**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 
 (Mark
        One)
 þ
              Quarterly
                  Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
                  Act Of
                  1934
 
 For
                  the quarterly period ended:**March 31,
                  2007**
 
 Or
 
 o
              Transition
                  Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
                  Act Of
                  1934
 
 For
                  the transition period from ______________ to
                  _______________
 
 Commission
        File Number: **0-26760**
  **SINO-AMERICAN
                  DEVELOPMENT CORPORATION**(Exact
                  name of registrant as specified in its
                  charter)
  **Nevada**
              
              **20-5065416**(State
                  or other jurisdiction of incorporation of organization)
              
              (I.R.S.
                  Employer Identification Number)
 
 **1427
                  West Valley Boulevard, Suite 101**
                **Alhambra,
                  California**
              
              **91803**(Address
                  of principal executive offices)
              
              (Zip
                  code)
  **(310)
                  208-1182**(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 þ No o
  The
        registrant is a shell company (as defined by Rule 12b-2 of the Exchange
        Act).     Yes o No þ
  APPLICABLE
        ONLY TO CORPORATE ISSUERS:
 
 Indicate
        the number of shares outstanding of each issuer’s classes of common stock, as of
        the latest practicable date: 2,408,000 issued and outstanding as of September
        24, 2007.
  Transitional
        Small Business Disclosure
        Form (Check one):    YesoNoþ
 
  
  **TABLE
        OF CONTENTS**
 **TO
        QUARTERLY REPORT ON FORM 10-QSB**
 **FOR
        QUARTER ENDED MARCH 31, 2007**
   PagePART
                  I
              FINANCIAL
                  INFORMATION
              4Item
                  1.
              Financial
                  StatementsConsolidated
                  Balance Sheet
              4Consolidated
                  Statements of operations and other
                  Comprehensive income
              5Consolidated
                  Statements of Cash
                  Flows
              6Notes
                  to Consolidated Financial
                  Statements
              7Item
                  2.
              Management’s
                  Discussion and Analysis or Plan
                  of Operation
              30Item
                  3.
              Controls
                  and Procedures
              50PART
                  II
              OTHER
                  INFORMATION
              51Item
                  1.
              Legal
                  Proceedings
              51Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              51Item
                  3.
              Defaults
                  Upon Senior Securities
              51Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              51Item
                  5.
              Other
                  Information
              51Item
                  6.
              Exhibits
              5151Signatures
              52
 
 
 
 (REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK)
 
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  **CAUTION
        REGARDING FORWARD-LOOKING INFORMATION**
 
 All
        statements contained in this Quarterly Report on Form 10-QSB (“Form 10-QSB”) for
        Sino-American Development Corporation, other than statements of historical
        facts, that address future activities, events or developments are
        forward-looking statements, including, but not limited to, statements containing
        the words “believe,” “anticipate,” “expect” and words of similar import. These
        statements are based on certain assumptions and analyses made by us in light
        of
        our experience and our assessment of historical trends, current conditions
        and
        expected future developments as well as other factors we believe are appropriate
        under the circumstances. However, whether actual results will conform to
        the
        expectations and predictions of management is subject to a number of risks
        and
        uncertainties that may cause actual results to differ materially.
 
 Such
        risks include, among others, the following: international, national and local
        general economic and market conditions: our ability to sustain, manage or
        forecast our growth; raw material costs and availability; new product
        development and introduction; existing government regulations and changes
        in, or
        the failure to comply with, government regulations; adverse publicity;
        competition; the loss of significant customers or suppliers; fluctuations
        and
        difficulty in forecasting operating results; changes in business strategy
        or
        development plans; business disruptions; the ability to attract and retain
        qualified personnel; the ability to protect technology; and other factors
        referenced in this and previous filings.
 
 Consequently,
        all of the forward-looking statements made in this Form 10-QSB are qualified
        by
        these cautionary statements and there can be no assurance that the actual
        results anticipated by management will be realized or, even if substantially
        realized, that they will have the expected consequences to or effects on
        our
        business operations. As used in this Form 10-QSB, unless the context requires
        otherwise, “we” or “us” or “Sino” or the “Company” means Sino-American
        Development Corporation and its subsidiaries.
 
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  **PARTI
–
FINANCIAL
        INFORMATION**
 **Item1.**
              **Financial
                  Statements**
  **Sino-American
                      Development Corporation and Subsidiaries**
                  ****
                  ****
                  ******Consolidated
                      Balance Sheet**
                  ****
                  ****
                  ******As
                      of March 31, 2007**
                  ****
                  ****
                  ******Unaudited**
                  ****
                  ****
                  ******(Amounts
                      expressed in U.S. Dollars)**ASSETSCurrent
                      assetsCash
                      and cash equivalents (note 3(b))
                  
                  $
                  1,489,009Accounts
                      receivable and prepayments,net
                      of allowance of $344,361 (notes 3(c) and 5)
                  
                  
                  120,084Prepaid
                      expenses
                  
                  
                  164,439Properties
                      held for resale (note 6)
                  
                  
                  3,929,545Total
                      current assets
                  
                  
                  5,703,077Land
                      held for development (note 7)
                  
                  
                  4,826,378Property
                      and equipment,net of accumulated depreciationand
                      amortization (note 8)
                  
                  
                  2,844,964Total
                      assets
                  
                  $
                  13,374,419LIABILITIES
                      AND SHAREHOLDERS' EQUITYCurrent
                      liabilitiesAccounts
                      payable and accrued expenses (note 9)
                  
                  $
                  7,453,352Customers'
                      deposits (note 10)
                  
                  
                  2,703,318Income
                      and other taxes payable (note 3(k))
                  
                  
                  3,864,148Short-term
                      loans (note 12)
                  
                  
                  3,114,462Total
                      current liabilities
                  
                  
                  17,135,280Minority
                      interest
                  
                  
                  411,501Commitments
                      and Contingencies (note 17)Share
                      capitalAuthorized:
                      150,000,000 common stock of parvalue
                      $0.001 and 50,000,000 preferred stockof
                      par values 0.001Issued
                      and outstanding: 2,408,000 common stocksof
                      par values 0.001
                  
                  $
                  2,408Additional
                      paid-in capital
                  
                  
                  5,944,470Accumulated
                      deficit
                  
                  
                  (8,459,960
                  )Accumulated
                      other comprehensive loss
                  
                  
                  (286,562
                  )Total
                      shareholders' (deficit) before advances offset
                  
                  
                  (2,802,052
                  )Advances
                      to directors
                  
                  
                  (1,372,718
                  )Total
                      stockholders'(deficit), net of advances offset
                  
                  
                  (4,174,770
                  )Total
                      liabilities and shareholders' equity
                  
                  $
                  13,372,011See
                    accompanying summary of accounting policies and notes to the
                    consolidated
                    financial statements
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 **Sino-American****Development
                    Corporation and Subsidiaries**********************
                ******Consolidated
                    Statements of Operations and Other Comprehensive
                    Income**********************
                ******For
                    the Three Months Ended March 31, 2007 and 2006**
                ******Unaudited**********************
                ******(Amounts
                    expressed in U.S. Dollars)**Three
                    months ended March 31,2007
                
                
                2006Sales
                    revenue
                
                $
                1,800,173
                
                
                $
                4,287,805Cost
                    of properties sold
                
                
                (2,747,932
                )
                
                
                (3,279,050
                )Gross
                    (loss) profit
                
                
                (947,759
                )
                
                
                1,008,755Selling
                    expenses
                
                
                (48,896
                )
                
                
                (159,968
                )Depreciation
                    expenses
                
                
                (35,616
                )
                
                
                (38,894
                )General
                    and administrative expenses
                
                
                (382,529
                )
                
                
                (557,953
                )Impairment
                    losses
                
                
                -
                
                
                
                (956,855
                )(Loss)
                    from operations
                
                
                (1,414,800
                )
                
                
                (704,915
                )Other
                    income (expenses)Other
                    revenues
                
                
                37,938
                
                
                
                2,111Interest
                    and finance costs
                
                
                (67,478
                )
                
                
                (57,883
                )Total
                    other expenses
                
                
                (29,540
                )
                
                
                (55,772
                )Loss
                    before provision for incometaxes
                    and minority interest
                
                
                (1,444,340
                )
                
                
                (760,687
                )Provision
                    for income taxes (notes 3(k) and 14)
                
                
                (89,109
                )
                
                
                (212,246
                )Loss
                    before minority interest
                
                
                (1,533,449
                )
                
                
                (972,933
                )Less
                    minority interest
                
                
                46,003
                
                
                
                27,109Net
                    loss
                
                
                (1,487,446
                )
                
                
                (945,824
                )Other
                    comprehensive incomeForeign
                    currency translation adjustment
                
                
                9,262
                
                
                
                3,814Comprehensive
                    loss
                
                $
                (1,478,184
                )
                
                $
                (942,010
                )Weight
                    average number of shares-
                    Basic and diluted
                
                
                2,408,000
                
                
                
                1,671,484Loss
                    per share-
                    Basic and diluted
                
                $
                (0.62)
                
                
                $
                (0.56)Comprehensive
                    loss per share-
                    Basic and diluted
                
                $
                (0.61)
                
                
                $
                (0.56)See
                    accompanying summary of accounting policies and notes to the
                    consolidated
                    financial statements.
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  **Sino-American
                  Development Corporation and Subsidiaries**********************
              ******Consolidated
                  Statements of CashFlows**********************
              ******For
                  the Three Months Ended March 31, 2007 and 2006****Unadited**********************
              ******(Amounts
                  expressed in U.S. Dollars)**Three
                  months ended March 31,2007
              
              
              2006Cash
                  flows from operating activities:Net
                  loss
              
              $
              (1,487,446
              )
              
              $
              (945,824
              )Adjustments
                  to reconcile net income to cashprovided
                  by operating activities:Minority
                  Interest
              
              
              (46,003
              )
              
              
              (18,109
              )Depreciation
                  and amortization
              
              
              35,616
              
              
              
              38,894(Increase)
                  decrease in assets:Advances
                  to suppliers
              
              
              -
              
              
              
              196,637Construction-in
                  progress
              
              
              -
              
              
              
              2,729,019Prepaid
                  expenses
              
              
              (11,878
              )
              
              
              -Account
                  receivable
              
              
              2,999
              
              
              
              348,293Properties
                  held for resale
              
              
              1,659,353
              
              
              
              252,996Increase
                  (decrease) in liabilities:Account payable and other payables
              
              
              (50,310
              )
              
              
              (567,548
              )Customers' deposits
              
              
              (273,355
              )
              
              
              (1,716,776
              )Income
                  and other taxes payable
              
              
              219,203
              
              
              
              364,016Net
                  cash provided by operating activities
              
              
              48,179
              
              
              
              681,598Cash
                  flows from investing activities:Purchase
                  property, plant and equipment
              
              
              (25,971
              )
              
              
              (2,366
              )Net
                  cash used in investing activities
              
              
              (25,971
              )
              
              
              (2,366
              )Cash
                  flows from financing activities:Principal
                  loans repayments
              
              
              (289,421
              )
              
              
              (404,225
              )Advances
                  to directors and affiliated companies
              
              
              253,039
              
              
              
              (1,115,309
              )Net
                  cash used in financing activities
              
              
              (36,382
              )
              
              
              (1,519,534
              )Foreign
                  currency translation adjustment
              
              
              (23,555
              )
              
              
              3,814Net
                  decrease in cash and cash equivalents
              
              
              (37,729
              )
              
              
              (836,488
              )Cash
                  and cash equivalents, beginning of period
              
              
              1,526,738
              
              
              
              2,858,344Cash
                  and cash equivalents, end of period
              
              $
              1,489,009
              
              
              $
              2,021,856See
                  accompanying summary of accounting policies and notes to the consolidated
                  financial statements.
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  SINO-AMERICANDEVELOPMENT
          CORPORATION
 NOTES
          TO
          THE  CONSOLIDATED FINANCIAL STATEMENTS
 1.           CORPORATIONREORGANZATIONAND BUSINESS ACTIVITIES
 
 SINO-American
        Development Corporation, (the "Company") was originally incorporated in Colorado
        in 1985 as Gemini Ventures, Inc. The name was changed in 1989 to Solomon
        Trading
        Company, Ltd., in 1994 to the Voyageur First, Inc., in 1995 to North American
        Resorts, Inc., in 2000 to Immulabs Corp. Effective March 28, 2003, as filed
        with
        the State of Colorado, the Company changed its name to Xerion EcoSolutions
        Group
        Inc. and was engaged in the business of developing gold extraction technology
        for the mining industry until it became inactive in 2004.
 
 In
        October of 2005, the Company entered into a stock exchange agreement with
        Town
        House Land Limited (“Town House") whereby the Company issued stock equal to
        98.75% in its ownership in exchange for 100% of the ownership interest in
        Town
        House.
 
 This
        transaction was treated as a recapitalization of Town House for financial
        reporting purposes.
 
 On
        May
        31, 2006, the shareholders elected to reincorporate the Company from the
        state
        of Colorado to the state of Nevada and to change the name to SINO-American
        Development Corporation.  The Company also approved an eight for one
        reverse stock split which reduced the number of shares outstanding from
        227,321,840 to 28,415,230.   The effect of this reverse stock split
        has been reflected retroactively for all periods included in these financial
        statements.
 
 *-
              7
              -*
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              of Contents*
 
 
 On
        December 11, 2006, the Company entered into an agreement with twenty-two
        accredited investors (“the Buyers”) pursuant to which the company agreed to
        issue 12,505,000 shares of it’s common stock, in consideration for an aggregate
        of $12,505 in cash. Additionally on December 11,2006, the Buyers directly
        acquired (the “Stock Acquisition”) from the following stockholders all of their
        shares of our common stock: Mr. Fang Zhong, a current director and our
        President, Chief  Executive Officer, Chief Financial Officer and
        Treasurer at the time of the Stock Acquisition; Ms Hu Min, a current director
        and our Secretary at the time of the Stock Acquisition; Mr. Fang Wei Jun,
        a
        current director of the Company;and Mr. Fang Zhong in his capacity as legal
        representative of Fang Hui. The Stock Purchase Agreement and the Stock
        Acquisition effectuated a change in control of the Company, and in connection
        therewith, Mr. Fang Zhong resigned as our President, Chief Executive Officer,
        Chief Financial Officer, and Treasurer, and Ms. Hu Min resigned as our Secretary
        both effective December 11, 2006. In their places, Mr. Silas Phillips was
        appointed as our President, Chief Executive Officer, Chief Financial Officer,
        and Treasurer, effective December 11, 2006.
 
 The
        Stock
        Purchase Agreement also requires that, after the closing (the “ Closing ) of the
        Stock Purchase and Stock Acquisition,, all current assets of the Company
        would
        be transferred to Town House, and all of the Company’s liabilities to be assumed
        by Town House. Thereafter, immediately after the closing of any future
        transaction whereby the Company acquires control and ownership of another
        company, the Company would transfer all of the shares of Town House held
        by the
        Company to a trust, the beneficiaries of which would be the stockholders
        of the
        Company immediately prior to Closing.
 
 *-
              8
              -*
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              of Contents*
 
 
 On
        December 5 2006, the Board of Directors and the majority holders of the
        Company’s stock jointly approved resolutions by written consent to amend the
        Articles of Incorporation to effectuate a one for seventeen reverse stock
        split
        which reduced the number of shares outstanding from 40,920,230 to 2,408,000.
        This stock split became effective on January 12, 2007. The effect of this
        reverse stock split has been reflected retroactively for all periods included
        in
        these financial statements.
 
 Effective
        from September 7 2007, Mr. Silas Philips resigned as the Company’s Principal
        Executive Officer and Principal Financial and Accounting Officer. Mr. Dick
        Lee
        resigned as a member of the Board of Directors of the company. Mr. Fang Zhong
        was appointed as the Company’s Principal Executive Officer and Principal
        Financial and Accounting Officer to fill the vacancies resulting from Mr.
        Phillip’s resignation.
 
 Town
        House Land Limited (“Town House Land”) was incorporated in Hong Kong, as a
        private limited liability company on August 13, 2001 with an authorized capital
        of $64,103 (HK$500,000) divided into 500,000 ordinary shares of par value
        $0.12
        (HK$1.00) each. Town House Land changed to its present name on August 13,
        2003.
        On August 15, 2003, Town House Land acquired 97% of the outstanding registered
        capital of Wuhan Town House Land (“Wuhan Town House”). Terms of the transaction
        call for Town House Land to pay $1,602,564 in cash plus the contribution
        of an
        additional $5,857,488 in share capital in Town House Land as consideration
        for
        the acquisition of the 97% interest in Wuhan Town House's registered capital.
        For financial reporting purposes, Wuhan Town House was considered to be the
        acquiring entity and the additional cash consideration paid was treated as
        a
        distribution to members. Town House Land had no operations prior to this
        reverse
        acquisition and there was substantially no change in ownership from that
        of
        Wuhan Town House as a result of this transaction.
 
 *-
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              -*
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              of Contents*
 
 
 At
        March
        31, 2007 Town House Land held 97% of the registered capital of Wuhan Town
        House,
        directly held 100% of the equity in Town House Land (Miami) Corporation (“Town
        House Miami”)and indirectly 97% of the equity in Town House Land (USA) Inc
        (“Town House USA”). Collectively hereinafter, Town House Land, Wuhan Town House,
        Town House Miami Corporation and Town House USA, Inc., are referred to as
        "the
        Company".
 
 Wuhan
        Town House (formerly: Wuhan Pacific Real Estate Development Company Limited)
        was
        registered as a formal third level property Company in Hubei Province, in
        the
        People's Republic of China as a limited liability company (in which investors'
        potential losses are limited to their capital contributions) on December
        18,
        1995 with a registered capital of $1,207,729 (RMB 10,000,000) and a defined
        period of existence of 14 years to December 18, 2009. To meet the qualifications
        of third level property company, the company must (1) have registered capital
        of
        RMB10,000,000, (2) have engineering and staff of not less than 12 people,
        (3)
        should have completed at least 50,000 square meters of accumulated development
        area, and (4) have a 100% passing rate in construction quality and 10% ranked
        as
        excellent.
 
 Subsequent
        recapitalizations during 2000 increased Wuhan Town House's registered capital
        to
        $6,038,647 and changed is classification to a second level property company.
        To
        meet the qualifications of a second level property company, the company must
        (1)
        have registered capital of RMB 40,000,000, (2) have engineering and management
        staff of not less than 24 people, (3) should have completed 150,000 square
        meters of accumulated areas completed within three years, (4) 100% pass rate
        in
        construction quality with 10% ranked as excellent, and (5) at least three
        years
        experience in property development. On August 15, 2003, Wuhan Town House
        entered
        into a reverse merger agreement with Town House Land.
 
 *-
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 On
        October 10, 2003 Wuhan City Foreign Investment Bureau approved the registration
        of Wuhan Town House Land as a Sino Foreign Joint Investment Enterprise with
        a
        defined period of existence of 20 years to October 27, 2023.
 
 Pursuant
        to the approval of Wuhan City Industrial and Commercial Administrative Bureau
        on
        February 20, 2004, Wuhan Pacific Real Estate Development Company Limited
        changed
        its name to Wuhan Town House Land Limited.
 
 Town
        House USA was incorporated in California on March 4, 2004 and owns real estate
        which it is holding for development. Town House USA is a wholly owned subsidiary
        of Wuhan Town House.
 
 Town
        House Miami was incorporated in Florida on November 18, 2004 and owns real
        estate which it is holding for development. Town House Miami is a wholly
        owned
        subsidiary of Wuhan Town House.
 
 The
        Company's principal activity is the development and sale of commercial and
        residential real estate. The Company's principal country of operations through
        March 31 2007 was the People's Republic of China ("PRC"), however, the Company
        held substantial real estate holdings in the United States as of that date
        which
        it plans to develop in the near future.
 
 
 2.
              GOING
                  CONCERN AND MANAGEMENT’S PLANS
 
 The
        Company had a working capital deficit of $11,432,203 as of March 31,
        2007.  The Company’s ability to continue as a going concern is
        dependent on the ability to renegotiate an extension of the bank debt maturities
        and to obtain a profitable level of operations.  These issues raise
        doubts about the Company’s ability to continue as a going
        concern.  Management is in the process of attempting to raise
        additional capital through debt and equity offerings.
 
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 The
        financial statements do not give effect to any adjustments which would be
        necessary should the Company be unable to continue as a going concern and
        therefore be required to realize its assets and discharge its liabilities
        in the
        normal course of business at amounts different from those reflected in these
        financial statements.
 
 
 3.           SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.
              Basis
                  of presentation and
                  consolidation
 
 The
        accompanying consolidated financial statements are prepared in accordance
        with
        accounting principles generally accepted in the United States of
        America.
 
 The
        consolidated financial statements include the accounts of the Company, Town
        House, Wuhan Town House, Town House USA, and Town House Miami. All significant
        inter-company transactions and balances within the Company are eliminated
        on
        consolidation.
 
 b.
              Cash
                  and cash equivalents
 
 The
        Company considers all highly liquid debt instruments purchased with maturity
        period of three months or less to be cash equivalents. The carrying amounts
        reported in the accompanying consolidated balance sheet for cash and cash
        equivalents approximate their fair value. The Company has restricted cash
        in
        accordance with the loan covenants.  As of March 31, 2007 there were
        no restrictions on the Company’s cash balances.
 
 
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 c.
              Accounts
                  receivables
 
 The
        Company provides an allowance for doubtful accounts equal to the estimated
        uncollectible amounts. The Company's estimate is based on historical collection
        experience and a review of the current status of trade accounts receivable.
        Accounts receivable in the balance sheet is stated net of such
        provision.
 
 d.
              Properties
                  held for sale
 
 Properties
        held for sale are comprised of properties held for sale and repossessed
        properties held for resale and are stated at the lower of cost or net realizable
        value. Cost includes acquisition costs of land use rights, development
        expenditure, interest and any overhead costs incurred in bringing the developed
        properties to their present location and condition.
 
 Net
        realizable value is determined by reference to management estimates based
        on
        prevailing market conditions.
  
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              13
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 e.
              Property
                  and equipment
  Property
        and equipment are recorded at cost and are being depreciated and amortized
        over
        the estimated useful lives of the related assets. Depreciation and amortization
        is computed on the straight-line basis over useful lives net of a 5% salvage
        value as follows:
 
 Building
                  and land use right
              40
                  yearsEquipment
              5
                  yearsMotor
                  vehicles
              5-8
                  yearsOffice
                  furniture and fixtures
              5
                  yearsEquipment
              5
                  years
 
 Repairs
        and maintenance costs are normally charged to the statement of operations
        in the
        year in which they are incurred. In situations where it can be clearly
        demonstrated that the expenditure has resulted in an increase in the future
        economic benefits expected to be obtained from the use of the asset, the
        expenditure is capitalized as an additional cost of the asset.
 
 Property
        and equipment are evaluated annually for any impairment in value. Where the
        recoverable amount of any property and equipment is determined to have declined
        below its carrying amount, the carrying amount is reduced to reflect the
        decline
        in value.
 
 f.
              Related
                  companies
 
 A
        related
        company is a company in which a director has beneficial interests in and
        in
        which the Company has significant influence.
 
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 g.
              Income
                  recognition
 
 Revenue
        from the sale of properties is recognized when the following four criteria
        are
        met: (1) a sale is consummated, (2) the buyers initial and continuing
        investments are adequate to demonstrate a commitment to pay for the property,
        (3) the seller's receivable is not subject to future subordination, and (4)
        the
        seller has transferred to the buyer the usual risks and rewards of ownership
        in
        a transaction that is in substance a sale and does not have a substantial
        continuing involvement with the property.
 
 Interest
        income is recognized when earned, taking into account the average principal
        amounts outstanding and the interest rates applicable.
 
 h.
              Cost
                  of properties sold
 
 The
        cost
        of goods sold includes the carrying amount of the properties being sold and
        the
        business taxes paid by the Company in connection with the sales.
 
 i.
              Advertising
 
 Advertising
        costs are expensed as incurred.
 
 
 *-
              15
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              of Contents*
 
 j.
              Foreign
                  Currencies
 
 These
        financial statements have been prepared in U.S. dollars. The functional
        currencies for Town House and Wuhan Town House are the "Hong Kong dollar"
        and
        "Renminbi" or "Yuan", respectively. Nonmonetary assets and liabilities are
        translated at historical rates, monetary assets and liabilities are translated
        at the exchange rates in effect at the end of the year, and income statement
        accounts are translated at average exchange rates.
 
 k.
              Taxation
 
 Taxation
        on overseas profits has been calculated on the estimated assessable profits
        for
        the year at the rates of taxation prevailing in the countries in which the
        Company operates.
 
 Provision
        for The People's Republic of China enterprise income tax is calculated at
        the
        prevailing rate based on the estimated assessable profits less available
        tax
        relief for losses brought forward.
 
 Enterprise
        income tax
 
 Under
        the
        Provisional Regulations of The People's Republic of China ("PRC")Concerning
        Income Tax on Enterprises promulgated by the State Council and which came
        into
        effect on January 1, 1994, income tax is payable by enterprises at a rate
        of 33%
        of their taxable income. Preferential tax treatment may, however, be granted
        pursuant to any law or regulations from time to time promulgated by the State
        Council. For the periods ended March 31, 2007 and 2006, the Company has been
        granted the privilege of computing the gross profit margins on real estate
        development sales at 15% of sales and computed the enterprise income tax
        at 33%
        on only 15% of sales.
 
 Enterprise
        income tax ("EIT") is provided on the basis of the statutory profit for
        financial reporting purposes, adjusted for income and expense items, which
        are
        not assessable or deductible for income tax purposes.
 
 *-
              16
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 l.
              Retirement
                  benefit costs
 
 According
        to The People's Republic of China regulations on pension, the Company
        contributes to a defined contribution retirement plan organized by municipal
        government in the province in which the Company was registered and all qualified
        employees are eligible to participate in the plan. Contributions to the plan
        are
        calculated at 20% or 26% of the employees' salaries above a fixed threshold
        amount and the employees contribute 6% while the Company contributes the
        balance
        contribution of 14% or 20%. The Company has no other material obligation
        for the
        payment of retirement benefits beyond the annual contributions under this
        plan.
 
 m.
              Fair
                  value of financial instruments
  The
        carrying amounts of certain financial instruments, including cash, accounts
        receivable, other receivables, accounts payable, accrued expenses, and other
        payables approximate their fair values as of March 31, 2007 because of the
        relatively short-term maturity of these instruments.
 
 n.
              Earnings(loss)per
                  share
  Basic
        earnings (loss) per share is computed by dividing net income by the
        weighted-average number of common shares outstanding during the period. Diluted
        earnings per share is computed by dividing net income by the weighted-average
        number of common shares and dilutive potential common shares outstanding
        during
        the period. As of March 31, 2007 and 2006, there were no outstanding securities
        or other contracts to issue common stock, such as options, warrants or
        conversion rights, which would have a dilutive effect on earnings per
        share.
 
 On
        May
        31, 2006 the Company approved an eight for one reverse stock split which
        reduced
        the number of shares outstanding from 227,321,840 to 28,415,230. The effect
        of
        this reverse stock split has been reflected retroactively for all periods
        included in these financial statements.
 
 *-
              17
              -*
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              of Contents*
 
 
  On
        December 5, 2006, the Board of Directors and the majority holders of the
        Company’s stock jointly approved resolutions by written consent to amend the
        Articles of Incorporation to effectuate a one for seventeen reverse stock
        split
        which reduced the number of shares outstanding from 40,921,500 to 2,408,000.
        This stock split became effective on January 12, 2007. The effect of this
        reverse stock split has been reflected retroactively for all periods included
        in
        these financial statements.
 
 o.
              Use
                  of estimates
  The
        preparation of financial statements in accordance with generally accepted
        accounting principles require management to make estimates and assumptions
        that
        affect reported amounts of assets and liabilities and disclosure of contingent
        assets and liabilities at the date of the financial statements and reported
        amounts of revenues and expenses during the reporting period. Actual results
        could differ from those estimates. The most significant estimates related
        to
        allowance for uncollectible accounts receivable, depreciation, costs to complete
        construction in progress, taxes, and contingencies. Estimates may be adjusted
        as
        more current information becomes available, and any adjustment could be
        significant.
  
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 p.
              Recent
                  accounting pronouncements
  In
        February 2006, the FASB issued Statement No. 155, “Accounting for Certain
        Hybrid Financial Instruments” (“SFAS No. 155”), which amends FASB
        Statements No. 133 and 140. This Statement permits fair value remeasurement
        for any hybrid financial instrument containing an embedded derivative that
        would
        otherwise require bifurcation, and broadens a Qualified Special Purpose Entity’s
        (“QSPE”) permitted holdings to include passive derivative financial instruments
        that pertain to other derivative financial instruments. This Statement is
        effective for all financial instruments acquired, issued or subject to a
        remeasurement event occurring after the beginning of an entity’s first fiscal
        year beginning after September 15, 2006. Adoption of this Statement has no
        material impact on the Company’s financial position, results of operations, or
        cash flows.
 In
        June
        2006, the FASB issued Interpretation 48, “Accounting for Uncertainty in Income
        Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109,
“Accounting for Income Taxes.”  FIN 48 clarifies the accounting
        and reporting for income taxes where interpretation of the law is uncertain.
        FIN 48 prescribes a comprehensive model for the financial statement
        recognition, measurement, presentation and disclosure of income tax
        uncertainties with respect to positions taken or expected to be taken in
        income
        tax returns. FIN 48 is effective for fiscal years beginning after
        December 15, 2006. Adoption of FIN 48 has no material impact on the
        Company’s financial position, results of operations, or cash flows.
  In
        September 2006, the FASB issued Statement No. 157, “Fair Value
        Measurements” (“SFAS No. 157”). SFAS No. 157 addresses how
        companies should measure fair value when they are required to use a fair
        value
        measure for recognition or disclosure purposes under GAAP.
        SFAS No. 157 defines fair value, establishes a framework for measuring
        fair value and expands disclosures about fair value measurements.
        SFAS No. 157 is effective for fiscal years beginning after
        November 15, 2007, with earlier adoption permitted. Management is assessing
        the impact of the adoption of this Statement.
 
 
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              of Contents*
 
 
 In
        September 2006, the FASB issued Statement No. 158, “Employers’ Accounting
        for Defined Benefit Pension and Other Postretirement Plans”
(“SFAS No. 158”), an amendment of FASB Statements No. 87, 88, 106
        and 132(R). SFAS No. 158 requires (a) recognition of the funded
        status (measured as the difference between the fair value of the plan assets
        and
        the benefit obligation) of a benefit plan as an asset or liability in the
        employer’s statement of financial position, (b) measurement of the funded
        status as of the employer’s fiscal year-end with limited exceptions, and
        (c) recognition of changes in the funded status in the year in which the
        changes occur through comprehensive income. The requirement to recognize
        the
        funded status of a benefit plan and the disclosure requirements are effective
        as
        of the end of the fiscal year ending after December 15, 2006. The
        requirement to measure the plan assets and benefit obligations as of the
        date of
        the employer’s fiscal year-end statement of financial position is effective for
        fiscal years ending after December 15, 2008.  This Statement has
        no current applicability to the Company’s financial
        statements.  Management is assessing the impact of adoption of this
        statement.
 
 In
        September 2006, the Securities Exchange Commission issued Staff Accounting
        Bulletin No. 108 (“SAB No. 108”). SAB No. 108
        addresses how the effects of prior year uncorrected misstatements should
        be
        considered when quantifying misstatements in current year financial statements.
        SAB No. 108 requires companies to quantify misstatements using a
        balance sheet and income statement approach and to evaluate whether either
        approach results in quantifying an error that is material in light of relevant
        quantitative and qualitative factors. When the effect of initial adoption
        is
        material, companies will record the effect as a cumulative effect adjustment
        to
        beginning of year retained earnings and disclose the nature and amount of
        each
        individual error being corrected in the cumulative adjustment.
        SAB No. 108 is effective beginning January 1, 2007 and the
        adoption of SAB No. 108 has no material impact on the Company’s
        financial position, results of operations, or cash flows.
 
 *-
              20
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 In
        February 2007, the FASB issued Statement No.159 “The Fair Value Option for
        Financial Assets and Financial Liabilities” (SFAS 159). This statement permits
        companies to choose to measure many financial assets and liabilities at fair
        value. Unrealized gains and losses on items for which the fair value option
        had
        been elected are reported in earnings. SFAS 159 is effective for fiscal years
        beginning after November 15, 2007. The Company is currently assessing the
        impact
        of SFAS 159 on its consolidated financial statements.
 
 
 4.           CONCENTRATIONOFBUSINNESS ANDCREDIT RISK
 
 At
        March
        31, 2007, the Company had $1,445,222 cash in banks located in the People's
        Republic of China ("PRC") and these balances are not covered by any type
        of
        protection similar to that provided by the FDIC on funds held in United States
        banks.
 
 Substantially
        all of the Company's operations are in the PRC other than three significant
        real
        estate holdings in the United States.
 
 The
        Company provides credit in the normal course of business. The Company performs
        ongoing credit evaluations of its customers and clients and maintains allowances
        for doubtful accounts based on factors surrounding the credit risk of specific
        customers and clients, historical trends, and other information. Accounts
        receivable totaling $Nil and $246,492 as of March 31, 2007 and 2006,
        respectively, were collateralized by real estate.
 
 *-
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              -*
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 5.           ACCOUNTS
        RECEIVABLE AND PREPAYMENTS
 
 Accounts
        receivable consist of the followings:
 Accounts
                  receivable
              
              $
              332,557Prepayment
                  for operating purpose
              
              
              131,888Less:
                  Provision for doubtful debts
              
              
              (344,361
              )Accounts
                  receivable and other receivables net of provision for doubtful
                  debts
              
              $
              120,084
 
 6.           PROPERTIES
        HELD FOR RESALE
 
 As
        of
        March 31, 2007, the Company had the following properties held for
        resale:
 
 Diamond
                  Mansion Phase I Residential
              
              $
              20,015Diamond
                  Mansion Phase 2
              
              
              254,473Gutian
                  Apartments
              
              
              291,975Wuhan
                  Town House Plaza
              
              
              231,962YiChang
                  Town House Plaza
              
              
              3,131,120Total
              
              $
              3,929,545
 
 During
        the first quarter of 2006, the Company decided to abandon the Jing Qi project
        which had been long delayed waiting for the Province to build access roads.
        This
        resulted in an impairment loss of $956,855.
 
 During
        the quarter ended June 30, 2006 the Company revised its cost estimates to
        complete the YiChang Town House Plaza project.  These upward revisions
        resulted in an increase in cost of sales during the second quarter to reflect
        both additional cost associated with sales made in the first quarter as well
        as
        costs incurred on sales during the second quarter.  Management anticipates
        that it will be able to recover its costs in remaining unsold and uncompleted
        units on this project
 
 *-
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              -*
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 7.           LAND
        HELD FOR DEVELOPMENT
 
 As
        of
        March 31, 2007, the Company owned three tracts of land located in the United
        States which it was holding for development. The cost basis in this land
        at
        March 31, 2007 was $4,826,378. At March 31, 2007, substantially all of this
        land
        was pledged as collateral on various loans.
 
 
 8.           PROPERTY,
        PLANT AND EQUIPMENT
 
 Properties
        and equipment as of March 31, 2007, stated at cost less accumulated depreciation
        and amortization, consist of:
 Buildings
                  and land use right
              
              $
              2,667,065Plant
                  and machineries
              
              
              31,630Motor
                  vehicles
              
              
              599,801Office
                  equipment
              
              
              194,832Furniture
                  and fixtures
              
              
              61,9263,555,254Less:
                  Accumulated depreciation and amortization
              
              
              (710,290
              )$
              2,844,964
 
 
 9.           ACCOUNTS
        PAYABLE AND ACCRUED EXPENSES
 
 Accounts
        payable and accrued expenses as follows:
 Accounts
                  payable
              
              $
              6,540,971Accrual
                  expenses for operating purpose
              
              
              85,831Accrued
                  welfare payable
              
              
              142,540Stamp
                  duty payable
              
              
              684,010$
              7,453,352
 
 
 
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 10.
              CUSTOMERS’
                  DEPOSITS
 
 Customers’
        deposits represented deposits from residential property buyers and which
        procedures for the transfer of ownership of the property purchased have not
        been
        completed as at the balance sheets date.
 
 
 11.  TRANSACTIONS
        WITH RELATED PARTIES
 
 Amounts
        due from/(to) directors at March 31, 2007 are as follows:
 Fang
                  Zhong (Director)
              
              $
              1,372,274Hu
                  Min (Director)
              
              
              45,420Fang
                  Wei Jun (Director
              
              
              (879
              )Fang
                  Wei Feng (Director)
              
              
              (44,097
              )$
              1,372,718
 
 
 The
        amounts due are unsecured, interest free and have no fixed repayment terms.
        For
        financial reporting purposes, the net balance due from directors has been
        reflected as an offset against stockholders equity.
 
 12.  SHORT-TERM
        LOANS
 
 The
        Company had the following short-term loans at March 31, 2007:
 
 Town
        House Land (Miami) short-term bank loan,
 secured
        by real estate property in the United
 States,
        interest at 1% over prime, principal
 due
        on
        July 30, 2007.  Management is in the
 course
        of
        negotiation for the loan to be extended.    $800,000
 
 *-
              24
              -*
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 Wuhan
        Town House short-term bank loan,
 secured
        by YiChang Project land use rights,
 interest
        at 115% of the national rate (5.58% at
 December
        31, 2006), principal due based upon
 a
        percentage of sales through December 20, 2006,
 extended
        to June 20, 2007.  Management is in the
 course
        of
        negotiation for the loan to be further
 extended.                                                                 387,300
 
 Town
        House Land (USA) short-term bank loan,
 secured
        by real estate property in the United
 States,
        interest at Far East Bank Prime Rate
 Plus
        1%
        (9.25% at December 31, 2006) paid
 periodically,
        principal due on January 1, 2007.
 Management
        is in the course of negotiation
 for
        the
        loan to be
        extended.                                                                                         755,252
 
 Town
        House Land (Miami) short-term loan from a
 financial
        institution, secured by real property,
 interest
        at Far East Bank Prime Rate plus 1%
 paid
        periodically, principal due on July 30, 2007.
 Management
        is in the course of negotiation
 for
        the
        loan to be
        extended.                                                                                        100,000
 
 Indirect
        financing                                                                                                      1,071,910
 
 $3,114,462
 
 13.  EQUITY
 
 On
        May
        31, 2006, the shareholders elected to reincorporate the Company from the
        state
        of Colorado to the state of Nevada and to change the name to SINO-American
        Development Corporation.  The Company also approved an 8 for one reverse
        stock split which reduced the number of shares outstanding from 227,321,840
        to
        28,415,230.   The effect of this reverse stock split has been
        reflected retro actively for all periods included in these financial
        statements.
 
 *-
              25
              -*
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              of Contents*
 
 
 
 The
        Common Stock retained a par value of $.001 per share but the Authorized Capital
        was reduced from 300,000,000 shares to 150,000,000 shares.  The preferred
        stock, of which there was none outstanding at September 30, 2006 was changed
        to
        a par value of $0.01 per share from no par.
 
 On
        December 11, 2006, the Company issued 12,505,000 shares of the Company’s common
        stock, at par value $0.001, in consideration for an aggregate of $12,505
        in
        cash.
 
 On
        December 5, 2006, the Board of Directors and the majority holders of the
        Company’s stock jointly approved resolutions by written consent to amend the
        Articles of Incorporation to effectuate a one for seventeen reverse stock
        split
        which reduced the number of shares outstanding from 40,921,500 to 2,408,000.
        This stock split became effective on January 12, 2007. The effect of this
        reverse stock split has been reflected retroactively for all periods included
        in
        these financial statements.
 
 
 14.           INCOME
        TAXES
 
 Provision
        for the People's Republic of China enterprise income tax ("EIT") is calculated
        at the prevailing rate based on the estimated assessable profits less available
        tax relief for losses carried forward.
 
 For
        the
        periods ended March 31, 2007 and 2006, the Company has been granted the
        privilege of computing the gross profit margins on real estate development
        sales
        at 15% of sales and computed the enterprise income tax at 33% on only 15%
        of
        sales.
 
 EIT
        is
        provided on the basis of the statutory profit for financial reporting purposes,
        adjusted for income and expense items, which are not assessable or deductible
        for income tax purposes.
 
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 A
        reconciliation of EIT tax at the statutory rate to the Company's effective
        rate
        is as follows:
 
 Three
        Months Ended March 31,
   
 2007                  2006
 
 Computed
        tax at Federal statutory rate
 of
        34%                                                                                $
        (91,808)$(254,608)
 
 Difference
        primarily attributable to
 EIT
        tax
        assessed on gross real estate
 sales
        and
        adjustments to prior years
 tax
        liabilities based on assessments
 from
        the
        PRC taxing
 authorities                                                                                            2,699                  42,362
 
 
 Provision for(benefit from)income taxes$(89,109)            $(212,246)
   15.           IMPAIRMENT
        LOSSES
 
 During
        the period ended March 31, 2006, the Company decided to abandon the Jing
        Qi
        project which had been long delayed waiting for the Province to build access
        roads. This resulted in an impairment loss of $956,855.
 
 
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 16.           STOCK
        PURCHASE AGREEMENT
 
 The
        Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”)
        on December 11, 2006, with twenty-two accredited investors (collectively,
        the
“Buyers”) pursuant to which we issued 12,505,000 shares of the Company’s common
        stock, par value $0.001, in consideration for an aggregate of $12,505 in
        cash
        (the “Stock Purchase”). Additionally on December 11, 2006, the Buyers directly
        acquired (the “Stock Acquisition”) from the following stockholders all of their
        shares of our common stock: Mr. Fang Zhong, a current director and our
        President, Chief Executive Officer, Chief Financial Officer, and Treasurer
        at the time of the Stock Acquisition; Ms. Hu Min, a current director and
        our
        Secretary at the time of the Stock Acquisition; Mr. Fang Wei Jun, a current
        director of the Company; and Mr. Fang Zhong in his capacity as legal
        representative of Fang Hui. The Stock Purchase Agreement and the Stock
        Acquisition effectuated a change in control of the Company, and in connection
        therewith, Mr.Fang Zhong resigned as our President, Chief Executive Officer,
        Chief Financial Officer, and Treasurer, and Ms. Hu Min resigned as our
        Secretary, both effective December 11, 2006. In their places, Mr. Silas Phillips
        was appointed as our President, Chief Executive Officer, Chief Financial
        Officer, and Treasurer, effective December 11, 2006.
 
 The
        Stock
        Purchase Agreement also requires that, after the closing (the “Closing”) of the
        Stock Purchase and the Stock Acquisition , all current assets of the Company
        would be transferred to Town House, and all of the Company’s liabilities to be
        assumed by Town House. Thereafter, immediately after the closing of any future
        transaction whereby the Company acquires control and ownership of another
        company, the Company would transfer all of the shares of Town House held
        by the
        Company to a trust (the “Trust”), the beneficiaries of which would be the
        stockholders of the Company immediately prior to Closing.
 
 
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              28
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 17.
              COMMITMENTS
 
 As
        of
        March  31, 2007 the Company had contractual commitments of lease
        expenditures of $3,944.
 
 During
        January of 2005, the Company and Fang Zhong entered into a three year commitment
        to advance up to RMB 30,000,000 ($3,699,137) to Wuhan Pacific Shopping Mall
        Limited. Fang Zhong has personally guaranteed the repayment of these advances.
        As of March 31, 2006, the Company had advanced a total of $3,278,774 to Wuhan
        Pacific Shopping Mall Limited, all of which was treated as a repayment/advance
        of funds to Fang Zhong.
  In
        December 2006, the board of directors approved a scheme to spin-off its real
        estate business. The spin-off will be accomplished through a series of
        transactions whereas the assets and liabilities of the real estate business
        and
        holdings in China and the United States will be transferred to a private
        company, and shares of the private company’s common stock will be distributed to
        the stockholders of the Company (excluding the private placement shareholders
        who acquired shares in December 2006), on a pro rata basis. The spin-off
        has not
        been effectuated.


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  **Item
                  2.**
              **Management’s
                  Discussion and Analysis or Plan of
                  Operation.**
 
 *The
        following management’s discussion and analysis should
        be read in conjunction with our consolidated financial statements and the
        notes
        thereto and the other financial information appearing elsewhere in this
        item.  In addition to historical information, the following discussion
        contains certain forward-looking statements within the “safe harbor” provisions
        of the Private Securities Litigation Reform Act of 1995.  These
        statements relate to our future plans, objectives, expectations and
        intentions.  These statements may be identified by the use of words
        such as “may”, “will”, “could”, “expect”, “anticipate”, “intend”, “believe”,
“estimate”, “plan”, “predict”, and similar terms or terminology, or the negative
        of such terms or other comparable terminology.  Although we believe
        the expectations expressed in these forward-looking statements are based
        on
        reasonable assumptions within the bound of our knowledge of our business,
        our
        actual results could differ materially from those discussed in these statements.
        Factors that could contribute to such differences include, but are not limited
        to, those discussed in the “Risk Factors” section of this Quarterly Report on
        Form 10-QSB.  We undertake no obligation to update publicly any
        forward-looking statements for any reason even if new information becomes
        available or other events occur in the future.*
 
 *Our
        financial statements are prepared in US Dollars and in accordance with
        accounting principles generally accepted in the United States.  See
“Exchange Rates” below for information concerning the exchanges rates at which
        Renminbi were translated into US Dollars at various pertinent dates and for
        pertinent periods.*
 
 **Overview**
 
 We
        are a
        real estate development company with our business operations primarily in
        Wuhan
        City, China. On October 31, 2005, the Company acquired Town House and, as
        a
        result, Town House’s operating subsidiary Wuhan Townhouse, by way of the
        exchange of 224,480,317 shares of the Company’s common stock for 100% of the
        issued and outstanding registered capital of Town House. We accounted for
        this
        share exchange transaction as a recapitalization and, as a result, our
        consolidated financial statements are in substance those of Town House. Please
        see Note 1 to our consolidated financial statements included in this report
        for
        further details of this stock exchange transaction. Having no substantive
        operation of its own, Town House, through its operating subsidiary, Wuhan
        Townhouse, develops commercial and residential properties primarily in Wuhan
        City, China.
 
 **Critical
        Accounting Policies**
 
 In
        preparing the consolidated financial statements in accordance with accounting
        principles generally accepted in the United States, we make estimates and
        assumptions about the effect of matters that are inherently uncertain and
        may
        change in subsequent periods. The resulting accounting estimates will, by
        definition, may vary from the related actual results. We consider the following
        to be the most critical accounting policies:
 
 CONSOLIDATION
        POLICY - The consolidated financial statements include the accounts of the
        Company, Town House, Wuhan Town House, Town House USA, and Town House Miami.
        All
        significant inter-company transactions and balances within the Company are
        eliminated on consolidation.
 
 CASH
        AND
        EQUIVALENTS - The Company considers all highly liquid debt instruments purchased
        with maturity period of three months or less to be cash equivalents. The
        carrying amounts reported in the accompanying consolidated balance sheet
        for
        cash and cash equivalents approximate their fair value. The Company has
        restricted cash in accordance with the loan covenants.  As of March
        31, 2007 there were no restrictions on the Company’s cash
        balances.
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 ACCOUNTS
        RECEIVABLE - The Company provides an allowance for doubtful accounts equal
        to
        the estimated uncollectible amounts. The Company's estimate is based on
        historical collection experience and a review of the current status of trade
        accounts receivable. Accounts receivable in the balance sheet is stated net
        of
        such provision.
 
 PROPERTIES
        HELD FOR SALE - Properties held for sale are comprised of properties held
        for
        sale and repossessed properties held for resale and are stated at the lower
        of
        cost or net realizable value. Cost includes acquisition costs of land use
        rights, development expenditure, interest and any overhead costs incurred
        in
        bringing the developed properties to their present location and
        condition.
 
 Net
        realizable value is determined by reference to management estimates based
        on
        prevailing market conditions.
 
 PROPERTY
        AND EQUIPMENT - Property and equipment are recorded at cost and are being
        depreciated over the estimated useful lives of the related assets. Depreciation
        is computed on the straight-line basis for both financial and income tax
        reporting purposes over useful lives net of a 5% salvage value as
        follows:
  Building
                  and land use right
              40
                  yearsEquipment
              5
                  yearsMotor
                  vehicles
              5-8
                  yearsOffice
                  furniture and fixtures
              5
                  yearsEquipment
              5
                  years
 Repairs
        and maintenance costs are normally charged to the statement of operations
        in the
        year in which they are incurred. In situations where it can be clearly
        demonstrated that the expenditure has resulted in an increase in the future
        economic benefits expected to be obtained from the use of the asset, the
        expenditure is capitalized as an additional cost of the asset.
 
 Property
        and equipment are evaluated annually for any impairment in value. Where the
        recoverable amount of any property and equipment is determined to have declined
        below its carrying amount, the carrying amount is reduced to reflect the
        decline
        in value.
  RELATED
        COMPANIES - A related company is a company in which a director has beneficial
        interests in and in which the Company has significant influence.
 
 INCOME
        RECOGNITION - Revenue from the sale of properties is recognized when the
        following four criteria are met: (1) a sale is consummated, (2) the buyers
        initial and continuing investments are adequate to demonstrate a commitment
        to
        pay for the property, (3) the seller's receivable is not subject to future
        subordination, and (4) the seller has transferred to the buyer the usual
        risks
        and rewards of ownership in a transaction that is in substance a sale and
        does
        not have a substantial continuing involvement with the
        property.
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 Interest
        income is recognized when earned, taking into account the average principal
        amounts outstanding and the interest rates applicable.
 
 COST
        OF
        PROPERTIES SOLD - The cost of goods sold includes the carrying amount of
        the
        properties being sold and the business taxes paid by the Company in connection
        with the sales.
 
 ADVERTISING
        - Advertising costs are expensed as incurred.
  FOREIGN
        CURRENCIES - These financial statements have been prepared in U.S. dollars.
        The
        functional currencies for Town House and Wuhan Pacific are the "Hong Kong
        dollar" and "Renminbi" or "Yuan", respectively. Nonmonetary assets and
        liabilities are translated at historical rates, monetary assets and liabilities
        are translated at the exchange rates in effect at the end of the year, and
        income statement accounts are translated at average exchange rates.
 
 TAXATION
        - Taxation on overseas profits has been calculated on the estimated assessable
        profits for the year at the rates of taxation prevailing in the countries
        in
        which the Company operates.
 
 Provision
        for The People's Republic of China enterprise income tax is calculated at
        the
        prevailing rate based on the estimated assessable profits less available
        tax
        relief for losses brought forward.
 
 Enterprise
        income tax
 
 Under
        the
        Provisional Regulations of The People's Republic of China ("PRC")Concerning
        Income Tax on Enterprises promulgated by the State Council and which came
        into
        effect on January 1, 1994, income tax is payable by enterprises at a rate
        of 33%
        of their taxable income. Preferential tax treatment may, however, be granted
        pursuant to any law or regulations from time to time promulgated by the State
        Council. For the periods ended March 31, 2007 and 2006, the Company has been
        granted the privilege of computing the gross profit margins on real estate
        development sales at 15% of sales and computed the enterprise income tax
        at 33%
        on only 15% of sales.
 
 Enterprise
        income tax ("EIT") is provided on the basis of the statutory profit for
        financial reporting purposes, adjusted for income and expense items, which
        are
        not assessable or deductible for income tax purposes.
 
 RETIREMENT
        BENEFIT COSTS - According to The People's Republic of China regulations on
        pension, the Company contributes to a defined contribution retirement plan
        organized by municipal government in the province in which the Company was
        registered and all qualified employees are eligible to participate in the
        plan.
        Contributions to the plan are calculated at 20% or 26% of the employees'
        salaries above a fixed threshold amount and the employees contribute 6% while
        the Company contributes the balance contribution of 14% or 20%. The Company
        has
        no other material obligation for the payment of retirement benefits beyond
        the
        annual contributions under this plan.
 
 FAIR
        VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of certain financial
        instruments, including cash, accounts receivable, commercial notes receivable,
        other receivables, accounts payable, commercial notes payable, accrued expenses,
        and other payables approximate their fair values as of March 31, 2007 because
        of
        the relatively short-term maturity of these instruments.
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 EARNINGS
        PER SHARE - Basic earnings per share is computed by dividing net income by
        the
        weighted-average number of common shares outstanding during the period. Diluted
        earnings per share is computed by dividing net income by the weighted-average
        number of common shares and dilutive potential common shares outstanding
        during
        the period. As of March 31, 2007 and 2006, there were no outstanding securities
        or other contracts to issue common stock, such as options, warrants or
        conversion rights, which would have a dilutive effect on earnings per share.
        For
        presentation purposes, loss per share for 2007 and 2006 were computing assuming
        the reorganization occurred on January 1, 2004.
 
 On
        May
        31, 2006 the Company approved an eight for one reverse stock split which
        reduced
        the number of shares outstanding from 227,321,840 to 28,415,230. The effect
        of
        this reverse stock split has been reflected retroactively for all periods
        included in these financial statements.
 On
          December 5, 2006 the Company approved a one for seventeen reverse stock
          split
          which reduced the number of shares outstanding from 40,921,500 to
          2,408,000.  The effect of this reverse stock split has been reflected
          retroactively for all periods included in these financial
          statements.
 USE
        OF
        ESTIMATES - The preparation of financial statements in accordance with generally
        accepted accounting principles require management to make estimates and
        assumptions that affect reported amounts of assets and liabilities and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and reported amounts of revenues and expenses during the reporting
        period. Actual results could differ from those estimates. The most significant
        estimates related to allowance for uncollectible accounts receivable,
        depreciation, costs to complete construction in progress, taxes, and
        contingencies. Estimates may be adjusted as more current information becomes
        available, and any adjustment could be significant.
 
 **Recent
                  Accounting Pronouncements**
  In
        February 2006, the FASB issued Statement No. 155, “Accounting for Certain
        Hybrid Financial Instruments” (“SFAS No. 155”), which amends FASB
        Statements No. 133 and 140. This Statement permits fair value remeasurement
        for any hybrid financial instrument containing an embedded derivative that
        would
        otherwise require bifurcation, and broadens a Qualified Special Purpose Entity’s
        (“QSPE”) permitted holdings to include passive derivative financial instruments
        that pertain to other derivative financial instruments. This Statement is
        effective for all financial instruments acquired, issued or subject to a
        remeasurement event occurring after the beginning of an entity’s first fiscal
        year beginning after September 15, 2006. This Statement has no current
        applicability to the Company’s financial statements.  Management plans
        to adopt this Statement on January 1, 2007 and it is anticipated that the
        initial adoption of this Statement will not have a material impact on the
        Company’s financial position, results of operations, or cash
        flows.
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 In
        June
        2006, the FASB issued Interpretation 48, “Accounting for Uncertainty in Income
        Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109,
“Accounting for Income Taxes.”  FIN 48 clarifies the accounting
        and reporting for income taxes where interpretation of the law is uncertain.
        FIN 48 prescribes a comprehensive model for the financial statement
        recognition, measurement, presentation and disclosure of income tax
        uncertainties with respect to positions taken or expected to be taken in
        income
        tax returns. FIN 48 is effective for fiscal years beginning after
        December 15, 2006. This Statement has no current applicability to the
        Company’s financial statements.  Management plans to adopt this
        Statement on January 1, 2007 and it is anticipated that the initial
        adoption of FIN 48 will not have a material impact on the Company’s
        financial position, results of operations, or cash flows.
  In
        September 2006, the FASB issued Statement No. 157, “Fair Value
        Measurements” (“SFAS No. 157”). SFAS No. 157 addresses how
        companies should measure fair value when they are required to use a fair
        value
        measure for recognition or disclosure purposes under GAAP.
        SFAS No. 157 defines fair value, establishes a framework for measuring
        fair value and expands disclosures about fair value measurements.
        SFAS No. 157 is effective for fiscal years beginning after
        November 15, 2007, with earlier adoption permitted. Management is assessing
        the impact of the adoption of this Statement.
 
 In
        September 2006, the FASB issued Statement No. 158, “Employers’ Accounting
        for Defined Benefit Pension and Other Postretirement
        Plans”  (“SFAS No. 158”), an amendment of FASB Statements
        No. 87, 88, 106 and 132(R). SFAS No. 158 requires
        (a) recognition of the funded status (measured as the difference between
        the fair value of the plan assets and the benefit obligation) of a benefit
        plan
        as an asset or liability in the employer’s statement of financial position,
        (b) measurement of the funded status as of the employer’s fiscal year-end
        with limited exceptions, and (c) recognition of changes in the funded
        status in the year in which the changes occur through comprehensive income.
        The
        requirement to recognize the funded status of a benefit plan and the disclosure
        requirements are effective as of the end of the fiscal year ending after
        December 15, 2006. The requirement to measure the plan assets and benefit
        obligations as of the date of the employer’s fiscal year-end statement of
        financial position is effective for fiscal years ending after December 15,
        2008.  This Statement has no current applicability to the Company’s
        financial statements.  Management plans to adopt this Statement on
        December 31, 2006 and it is anticipated the adoption of
        SFAS No. 158 will not have a material impact to the Company’s
        financial position, results of operations, or cash flows.
 
 In
        September 2006, the Securities Exchange Commission issued Staff Accounting
        Bulletin No. 108 (“SAB No. 108”). SAB No. 108
        addresses how the effects of prior year uncorrected misstatements should
        be
        considered when quantifying misstatements in current year financial statements.
        SAB No. 108 requires companies to quantify misstatements using a
        balance sheet and income statement approach and to evaluate whether either
        approach results in quantifying an error that is material in light of relevant
        quantitative and qualitative factors. When the effect of initial adoption
        is
        material, companies will record the effect as a cumulative effect adjustment
        to
        beginning of year retained earnings and disclose the nature and amount of
        each
        individual error being corrected in the cumulative adjustment.
        SAB No. 108 will be effective beginning January 1, 2007 and it is
        anticipated that the initial adoption of SAB No. 108 will not have a
        material impact on the Company’s financial position, results of operations, or
        cash flows.
  In
          February 2007, the FASB issued Statement No.159 “The Fair Value Option for
          Financial Assets and Financial Liabilities” (SFAS 159). This statement permits
          companies to choose to measure many financial assets and liabilities at
          fair
          value. Unrealized gains and losses on items for which the fair value option
          had
          been elected are reported in earnings. SFAS 159 is effective for fiscal
          years
          beginning after November 15, 2007. The Company is currently assessing the
          impact
          of SFAS 159 on its consolidated financial statements.
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 **Results
        of Operations – Three months ended March 31, 2007 as compared to three months
        ended March 31, 2006**
 
 REVENUES.  All
        of our revenue is derived from the sale from our inventory of apartments
        from
        our completed development projects. During the three months ended March 31,
        2007, we had revenues of $1,800,173 as compared to revenues of $4,287,805
        during
        the three months ended March 31, 2006, a decrease of approximately
        58.0%.  The unfavorable variance in sales revenue was mainly
        attributable to lower sales activities.
 
 COST
        OF
        GOODS SOLD.  Cost of properties sold decreased by $531,118, or 16.2%,
        to $2,747,932 for the three months ended March 31, 2007, compared to $3,279,050
        during the same period in 2006. The decrease in cost of goods sold is due
        to a
        decrease in number of properties sold.
 
 SELLING
        EXPENSES. Selling expenses decreased by $111,072, or 69.4%, to $48,896 for
        the
        quarter ended March 31, 2007, from $159,968 for the same quarter in 2006,
        primarily as a result of the significant decrease in advertising and promotional
        expenses.
 
 GENERAL
        AND ADMINISTRATIVE EXPENSES.  General and administrative expenses
        decreased by $175,424, or 31.4%, to $382,529 for the three months ended March
        31, 2007, compared to $557,953 for the same period in 2006, primarily as
        a
        result of the decrease in traveling expenses as we had no development activities
        in the United States of America during the first quarter of 2007 and the
        decrease in traveling expenses, salaries as well as increases in both our
        legal
        fees and audit fees.
 
 DEPRECIATION
        EXPENSES.  Depreciation expense decreased by $3,278, or 8.4%, to
        $35,616 for the first quarter of fiscal 2007, from $38,894 for the same quarter
        of fiscal 2006. This decrease resulted because we did not acquire any additional
        assets, and certain of our assets were fully depreciated during fiscal
        2006.
  INTEREST
        AND FINANCE COSTS.  Interest and finance costs increased by $9,595, or
        16.50%, to $67,478 during the three months ended March 31, 2007, as compared
        to
        $57,883 during the same period in 2006.
 
 We
        recorded the following impairment losses:
 During
        the period ended March 31, 2006, the Company decided to abandon the
        Jing Qi project which had been long delayed waiting for the Province to build
        access roads. This resulted in an impairment loss of $956,855.
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 **Liquidity
        and Capital Resources**
 
 As
        of
        March 31, 2007, the Company had a working capital deficit of
        $11,432,203.  The Company’s ability to continue as a going concern is
        dependent on the ability to renegotiate an extension of the bank debt maturities
        and to obtain a profitable level of operations. These issues raise doubts
        about
        the Company’s ability to continue as a going concern.  Management is
        in the process of attempting to raise additional capital through debt and
        equity
        offerings.
 
 The
        financial statements do not give effect to any adjustments which would be
        necessary should the Company be unable to continue as a going concern and
        therefore be required to realize its assets and discharge its liabilities
        in the
        normal course of business at amounts different from those reflected in the
        financial statements.
 
 **Cash
        flows**
 
 OPERATING.  Net
        cash flow provided by operating activities amounting to $48,179 during
        the three months ended March 31, 2007, as compared to $681,598 generated
        from
        operating activities for the same period in 2006. This increase is primarily
        attributable to cash outflow from operating activities.
 
 INVESTING.  Cash used
        in investing activities increased 99.77%, to $25,971 for the first quarter
        of fiscal 2007, from $2,366 used in investing activities for the same quarter
        in
        fiscal 2006.
 
 FINANCING.  The
        Company has net loan repayments of $289,421 during the first three months
        of
        fiscal 2007 compared to net loan repayments of $404,225 during the same period
        in 2006. This change is primarily a result of completing projects and paying
        down financing. The Company made cash advances to directors and
        affiliated companies of $253,039 in the first quarter of 2007, as compared
        to
        $1,115,309 in repayment of cash advances to directors and affiliated companies
        for the same period in 2006.
 
 **Off-Balance
        Sheet Arrangements**
 
 As
        of
        March 31, 2007, we have not entered into any off-balance sheet arrangements
        with
        any individuals or entities.
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            36
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 **Related
        Party Transactions**
 
 Amounts
        due from/(to) directors at March 31, 2007 are as follows:
 
 Fang
        Zhong
        (Director)                                                                                                         $
        1,372,274
 Hu
        Min
        (Director)                                                                                                                         
45,420
 Fang
        Wei
        Jun
        (Director)                                                                                                                  (879)
 Fang
        Wei
        Feng
        (Director)                                                                                                          (44,097)
 
 $1,372,718
 
 
 
 The
        amounts due are unsecured, interest free and have no fixed repayment terms.
        For
        financial reporting purposes, the net balance due from directors has been
        reflected as an offset against stockholders equity.
 
 
 **Exchange
        Rates**
 
 Wuhan
        Townhouse maintains its books and records in Renminbi (“RMB”), the lawful
        currency of the PRC.  In general, for consolidation purposes, the
        Company translates Wuhan Townhouse’s assets and liabilities into US Dollars
        using the applicable exchange rates prevailing at the balance sheet date,
        and
        the statement of income is translated at average exchange rates during the
        reporting period.  Adjustments resulting from the translation of Wuhan
        Townhouse’s financial statements are recorded as accumulated other comprehensive
        income.
 
 Until
        July 21, 2005, RMB had been pegged to US$ at the rate of RMB8.30: US$1.00.
        On
        July 21, 2005, the PRC government reformed the exchange rate system into
        a
        managed floating exchange rate system based on market supply and demand with
        reference to a basket of currencies. In addition, the exchange rate of RMB
        to
        US$ was adjusted to RMB8.11: US$1.00 as of July 21, 2005.  The
        People’s Bank of China announces the closing price of a foreign currency such as
        US$ traded against RMB in the inter-bank foreign exchange market after the
        closing of the market on each working day, which will become the unified
        exchange rate for the trading against RMB on the following working
        day.  The daily trading price of US$ against RMB in the inter-bank
        foreign exchange market is allowed to float within a band of ±0.3% around
        the
        unified exchange rate published by the People’s Bank of China. This quotation of
        exchange rates does not imply free convertibility of RMB to other foreign
        currencies.  All foreign exchange transactions continue to take place
        either through the Bank of China or other banks authorized to buy and sell
        foreign currencies at the exchange rates quoted by the People’s Bank of
        China.  Approval of foreign currency payments by the Bank of China or
        other institutions required submitting a payment application form together
        with
        invoices, shipping documents and signed contracts.
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 The
        exchange rates used to translate amounts in RMB into US Dollars for the purposes
        of preparing the consolidated financial statements or otherwise stated in
        this
        MD&A were as follows:
 
 March
                  31, 2007
              
              December  31,
                  2006
              
              March
                  31, 2006Balance
                  sheet items, except for the registered and paid-up capital, as
                  of end of
                  period/year
              USD0.12952:RMB1
              
              USD0.12825:RMB1
              
              USD0.12476:RMB1Amounts
                  included in the statement of operations, statement of changes in
                  stockholders’ equity and statement of cash flows for the period/ year
                  ended
              USD0.12952:RMB1
              
              USD0.12825:RMB1
              
              USD0.12476:RMB1
 
 No
        representation is made that RMB amounts have been, or would be, converted
        into
        US$ at the above rates.
 
 **INFLATION**
 
 We
        believe that inflation has not had a material effect on our operations to
        date.
 
 **RISK
        FACTORS**
 
 ***1.***  ***Investing
        in our common stock involves a high degree of risk. If any of the following
        risks actually materializes, our business, financial condition and results
        of
        operations would suffer. You should read the section entitled “Forward-Looking
        Statements” immediately following these risk factors for a discussion of what
        types of statements are forward-looking statements, as well as the significance
        of such statements in the context of this prospectus.***
 
 ***Change
                  in political and economic
                  conditions.***
 
 Since
        the
        Company's main country of business operations is China, Town House's business
        operations and financial position are subject, to a significant degree, to
        the
        economic, political and legal developments in China.
 
 China's
        government started implementing its economic reform policy in 1978, which
        has
        enabled China economy to gradually transform from a "planned economy" to
        a
        "socialist market economy." In 1993, the concept of the socialist market
        economy
        was introduced into the Constitution of China, and the country has since
        accelerated development of a market economy. A noteworthy phenomenon in the
        recent development of China economy is that non-state owned enterprises such
        as
        private enterprises play an increasingly important role in China economy
        and the
        degree of direct control by China government over the economy is gradually
        declining.
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 China
        government has been taking macro-economic austerity measures to suppress
        inflation and curb the pace of economic growth since July 1993. These measures
        include raising interest rates, tightening credit supply, delaying
        implementation of certain reform policies on pricing, enhancing financial
        supervision as well as tightening control on the granting of approval for
        property and infrastructure projects. However, since 1998, there has been
        deflation in China economy and the current economic policies of China mainly
        focus on stimulating consumption and expansion of domestic demand.
 
 While
        China government has not stopped its economic reform policy since 1978, any
        significant adverse changes in the social, political and economic conditions
        of
        China, may have fundamental changes in China economic reform
 policies
        and thus the Company's operations and profits may be adversely
        affected.
 
 ***Change
                  in tax laws and regulations in
                  China.***
 
 Various
        tax reform policies have been implemented in China in recent years.
        Interpretation of certain tax policies is still awaiting guidance from China
        government. Moreover, there can be no assurance that the existing tax laws
        and
        regulations will not be revised or amended in the future.
 
 ***Changes
                  in China's legal
                  system.***
 
 China's
        legal system is based on statutory law. Unlike the common law system, statutory
        law is based on written statutes. Prior court decisions may be cited as
        persuasive authority but do not have binding effect. Since 1979, China
        government has been promulgating and amending the laws and regulations regarding
        economic matters, such as corporate organization and governance, foreign
        investment, commerce, taxation and trade. However, China's legal system is
        still
        not as fully developed as those western countries with a common law legal
        system.
 
 ***Chinese
                  real estate law.***
 
 Over
        the
        past five years, the majority of China's urban dwellers have changed their
        housing situation for apartments provided by their work units at a pittance
        to
        housing that they have had to buy and pay to maintain (through homeowner's
        associations that hire state supervised management companies). There are
        some
        estimates that 80% of urban Chinese now own their own home. But China has
        no
        legal concept of condominiums and no statute (yet) that defines the rights
        of
        these millions of homeowners.
 
 In
        1998,
        China created the basic building block of a market economy in real estate
        - a
        transferable ownership interest. This interest, called the "granted land
        use
        right" - is not 100% ownership as we know it in the West. The period of the
        interest is limited to a fixed term - varying from 40-70 years, depending
        upon
        the charter of the right - and the use to which the property must be put
        is
        specified as part of the grant. The granted land use right is transferable,
        mortgageable, leaseable, and usually can be subdivide. Further, it theoretically
        is renewable, but there will be a fee and since these land ownership rights
        are
        new there is no experience yet with renewals. Chinese anti-speculation rules
        provide that one cannot acquire or hold property just to "ride the market;"
        the
        property must be put to productive use within a set time of acquisition of
        the
        land use right - usually two years, or face penalties and ultimately forfeiture
        of the right.
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 For
        the
        development of a new commercial real estate project, the developer must first
        obtain granted land use rights. Land use rights can be granted through bidding,
        auction and listings. The developer then enters into a land use right grant
        contract with the relevant government authority. The granted land use right
        can
        be transferred, leased, or mortgaged. The transferor and transferee must
        enter
        into a land use right transfer contract and file the executed contract with
        the
        appropriate government bureau, which will then issue a new land use certificate
        in the name of the transferee. In May 2002, the Ministry of Land and Resources
        issued a regulation regarding the land use right transfer. Whereas in the
        past,
        private parties were able to transfer land use rights by mutual agreement,
        this
        practice was prohibited by the new regulation. Under the new scheme, any
        procurement of land for business purposes can only be effected through bidding,
        auction and listing on an authorized exchange floor.
 
 The
        long
        term value of Chinese land rights are still quite uncertain, and their rights
        not the kind of secure investment that would lead a lender, as might happen
        in
        American, to rely primarily on the land value and look beyond the individual
        ability of a borrower to repay the debt. Chinese banks, for example, rarely
        make
        construction loans because in theory they cannot lend more than the value
        of the
        land that is their security at the time of the loan. The Chinese deal with
        this
        problem by signing "prelease" or "prepurchase" contracts whereby the end
        user
        pays all of the consideration before the building is commenced. Effectively,
        the
        users finance the seller's construction. Users borrow the money from the
        banks
        under arrangements which later will "morph" into mortgage loans when there
        is
        something to which the mortgage can attach. Usually the developer must deposit
        the purchase proceeds in the bank and the bank monitors the
        expenditures.
 
 Before
        a
        presale method can be legally adopted, the developer of the project must
        have
        obtained (i) a land use right certificate, (ii) a planning permit for
        construction use of land, (iii) a planning permit for the construction project,
        (iv) a certificate of commencement of construction, and (v) a permit for
        presale
        of commercial housing.
 
 ***Mortgages.***
 
 In
        1993,
        the Central Government allowed state-owned banks to provide mortgage facilities
        to property buyers. In accordance with the banking regulations announced
        in
        1998, loan repayment period was initially for a maximum of 20 years, and
        extent
        of the mortgage loan amount was for a maximum of 70 percent of the purchased
        property price. In 1999, banking regulations were amended to extend the loan
        repayment period to a maximum of 30 years and the extent of the mortgage
        loan
        amount was increased to a maximum of 80 percent of the purchased property
        price.
        As further incentives, state-owned banks were allowed to increase the mortgage
        loan facilities by an additional 15 percent of the approved banking facilities
        (maximum of 92 percent of the purchased property price). The provision of
        mortgage facilities to property buyers is considered to have created increasing
        demand for properties in the China.
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 In
        accordance with market practice in the China, the Company is required to
        provide
        guarantees (during the development phase) to the banks in respect of mortgages
        offered to the property buyers until submission of the relevant real estate
        ownership certificates and certificates of other interests in the property
        unit
        by the relevant property buyers to the mortgagee bank. In the experience
        of the
        Company, such guarantee periods normally last for up to 6 months. If a property
        buyer defaults under the loan and the Company is required, during the guarantee
        period, to repay all debt owed by the defaulting property buyer to the mortgagee
        bank, the mortgagee bank will assign its rights under the loan and the mortgage
        to the Company and, subject to registration, the Company will have full recourse
        to the property. In line with industry practice, the Company does not conduct
        independent credit checks on the property buyers but relies instead on the
        credit checks conducted by the mortgagee banks. For financial reporting
        purposes, the sale of a property unit is not recognized until title has passed
        and the Company is released from its loan guarantee on the unit.
 
 ***Wholly-owned
                  foreign enterprises.***
 
 A
        wholly
        foreign-owned enterprise ("WFOE") is an entity 100 percent owned by a foreign
        investor or investors. An apparent advantage of a WFOE is that it can enjoy
        exclusive management control of its business activities and have autonomy
        in its
        operation without too much external interference.
 
 The
        original WFOE regulations only permitted WFOEs in certain limited sectors
        and
        required that the foreign party either provided advanced technology or that
        at
        least 50% of the production could be exported. These conditions were relaxed
        over time as more WFOEs were permitted in increasingly broader sectors of
        the
        economy. In accordance with the Wholly Foreign-owned Enterprise Law as amended
        in 2001 and the Industrial Catalogue Guiding Foreign Investments (2004) (the
        "2004 Catalogue"), the export requirement is no longer permitted and WFOEs
        are
        now much more common, except in certain "restricted" or "prohibited" sectors
        as
        provided in the 2004 Catalogue.
 
 With
        respect to China's real estate industry, the market has been gradually opened
        to
        WFOEs since China's entry into the World Trade Organization. Pursuant to
        the
        2004 Catalogue, WFOEs are permitted to engage in the development, construction
        and management of ordinary residential houses while they, with limited
        exceptions, are restricted to participate in the development of high standard
        real estate projects.
 
 One
        of
        the most important issues covered in the project documentation is the business
        scope of the WOFE. Business scope is narrowly defined for all businesses
        in
        China and the WOFE can only conduct business within its approved business
        scope,
        which ultimately appears on the business license. Any amendments to the business
        scope require further application and approval. The Company's business scope
        is
        defined to include general real estate development, sales, leasing and property
        management.
 
 ***Changes
                  in currency conversion policies in
                  China.***
 
 Renminbi
        (Yuan) is not a freely exchangeable currency. Since 1998, the State
        Administration of Foreign Exchange of China has promulgated a series of
        circulars and rules in order to further enhance the verification of the
        truthfulness of foreign exchange payments under the current account items
        of a
        China enterprise and has imposed strict requirements in respect of borrowings
        and repayments of foreign exchange debts from and to foreign creditors under
        the
        capital account items and creation of foreign security in favor of foreign
        creditors.
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 This
        may
        cause complicated procedures in foreign exchange payments to foreign creditors
        under the current account items and thus will affect the restrictions on
        borrowing of international commercial loans, creation of foreign security
        and
        borrowing of Renminbi loans under guarantees in foreign currencies. (The
        majority of the income from the Town House entities is in Renminbi).
        Furthermore, the value of Renminbi (Yuan) may become subject to supply and
        demand, which could be largely affected by the international economic and
        political environment and any fluctuations in the exchange rate of Renminbi
        could have an adverse effect on the operational and financial condition of
        its
        subsidiaries in China.
 
 ***Borrowing
                  policies.***
 
 The
        Company borrows at competitive rates of interest. Borrowed funds will not
        be
        used for dividends to the shareholders.
 
 The
        precise amount, if any, borrowed by the Company will depend in part upon
        the
        availability of financing, and prevailing interest rates and other loan costs.
        There is no assurance that such financing, if any, will be available to the
        Company in the amounts desired or on terms considered reasonable by the Board
        of
        Directors.
 
 Loan
        agreements may require that the Company maintain certain reserves or
        compensating balances and may impose other obligations on the Company. Moreover,
        since a significant proportion of revenues may be reserved for repayment
        of
        debt, the use of financing may reduce the cash that might otherwise be available
        for dividends until the debt has been repaid and may reduce total cash flow
        for
        a significant period.
 
 The
        Company may, under appropriate circumstances, attempt to cause Town House
        to
        borrow funds at fixed interest rates. However, the Company may borrow funds
        at
        rates that vary with a "prime" or "base" rate, particularly on an interim
        basis
        or when interest rates are believed to be trending downward. A rise in the
        indexed rate may increase borrowing costs and reduce the amount of its income
        and cash available for distribution. In past years, the prime rates charged
        by
        major banks have fluctuated significantly; as a result, the precise amount
        of
        interest that the Company might be charged cannot be predicted with any
        certainty.
 
 ***Expansion
        risks.***
 
 The
        Company anticipates that its proposed expansion of its real estate development
        activities will include the construction of new building projects. The Company's
        cost estimates and projected completion dates for construction of new building
        projects may change significantly as the projects progress. In addition,
        the
        Company's projects will entail significant construction risks, including
        shortages of materials or skilled labor, unforeseen environmental or engineering
        problems, weather interferences and unanticipated cost increases, any of
        which
        could have a material adverse effect on the projects and could delay their
        scheduled openings. A delay in scheduled openings will delay the Company's
        receipt of increased sale revenues.
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 ***New
        projects.***
 
 The
        projects of the Company to finance, develop, and expand its real estate
        processing facilities will be subject to the many risks inherent in the rapid
        expansion of a high growth business enterprise, including unanticipated design,
        construction, regulatory and operating problems, and the significant risks
        commonly associated with implementing a marketing strategy in changing and
        expanding markets. There can be no assurance that any of these projects will
        become operational within the estimated time frames and projected budgets
        at the
        time the Company enters into a particular agreement, or at all. In addition,
        the
        Company may develop projects as joint ventures in an effort to reduce its
        financial commitment to individual projects. There can be no assurance that
        the
        significant expenditures required to expand its real estate processing plants
        will ultimately result in the establishment of increased profitable
        operations.
 
 When
        the
        Company's future expansion projects become operational, the Company will
        be
        required to add and train personnel, expand its management information systems
        and control expenses. If the Company does not successfully address the Company's
        increased management needs or the Company otherwise is unable to manage its
        growth effectively, the Company's operating results could be materially and
        adversely affected.
 
 ***Uncertainty
        of market acceptance.***
 
 The
        Company is currently selling its developed properties principally in the
        City of
        Wuhan. Achieving market acceptance for the Company's properties, particularly
        in
        new markets, will require substantial marketing efforts and the expenditure
        of
        significant funds. There is substantial risk that any new markets may not
        accept
        or be as receptive to the Company's properties. Market acceptance of the
        Company's current and proposed properties will depend, in large part, upon
        the
        ability of the Company to inform potential customers that the distinctive
        characteristics of its properties make them superior to competitive properties
        and justify their pricing. There can be no assurance that the Company's current
        and proposed properties will be accepted by consumers or that any of the
        Company's current or proposed properties will be able to compete effectively
        against other properties. Lack of market acceptance of the Company's properties
        would have a material adverse effect on the Company.
 
 ***Changing
        consumer preferences.***
 
 As
        is the
        case with other companies new real estate developments, the Company is subject
        to changing consumer preferences and location-related concerns.
 
 ***Sales
        force.***
 
 The
        Company intends to hire additional sales personnel during 2007. There is
        no
        assurance that hiring these additional sales people will result in increased
        sales. The Company anticipates using independent sales agents to sell and
        distribute its real estate development projects. The Company cannot predict
        whether it will be able to obtain and maintain satisfactory sales arrangements
        and the failure to do so could have a material adverse effect on its business,
        operations and finances.
 
 ***Geographic
        concentration; fluctuations in regional economic
        conditions.***
 
 Nearly
        all of the Company's sales are concentrated in the central area of China.
        Accordingly, the Company is susceptible to fluctuations in its business caused
        by adverse economic conditions in this region. Difficult economic conditions
        in
        other geographic areas into which the Company may expand may also adversely
        affect its business, operations and finances.
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 ***Dependence
        on executives.***
 
 The
        Company is highly dependent on the services of Mr. Fang Zhong, and the loss
        of
        his services would have a material adverse impact on the operations of the
        Company. He has been primarily responsible for the development of the Company
        and the development and marketing of its real estate projects. The Company
        has
        not applied for key-man life insurance on the lives of its executives, but
        may
        do so in the future.
 
 ***Competition.***
 
 The
        real
        estate business is highly competitive and, therefore, the Company faces
        substantial competition in connection with the marketing and sale of its
        projects. In general, real estate properties are price sensitive and affected
        by
        many factors beyond the control of the Company, including changes in consumer
        tastes, fluctuation commodity prices and changes in supply due to weather,
        production, and natural disaster. The Company's real estate properties face
        competition from other developers in its marketing areas.  Most of the
        Company's competitors are well established, have greater financial, marketing,
        personnel and other resources, have been in business for longer periods of
        time
        that the Company, and have projects that have gained wide customer acceptance
        in
        the marketplace. The largest competitors of the Company are state-owned
        companies owned by the government of China. Large foreign real estate companies
        have also entered the real estate industry in China. The greater financial
        resource of such competitors will permit them to procure properties and to
        implement extensive marketing and promotional programs, both generally and
        indirect response to advertising claims by the Company.
 
 ***Lack
        of property and general liability insurance.***
 
 The
        Company and its subsidiaries are self-insured, and they do not carry any
        property insurance, general liability insurance, or any other insurance that
        covers the risks of their business operations. As a result, any material
        loss or
        damage to its properties or other assets, or personal injuries arising from
        its
        business operations would have a material adverse affect on its financial
        condition and operations.
 
 ***Government
        regulation.***
 
 The
        Company is subject to extensive regulation by China and by other province,
        county and local authorities in jurisdiction in which its properties are
        sold.
        The Company believes that it is currently in substantial compliance with
        all
        material governmental laws and regulations and maintains all material permits
        and licenses relating to its operations. Nevertheless, there can be no assurance
        that the Company will continue to be in substantial compliance with current
        laws
        and regulations, or whether the Company will be able to comply with any future
        laws and regulations. To the extent that new regulations are adopted, the
        Company will be required to conform its activities in order to comply with
        such
        regulations. Failure by the Company to comply with applicable laws and
        regulations could subject the Company to civil remedies, including fines,
        injunctions, recalls or seizures, as well as potential criminal sanctions,
        which
        could have a material adverse effect on its business, operations and
        finances.
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 ***Doing
        business in China.***
 
 Doing
        business in China involves various risks including internal and international
        political risks, evolving national economic policies as well as financial
        accounting standards, expropriation and the potential for a reversal in economic
        conditions. Since the late 1970s, the government of China has been reforming
        China's economic system. These reforms have resulted in significant economic
        growth and social progress. Although we believe that economic reform and
        the
        macroeconomic policies and measures adopted by the current China government
        will
        continue to have a positive effect on economic development in China and that
        we
        will continue to benefit from such policies and measures. These policies
        and
        measure may from time to time be modified or revised. Adverse changes in
        economic policies of the China government or in the laws and regulations,
        if
        any, could have a material adverse effect on the overall economic growth
        of
        China, and could adversely affect our business operations.
 
 ***China
        currency, "Renminbi", is not a freely convertible currency, which could limit
        our ability to obtain sufficient foreign currency to support our business
        operations in the future.***
 
 We
        rely
        on China government's foreign currency conversion policies, which may change
        at
        any time, in regard to our currency exchange needs. We receive substantially
        all
        of our reveues in Renminbi, which is not freely convertible into other foreign
        currencies. In China, the government has control over Renminbi reserves through,
        among other things, direct regulation of the conversion or Renminbi into
        other
        foreign currencies and restrictions on foreign imports. Although foreign
        currencies which are required for "current account" transactions can be bought
        freely at authorized China banks, the proper procedural requirements prescribed
        by China law must be met. At the same time, China companies are also required
        to
        sell their foreign exchange earnings to authorize China banks and the purchase
        of foreign currencies for capital account transactions still requires prior
        approval of the China government. This type of heavy regulation by the China
        government of foreign currency exchange restricts certain of our business
        operations and a change in any of these government policies, or any other,
        could
        further negatively impact our operations.
 
 ***Fluctuations
        in the exchange rate between the China currency and the United States dollar
        could adversely affect our operating results.***
 
 *The
        functional currency of our operations in China is "Renminbi". Results of
        our
        operations are translated at average exchange rates into United States dollars
        for purposes of reporting results. As a result, fluctuations in exchange
        rates
        may adversely affect our expenses and results of operations as well as the
        value
        of our assets and liabilities. Fluctuations may adversely affect the
        comparability of period-to-period results. Although we may use hedging
        techniques in the future (which we currently do not use), we may not be able
        to
        eliminate the effects of currency fluctuations. Thus, exchange rate fluctuations
        could have a material adverse impact on our operating results and stock
        prices.*
 
 ***Fluctuations
        in exchange rates of the Renminbi could adversely affect the value of stock
        ownership in the Company.***
 
 For
        over
        10 years the official exchange rate for the conversion of Renminbi to US
        dollars
        was unofficially pegged at US$1 to RMB8.28. In July 2005, the People's Bank
        of
        China (PBOC), the country's central bank, began a new policy of calculating
        the
        Renminbi's value against the US dollar using a weighted average of the prices
        given by major banks. The highest and lowest offers are excluded from the
        calculation. As a result of this change the RBM has appreciated against the
        US
        dollar so that the exchange rate was US$1 to RMB8.11 at December 31, 2005,
        and
        is now approximately US$1 to RMB8.04. It should be expected that currency
        exchange fluctuations will occur in the future as a result of
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  circumstances
        beyond the Company's control, such as the level of trade deficit or equalization
        between the US and the China, global economic conditions, global currency
        markets, and other factors. All of the Company's revenue is generated in
        the
        China in Renminbi, so that during periods that the US dollar is worth less
        in
        relation to the value of the Renminbi, the total revenue and results of
        operations of the Company reported in US dollars in the financial statements
        we
        publish in the US will be less. Consequently, fluctuations in exchange rates
        could adversely affect the US dollar value of our results of operations and
        the
        perceived value of the Company in the public market.
 
 ***Uncertainty
        relating to the existing law and regulations in the China may restrict the
        level
        of legal protections to foreign investors.***
 
 The
        China
        currently adopts civil law system which relies heavily on written statutes,
        and
        decisions made by the courts are not binding precedents, but for guidance
        only.
        The legal system in the China cannot provide the investors with the same
        level
        of protection as in the US. The Company is governed by the law and regulations
        generally applicable to local enterprises. These laws and regulations were
        recently introduced and remain experimental in nature and subject to changes
        and
        refinements. Interpretation, implementation and enforcement of the existing
        law
        and regulations can be uncertain and unpredictable and therefore have
        restrictions on legal protections on both Hong
 Kong
        and
        foreign investors.
 
 ***The
        Company has traditionally been dependent on bank debt to finance its projects
        and is therefore subject to availability of such financing and fluctuations
        in
        interest rates.***
 
 The
        development of high quality housing requires substantial funds. The Company
        had
        internally funded its development projects from presale revenue and externally
        from bank loans. The Company cannot guarantee that sufficient capital can
        be
        generated to develop every one of the Company's projects by way of only presale
        revenue. In addition, the Company cannot guarantee its ability to continue
        to
        obtain bank loans and credit facilities and renewals of existing borrowings
        from
        financial institutions on maturity under favorable terms and conditions.
        Changes
        in interest rates on the Company's borrowings will also affect its financing
        costs and consequently its results of operations.
 
 ***Reliance
        on independent contractors in providing various services creates risks and
        the
        Company is exposed to various risks in relation to contractors’
performance.***
 
 The
        Company engages independent third party contractors, through open tenders,
        to
        provide various services including construction, piling and foundation, building
        and fitting-out works, interior decoration and installation of elevators.
        Although it is the Company's strategy and policy to select reputable independent
        third party contractors with positive track records in most cases and supervises
        the construction progress, there is no assurance that the services rendered
        by
        any of these independent third party contractors will always be satisfactory
        or
        match the targeted quality level required by the Company. Additionally, the
        Company is exposed to the risk that a contractor may require additional capital
        in excess of the cost they tendered to complete a contractual property
        development and the Company may have to provide such additional capital.
        Furthermore, there is risk that contractors may experience financial or other
        difficulties which may affect their ability to carry out construction works,
        thus delaying the completion of the Company's property developments or resulting
        in additional costs for the Company. Any of these factors could adversely
        affect
        the Company's revenues and reputation.
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 ***In
        order for the China subsidiaries of the Company to pay dividends in the United
        States, a conversion of Renminbi into US dollar is
        required.***
 
 Under
        current China law, the conversion of Renminbi into foreign currency generally
        required government consent. Government authorities may impose restrictions
        that
        could have a negative impact in the future on the conversion process and
        upon
        the ability of the Company to meet its cash needs, and to pay dividends to
        its
        shareholders. However, the subsidiaries of the Company are presently classified
        as a wholly foreign owned enterprise ("WFOE") in China that have verifiable
        foreign investment in China, funding having been made through an official
        China
        banking channel. Because the subsidiaries of the Company qualify for treatment
        as a WFOE, the subsidiaries can declare dividends and their funds can be
        repatriated to the Company in the United States under current laws and
        regulations in China.
 
 ***Mortgage
        interest rates may increase, cooling demand for the Company's
        properties.***
 
 Bank
        mortgages are becoming increasingly popular as a means of financing property
        purchases in China. Any increase in bank mortgage interest rates may
        significantly increase the cost of mortgage financing to property buyers,
        thus
        reducing the attractiveness of mortgages as a source of financing property
        purchases and, accordingly, adversely affecting the affordability of residential
        properties. The Chinese government may also increase the level down payment
        requirement or impose certain other conditions which would make mortgage
        financing unavailable or unattractive to the potential property
        buyers.
 
 ***The
        practice of pre-selling developments may expose the Company to substantial
        liabilities.***
 
 The
        existing common practices by property developers to pre-sale properties (while
        still under construction) in China involves certain risks. For example, the
        Company may fail to complete a property development which may have been fully
        or
        partially pre-sold. In such circumstances, it could find itself liable to
        purchasers of pre-sold units for losses suffered by them. There can be no
        assurance that these losses would not exceed the purchase price paid in respect
        of the pre-sold units. In addition, if a pre-sold property development is
        not
        completed on time, the purchasers of pre-sold units may be entitled to
        compensation for late delivery. If the delay extends beyond a certain period,
        the purchasers may even be entitled to terminate the pre-sale agreement and
        claim for damages.
 
 ***The
        shares of the Company may have limited liquidity, and after completion of
        the
        Spin-Off, the spun-off shares of Town House Land Limited, a Hong Kong company,
        will have no market for resale..***
  A
        substantial portion of the Company’s shares of common stock are subject to
        registration, and are closely held by certain institutional and insider
        investors. Consequently, the public float for the shares may be highly limited.
        As a result, should you wish to sell your shares into the open market you
        may
        encounter difficulty selling large blocks of your shares or obtaining a suitable
        price at which to sell your shares.
 
 In
        addition, concerning holders of our stock immediately prior to the December
        11,
        2006 stock purchase and change of control, the shares of Town House Land
        Limited
        (“Town House”) to be spun off will have no market for resale, and there can be
        no assurance that such a market will ever be developed. Town House is a private
        company organized and existing under the laws of Hong Kong. Any future transfer
        of shares of Town House will be subject to applicable restrictions under
        Hong
        Kong law.
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   ***If
        we fail to maintain the adequacy of our internal controls, our ability to
        provide accurate financial statements and comply with the requirements of
        the
        Sarbanes-Oxley Act of 2002 could be impaired, which could cause our stock
        price
        to decrease**substantially.***
 
 We
        will
        need to continue to improve our financial and managerial controls, reporting
        systems and procedures, and documentation thereof. If our financial and
        managerial controls, reporting systems or procedures fail, we may not be
        able to
        provide accurate financial statements on a timely basis or comply with the
        Sarbanes-Oxley Act of 2002 as it applies to us. Any failure of our internal
        controls or our ability to provide accurate financial statements could cause
        the
        trading price of our common stock to decrease substantially.
 
 ***Our
        common shares are thinly traded and, you may be unable to sell at or near
        ask
        prices or at all if you need to sell your shares to raise money or otherwise
        desire to liquidate such shares.***
 
 The
        Company cannot predict the extent to which an active public market for its
        common stock will develop or be sustained. Our common shares have historically
        been sporadically or “thinly-traded” on the “Over-The-Counter Bulletin Board,”
meaning that the number of persons interested in purchasing our common shares
        at
        or near bid prices at any given time may be relatively small or non-existent.
        This situation is attributable to a number of factors, including the fact
        that
        SOAD is a small company which is relatively unknown to stock analysts, stock
        brokers, institutional investors and others in the investment community that
        generate or influence sales volume, and that even if we came to the attention
        of
        such persons, they tend to be risk-averse and would be reluctant to follow
        an
        unproven company such as ours or purchase or recommend the purchase of our
        shares until such time as we became more seasoned and viable. As a consequence,
        there may be periods of several days or more when trading activity in our
        shares
        is minimal or non-existent, as compared to a seasoned issuer which has a
        large
        and steady volume of trading activity that will generally support continuous
        sales without an adverse effect on share price. We cannot give you any assurance
        that a broader or more active public trading market for our common stock
        will
        develop or be sustained, or that current trading levels will be
        sustained.
 
 The
        market price for SOAD’s common stock is particularly volatile given our status
        as a relatively small company with a small and thinly traded “float” and lack of
        current revenues that could lead to wide fluctuations in our share price.
        You
        may be unable to sell your common stock at or above your purchase price if
        at
        all, which may result in substantial losses to you.
 
 The
        market for SOAD’s common shares is characterized by significant price volatility
        when compared to seasoned issuers, and we expect that our share price will
        continue to be more volatile than a seasoned issuer for the indefinite future.
        The volatility in SOAD’s share price is attributable to a number of factors.
        First, as noted above, our common shares are sporadically and/or thinly traded.
        As a consequence of this lack of liquidity, the trading of relatively small
        quantities of shares by its shareholders may disproportionately influence
        the
        price of those shares in either direction. The price for its shares could,
        for
        example, decline precipitously in the event that a large number of our common
        shares are sold on the market without commensurate demand, as compared to
        a
        seasoned issuer which could better absorb those sales without adverse impact
        on
        its share price. Secondly, an investment in Speedhaul is a speculative or
        “risky” investment due to our lack of revenues or profits to date and
        uncertainty of future market acceptance for current and potential products.
        As a
        consequence of this enhanced risk, more risk-adverse investors may, under
        the
        fear of losing all or most of their investment in the event of negative news
        or
        lack of progress, be more inclined to sell their shares on the market more
        quickly and at greater discounts than would be the case with the stock of
        a
        seasoned issuer.
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 Shareholders
        should be aware that, according to SEC Release No. 34-29093, the market for
        penny stocks has suffered in recent years from patterns of fraud and abuse.
        Such
        patterns include (1) control of the market for the security by one or a few
        broker-dealers that are often related to the promoter or issuer; (2)
        manipulation of prices through prearranged matching of purchases and sales
        and
        false and misleading press releases; (3) boiler room practices involving
        high-pressure sales tactics and unrealistic price projections by inexperienced
        sales persons; (4) excessive and undisclosed bid-ask differential and markups
        by
        selling broker-dealers; and (5) the wholesale dumping of the same securities
        by
        promoters and broker-dealers after prices have been manipulated to a desired
        level, along with the resulting inevitable collapse of those prices and with
        consequent investor losses. Our management is aware of the abuses that have
        occurred historically in the penny stock market. Although we do not expect
        to be
        in a position to dictate the behavior of the market or of broker-dealers
        who
        participate in the market, management will strive within the confines of
        practical limitations to prevent the described patterns from being established
        with respect to our securities. The occurrence of these patterns or practices
        could increase the volatility of our share price.
 
 ***We
        do not anticipate paying any cash dividends.***
 
 We
        presently do not anticipate that we will pay any dividends on any of our
        capital
        stock in the foreseeable future. The payment of dividends, if any, would
        be
        contingent upon our revenues and earnings, if any, capital requirements,
        and
        general financial condition. The payment of any dividends will be within
        the
        discretion of our Board of Directors. We presently intend to retain all
        earnings, if any, to implement our business plan; accordingly, we do not
        anticipate the declaration of any dividends in the foreseeable
        future.
 
 ***Fluctuations
        in exchange rates of the Renminbi could adversely affect the value of stock
        ownership in the Company.***
 
 For
        over
        10 years the official exchange rate for the conversion of Renminbi to US
        dollars
        was unofficially pegged at US$1 to RMB8.28. In July 2005, the People's Bank
        of
        China (PBOC), the country's central bank, began a new policy of calculating
        the
        Renminbi's value against the US dollar using a weighted average of the prices
        given by major banks. The highest and lowest offers are excluded from the
        calculation. As a result of this change the RBM has appreciated against the
        US
        dollar so that the exchange rate was US$1 to RMB8.11 at December 31, 2005,
        and
        is now approximately US$1 to RMB7.67. It should be expected that currency
        exchange fluctuations will occur in the future as a result of circumstances
        beyond the Company's control, such as the level of trade deficit or equalization
        between the US and the China, global economic conditions, global currency
        markets, and other factors. All of the Company's revenue is generated in
        the
        China in Renminbi, so that during periods that the US dollar is worth less
        in
        relation to the value of the Renminbi, the total revenue and results of
        operations of the Company reported in US dollars in the financial statements
        we
        publish in the US will be less. Consequently, fluctuations in exchange rates
        could adversely affect the US dollar value of our results of operations and
        the
        perceived value of the Company in the public market.
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 ***The
        Application of the "Penny Stock" Rules Could Adversely Affect the Market
        Price
        of Our Common Stock and Increase Your Transaction Costs to Sell Those
        Shares.***
 
 As
        long
        as the trading price of our common shares is below $5 per share, the open-market
        trading of our common shares will be subject to the "penny stock" rules.
        The
        "penny stock" rules impose additional sales practice requirements on
        broker-dealers who sell securities to persons other than established customers
        and accredited investors (generally those with assets in excess of $1,000,000
        or
        annual income exceeding $200,000 or $300,000 together with their spouse).
        For
        transactions covered by these rules, the broker-dealer must make a special
        suitability determination for the purchase of securities and have received
        the
        purchaser's written consent to the transaction before the purchase.
        Additionally, for any transaction involving a penny stock, unless exempt,
        the
        broker-dealer must deliver, before the transaction, a disclosure schedule
        prescribed by the Securities and Exchange Commission relating to the penny
        stock
        market. The broker-dealer also must disclose the commissions payable to both
        the
        broker-dealer and the registered representative and current quotations for
        the
        securities. Finally, monthly statements must be sent disclosing recent price
        information on the limited market in penny stocks. These additional burdens
        imposed on broker-dealers may restrict the ability or decrease the willingness
        of broker-dealers to sell our common shares, and may result in decreased
        liquidity for our common shares and increased transaction costs for sales
        and
        purchases of our common shares as compared to other securities.
 
 ***We
        may be unable to achieve some or all of the benefits that we expect to achieve
        through the Spin-Off.***
 
 The
        full
        strategic and financial benefits expected to result from the Spin-Off may
        be
        delayed or may never occur at all. For instance, there can be no assurance
        that
        investors will regard the new corporate structure as more clear and simple
        than
        the current corporate structure.
 
 **Item
        3.                     Controls
        And Procedures**
 
 (a)         
                  *Evaluation of disclosure controls and procedures*.  As
                  of the end of the period covered by this report, we carried out
                  an
                  evaluation, under the supervision and with the participation of
                  our
                  management, including our Chief Executive Officer and Chief Financial
                  Officer, of the effectiveness of the design and operation of our
                  disclosure controls and procedures, as defined in Rules 13a-15(e)
                  and
                  15d-15(e) under the Securities Exchange Act of 1934, as amended.
                  Based
                  upon that evaluation, our Chief Executive Officer and Chief Financial
                  Officer concluded that our disclosure controls and procedures were
                  effective as of the end of the applicable period to ensure that
                  the
                  information required to be disclosed by the Company in reports
                  that it
                  files or submits under the Exchange Act (i) is recorded, processed,
                  summarized and reported within the time periods specified in Securities
                  and Exchange Commission rules and forms and (ii) 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.
 
 (b)        
                  *Changes in internal controls over financial
                  reporting*.  There was no change in our internal control
                  over financial reporting during our most recent fiscal quarter
                  that has
                  materially affected, or is reasonably likely to materially affect,
                  our
                  internal control over financial
                  reporting.
 
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 *Table
            of Contents*
  **PART
                  II- OTHER
                  INFORMATION**
 
 **Item 1.**
              **Legal
                  Proceedings.**
 
 None.
 
 **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 Securities Holders.**
 
 None.
 
 **Item 5.**                                **Other
        Information**.
 
 None.
 
 **Item
        6.                                Exhibits**
 
 Exhibit
 Number
              Description
 
 2.1
              Stock
                  Exchange Agreement dated as of October 19, 2005, by and among Xerion
                  EcoSolutions Group, Inc., Town House Land Limited and its Shareholders
                  (1)
 
 3.1
              Articles
                  of Incorporation of Gemini Ventures, Inc. filed on November 11,
                  1985 with
                  the Secretary of State of the State of Colorado
                  (2)
 
 3.2
              Articles
                  of Amendment to the Articles of Incorporation filed July 3, 1989
                  (2)
 
 3.3
              Certificate
                  of Correction filed on December 9, 1994, to correct the name of
                  the
                  Company to The Voyageur First, Inc.
                  (2)
 
 3.4
              Articles
                  of Amendment to the Articles of Incorporation filed November 29,
                  1995,
                  changing the name of the Company to North American Resorts, Inc.,
                  and
                  additional changes (2)
 
 3.5
              Amendments
                  to Articles of Incorporation filed April 21, 1998, increasing the
                  authorized number of shares of common stock to 150,000,000 shares,
                  par
                  value $.001 (2)
 
 3.6
              Amendment
                  to Articles of Incorporation filed October 5, 1998, naming the
                  members of
                  the Board of Directors (2)
 
 3.7
              Amendment
                  to Articles of Incorporation filed April 14, 2000, to change directors
                  and
                  amend Bylaws (2)
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 3.8
              Amendment
                  to Articles of Incorporation filed on June 30, 2000, to change
                  the name of
                  the Company to Immulabs Corporation
                  (2)
 
 3.9
              Amendment
                  to Articles of Incorporation filed on March 28, 2005, changing
                  the name of
                  the Company to Xerion EcoSolutions Group Inc.
                  (2)
 
 3.10
              Bylaws
                  of the Company (2)
 
 10.1
              Stock
                  Purchase Agreement dated as of December 11, 2006 by and among
                  Sino-American Development Corporation and Certain Purchasers
                  (3)
 
 31.1
              Section
                  302 Certification by the Corporation’s Principal Executive Officer and
                  Principal Financial and Accounting Officer
                  (4)
 
 32.1
              Section
                  906 Certification by the Corporation’s Principal Executive Officer and
                  Principal Financial and Accounting Officer
                  (4)
 
 99.1                        Charter
        of the Compensation Committee of the Board of Directors (2)
 
 99.2                        Charter
        of the Audit Committee of the Board of Directors (2)
 **______________________**
 
 (1)
              Incorporated
                  by reference from the Registrant’s Current Report on Form 8-K/A filed on
                  November 14, 2005.
 (2)
              Incorporated
                  by reference from the Registrant’s Annual Report on Form 10-KSB filed on
                  April 17, 2006.
 (3)
              Incorporated
                  by reference from the Registrant’s Current Report on Form 8-K filed on
                  December 15, 2006.
 (4)
              Filed
                  herewith.
 
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 **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.
 **SINO-AMERICAN
                  DEVELOPMENT CORPORATION**
                (Registrant)Date: September
                  27, 2007
              By:
              /s/ Fang
                  ZhongFang
                  Zhong
                Chief Executive
                  Officer,
                Cheif Financial
                  Officer
 *-
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