**UNITED
      STATES**




**SECURITIES
      AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**




**FORM
      10-Q**




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




For
      the
      quarterly period ended March 31, 2008




or




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




For
      the
      transition period from ___________ to ______________




**Commission
      File No. 000-52020**




**CLIFFORD
      CHINA ESTATES INC.**




(Formerly
      Elite Artz, Inc.)




*(Exact
      name of registrant as specified in its charter)*


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




7/F,
      Chai Wan Industrial City, Phase 2, 70 Wing Tai Road, Chai Wan, Hong
      Kong


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




(+852)
      2889-0183


*(Registrant’s
      telephone number, including area code)*




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.   YES  x            NO 
o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.




Large
      accelerated filer oAccelerated
      filer oNon-accelerated filer oSmaller
      reporting company x




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




As
      of May
      12, 2008, the registrant had 50,000,000 shares of common stock ($0.001 par
      value) and 5,000,000 shares of preferred stock ($0.001 par value) issued and
      outstanding.









Table
      of
      Contents


Page




**PART
                I - FINANCIAL INFORMATION**
            1Item
                1.
            Financial
                Statements
            1Condensed
                Consolidated Balance Sheets as at December 31, 2007 and March 31,
                2008
                (Unaudited)
            1Condensed
                Consolidated Statements of Operations and Comprehensive Income for
                the
                Three Months Ended March 31, 2007 and 2008 (Unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the Three Months Ended
                March 31,
                2007 and 2008 (Unaudited)
            3Notes
                To Condensed Consolidated Financial Statements (Unaudited)
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            20Item
                4T.
            Controls
                and Procedures
            20**PART
                II - OTHER INFORMATION**
            22Item
                1.
            Legal
                Proceedings
            22Item
                1A.
            Risk
                Factors
            22Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            22Item
                3.
            Defaults
                Upon Senior Securities
            22Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            22Item
                5.
            Other
                Information
            22Item
                6.
            Exhibits.
            23**SIGNATURES**
            
            24




i




**PART
      I - FINANCIAL INFORMATION**




**Item
        1** **.**  **FINANCIAL
        STATEMENTS**




**CLIFFORD
      CHINA ESTATES INC.**




**CONDENSED
      CONSOLIDATED BALANCE SHEETS**




**March
                31, 2008 (Unaudited)**
            
            **December
                31, 2007****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            13,337,031
            
            $
            5,282,725Construction
                in progress - real estate for resale
            
            
            33,843,904
            
            
            21,848,349Receivables
                from associated companies
            
            
            —
            
            
            486Prepayments
                and other receivables
            
            
            297,570
            
            
            457,698Total
                current assets
            
            
            47,478,505
            
            
            27,589,258PROPERTY
                AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
            
            
            159,690
            
            
            153,056**TOTAL
                ASSETS**
            
            $
            47,638,195
            
            $
            27,742,314**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            3,533,920
            
            $
            2,680,137Payables
                to associated companies
            
            
            15,969,837
            
            
            17,616,038Accrued
                expenses and other payables
            
            
            86,353
            
            
            91,659Deferred
                tax liability
            
            
            162,212
            
            
            127,357Due
                to director
            
            
            5,964,760
            
            
            5,706,764Bank
                loan (Current portion)
            
            
            6,403,233
            
            
            —Total
                current liabilities
            
            
            32,120,315
            
            
            26,221,955NON-CURRENT
                LIABILITIESBank
                loan (Net of current portion)
            
            
            13,518,095
            
            
            —**STOCKHOLDERS’
                EQUITY**Preferred
                stock: 5,000,000 shares authorized, issued and outstanding at $0.001
                par
                value
            
            
            5,000
            
            
            5,000Common
                stock: 50,000,000 shares authorized, issued and outstanding at $0.001
                par
                value
            
            
            50,000
            
            
            50,000Additional
                paid in capital
            
            
            4,520,764
            
            
            4,188,355Accumulated
                deficit
            
            
            (3,184,599
            )
            
            (3,077,576
            )Accumulated
                other comprehensive income
            
            
            608,620
            
            
            354,580**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            1,999,785
            
            
            1,520,359**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            $
            47,638,195
            
            $
            27,742,314




See
      accompanying notes to the condensed consolidated financial statements


1




**CLIFFORD
      CHINA ESTATES INC.**




**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**AND
      COMPREHENSIVE INCOME (UNAUDITED)**





**For
                  the three months ended** March 31,**2008**
            
            **2007**REVENUES
            
            $
            —
            
            $
            —COST
                OF REVENUE
            
            
            —
            
            
            —GROSS
                PROFIT
            
            
            —
            
            
            —EXPENSESGeneral
                and administrative
            
            
            223,888
            
            
            40,327(223,888
            )
            
            (40,327
            )OTHER
                INCOMEInterest
                income
            
            
            14,314
            
            
            3,753Exchange
                gain
            
            
            136,729
            
            
            127,357Other
            
            
            4
            
            
            —(LOSS)
                INCOME BEFORE INCOME TAXES
            
            
            (72,841
            )
            
            90,783PROVISION
                FOR INCOME TAX
            
            
            (34,182
            )
            
            (31,839
            )NET
                (LOSS) INCOME
            
            
            (107,023
            )
            
            58,944FOREIGN
                CURRENCY TRANSLATION GAIN (LOSS)
            
            
            254,040
            
            
            (37,139
            )COMPREHENSIVE
                INCOME
            
            $
            147,017
            
            $
            21,805Earnings
                per common share, basic and diluted
            
            $
            *
            
            $
            *Weighted
                average number of common shares outstanding, basic and
                diluted
            
            
            50,000,000
            
            
            3,000,000




*
      Less
      than $.01 per share




See
      accompanying notes to the condensed consolidated financial statements


2




**CLIFFORD
      CHINA ESTATES INC.**




**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**







**For
                the three months ended**
              **March
                31,****2008**
            
            **2007****Cash
                flows from operating activities**Net
                (loss) income
            
            $
            (107,023
            )
            $
            58,944Adjustments
                to reconcile net (loss) income to netcash
                used in operating activities:Depreciation
            
            
            3,727
            
            
            3,618Deferred
                income tax
            
            
            34,182
            
            
            31,839Changes
                in operating assets and liabilities:Additions
                to construction in progress
            
            
            (10,638,133
            )
            
            (245,374
            )Decrease
                (increase) in prepayments and other receivables
            
            
            173,785
            
            
            (118,592
            )Increase
                (decrease) in accounts payable
            
            
            739,219
            
            
            (869
            )Decrease
                in accrued expenses
            
            
            (7,061
            )
            
            —**Net
                cash used in operating activities**
            
            
            (9,801,304
            )
            
            (270,434
            )**Cash
                flows from investing activities**Purchase
                of property and equipment
            
            
            (4,632
            )
            
            (2,729
            )**Net
                cash used in investing activities**
            
            
            (4,632
            )
            
            (2,729
            )**Cash
                flows from financing activities**Repayment
                received from associated companies
            
            
            495
            
            
            778,078Advance
                to an associated company
            
            
            -
            
            
            (2,671,606
            )Repayment
                to associated companies
            
            
            (2,057,584
            )
            
            (3,679,602
            )Advance
                from a director
            
            
            257,897
            
            
            3,790,800Increase
                in bank loan
            
            
            19,536,657
            
            
            —**Net
                cash provided by (used in) financing activities**
            
            
            17,737,465
            
            
            (1,782,330
            )**Net
                increase (decrease) in cash and cash equivalents**
            
            
            7,931,529
            
            
            (2,055,493
            )Cash
                and cash equivalents - beginning of period
            
            
            5,282,725
            
            
            3,251,774Effect
                of foreign exchange rate changes
            
            
            122,777
            
            
            545Cash
                and cash equivalents - end of period
            
            $
            13,337,031
            
            $
            1,196,826**Supplemental
                disclosures of cash flow information**Imputed
                interest capitalized in construction in progress on related party
                payables
            
            $
            326,267
            
            $
            296,390Cash
                paid for interest
            
            $
            124,488
            
            $
            —




See
      accompanying notes to the condensed consolidated financial
      statements


3




**CLIFFORD
      CHINA ESTATES INC.**




**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**




**March
      31, 2008 and 2007**




**NOTE
      1**  **-
      ORGANIZATION AND PRINCIPAL ACTIVITIES**




Clifford
      China Estates Inc. (the “Company”) was originally incorporated under the laws of
      the State of Delaware on July 15, 2002 under the name “North American Marketing
      Corporation” with authorized common stock of 50,000,000 shares with $0.001 par
      value. On March 25, 2004, the Company changed its domicile to the state of
      Nevada and changed its name to “Elite Artz, Inc.” (“Elite Artz”) with the
      addition of authorized capitalization of 20,000,000 shares of preferred stock
      with $0.001 par value.




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




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




On
      January 28, 2008, Elite Artz formed a corporation under the laws of the State
      of
      Nevada with the name “Clifford China Estates Inc.” (“Merger Sub”) and on January
      29, 2008, Elite Artz acquired one thousand shares of Merger Sub’s common stock
      for cash. As such, Merger Sub became a wholly-owned subsidiary of Elite Artz.
      On
      January 31, 2008, Merger Sub was merged with and into Elite Artz. As a result
      of
      the merger, the Company’s name was changed to “Clifford China Estates Inc.”
Prior to the merger, Merger Sub had no liabilities and nominal assets and,
      as a
      result of the merger, the separate existence of Merger Sub then ceased. Clifford
      China Estates Inc. was the surviving corporation in the merger and, except
      for
      the name change provided for in the Agreement and Plan of Merger, there was
      no
      change in the Company’s directors, officers, capital structure or the
      business.




4




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




Glory
      Park International Limited (“GP”), a wholly-owned subsidiary of Parkade, was
      incorporated on January 22, 2008 under the laws of the British Virgin Islands.
      GP is a newly established entity; therefore, it did not have significant
      operations during the quarter ended March 31, 2008.




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




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




Clifford
      Manufacturing also controls other companies whose operations are related to
      the
      Company. As of March 31, 2008 and 2007, the Company has payables to other
      companies under common control.




**NOTE
      2**  **-
      PRINCIPLES OF CONSOLIDATION**




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




The
      accompanying financial statements as of March 31, 2008 and for the three months
      ended March 31, 2008 and 2007, have been prepared by Clifford China Estates
      Inc.
      (the “Company”) without an audit. Pursuant to the rules and regulations of the
      Securities and Exchange Commission (the “SEC”), certain information and footnote
      disclosures normally included in the financial statements prepared in accordance
      with US GAAP have been condensed or omitted. These financial statements should
      be read in conjunction with the financial statement and the notes thereto
      included in the Company’s audited annual financial statements for the year ended
      December 31, 2007, which are included in the Company’s Annual Report on Form
      10-KSB for the year ended December 31, 2007, filed with the SEC on April 1,
      2008. Amounts as of December 31, 2007 are derived from these audited
      consolidated financial statements.




The
      preparation of financial statements in conformity with US GAAP requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets, liabilities, revenues and expenses and the disclosure of contingent
      assets and liabilities. Actual results could differ from these estimates.


5


In
      the
      opinion of the management, all adjustments (which include only normal recurring
      adjustments) necessary to present fairly the financial position as of March
      31,
      2008, results of operations and cash flows for the three months ended March
      31,
      2008 and 2007, have been made. The results of operations for the three months
      ended March 31, 2008 are not necessarily indicative of the operating results
      for
      the full year.




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




(a)
            Cash
                and Cash Equivalents




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




(b)
            Construction
                in Progress - Real Estate for
                Resale




Construction
      in progress of real estate for resale consists of expenditures for land
      development including set-up cost, infrastructure cost, construction cost and
      indirect cost. Expenditures for land development are capitalized and are
      allocated to development projects by the specific identification method.
      Construction in progress is stated at the lower of cost or net realizable value.
      During 2008 and 2007, the Company had only one construction project in progress
      and no sales transactions related to sales of real estate.




(c)
            Property
                and Equipment




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




(d)
            Depreciation




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




Residential
                apartment properties
            20
                yearsComputer
                equipment and other equipment
            5
                years




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




Depreciation
      expense for the three months ended March 31, 2008 and 2007 was $3,727 and
      $3,618, respectively.


6


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




The
      long-lived assets held and used by the Company are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      assets may not be recoverable. It is reasonably possible that these assets
      could
      become impaired as a result of technology or other industry changes.
      Determination of recoverability of assets to be held and used is made by
      comparing the carrying amount of an asset to future net undiscounted cash flows
      to be generated by the assets. If such assets are considered to be impaired,
      the
      impairment to be recognized is measured by the amount by which the carrying
      amount of the assets exceeds the fair value of the assets. Assets to be disposed
      of are reported at the lower of the carrying amount or fair value less costs
      to
      sell. There were no impairments of long-lived assets for the three months ended
      March 31, 2008 and 2007.




(f)
            Income
                Tax




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




In
      accordance with the relevant tax laws and regulations of the PRC and Hong Kong,
      the corporation income tax rate is 25% and 17.5% respectively. The Company
      recognizes certain income and expenses that do not conform to the timing and
      conditions allowed by the PRC tax authorities.




“Accounting
      for Uncertainty in Income Taxes”— an interpretation of FASB Statement No. 109.
      (“FIN 48”) clarifies the accounting for uncertainty in income taxes recognized
      in an enterprise’s financial statements in accordance with SFAS 109, and
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. This interpretation also provides guidance on
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition.




(g)
            Fair
                Value of Financial Instruments




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




7
 (h)
                Revenue
                    Recognition


During
      the three months ended 31 March 2008, no real estate sales are recorded as
      the
      real estate project is not yet completed. The real estate project is expected
      to
      be completed during the rest of the year ended December 31, 2008. Real estate
      sales will be reported in accordance with the provisions of Statement of
      Financial Accounting Standard No. 66, “Accounting for Sales of Real Estate”.
      Revenue from sale of residential properties is recognized when relevant units
      and spaces are available for occupancy and delivered to buyers with appropriate
      title documents. Profit from the sales of development properties, less 5%
      business tax, is recognized by the full accrual method when the sale is
      consummated. A sale is not considered consummated until (1) the parties are
      bound by the terms of a contract, (2) all consideration has been exchanged,
      (3)
      any permanent financing of which the seller is responsible has been arranged,
      (4) all conditions precedent to closing have been performed, (5) the seller
      does
      not have substantial continuing involvement with the property, and (6) the
      usual
      risks and rewards of ownership have been transferred to the buyer. Sales
      transactions not meeting all the conditions of the full accrual method are
      accounted for using the deposit method of accounting. Under the deposit method,
      all costs are capitalized as incurred, and payments received from the buyer
      are
      recorded as a deposit liability. Real estate rental income, less 5% business
      tax, is recognized on the straight-line basis over the terms of the tenancy
      agreements.




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




(i)
            Deferred
                Revenue




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




(j)
            Real
                Estate Project Costs




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




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




(k)
            Capitalized
                Interest Costs




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




Subsequent
      to completion of the real estate projects, interest costs are expensed when
      incurred.


8


(l)
            Land
                Usage Right




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




(m)
            Earnings
                Per Share




Basic
      earnings per share is computed by dividing net income available to common
      shareholders by the weighted-average number of common shares outstanding during
      the period. Diluted earnings per share is computed similar to basic earnings
      per
      share except that the denominator is increased to include the number of
      additional common shares that would have been outstanding if the potential
      common shares had been issued and if the additional common shares were dilutive.
      As of March 31, 2008 and 2007, there were no dilutive securities
      outstanding.




(n)
            Use
                of Estimates




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




(o)
            Retirement
                Benefits




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




Hong
      Kong
      requires companies to operate a mandatory provided fund plan, which is available
      to all employees in Hong Kong. Both the Company and the employees are required
      to contribute 5% (subject to a maximum amount of $256) per month of the
      employees’ relevant income. Contributions from the Company are 100% vested in
      the employees as soon as they are paid to the plan. Contributions to the plan
      are expensed in the statement of income as they become payable in accordance
      with the rules of the plan. The assets of the plan are held separately from
      those of the Company and managed by independent professional fund
      managers.




(p)
            Comprehensive
                Income




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


9


(q)
            Foreign
                Currency Translation




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


**2008**
            
            **2007**Period
                end RMB : $ exchange rate
            
            
            7.0277
            
            
            7.7113Average
                period RMB : $ exchange rate
            
            
            7.1660
            
            
            7.7512Period
                end HKD : $ exchange rate
            
            
            7.800
            
            
            7.800Average
                period HKD : $ exchange rate
            
            
            7.800
            
            
            7.800




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




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




(r)
            Recent
                Accounting Pronouncements




In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (“SFAS 159”). SFAS 159 allows entities to
      voluntarily choose to measure certain financial assets and liabilities at fair
      value (“fair value option”). The fair value option may be elected on an
      instrument-by-instrument basis and is irrevocable, unless a new election date
      occurs. If the fair value option is elected for an instrument, SFAS 159
      specifies that unrealized gains and losses for that instrument be reported
      in
      earnings at each subsequent reporting date. SFAS 159 was effective for the
      Company on January 1, 2008. The Company did not apply the fair value option
      to
      any of its outstanding instruments and therefore, SFAS 159 did not have an
      impact on the Company’s consolidated financial statements.




In
      September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS
      157”), which defines fair value, establishes a framework for measuring fair
      value in accordance with generally accepted accounting principles, and expands
      disclosures about fair value measurements. SFAS 157 was effective for the
      Company on January 1, 2008 for all financial assets and liabilities. For all
      non-financial assets and liabilities, SFAS 157 is effective for the Company
      on
      January 1, 2009. As it relates to the Company’s financial assets and
      liabilities, the adoption of SFAS 157 did not have a material impact on the
      Company’s consolidated financial statements. The Company is still in the process
      of evaluating the impact that SFAS 157 will have on its non-financial assets
      and
      liabilities.


10


**NOTE
      4**  **-
      CONSTRUCTION IN PROGRESS - REAL ESTATE FOR RESALE**




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




Construction
      in progress - real estate for resale as of March 31, 2008 and December 31,
      2007
      is summarized as follows:







**As
                of**
              **March
                31, 2008 (unaudited)**
            
            **As
                of**
              **December
                31, 2007**Cost
                of land use rights
            
            $
            3,204,692
            
            $
            3,089,411Set-up
                costs
            
            
            4,275,948
            
            
            2,984,240Infrastructure
                costs
            
            
            1,547,664
            
            
            1,233,659Construction
                costs
            
            
            24,262,423
            
            
            14,510,139Indirect
                costs
            
            
            553,177
            
            
            30,900$
            33,843,904
            
            $
            21,848,349




**NOTE
      5**  **-
      PROPERTY AND EQUIPMENT**




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




Equipment
      consists primarily of office computer equipment and other
      equipment.




Property
      and equipment




**As
                of**
              **March
                31, 2008 (unaudited)**
            
            **As
                of**
              **December
                31, 2007**At
                cost:Residential
                apartment properties
            
            $
            313,291
            *
            $
            301,818
            *Computer
                equipment
            
            
            7,443
            
            
            2,811Other
                equipment
            
            
            398
            
            
            398321,132
            
            
            305,027Less:
                Accumulated depreciationResidential
                apartment properties
            
            
            159,900
            
            
            150,999Computer
                equipment
            
            
            1,439
            
            
            881Other
                equipment
            
            
            103
            
            
            91161,442
            
            
            151,971Property
                and equipment, net
            
            $
            159,690
            
            $
            153,056




*
      Balance
      change due to exchange rate difference between December 31, 2007 and March
      31,
      2008.




11






**NOTE
      6**  **-
      RECEIVABLES FROM ASSOCIATED COMPANIES**




Receivables
      from associated companies represent advances from the Company to associated
      companies and are non interest bearing with no fixed repayment terms. The
      breakdown of receivables from associated companies as of March 31, 2008 and
      December 31, 2007 is summarized as follows:




**As
                of**
              **31-Dec-07**
            
            **During
                the quarter ended**
              **31-March-08**
            
            **As
                of**
              **31-Mar-08****Advances**
            
            **Repayments**
            
            **(unaudited)**Fartake
                Investment Ltd.
            
            $
            275
            
            $
            -
            
            $
            275
            
            $
            -Guangzhou
                City Huadu Clifford Estate Ltd.
            
            
            211
            
            
            -
            
            
            211
            
            
            -$
            486
            
            $
            -
            
            $
            486
            
            $
            -




**NOTE
      7**  **-
      PAYABLES TO ASSOCIATED COMPANIES**




Payables
      to associated companies consist of amounts owed by the Company. The advances
      from the associated companies are mainly used for the Company’s construction
      projects in China. These liabilities are not secured by any of the Company’s
      assets, are interest bearing at 6% per annum and have no fixed repayment terms
      but are expected to be repaid to the companies during 2008. The breakdown of
      payables to associated companies as of March 31, 2008 and December 31, 2007
      is
      summarized as follows:




**As
                of**
              **31-Dec-07**
            
            **For
                the quarter ended**
              **31-Mar-08**
            
            **As
                of**
              **31-Mar-08****Advances**
            
            **Repayments**
            
            **(unaudited)**Clifford
                Investment Co. Ltd.
            
            $
            4,515,074
            
            $
            -
            
            $
            -
            
            $
            4,515,074Guangzhou
                City Clifford Property Limited
            
            
            1,783,294
            
            
            -
            
            
            -
            
            
            1,849,838
            *Guangzhou
                City Guanwan Property Ltd.
            
            
            1,783,294
            
            
            -
            
            
            -
            
            
            1,849,838
            *Foshan
                City Clifford Estates (Nanhoi) Ltd.
            
            
            3,017,882
            
            
            -
            
            
            -
            
            
            3,130,494
            *Foshan
                City Clifford Property (Nanhoi) Ltd.
            
            
            1,371,765
            
            
            -
            
            
            1,371,765
            
            
            -Guangzhou
                City Clifford Property Management Limited
            
            
            4,458,910
            
            
            -
            
            
            -
            
            
            4,624,593
            *Guangzhou
                City Huadu Clifford Development Ltd
            
            
            685,819
            
            
            -
            
            
            685,819
            
            
            -$
            17,616,038
            
            $
            -
            
            $
            2,057,584
            
            $
            15,969,837




*
      Balance
      change due to exchange rate difference between December 31, 2007 and March
      31,
      2008.




12




**NOTE
      8**  **-
      BANK LOAN**




On
      August
      3, 2007, Panyu obtained a bank loan from the Bank of China in the amount of
      $19,921,328 to finance the construction projects. The bank loan is due in 36
      months from the initial draw date, and bears interest at The People's Bank
      of
      China legal standard rate times 90% (6.8040% as of March 31, 2008). The bank
      loan is guaranteed by Foshan Clifford Estates (Nanhoi) Ltd., an associated
      company, and was drawn during the three-month period ended March 31, 2008.
      The
      bank loan requires repayment of $2,845,881 before September 30, 2008,
      accumulated repayment of $6,403,233 before March 31, 2009, and accumulated
      repayment of $9,960,585 before September 30, 2009. The remaining balance must
      be
      repaid before the expiration date of the loan or before the Company sells 85%
      of
      the total square meters of the Clifford Waterfront project, whichever is
      earlier.




**NOTE
      9**  **-
      PREFERRED STOCK**




Our
      Series A preferred stock has the following characteristics:




(a)
            Voting




The
      preferred stock has voting rights equal in all aspects to the number of common
      stock represented by such preferred stock on an as converted basis and is
      entitled to vote on any and all matters brought to a vote of shareholders of
      common stock and all matters brought to a vote of shareholders of preferred
      stock.




(b)
            Dividends




No
      dividends are payable with respect to the preferred stock. No dividends are
      payable with respect to the common stock while the preferred stock is
      outstanding. The common stock is not redeemable while the preferred stock is
      outstanding.




(c)
            Liquidation
                Preference




Upon
      any
      liquidation, dissolution or winding-up of the Company, whether voluntary or
      involuntary, the holders of preferred stock are entitled to receive out of
      the
      assets of the Company, whether such assets are capital or surplus, for each
      share of preferred stock an amount equal to the original purchase price paid
      per
      share before any distribution or payment shall be made to the holders of any
      junior securities, and if the assets of the Company are insufficient to pay
      in
      full such amounts, then the entire assets to be distributed to the holders
      of
      preferred stock are to be distributed among the holders ratably in accordance
      with the respective amounts that would be payable on such shares if all amounts
      payable thereon were paid in full.




(d)
            Conversion




Each
      share of preferred stock is initially convertible into ten shares of common
      stock at the option of the holders, subject to the availability of common
      shares, at any time and from time to time from and after the original issue
      date.




13
 **NOTE
          10**  **-
          INCOME TAX AND DEFERRED TAX ASSETS / LIABILITIES**


(a)
            Corporation
                Income Tax (“CIT”)




In
      accordance with the relevant tax laws and regulations of Hong Kong and the
      PRC,
      the statutory CIT rates are 17.5% for Hong Kong and 25% (33% for the three
      months ended March 31, 2007) in the PRC.




No
      provision for Hong Kong profits tax has been made as the Company has no
      assessable profits for the three months ended March 31, 2008 and 2007. Provision
      for PRC Enterprise Income Tax was provided at the applicable statutory CIT
      rate.




(b)
            Deferred
                Tax Assets and Liabilities




As
      of
      March 31, 2008, Panyu has an accumulated net operating loss of $146,783 eligible
      to be carried forward from 2008 to 2011. Under the PRC tax regulations Panyu
      is
      entitled to claim back its tax loss for up to prior 5 years of operations.
      No
      deferred tax asset was recorded in Panyu to reflect such tax loss because the
      PRC tax regulations change frequently and it is uncertain whether such deferred
      tax asset can be realized in subsequent years.




As
      of
      March 31, 2008, Panyu recorded a gain on the foreign currency translation of
      a
      loan to Panyu. In accordance with the current tax laws of the PRC, the Company
      is required to pay PRC tax on the translation gain. Accordingly, the estimated
      tax liability in the amount of $162,212 was recorded as a deferred tax liability
      of Panyu as of March 31, 2008.




**NOTE
      11**  **-
      RELATED PARTY TRANSACTIONS**




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




Due
      to
      director consists of advances from a director and payments on behalf of the
      Company by the director. The amounts are unsecured and non interest bearing
      with
      no fixed payment terms, but are expected to be repaid to the director during
      2008. An amount of $257,897 was advanced from a director during the
      quarter.




The
      Company has signed a project management contract for the period from January
      2007 to December 2008 for the development of Clifford Waterfront with Richpro
      International Limited, a company owned by Clifford L.K. Pang (“Mr. Pang”), the
      Company’s Chief Executive Officer, Chief Financial Officer and Director, at a
      cost equal to 5% of total construction cost of Clifford Waterfront, which the
      Company believes is equivalent to a project management agreement it may receive
      from an unaffiliated third party. During the three months ended March 31, 2008,
      management fee paid to Richpro International Limited amounted to $611,798.
      Nil
      for the corresponding period in 2007.





The
      Company has signed a consultancy agreement for the period from October 2007
      to
      September 2009 for the sales and marketing planning and execution of Clifford
      Waterfront development project with Abroad Trading Limited, a company owned
      by
      Mr. Pang, at a cost equal to 2% of total sales of Clifford Waterfront, which
      the
      Company believes is equivalent to a similar consultancy agreement it may receive
      from an unaffiliated third party. Since there were no sales and marketing
      activities during the three months ended March, 31, 2008 and 2007, no payment
      was paid to Abroad Trading Limited.


14


During
      the three months ended March 31, 2008 and 2007, Parkade used the office address
      of a related company for its registered address purpose. The registered address
      is provided free of charge for both periods. The fair value of registered
      address is estimated to be $385 per annum for each year.




**NOTE
      12**  **-
      CONTINGENCIES AND COMMITMENTS**




Commitments
      for outstanding construction work for Clifford Waterfront were $34 million
      as of
      March 31, 2008. The commitments should be fulfilled by the end of 2008 when
      the
      project is estimated to be fully completed.




We
      expect
      to meet our capital commitments through internally generated cash flow and
      from
      future borrowings.




**NOTE
      13**  **-
      SUBSEQUENT EVENTS**




On
      April
      1, 2008, our subsidiary, Panyu, entered into a consultancy agreement for the
      period from April 1, 2008 to March 31, 2009 for the international sales and
      marketing planning and execution of Clifford Waterfront development project
      with
      Hitech Company Limited, a company owned by Mr. Pang, the Company’s Chief
      Executive Officer, Chief Financial Officer and Director, at a cost equal to
      2%
      of total sales of Clifford Waterfront, which the Company believes is equivalent
      to a similar consultancy agreement it may receive from an unaffiliated third
      party. There were no sales and marketing activities between April 1, 2008 and
      May 12, 2008, therefore, no payments were made to Hitech Company
      Limited.




**Item
      2** **.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




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




CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES




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


15


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




**Recent
      Accounting Pronouncements**




Please
      refer to footnote 3(r) of our quarterly financial statements appearing
      above.




**Liquidity
      and Capital Resources**




We
      have
      financed our growth and cash needs to date with temporary loans from affiliated
      companies and directors. In addition, on August 3, 2007, Panyu, our wholly-owned
      subsidiary, entered into a long-term loan agreement with the Bank of China
      in the amount of $19,921,328 for financing the construction project Clifford
      Waterfront. The bank loan, guaranteed by Foshan Clifford Estates (Nanhoi) Ltd.,
      an associated company, was drawn during the three-month period ended March
      31,
      2008. The following sets out our cash position as at March 31, 2008 and our
      cash
      flows for three months ended March 31, 2008 and 2007.




Cash
      Position




As
      at
      March 31, 2008, the Company had cash and cash equivalents and working capital
      in
      the amount of $13,337,031 and 15,358,190, respectively.


16


Cash
      Flow




**For
                  the three months ended****March
                31,****2008**
            
            **2007**Net
                cash (used in) operating activities
            
            $
            (9,801,304
            )
            $
            (270,434
            )Net
                cash (used in) investing activities
            
            $
            (4,632
            )
            $
            (2,729
            )Net
                cash provided by (used in) financing activities
            
            $
            17,737,465
            
            $
            (1,782,330
            )Net
                increase (decrease) in cash and cash equivalents
            
            $
            7,931,529
            
            $
            (2,055,493
            )




*Cash
      flows from operating activities*




Net
      cash
      used in operating activities was $9,801,304 for the period ended March 31,
      2008,
      an increase of $9,530,870 from $270,434 for the same period in 2007. The
      increase was mainly due to an increase of construction in progress for the
      Clifford Waterfront project.




*Cash
      flows from investing activities*




The
      investing activities represent the purchase of property and
      equipment.




*Cash
      flows from financing activities*




Net
      cash
      provided by financing activities for the three months ended March 31, 2008
      was
      $17,737,465 as compared to net cash used of $1,782,330 for the three months
      ended March 31, 2007. The increase was mainly attributable to a net increase
      in
      bank borrowings from the Bank of China. We believe that our available cash
      and
      cash equivalents as at March 31, 2008, along with the expected proceeds from
      our
      operations, will provide adequate liquidity to fund our operations through
      at
      least the next twelve months.




**Results
      of Operations - Three Months Ended March 31, 2008 as Compared to Three Months
      Ended March 31, 2007**




The
      following table summarizes the results of our operations during the three-month
      period ended March 31, 2008 and 2007, and provides information regarding the
      dollar and percentage changes from the three-month period ended March 31, 2007
      to the three-month period ended March 31, 2008.


**Three
                months ended**
              **March
                31,****2008**
            
            **2007**
            
            **Change**
            
            **%
                Change**Revenue
            
            $
            —
            
            $
            —
            
            $
            —
            
            
            —Cost
                of sales
            
            
            —
            
            
            —
            
            
            —
            
            
            —Gross
                profit
            
            
            —
            
            
            —
            
            
            —
            
            
            —General
                & administrative
            
            
            223,888
            
            
            40,327
            
            
            183,561
            
            
            455
            %Sales
                & marketing
            
            
            —
            
            
            —
            
            
            —
            
            
            —Finance
            
            
            —
            
            
            —
            
            
            —
            
            
            —(Loss)
                from operations
            
            
            (223,888
            )
            
            (40,327
            )
            
            (183,561
            )
            
            455
            %Other
                income
            
            
            151,047
            
            
            131,110
            
            
            19,937
            
            
            15
            %Provision
                for taxation
            
            
            (34,182
            )
            
            (31,839
            )
            
            (2,343
            )
            
            7
            %Minority
                interests
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                (loss) income
            
            
            (107,023
            )
            
            58,944
            
            
            (165,967
            )
            
            (282
            %)




17




Revenues
      and Cost of Sales




No
      sales
      were recognized as sales of Clifford Waterfront units have not commenced as
      of
      March 31, 2008.




Operating
      expenses




*Selling
      and marketing*




As
      construction of Clifford Waterfront has not been completed as of March 31,
      2008,
      no selling and marketing expenses were incurred.




*General
      and administrative*




General
      and administrative expenses consist of the following:




**For
                the three months ended**
              **March
                31,****2008**
            
            **2007****Salaries**
            
            $
            36,836
            
            $
            34,615**Insurance**
            
            
            10,306
            
            
            621**Legal
                and professional fee**
            
            
            140,519
            
            
            774**Stamp
                duty and property tax**
            
            
            27,634
            
            
            6**Others**
            
            
            8,593
            
            
            4,311$
            223,888
            
            $
            40,327




*Legal
      and other professional fee*




Legal
      and
      professional fees composed of legal and professional service fee in the amount
      of $49,435 for 2008 (2007:nil) and audit fee in the amount of $91,084 for
      2008(2007: $774). The increase of legal and professional service fee was mainly
      due to the facts that the Company has started to pay legal and accounting fees
      in 2008. In addition, the audit fee in the amount of $91,084 were paid for
      audit
      services rendered in connection with the 2007 audit.




*Stamp
      duty and property tax*




The
      stamp
      duty incurred in the period ended March 31, 2008 was for the construction
      contracts of Clifford Waterfront project. No construction work was performed
      in
      the corresponding period in 2007 and therefore only a minimal stamp duty or
      property taxes were incurred.




Other
        Income
  Other
        income consists of interest income in the amount of $14,314 for 2008 (2007:
        $3,753) and exchange gain in the amount of $136,729 for 2008
        (2007:$127,357).




Income
      (loss) before tax




As
      a
      result of the above changes, (loss) income before income taxes for the first
      quarter of 2008 went from a profit of $90,783 in 2007 to a loss of $72,841
      in
      2008.




18




Inflation




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




Currency
      Exchange Fluctuations




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




Trends
      or Uncertainties




Our
      management has identified some trends and uncertainties that may unfavorably
      affect the Company’s future sales and profitability. First, austerity measures
      implemented by the Chinese government have taken aim at the fast growing real
      estate industry. Regulations such as tightening lending to real estates
      developers and restricting usage on borrowed capital have caused developers
      to
      operate with a relatively limited source and amount of capital. Moreover,
      increased mortgage interest rate has added some burden to consumers, and this
      has become one of the major factors in causing the reduction in housing
      transaction volume. Second, inflation has caused significant increase in
      construction costs. According to the National Bureau of Statistics of China,
      overall construction prices have increased by 12.4% in the first quarter of
      2008. Within construction prices, material prices rose by 13.7%, and labor
      costs
      rose by 13.5%. We believe that inflation will continue to add pressure on our
      construction costs in the coming quarters. Finally, in the attempt to stimulate
      sales, some of our competitors in Panyu have cut prices of their newly developed
      properties. This has increased pressure on our pricing for Clifford Waterfront,
      sales of which will commence in the next quarter. Going forward, our management
      will closely monitor these trends and minimize the impact from these adverse
      trends and uncertainties. We will continue to employ a prudent financial
      management strategy to ensure smooth and efficient operations.




Plan
      of Operation




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


19


We
      do not
      plan to perform any product research and development in the next twelve months.
      We also do not expect to make any purchases or sales of plant and significant
      equipment.




We
      do not
      expect significant changes in the number of employees. However, the number
      of
      employees in our sales and marketing department may increase slightly as we
      approach the sales date of Clifford Waterfront.




**Off-Balance
      Sheet Arrangements**




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




**Item
      3** **.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




This
      information has been omitted based on the Company’s status as a smaller
      reporting company.




**Item
      4** **T.**  **CONTROLS
      AND PROCEDURES**




Our
      Chief
      Executive Officer and Chief Financial Officer conducted an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
      of
      1934, as amended (the Exchange Act)) as of March 31, 2008. Based on that
      evaluation, the Chief Executive Officer and Chief Financial Officer concluded
      that our disclosure controls and procedures were not effective as of the end
      of
      the period covered by this report to ensure that information required to be
      disclosed in the reports that we file or submit under the Exchange Act is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate to allow timely decisions
      regarding required disclosures. The reasons that our Chief Executive Officer
      and
      Chief Financial Officer arrived at this conclusion are:




·
            *Our
                inability to complete the Management’s Annual Report on Internal Control
                over Financial Reporting.*For the reasons described below under “Internal Control over Financial
                Reporting,” our management’s assessment of our internal controls over
                financial reporting was substantially delayed and is not complete
                as of
                the date of this quarterly report. Because we were not able to complete
                this report within the time period prescribed our management is not
                able
                to make a determination at this time that our disclosure controls
                and
                procedures were effective as of the end of the period covered by
                this
                report.




*·*
            *Our
                independent registered public accounting firm has reported a material
                weakness in our disclosure controls and
                procedures.*




In
      light
      of the foregoing, we are working diligently with our Board of Directors and
      outside advisors to design and implement more formal disclosure controls and
      procedures to ensure that such procedures are effective.


20


Notwithstanding
      the conclusion that our disclosure controls and procedures were not effective
      as
      of the end of the period covered by this report, the Chief Executive Officer
      and
      the Chief Financial Officer believe that the financial statements and other
      information contained in this quarterly report present fairly, in all material
      respects, our business, financial condition and results of
      operations.




INTERNAL
      CONTROL OVER FINANCIAL REPORTING




*Management’s
      Report on Internal Control over Financial Reporting*




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Exchange Act. Our internal control over financial reporting is
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with generally accepted accounting principles. Our internal control
      over financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of our assets, (2) provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of
      financial statements in accordance with generally accepted accounting
      principles, and that our receipts and expenditures are being made only in
      accordance with authorizations of our management and directors; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the consolidated financial statements.




Until
      after the reverse merger with Elite Artz in October 2007, we did not know that
      would be required to assess and evaluate our internal controls over financial
      reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX
      404”) as of the end of the period covered by the last annual report on Form
      10-KSB. Because we did not have an accurate understanding of when compliance
      with SOX 404 was required, we have not fully implemented SOX 404 as of today.
      In
      addition, we devoted substantial time and resources to be in compliance with
      the
      reporting requirement for the reverse merger, which further delayed our ability
      to document, assess and evaluate our internal controls over financial reporting.
      For the foregoing reasons, management’s assessment of the effectiveness of our
      internal control over financial reporting has been substantially delayed and
      is
      not complete.




Management
      is committed to take appropriate steps to implement compliance with SOX 404
      and
      is in the process of hiring an independent consulting firm to document, identify
      any deficiencies or material weaknesses, evaluate and implement recommended
      changes and test our internal control over financial reporting. In making our
      assessment of internal control over financial reporting, management is using
      the
      criteria established in the “Internal Control - Integrated Framework” issued by
      the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      Because our evaluation of internal control over financial reporting is not
      yet
      complete, we cannot assure you that we will not discover additional material
      weaknesses; however management will work with the independent consulting firm
      and work towards compliance with SOX 404 as of December 31, 2008.




CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING




There
      were no changes in internal controls over financial reporting that occurred
      during the first quarter of 2008 that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.


21


**PART
      II - OTHER INFORMATION**




**Item 1** **.**  **LEGAL
      PROCEEDINGS**




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




**Item
      1** **A.**  **RISK
      FACTORS**




This
      information has been omitted based on the Company’s status as a smaller
      reporting company.




**Item
      2** **.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**




None.




**Item
      3** **.**  **DEFAULTS
      UPON SENIOR SECURITIES**




None.




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




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




**Item
      5** **.**  **OTHER
      INFORMATION**




On
      January 22, 2008, our subsidiary, Parkade International Limited established
      a
      wholly-owned subsidiary, Glory Park International Limited (“GP”), under the laws
      of the British Virgin Islands. GP did not have significant operations during
      the
      current quarter.




On
      April
      1, 2008, our subsidiary, Panyu, entered into a consultancy agreement for the
      period from April 1, 2008 to March 31, 2009 for the international sales and
      marketing planning and execution of Clifford Waterfront development project
      with
      Hitech Company Limited, a company owned by Clifford L.K. Pang, a director of
      the
      Company, at a cost equal to 2% of total sales of Clifford
      Waterfront.


22


On
      April
      16, 2008, we terminated the Capital Raising Consultancy Agreement with First
      Asia International Capital Markets Limited, which acted as our financial
      adviser.




**Item
      6** **.**  **EXHIBITS.**





Exhibit
                No.
            
            Description10.1
            
            Loan
                Agreement by and between the Bank of China and Guangzhou City
                Clifford Development (Panyu) Company Limited, dated August 3, 2007
                *10.2
            
            Amendment
                to Loan Agreement by and between the Bank of China and Guangzhou
                City
                Clifford Development (Panyu) Company Limited, dated January 19,
                2008.*10.3
            
            Consultancy
                Agreement by and between Guangzhou City Clifford Development (Panyu
                )
                Company Limited and Hitech Company Limited dated April 1,
                2008.*31.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of
                2002.




*
      Summary
      translation filed as an exhibit. The agreement is in Chinese and the version
      executed by the Company is in Chinese.




23




**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.


Dated:
                May 15, 2008
            **Clifford
                China Estates Inc.**By:/s/
                Clifford L.K. PangClifford
                L.K. PangChief
                Executive Officer, Chief Financial Officer and Director(Principal
                Executive, Accounting and Financial
                Officer)


24