.
 
 Statutory
        surplus reserves are to be utilized to offset prior years’ losses, or to
        increase its share capital. When the statutory surplus reserve fund of a
        limited
        liability company converts its surplus reserves to capital in accordance
        with a
        shareholders’ resolution, the company will either distribute new shares in
        proportion to the number of shares held by the each shareholder, or increase
        the
        par value of each share. Except for the reduction of losses incurred, any
        other
        usage should not result in this reserve balance falling below 25% of the
        registered capital.
  19
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 Pursuant
        to the board of directors’ resolution, the Company transferred 10% of its net
        income, as determined in accordance with the PRC accounting rules and
        regulations, to a statutory surplus reserve fund until such reserve balance
        reaches 50% of the Company’s registered capital.
 
 The
        transfer to this reserve must be made before distributions of any dividends
        to
        shareholders. For the three months ended March 31, 2007 and 2006, the Company
        appropriated $83,986 and $321,840, respectively to this surplus reserve.
 
 **Note
        12 - Employee welfare plan**
 
 Regulations
        in the PRC require the Company to contribute to a defined contribution
        retirement plan for all
        permanent employees .
        The
        Company established a retirement pension insurance, unemployment insurance,
        health insurance and house accumulation fund for the employees during the
        term
        they are employed. The amount contributed to the fund is based on a certain
        % on
        the base salaries set forth by the provincial and city government. For
        the months ended March
        31,
        2007 and 2006, the Company made con tribution s
        in the
        amount of  $6,218.
        and $17,079, respectively.
  **Note
        13 - Earnings per share**
 
 Earnings
        per share for three months ended March 31, 2007 and 2006 were determined
        by
        dividing net income for the periods by the weighted average number of both
        basic
        and diluted shares of common stock and common stock equivalents outstanding.
        There were no common stock equivalents that were dilutive during the three
        months ended March 31, 2007 and 2006; accordingly, basic and diluted earning
        per
        share were the same for all periods presented.
 
 **Note
        14 - Commitments and contingencies**
 
 The
        Company leases part of its office space under long-term, non-cancelable
        operating lease agreements. The leases expire on 12/31/2008.
 
 The
        following is a schedule of future minimum rental payments required under
        the
        operating lease agreements:
 
 Year
                  ending
              
              OfficeMarch
                  31
              
              Lease2007
              
              $
              67,5852008
              
              
              67,585135,170
 
 Rental
        expense for the three months ended March 31, 2007 and 2006 amounted to $16,896
        and $18,988, respectively.
  20
 CHINA
          HOUSING & LAND DEVELOPMENT INC. AND SUBSIDARY
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
          31,
          2007
 (UNAUDITED)
 **Note
        15 - Subsequent events**
 
 On
        May 7,
        2007, China Housing & Land Development Inc. (the "Company"), entered into
        securities purchase agreements with accredited investors, and on May 9, 2007
        (the “Closing Date”), the Company completed the sale of $25,006,978 of common
        stock of the Company ("Common Stock") and common stock purchase warrants
        (the
        "Warrants"). The securities sold were an aggregate of 9,261,847 shares of
        Common
        Stock and 2,778,554 Warrants. Each Warrant is exercisable for a period of
        five
        (5) years at an exercise price of $4.50 per share. Cantor Fitzgerald & Co.
        acted as the placement agent of the transaction. All of these securities
        were
        sold pursuant to the exemption provided by Section 4(2) under the Securities
        Act
        for a transaction not involving a public offering, and Regulation D promulgated
        thereunder. After
        completion of the May 7, 2007 agreement, and according to Section 4.8,
        Anti-Dilute of the Share Purchase Agreements dated June 28, 2006, July 7,
        2006
        and August 21, 2006, the Company is required to issue and register 126,138
        shares common stock and 27,418 warrants; additionally, the Company is required
        to reduce the exercise price of the warrant from $3.60 to
        $3.31.
  21


ITEM
      2.
      Management's Discussion and Analysis





FORWARD
      LOOKING STATEMENTS





Some
      of
      the statements contained in this Form 10-QSB that are not historical facts
      are
      "forward-looking statements" which can be identified by the use of terminology
      such as "estimates," "projects," "plans," "believes," "expects," "anticipates,"
      "intends," or the negative or other variations, or by discussions of strategy
      that involve risks and uncertainties. We urge you to be cautious of the
      forward-looking statements, that such statements, which are contained in this
      Form 10-QSB, reflect our current beliefs with respect to future events and
      involve known and unknown risks, uncertainties and other factors affecting
      our
      operations, market growth, services, products and licenses. No assurances can
      be
      given regarding the achievement of future results, as actual results may differ
      materially as a result of the risks we face, and actual events may differ from
      the assumptions underlying the statements that have been made regarding
      anticipated events. Factors that may cause actual results, our performance
      or
      achievements, or industry results, to differ materially from those contemplated
      by such forward-looking statements include without limitation:




·
              Our
                  ability to attract and retain management, and to integrate and
                  maintain
                  technical information and management information
                  systems;




·
              Our
                  ability to raise capital when needed and on acceptable terms and
                  conditions;




·
              The
                  intensity of competition; and




·
              General
                  economic conditions.





All
      written and oral forward-looking statements made in connection with this Form
      10-QSB that are attributable to us or persons acting on our behalf are expressly
      qualified in their entirety by these cautionary statements. Given the
      uncertainties that surround such statements, you are cautioned not to place
      undue reliance on such forward-looking statements.





Three
      Months Ended March 31, 2007 as Compared To Three Months Ended March 31,
      2006





Revenue





We
        generated revenues of $8,196,197 for the three months ended March 31, 2007,
        a
        decrease of $8,800,626 or 52% compared to $16,996,823 for the three months
        ended
        March 31, 2006. The reason for decrease is that on January 2006, 7 buildings
        covered 706,792 sq.ft in Junjing Yuan I were completed, and all pre-sale
        of
        these area before the completion were recognized into revenue in the first
        quarter of 2006, which were $14.6 million. These recognized pre sales were
        contributed the most part of the revenues for the first quarter of
        2006.
 
 Revenue
        Contribution by Project:
 (All
        numbers in USD millions)
  March
                    31, 2007
                
                December
                    31, 2006Tsining-24G
                
                $
                7.1Tsining
                  Junjing Yuan
                
                $
                0.5
                
                $
                16.7Tsining
                  GangWan
                
                
                
                
                $
                0.1Other
                
                $
                0.5
                
                $
                0.2Total
                
                $
                8.2
                
                $
                17.0
 For
          the
          three-month period ended March 31, 2007, we had revenues of $541,817 for
          Tsining
          JunJing I, $7,128,387 for Tsining-24G, and $525,993 for other projects.
          During
          the three month period ended March 31, 2007, we sold $3,775,070 of residential
          and commercial units of Tsining 24G to one customer, Hang Zhou Ye Feng
          Company,
          which was the largest customer in the first quarter of 2007. The revenue
          from
          Hang Zhou Ye Feng Company represents almost 46% of total revenues for the
          three
          months ended March 31, 2007.







22


Costs
      and Expenses





Our
      costs
      and expenses for the three months ended March 31, 2007 as compared to the three
      months ended March 31, 2006 were in line with the decreased revenue from the
      sale of properties.





The
      cost
      of properties sold for the three months ended March 31, 2007 was $6,251,458,
      a
      decrease of $5,255,648 or 46% compared to $11,507,106 for the three months
      ended
      March 31, 2006. This is in line with the 52% decrease in revenues generated
      by
      the Company from the sale of properties during the same two
      periods.





Other
      expenses for the three months ended March 31, 2007 was $32,619, a decrease
      of
      $39,795 or 55% compared to $72,414 for the three months ended March 31, 2006.





Our
      selling, general and administrative expenses for the three months ended March
      31, 2007 was $498,097, a decrease of $125,143 or 20% compared to $623,240 for
      the three months ended March 31, 2006. Selling, general and administrative
      expenses reflects our overhead expenses such as office rent, management and
      staff salaries, general insurance, accounting and legal expenses. We staff
      our
      sales department at fixed levels. As one project approaches the end of the
      sales
      cycle, the sales staff is shifted to the next project.





Interest
      Expense





We
      incurred interest expense for the three months ended March 31, 2007 of $207,876,
      an increase of $186,093 or 854% compared to $21,783 for the three months ended
      March 31, 2006. Capitalized interest for the three months ended March 31, 2007
      was $323,227 compared to $684,866 for the three months ended March 31, 2006
      .
      Interest expense increased in the first quarter of 2007 compared to 2006 since
      most projects are completed in 2007 and interest incurred was expensed rather
      than capitalized.





Operating
      Income before Income Tax





We
      had
      operating income before income tax of $1,206,165 for the three months ended
      March 31, 2007; a decrease of $3,566,115, compared to $4,772,280 for the three
      months ended March 31, 2006.





We
      had
      one major customer, Hang Zhou Ye Feng Company, which accounted for almost 46%
      of
      total revenues for the three months ended March 31, 2007, which we sold the
      properties to Hang Zhou Ye Feng Company at a discount sales price. And, for
      the
      three months ended March 31, 2007, we sold some parking lots, which the profit
      margin is lower than residential and commercial properties.





Net
      Income





Our
      net
      income for the three months ended March 31, 2007 was $792,502, a decrease of
      $2,425,900 compared to $3,218,402 for the three months ended March 31, 2006,
      which is a direct result of the decrease of revenues earned from the sale of
      properties.




23





Liquidity
      and Capital Resources





Our
      principal demands for liquidity are for development of new properties and future
      property acquisitions and general corporate purposes. As of March 31, 2007,
      we
      had total mortgage indebtedness of $22,626,329 with a weighted average interest
      rate of 0.725% per month, payable quarterly. Future scheduled maturities of
      mortgages payable are as follows: May 6, 2007-- $3,501,684; June 27, 2007 --
      $407,925; July 6, 2007 -- $2,680,653; August 7, 2007 -- $5,180,000; September
      20, 2007 -- $508,935; December 31, 2007 -- $6,345,506. The mortgage debt is
      secured by assets of the Company.





As
      of
      March 31, 2007, we had $257,187 of cash and cash equivalents on hand, a decrease
      of $122,446 compared to $379,633 of cash and cash equivalents on hand as of
      March 31, 2006.





As
      of
      March 31, 2007 accounts payable was $5,550,820 and other payables was
      $1,857,590. We increased properties under construction by $818,425. Receivables,
      deferred charges and other assets increased $154,668. Advances to suppliers
      increased by $4,753,433 during the three months ended March 31, 2007, most
      of it
      was the advance payment on Land related expenses for the JunJing II project.
      Accounts payable increased $226,005, other payables decreased $715,248, and
      accrued expenses decreased $257,413, while advance from customers decreased
      $887,176.





Our
      operating activities provided cash of $508,609 during the three months ended
      March 31, 2007. We used cash of $213,447 in investing activities during the
      three months ended March 31, 2007 primarily $108,838 for the Notes receivable
      funded. During the three months ended March 31, 2007. Cash used in financing
      activities was $421,473, the result of $1,457,813 payments on loans and $645,050
      of loan proceeds made during the three months ended March 31, 2007 and $391,290
      of loan from employees.





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


As
        part
        of our funding plan, on March 9, 2007, we entered into a Shares Transfer
        Agreement with the shareholders of Xi'an New Land Development Co., Ltd. ("New
        Land"), pursuant to which we have acquired 32,000,000 shares of New Land,
        constituting 100% equity ownership of New Land. Xi’an New Land Development Co.,
        LTD (“New Land”) is now in cooperation with BaQiao District Government of Xi’an
        City in developing BaQiao Science & Technology Industrial Park, a provincial
        development zone in Shaan’xi Province. Now, this acquisition is in process, in
        the future, China Housing will take the first steps in the primary land market,
        and also have the right to develop and sell 487 acres of property which has
        been
        targeted for new residential developments.


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





Subsequent
      Events





On
      May 7,
      2007, we entered into securities purchase agreements with accredited investors,
      and on May 9, 2007, we completed the sale of $25,006,978 of common stock of
      the
      Company and common stock purchase warrants. The securities sold were an
      aggregate of 9,261,847 shares of common stock and 2,778,554 warrants. Each
      warrant is exercisable for a period of five (5) years at an exercise price
      of
      $4.50 per share. Cantor Fitzgerald & Co. acted as the placement agent of the
      transaction. All of these securities were sold pursuant to the exemption
      provided by Section 4(2) under the Securities Act for a transaction not
      involving a public offering, and Regulation D promulgated thereunder. After
      completion of the May 7, 2007 agreement, and according to Section 4.8,
      Anti-Dilute of the Share Purchase Agreements dated June 28, 2006, July 7, 2006
      and August 21, 2006, the Company is required to issue and register 126,138
      shares common stock and 27,418 warrants; additionally, the Company is required
      to reduce the exercise price of the warrant from $3.60 to
      $3.31.




Item
      3.
      Controls and Procedures





The
      Chief
      Executive Officer and Chief Financial Officer conducted an evaluation of the
      effectiveness of the design and operation of the Company's 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 the Company's disclosure controls and
      procedures were effective as of the end of the period covered by this report.
      There were no significant changes in internal control over financial reporting
      (as defined in Rule 13a-15(e) under the Exchange Act) that occurred during
      the
      first quarter of 2007 that have materially affected, or are reasonably likely
      to
      materially affect, the Company's internal control over financial
      reporting.




24





Part
      II.
      OTHER INFORMATION




Item
      1.
      Legal Proceedings





Not
      applicable





Item
      2.
      Unregistered Sales of Equity Securities and Use of Proceeds





Not
      applicable





Item
      3.
      Defaults Upon Senior Securities





Not
      applicable





Item
      4.
      Submission of Matters to a Vote of Security Holders





Not
      applicable





Item
      5.
      Other Information





Not
      applicable





Item
      6.
      Exhibits





(a)
      Exhibits





Exhibit
                Number
            
            Description
                of Exhibit31.1
            
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended31.2
            
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
                14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002(Chief Executive Officer)32.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002(Chief Financial
                Officer)




25




SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


China
                Housing & Land Development, Inc.May
              14,
              2007
            By:
            /s/
                LU PINGJILu
                Pingji
              Chief
                Executive Officer (Principal
              Executive
                Officer)


May
              14,
              2007
            By:
            /s/
              WAN
              YULONGWan
                Yulong
              Chief
                Financial Officer
              (Principal
                Financial and
              Accounting
                Officer)





26