**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549




**FORM
      10-QSB**




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




For
      the
      quarterly period ended September 30, 2006




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




For
      the
      transition period from ______________ to _____________




*Commission
      File Number: 0-26760*





**SINO-AMERICAN
      DEVELOPMENT CORPORATION**


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





Nevada
            
            20-5065416(State
                or other jurisdiction
            
            (IRS
                Employer Identification Number)of
                incorporation or organization)





1427
      West
      Valley Boulevard


Suite
      101


Alhambra,
      CA 91803


(Address
      of principal executive offices)





(604)
      902
      0178


(Issuer's
      telephone number)





n/a


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




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




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




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**




**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**




Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes o No o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer's classes of common equity
      as
      of the latest practicable date as of December 5, 2006, 28,416,500
      shares.




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










**SINO-AMERICAN
      DEVELOPMENT CORPORATION**





INDEX




PART
                I. FINANCIAL INFORMATIONItem
                1.    Financial
                Statements:Condensed
                Consolidated Balance Sheet as of September 30,
                2006
            1Condensed
                Consolidated Statements of Operations for the three
                months and nine months ended September 30, 2006, and
                2005
            2Condensed
                Consolidated Statements of Cash Flows for the nine
                months ended September 30, 2006, and 2005
            3Notes
                to the Condensed Consolidated Financial
                Statements
            4Item
                2.    Management's Discussion and
                Analysis or Plan of Operation
            12Item
                3.    Controls and Procedures
            16PART
                II. OTHER INFORMATIONItem
                1.    Legal
                Proceedings
            16Item
                2.    Unregistered Sales of Equity
                Securities and Use of Proceeds
            16Item
                3.    Defaults upon Senior
                Securities
            16Item
                4.    Submission of Matters to a Vote
                of Security Holders
            16Item
                5.    Other
                Information
            16Item
                6.    Exhibits
            16Signatures
            17




-i-




Item
                1.    Financial
                statements.




**SINO-AMERICAN
                DEVELOPMENT CORPORATION****CONSOLIDATED
                CONDENSED BALANCE SHEET****September
                30, 2006****(Unaudited)**ASSETSCurrent
                AssetsCash
                and equivalents
            
            $
            1,781,452Accounts
                receivable, net of allowance of $418,737
            
            
            282,539Properties
                held for resale
            
            
            9,266,104Total
                Current Assets
            
            
            11,330,095Land
                held for development
            
            
            4,826,378Property
                and equipment, net of accumulated depreciation
            
            
            3,483,789$
            19,640,262LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)Current
                LiabilitiesAccounts
                payable and accrued expenses
            
            $
            841,209Accrued
                construction costs
            
            
            7,649,776Advances
                from buyers
            
            
            2,944,470Enterprise
                taxes payable
            
            
            774,015Other
                taxes payables
            
            
            1,748,028Short-term
                loans
            
            
            3,323,194Total
                Current Liabilities
            
            
            17,280,692Long-term
                liabilities
            
            
            88,626Long-term
                loans, net of current portion
            
            
            641,978Minority
                Interest
            
            
            230,197Stockholders'
                EquityCommon
                stock, par value $0.001, 150,000,000 shares authorized,28,415,230
                shares issued and outstanding atSeptember
                30, 2006
            
            
            28,415Additional
                paid in capital
            
            
            5,946,588Retained
                deficit
            
            
            (3,170,376
            )Accumulated
                other comprehensive income
            
            
            301,625Total
                stockholders' equity before advances offset
            
            
            3,106,252Advances
                to directors
            
            
            (1,707,483
            )Total
                stockholders' equity, net of advances offset
            
            
            1,398,769$
            19,640,262See
                accompanying summary of accounting policies and notes to the condensed
                financial statements.


-1-




**SINO-AMERICAN
                DEVELOPMENT CORPORATION****CONSOLIDATED
                CONDENSED STATEMENTS OF
                OPERATIONS****(Unaudited)**




**Three
                months ending**
            
            **Nine
                months ending****September
                30,**
            
            **September
                30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Sales
                revenues
            
            $
            6,524,081
            
            $
            983,575
            
            $
            11,409,809
            
            $
            6,176,916Cost
                of properties sold
            
            
            6,397,059
            
            
            610,287
            
            
            11,263,593
            
            
            4,744,786Gross
                profit
            
            
            127,022
            
            
            373,288
            
            
            146,216
            
            
            1,432,130Selling,
                general and administrative expenseSelling
                expenses
            
            
            121,293
            
            
            219,175
            
            
            294,882
            
            
            568,164Depreciation
                expense
            
            
            35,198
            
            
            40,962
            
            
            136,574
            
            
            115,677Impairment
                loss
            
            
            982,786
            
            
            —
            
            
            4,225,949
            
            
            —General
                and administrative expenses
            
            
            537,225
            
            
            487,921
            
            
            1,605,506
            
            
            1,055,7201,676,502
            
            
            748,058
            
            
            6,262,911
            
            
            1,739,561Income
                (Loss) from operations
            
            
            (1,549,480
            )
            
            (374,770
            )
            
            (6,116,695
            )
            
            (307,431
            )Other
                income (expense)Other
                revenues (expense)
            
            
            18,746
            
            
            (9,482
            )
            
            25,321
            
            
            24,505Interest
                and finance costs
            
            
            (89,997
            )
            
            (133,021
            )
            
            (222,732
            )
            
            (249,369
            )(71,251
            )
            
            (142,503
            )
            
            (197,411
            )
            
            (224,864
            )Net
                (loss) before income taxes and minority interest
            
            
            (1,620,731
            )
            
            (517,273
            )
            
            (6,314,106
            )
            
            (532,295
            )(Provision
                for) benefit from income taxes
            
            
            (307,906
            )
            
            (40,906
            )
            
            (549,750
            )
            
            656,140Net
                income(loss) before minority interest
            
            
            (1,928,637
            )
            
            (558,179
            )
            
            (6,863,856
            )
            
            123,845Minority
                interest in (earnings) loss
            
            
            93,907
            
            
            13,796
            
            
            235,084
            
            
            (12,065
            )Net
                income (loss)
            
            $
            (1,834,730
            )
            $
            (544,383
            )
            $
            (6,628,772
            )
            $
            111,780Other
                comprehensive income(loss)
            
            $
            (281,086
            )
            $
            193,522
            
            $
            38,916
            
            $
            193,522Total
                comprehensive income (loss)
            
            $
            (2,115,816
            )
            $
            (350,861
            )
            $
            (6,589,856
            )
            $
            305,302Basic
                and diluted income (loss) per share
            
            $
            (0.06
            )
            $
            (0.02
            )
            $
            (0.23
            )
            $
            —Basic
                and diluted comprehensive income (loss) per share
            
            $
            (0.07
            )
            $
            (0.01
            )
            $
            (0.23
            )
            $
            0.01Basic
                and diluted weighted average shares outstanding
            
            
            28,415,230
            
            
            28,415,230
            
            
            28,415,230
            
            
            28,415,230See
                accompanying summary of accounting policies and notes to the condensed
                financial statements.


-2-




**SINO-AMERICAN
                DEVELOPMENT CORPORATION****CONSOLIDATED
                CONDENSED STATEMENTS OF CASH
                FLOWS****(Unaudited)****Nine
                months ended****September
                30,****2006**
            
            **2005**Cash
                Flows From Operating ActivitiesNet
                Income (Loss)
            
            $
            (6,628,772
            )
            $
            111,780Adjustments
                to reconcile net loss to net cash provided byoperating
                activitiesDepreciation
            
            
            136,574
            
            
            115,677Minority
                interest
            
            
            (235,084
            )
            
            12,066Impairment
                of properties
            
            
            4,225,949
            
            
            —Changes
                inAccounts
                receivable, net and other receivable
            
            
            312,246
            
            
            97,589Properties
                held for resale
            
            
            (583,678
            )
            
            (11,161
            )Advances
                to suppliers
            
            
            196,637
            
            
            (11,610
            )Construction-in-progress
            
            
            —
            
            
            (208,783
            )Accounts
                payable and other payables
            
            
            6,044,029
            
            
            433,778Advances
                from buyers
            
            
            (2,508,748
            )
            
            (666,508
            )Income
                and other taxes payable
            
            
            845,276
            
            
            (606,936
            )Net
                Cash Flows Provided (Used) By Operating Activities
            
            
            1,804,429
            
            
            (734,108
            )Cash
                Flows From Investing ActivitiesPurchase
                of land held for development
            
            
            —
            
            
            (4,803,651
            )Purchases/transfer
                of fixed assets
            
            
            (783,970
            )
            
            (78,575
            )Net
                Cash Provided (Used) by Investing Activities
            
            
            (783,970
            )
            
            (4,882,226
            )Cash
                Flows from Financing ActivitiesLoan
                proceeds
            
            
            425,820
            
            
            6,774,402Principal
                loans repayments
            
            
            (1,784,549
            )
            
            (666,155
            )Minority
                interest in capital contributions
            
            
            —
            
            
            69,901Advances
                to directors and affiliated companies
            
            
            (777,538
            )
            
            (1,582,237
            )Net
                Cash Provided (Used) by Financing Activities
            
            
            (2,136,267
            )
            
            4,595,911Foreign
                currency translation adjustment
            
            
            38,916
            
            
            193,522(Decrease)
                in Cash
            
            
            (1,076,892
            )
            
            (826,901
            )Cash
                at Beginning of Year
            
            
            2,858,344
            
            
            4,251,678Cash
                at End of Period
            
            $
            1,781,452
            
            $
            3,424,777Supplemental
                disclosure of cash flow informationInterest
                Paid in Cash
            
            $
            222,732
            
            $
            245,031Properties
                transferred from construction-in-progessto
                properties held for sale
            
            $
            8,221,620
            
            $
            —See
                accompanying summary of accounting policies and notes to the condensed
                financial statements.


-3-




SINO-AMERICAN
      DEVELOPMENT CORPORATION





NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS





1.
            DESCRIPTION
                OF BUSINESS





ORGANIZATIONAL
      STRUCTURE





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.





Town
      House Land (formerly: Hong Kong Window of the World Apparel Co., Limited) 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 Limited
      ("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. 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.





At
      September 30, 2006 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 and indirectly 97% of the equity in Town House Land (USA) Inc.
      Collectively hereinafter, Town House Land, Wuhan Town House, Town House Land
      (Miami) Corporation and Town House Land (USA), Inc., are referred to as "the
      Company".





Wuhan
      Town House Land Limited ("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 Rmb.10,000,000, (2) have
      engineering and staff of not less that 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 its 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 Limited ("Town House
      Land").





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.


-4-


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 Land (USA) Inc. ("Town House USA") was incorporated in California on
      March
      4, 2004 and owns real estate which it is holding for development. Town House
      Land is a wholly owned subsidiary of Wuhan Town House.





Town
      House Land (Miami) Corporation ("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
      September 30, 2006 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





The
      Company had a working capital deficit of $5,950,597 as of September 30, 2006.
      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 these
      financial statements.





3.
            SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES





The
      following is a summary of significant accounting policies:


BASIS
        OF
        PRESENTATION - The accompanying condensed consolidated financial statements
        have
        been prepared in compliance with Regulation S-B and U.S. generally accepted
        accounting principles, but do not include all of the information and disclosures
        required for audited financial statements. These statements should be read
        in
        conjunction with the consolidated financial statements and notes thereto
        included in the Company’s latest Annual Report on Form 10-KSB for the year ended
        December 31, 2005. In the opinion of management, these statements include
        all
        adjustments (consisting of normal recurring adjustments) considered necessary
        for a fair presentation of the results of operations, financial position
        and
        cash flows for the interim periods presented. Operating results for the nine
        months ended September 30, 2006 are not necessarily indicative of the results
        that may be expected for the year ending December 31, 2006.
 
 The
        factors discussed in Footnote 2 above raise substantial doubt about the
        Company's ability to continue as a going concern. The financial statements
        do
        not include any adjustments that might result from the outcome of this
        uncertainty.




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 September 30,
      2006
      there were no restrictions on the Company’s cash balances.





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 rights
            
            
            40
                yearsEquipment
            
            
            5
                yearsMotor
                vehicles
            
            
            5-8
                yearsOffice
                furniture and fixtures
            
            
            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.


-5-


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. There were no property and equipment impairments recognized during
      the
      nine months ended September 30, 2006 and 2005.





CONSTRUCTION-IN-PROGRESS
      - Properties currently under development are accounted for as
      construction-in-progress. Construction-in-progress is recorded at acquisition
      cost, including land rights costs, development expenditures, and professional
      fees during the course of construction for the purpose of financing the project.
      Upon completion and readiness for use of the project, the cost of
      construction-in-progress is to be transferred to properties held for
      sale.





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.





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. Business taxes included in cost of sales were $571,719 and
      $339,222 for the nine months ended September 30, 2006 and 2005,
      respectively.





ADVERTISING
      - Advertising costs are expensed as incurred. During the nine months ended
      September 30, 2006 and 2005, the Company incurred advertising expenses of
      $73,783 and $327,116 respectively.





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 years ended December 31, 2005 and 2004, 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. During 2005, the Company was able to settle its 2004
      and
      prior years enterprise tax liabilities with the PRC taxing authorities for
      substantially less than the prevailing statutory rate resulting in the
      recognition of a net income tax benefit of $656,140 during the nine months
      ended
      September 30, 2005.





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.


-6-


For
      the
      nine months ended September 30, 2006 and 2005, the Company's pension cost
      charged to the statements of operations under the plan amounted to $5,159 and
      $6,530, respectively.





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 September 30, 2006
      because of the relatively short-term maturity of these instruments.





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 September 30, 2006 and 2005, 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, earnings per share for 2006 and 2005 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.





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 - SFAS 123(R), SFAS 151, SFAS 152, SFAS 153 and SFAS
      154 - SFAS 123 (R), Share Based Payment replaces SFAS 123, Accounting for
      Stock-Based Compensation, SFAS No. 151, Inventory Costs - an amendment of ARB
      No. 4 and SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions
      -
      an amendment of FASB Statements No. 66 and 67, SFAS No. 153, Exchange of
      Non-monetary Assets - an amendment of APB Opinion No. 29 and SFAS No. 154,
      Accounting Changes and Error Corrections - a replacement of APB No. 20 and
      SFAS
      3 were recently issued. SFAS No. 123(R), 151, 152, 153 and 154 have no current
      applicability to the Company and have no effect on the consolidated financial
      statements.





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.





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


-7-


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.





RECLASSIFICATIONS
      - Certain amounts in the 2005 financial statements have been reclassified to
      conform to the 2006 presentation.





4.
            CONCENTRATIONS
                OF BUSINESS AND CREDIT RISK





At
      September 30, 2006, the Company had $1,732,976 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 $282,539 and $791,321 as of September 30, 2006 and 2005,
      respectively, were collateralized by real estate.





5.
            ACCOUNTS
                RECEIVABLE AND OTHER RECEIVABLES





Accounts
      receivable consist of the following as of September 30, 2006:





Accounts
                receivable
            
            $
            705,506Less:
                Provision for doubtful debts
            
            
            (422,967
            )Accounts
                receivable net of provision for doubtful debts
            
            $
            282,539





6.
            PROPERTIES
                HELD FOR RESALE





As
      of
      September 30, 2006, the Company had the following properties held for
      resale:





General
                Garden
            
            $
            13,597Diamond
                Mansion Phase I Residential
            
            
            28,968Diamond
                Mansion Phase I Commercial
            
            
            1,518,621Diamond
                Mansion Phase 2
            
            
            120,269Gutian
                Apartments
            
            
            224,813Wuhan
                Town House Plaza
            
            
            199,876YiChang
                Town House Plaza Commercial
            
            
            2,157,690YiChang
                Town House Plaza Residential
            
            
            4,907,573Other
            
            
            94,697Total
            
            $
            9,226,104


-8-




During
      the quarter ended June 30, 2006, management determined that the unsold
      commercial properties located on floors one through five of the Diamond Mansion,
      Phase One should be converted to residential properties as the commercial space
      was not selling.  This resulted in impairment in value of $2,289,176 on
      these properties as residential properties have a significantly lower retail
      value than commercial properties.





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.


During
        the quarter ended September 30, 2006 the Company revised its sales revenues
        estimates related to the Yi Chang Town House Plaza project. Based on these
        revised estimates an impairment of $979,918 was recorded.





7.
            PROPERTIES
                AND EQUIPMENT





Properties
      and equipment as of September 30, 2006, stated at cost less accumulated
      depreciation and amortization, consist of:




Land
                use rights and buildings
            
            $
            3,156,624Plant
                and machineries
            
            
            30,934Motor
                vehicles
            
            
            683,366Office
                equipment
            
            
            203,675Furniture
                and fixtures
            
            
            30,4974,105,096Less:
                Accumulated depreciation and amortization
            
            
            (621,307
            )$
            3,483,789





As
      of
      September 30, 2006, 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
      September 30, 2006 was $4,826,378. At September 30, 2006, substantially all
      of
      this land was pledged as collateral on various loans.





8.
            CONSTRUCTION-IN-PROGRESS





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.





9.
            ADVANCES
                FROM BUYERS





Advances
      from buyers represented deposits from residential property buyers and which
      procedures for the transfer of ownership of the property purchased have not
      been
      completed as of the balance sheets date. The deposits from such property buyers
      for residential properties to be transferred in the subsequent years are carried
      forward as deferred revenue. Included in advances from buyers is $1,484,470
      of
      deposits that are for property in the redevelopment of a portion of the Diamond
      Mansion project by Wuhan Pacific Shopping Mall Limited. The allocation of these
      deposits between the Company and Wuhan Pacific will be made when the
      redevelopment is complete.





10.
            TRANSACTIONS
                WITH RELATED PARTIES





Amounts
      due from/(to) directors at September 30, 2006 are as follows:




Fang
                Zhong (Director)
            
            $
            1,704,623Hu
                Min (Director)
            
            
            45,420Fang
                Wei Jun (Director)
            
            
            39,010Fang
                Wei Feng (Director)
            
            
            (81,570
            )$
            1,707,483


-9-




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.





During
      the nine months ended September 30, 2006 Fang Zhong received $700,113 in
      advances from the Company. Of these advances, $669,038 went to Wuhan Pacific
      Shopping Mall Limited pursuant to a guarantee of Fang Zhong.





11.
            TAXES
                PAYABLE





Tax
      payables at September 30, 2006 consist of the following:





Business
                tax
            
            $
            1,748,028Other
                taxes
            
            
            774,015$
            2,522,043





12.
            SHORT-TERM
                LOANS





The
      Company had the following short-term loans at September 30, 2006:





Town
                House Land (Miami) short-term bank loan,secured
                by real estate property in the UnitedStates,
                interest at 1% over prime (8.250% atDecember
                31, 2005), principal due onDecember
                31, 2006.
            
            
            800,000Wuhan
                Town House short-term bank loan,secured
                by corporate guarantee, interestat
                6.696% paid periodically, principal due onDecember
                31, 2007.
            
            
            641,978Wuhan
                Town House short-term bank loan,secured
                by YiChang Project land use rights,interest
                at 115% of the national rate(5.85% atSeptember
                30, 2006), principal due based upona
                percentage of sales through December 20, 2006.
            
            
            1,047,980Town
                House Land (USA) short-term bank loan,secured
                by real estate property in the UnitedStates,
                interest at Far East Bank Prime RatePlus
                1% (9.25% at September 30, 2006) paidperiodically,
                principal due onJanuary
                1, 2007.
            
            
            760,000Town
                House Land (Miami) short-term loan from afinancial
                institution, secured by real property,interest
                at Far East Bank Prime Rate plus 1%(9.25%
                at September 30, 2006) paid periodically,principal
                due on January 1, 2007.
            
            
            100,000Wuhan
                Town House short-term bank loan,Secured
                by YiChang Project land use rights,interest
                at 115% of national rate(5.85%
                at September 30, 2006) paidperiodically,
                principal due based upon apercentage
                of sales through February 28, 2007.
            
            
            189,394Indirect
                financing
            
            
            425,820$
            3,965,172Less
                current portion
            
            
            (3,323,194
            )Long-term
                notes
            
            $
            641,978


-10-




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 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 retro actively for all periods included in these financial
      statements.





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 $.001 per share from no par.





14.
            INCOME
                TAX





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
      nine months ended September 30, 2006 and 2005, 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.





A
      reconciliation of EIT tax at the statutory rate to the Company's effective
      rate
      is as follows:





2006
            
            2005Computed
                tax at Federal statutory rate of 34%
            
            $
            (2,024,001
            )
            $
            (180,980
            )Difference
                primarily attributable to EIT taxassessed
                on gross real estate sales andadjustments
                to prior years tax liabilitiesbased
                on assessments from the PRC taxingauthorities
            
            
            2,573,751
            
            
            837,120Provision
                for (benefit from) income taxes
            
            $
            549,750
            
            $
            (656,140
            )





15.
            COMMITMENTS





As
      of
      September 30, 2006 the Company had contractual commitments of lease expenditures
      of $6,818; and an advertising commitment of $22,927.





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 September 30, 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.


-11-


**ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





This
      Form
      10-QSB contains forward-looking statements that involve substantial risks of
      uncertainties. You can identify these statements by forward-looking words such
      as "may", "will", "expect", "plans", "intends", "anticipate", "believe",
      "estimate" and "continue" or similar words and are intended to identify
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should
      read statements that contain these words carefully because they discuss its
      future expectations, contain projections of its future results of operations
      or
      of its financial condition or state other "forward-looking" information. The
      Company believes that it is important to communicate its future expectations
      to
      its investors. However, there may be events in the future that the Company
      is
      not able to accurately predict or control. The factors listed above in the
      section captioned "Risk Factors", as well as any differ materially from the
      expectations the Company describe in its forward-looking
      statements.





Results
      of Operations





Comparison
      of operations for the three months ended September 30, 2006 with the three
      months ended September 30, 2005:





Revenues





Sales
      revenues increased by $5,540,506 or 563%, in 2006 from $983,575 in 2005 to
      $6,524,081 in 2006. The favorable variance in sales revenue was mainly
      attributable to sale of 2 commercial units and 243 residential units from
      YiChang Town House Plaza.





o
            Sales
                of residential properties were $6,222,746 for the three months ended
                September 30, 2006.




o
            Sales
                of commercial properties were $301,335 for the three months ended
                September 30, 2006.





Cost
      of
      Goods Sold





Cost
      of
      properties sold increased to $6,397,059 for the three months ended September
      30,
      2006 from $610,287 during the comparable period in 2005. This increase is due
      primarily to a 642% increase in the gross floor area sold.





Operating
      and other expenses





Selling
      expenses decreased by $97,882, or 45%, to $121,293 in 2006 from $219,175 in
      2005, primarily as a result of the following:





o
            Advertising
                expenses decreased by $97,586 or 63%, due to the cessation of advertising
                to stimulate sales of the Wuhan Town House Plaza, which began its
                sales
                campaign in the quarter ended September 30,
                2005.





Administrative
      expenses increased by $49,304 or 10%, to $537,225 in 2006
      from
      $528,883 in 2005, primarily as a result of the following:





o
            Salaries
                of administrative staff increased by $118,570 or 205%, due to an
                increase
                in bonuses and average monthly
                salaries.





o
            Legal
                and professional fees increased by $63,309, or 142%, as a result
                of
                increases legal services during
                2006.





o
            Other
                tax expenses decreased by $24,422, or 46% as a result of decreases
                in
                stamp duty, property duty and licenses duty
                paid.





o
            Audit
                fees decreased by $83,063, or 66% as a result of audit fees related
                to our
                reverse acquisition incurred in
                2005.





Depreciation
      expense decreased by $5,764, or 14%, to $35,198 in 2006 from 40,962 in 2005.
      This decrease is primarily attributable to the full depreciation of certain
      assets during 2006.





Interest
      and finance costs decreased by $43,024, or 32%, to $89,997 in 2006 from $133,021
      in 2005. This decrease is primarily a result of a decrease in outstanding
      balances related to short term loans coupled with bank handling
      charges.


Impairment
          loss
  An
          impairment loss of $979,918 was recorded related
          to the Yi Chang Town House Plaza project due to revised estimates of the
          expected sales proceeds from this project.







-12-




Comparison
      of operations for the nine months ended September 30, 2006 with the nine months
      ended September 30, 2005:





Revenues




Sales
      revenues increased by $5,232,893 or 85%, in 2006 from $6,176,916 in 2005 to
      $11,409,809 during the comparable period in 2006.





o
            Sales
                of residential properties were $10,532,779 for the nine months ended
                September 30, 2006. The percentage of residential sales to total
                sales was
                92% for 2006.





o
            Sales
                of commercial properties were $877,030 for the nine months ended
                September
                30, 2006. The percentage of commercial sales to total sales was 8%
                2006.





o
            Sales
                totaled 29,376 square meters in 2006 as compared to 13,997 square
                meters
                in 2005 or an increase of 110%.





Cost
      of
      Goods Sold





Cost
      of
      properties sold increased to $11,263,593 for the nine months ended September
      30,
      2006 from $4,744,786 during the comparable period in 2005. This increase is
      primarily due to an increase in the properties sold as previously discussed.
      This is also due to the fact that the Company revised its cost estimates to
      complete the YiChang Town House Plaza project.  This upward revision
      resulted in a substantial 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 and third quarters. 
Management anticipates that it will be able to recover its costs in remaining
      unsold and uncompleted units on this project.





Operating
      and other expenses





Selling
      expenses decreased by $273,282, or 48%, to $294,882 in 2006 from $568,164 in
      2005, primarily as a result of the following:





o
            Advertising
                expenses decreased by $253,333, or 77%, due to the cessation of
                advertising to stimulate sales of the Wuhan Town House Plaza, which
                began
                its sales campaign in 2005.





Administrative
      expenses increased by $549,786, or 52%, to $1,605,506 in 2006
      from
      $1,055,720 in 2005, primarily as a result of the following:





o
            Salaries
                of administrative staff increased by $363,111, or 178%, due to an
                increase
                in bonuses and average monthly
                salaries.





o
            Legal
                and professional fees increased by $196,241, or 269%, as a result
                of
                increases legal services during
                2006.





o
            Other
                tax expenses increased by $44,964, or 73% as a result of increases
                in
                stamp duty, property duty and licenses duty
                paid.





o
            Rental
                expense increased $37,700, or 109%, as a result of new offices established
                in Miami and additional sales office in
                Yichang.





Depreciation
      expense





Depreciation
      expense increased by $20,897, or 18%, to $136,574 in 2006 from $115,677 in
      2005.
      This increase is primarily attributable to the purchase of additional assets
      during 2005.





Impairment
      losses





Impairment
      loss of $956,855 due to the termination of the Jing Qi project. The Jing Qi
      project has been suspended for many years waiting for the construction of a
      public road near the project. Because the status of the road construction could
      not be determined with any degree of certainty the Company has canceled the
      project.





Impairment
      loss of $2,286,308 due to the fact that management determined that the unsold
      commercial properties located on floors one through five of the Diamond Mansion,
      Phase One should be converted to residential properties as the commercial space
      was not selling.  This resulted in impairment in the amount of $2,286,308
      on these properties as residential properties have a significantly lower retail
      value than commercial properties.


An
        impairment loss of $979,918 was recorded related
        to the Yi Chang Town House Plaza project due to revised estimates of the
        expected sales proceeds from this project.





-13-





Interest
      and Finance costs


Interest
      and finance costs decreased by $26,637, or 11%, to $222,732 in 2006 from
      $249,369 in 2005. This decrease is primarily a result of a decrease in
      outstanding balances related to short term loans coupled with bank handling
      charges.





Liquidity
      and Capital Resources





As
      of
      September 30, 2006, the Company had a working capital deficit of $5,950,597. The
      Company had a working capital deficit of $5,950,597 as of September 30, 2006.
      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.





Cash
      flows





Operating





Net
      cash
      flow provided by operating activities increased by $2,538,527, or 346%, to
      $1,804,429 in 2006 from $(734,108) in 2005. This increase is primarily
      attributable to the addition of accounts payable partially offset by decreases
      in advances from buyers.





Investing





Cash
      used
      in investing activities decreased $4,098,256 to $783,970 in 2006 from $4,882,226
      in 2005. This decrease is primarily attributable to the acquisition of
      properties in 2005.





Financing





The
      Company has net loan repayments of $1,358,729 in 2006 compared to net borrowing
      of $6,108,247 in 2005. This change is primarily a result of completing projects
      and paying down financing. The Company paid cash advances to directors and
      affiliated companies of $777,538 in 2006.





Critical
      Accounting Policies





The
      financial statements are prepared in accordance with accounting principles
      generally accepted in the United States of America and the following is a
      summary of significant 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.





At
      September 30, 2006, the Company had $1,732,976 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.





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.





Related
      companies - A related company is a company in which a director has beneficial
      interests in and in which the Company has significant influence.





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, interests 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.





Construction-in-progress
      - Properties currently under development are accounted for as
      construction-in-progress. Construction-in-progress is recorded at acquisition
      cost, including land rights costs, development expenditures, professional fees
      and during the course of construction for the purpose of financing the project.
      Upon completion and readiness for use of the project, the cost of
      construction-in-progress is to be transferred to properties held for
      sale.





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,


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(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.





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 nine months ended September 30, 2006 and 2005, 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. During 2005, the Company was able to settle its 2004
      and
      prior years enterprise tax liabilities with the PRC taxing authorities for
      substantially less than the prevailing statutory rate resulting in the
      recognition of a net income tax benefit during the nine months ended September
      30, 2005 of $656,140.





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.





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 Juen 30, 2006 because
      of
      the relatively short-term maturity of these instruments.





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.





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 June 30, 2006 and 2005, 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, earning per share for 2006 and 2005 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.


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**ITEM
      3 - CONTROLS AND PROCEDURES**




EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's Chief Executive Officer
      and
      Chief Financial Officer has evaluated the effectiveness of the Company's
      disclosure controls and procedures (as such term is defined in Rules 13a-15
      and
      15d-15 under the Exchange Act) as of the end of period covered by this quarterly
      report (the "Evaluation Date"). Based on such evaluation, such officer has
      concluded that, as of the Evaluation Date, the Company's disclosure controls
      and
      procedures are effective.




CHANGES
      IN INTERNAL CONTROLS OVER FINANCIAL REPORTING. During the most recent fiscal
      quarter, there have not been any significant changes in the Company's internal
      controls over financial reporting or in other factors that have materially
      affected, or are reasonably likely to materially affect internal controls over
      financial reporting.




**PART
      2 - 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 SECURITY
      HOLDERS**




None.




**ITEM
      5 - OTHER INFORMATION**




None




**ITEM
      6 - EXHIBITS**





31
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a)
                promulgated under the Securities and Exchange Act of 1934, as
                amended32
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Principal Executive
                Officer)




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**SIGNATURES**




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




**SINO-AMERICAN
      DEVELOPMENT CORPORATION**




December
      5, 2006





/s/
                Fang Zhong
              Fang
                Zhong President, Chief Executive Officer and
                Director


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