<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F/A
(MARK ONE)
<TABLE>
<S>    <C>
[ ]    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                                       OR

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       FOR THE FISCAL YEAR ENDED MARCH 31, 2002

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM ________TO _________.
</TABLE>

Commission file number: 0-30304

                              NEW CHINA HOMES, LTD.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                              New China Homes, Ltd.
--------------------------------------------------------------------------------
                (Translation of Registrant's name into English)

                                 Cayman Islands
--------------------------------------------------------------------------------
                (Jurisdiction of incorporation or organization)

   16/F Far East Consortium Building, 121 Des Voeux Road, Central, Hong Kong,
                         The People's Republic of China
--------------------------------------------------------------------------------
                     (Address of principal or organization)


Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                      NONE
--------------------------------------------------------------------------------
                                (Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

                               TITLE OF EACH CLASS

          Common Shares, par value US$1.00 per share, or Common Shares
          ------------------------------------------------------------
          Redeemable Common Share Purchase Warrants, or Warrants
          ------------------------------------------------------------

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

                                      NONE
--------------------------------------------------------------------------------
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report (October 1, 2002):

Common Shares, par value US$ 1.00 per share: 7,500,000
                                             -----------------------------------

     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.

     [X]  Yes           [ ]  No


     Indicate by check mark which financial statement item the registrant has
elected to follow:

     [ ]  Item 17       [X]  Item 18

================================================================================

<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<S>               <C>                                                                                <C>
INTRODUCTION......................................................................................... 1


PART I............................................................................................... 2

    Item 1.       Identity of Directors, Senior Management and Advisors.............................. 2

    Item 2.       Offer Statistics and Expected Timetable............................................ 2

    Item 3.       Key Information.................................................................... 2

                  Risk Factors....................................................................... 9

    Item 4.       Information on the Company.........................................................24

    Item 5.       Operating and Financial Review and Prospects.......................................42

    Item 6.       Directors, Senior Management and Employees.........................................53

    Item 7.       Major Shareholders and Related Party Transactions..................................60

    Item 8.       Financial Information..............................................................61

    Item 9.       The Offer and Listing..............................................................62

    Item 10.      Additional Information.............................................................63

    Item 11.      Quantitative and Qualitative Disclosures About Market Risk.........................77

    Item 12.      Description of Securities Other than Equity Securities.............................77


PART II..............................................................................................78

    Item 13.      Defaults, Dividend Arrearages and Delinquencies....................................78

    Item 14.      Material Modifications to the Rights of Security Holders and Use of Proceeds.......78

    Item 15.      Reserved...........................................................................78

    Item 16.      Reserved...........................................................................78

    Item 17.      Financial Statements...............................................................78


PART III.............................................................................................79

    Item 18.      Financial Statements...............................................................79

    Item 19.      Exhibits...........................................................................79
</TABLE>

                                        i

<PAGE>
                                  INTRODUCTION

     This Annual Report on Form 20-F for the fiscal year ended March 31, 2002,
as filed with the United States Securities and Exchange Commission, or the
Commission, includes our audited consolidated financial statements for the
fiscal years ended March 31, 2000, 2001 and 2002. Our Common Shares and Warrants
are listed on the Nasdaq Small Cap Market under the symbols NEWC and NEWCW,
respectively.


FORWARD-LOOKING INFORMATION

     Information contained in this Annual Report contains certain
forward-looking statements and information relating to New China Homes, Ltd., or
the Company, which can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "estimate," "plan," "project,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology. Such statements reflect the current views of our
management with respect to future events and are subject to numerous risks,
uncertainties and assumptions, including the risk factors described in this
Annual Report. No assurance can be given that the future results covered by the
forward-looking statements or projections will be achieved. There can be no
assurance that these assumptions will prove accurate or that future events will
not cause material changes in our business which adversely affect our financial
results. Many factors could cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward looking
statements, including, among others, the development of the private residential
and commercial real estate markets in Shanghai and other parts of China,
interest rate and inflation fluctuations, our ability to obtain the requisite
additional financing, governmental uncertainties, general competition and price
pressures in the marketplace, our ability to control costs and expenses,
currency fluctuations and various other factors, both referenced and not
referenced in this Annual Report. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, intended, planned or projected.


CURRENCY TRANSLATION

     We have prepared our financial statements in accordance with United States
generally accepted accounting principles, or US GAAP, and published such
statements in Hong Kong dollars. On consolidation, the financial statements of
our joint venture subsidiary in China are translated from Renminbi, being its
functional currency, into Hong Kong dollars. All references to "HK$" are to Hong
Kong dollars. All references to "U.S. dollars," "dollars," "US$" or "$" are to
United States dollars. All references to "RMB" are to Chinese Renminbi. For your
convenience, conversion of amounts from Hong Kong dollars into United States
dollars have been made at the unified exchange rate of US$ 1.00 = HK$ 7.7999,
the approximate rate of exchange on March 31, 2002. Such translations should not
be construed as representations that the Hong Kong dollar amounts could be
converted into United States dollars at that rate or any other rate.

                                       1
<PAGE>

                                     PART I


ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable


ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable


ITEM 3. KEY INFORMATION

     A.   SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

We have derived the selected statement of operations data for the fiscal years
ended March 31, 1998, 1999, 2000, 2001 and 2002 and the selected balance sheet
data as of March 31, 1998, 1999, 2000, 2001 and 2002 presented below from our
audited consolidated financial statements prepared in accordance with US GAAP.
You should read the selected financial and operating data presented below
together with Operating and Financial Review and Prospects and our consolidated
financial statements and notes thereto included elsewhere in this Annual Report.

                                       2
<PAGE>

STATEMENT OF OPERATIONS DATA:


<TABLE>
<CAPTION>
                                                                            Year ended March 31,
                                                ------------------------------------------------------------------------------
                                                   1998          1999         2000         2001          2002           2002
                                                ----------   -----------  -----------  -----------   -----------    ----------
                                                    HK$          HK$          HK$          HK$            HK$           US$

<S>                                             <C>          <C>          <C>          <C>           <C>            <C>
Operating revenues ..........................   74,197,884   270,830,228  174,742,842  169,008,016    73,122,935     9,374,735
                                                ----------   -----------  -----------  -----------
Operating (loss) income before
 minority interest and income taxes .........   (5,718,280)   40,915,526   12,372,604     (800,556)  (53,669,696)   (6,880,730)
Income taxes ................................   (1,430,566)   15,773,365    7,508,689    5,712,188    (2,320,628)     (297,517)
                                                ----------   -----------  -----------  -----------
(Loss) income before minority interests .....   (4,287,714)   25,142,161    4,863,915   (6,512,744)  (55,990,324)   (7,178,247)
Minority interests ..........................      (41,358)      570,569      263,568      202,750      (618,198)      (79,255)
                                                ----------   -----------  -----------  -----------
Net (loss) income ...........................   (4,246,356)   24,571,592    4,600,347   (6,715,494)  (55,372,126)   (7,098,992)
                                                ----------   -----------  -----------  -----------
(Loss) earnings per share - basic ...........    (4,246.36)    24,571.59         0.44        (0.53)        (5.48))       (0.70)
                                                ----------   -----------  -----------  -----------
(Loss) earnings per share - diluted .........    (4,246.36)    24,571.59         0.44        (0.53)        (5.48)        (0.70)
                                                ----------   -----------  -----------  -----------
Weighted average number of shares outstanding
- basic (See note (1)) ......................        1,000         1,000   10,538,630   12,700,000    10,100,000    10,100,000
                                                ----------   -----------  -----------  -----------
Weighted average number of shares outstanding
- diluted (See note (1)) ....................        1,000         1,000   10,575,467   12,700,000    10,100,000    10,100,000
                                                ==========   ===========  ===========  ===========   ===========    ==========
</TABLE>

No dividends have been paid during the periods indicated above.


BALANCE SHEET DATA:

<TABLE>
<CAPTION>
                                                                        As of March 31,
                                         -----------------------------------------------------------------------------
                                             1998          1999        2000          2001        2002          2002
                                         -----------   -----------  -----------  -----------  -----------   ----------
                                             HK$           HK$           HK$          HK$         HK$           US$
<S>                                      <C>           <C>          <C>          <C>          <C>           <C>
Total assets...........................  126,578,854   221,500,707  386,945,862  343,317,913  259,466,075   33,264,881
Long-term debt ........................          Nil    30,327,409    9,981,610    5,876,352          Nil          Nil
Total stockholders' (deficit) equity...   (3,719,657)   22,271,842  182,027,011  172,201,833  119,318,444   15,297,238
</TABLE>

(1)  Adjusted to give effect to a 999-for-one stock split effected in August
     1999.

(2)  As of March 31, 1998, 1999, 2000, 2001 and 2002, Shanghai Chingchu Property
     Development Limited, a Sino-foreign equity joint venture organized under
     the laws of the People's Republic of China, or Shanghai Chingchu, one of
     our operating subsidiaries had a total of HK$ 123.5 million, HK$ 81
     million, HK$ 76 million, HK$ 73.41 million and HK$ 26.64 million,
     respectively, of outstanding mortgage loans subject to performance
     guarantees. Shanghai Chingchu has agreed to secure the obligations of
     California Gardens home purchasers to make repayment to the mortgages of
     their homes. The performance guarantees provide that upon default by a home
     purchaser of its obligation to repay the mortgage installments for three
     consecutive months, the relevant mortgage bank may require Shanghai
     Chingchu to pay the outstanding mortgage. The guarantees will be released
     when the property title deeds are passed to the relevant mortgage banks as
     security for the mortgage loans. As of March 31, 2002, Shanghai Chingchu
     has not been required to make any payment under these performance
     guarantees.

                                       3
<PAGE>

KEY OPERATING DATA:

     The following tables set forth key operating data for the Company as of
March 31, 2002:

a)   Revenue recognized for the sale of homes in California Gardens:

<TABLE>
<CAPTION>
                                                       Fiscal year ended March 31,
                                            ----------------------------------------------
                                             1999           2000         2001         2002
                                            ------         ------       ------       -----
                                                           (in HK$ millions)
<S>                                         <C>            <C>          <C>          <C>
Phase I..............................        35.26           0.23         1.14        1.10
Phase II.............................       234.66          22.71         2.09        0.17
Phase IIA............................            -              -        25.04       16.91
Phase III............................            -         151.13         1.89        6.78
Phase IV.............................            -              -       137.69       47.73
                                            ------         ------       ------       -----
Total                                       269.92         174.07       167.85       72.66
                                            ======         ======       ======       =====
</TABLE>


Under US GAAP, we recognize revenue from the sale of homes on a percentage of
completion basis. The tables below, however, provide information based upon the
purchase price of units for which a sales purchase agreement has been executed,
plus the amount of deposits, or booking fees received by us for units which have
not been purchased.

a)   Total revenue:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
                   AS OF MARCH 31, 2001           AS OF MARCH 31, 2002
--------------------------------------------------------------------------
                 NUMBER OF    TOTAL SALES      NUMBER OF     TOTAL SALES
                   UNITS         VALUE           UNITS           VALUE
--------------------------------------------------------------------------
                               HK$ '000                       HK$ '000
--------------------------------------------------------------------------
<S>              <C>          <C>              <C>           <C>
Purchased          1,913        676,465          2,073        767,660
--------------------------------------------------------------------------
Booked                90         37,309             13          6,269
--------------------------------------------------------------------------
Total              2,003        713,774          2,086        773,929
--------------------------------------------------------------------------
</TABLE>

b)   During the fiscal years ended March 31, 2001 and March 31, 2002, we
     received a total of HK$1.69 million and HK$0.11 million in booking fees,
     respectively and HK$0.47 million and HK$0.08 million booking fees were owed
     to us by home buyers, respectively. As of March 31, 2001 and March 31,
     2002, the average unit booking fee taken by us was HK$18,400 and HK$8,310,
     respectively. As of March 31, 2001 and March 31, 2002, the average unit
     price was HK$406,400 and HK$478,065 for homes sold, respectively. Average
     unit price is comprised of a HK$18,400 booking fee and HK$388,000 balance
     of the home price for the year ended March 31, 2001 and a HK$8,310 booking
     fee and HK$469,755 balance of the home price for the year ended March 31,
     2002.

-    Booking fees are the refundable deposits from potential homes buyers which
     reserve a person's right to purchase a home at a later date until we have
     started construction and secured the requisite pre-sales

                                       4
<PAGE>

     permits from the relevant land administration bureau but before the sale
     purchase agreement is signed. The term "sold" refers to the signing of a
     sales and purchase agreement.

c)   When a home buyer has paid 20% of the total purchase price (inclusive of
     the booking fee), the home buyer is eligible to execute a pre-sales
     agreement. When signing a pre-sales agreement, a home buyer must specify
     the method of paying the remaining 80%, which generally can be made through
     one or more of the following options: 1) Mortgage; 2) Public housing fund;
     3) A mixture of mortgage and public housing fund; or 4) Installment.

For settlement methods one, two, or three, the balance of the purchase price is
required to be paid within two months from the date of signing the pre-sales
agreement. If a home buyer elects to pay the balance of the purchase price in
installments, 90% of the purchase price is required to be paid within two months
from the date of signing the pre-sales agreement and the remaining 10% is
required to be paid on delivery of the home unit.

Regardless of the method of settlement selected, at least 90% of the total
purchase consideration is required to be settled within 2 months from the date
of signing the pre-sales agreements. It is at the date of signing the pre-sales
agreement that a home unit is considered to be "purchased" by a home buyer
because a condition of sales under the percentage of completion method is
established. Revenue will therefore be recognized in accordance with the
percentage of completion method of accounting.

For the year ended March 31, 2001, the following table sets forth information as
to the timing of payment of the purchase price balance by home buyers who paid a
booking fee:

A -- represents: the home buyers who made the timely payment of at least 90%
     of the purchase price, i.e. within 2 months from the date of signing the
     pre-sales agreement.

B -- represents: the home buyers who were late in paying 90% of the purchase
     price, but paid the 90% of the purchase price as at March 31, 2001.

C -- represents: the home buyers who are currently late in their payment of
     90% of the purchase price, but have paid a portion of the amount due, the
     booking fee excepted.

D -- represents: the home buyers whose purchase price balance is not
     currently due.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                  Phase I                    Phase II                 Phase IIA
           -------------------------------------------------------------------------
           No. of       Percent      No. of       Percent      No. of      Percent
Category    Units                     Units                     Units
------------------------------------------------------------------------------------
<S>        <C>          <C>          <C>          <C>          <C>         <C>
A             78         21.25%        205         27.37%        18         43.90%
------------------------------------------------------------------------------------
B            289         78.75%        540         72.10%        10         24.39%
------------------------------------------------------------------------------------
C              0          0.00%          4          0.53%         5         12.20%
------------------------------------------------------------------------------------
D              0          0.00%          0          0.00%         8         19.51%
------------------------------------------------------------------------------------
Total        367        100.00%        749        100.00%        41        100.00%
------------------------------------------------------------------------------------
</TABLE>

                                       5

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                       Phase III                  Phase IV             Total of all Phases
                    ----------------------------------------------------------------------
                    No. of     Percent       No. of      Percent       No. of      Percent
Category             Units                    Units                    Units
------------------------------------------------------------------------------------------
<S>                 <C>        <C>           <C>         <C>           <C>         <C>
A                     158       40.20%          238       65.57%          697       36.43%
------------------------------------------------------------------------------------------
B                     223       56.74%           79       21.76%        1,141       59.65%
------------------------------------------------------------------------------------------
C                      10        2.55%            8        2.20%           27        1.41%
------------------------------------------------------------------------------------------
D                       2        0.51%           38       10.47%           48        2.51%
------------------------------------------------------------------------------------------
Total                 393      100.00%          363      100.00%        1,913      100.00%
------------------------------------------------------------------------------------------
</TABLE>

For the year ended March 31, 2002, the following table sets forth information as
to the timing of payment of the purchase price balance by home buyers who paid a
booking fee:

E -- represents: the home buyers who made the timely payment of 90% of the
     purchase price, i.e. within 2 months from the date of signing the pre-sales
     agreement.

F -- represents: the home buyers who were late in paying 90% of the purchase
     price, but paid the 90% of the purchase price as at March 31, 2002.

G -- represents: the home buyers who are currently late in their payment of
     90% of the purchase price, but have paid a portion of the amount due, the
     booking fee excepted.

H -- represents: the home buyers whose purchase price balance is not
     currently due.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                       Phase I                  Phase II                 Phase IIA
                    ----------------------------------------------------------------------
                    No. of     Percent        No. of     Percent         No. of    Percent
Category             Units                     Units                     Units
------------------------------------------------------------------------------------------
<S>                 <C>        <C>            <C>        <C>             <C>       <C>
E                      46       12.47%          136       18.16%           26       37.68%
------------------------------------------------------------------------------------------
F                     322       87.26%          612       81.71%           38       55.07%
------------------------------------------------------------------------------------------
G                                0.00%            1        0.13%            2        2.90%
------------------------------------------------------------------------------------------
H                       1        0.27%            -        0.00%            3        4.35%
------------------------------------------------------------------------------------------
Total                 369      100.00%          749      100.00%           69      100.00%
------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                       Phase III                   Phase IV            Total of all Phases
                    ----------------------------------------------------------------------
                    No. of     Percent        No. of     Percent      No. of       Percent
Category             Units                    Units                   Units
------------------------------------------------------------------------------------------
<S>                 <C>        <C>            <C>        <C>          <C>          <C>
E                      76       18.58%          222       46.54%          506       24.41%
------------------------------------------------------------------------------------------
F                     320       78.24%          224       46.96%        1,516       73.13%
------------------------------------------------------------------------------------------
G                       7        1.71%           15        3.14%           25        1.21%
------------------------------------------------------------------------------------------
H                       6        1.47%           16        3.35%           26        1.25%
------------------------------------------------------------------------------------------
Total                 409      100.00%          477      100.00%        2,073      100.00%
------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

Delays may be caused for the following reasons:

     1.   mortgages are new financial products in China and the bankers
          providing such facilities to new home buyers are unfamiliar with the
          procedure;

     2.   delay by Chinese government (or other relevant authorities) in issuing
          certain documents, such as final grant documents for sold homes, which
          in turn delays the disbursement of loan proceeds to our Company; and

     3.   home buyers' personal reasons.

d)   Status of payment for homes purchased; total sales value is based on the
     full purchase price of the home purchased:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                           Number of       Total Sales           Amount              Amount
AS OF MARCH 31, 2001        Units            Value             Received              Owing
-------------------------------------------------------------------------------------------
                                            HK$'000             HK$'000             HK$'000
-------------------------------------------------------------------------------------------
<S>                        <C>             <C>                 <C>                  <C>
Phase I                       367           108,808             108,891                 -83
-------------------------------------------------------------------------------------------
Phase II                      749           255,109             254,050               1,059
-------------------------------------------------------------------------------------------
Phase IIA                      41            25,041              19,173               5,867
-------------------------------------------------------------------------------------------
Phase III                     393           149,827             147,066               2,761
-------------------------------------------------------------------------------------------
Phase IV                      363           137,680             123,866              13,814
-------------------------------------------------------------------------------------------
Total                       1,913           676,465             653,046              23,418
-------------------------------------------------------------------------------------------
</TABLE>

As at March 31, 2001, Phases I, II, IIA, III and IV have been constructed and
are currently ready for delivery or have been delivered.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                          Number of       Total Sales          Amount               Amount
AS OF MARCH 31, 2002       Units            Value             Received              Owing
------------------------------------------------------------------------------------------
                                           HK$'000             HK$'000             HK$'000
------------------------------------------------------------------------------------------
<S>                       <C>             <C>                 <C>                  <C>
Phase I                      369           112,329             111,787                 542
------------------------------------------------------------------------------------------
Phase II                     749           260,833             260,451                 383
------------------------------------------------------------------------------------------
Phase IIA                     69            43,349              41,402               1,940
------------------------------------------------------------------------------------------
Phase III                    409           160,231             157,412               2,818
------------------------------------------------------------------------------------------
Phase IV                     477           190,919             183,511               7,408
------------------------------------------------------------------------------------------
Total                      2,073           767,660             754,569              13,091
------------------------------------------------------------------------------------------
</TABLE>

As at March 31, 2002, Phases I, II, IIA, III, and IV have been constructed and
are currently ready for delivery or have been delivered.

                                       7
<PAGE>

The following table sets forth a categorical analysis of the status of payment
of homes as at March 31, 2002:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                     Phase I       Phase II     Phase IIA    Phase III      Phase IV       Total
                     ----------------------------------------------------------------------------
Category             HK$'000       HK$'000       HK$'000      HK$'000       HK$'000       HK$'000
-------------------------------------------------------------------------------------------------
<S>                  <C>           <C>          <C>          <C>            <C>           <C>         <C>
E                                                  (423)                        (8)         (431)     (note below)
-------------------------------------------------------------------------------------------------
F                      (97)            0              0           (2)            0           (99)     (note below)
-------------------------------------------------------------------------------------------------
G                        0           383            644        1,184         3,382         5,593
-------------------------------------------------------------------------------------------------
H                      639             0          1,719        1,636         4,034         8,028
-------------------------------------------------------------------------------------------------
Total                  542           383          1,940        2,818         7,408        13,091
-------------------------------------------------------------------------------------------------
</TABLE>

Note: These represent over-payment from customers and should be refunded to
      customers.


e)   The number of homes completed but not sold is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                               Number of Homes     Number of Homes     Number of Homes
AS AT MARCH 31, 2001             Completed              Sold              Not Sold
--------------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>
Phase I                              367                 367                   -
--------------------------------------------------------------------------------------
Phase II                             752                 749                   3
--------------------------------------------------------------------------------------
Phase IIA                             74                  41                  33
--------------------------------------------------------------------------------------
Phase III                            416                 393                  23
--------------------------------------------------------------------------------------
Phase IV                             545                 363                 182
--------------------------------------------------------------------------------------
Total                              2,154               1,913                 241
--------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                               Number of Homes     Number of Homes     Number of Homes
AS AT MARCH 31, 2002              Completed             Sold              Not Sold
--------------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>
Phase I                              375                 369                  6
--------------------------------------------------------------------------------------
Phase II                             752                 749                  3
--------------------------------------------------------------------------------------
Phase IIA                             74                  69                  5
--------------------------------------------------------------------------------------
Phase III                            416                 409                  7
--------------------------------------------------------------------------------------
Phase IV                             545                 477                 68
--------------------------------------------------------------------------------------
Total                              2,162               2,073                 89
--------------------------------------------------------------------------------------
</TABLE>

                                       8
<PAGE>

EXCHANGE RATE INFORMATION

     The following table sets forth the average buying rate for Renminbi and
Hong Kong dollars expressed as per one U.S. dollar for the fiscal years 1998,
1999, 2000, 2001 and 2002.

<TABLE>
<CAPTION>
                  Renminbi       Hong Kong Dollars
Fiscal Year      Average(1)         Average(1)
-----------      ----------      -----------------
<S>              <C>             <C>
1998               8.3105             7.7428
1999               8.2916             7.7479
2000               8.2783             7.7685
2001               8.2783             7.7977
2002               8.2873             7.7977
</TABLE>

(1)  The noon buying rate in New York for cable transfers payable in foreign
     currencies as certified for customs purposes by the Federal Reserve Bank in
     New York. Average rate is determined by averaging the rates on the last
     business day of each month during the relevant period.

     The following table sets forth the high and low exchange rates for Renminbi
and Hong Kong dollars expressed as per one U.S. dollar during the past six
months.

<TABLE>
<CAPTION>
Month Ended                             Renminbi                    Hong Kong Dollars
-----------                      ----------------------          ----------------------
                                  High             Low            High            Low
                                 ------          ------          ------          ------
<S>                              <C>             <C>             <C>             <C>
May 31, 2002                     8.3419          8.1588          7.8080          7.7580
June 30, 2002                    8.3419          8.1759          7.8080          7.7580
July 31, 2002                    8.3262          8.1387          7.8050          7.7600
August 31, 2002                  8.3084          8.1387          7.8050          7.7600
September 30, 2002               8.3080          8.1387          7.8000          7.7600
October 31, 2002                 8.2773          8.2668          7.8024          7.7898
</TABLE>

     On November 25, 2002, the noon buying rate for cable transfers as certified
for customs purposes by the Federal Reserve Bank in New York was one U.S. dollar
equals 7.8000 Hong Kong dollars or 8.2671 Renminbi.


B.   RISK FACTORS

RISKS RELATING TO OUR COMPANY

WE HAVE LIMITED OPERATING HISTORY UPON WHICH YOU MAY EVALUATE US.

     We only commenced operations in 1997. Accordingly, our limited operating
history makes predicting our future operating results, including operating
expenses, difficult. Our revenues may not grow at the rate that we anticipate,
or may not continue at their current levels.

WE HAVE EXPERIENCED LOSSES OF HK$6,715,494 OR US$860,962 AND HK$55,372,126 OR
US$7,098,992 FROM OPERATIONS FOR THE YEARS 2001 AND 2002, RESPECTIVELY, AND IF
WE LOSE THE FUNDING SUPPORT FROM FAR EAST CONSORTIUM, IT IS UNCERTAIN THAT WE
WILL BE ABLE TO CONTINUE AS A GOING CONCERN.

                                       9

<PAGE>
     For the years ended March 31, 2001 and 2002, we have experienced a net loss
of HK$6,715,494, or US$860,962 and HK$55,372,126, or US$7,098,992, respectively,
from operations. In addition, we had net current liabilities outstanding as of
March 31, 2002. Although our major shareholder, Far East Consortium, has agreed
to provide adequate funds to enable us to meet in full our financial obligations
as they fall due for the near future, without the addition of new funding, there
is substantial uncertainty whether we will be able to pay our debts as and when
they fall due and extinguish our liabilities in the normal course of business if
the support from Far East Consortium ends for whatever reason.


TO DATE, ALL OF OUR REVENUES HAVE BEEN DERIVED FROM THE DEVELOPMENT OF
CALIFORNIA GARDENS.

     Shanghai Chingchu, one of our operating subsidiaries, began construction of
our first property development project, California Gardens, in 1997.

     We derived all of our profits and losses for the fiscal years ended March
31, 1998, 1999, 2000, 2001 and 2002 from the sale of units in California
Gardens. Our future results will heavily depend on the development and sale of
units in the additional phases and on our ability to undertake new property
projects, which involves identifying suitable development sites.

     We have encountered local zoning issues where a portion of our real
property earmarked for development may be subject to compulsory acquisition by
the government. Presently, acquisition of additional tracts of land in Shanghai
and other parts of major cities in China have been cost prohibitive due to
recent increases in land cost. Furthermore, we have no land bank for future
development.

     If Shanghai Chingchu is unable to generate satisfactory sales for its
California Garden units or if we cannot acquire additional land for development
or if land we have earmarked for development is compulsorily acquired by the
government, our business growth and prospects will be impaired.


WE ARE NO LONGER DEVELOPING THE MILLENNIUM TOWERS PROJECT, AS DESCRIBED IN OUR
PRIOR FILINGS WITH THE COMMISSION, AND ARE CURRENTLY FOCUSING ONLY ON SHANGHAI.

     In our prospectus dated March 8, 2000 and Annual Report on Form 20-F for
the year ended March 31, 2000, we described our expansion into Beijing, which
was to be a residential and commercial complex to be known as Millennium Towers.
Overall costs related to the Millennium Towers project, however, turned out to
be significantly more than management had originally projected and the project
has therefore been cancelled. Although we continue to seek new property projects
in Shanghai and other parts of China, feasibility of such new projects involves
identifying suitable development sites that can justify substantial property
development costs. Because we have not yet selected another suitable site, we
remain heavily dependent on the development and sales of units in our California
Gardens project.


THE AGREEMENT TO DISPOSE OF CERTAIN PROPERTY INTERESTS RELATED TO THE CALIFORNIA
GARDENS PROJECT TO A RELATED PARTY FOR A PROMISSORY NOTE HAS BEEN TERMINATED.

                                       10
<PAGE>
     On March 30, 2001, the Company entered an agreement with Wonder China
Investments Limited, or Wonder China, a wholly-owned subsidiary of Far East
Consortium International Limited, a Cayman Islands corporation, or Far East
Consortium, the Company's major shareholder, disposing of its 100% interest in
Top Trend Development Limited, a British Virgin Islands corporation, or Top
Trend. Under the terms of this agreement, the Company has agreed to sell to
Wonder China (a) the entire issued share capital of Top Trend and (b) a debt in
the approximate amount of HK$18,414,717 advanced as a shareholder loan by the
Company to Top Trend, in exchange for (y) HK$1,280,000 in cash paid as of March
30, 2001, or the Deposit, and (z) a HK$126,720,000 promissory note, or the
Promissory Note. The HK$126,720,000 Promissory Note was due originally on
September 30, 2001. Due to a change in Chinese law, however, a warranty
contained in the agreement regarding the commercial use of land held indirectly
by Top Trend was not fulfilled and the parties had agreed to extend the due date
of the Promissory Note by six months to March 31, 2002. The parties had also
delayed completion of the transaction until March 31, 2002. On or about March
31, 2002, the warranty was still not fulfilled and the parties had agreed to
extend the due date of the Promissory Note to September 30, 2002 and delayed the
completion of the transaction until September 30, 2002. On or about September
30, 2002, the warranty was still not fulfilled and the parties mutually agreed
to terminate the transaction. As of October 2, 2002, the transaction was
terminated, the Promissory Note was cancelled and the Company is obligated, and
is preparing, to refund to Wonder China the HK$1,280,000 Deposit. The parties
have agreed to waive any and all claims against the other in connection with the
termination of the transaction.


OUR GROWTH HAS BEEN DECLINING AND MAY DECLINE FURTHER

     Our growth has been declining and may decline further in the near future
due to various factors in the China homes market. Some of the factors of the
declining growth include 1) the rezoning of property by the local government
that will likely to have an adverse effect on the popularity and sales of our
homes; 2) increase competition from the existing and new property developers; 3)
the Company's inability to raise sufficient funding for expansion both from the
financial institution and capital market due to the adverse market condition;
and 4) the general economic downturn in the world economy.


WE EXPECT OUR EXPENDITURES TO INCREASE.

     Some of our expenditures are fixed, including salary and office expenses.
If our revenues do not increase, we may not be able to compensate by reducing
expenses in a timely manner. In addition, we plan to significantly increase our
operating expenses to:

     -    develop additional residential communities;
     -    increase our sales and marketing operations; and
     -    purchase land for future development.

     Further, as a publicly-traded company, our expenses for professional
services have increased and we expect they will continue to increase in the
future. If increased revenues do not accompany these expenses, our business,
financial condition, liquidity and operating results will be materially
adversely affected.


WE HAVE EXPERIENCED TURNOVER IN MANAGEMENT AND OUR SUCCESS IS DEPENDENT ON OUR
SENIOR MANAGEMENT TEAM AND KEY EMPLOYEES WHO WE MAY NOT BE ABLE TO RETAIN.

                                       11
<PAGE>
     During fiscal 2001, we have experienced a significant turnover in
management. In January 2002, Ms. Peggy Pui Ki Ng replaced Mr. Ton Voon Lim as
our Chief Executive Officer and continues in her capacity as Senior Vice
President of Marketing and Sales. In December 2001, Mark Kallan resigned as our
Senior Vice President of Investor Relations and his duties were taken over by
Gerald Breslaeur, who is also our Company Secretary. In August 2001, Henry Chen
resigned as Vice President of Advertising and has not been replaced. In December
and September of 2001, Mr. Jay Haft and Mr. Charles Stein, respectively, each
resigned as a directors and they have not been replaced. In September 2002, Mr.
Gao Yang Zhi resigned as Vice-President of Engineering and has not yet been
replaced. In light of these recent changes in management, our future performance
will depend in part on our ability to successfully hire suitable replacements
for key management positions and integrate our key personnel into our management
team and into the Company as an integrated unit.

     Further, if one or more members of our senior management team or key
employees, including Ms. Ng, our Chief Executive Officer and Senior
Vice-President of Marketing and Sale, were unable or are unwilling to continue
in their present positions, our business, financial condition and operating
results could be materially adversely affected. Most members of our senior
management do not have employment agreements.

     We plan to hire additional employees to replace some of the employees who
have resigned to manage the Company, however, competition for personnel,
particularly for employees with management and technical expertise, is intense.
Our business, financial condition, liquidity and operating results may be
materially adversely affected if we cannot hire and retain suitable personnel.


THE INTERESTS OF FAR EAST CONSORTIUM, OUR CONTROLLING SHAREHOLDER, MAY CONFLICT
WITH OUR INTERESTS AND THE INTERESTS OF OUR OTHER SHAREHOLDERS, AND FAR EAST
CONSORTIUM MAY PLACE THEIR INTERESTS BEFORE THE INTERESTS OF OUR OTHER
SHAREHOLDERS.

     Far East Consortium owns approximately 63.88% of our outstanding Common
Shares. Accordingly, they have the power to elect all our directors and to
approve most matters presented to our shareholders for a vote. Far East
Consortium's ownership might discourage someone from making a significant equity
investment in us, even if we need the investment to meet our obligations and to
operate our business.


WE WILL REQUIRE ADDITIONAL CAPITAL RESOURCES TO DEVELOP ADDITIONAL PROJECTS, AND
THESE RESOURCES MAY NOT BE AVAILABLE WHEN NEEDED OR AT ALL.

     We will require additional capital resources to develop additional
residential projects. Prior to our initial public offering in March 2000, we
relied primarily on financing from Far East Consortium. We expected to derive
capital resources from internally generated funds, borrowings and the issuance
of additional equity or debt securities. However, after initially reaching
prices of up to US$11.00 per Common Share in the first half of the year ended
2000, the price of the Company's Common Shares has steadily dropped. In October
of 2002, the price of the Company's Common Shares and Warrants dropped to as low
as US$0.11 and US$0.03, respectively, although as of the end of November, 2002,
they have recovered to US$0.48 and US$0.07 respectively. Under the present
circumstances, it is unlikely that we will be able to obtain additional
financing on satisfactory terms, or at all. If we are unable to obtain
additional financing, we will not be able to develop additional real estate
projects and our business development will be curtailed until such time as
additional funding is obtained.

                                       12
<PAGE>
WE MAY NOT BE ABLE TO SELL OUR HOMES IF INTEREST RATES INCREASE OR OUR
PROSPECTIVE HOME BUYERS ARE NOT ABLE TO OBTAIN MORTGAGE FINANCING.

     Most of our prospective home buyers are expected to finance a substantial
portion of the purchase price of their homes with mortgage loans. Because of the
need for mortgages, demand for homes is likely to be adversely affected by
increases in interest rates or reduced availability of mortgage financing in
China.

WE MAY NOT BE ABLE TO GENERATE ADEQUATE REVENUES IF LOCAL BUSINESS CONDITIONS IN
SHANGHAI CHANGE ADVERSELY. OUR REVENUES MAY BE AFFECTED BY THE FOLLOWING LOCAL
BUSINESS CONDITIONS: UNEMPLOYMENT AND INFLATION RATES, THE EMERGENCE OF NEW
RESIDENTIAL AND COMMERCIAL PROPERTY DEVELOPMENTS, AND ADVERSE CHANGES IN
PROPERTY VALUES AND LOCAL GOVERNMENTAL REGULATIONS. AS A RESULT OF THESE
CONDITIONS, THE TRADING PRICE OF OUR COMMON SHARES MAY ALSO DECLINE IN VALUE.

     All our revenues are currently generated in Shanghai, China. Accordingly,
demand for our homes could decrease resulting in lower revenues if there occurs
an adverse change in Shanghai's local economy and other conditions, such as
rates of unemployment and inflation, emergence of new residential and commercial
property developments, property values generally and changes in local
governmental regulations. We intend to expand into other regions in China, which
we expect will reduce the overall risk of having all of our operations
concentrated in one city. However, new markets in other areas of China may prove
to be less stable than the Shanghai market and may involve delays, problems and
expenses not encountered by us in Shanghai which may adversely affect our
business.


THE MANNER IN WHICH WE RECOGNIZE PROFITS AND EXPENSES FOR ACCOUNTING PURPOSES
MAY NOT BE AN ACCURATE REFLECTION OF OUR SALES LEVELS OR OTHER IMPORTANT EVENTS
AFFECTING THE CONSTRUCTION OF OUR HOMES.

     We use the percentage of completion method to recognize income from the
development and sale of our homes when construction has progressed beyond the
preliminary stage. The amount of income that we recognize from the pre-sale of
our units is based on the proportion of construction costs incurred up to the
accounting date to the estimated total construction costs to completion, but is
limited to the amount of sales proceeds received and receivable. Accordingly,
our reported results from operations are sensitive to the progress of actual
construction of our units and the changes in our estimated total construction
costs. See note 2 of the notes to consolidated financial statements.


OUR PROFITS WHICH MAY BE AVAILABLE FOR DISTRIBUTION MAY BE LIMITED.

     We mainly carry out our property development business through our
subsidiaries and Sino-foreign equity joint ventures established in China.
Profits available for distribution by these companies are determined in
accordance with accounting principles and financial regulations in China, and
profits as so determined differ from profits determined in accordance with US
GAAP in certain significant aspects, which include the use of different bases
for recognition of revenues and expenses. Under relevant Chinese foreign
investment laws and regulations, profits available for distribution are
determined after transfers to statutory reserve funds and the payment of taxes.
Under the Law of the People's Republic of China on Chinese Foreign Equity Joint
Ventures and its implementing rules, the Regulations of the People's Republic of
China Concerning Financial Administration of Foreign Investment Enterprise and
the Accounting System of the People's Republic of China for Foreign Investment
Enterprises, profits

                                       13
<PAGE>
may be distributed as dividends only after the following payments are made: (1)
the enterprise income tax; (2) to cover previous years' losses; (3) payments to
the reserve fund, enterprise development fund, the bonus and welfare fund for
staff and workers (to be determined by the Company's board of directors and, in
the case of California Gardens, the amount paid out for such funds amounts to
approximately 15.5% of the payroll); and (4) compensation, liquidated damages,
late-payment penalties, penalty interest and fines. As of March 31, 2002, we had
profits under China GAAP of RMB 19.10 million, or HK$ 17.96 million or US$ 2.30
million, which were available for distribution to shareholders as dividends.


OUR OPERATIONS ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATIONS IN THE AREAS OF
PLANNING AND ZONING, BUILDING DESIGN AND CONSTRUCTION, HUMAN HEALTH AND THE
ENVIRONMENT. OUR DEVELOPMENT PROJECTS MAY BE DELAYED BY EXTENSIVE GOVERNMENTAL
REGULATIONS.

     We are subject to various laws and regulations concerning planning and
zoning, building design and construction. We may experience delays or other
problems in the issuance of the necessary permits and/or licenses to complete
our projects. We cannot assure you that we will be able to obtain the necessary
licenses or permits in a timely manner. We may also be subject to periodic
delays in our home building projects due to building moratoria in any of the
areas in which we operate or plan to operate.

     We are also subject to a variety of laws and regulations concerning the
protection of health and the environment. The particular environmental laws
which apply to any given home building site vary greatly according to the site's
location, the site's environmental condition, the present and former uses of the
site, as well as adjoining properties. Environmental laws and conditions may
result in delays, may cause us to incur substantial compliance and other costs,
and can prohibit or severely restrict residential or commercial building
activity in environmentally sensitive regions or areas. See Item 4 Acquisitions
of Land Use Rights and Licensing of Foreign Investment in Property Development;
Investment Structure. See also, Item 4 Foreign Exchange Control Implications for
Foreign Investors in China.


WE ARE SUBJECT TO CLAIMS UNDER PERFORMANCE GUARANTEES FOR OUR HOME PURCHASERS.

     Shanghai Chingchu usually arranges bank financing for the purchasers of our
homes in California Gardens and provides guarantees to secure the obligations of
these purchasers to make repayment to the mortgagees of their homes. Under the
terms of the performance guarantees, upon default by the home purchaser of his
obligation to repay the mortgage installments for three consecutive months, the
relevant mortgage bank may require Shanghai Chingchu to pay the outstanding
mortgage principal together with accrued interest of the relevant property,
subject to transferring all its rights and interests in the property to Shanghai
Chingchu. As of March 31, 2002, the Company had a total of HK$ 26.64 million of
outstanding mortgage loans subject to performance guarantees. As of March 31,
2002, we have not been required to make any payment under these performance
guarantees. There is no assurance that the purchasers whose mortgage facilities
are covered by these performance guarantees will comply with all relevant
provisions regarding the repayment of the mortgage loans, and substantial costs
may be incurred by Shanghai Chingchu if these provisions are breached and the
performance guarantees are invoked. The performance guarantees will be released
when the property title deeds are passed to the relevant banks as security for
the mortgage loans.

                                       14
<PAGE>
RISKS RELATING TO OUR INDUSTRY

THE PRIVATE RESIDENTIAL REAL ESTATE MARKET IN CHINA IS IN AN EARLY STAGE OF
DEVELOPMENT. WE MAY NOT BE ABLE TO DEVELOP OUR RESIDENTIAL REAL ESTATE
DEVELOPMENT BUSINESS IF THIS MARKET DOES NOT DEVELOP IN ACCORDANCE WITH OUR
EXPECTATION.

     Private ownership of property in China is still in an early stage of
development. It is therefore difficult for us to predict with certainty the
timing and the level of demand for our properties. The lack of an active
secondary market for residential properties in most regions of China and the
early stage of a market for mortgage financing in China may adversely affect
demand for our projects.


RESIDENTIAL PROPERTY DEVELOPMENT ACTIVITIES INVOLVE SIGNIFICANT RISKS, INCLUDING
MATERIAL PRE-DEVELOPMENT EXPENDITURES, UNFORESEEABLE CONSTRUCTION DELAYS,
LAGGING HOME SALES GROWTH AND THE COSTS ASSOCIATED WITH OBTAINING GOVERNMENT
APPROVALS. WE MAY NOT BE ABLE TO GENERATE ADEQUATE REVENUES TO PROPERLY OPERATE
OUR BUSINESS SHOULD THESE RISKS MATERIALIZE.

     We operate by purchasing land use rights for large tracts of undeveloped
land from municipal and provincial governments of China, which we later develop
into planned communities. Acquiring land use rights and committing the financial
and managerial resources to develop this land involves significant risks. Before
a subdivision generates any revenue, material expenditures are required for
items including acquiring land use rights and constructing subdivision
infrastructure, such as roads and utilities. Property development also involves
the following risks:

     -    construction may not be completed on schedule or within budget due to
          unforeseeable factors such as adverse weather conditions;
     -    government approvals may take more time and resources to obtain than
          expected;
     -    we may experience delays in the process of clearing and resettlement
          of the development site; and
     -    our properties may not achieve anticipated sales.


THE REVENUES FROM, AND MARKET VALUE OF, OUR PROPERTIES MAY BE ADVERSELY AFFECTED
BY MANY FACTORS BEYOND OUR CONTROL. THESE FACTORS INCLUDE ECONOMIC CONDITIONS,
THE REAL ESTATE MARKET GENERALLY, INTEREST AND EXCHANGE RATE FLUCTUATIONS, AND
CHANGES IN GOVERNMENTAL REGULATIONS.

     The revenues from, and market values of, our property development projects
may be affected by a number of factors, including the international, regional
and local economic climate, the local real estate market, the proximity and
quality of management, changes in market rates for comparable sales and rentals
and fluctuation in operating costs.

     Property investment projects may also be affected by factors such as
interest rates and exchange rate fluctuations, changes in government
regulations, availability of financing, changes in tax laws or rates and
environmental policies. In addition, our costs of holding unsold properties may
be significant and may result in losses in a poorly performing project or
market. In the event of significant changes in economic or market conditions, we
may not be able to dispose of certain subdivision inventories on a bulk or other
basis which may result in a loss.

                                       15
<PAGE>
OUR INVESTMENTS IN PROPERTIES MAY BE ILLIQUID.

     Due to the generally illiquid nature of property investment, it may be
difficult for us to convert real estate assets into cash upon short notice. In
addition, if we need to dispose of a property quickly, we may have to accept a
lower price than if we had the ability to hold the property until a more
opportune time. Depending on the prevailing property market conditions, we may
sometimes encounter difficulty in obtaining commercially favorable financing in
lending transactions secured by our properties.


WE MAY ENCOUNTER CONSTRUCTION DELAYS AND COST OVERRUNS.

     Property development projects that we have undertaken and expect to
undertake in the future typically require substantial capital expenditures
during the construction period, and it may take many months or years before the
project can be pre-sold and/or completed to generate positive cash flow. The
duration and the costs involved in completing a development project can be
adversely affected by many factors including shortages of materials, equipment
and labor, natural catastrophe, labor disputes, accidents and other
unforeseeable circumstances. Delays in obtaining the requisite licenses, permits
or approval from governmental agencies or authorities can also increase the
costs, delay or prevent the pre-sale or completion of a project. Construction
delays or failure to complete the construction of a project to its planned
specifications or schedule may result in liabilities, loss of revenues and less
attractive returns.


WE MAY SUFFER CAPITAL INVESTMENT LOSSES AS WELL AS LOST REVENUES IF NATURAL
DISASTERS AND OTHER EVENTS RESULT IN LOSSES IN EXCESS OF OUR INSURANCE PROCEEDS.

     The climate and geology of China present increased risk of natural
disasters as compared to many other regions in the world. Our business may be
adversely affected to the extent that hurricanes, severe storms, earthquakes,
droughts, floods, wildfires or other natural disasters or similar events occur
in an area where our projects are underway. Although we have appropriate public
liability insurance and contractors' comprehensive insurance for our property
projects, certain types of losses, such as losses from natural disasters, are
generally not insured because they are either uninsurable or not cost
justifiable. If an uninsured loss or a loss in excess of our insured limits
occurs, we may suffer losses of capital investment which could adversely affect
future revenue streams while we remain liable for any financial obligations
relating to the relevant project.


THE RESIDENTIAL REAL ESTATE MARKET IN CHINA IS SUBJECT TO INTENSE COMPETITION
FROM OTHER REAL ESTATE DEVELOPERS, INDIVIDUAL SALES IN THE SECONDARY MARKET AND
AVAILABLE RENTAL HOUSING.

     Over the last decade, a large number of property developers have expanded
their operations into China. These include a number of leading Hong Kong and
Asian real estate development and investment groups, many of whom have greater
financial, managerial, marketing and other resources than us. Residential
property developers compete not only for home buyers, but also for desirable
development sites, raw materials and skilled subcontractors. We also compete for
residential sales with individual sales of existing homes in the secondary
market and available rental housing. We also expect that continued economic
development of China will be accompanied by further property development and
expansion. Increasing competition may substantially, adversely affect our
business.

                                       16
<PAGE>
THE LAND APPRECIATION TAX MAY CONSUME BETWEEN 30 AND 60 PERCENT OF OUR PROFITS.

     Income from the transfer of state-owned land use rights, buildings and
their attachments is subject to a land appreciation tax or LAT. LAT is payable
on the balance of proceeds received on the transfer, after deducting various
prescribed items, including sums paid for acquisition of land use rights and the
costs and expenses of the development of the land and construction of buildings.
LAT is charged on gains at progressive rates ranging from 30% to 60%.

     An exemption from payment of LAT may be available if the taxpayer
constructs ordinary standard residential apartments and the appreciation amount
does not exceed 20 percent of the sum of certain deductions as allowed under
Chinese law.

     If we decide to sell any of our property interests in the future, such sale
may be subject to LAT depending on:

     -    the prevailing circumstances at the time of such sale;
     -    the manner of sale;
     -    the provisions of the relevant Chinese regulations which are in force
          at the relevant time; and
     -    the profit margin on the sale of our homes.

     LAT could reduce the attractiveness of investment in property development
projects in China and thereby affect the prospects of the Company's property
business in China. For further information about the LAT, please refer to note 5
of our notes to consolidated financial statements.


RISKS RELATING TO CHINA

THE EFFECT OF THE CONTINUING RAPID EVOLUTION OF CHINA'S POLITICAL AND ECONOMIC
SYSTEMS ON OUR FUTURE IS DIFFICULT TO PREDICT.

     All of our operations are in China. As a result, political and economic
uncertainties may affect our operations and assets. The political and economic
systems of China differ significantly from those of many countries you may be
familiar with, including the United States, countries of the European Union and
Japan. Compared to these countries, China's economic system is generally
characterized by a higher rate of growth, a lower level of development and a
higher level of government involvement and planning.

     Central economic planning is still a major feature of the Chinese economy.
The State Council, with the approval of the National People's Congress, plans
and manages a substantial part of the Chinese economy by means of a series of
five-year economic and social development plans, referred to as Five-Year Plans.
Each Five-Year Plan sets overall targets for development of agriculture,
industry, finance and other aspects of economic and social life. To implement
each Five-Year Plan, the State Development and Planning Commission:

     -    establishes annual production and development targets;
     -    formulates and supervises annual plans to achieve the targets;
     -    allocates resources necessary to achieve the targets; and
     -    approves all major economic projects.

     Economic reform policies are still experimental. Since the founding of the
Peoples' Republic of China, the Chinese Government has owned the majority of all
productive assets. However, since 1978, the government has been pursuing a
course of economic reform. These reforms have emphasized, at different times:

                                       17
<PAGE>
     -    decentralization of decision-making;
     -    separation of regulatory and governmental functions from management
          functions;
     -    utilization of market forces in setting prices for many commodities
          and services;
     -    encouragement of private economic activity and ownership, including
          private home ownership;
     -    encouragement of foreign investment in certain sectors; and
     -    encouragement of exports.

     We cannot assure you that the Chinese government will continue to pursue
its course of reform. The government considers many of these reform measures to
be experimental, and accordingly it may refine, modify, suspend, delay or
reverse any of the measures. Factors that have caused the government to modify
or delay the implementation of certain reform measures include political
changes, and such economic factors as changes in rates of national and regional
economic growth, unemployment and inflation. We cannot assure you that the
government will not adopt changes in policy or regulations that might have an
adverse effect on us, such as changes in the rate or method of taxation,
additional restrictions on currency conversion or remittance, or others. For
further information about the political and regulatory environment to which we
are subject, please refer to the sections entitled National Legislation and
Local Legislation, in Item 4.


WE MAY NOT BE ABLE TO GENERATE ADEQUATE SALES REVENUES IF CERTAIN ECONOMIC
TRENDS IN CHINA'S ECONOMY CONTINUE. THESE TRENDS INCLUDE INCREASED INTEREST
RATES, SLOWER ECONOMIC GROWTH AND DECLINES IN MARKET VALUES OF REAL ESTATE.

     During the 1980s and generally through 1997, the Chinese economy
experienced relatively high rates of growth, which to a certain extent has been
uneven among various geographical regions of China and among various sectors of
the economy. The government responded by implementing measures to restrain the
rate of growth and control inflation, including measures to reduce availability
of credit, giving rise to systemic liquidity constraints. However, since
mid-1997, many Asian countries have experienced significant adverse economic
developments, known as the Asian-financial crisis, including:

     -    substantial deterioration in currency exchange rates between the U.S.
          dollar and certain Asian currencies;
     -    increased domestic interest rates;
     -    reduced economic growth rates;
     -    increased corporate defaults and bankruptcies;
     -    declines in market values of real estate, listed shares and other
          classes of assets;
     -    decreases in levels of direct foreign investment; and
     -    government-imposed austerity measures.

     China has been somewhat less affected by the Asian financial crisis than
other Asian economies, in part because of its relatively lower levels of foreign
currency borrowings and the non-convertibility of its currency, the Renminbi
yuan, for capital account transactions. In an attempt to counteract these
effects and maintain economic growth, the government has taken steps, including
increased spending on infrastructure projects, including housing projects,
intended to increase domestic demand and consumer spending. We cannot assure you
that these steps will be successful in maintaining economic growth in China at
historical rates.

                                       18
<PAGE>
     Further, over the past year global markets have been experiencing a rapid
downturn, especially in relation to the United States' capital markets, which
effect has been worsened by the terrorist attacks in New York, New York on
September 11, 2001. The recent turn of events in the United States has affected
other countries' economies on a global scale, including China, which has a
strong export relationship with the United States. We cannot assure you that the
current economic developments in the United States and other Asian countries
will not continue to have an adverse effect on the economy of China, or that
similar economic developments will not occur in China in the future, which would
have an adverse effect on our business.


CHINA'S LEGAL SYSTEM IS RELATIVELY NEW, AND THE APPLICATION, INTERPRETATION AND
ENFORCEMENT OF LAWS IS DIFFICULT TO PREDICT.

     Commencing in 1978, China began the process of modernizing its legal system
by enacting a comprehensive system of statutory law and regulations. Under the
Chinese legal system, as in civil law jurisdictions, court decisions are based
on statute law. Prior court decisions do not have binding precedential effect in
the Chinese system, as they do in common law systems. As a consequence, it may
be difficult to predict the outcome of a dispute, as a court's application and
interpretation of the law may differ from prior interpretations. In addition,
because of the recent adoption of most laws, the amount of guidance available in
the form of published case law and judicial interpretation of laws is limited.


CHANGES IN LAND USE LAWS BY THE CHINESE GOVERNMENT MAY MAKE THE EXPANSION OF OUR
RESIDENTIAL REAL ESTATE BUSINESS DIFFICULT.

     In the past, local land bureaus had the power to approve land projects
comprising non-farmland of a size of up to 1,333,400 square meters. Pursuant to
the Land Administration Law of China adopted on August 29, 1998 and effective as
of January 1, 1999, China has adopted a policy of limiting the power of local
land bureaus to approve land projects of a size of 700,000 square meters or
below. For projects which comprise non-farmland and which exceed this size,
approval will have to be obtained from China's central government. Such a
measure is expected to have the two-fold effect of creating a barrier against
entry to China's property market by less established developers without an
existing land bank, as well as adversely affecting the ability of established
developers to obtain approvals for the acquisition of large sites to replenish
its land bank for new projects. As this land policy was introduced relatively
recently, it will take some time before its impact on China's property market in
general and on our Company in particular can be evaluated.

     Further, the Chinese government may, under special circumstances, in the
needs of public interest, repossess land or structures on land. In this
situation, the Chinese government will pay compensation taking into account the
remaining term of the land use rights, as well as the development and use of the
land and the structures on the land.


IF THE GOVERNMENT DECIDES TO DEVALUE THE RENMINBI, OUR RESULTS OF OPERATIONS
COULD BE AFFECTED IN WAYS THAT MIGHT BE POSITIVE OR NEGATIVE.

     In 1994, the People's Bank of China, or PBOC, eliminated the prior system
of fixed exchange rates for conversion of Renminbi into other currencies in
favor of a system in which published exchange rates reflect buying and selling
rates within a prescribed range quoted by foreign exchange bank participants in
an interbank market. Since that time, the exchange rates for conversion of the
Renminbi to the U.S. dollar have remained relatively stable, with the Renminbi
appreciating slightly against the dollar. Although authoritative Chinese
government sources

                                       19
<PAGE>
confirm that there is no current intention to devalue the Renminbi, many
independent economists believe that with domestic growth slowing and currency
devaluations by other Asian countries putting pressure on the competitiveness of
Chinese exports, the possibility exists of a future devaluation of the Renminbi.
We have not entered into any agreements or purchased any instruments to hedge
our exchange rate risks, although we may do so in the future.


IF WE FAIL TO OBTAIN AND MAINTAIN FOREIGN EXCHANGE REGISTRATION CERTIFICATES, WE
MAY NOT BE ABLE TO REPATRIATE OUR INCOME.

     We rely on the revenue generated by our joint venture subsidiaries. Under
Chinese law, joint venture companies must complete the procedures for obtaining
their foreign exchange registration certificates and have such certificates
annually examined by the foreign exchange administrative authorities of China,
before principal and interest income in Renminbi generated in China can be
converted into foreign currency and repatriated from the country in foreign
currency. If we are unable to obtain the necessary foreign exchange registration
certificates or fail to have such certificates examined annually for any of our
joint venture companies, we may not be able to repatriate the Renminbi income
earned by these companies in China, which may have an adverse impact on our
business operations and financial position.


RISKS RELATING TO OUR COMMON SHARES AND WARRANTS

THE PRICE OF OUR COMMON SHARES AND WARRANTS IS LIKELY TO BE HIGHLY VOLATILE

     The market price of our Common Shares and Warrants is likely to be, and has
been, highly volatile as the stock market in general, and the market for
start-up companies in particular, has been highly volatile. Investors may not be
able to resell their Common Shares and Warrants following periods of volatility
because of the market's adverse reaction to such volatility. The trading prices
of many start-up companies' stocks have been highly volatile. Within the last 52
weeks, the market prices of these companies' stocks have both reached historical
highs with relative valuations substantially above historical levels, as well as
lows well below such historical high marks. Factors that could cause such
volatility may include, among other things:

     -    actual or anticipated variations in quarterly operating results;
     -    changes in financial estimates by securities analysts;
     -    conditions or trends in China or the residential housing market in
          China;
     -    announcements by us or our competitors of significant acquisitions,
          strategic partnerships or joint ventures;
     -    capital commitments;
     -    additions or departures of key personnel; and
     -    sales of Common Shares or Warrants.

     Many of these factors are beyond our control. These factors may materially
adversely affect the market price of our Common Shares and Warrants, regardless
of our operating performance.

                                       20
<PAGE>
WE MAY HAVE DIFFICULTY IN MEETING MINIMUM FINANCIAL REQUIREMENTS FOR CONTINUED
LISTING ON THE NASDAQ SMALL CAP MARKET.

     Trading of our Common Shares and Warrants on the Nasdaq National Market
commenced on March 10, 2001. Due to a general downturn in markets, we had
difficulty maintaining continued listing standards on the Nasdaq National Market
and therefore moved our Common Shares and Warrants to the Nasdaq Small Cap
Market in August 2001. Since early September 2001 until the date of this Annual
Report, the price of our Common Shares was trading below the US$1.00 minimum bid
price. In response to market conditions caused by the terrorist attack in New
York, New York on September 11, 2001, Nasdaq declared an across-the-board
moratorium on the minimum bid and public float requirements, thereby preventing
delisting from the Nasdaq markets on these bases until January 2, 2002. However,
since January 2, 2002, the price of our Common Shares has declined to well below
the NASDAQ maintenance standard minimum bid price of US$1.00. As of October
2002, the price of our Common Shares and Warrants have dropped to as low as
US$0.11 and US$0.03, respectively, although as of the end of November, 2002,
they have recovered to US$0.48 and US$0.07 respectively. There can be no
assurance that the Common Shares will increase to above the minimum bid price
requirement and if it does not, there can be no assurance that the Common Shares
will not be de-listed from the Nasdaq Small Cap Market in the near future.


THE MARKET PRICE OF OUR COMMON SHARES MAY DECLINE AS A RESULT OF FLUCTUATIONS IN
OUR YEARLY RESULTS. THE FOLLOWING FACTORS MAY AFFECT OUR YEARLY RESULTS: THE
SEASONALITY OF OUR REVENUES, THE GENERAL LEVEL OF MARKET ACCEPTANCE OF OUR
HOMES, INTENSE COMPETITION AND UNCERTAIN GOVERNMENTAL REGULATIONS IN THE AREA OF
REAL ESTATE.

     We expect that our yearly operating results will fluctuate significantly
due to many factors, many of which are beyond our control, including:

     -    the seasonality of our revenues;
     -    the uncertain acceptance of our homes by Chinese buyers;
     -    intense competition; and
     -    uncertainty surrounding the regulation of the housing market.

     Due to the limited history of the residential housing market in China, we
believe that period-to-period comparisons of our operating results are not
meaningful. Additionally, if our operating results in one or more quarters do
not meet the securities analysts' or your expectations, the price of our Common
Shares or Warrants could be materially adversely affected.


IF OUR PRE-INITIAL PUBLIC OFFERING SHAREHOLDERS SELL SHARES ELIGIBLE FOR FUTURE
SALE, THE MARKET PRICE OF OUR COMMON SHARES MAY DECLINE.

     If our pre-initial public offering shareholders sell substantial amounts of
our Common Shares, including shares issued upon the exercise of outstanding
options and warrants, in the public market, then the market price of our Common
Shares could fall. On the date of this Annual Report, all Common Shares,
including the 2,300,000 Common Shares which were sold in the offering, which
number includes the exercise by Barron Chase Securities, Inc., our managing
underwriter, of its over-allotment option, are freely tradable. Our directors
and officers had agreed with our managing underwriter not to sell or otherwise
dispose of any of our securities for a period of 24 months from March 8, 2000,
the effective date of our offering, without its prior written consent. The
restriction of the sale of securities lapsed in March 2002. Sales of substantial
amounts of our Common Shares or Warrants, or the potential for such sales, in
the public market could materially adversely affect the market price of our
Common Shares or Warrants.

                                       21
<PAGE>
OUR BOARD OF DIRECTORS HAS THE AUTHORITY TO ISSUE PREFERRED SHARES HAVING RIGHTS
AND PREFERENCES WHICH ARE MORE FAVORABLE THAN OUR COMMON SHARES.

     Our board of directors has the authority, without further action by our
shareholders, to issue up to 5,000,000 preferred shares in one or more series
and to fix the designations, powers, preferences, privileges, and relative
participating, optional or special rights and the qualifications, limitations or
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption and liquidation preferences, any or all of which may
be greater than the rights associated with our Common Shares. Our board of
directors could quickly issue preferred shares with terms calculated to delay or
prevent a change in control or make removal of management more difficult. In
addition, if the board of directors issues preferred shares, the market price of
our Common Shares may fall and the relative voting and other rights of the
holders of our Common Shares may be adversely affected. For three years after
the effective date of our offering, March 8, 2000, we may not issue preferred
shares without the prior written consent of our managing underwriter, Barron
Chase Securities, Inc. which has gone into bankruptcy recently.


BECAUSE WE ARE A CAYMAN ISLANDS COMPANY, OUR SHAREHOLDERS MAY FACE GREATER
DIFFICULTIES IN PROTECTING THEIR INTERESTS THAN WOULD SHAREHOLDERS OF A COMPANY
INCORPORATED IN THE UNITED STATES.

     Our corporate affairs are governed by our Amended and Re-stated Memorandum
and Articles of Association and by the Companies Law (1998 Revision) of the
Cayman Islands. The rights of our shareholders and the fiduciary
responsibilities of our directors under Cayman Islands law are not as clearly
established as under statutes or judicial precedent in existence in
jurisdictions in the United States. Therefore, our public shareholders may have
more difficulty in protecting their interests in the face of action by the
management, directors or our controlling shareholder than would shareholders of
a corporation incorporated in a jurisdiction in the United States. See Item 10
-- Differences in Corporate Law for a description of the differences between
U.S. and Cayman Islands law with respect to shareholders' rights and the
fiduciary responsibilities of directors. See Enforceability of Civil Liabilities
in Item 10.


YOU MAY EXPERIENCE DIFFICULTIES IN EFFECTING SERVICE OF LEGAL PROCESS AND
ENFORCING JUDGMENTS AGAINST NEW CHINA HOMES AND OUR DIRECTORS.

     We are a Cayman Islands company and substantially all of our assets and our
subsidiaries are located in China. In addition, all of our directors are
non-residents of the United States, and all or a substantial portion of the
assets of such non-residents are located outside the United States. As a result,
it may not be possible to effect service of process within the United States
upon any of our directors; including with respect to matters arising under the
U.S. federal securities laws and applicable state securities laws. Moreover,
there is doubt as to whether the courts of the Cayman Islands or China would
enforce judgments of United States courts against us or our directors predicated
on the civil liability provisions of the securities laws of the United States or
any state thereof or in original actions brought in the Cayman Islands or China,
liabilities against us or such non-residents predicated upon the U.S. federal
securities laws and applicable state securities laws. See Item 10 --
Enforceability of Civil Liabilities and Certain Foreign Issuer Considerations.

                                       22
<PAGE>
DATA ABOUT CHINA AND THE CHINESE HOUSING MARKET INCLUDED IN THIS ANNUAL REPORT
MAY PROVE TO BE INACCURATE.

     Data in this Annual Report relating to China's economy, its seven political
conditions and its property markets in various regions are derived from or based
on various official and unofficial publications. While we have taken reasonable
care to ensure that the facts presented in these statements are accurately
reproduced from such sources, such information has not been independently
verified by us. Such information may not be accurate, complete or up-to-date.
The statistical statements in this Annual Report may be incorrect or inaccurate
and they may not be comparable to the statistics produced for other
jurisdictions.


IF WE ARE UNABLE TO MAINTAIN A CURRENT REGISTRATION STATEMENT FOR COMMON SHARES
UNDERLYING THE WARRANTS OR THE WARRANTS ARE NOT REGISTERED, QUALIFIED OR EXEMPT
FROM REGISTRATION UNDER STATE SECURITIES LAWS, THE WARRANT HOLDERS WILL BE
UNABLE TO EXERCISE THE WARRANTS AND THE WARRANTS MAY BECOME VALUELESS.

     The Warrants are not exercisable unless, at the time of the exercise, we
have a current prospectus covering the Common Shares issuable upon exercise of
the Warrants, and such shares are registered, qualified or deemed to be exempt
under the applicable state securities laws. As of the date of this Annual
Report, management of the Company believed it was not prudent to maintain an
effective registration statement given current market conditions. Should
management ultimately decide not to maintain a current registration statement
because the costs render it uneconomical, or because the value of the Common
Shares underlying the Warrants is less than the exercise price, or any number of
other reasons, the Warrant holders will be unable to exercise the Warrants and
the Warrants may become valueless.

     Although we did not knowingly sell the Warrants to purchasers in
jurisdictions in which the Common Shares are not registered or otherwise
qualified for sale, purchasers who may have bought the Warrants in the
after-market or move to jurisdictions in which the Common Shares underlying the
Warrants are not registered or qualified during the period that the Warrants are
exercisable. In this event, we are unable to issue Common Shares to those
persons desiring to exercise their Warrants, whether in response to a redemption
notice or otherwise, unless and until the Common Shares could be qualified for
sale in the jurisdictions in which such purchasers now reside, or exemptions
exist in such jurisdictions from such qualification. Warrant holders would have
no choice but to attempt to sell the Warrants or allow them to expire
unexercised.


AS A CHINESE-BASED COMPANY, OUR SHAREHOLDERS MAY HAVE GREATER DIFFICULTY IN
OBTAINING INFORMATION ABOUT US ON A TIMELY BASIS THAN WOULD SHAREHOLDERS OF A
U.S.-BASED COMPANY.

     Our operations will continue to be conducted in China and shareholders may
have difficulty in obtaining information about us from sources other than us.
Information available from newspapers, trade journals, or local, regional or
national regulatory agencies such as issuance of construction permits, contract
awards for development projects, etc. will not be readily available to
shareholders. Shareholders will be dependent upon our management for reports of
our progress, development, activities and expenditure of proceeds. The current
Chinese legal system provides that the laws and regulations governing the
issuance of construction permits and construction awards for development
projects are publicly available in China. It is uncertain, however, whether the
public will have the access to obtain copies of construction permits of a
particular developer, or other information relating to contract awards for a
particular project. While it may be possible for an unrelated third party to
instruct a local attorney in

                                       23
<PAGE>
China to obtain copies of the construction permits, it is within the discretion
of the local authorities to disclose such information. With respect to other
information on contract awards, it is unlikely that any other information will
be made available to the public.


ITEM 4. INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

     New China Homes, Ltd., formerly known as China Homes Limited until its name
change in August 1999, was incorporated in the Cayman Islands on January 6, 1999
and operates under the Cayman Islands Companies Law (Revised 2000). Its
principal place of business is 16/F, Far East Consortium Building, 121 Des Voeux
Road, Central, Hong Kong, the People's Republic of China and its telephone
number is (852) 2850-0600. Its registered office is Walker House, Mary Street,
George Town, Grand Cayman, Cayman Islands. Its agent for service of process in
the United States is CT Corporation System, 1633 Broadway, New York, New York
10019.

     On April 2, 1999, we entered into consulting agreements with Messrs. Stein,
Haft and Kallan and Silver Pacific Trading Ltd., or Silver Pacific, all of whom
are now shareholders of the Company. In March 2000, we completed the initial
public offering of our Common Shares and Warrants, or the IPO, and listed each
of those securities on the Nasdaq National Market. Messrs. Stein, Haft and
Kallan, Silver Pacific Trading Ltd. and Far East Consortium, or the Founders,
agreed to established net income thresholds for the first and second years
following our IPO amounting to US$10 million and US$20 million, respectively,
whereby in each of these two years, 25% of the Founders' Common Shares are
subject to redemption and cancellation by the Company in the event the net
income thresholds are not met. For the year ended March 31, 2001, the first year
following the closing date of our IPO, the Company incurred a net loss of HK$
6,715,494, or US$ 860,962, thereby falling under the US$10 million threshold.
Effective April 1, 2001, 2.6 million Common Shares were cancelled. For the year
ended March 31, 2002, the second year following the closing date of our IPO, the
Company incurred a net loss of HK$55,372,126 or US$7,098,992, thereby falling
under the US$20 million threshold. Effective April 1, 2002, an additional 2.6
million Common Shares were cancelled. For further information about the
cancellation of shares, please refer to note 1 of our notes to consolidated
financial statements.

     On December 9, 1999, the Company formed Chingchu (Shanghai) Real Estate
Development Company Limited by contributing certain commercial land interests to
Chingchu (Shanghai) Real Estate Development Company Limited.

     At March 31, 2000, we entered into a co-operative joint venture agreement
with Beijing Jida Real Estate Development Company, or Beijing Jida, and Beijing
Minglihua Property Consultants Co., Ltd., or Beijing Minglihua, and established
Beijing Chingchu to develop and sell Millennium Towers. Due to overall cost
considerations, we have cancelled the Millennium Towers project. Therefore,
during the year ended March 31, 2001, the Company withdrew from its 100%
interest in Beijing Chingchu Zhichun Gardens Property Development Co., Ltd., or
Beijing Chingchu, a Sino-foreign cooperative joint venture organized under the
People's Republic of China. Pursuant to such withdrawal, the Company's original
contribution of capital to Beijing Chingchu has been returned to the Company.

     The Company formed Top Trend on September 22, 2000. On March 12, 2001, the
Company contributed to Top Trend its shares in Chingchu (Shanghai) Real Estate
Development Company Limited, whose major asset is a commercial land interest
that is part of the California Gardens project.

                                       24
<PAGE>
     On March 30, 2001, the Company entered an agreement with Wonder China
Investments Limited, or Wonder China, a wholly-owned subsidiary of Far East
Consortium, the Company's major shareholder, to dispose of its 100% interest in
Top Trend. Under the terms of this agreement, the Company will sell to Wonder
China (a) the entire issued share capital of Top Trend and (b) a debt in the
approximate amount of HK$18,414,717 advanced as a shareholder loan by the
Company to Top Trend, in exchange for (y) HK$1,280,000 in cash, or the Deposit,
paid as of March 30, 2001 and (z) a HK$126,720,000 promissory note, or the
Promissory Note of Wonder China. The HK$126,720,000 Promissory Note was due
originally on September 30, 2001. Due to a change in Chinese law, however, a
warranty contained in the agreement regarding the commercial use of land held
indirectly by Top Trend was not fulfilled and the parties had agreed to extend
the due date of the Promissory Note by six months to March 31, 2002. The parties
had also delayed completion of the transaction until March 31, 2002. On or about
March 31, 2002, the warranty was still not fulfilled and the parties had agreed
to extend the due date of the Promissory Note to September 30, 2002 and delayed
the completion of the transaction until September 30, 2002. On or about
September 30, 2002, the warranty was still not fulfilled and the parties
mutually agreed to terminate the transaction. As of October 2, 2002, the
transaction was terminated, the Promissory Note was cancelled and the Company is
obligated, and is preparing, to refund to Wonder China the HK$1,280,000 Deposit.
The parties have agreed to waive any and all claims against the other in
connection with the termination of the transaction.

     In August 2001, the Company moved its Common Shares and Warrants from the
Nasdaq National Market to the Nasdaq Small Cap Market.


BUSINESS OVERVIEW

     GENERAL

     We own 98.2% of Shanghai Chingchu which is our operating subsidiary. It was
founded in 1997 to become a developer of large, planned residential communities
in China's emerging private home building market.

     We design, develop, construct, market and sell spacious, high-quality,
affordable homes in planned residential communities, which are targeted at
Chinese middle income families. We also design, develop, construct, market and
sell these homes in mixed-use development projects.

     OUR CALIFORNIA GARDENS PROJECT

     In May 1997, Shanghai Chingchu began construction of our first planned
residential community, called California Gardens. California Gardens is located
on a 350-acre site just inside the northwestern corner of the outer ring road
surrounding the city of Shanghai. When completed, our development will feature
the following:

     -    an 8,161 unit residential and commercial development representing a
          total of approximately 10 million square feet.
     -    The residential development will provide an average floor space of GFA
          1,400 square feet per unit and feature front yards convertible to
          carports and a back yards;
     -    Close proximity to one of Shanghai's main motor transportation
          arteries, which is located within eight miles of the city center; and
     -    A wide range of amenities, making California Gardens a full service
          residential community. These amenities include the following:

                                       25
<PAGE>

          -   kindergartens, primary and high schools;
          -   full sports facilities, including swimming pools and a pitch and
              putt golf area;
          -   a meeting and conference facility;
          -   a 24-hour medical clinic;
          -   an on-site motel; and
          -   retail shopping, restaurants and a country club.

     As of March 31, 2002, Shanghai Chingchu had completed the construction of
2,162 homes and sold 2,073 homes. Shanghai Chingchu is developing and marketing
our homes at California Gardens in five phases consisting of a specified number
of homes. Phase I consists of 375 homes. Each home in Phase I has been sold. The
construction of Phase II, consisting of a total of 752 homes which was offered
in two-subdivisions, was completed in June 1999 and we have delivered all homes
in that Phase. Phase IIA consists of 74 semi-detached home units that have been
completed and 69 have been sold and delivered. Construction of Phase III,
consisting of 416 homes was completed at the end of 1999 and we have sold and
delivered 409 homes within that Phase. The first sub-division of Phase IV
consists of 545 homes have been completed and we have sold and delivered 477
homes within that Phase.

     Construction of homes in the second sub-division of Phase IV, which will
consist of 160 homes, commenced in October 2001 and is expected to be completed
by the end of December 2002. Shanghai Chingchu presently has land use rights
only for Phases I, II, IIA, III and three of the sub-divisions of Phase IV. The
remaining homes in California Gardens are in different stages of planning and
pre-development processing. We anticipate that development of Phase IV will be
completed in 2003.


OUR BUSINESS STRATEGY

     Our objective is to complete the development and sale of homes at the
California Gardens project and to develop and market other major development
projects in other principal cities in China. Key elements of our business
strategy include:

     -    Focusing on key urban markets in China for the development of
          residential communities. We believe that the size and growth potential
          of key Chinese commercial centers coupled with the ongoing
          liberalization of the real estate markets offer us considerable growth
          opportunities. We intend to construct additional residential
          communities and mixed-use developments within reasonable commuting
          distance to Shanghai and other key Chinese population centers that
          have:

          -   A population of more than five million where the economic
              development and infrastructure are established;
          -   a significant level of unsatisfied demand for high quality, yet
              affordable homes;
          -   a regulatory environment that encourages the development of our
              residential communities, in terms of enabling us to obtain
              necessary permits and approvals to engage in our business without
              undue difficulty or expense, and encourages individual home
              ownership through the use of subsidies or otherwise; and
          -   available real estate development rights at attractive prices.

     -    Targeting the emerging Chinese middle-income class as home buyers and
          technology companies as commercial tenants. Our target residential
          market is the growing Chinese middle income population.

                                       26
<PAGE>
          China's home builders have traditionally targeted the upper and lower
          income market, and largely ignored the middle-income class. Because of
          banking reforms permitting wider availability of home mortgage loans
          and the positive effects of China's economic reforms, we believe that
          the home building market for the middle-income class represents
          substantial growth opportunities for us. Further, we intend to market
          our commercial properties to the vast growing number of
          high-technology companies entering the Chinese marketplace.

     -    Providing substantial benefits to home buyers. We believe that our
          residential communities provide the following benefits to home buyers:

          -   affordable living space to support large families, which
              frequently include three generations--grandparents, parents and
              children;
          -   amenities within or adjacent to residential communities, which
              may include schools, shopping centers, athletic facilities,
              retail shops, medical facilities, motel and country club
              facilities;
          -   the ability to live in an environment of similar families who
              have also chosen to live in a planned residential community, and
              whose values tend to closely parallel those of the home buyer;
          -   living within close proximity to public transportation to city
              centers; and
          -   quality building management services including security,
              landscape and maintenance.

     -    Continuing our commitment to quality leadership. We seek to construct
          buildings having a high quality of construction and workmanship.
          Because of our emphasis on quality home construction, our California
          Gardens project received the Shanghai Home of the Year Award in 1997.

     -    Entering markets early. We will continue to enter markets early where
          we can acquire land use rights at reasonable prices and develop
          residential communities in key commercial centers. We have
          successfully implemented this strategy in Shanghai, where we are one
          of the first home builders to construct a residential community
          targeted at middle income families. We believe that early entry into
          markets will continue to enable us to establish ourselves in these
          markets before the onset of widespread competition.


SITE SELECTION AND PROJECT APPRAISAL

     We believe that securing a good location is a major factor in the success
of a property development project. We consider the following factors when we
evaluate our property development sites:

     -    size of land;
     -    geographic location;
     -    potential financial return;
     -    potential market demand for the development;
     -    our existing property portfolio and available resources;
     -    land cost, affordability and potential financial return;
     -    overall market situation and opportunities;
     -    access to city centers;
     -    geological conditions;
     -    demolition and resettlement costs; and
     -    infrastructure support.

                                       27
<PAGE>
During the site selection process, we will evaluate and research the political,
economic and social situation of the relevant region, the market demand for and
potential returns from a proposed project and the funding and manpower
requirements. Once we have selected a site, we formulate a comprehensive
development plan.


DEVELOPMENT AND CONSTRUCTION

     We act as the general contractor for the construction of our residential
developments. Our employees monitor the construction of each project,
participate in all material design and building decisions, coordinate the
activities of subcontractors and suppliers, subject their work to quality and
cost controls and monitor compliance with zoning and building codes. The
selection of our subcontractors is conducted through a competitive process, and
several subcontractors are invited to participate. The main criteria for
selecting subcontractors are cost, qualifications, the quality of completed
projects and of work done, if any, on our existing or prior projects. Once the
selection process is completed, we will normally negotiate a fixed price
contract with the contractor which includes terms relating to time for
completion of construction, quality of materials used and warranty periods.

     We do not maintain significant inventories of construction materials except
for work in process, materials for homes under construction and a limited amount
of other construction materials. Generally, the construction materials used in
our operations are readily available from numerous sources.


QUALITY CONTROL

     We place emphasis on the quality of our development projects and implement
quality control procedures at different construction stages to ensure that the
work done by our contractors meets our standards and requirements and those of
the relevant governmental authorities.

     We impose quality control on our home building materials. Our on-site
management team conducts regular quality inspections of the construction work.
When a particular section of construction work is completed, our on-site
management team will inspect the work to ensure that the work is in compliance
with our quality standards and the relevant governmental regulations. We require
our contractors to promptly remedy all defects, and we then make a further
inspection of their work.


PROJECT MANAGEMENT

     Our project management is undertaken by a team of architects, engineers,
project managers and other support staff. The project management team is
responsible for the overall management of all of our development projects. For
each project, there is a team responsible for the day-to-day management. Project
management covers all major stages of a development project, as follows:

     -    FEASIBILITY STUDY. Conducting a detailed geological study and market
          study, formulating a master timetable, and preparing preliminary
          proposals for the type and class of property to be constructed;

     -    DESIGN. Completing a preliminary design layout and obtaining approvals
          from relevant authorities, commencing site preparation, selecting
          construction materials, modifying the design layout, producing a
          construction blue-print and establishing a construction management
          team;

                                       28
<PAGE>
     -    CONSTRUCTION. Obtaining, evaluating and selecting contractor bids,
          finalizing the design layout and construction blue-print, monitoring
          construction progress compared to our timetable and introducing and
          implementing quality and cost control procedures; and

     -    COMPLETION. Establishing a property management team, submitting a
          completion and inspection report to the governmental authorities,
          obtaining required government approvals and settling payments.


OTHER PROJECTS

     Assuming sufficient working capital raised through the public market, bank
financing and/or other means, our future developments will seek to apply the
techniques of the California Gardens community, and we intend to target several
of China's largest cities for development. A listing of those cities follows,
including their approximate city population:

<TABLE>
<CAPTION>
                                 CITY
CITY                          POPULATION
----                          ----------
<S>                           <C>
Chongqing                     15,200,000
Shanghai                      14,500,000
Beijing                       10,700,000
Chengdu                        9,700,000
Tianjin                        8,900,000
Shijiazhuang                   8,600,000
Wuhan                          7,100,000
Qingdao                        6,800,000
Shenyang                       6,700,000
Changchun                      6,700,000
Xian                           6,500,000
Guangzhou                      6,500,000
</TABLE>

     Although we have cancelled the Millennium Tower project for cost reasons we
still believe that Beijing will be the site of one of China's largest middle
income housing booms, as there is presently a significant shortage of affordable
residential housing for this segment of the population. This housing shortfall
is projected to intensify with the continuing shift to privatized housing, and
Beijing already enjoys the lowest vacancy rate for recently built homes.
Additionally, the Beijing city government has set a target of 140 square feet of
living space for each individual, and the present level is approximately 90
square feet. The Beijing government expects the population of Beijing to quickly
rise from its present level to about 15,000,000 people, which will create the
need for more than 500 million square feet of living area, which can represent
more than 500,000 new homes.

     We believe that low interest rates and the availability of bank mortgage
financing will allow small to medium businesses to purchase real estate rather
than lease it. On this basis, we expect that the demand for quality office space
in regions such as Beijing will increase in the near future. However, due to the
present economic downturn, and our inability to raise additional working capital
to fund additional development projects, we have no immediate plans to develop
additional areas in other parts of China.

                                       29
<PAGE>
COMPETITION

     The residential and commercial real estate markets in China are subject to
intense competition. Over the last decade, a large number of property developers
have expanded their operations into China. These include a number of leading
Hong Kong and Asian real estate development and investment groups, many of whom
have greater financial, managerial, marketing and other resources than us.
Residential and commercial property developers compete not only for property
buyers, but also for desirable properties, raw materials and skilled
subcontractors. We also compete for residential sales with individual sales of
existing homes in the secondary market and available rental housing. We also
expect that continued economic development of China will be accompanied by
further property development and expansion. We believe that our principal
competitive strengths are as follows:

     -    the extensive experience and in-depth knowledge of our management team
          in the Chinese and Asian real estate markets;

     -    our emphasis on developing high-quality residential properties for
          middle income families;

     -    our marketing and sales strategies and techniques;

     -    our relationship with Far East Consortium, including the experience
          and relationships developed by our management team in the course of
          developing properties on behalf of Far East Consortium before joining
          New China Homes;

     -    our focus on development projects which are compatible with China's
          policies of encouraging private home ownership and shifting away from
          a system of subsidized housing; and

     -    our close working relationships with local business partners in China.


SALES AND MARKETING

     Our target market for residential customers is Chinese middle income
families in key urban markets who want to become home owners in a planned
community. The principal purchasers of our Shanghai California Gardens project
are from the middle income sector. We classify a typical family income of RMB
4,000-5,000, or HK$ 3,760-4,700 or US$ 483-604, per month as middle income
earners. We believe that families earning this income will be able to purchase
houses costing approximately RMB 400,000-500,000, or HK$ 367,985 - 459.982 or
US$ 47,178 - 58,972, through a down payment of 20% or RMB 80,000-100,000, HK$
73,597 - 91,996 or US$ 9,436-11,794, with the balance financed by a bank
mortgage having a repayment period ranging from 10-20 years, resulting in a
monthly payment of between RMB 2,500 - 4000, or HK$ 2,300 - 3680 or US$ 295-
472.

     For each development project, our sales and marketing division forms a
special team to handle the related sales and marketing activities. Subject to
market conditions and government approval by the relevant land administration
bureau, we seek to pre-sell our development projects at an early stage. We also
arrange with one or more banks to provide mortgage loan facilities to home
purchasers for up to 80% of the home purchase price, substantially all of which
is guaranteed by New China Homes until the homes are delivered to the buyers. In
the case of California Gardens, we establish relationships with banks to provide
mortgage loans to customers prior to the launch of each phase. For Phase I,
mortgages for 375 homes were provided by Construction Bank. For Phase II,
mortgages for 752 homes were provided by the Construction Bank and the
Industrial and Commercial Bank. For

                                       30
<PAGE>
Phases III and IVA, the Bank of Shanghai, the Bank of Communications and
Agricultural Bank have been added as lenders. Our sales and marketing strategy
involves the following key elements:

     -    offering a financing package for home buyers which pre-qualifies home
          buyers for a 80% mortgage with only a small down payment, or booking
          fee, which is typically no more than RMB 20,000, or HK$ 18,400 or US$
          2,359, and the balance of the purchase price paid over a staggered
          period between 15 days to two months;
     -    advertising through various media, including national and regional
          television networks, radio, newspapers, magazines, posters, billboards
          and advertising pamphlets to reach potential purchasers;
     -    generating newspaper publicity and television coverage providing wide
          visibility;
     -    using sales literature and brochures which describe our projects and
          our company; and
     -    operating sales centers in high-traffic downtown areas and on-site,
          with billboard advertising visible to large numbers of city residents.

     We have established a high level of visibility in Shanghai for our
California Gardens project, and our development has received a substantial
amount of local media coverage. We also believe that local awareness of our
project has been facilitated through word of mouth. Sales of our homes are
normally made at our sales centers situated either in the city center or at our
development site. Our sales and marketing staff consists of 13 people.

     We have established a policy of contributing 0.35% of all sales revenues to
a sales commission fund, which is distributed among our sales staff.


PRE-SALE OF OUR HOMES

     We normally seek to pre-sell homes in the several phases in our development
as early as possible, subject to market conditions and regulatory constraints.
Pre-sales occur when units of a project are sold while the project is still
under construction. Under Chinese law, pre-sale is only permitted if a pre-sale
permit has been granted by the relevant land administration bureau to the
project which is still under construction. Pre-selling allows us to begin
marketing our development before we would otherwise be able to do so, and
shorten the time during which we have market exposure for the construction and
other expenses of our developments. Pre-sales also allow us to improve our
working capital management by accelerating our cash inflow and to minimize
market risks associated with our development projects.

     In a pre-sale, the first step is that the home buyer pays an initial
booking fee. The home buyer then pays 20% of the purchase price less the booking
fee upon the execution of a sales and purchase agreement. The remaining 80% must
be paid within 60 days although, in most instances, it is paid by the bank
providing the mortgage financing upon execution of the sales and purchase
agreement.


FINANCING FOR OUR HOME PURCHASERS

     As part of our pre-sale activities, we may arrange for commercial banks to
provide purchaser financing in the sale of our developments. Unlike mortgage
financing in the United States, banks will typically look to the developer and
the planned development to determine whether to make a commitment to provide
purchaser mortgages. However, the banks retain the right to approve or reject
mortgages on an individual basis based upon the perceived credit-worthiness of
the home purchaser and other factors that it considers appropriate. We guarantee
a customer's mortgage until the property title deeds are passed to banks as
security for the respective mortgage loans. In average, the guarantee period is
three months for each mortgage loan. As of March 31, 2002, the outstanding

                                       31
<PAGE>
amount of unpaid mortgage loans made to purchasers of homes in our California
Gardens project was approximately HK$26.64 million, or US$3.43 million or
RMB28.34 million. There have been no payment defaults on any of these mortgage
loans. Approximately 80% of our home buyers obtain financing at an average
amount of HK$209,094, or US$26,903 or RMB 222,440.


MORTGAGES

     The grant of mortgages in China is governed by the Security Law of China
and by the laws regulating real estate. Under the Security Law, any mortgage
agreement or security agreement must include various specified provisions. If
land use rights are mortgaged, the structures and other fixtures erected on the
mortgaged land at the time the mortgage agreement is signed will also be subject
to the mortgage. If buildings are built on the mortgaged land after the mortgage
agreement has been signed, the buildings will not be subject to the pre-existing
mortgage. When structures and other fixtures on the land are mortgaged, the land
use right relevant to such structures and other fixtures shall also be
mortgaged.

     For the assignment of real property for which the land use right was
obtained by allocation, the application for the assignment shall be submitted to
and approved by the relevant authority. Upon such approval of the assignment,
the assignee shall go through the procedures for the grant of a land use right
and pay the grant fee according to the laws of the People's Republic of China.
In a few rare cases, this procedure may be avoided provided that the parties
seek approval of the relevant authorities; however, gain from the land use right
must still be paid accordingly.

     Where a real property mortgage is created over an allocated land use right
and such real property is subsequently lawfully auctioned off, the mortgagee may
enjoy priority in receiving compensation only after an amount equivalent to the
land use right grant fee has been paid in full from the proceedings of such
auction.

     The validity of a mortgage depends on, among other things, the validity of
the main contract, and whether the mortgagor has the certificates of property
ownership and/or certificates of land use rights obtained by allocation or
assignment for value. Registration with appropriate authorities is also
necessary to make a mortgage effective. If a loan is not duly repaid, the
mortgagee may foreclose or sell the collateral by auction where the mortgagor
and mortgagee have reached an agreement in this respect. In the absence of such
an agreement, the mortgagee will have to bring an action before a competent
court in China in order to enforce its rights under the mortgage agreement.

     Further, the Chinese government may, under special circumstances, in the
needs of public interest, repossess land or structures on land. In this
situation, the Chinese government will pay compensation taking into account the
remaining term of the land use rights, as well as the development and use of the
land and the structures on the land.


PROJECT FINANCE

     We have financed the development of our California Gardens project to date
through loans provided by Far East Consortium which were converted to Common
Shares in April 1999. We have also financed our development projects with
proceeds from our initial public offering, bank borrowings, proceeds from the
pre-sale of portions of our development projects, credits provided by our
contractors and through our internally generated funds. Because each

                                       32
<PAGE>
development project will require a substantial amount of capital to finance its
construction cost, it is our policy to control the timing of the launch of each
of our development projects and the phases of these projects.


PROPERTY MANAGEMENT SERVICE FEES

     One of our operating subsidiaries provides property management services to
each homeowner of California Gardens for a monthly general maintenance fee which
is currently US$24 per unit. These services include garbage collection,
security, maintenance services, bus transportation to and from local, mass
transit locations and landscaping. These property management costs will likely
increase over time. Should the costs increase, we will be required to obtain
approval from the proper authority prior to instituting any increase in the
monthly general maintenance fee. Our operating subsidiary also provides general
property maintenance services.

     The aforementioned US$ 24 monthly general maintenance service fee, however,
does not cover the costs of major repairs, which may include significant work
required to fix or replace the roof or facade. Residents of California Gardens
must contribute RMB 3,600 to a sinking fund prior to moving in. The sinking fund
covers maintenance of the roof and outside wall as well as all other major
repairs that may be required within the development. The California Gardens
resident's association can seek further payment from unit owners if the cost of
any major repair exceeds the amount in the sinking fund. We are not responsible,
however, once a standard one-year warranty has expired. Relatively minor repairs
will be paid by unit owners on a job-to-job basis after the standard one-year
warranty has expired. The sinking fund was kept by the PRC local government.


FUTURE PLANS AND PROSPECTS

     Our long-term business objective is to become a developer of large, planned
residential communities and mixed-use projects at prime locations within major
cities in China. Our management have devoted significant efforts to identifying
and securing further suitable locations for future expansion. However, the
Millennium Towers project has been cancelled and we have not immediate plans to
develop any property in other parts of China, other than the continued
development of California Gardens. We believe that, with continued economic
growth and the improvement in living standards in China, there will be sustained
demand for quality and well-managed residential and mixed-use developments which
have well-equipped ancillary facilities.


REVENUES:

     Under US GAAP, we recognize revenue from the sale of homes on a percentage
of completion basis. The Company's revenues for the fiscal years ended March 31,
2000, 2001 and 2002, all of which was derived in the People's Republic of China
from our California Gardens project, is as follows:

<TABLE>
<CAPTION>
                                                         Fiscal year ended March 31,
                                                       ------------------------------
                                                        2000         2001        2002
                                                        ----         ----        ----
                                                        HK$m         HK$m        HK$m
<S>                                                    <C>          <C>         <C>
Phase I ............................................     0.23         1.14       1.10
Phase II ...........................................    22.71         2.09       0.17
Phase IIA ..........................................        -        25.04      16.91
Phase III ..........................................   151.13         1.89       6.78
Phase IV ...........................................        -       137.69      47.73
                                                       ------       ------      -----
Total                                                  174.07       167.85      72.66
                                                       ======       ======      =====
</TABLE>

                                       33
<PAGE>
SEASONALITY

     The revenues we recognize may fluctuate on a seasonal basis. Because we
recognize revenues utilizing the percentage of completion method, construction
schedules play a critical role. As a result, we may not recognize significant
revenues during the winter months because of poor weather conditions hindering
our construction schedule.


RECENT TRENDS

     As at March 31, 2002, we had contracted for the expenditure of
approximately HK$87.72 million in respect of land and lots under development
relating to California Gardens. We expect to expend this amount within the next
two years. We have also authorized but not yet contracted for additional
expenditures on California Gardens of approximately HK$216.58 million.


OVERVIEW OF THE LEGAL FRAMEWORK REGULATING CHINA'S REAL ESTATE MARKET

GENERAL

     Private land ownership in China was abolished in the 1950s and was replaced
by a centrally planned and managed land resources allocation system, which
legally prohibited the transfer or lease of land in China. With China's economy
moving towards a more liberalized market-oriented system, reforms have been
introduced in its property sector. Under land reform legislation, while the
transfer of land ownership is still restricted, land use rights may be granted,
transferred, leased or mortgaged in accordance with stipulated legal procedures
and requirements.


NATIONAL LEGISLATION

     GENERAL

     In 1988, the Seventh National People's Congress passed an amendment to the
constitution of China which paved the way for reforms of the legal regime
governing the use of land and transfer of land use rights. In 1990, the State
Council enacted the Provisional Regulations of China Concerning the Grant and
Assignment of the Right to Use State Land in Urban Areas, which are generally
referred to as the Urban Land Regulations. The Urban Land Regulations formalized
the process of the grant and transfer of land use rights for consideration.
Under this system, the State retains the ultimate ownership of the land.
However, the right to use the land can be granted by the State and local
governments in its capacity as land owner for a maximum period of 70 years for
residential development, upon the payment to the State of a land premium for the
grant of the land use right. As a result of these reforms, local and foreign
companies, enterprises, other economic organizations and individuals may apply
for and be granted land use rights. The Urban Land Regulations provide that the
right to use land may be granted by agreement with the land grant authority, by
invitation for bids or by auction and that a land grant contract should be
entered into upon the grant of a land use right. Subject to compliance with the
terms of a land grant contract, a

                                       34
<PAGE>
holder of land use rights may exercise substantially the same rights as a land
owner during the grant term, including holding, leasing, transferring,
mortgaging and developing the land for sale. Upon expiration of the term of
grant, renewal is possible subject to the payment of a new land premium and
execution of a new land grant contract. If the term of grant is not renewed, the
land use rights and the ownership of any homes or buildings on the land will
become the property of the government without compensation.

     RECENT DEVELOPMENTS

     Upon becoming the Premier of China in March 1998, Zhu Rongji renewed
efforts for structural economic reform by announcing, among other initiatives, a
new housing reform program. The program directs employers to stop distributing
free housing to employees beginning July 1, 1998, which was deferred until
January 1999, and instead to increase cash wages so that employees can buy
housing or pay higher rents. According to a bulletin distributed by the U.S.
Department of State in April 1999, the principal policies of this new housing
initiative are as follows:

-    ESTABLISHING A NEW URBAN HOUSING SYSTEM ADAPTED TO THE SOCIALIST MARKET
     ECONOMIC SYSTEM AND THE SPECIFIC NATIONAL SITUATION OF CHINA. The principal
     element of this policy involves the termination of employee housing
     benefits and an increase in cash wages to encourage home ownership.
     Historically, employees of the government and State-owned enterprises
     received a small salary and a generous benefits package, including low rent
     or free housing. Under the new policy, wages are expected to increase and a
     cash housing allowance will be provided or a provident fund will be
     established for employees. Employees are able to use the cash allowance to
     pay rent or make mortgage payments. The fund would serve primarily to
     assist individuals in securing loans to purchase homes.

-    CREATING A MULTI-LEVEL HOUSING SUPPLY SYSTEM. A multi-level housing supply
     system has been introduced to accommodate the needs of families of
     different income levels. This system is designed to gradually abolish
     subsidized, or welfare housing, establish settlement and low margin housing
     for low income families and define commercial housing for middle and high
     income families.

-    EXPANDING THE SCOPE OF HOME FINANCING. Under the new policy, commercial
     banks in all cities can issue individual mortgage loans for the purchase of
     government-directed and sanctioned housing. The People's Bank of China has
     reduced its interest rates, and a number of foreign banks have obtained the
     necessary licenses to conduct retail banking operations in China. We expect
     this to result in a more competitive mortgage market which will benefit new
     home buyers. In order to ensure the effectiveness of housing loans, efforts
     will be made to improve the housing property rights mortgage registration
     system. In June 1998, the government announced a Personal Housing Loan
     Management Regulation, which addressed different aspects of personal
     housing loans.

-    IMPROVING THE REGULATION OF THE HOUSING MARKET. New regulations are being
     developed to insure the stability and safety of China's housing reforms and
     programs.


LOCAL LEGISLATION

     While the Urban Land Regulations set out a general framework for
transactions governing land use rights, regulations adopted by local governments
control specific transactions within their respective jurisdictions. Local
regulations contain provisions and have implemented procedures which differ from
the national legislation. National

                                       35
<PAGE>
land authorities, however, take the position that any inconsistencies should be
resolved in favor of the national legislation.


U.S.-CHINA HOUSING INITIATIVE

     On July 1, 1998 the day China's housing reform program was implemented,
Former President Clinton visited a housing site in Shanghai to demonstrate U.S.
support for China's home ownership program. The President announced the
establishment of a U.S.- China housing initiative at that time, including the
formation of a U.S.- China Residential Building Council of which we have been
invited to be a member.

     The housing initiative will address finance and construction issues and is
intended to support China's social reform efforts by providing sector-specific
guidance and cooperation to China as it pursues housing reform measures.


ACQUISITION OF LAND USE RIGHTS

     GRANT

     The grant of land use rights from the State is often referred to as the
first tier market by Chinese developers. Under the law of the People's Republic
of China on the Administration of Urban Real Estate, or the Urban Real Estate
Law, land use rights may be granted by way of auction, invitation of tenders or
by agreement between the State and the land user. It requires that the prices of
land granted by way of agreement must not be below the minimum land premium set
by the State. Beijing, Guangzhou and Shanghai have already issued formulae for
calculating land premium, with reference to location, transportation and
infrastructure. These formulae are expected to be reviewed periodically in order
to reflect the market supply and demand. Local governments at or above the
county level may grant land use rights. Their scope of authority varies in
accordance with their position in the administrative hierarchy. Central
government approval must be obtained for any grant of any arable land which is
designated as basic cropland by the State, other arable land over 35 acres and
non-arable land over 70 acres.

     In the case of a grant by agreement, the local land bureau will provide
information on the land and the basic terms upon which land use rights will be
granted. Once the terms have been agreed on, a grant contract will be signed by
the local land bureau and the land user. Normally, land use rules will be
attached to the grant contract. A deposit is normally required to be paid and a
time schedule will be specified for the payment of the balance of the land
premium. Upon payment of the land premium and subject to the other requirements
of the local land bureau, a State Land Use Rights Certificate will be issued to
the land user. On July 1, 2001, the amended Shanghai's Land Use Right Grant
Measures took effect in Shanghai. According to the Measures, a grant by
agreement will not be permitted unless specifically approved by the Shanghai
People's Government under special circumstances.

     A land bureau setting out the terms of the grant can also send invitation
of tenders, and bidders are asked to submit sealed bids together with the
payment of a security deposit. A bid evaluation committee formed by the land
bureau is responsible for opening the bids and deciding on the successful bidder
who shall then sign the grant contract with the land bureau and pay the balance
of the land premium before obtaining the State Land Use Rights Certificate and
effecting registration.

                                       36
<PAGE>
     In an auction, the grant is awarded to the highest bidder. The land bureau
will then sign a grant contract and the usual registration requirements have to
be complied with.

     Several local governments have stipulated standard terms for inclusion in
grant contracts. For example, the standard form grant contracts promulgated by
the State Land Bureau list the following items for inclusion in grant contracts:

     -    manner of payment of land premium;

     -    use of land;

     -    building restrictions: site coverage, total gross floor area and
          height limitations;

     -    construction of public facilities;

     -    easement and repair rights to be reserved by the government;

     -    submission of building plans and approval;

     -    deadline for completion of construction;

     -    repair obligations;

     -    responsibility for obtaining supply of utilities; and

     -    restrictions against alienation before payment of land premium and
          completion of prescribed development.

     If a land user wishes to change the specified use of the land after the
execution of a grant contract, then approval must first be obtained from the
land bureau and the urban planning department and a new grant contract may have
to be signed where the land premium will be adjusted.

     If the land user fails to develop and invest in the land within the period
of time specified in the grant contract, the land bureau has the right to impose
various penalties ranging from fines to withdrawal of the grant without
consideration.


     ASSIGNMENT FROM CURRENT LAND USERS

     In addition to a direct grant from the government, an investor may also
acquire land use rights by entering into an assignment contract with an existing
land user who holds granted land use rights or by entering into a joint
development agreement with such a land user. Local Chinese entities very often
enjoy the right to use land allocated by the State without payment of any
consideration. This type of land use right is generally referred to as allocated
land use right. The Urban Land Regulations state that assignment or mortgage of
allocated land use right in urban areas and any buildings or attachments
situated on the land is subject to the approval of the relevant land and real
estate departments. The conditions for approval include the following:

     -    the existing land user must be an individual or a company, enterprise
          or other economic organization;

                                       37
<PAGE>

     -    the existing land user must hold a State Land Use Rights Certificate
          and the relevant real estate ownership certificates for the buildings
          and attachments;

     -    a formal grant contract must be entered into with the relevant land
          department; and

     -    the land premium in respect of the land payable and the grant contract
          must be paid (although payment may be made from the proceeds of
          development).

     The assignment or joint development is subject to terms and conditions
specified in the land use rights grant contract. For housing construction
projects, Chinese law requires that at least 25% of total construction costs,
excluding land premium costs, be expended and the construction schedule and date
of completion and delivery of the project have been determined before assignment
can take place. A higher minimum construction and investment fee may be provided
in land use rights grant contracts made between the local land administration
bureau and the land user. All rights and obligations of the current holder under
a land use rights grant contract will be transferred contemporaneously to the
assignee of the land use rights. The relevant local government has the right to
acquire the land use rights to be assigned if the assignment price is obviously
lower than the market price. Relevant local governments may also acquire the
land use rights from a land user in the event of redevelopment of the area under
a revised town planning. The land user will then be compensated for the loss of
his land use rights.


     LEASING

     The Urban Land Regulations and the Urban Real Estate Law both permit
leasing of granted land use rights and the buildings or homes situated on the
land. Leasing of properties situated in urban areas is governed by the Measures
for the Administration of Leasing of Urban Real Estate, which were promulgated
by China's Ministry of Construction in June 1995. These regulations permit
property owners to lease their properties to others for residential or
commercial uses except as otherwise prohibited by relevant laws. Parties to a
property lease transaction are required to enter into a lease contract that
should specify all of the terms of the lease arrangement as required by statute,
and to register the contract with the local real property authorities. Local
governments may impose rent control. Subject to the consent of the landlord, a
tenant may assign or sublease the leased property to a sub-tenant.


REGISTRATION OF REAL ESTATE INTERESTS

     Real estate registries have been established in all cities in China. In
most cities, there are separate registries for land use rights and buildings.
However, in Shenzhen, Shanghai, Guangdong and some other major cities, the two
registries have been combined. In places where there are separate registries,
the holder of a land use right will be issued a Real Estate Ownership
Certificate for its ownership of the property and a Land Use Rights Certificate
for its land use rights of the underlying property. The holder of a land use
right who is issued a Real Estate Ownership Certificate holds the land use
rights and owns the property erected on the land. In the other places where
registries have been combined, the holder of a land use right will be issued
only a Land and Real Estate Certificate. All entities and individuals must
register all their lawful state-owned land use rights and rights to own and use
of collectively-owned land as well as other rights in respect of land. Further,
the mortgage of a land use right must be registered in the land registration
departments. Duly registered land interests which are legally protected
constitute notice to all other persons of the interests of the registrant.

                                       38
<PAGE>

PRE-SALE

     The sale of interests in buildings under construction but which have not
been completed is permitted subject to the fulfillment of the requirements set
forth in the Measures for the Administration of the Pre-Sale of Urban Commodity
Premises, promulgated by China's Ministry of Construction and effective from
January 1, 1995, or the Pre-Sale Measures. In addition, most of the major cities
in China have promulgated local regulations governing pre-sales of commodity
premises. According to the Pre-Sale Measures, a developer must obtain a Pre-Sale
Permit before it may proceed to sell the uncompleted commodity units. To qualify
for the Pre-Sale Permit, the following conditions must be satisfied:

     -    the land premium has been paid in full and a State Land Use Rights
          Certificate has been obtained;

     -    a Construction Works Planning Permit is held;

     -    at least 25% of the total investment for the project development and
          construction of the units under pre-sale must be paid; and

     -    the construction schedule and the date of project completion have been
          determined.

     In addition to the foregoing, local Shanghai law stipulates more stringent
pre-conditions for the pre-sale of commodity premises including (i) for
commodity premises of less than six stories, the ceilings of all stories must be
completed and (ii) for commodity premises of more than six stories, the ceilings
of two-thirds of all stories must be completed.

     Further, the developer is required to execute pre-sale contracts in the
form approved by the local land and real estate administration authorities with
the purchaser, and must also file and register the executed pre-sale contracts
with the local land and real estate administration authorities. The proceeds
from the pre-sale of the commodity units may only be used for funding the
relevant construction works.

     Pre-sales conducted outside China are generally subject to approval by the
local government in which the property is situated.


DESIGN AND CONSTRUCTION

     A Chinese design institute must be engaged for the design of a foreign
investment property project in China to facilitate compliance with local
regulations concerning urban planning, architectural design and fire safety.

     Foreign contractors are generally required to work together with a Chinese
construction unit on construction projects. Foreign contractors are also
required to obtain a qualification certificate to engage in project construction
work.


WARRANTY OF BUILDING CONSTRUCTION

     The owner and builder of any building construction project must specify the
warranty scope, term and responsibilities for the project subject to relevant
national regulations. Normally, the minimum warranty period varies depending on
the area of construction and type of fixtures. For example, for a decoration
project, the warranty period

                                       39
<PAGE>
must be for no less than two years. By way of further example, a roof leakage
warranty period must be for no less than five years.

     If any defect is discovered during the warranty period, the builder must
either repair it or have it repaired at the expense of the party responsible for
the defect. The party responsible for the defect shall also be liable for any
losses and injuries resulting from such defect. New losses and injuries
resulting from any delay of repair shall be the liability of the party causing
such delay.


LICENSING OF FOREIGN INVESTMENT IN PROPERTY DEVELOPMENT; INVESTMENT STRUCTURE

     The Urban Land Regulations state that foreign entities may acquire land use
rights in China unless the law otherwise provides. However, in order to develop
the land acquired, foreign investment enterprises, in the form of equity or
co-operative joint ventures or wholly foreign-owned enterprises, need to be
established. Establishment of a foreign investment enterprise engaged in
property development, commonly referred to as a development company, is subject
to approval by the relevant departments of China's government in accordance with
the following procedure. First, the Chinese party to a joint venture project or
the foreign investor, in the case of a wholly foreign-owned project, will submit
a project proposal to the local planning commission for project proposal
approval. If the local planning commission considers the proposed property
development project to be consistent with the prevailing national and local
economic plans, it will grant a project proposal approval to the applicant. The
State Development and Planning Commission has been given the authority to
regularly promulgate guidelines for direction of foreign investment.

     Once the project proposal has been approved, the Chinese party and the
foreign investor may proceed to prepare a joint feasibility study report that
reflects their assessment of the overall economic viability of the proposed
development company. At the same time, the parties may proceed to negotiate and
execute the joint venture contract and articles of association for the
establishment of a development company. In the case of a wholly foreign-owned
project, the foreign investor may then prepare and sign the articles of
association. The joint feasibility study report, the joint venture contract
and/or articles of association will then be submitted to the local foreign
economic and trade commission for approval. If the local foreign economic and
trade commission finds the application documents to be in compliance with
Chinese law, it will issue an approval certificate for the establishment of the
development company. With this approval certificate, the foreign investor and/or
the Chinese party can apply to the local administration for industry and
commerce for a foreign investment enterprise business license for the
development company.

     Upon the issuance of the business license, the development company is
established as a Chinese legal person and is licensed to engage in property
development activities as described in the business license. Under the
Regulations for the Administration of Real Estate Development Enterprises,
promulgated by China's Ministry of Construction and effective from December 1,
1993, all property development companies, including foreign investment
enterprises, are also required to apply for a property development enterprise
qualification certificate from the local construction commission. The
qualification certificates are classified into grade 1 to grade 5 based upon the
type of business enterprise created. We have been accorded a grade 3 standard by
the local construction commission. Sole ownerships, joint ventures, and
co-operations are generally referred to as grade 3 enterprises. A grade 3
enterprise is not disadvantageous.

     Property development projects in China are generally divided into so-called
single projects and large tract development projects. In single projects,
buildings are constructed on a plot of land and the individual units in the

                                       40
<PAGE>

buildings are sold to purchasers. Large tract development projects involve
comprehensive development and construction after procurement of land use rights:
the land is leveled and facilities for water, electricity and heat supply,
roads, communications, etc. are constructed, thus forming an area for industrial
or other use. Thereafter, the developer either assigns the land use rights or
further develops the land for sale or leasing.


MORTGAGES

     The grant of mortgages in China is governed by certain laws of the People's
Republic of China, as previously discussed in this subsection, Business Overview
- Mortgages, above.


UNIFIED SALES OF COMMODITY HOUSING TO DOMESTIC AND FOREIGN PARTIES

     In some Chinese cities, including Shanghai, there are no longer
distinctions between domestic (PRC) and foreign parties that restrict to whom
housing can be sold and leased. Prior restrictions creating foreign and domestic
distinctions have recently been canceled; housing can now be sold or leased
regardless of whether the housing (and attendant land use rights) was built or
obtained before or after this change in the law. Domestic and foreign
enterprises, organizations and individuals may all purchase or rent such
housing.

     There has also been a unification of domestic and foreign distinctions in
connection with the land premium system, land income and distribution methods,
procedures and model contracts. These cities now call for tender invitation and
auctioning as the methods used for granting land.


FOREIGN EXCHANGE CONTROL IMPLICATIONS FOR FOREIGN INVESTORS IN CHINA

     China's government imposes control over the convertibility of Renminbi into
foreign currencies. Under the current unified floating exchange rate system, the
PBOC publishes a daily exchange rate for Renminbi, or the PBOC Exchange Rate,
based on the previous day's dealings in the inter-bank foreign exchange market.
Financial institutions authorized to deal in foreign currency may enter into
foreign exchange transactions at exchange rates within an authorized range above
or below the PBOC Exchange Rate according to market conditions.

     Pursuant to the Foreign Exchange Control Regulations issued by the State
Council on April 1, 1996 and the Administration of Settlement, Sale and Payment
of Foreign Exchange Regulations which came into effect on July 1, 1996 regarding
foreign exchange control, or the Regulations, conversion of Renminbi into
foreign exchange by foreign investment enterprises for current account items,
including the distribution of dividends and profits to foreign investors of
joint ventures, is permissible. Foreign investment enterprises are permitted to
remit foreign exchange from their foreign exchange bank account in China on the
basis of, inter alia, the terms of the relevant joint venture contracts and the
board resolutions declaring the distribution of the dividend and payment of
profits. Conversion of Renminbi into foreign currencies and remittance of
foreign currencies for capital account items, including direct investment,
loans, security investment, is still subject to the approval of the State
Administration of Foreign Exchange, or SAFE, in each such transaction. On
January 14, 1997, the State Council amended the Foreign Exchange Control
Regulations and added, among other things, an important provision, as Article 5
provides that the State shall not impose restrictions on recurring international
payments and transfers.

     Under the Regulations, foreign investment enterprises are required to open
and maintain separate foreign exchange accounts for different types of foreign
exchange transactions, and the permitted scope of receipts and expenditures for
such accounts is limited to the type of foreign exchange transactions designated
for such accounts.

                                       41
<PAGE>

In addition, foreign investment enterprises may only buy, sell and/or remit
foreign currencies at those banks authorized to conduct foreign exchange
business upon the production of valid commercial documents and, in the case of
capital account item transactions, document approval from the SAFE.

     Currently, foreign investment enterprises are required to apply to SAFE for
foreign exchange registration certificates for foreign investment enterprises.
With such foreign exchange registration certificates, which are granted to
foreign investment enterprises, upon fulfilling specified conditions and which
are subject to review and renewal by SAFE on an annual basis, or with the
foreign exchange sales notices from the SAFE. which are obtained on a
transaction-by-transaction basis, FIEs may enter into foreign exchange
transactions at banks authorized to conduct foreign exchange business to obtain
foreign exchange for their needs.


ORGANIZATIONAL STRUCTURE

     As of March 31, 2002, our major shareholder was Far East Consortium, who
owns 63.88% of our issued and outstanding share capital. The remaining 36.12% of
our Company was held by other shareholders. As of March 31, 2002, the Company
held a 100% interest in Far East Consortium China Investments Limited, a Hong
Kong corporation, or Far East Investments, which holds a 98.2% interest in
Shanghai Chingchu. As of March 31, 2002, the Company held a 100% interest in Top
Trend, which held a 100% interest in Chingchu (Shanghai) Real Estate Company
Limited. The Company entered into an agreement to sell Top Trend, which sale was
to be completed on March 31, 2002. On March 31, 2002, the completion date was
extended to September 30, 2002. However, in September 2002 it was mutually
agreed to terminate the transaction and the transaction was terminated as of
October 2, 2002. See Item 4 - History and Development for more information on
the Company's sale of Top Trend to Wonder China and note 1 to the consolidated
financial statements included elsewhere in this Annual Report.


PROPERTY AND EQUIPMENT

     Our principal executive offices, a 300 square feet office facility, is
currently located at 16/F Far East Consortium Building, 121 Des Voeux Road,
Central, Hong Kong. We are leasing our principal executive offices at an annual
rent of US$ 12,000, or HK$ 93,440. We also lease an office in the United States
which is located at 2255 Glades Road, Suite 112E, Boca Raton, Florida.

     We conduct our operations for the California Gardens project in Shanghai
from a 2,000 square feet leased facility adjacent to the project.


ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our financial condition and results of
operations is based upon and should be read in conjunction with our consolidated
financial statements and their related notes included in this Annual Report on
Form 20-F.

Critical Accounting Policies

The accompanying financial statements have been prepared in conformity with
USGAAP:

                                       42
<PAGE>

Completed homes - Completed homes are held for sale and stated at the lower of
cost or fair value less costs to sell and are reported net of valuation
reserves. If the Company determines that there has been a decline in, or the
Company expects that it will be unable to recover the carrying value of the
completed homes, an impairment charge may need to be recorded, which would have
an adverse effect upon the Company's future operating results.

Income taxes - The charge/credit for income taxes is based on the results for
the year as adjusted for items which are non-assessable or disallowed. Temporary
differences arise from the recognition for tax purposes of certain items of
income and expense in a different accounting period from that in which they are
recognized in the financial statements. The tax effect of temporary differences,
computed under the liability method, is recognized as deferred taxation in the
financial statements. We record a valuation allowance to reduce our deferred tax
assets to the amount that we believe is more likely than not to be realised. In
the event we were to determine that we would be able to realise our deferred tax
assets in the future in excess of their recorded amount, an adjustment to the
deferred tax asset would increase income in the period such determination was
made. Likewise, should we determine that we would not be able to realise all or
part of our net deferred tax asset in the future, an adjustment to the deferred
tax asset would be charged to income in the period such determination was made.

Allowance for warranties - Homes sold are provided with a two-year warranty
against certain building defects as stipulated in China building regulations.
This is covered by a warranty from the contractors who have built the homes. The
Company does not record any warranty costs. A portion of the amounts to be paid
to the contractors is withheld by the Company to cover any potential liability
under this warranty. Historically, excess cash retained by the Company was
adequate to cover the warranty liabilities. If the withheld amount is not
sufficient to cover the liability under this warranty, it can have a significant
impact on our future operating results and financial position.

Recognition of revenue - When homes are sold in advance of completion, profit
recognized is calculated under a percentage of completion method when
construction has progressed beyond the preliminary stage. Each phase is
accounted for on an individual building-by-building basis. The percentage used
is the proportion of construction costs (including land and common cost
allocated) incurred at the balance sheet date to estimated total construction
costs. Revenues recognized on this basis are limited to the amount of sales
proceeds received and receivable. We follow this method since reasonably
dependable estimates of the revenue and costs applicable to various stages of a
construction can be made. Recognised revenues and profits are subject to
revisions as the construction progresses to completion. Revisions in profit
estimates are charged to income in the period in which the facts that give rise
to the revisions become known. Accordingly, changes in our estimates would
impact our future operating results.

Property, equipment and construction-in-progress - Property and equipment are
stated at cost. Depreciation and amortization is provided using the straight
line method based on the estimated useful lives of the property and equipment,
after taking into account their residual value, being 5 to 15 years. No
impairment existed for property and equipment at March 31, 2002 or March 31,
2001. The management will assess the impairment of property and equipment
periodically, further impairment may need to be recognised in the future.

Construction-in-progress represents the common facilities of California Gardens
which are currently under construction. These facilities will be retained by the
Company as fixed assets upon completion of the construction. The cost includes
interest arising from borrowings used to finance these assets during the period
of construction. The Company intends to retain ownership of the common
facilities and either operate them or eventually sell the amenities. This has
yet to be decided. The Company assesses the need, if any, for an impairment
adjustment based on the fair value of the amenities using an undiscounted cash
flow model. Upon completion, the common facilities will be depreciated over a
period of 15 years. During the year ended March 31, 2002, impairment loss
amounting to HK$13,000,000 has been provided for the

                                       43
<PAGE>

construction-in-progress according to the assessment by the management. The
management will assess the impairment of the construction-in-progress
periodically, further impairment may need to be recognised in the future.


RECENTLY ISSUED ACCOUNTING POLICIES NOT YET ADOPTED

In June 2001, Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets" was issued. The provisions of this
statement are required to be applied starting with fiscal years beginning after
December 15, 2001. This statement is required to be applied at the beginning of
an entity's fiscal year and to be applied to all goodwill and other intangible
assets recognized in its financial statements at that date. The statement
requires that goodwill and certain other intangibles with an indefinite life, as
defined in the standard, no longer be amortized. However, goodwill and such
intangibles would have to be assessed each year to determine whether an
impairment loss had occurred. Any impairment recognized upon adoption would be
recorded as a change in accounting principle. Future impairments would be
recorded in income from continuing operations. The statement provides specific
guidance for testing goodwill for impairment. Based upon current information,
management believes there has been no impairment of the carrying amount of
assets of the Company has of the report date, as a result, management expects
there to be no effect on the financial position or results of operation of the
Company.

In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, "Accounting for Asset Retirement Obligations". This statement addresses
the diverse accounting practices for obligations associated with the retirement
of tangible long-lived assets and the associated asset retirement costs. The
Company will be required to adopt this standard on April 1, 2003. Management is
assessing, but has not yet determined, the impact that SFAS No. 143 will have,
if any, on its financial position and results of operations.

The FASB also issued SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", that is applicable to financial statements issued for fiscal
years beginning after December 15, 2001. The FASB's new rules on asset
impairment supersede SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", and portions of APB Opinion
No. 30, "Reporting the Results for Operations". The statement requires a single
accounting model for long-lived assets to be disposed of and significantly
changes the criteria that would have to be met to classify an asset as
held-for-sale. Classification as held-for-sale is an important distinction since
such assets are not depreciated and are stated at the lower of fair value and
carrying amount. The statement also requires expected future operating losses
from discontinued operations to be recorded in the periods in which the losses
are incurred, rather than as of the measurement date as previously required.
Management is assessing, but has not yet determined, the impact that SFAS No.
144 will have, if any, on its financial position and results of operations.


In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements 4, 44 and
64, Amendment to FASB Statement 13, and Technical Corrections. One of the major
changes of this statement is to change the accounting for the classification of
gains and losses from the extinguishment of debt. Upon adoption, the Company
will follow APB 30, Reporting the Results of Operations--Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions in determining whether such
extinguishment of debt may be classified as extraordinary. The provisions of
this statement related to the rescission of FASB Statement 4 shall be applied in
fiscal years beginning after May 15, 2002 with early application encouraged.
Management is assessing, but has not yet determined, the impact that SFAS No.
145 will have, if any, on its financial position and results of operations.

                                       44
<PAGE>

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
With Exit or Disposal Activities", which addresses financial accounting and
reporting for costs associated with exit or disposal activities and nulifies
Emerging Issues Task Force ("EITF") Issue No. 94-3 "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring.) SFAS No. 146 requires
that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. This statement also establishes that
fair value is the objective for initial measurement of the liability. The
provisions of SFAS No. 146 are effective for exit or disposal activities that
are initiated after December 31, 2002. Management is assessing, but has not yet
determined, the impact that SFAS No. 146 will have, if any, on its financial
position and results of operations.

                                       45

<PAGE>
CONTINGENT LIABILITIES

GUARANTEES

The Company has given guarantees in respect of mortgage loans provided to the
buyers of California Gardens as disclosed in note 4 to the financial statements.

At March 31, 2000 and 2001, the total amount of mortgages outstanding which are
subject to these guarantees was approximately HK$76 million and HK$74 million,
respectively.


DEVELOPMENT COST

In July 2001, Shanghai Chingchu was sued by a contractor working for it to
develop Phase III of California Garden. The contractor alleges that Shanghai
Chingchu owes it approximately HK$14 million for work performed. Of this amount,
approximately HK$3.8 million (net of HK$2.1 million due from this contractor)
related to work encompassed by the construction contract which has not been paid
by Shanghai Chingchu, which has been recorded as a liability in the accompanying
financial statement as of March 31, 2002. The remaining HK$10.2 million relates
to additional charges sought by the contractor. In August 2001, Shanghai
Chingchu filed a counter-suit seeking approximately HK$10.6 million from the
contractor asserting that it failed to comply with certain specifications of the
construction contract and sought damages for the contractor's delay in
completing the project. Both the contractor's suit and Shanghai Chingchu's
counter-suit are pending in a PRC court. The PRC court has ordered that certain
assets of the Company be frozen, including 43 units in the California Garden
Project with a carrying value of HK$13.7 million, as well as receivables of
approximately HK$1.7 million. The ultimate outcome of these matters is
uncertain.


TAX PAYMENTS

Under the existing China tax regulations, the sale of real estate in advance of
completion is subject to business tax and income tax. The Company has accrued
the full amount of business tax and foreign enterprises income tax pursuant to
the relevant tax regulations. The Company, however, has not made payments on
account of the tax liability based on the informal understanding that it has
reached with the relevant tax authority allowing the payments to be delayed
until the whole project is completed. In the absence of any formal approval from
the relevant tax authority, the Company may be liable for delinquent charges of
approximately HK$23,256,000 and HK$36,414,000 at March 31, 2001 and 2002,
respectively.


OVERVIEW

     We commenced construction of Phase I of the California Gardens project in
June 1997. Home sales in Phase I began in September 1997, and home sales in
Phase II began in July 1998, in each case after obtaining a pre-sales
certificate from the Shanghai House and Land Administration Bureau. Construction
of Phase III with 416 homes was completed in December 1999 and construction of
Phase IVA with 545 homes was completed in March 2001. Construction of Phase IVB
with 160 homes commenced in November 2001 with completion expected by the end of
calendar year 2002. Subsequent phases of California Gardens include Phase IVC,
with 120 homes and Phase V (District 11) with 630 homes and 36 single-story
commercial shops nearby the California Gardens clubhouse facilities, all of
which are scheduled for completion by first quarter 2004.

                                       46
<PAGE>
     The following tables set forth information relating to homes delivered to
buyers, the aggregate purchase price under new sales contracts, and sales
backlog for the fiscal years ended March 31, 2000, 2001 and 2002 (HK$ in
thousands):

<TABLE>
<CAPTION>
                                                                    HOMES DELIVERED

                                                              FISCAL YEAR ENDED MARCH 31,
                        ----------------------------------------------------------------------------------------------------------
                                   2000                                2001                                   2002
                                   ----                                ----                                   ----
                        NUMBER OF       AGGREGATE           NUMBER OF          AGGREGATE             NUMBER OF          AGGREGATE
                          HOMES        SALES PRICE            HOMES           SALES PRICE              HOMES           SALES PRICE
                        ---------      -----------          ---------         -----------            ---------         -----------
                                           HK$M                                  HK$M                                     HK$M
<S>                     <C>            <C>                  <C>               <C>                    <C>               <C>
California Gardens
  Phase I                      --             0.23                  2                1.14                    2                1.10
  Phase II                    744           258.47                  5                2.09                    0                0.17
  Phase IIA                    --               --                 41               25.04                   28               16.91
  Phase III                   391           151.13                  2               21.89                   16                6.78
  Phase IVA                    --               --                363               137.7                  114               47.73
                            -----           ------                ---               -----                  ---               -----
  TOTAL                     1,135           409.84                413               167.8                  160               72.66
</TABLE>

<TABLE>
<CAPTION>
                                                                   NEW SALES CONTRACTS

                                                               FISCAL YEAR ENDED MARCH 31,
                       -----------------------------------------------------------------------------------------------------------
                                   2000                                2001                                   2002
                                   ----                                ----                                   ----
                        NUMBER OF       AGGREGATE           NUMBER OF          AGGREGATE             NUMBER OF          AGGREGATE
                          HOMES        SALES PRICE            HOMES           SALES PRICE              HOMES           SALES PRICE
                        ---------      -----------          ---------         -----------            ---------         -----------
                                           HK$M                                  HK$M                                     HK$M
<S>                     <C>            <C>                  <C>               <C>                    <C>               <C>
California Gardens
  Phase I                      --            0.223                  2                1.14                    2                1.10
  Phase II                     31            12.19                  5                2.09                    0                0.17
  Phase IIA                    --               --                 41               25.04                   28               16.91
  Phase III                   391           151.13                  2                1.89*                  16                6.78
  Phase IVA                    --               --                363              137.68                  114               47.73
                              ---           ------                ---              ------                  ---               -----
  TOTAL                       422           163.56                413              167.84                                    72.66
</TABLE>

*Note: During the year ended March 31, 2000, homes were exchanged in and between
Phases by the home buyers. The amount shown represents the total price
differences of the exchanges together with the new sales. There were no homes
exchanged during the year ended March 31, 2001 and 2002.

                                       47
<PAGE>
<TABLE>
<CAPTION>
                                                                      HOMES BACKLOG

                                                               FISCAL YEAR ENDED MARCH 31,
                        ----------------------------------------------------------------------------------------------------------
                                   2000                                2001                                   2002
                                   ----                                ----                                   ----
                        NUMBER OF       AGGREGATE           NUMBER OF          AGGREGATE             NUMBER OF          AGGREGATE
                          HOMES        SALES PRICE            HOMES           SALES PRICE              HOMES           SALES PRICE
                        ---------      -----------          ---------         -----------            ---------         -----------
                                         HK$'000                                HK$'000                                  HK$'000
<S>                     <C>            <C>                  <C>               <C>                    <C>               <C>
California Gardens
  Phase I                      --               --                 --                  --
  Phase II                      1       HK$    389                 --                  --                    1                 394
  Phase IIA                    12       HK$  7,184                 11               6,705                    3               1,910
  Phase III                     7       HK$  3,184                  8               3,762                    1                 500
  Phase IVA                   366       HK$142,342                 35              13,622                    8               3,464
  Phase IVB                   123       HK$ 48,640                 18               7,535                    8               3,464
                              ---       ----------                 --              ------                   --               -----
  TOTAL                       509       HK$201,739                 72              31,624                   21               9,733
</TABLE>

     Home buyers pay an average booking fee of HK$18,700 per house for the year
ended March 31, 2000, HK$ 18,400 per house for the year ended March 31, 2001 and
HK$8,310 for the year ended March 31, 2002 and may cancel their purchase with a
full refund at any time before they sign a sales contract. The sales contract is
signed upon the completion of the roof structure. The booking fee is included in
our backlog upon receipt. We estimate that the average period between the
execution of a sales contract for a home and delivery of that home is
approximately 12 to 15 months.

     Under US GAAP, we recognize revenue from the sale of homes on a percentage
of completion basis. This accounting basis differs, however, from the accounting
basis we used when we calculated aggregate sales prices in the tables above. In
those tables, we indicate the full amount of the purchase price of each home
upon the execution and delivery of a sales contract. Revenues recognized under
the percentage of completion basis with respect to the sale of our homes in the
several Phases of the California Gardens project for the periods indicated are
as follows:

<TABLE>
<CAPTION>
                                                         Fiscal year ended March 31,
                                                ----------------------------------------------
                                                 2000                2001                2002
                                                 ----                ----                ----
                                                                In HK$ millions
<S>                                             <C>                 <C>                  <C>
Phase I...............................            0.23                1.14                1.10
Phase II..............................           22.71                2.09                0.17
Phase IIA.............................               -               25.04               16.91
Phase III.............................          151.13                1.89                6.78
Phase IV..............................               -              137.69               47.73
                                                ------              ------               -----
Total                                           174.07              167.85               72.66
                                                ======              ======               =====
</TABLE>

     Our backlog decreased 84.32%, or 85.85% based on bookings, to HK$ 31.62
million, 72 bookings, during fiscal 2001 from HK$201.74 million, 509 bookings,
as of March 31, 2000. Our backlog decreased 69.22.%, or 70.83% based on
bookings, to HK$9.733 million, 21 bookings, during fiscal 2002 from HK$ 31.62
million, 72 bookings, as of March 31, 2001.

     We will continue to develop and sell homes at the California Gardens
project and seek to develop and market similar residential communities in other
principal cities in China. Please refer to Item 4 Information on The Company -
Our Business Strategy for the details of our business strategy.

                                       48
<PAGE>
RESULTS OF OPERATIONS

Fiscal year ended March 31, 2002 compared to fiscal year ended March 31, 2001

Our revenues from sales for the fiscal year ended March 31, 2002 decreased by
56.71% to HK$72.66 million from HK$ 167.85 million for the fiscal year ended
March 31, 2001. The average selling price of homes delivered increased by 17.63%
to HK$ 478,065 per unit during the fiscal year ended March 31, 2002 from HK$
406,400 per unit during the fiscal year ended March 31, 2001, as a result of
strategic upward price revision for our homes. The decrease in revenue is due to
the lesser number of homes sold during fiscal 2002. The number of homes sold
decreased from 413 units in fiscal 2001 to 160 units in fiscal 2002. The
decrease in the number of homes sold is due primarily to a decrease in the
available stock of homes as the development of homes in California Gardens was
delayed due to a decrease in financial resources.

     Cost of sales for the fiscal year ended March 31, 2002 decreased by
approximately 52.49 % to HK$65.32 million from HK$ 137.49 million for the fiscal
year ended March 31, 2001. This decrease is primarily due to the related
decrease in home sales revenues. The cost of home sales as a percentage of home
sales for the fiscal year ended March 31, 2002 increased to 89.90% from 81.91%
for the fiscal year ended March 31, 2001 as a result of higher land and
foundation costs in Phase 4 of Districts 7A & B. As of March 31, 2002 and 2001,
for homes under construction, the amount of revenue recognized, costs incurred
and estimated costs to completion are as follows:

<TABLE>
<CAPTION>
                                     March 31,
                             ------------------------
                              2001              2002
                              ----              ----
                                 (in HK$ millions)
<S>                          <C>                <C>
Revenue recognized....       167.85             72.65

Cost incurred.........       137.49             65.32

Estimated costs to
completion............         0.00              0.00
</TABLE>

     Our selling, marketing, general and administrative, or SMG&A, expenses for
the fiscal year ended March 31, 2002 increased by approximately 90.4 % to
HK$61.5 million from HK$32.3 million for the fiscal year ended March 31, 2001.
This increase is primarily a result of impairment loss on the Club House and
higher general and administrative expenses incurred during the year. The
significant components of our SMG&A expenses during these periods were (a) wages
and employee benefits, which represented approximately 28 % and 18.97% of our
total SMG&A expenses in the fiscal year ended March 31, 2002 and 2001,
respectively, (b) travel and entertainment expenses related to increasing our
market exposure and establishing and enhancing relationships with third parties
such as contractors, design firms and public relations, which represented
approximately 1.6 % and 14.85% of our total SMG&A expenses in the fiscal year
ended March 31, 2002 and 2001, respectively, (c) Provision of impairment loss on
Club House totaling approximately HK$13 Million, which represented approximately
21.1%of our total SMG&A expenses for fiscal year ended March 31 2002. Overall,
SMG&A expenses as a percentage of total revenues increased to 84 % in the fiscal
year ended March 31, 2002 from 19.12% in the fiscal year ended March 31, 2001,
primarily due to economies of scale.

     As a result of the foregoing, loss before income taxes and minority
interest for the fiscal year ended March 31, 2002 was HK$53.67 million compared
to a loss of HK$ 0.8 million for the fiscal year ended March 31, 2001, a decline
in profitability of 6,609 %.

                                       49
<PAGE>
Fiscal year ended March 31, 2001 compared to fiscal year ended March 31, 2000.

     Our revenues from sales for the fiscal year ended March 31, 2001 decreased
by 3.57% to HK$167.85 million from HK$ 174.04 million for the fiscal year ended
March 31, 2000. The average selling price of homes delivered increased 19.18% to
HK$ 406,400 per unit during the fiscal year ended March 31, 2001 from HK$
341,000 per unit during the fiscal year ended March 31, 2000, as a result of
strategic upward price revision for our homes. The decrease in revenue is due to
the lesser number of homes sold during fiscal 2001.

     Cost of sales for the fiscal year ended March 31, 2001 decreased by
approximately 2.34% to HK$ 137.49 million from HK$ 140.79 million for the fiscal
year ended March 31, 2000. This decrease is primarily due to the related
decrease in home sales revenues. The cost of home sales as a percentage of home
sales for the fiscal year ended March 31, 2001 increased to 81.91% from 80.88%
for the fiscal year ended March 31, 2000 as a result of higher land and
foundation costs in Phase 4. As of March 31, 2001 and 2000, for homes under
construction, the amount of revenue recognized, costs incurred and estimated
costs to completion are as follows:

<TABLE>
<CAPTION>
                                     March 31,
                            --------------------------
                              2000              2001
                              ----              ----
                             (In HK$          (In HK$
                            millions)        millions)
<S>                         <C>              <C>
Revenue recognized....        174.07            167.85

Cost incurred.........        140.79            137.49

Estimated costs to
completion............          0.00              0.00

</TABLE>

     Our selling, marketing, general and administrative, or SMG&A, expenses for
the fiscal year ended March 31, 2001 increased by approximately 49.8% to HK$32.3
million from HK$21.6 million for the fiscal year ended March 31, 2000. This
increase is primarily a result of amortization of assets and higher general and
administrative expenses incurred during the year. The significant components of
our SMG&A expenses during these periods were (a) wages and employee benefits,
which represented approximately 18.97% and 12.15% of our total SMG&A expenses in
the fiscal year ended March 31, 2001 and 2000, respectively, (b) travel and
entertainment expenses related to increasing our market exposure and
establishing and enhancing relationships with third parties such as contractors,
design firms and public relations, which represented approximately 14.85% and
14.15% of our total SMG&A expenses in the fiscal year ended March 31, 2001 and
2000, respectively, and (c) advertising expenses, which represented
approximately 14.65% and 12.34% of our total SMG&A expenses in the fiscal year
ended March 31, 2001 and 2000, respectively. Overall, SMG&A expenses as a
percentage of total revenues increased to 19.26% in the fiscal year ended March
31, 2001 from 12.4% in the fiscal year ended March 31, 2000, primarily due to
economies of scale.

     As a result of the foregoing, profit before income taxes and minority
interest for the fiscal year ended March 31, 2001 was HK$12.4 million compared
to a loss of HK$ 0.8 million for the fiscal year ended March 31, 2001.

                                       50
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

GENERAL

     At March 31, 2002 we had the following loans outstanding:

<TABLE>
<CAPTION>
                                      AMOUNT OUTSTANDING           ANNUAL INTEREST
LENDER                                  HK$ (MILLIONS)                   RATE                MATURITY DATES
------                                ------------------           ---------------           --------------
<S>                                   <C>                          <C>                       <C>
Industrial & Commercial Bank
 of China                                          18.80                     6.435%                Aug 2002
China Merchants Bank                                5.17                     4.469%               June 2002
Agricultural Bank of China                         16.10                     6.435%              April 2002
Po Sang Bank                                       1.814                   10.5000%               July 2002
</TABLE>

Funds borrowed under these facilities were generally used for land acquisition,
start-up operations, and the building of homes, as well as for working capital
and other general corporate purposes. We have no additional fund availability
under these credit facilities. Scheduled and estimated maturities of our
borrowings after the recent extension of maturity dates of our credit facilities
are approximately HK$41.90 million during fiscal 2003.


COMMITMENTS

Operating leases

     We lease office and employee accommodation under various operating leases.
Rental expense under operating leases was HK$175,566 in 2000, HK$279,748 in 2001
and HK$304,358 in 2002. At March 31, 2002, we were committed under operating
leases requiring minimum rentals as follows:

<TABLE>
<CAPTION>
                                      HK$         US$
                                                (note 2)
<S>                                 <C>         <C>
         2003..............         262,080      33,600
         2004..............         198,198      25,410
         2005..............         208,104      26,680
         2006..............         198,627      25,465
                                    -------     -------
                                    867,009     111,155
                                    =======     =======
</TABLE>

     Capital expenditure

     At March 31, 2002, we had contracted for expenditure of approximately
HK$87,723,000 in respect of land and lots under development relating to
California Gardens which is expected to be expended within the next two years.
We has authorized but not yet contracted for additional expenditure on
California Gardens of approximately HK$216,576,000.

                                       51
<PAGE>
GUARANTEES

     The Company has given guarantees in respect of mortgage loans provided to
the buyers of California Gardens. At March 31, 2001 and 2002, the total amount
of mortgages outstanding which are subject to these guarantees was approximately
HK$74 million and HK$27 million, respectively.

     We intend to fund our cash needs through funds generated from operations,
and, if necessary, future equity or debt offerings or additional bank
borrowings. Further, we intend to seek extensions of the maturity dates of our
existing credit facilities, although no assurance can be given that we will be
able to do so on commercially acceptable terms or at all. If we are unable to
obtain additional financing, our development plans will be materially curtailed
until such time, if any, as we are able to obtain such financing. However, we
believe that funds generated from operations and expected borrowing availability
under existing and/or future bank credit facilities as well as from the our
principal shareholder, Far East Consortium, will be sufficient to fund our
working capital requirements during fiscal 2003.


CASH FLOWS

     We experienced a decrease in cash flows during fiscal 2002 of HK$ 1.72
million from fiscal 2001 primarily due to increased loss due to substantial
reduction of sales and profit margin. The revenue decreased by approximately 57%
to HK$73 million in year 2002 compares to HK$169 million in year 2001. The gross
margin declined to 10.1% in year 2002 compares to 18.1% in year 2001. The
reduction of cash flows was also partly contributed by the increase of net
repayment of bank borrowing to HK$35.3 million in year 2002 as compare to
positive net bank inflow of HK$12.3 Million in year 2001. The management believe
that funds generated from operations and expected borrowing availability under
existing and/or future bank credit facilities as well as from the our principal
shareholder, Far East Consortium, will be sufficient to fund our working capital
requirements during fiscal 2003. The management also believed that the source of
funds is sufficient to cover the contracted expenditures of approximately
HK$87.7 million in respect of land and lots under development relating to
California Gardens which is expected to be expended within the next two years
and the authorized but not yet contracted for additional expenditure on
California Gardens of approximately HK$216.5 million. However, should the
Company be unable to obtain new capital injection from the capital market or
continuous financial support from its banking facilities and/or Far East
Consortium Limited, its immediate holding company, there might be a serious
going concern problem. However, the Company has received a commitment of support
from Far East Consortium Limited, which the management believes will allow the
Company to meet its financial obligations when due and allow it continue as a
going concern.


INTEREST RATES

     Our business is sensitive to fluctuations in interest rates. Overall
housing demand is adversely affected by increases in interest rates. If mortgage
interest rates increase significantly, this may negatively impact the ability of
a home buyer to secure adequate financing. Higher interest rates may adversely
affect our revenues, gross margins and net income. According to the State
Statistical Bureau, Monthly Bulletin of Statistics - China, Beijing, as of March
31, 1997, 1998, 1999, 2000, and 2001, China's interbank interest rate was
11.58%, 10.50%, 9.00%, 1.98% and 2.58%, respectively.

                                       52
<PAGE>
INFLATION

     We believe that we, as well as the homebuilding industry in general, may be
adversely affected during periods of high inflation, primarily because of higher
land and construction costs. In addition, higher mortgage interest rates may
significantly affect the affordability of permanent mortgage financing to
prospective purchasers. Inflation also increases interest costs and costs of
labor and materials. We attempt to pass through any increases in costs through
increased home selling prices and, to date, inflation has not had a material
impact on our operating results. However, there is no assurance that inflation
will not have a material adverse impact on our business in the future. According
to the State Statistical Bureau, Monthly Bulletin of Statistics - China,
Beijing, as of March 31, 1997, 1998, 1999, 2000, and 2001, China's inflation
rate was 4.00%, 0.70%, -1.80%, -0.2% and 1.5%, respectively.


RECENT TRENDS

     The level of home sales in the first half of fiscal 2003 are expected to be
lower than the prior year levels. Several new housing development projects
competitive with California Gardens have been developed, and the general
economic downturn has had a significant effect on our home sales, however, due
to a continued strength in demand among the local Chinese to move to better
housing commensurate with their growing economic stature, we believe that the
Chinese housing market will improve and continue to show strength in line with
the generally strong economy in China. However due to the increase competition
and saturation of the market, decrease in the number of housing units developed
and general economic downturn, we expect that home sales in California Gardens
in the fiscal 2003 will decline.


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS

     The following table presents information with respect to our directors at
October 1, 2002.

<TABLE>
<CAPTION>
NAME                                                         AGE                POSITION
----                                                         ---                --------
<S>                                                          <C>                <C>
Trevor John Bedford                                           67                Director/Chairman of the Board
Charles H. Stein (Resigned in Dec 2001)                       73                Director
Jay M. Haft (Resigned in Sep 2001)                            66                Director
Denny Chi Hing Chan                                           39                Director
Margaret Chiu                                                 44                Director
David Chiu                                                    48                Director
Abraham Razack (Appointed on 4th Mar 2002)                    57                Director
</TABLE>

     All of the members of our board of directors serve for a period ending at
each annual meeting of shareholders.

                                       53
<PAGE>
EXECUTIVE OFFICERS

     The following sets forth the names, ages and positions of each of our
executive officers:

<TABLE>
<CAPTION>
NAME                                   AGE                 POSITION
----                                   ---                 --------
<S>                                    <C>                 <C>
Peggy Pui Ki Ng                         39                 Chief Executive Officer and Senior Vice President -
                                                           Marketing and Sales
Denny Chi Hing Chan                     39                 Treasurer
Gerald M. Breslauer                     65                 Vice President - Investor Relations and Secretary
</TABLE>

     Our executive officers are appointed by and serve at the discretion of our
board of directors.


BIOGRAPHICAL INFORMATION

     TREVOR JOHN BEDFORD has served as a director of the Company since January
2000 and Chairman of the Board since December 2001. He is currently the Governor
of the Royal Grammar School, High Wycombe in the United Kingdom. Mr. Bedford
also currently serves as Chairman and/or director of eight companies located in
the United Kingdom, Europe, the United States, Malaysia and Australia. These
companies include Leisure Development Holdings S.A., Royal Oak Hotel, Winsford,
Industrial Development Holdings Ltd., Aviata Resources Inc., Far East
Consortium, Northrock Group of Companies, Fortune Oil (OTC bb Foreign), and
Hanson Green. Mr. Bedford is the former Chairman and Chief Executive Officer of
the Hong Kong Land Group which was the second largest public company in Hong
Kong and the largest property group in the world. Mr. Bedford also served as a
member of the board of directors of the Hong Kong bank, Hong Kong Electric
Holdings and the Hong Kong Telephone Company. He also served as the Commandant
of the Royal Hong Kong Auxiliary Police Force, an honorary appointment by the
Governor of Hong Kong. Mr. Bedford was also made a member of the British Empire
in 1972. Mr. Bedford was educated in India from 1939-1946 and later at the
Colchester Royal Grammar School.

     MARGARET CHIU has served as a director of the Company since July 1999. She
has served as a director of Far East Holdings International Limited since
December, 1995. She has also served as a director of Far East Hotel and
Entertainment Ltd. since April 1989. For the past five years, Ms. Chiu has
served as a management consultant for the Sung Dynasty City theme park in Hong
Kong and the Tang Dynasty theme park in Singapore. Ms. Chiu holds a L.L.B.
Degree from the University of Buckingham, U.K. and has extensive experience in
the entertainment, television and motion picture business in Hong Kong, China
and overseas.

     DAVID CHIU has served as a director of the Company since July 2001. Mr.
Chiu also serves as deputy chairman of Far East Consortium, director of Far East
Technology International Limited and non-executive director of Far East Hotels
and Entertainment Limited. Mr. Chiu is also the vice-chairman and substantial
shareholder of Malaysia Land Holdings Berhad, Malaysia and chairman of both Mori
Denko Mfg. Co. Ltd and Tokai Kanko Ltd., both of which are listed on the Tokyo
stock exchange. Mr. Chiu is a member of the Guangxi Chinese People's Political
and Consultative Conference in China and honorary chairman of the Food, Biscuit
and Beverage Association in Hong Kong. In July 1997, Mr. Chiu was conferred an
honorary award with the title "Dato" by the King of Malaysia. Mr. Chiu received
a double degree of Bachelor of Science in Business Administration and Economics
from Sophia University, Japan. Mr. Chiu is the brother of one of our directors,
Margaret Chiu.

     MR ABRAHAM RAZACK was appointed as a director of the company effectively
from Mar 4, 2002. Mr Razack has been a member of the Legislative Counsel of the
Hong Kong Special Administrative Region of the People's Republic of China
representing the Real estate and Construction Constituency since October 2002.
Prior to his

                                       54
<PAGE>
service on the Legislative Counsel, Mr. Razack served as the Chief Executive
Officer of the Land Development Corporation from 1987 to the 2000. Mr Razack
serve as a Director for various publicly listed companies in Hong Kong and other
countries in the region. Mr Razack holds a Bachelor of Arts from Sydney
University and has served in senior management capacity in various companies in
Hong Kong prior to his appointment as a member Legislative Counsel of the Hong
Kong Special Administrative Region.

     DENNY CHI HING CHAN has served as a director of the Company since July
1999. He has served as the Group Chief Accountant for Far East Consortium since
October 1990. He is responsible for the Group's financial and accounting
functions. He has extensive experience in accounting and auditing of Hong Kong
listed companies.

     PEGGY PUI KI NG has served as Chief Executive Officer since January 2002
and Senior Vice-President - Marketing and Sales of the Company since March 2001.
Prior to her appointments with the Company, Ms Ng was a senior manager for Far
East Consortium. Ms. Ng has been involved in management and operations of
amusement parks and residential properties for the past 10 years. From 1983 to
1997, Ms. Ng was responsible for operations of Sung Dynasty Village, a tourist
attraction in Hong Kong.

     GERALD M. BRESLAUER has served as Vice President - Investor Relations since
April 2000 and as our Company Secretary since December 2000. From January 1998
until March 2000, Mr. Breslauer was District Manager of Health Watch Corporation
(OTC). From August 1996 until December 1998 he was Vice President and Secretary
of CCA Companies Incorporated (Nasdaq National Market). From 1991 until 1996 Mr.
Breslauer was a financial advisor with the Equitable Assurance Company. From
1988 to 1991 he was President of Sterling Financial, Inc., a financial
consulting company. Mr. Breslauer was Executive Vice President of Mayfair
Affiliates, Ltd. a developer, manufacturer and marketer of innovative new
products for the consumer, from 1985 until 1988. From 1969 until 1984 he was
Executive Vice President and Secretary of Hardwicke Companies Incorporated
(Nasdaq National Market), which built, developed, or operated more than 50
restaurants (Tavern on the Green, Maxwell's Plum, Samurai Japanese Steak Houses
and others), health spas, theme parks in North America, Europe and Asia
(including Great Adventure in New Jersey), and duty free shops. Mr. Breslauer is
an attorney, and graduated from New York University and Brooklyn Law School.


COMMITTEES OF THE BOARD OF DIRECTORS

     The board of directors has established two committees--the Audit Committee
and the Compensation Committee. These committees have the responsibilities and
authority described below.

     Audit Committee. On June 13, 2000, our board of directors adopted the New
China Homes, Ltd. Audit Committee Charter. The board of directors adopted this
plan pursuant to the Nasdaq National Market listing rules requiring each listed
company to adopt a formal audit committee charter specifying the scope of a
company's audit committee and the means by which its members are to carry out
its responsibilities. Pursuant to the New China Homes Ltd. Audit Committee
Charter, our audit committee has the following purpose and responsibilities:

-    review the Company's auditing, accounting and financial processes;

-    monitor the Company's internal controls regarding accounting, finance,
     legal compliance, and ethics;

-    review and evaluate the Company's outside auditors and internal auditing
     function;

                                       55
<PAGE>
-    reviewing with management and the independent public accountants the
     Company's financial statements and exercising general oversight of our
     financial reporting process; and

-    provide an open avenue of communication among the outside auditors,
     financial and senior management, the internal auditing function, and the
     board of directors.

     The members of our audit committee are Mr. Razack, Mr. Bedford and Ms.
Chiu.

     Compensation Committee. Our compensation committee has the following
responsibilities:

-    establish the salary rates of our officers and employees;

-    examine periodically our compensation structure; and

-    supervise our welfare and pension plans and compensation plans.

     The members of our Compensation Committee are Messrs. Razack, Chan and Ms.
Chiu.


DIRECTOR COMPENSATION

     Each outside director is paid an annual fee of US$91,527 and reimbursed for
travel expenses incurred for each board of director meeting attended.

     At March 31, 2002, our non-executive directors held an aggregate of 100,000
options, granted outside the Company's 1999 Stock Option and Restricted Stock
Purchase Plan, or the Option Plan, in respect of our Common Shares at an average
exercise price of US$ 7.50 per share.

     No options were granted during fiscal 2002.


DIRECTORS' AND OFFICERS' LIABILITY INSURANCE

     We have obtained officers' liability insurance on behalf of our officer who
is resident in the United States. We have not obtained directors' liability
insurance on behalf of our directors, who are not resident in the United States.


EXECUTIVE COMPENSATION

     The aggregate amount of compensation paid by us to all our executive
officers was HK$1.6 million, or US$0.21 million for the fiscal year ended March
31, 2002.

                                       56
<PAGE>
EMPLOYMENT AGREEMENTS

     None of our officers or directors is under an employment agreement.


MANAGEMENT SERVICE AGREEMENTS

     Since 1998, Messrs. Stein, Haft and Kallan and Silver Pacific have been
serving us as strategic advisors. On April 2, 1999, we formalized these
relationships by entering into three-year management service agreements with
Messrs. Stein, Haft and Kallan and Silver Pacific. Under these agreements,
Messrs. Stein, Haft and Kallan and Silver Pacific have agreed to provide advice
and assistance concerning our business strategy and corporate activities. Among
the services that these advisors will provide are the following:

-    developing and evaluating potential acquisitions and other business
     opportunities;

-    providing financial, marketing and business advice on particular land
     development and home building projects;

-    working with our management to monitor our financial affairs and initiating
     and maintaining relationships with potential financing sources including
     commercial banks and investment banking firms;

-    providing advice in all areas involving the execution of our business plan;
     and

-    coordinating our relationships with our accountants, attorneys and other
     professionals.

     In anticipation of the continued relationship that we will have with
Messrs. Stein, Haft and Kallan, on April 2, 1999 we paid US$ 175,000 to Mr.
Stein, US$ 200,000 to Mr. Haft, US$ 75,000 to Mr. Kallan and US$ 400,000 to
Silver Pacific. These payments were used to purchase an aggregate of 850 of our
Common Shares at US$ 1,000 per share. As a result of the 999-for-one stock split
effected in August 1999, Mr. Stein received an additional 174,825 Common Shares,
Mr. Haft received an additional 199,800 Common Shares, Mr. Kallan received an
additional 74,925 Common Shares and Silver Pacific received an additional
399,600 Common Shares. Messrs. Stein, Haft and Kallan and Silver Pacific, as
well as our other pre-initial public offering shareholder, have agreed with us
that 25% of their Common Shares will be cancelled if our net income was less
than US$ 10 million in the one-year period commencing on the first day of the
month following the effective date of the Company's IPO, March 8, 2000, and 25%
of their Common Shares will be canceled if our net income was less than US$ 20
million in the following one-year period. Because we incurred a net loss as of
March 31, 2001, the first year following our IPO, 25% of Messrs. Stein, Haft and
Kallan, Silver Pacific and Far East Consortium, amounting to 2.6 million Common
Shares, were cancelled effective as of April 1, 2001. Additionally, because we
incurred a net loss of as of March 31, 2002, the second year following our IPO,
25% of Messrs. Stein, Haft and Kallan, Silver Pacific and Far East Consortium,
amounting to an additional 2.6 million Common Shares, were cancelled effective
as of April 1, 2002.


1999 STOCK OPTION PLAN

     On August 10, 1999, our board of directors and shareholders adopted the
Option Plan. As of September 30, 2002, the Company has authorized for granting
600,000 options to purchase our Common Shares under the Option Plan. The purpose
of the Option Plan is to attract and retain qualified personnel, to provide
additional incentives to our employees, officers and advisors and to promote the
success of our business. The Option Plan is administered by the Compensation
Committee of the board of directors. The Compensation Committee has complete
discretion to

                                       57
<PAGE>

determine which eligible individuals are to receive option grants, the number of
shares subject to each such grant, the status of any granted option as either an
incentive stock option or a non-statutory option, the vesting schedule to be in
effect for the option grant and the maximum term for which any granted option is
to remain outstanding.

     Each option granted under the Option Plan has a maximum term of ten years,
subject to earlier termination following the optionee's cessation of service
with New China Homes. Options granted under the Option Plan may be exercised
only for fully vested Options. The exercise price of incentive stock options and
non-statutory stock options granted under the Option Plan must be at least 100%
and 85% of the fair market value of the stock subject to the option on the date
of grant, respectively (or 110% with respect to incentive stock options granted
to holders of more than 10% of the voting power of the Company's outstanding
Common Shares). The purchase price is payable immediately upon the exercise of
the option. Such payment may be made in cash, in outstanding Common Shares held
by the participant, through a promissory note payable in installments over a
period of years or any combination of the foregoing. The maximum number of
Common Shares subject to the Options granted to a single person shall not exceed
25% of the total number of Common Shares subject to the Options granted under
the Option Plan. Each Option, other than a restricted stock award, shall not be
transferable, otherwise than by will or the laws of descent and distribution.
Each Option, other than a restricted stock award, during lifetime shall only be
exercisable by the grantee. If a grantee of an Option, other than a restricted
stock award, leaves the service of the Company or any of its subsidiaries for
any reason other than for cause, death, or disability, the unexercised portion
of the Option, other than a restricted stock award, may only be exercised within
three months after the date on which the grantee ceased to be so employed, and
only to the extent that the grantee could have otherwise exercised such Option,
other than a restricted stock award, as of the date on which he ceased to be so
employed. If a grantee of an Option, other than a restricted stock award, ceases
to be an employee of the Company or any of its subsidiaries by reason of death,
the unexercised portion of the Option may only be exercised within one year
after the date of the grantee's death, and only to the extent that the grantee
could have otherwise exercised the Option, other than a restricted stock award,
at the time of his death. In such case, the Option, other than a restricted
stock award, may be exercised by the executor or administrator or by any person
or persons who shall have acquired the Option, other than a restricted stock
award, from the grantee's estate. If a grantee of an Option, other than a
restricted stock award, ceases to be an employee of the Company or any of its
subsidiaries as a result of termination of employment for cause or if a grantee
terminates his employment for any reason other than as a result of his death or
disability, the unexercised portion of his Option, other than a restricted stock
award, may only be exercised within one month after the date on which the
grantee ceased to be so employed, and only to the extent that the grantee could
have otherwise exercised such Option, other than a restricted stock award, as of
the date which he ceased to be so employed. If a grantee of an Option, other
than a restricted stock award, ceases to be an employee of the Company or any of
its subsidiaries by reason of a disability, the unexercised portion of his
Option, other than a restricted stock award, may only be exercised within one
year after the date on which the grantee ceased to be so employed, and only to
the extent that the grantee could have otherwise exercised such Option, other
than a restricted stock award, as of the date which he ceased to be so employed.

     The Company's board of directors shall make adjustments to the number of
Common Shares ,and the Option price per share, subject to the unexercised
portion of any outstanding Option, to the nearest possible full share, held by
the grantees in the case that the Company's outstanding Common Shares are
increased, decreased or exchanged for a different number or kind of shares or
other securities through a reorganization, merger or consolidation.

     If there is any capital reorganization or reclassification of the capital
stock of the Company or consolidation or merger of the Company with another
entity, or sale of substantially all of the Company's assets, and the holders of

                                       58
<PAGE>

the Common Shares become entitled to receive stock, securities or assets in
exchange for the Common Shares, such shares may be issued or payable with
respect to or in exchange for a number of outstanding shares of the common stock
equal to the number of Common Shares immediately theretofore so receivable had
such reorganization, reclassification, merger or sale not taken place.


EMPLOYEES

     As of March 31, 2002, we had 46 full-time employees, including 13 employees
in sales and marketing, 13 employees in engineering, estimating and construction
management, 5 in finance and accounting and 15 in general administration. In
addition, we employed two full-time employees in the United States to handle
investor relations. We have not experienced any labor-related work stoppages and
we consider the relations with our employees to be good. We are not subject to
any collective bargaining agreements.


SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of the date of this Annual Report,
information which is known by us with respect to the ownership of Common Shares
as to:

-    all persons who are expected to be the beneficial owners of 5% or more of
     our outstanding Common Shares;

-    each director and each person who has consented to be named as a director,
     or the Named Directors;

-    each Named Executive Officer; and

-    all executive officers and directors of New China Homes as a group.

     No beneficial owners of the Company own any shares of Far East Consortium.
However, Deacon Te Ken Chiu and David Chiu, one of our directors and brother of
one of our directors, Margaret Chiu, each own more than 10% of Far East
Consortium.

     Unless otherwise indicated, as of 1 April 2002, each of the following
persons may be deemed to have sole voting and dispositive power with respect to
such shares. Information set forth in the table with respect to beneficial
ownership of the Common Shares has been provided to New China Homes by such
holders.

<TABLE>
<CAPTION>
                                                                             Amount and
                                                                              Nature of
                                                                              Beneficial            Percent of
                                                                             Ownership of           Outstanding
                                                                            Common Shares          Common Shares
                                                                            -------------          -------------
<S>                                                                         <C>                    <C>
Far East Consortium International Limited
16/F Far East Consortium Building,
121 Des Voeux Road, Central
Hong Kong.....................................................                4,791,200                63.88%

Charles H. Stein Trust
5345 Pine Tree Drive
Miami Beach, FL 33140.........................................                   87,500                 1.17%

Jay M. Haft
1001 Brickell Bay Avenue
9th Floor
Miami, FL 33131...............................................                  100,000                 1.33%

Mark L. Kallan
19999 Backnine Drive
Boca Raton, FL 33498..........................................                   37,500                 0.50%

All executive officers and directors a group (3 persons)......                  200,000                 2.67%
</TABLE>

---------------------------
*    Beneficially owns less than 1% of the outstanding Common Shares.

                                       59
<PAGE>

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     We are aware of only one major shareholder, a shareholder owning in excess
of 5% of our Common Shares, Far East Consortium. As of October 1, 2002, Far East
Consortium owned 4,791,200 Common Shares or approximately 63.88% of the issued
and outstanding Common Shares. As a result of its Common Share ownership, we
consider Far East Consortium to be our controlling shareholder.

     As of October 1, 2002, we had 1480 shareholders of record and 2,283,800 of
our Common Shares and 2,300,000 of our Warrants were held in the United States.


TRANSACTIONS INVOLVING OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS

     Messrs. Stein and Haft, who are directors, Mr. Kallan, who is an executive
officer, and Silver Pacific, which is a principal shareholder of New China
Homes, have been rendering management services to us since 1998. On April 2,
1999, Messrs. Stein, Haft and Kallan and Silver Pacific entered into management
service agreements with us in which they agreed to continue to provide
management services to us until April 2, 2002. See Item 6 Directors, Senior
Management and Employees -- Management Service Agreements. Under these
agreements, Messrs. Stein, Haft and Kallan and Silver Pacific were each required
to use the cash received for services to purchase an aggregate total of 850
Common Shares at a price of US$1,000 per share, which shares were also issued on
April 2, 1999.

     On April 2, 1999, the Company issued 9,549 Common Shares at US$ 1,000 per
share to Far East Consortium, the Company's major shareholder, for cash in the
amount of US$ 9,549,000, which amount was used to offset a debt payable to Far
East Consortium, which amounted to US$ 9,795,997 as at March 31, 1999.

     Far East Consortium, our principal shareholder, has entered into a
non-competition agreement with us under which it agreed not to compete with us
in the residential property development business in China, excluding Hong Kong.
In addition, prior to our IPO we were financed by advances from Far East
Consortium. As of March 31, 1999, the aggregate amount of these advances was US$
9,795,997. In April 1999, we issued 9,549 Common Shares to Far East Consortium
in exchange for the reduction of US$ 9,549,000 of indebtedness. As of March 31,
2000, the aggregate amount of advances from Far East Consortium was reduced to
US$ 2,000,000. As a result of a 999-for-one stock split effected in August 1999,
we issued an additional 9,540,450 shares to Far East Consortium. See note 1 to
our audited consolidated financial statements.

     On March 30, 2001, the Company entered an agreement with Wonder China
Investments Limited, or Wonder China, a wholly-owned subsidiary of Far East
Consortium International Limited, a Cayman Islands corporation, or Far East
Consortium, the Company's major shareholder, disposing of its 100% interest in
Top Trend Development Limited, a British Virgin Islands corporation, or Top
Trend. Under the terms of this agreement, the

                                       60
<PAGE>

Company has agreed to sell to Wonder China (a) the entire issued share capital
of Top Trend and (b) a debt in the approximate amount of HK$18,414,717 advanced
as a shareholder loan by the Company to Top Trend, in exchange for (y)
HK$1,280,000 in cash paid as of March 30, 2001, or the Deposit, and (z) a
HK$126,720,000 promissory note, or the Promissory Note. The HK$126,720,000
Promissory Note was due originally on September 30, 2001. Due to a change in
Chinese law, however, a warranty contained in the agreement regarding the
commercial use of land held indirectly by Top Trend was not fulfilled and the
parties had agreed to extend the due date of the Promissory Note by six months
to March 31, 2002. The parties had also delayed completion of the transaction
until March 31, 2002. On or about March 31, 2002, the warranty was still not
fulfilled and the parties had agreed to extend the due date of the Promissory
Note to September 30, 2002 and delayed the completion of the transaction until
September 30, 2002. On or about September 30, 2002, the warranty was still not
fulfilled and the parties mutually agreed to terminate the transaction. As of
October 2, 2002, the transaction was terminated, the Promissory Note was
cancelled and the Company is obligated, and is preparing, to refund to Wonder
China the HK$1,280,000 Deposit. The parties have agreed to waive any and all
claims against the other in connection with the termination of the transaction.

     In addition, the Company has a number of amounts due and from related
companies representing unsecured advances which are interest free and repayable
on demand. For more information, see note 9 to our audited consolidated
financial statements found elsewhere in this Annual Report.


ITEM 8. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

     See Item 18 - Financial Statements for our audited consolidated financial
statements filed as part of this Annual Report.


LEGAL PROCEEDINGS

     In July 2001, Shanghai Chingchu was sued by a contractor working for us to
develop Phase III of the California Gardens project. The contractor alleges that
the Shanghai Chingchu owes it RMB 15,063,068 for contracting work performed for
Phase III. Shanghai Chingchu has counter-sued the contractor in connection with
the contractor's poor work quality, road and sewer pipe work, which failed to
comply with certain specifications and delays in work. Both the contractor's
suit and Shanghai Chingchu's counter-suit are pending in a Chinese court, which
is expected to be heard by the end of calendar year 2002. Pending a decision,
the Chinese court has ordered that certain assets be frozen, including 43 units
in the California Gardens project as well as approximately RMB 1.79 million
deposits. The ultimate outcome of this matter is uncertain as of March 31, 2002.

     Other than as disclosed here, we are not a party to any material legal
proceedings, nor are there any material legal proceedings pending with respect
to any of our properties. We also are not aware of any legal proceedings
contemplated by any governmental authorities involving either us or our
property. None of our directors, officers or affiliates is an adverse party in
any legal proceedings involving New China Homes or its subsidiaries, or has an
interest in any such proceeding which is adverse to New China Homes or its
subsidiaries.

                                       61
<PAGE>

DIVIDEND POLICY

     We have never declared or paid any cash dividends on our Common Shares. We
do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings, if any, to finance operations and
the expansion of our business. Any future determination to pay cash dividends
will be at the discretion of the board of directors and will be dependent upon
our financial condition, operating results, capital requirements and such other
factors as the board of directors deems relevant.


SIGNIFICANT CHANGES

     We have not experienced any significant changes since the date of our
audited consolidated financial statements included in this Annual Report.


ITEM 9. THE OFFER AND LISTING

     Our Common Shares and our Warrants are listed on Nasdaq Small Cap under the
symbols NEWC and NEWCW, respectively. Trading in our Common Shares and Warrants
commenced on the Nasdaq National Market on March 10, 2000 and moved to the
Nasdaq Small Cap in August 2001.

     For the fiscal year ended March 31, 2002, the high and low price of our
Common Shares on the Nasdaq National Market has ranged from US $0.41 to US$
1.594. For the fiscal year ended March 31, 2001, the high and low price of our
Warrants on the Nasdaq National Market has ranged from US$8.75 to US$ 1.00.

     The following table sets forth, for the quarter indicated, the high and low
sales prices of our Common Shares and our Warrants on the Nasdaq National Market
and the Nasdaq Small Cap Market as of September 2002.

<TABLE>
<CAPTION>
                                       SALES PRICE (US$)
                                 -----------------------------
                                 COMMON SHARES     WARRANTS
                                 -------------   -------------
                                 HIGH     LOW    HIGH     LOW
                                 -----   -----   -----   -----
<S>                              <C>     <C>     <C>     <C>
Q1 2001(Apr May June 2000)       8.375   3.250   3.625    1.00
Q2 2001(July Aug Sept 2000)      4.438   2.313   1.563   0.813
Q3 2001(Oct Nov Dec 2000)        2.438   1.031   0.906   0.188
Q4 2001(Jan Feb Mar 2001)        2.281   1.188   0.781   0.313
Q1 2002 (Apr May June 2001)      1.813    1.03    0.49    0.23
Q2 2002 (July Aug Sept 2001)      1.69    0.73    0.47    0.11
Q3 2002 (Oct Nov Dec 2001)        0.88    0.41    0.19    0.08
Q4 2002 (Jan Feb Mar 2002)        0.92    0.49    0.21    0.10
Q1 2003 (Apr May June 2002)       0.65    0.34    0.20    0.12
Q2 2003 (July Aug Sept 2002)     0.399    0.15    0.12    0.03
</TABLE>

                                       62
<PAGE>

     The following table sets forth, for the month indicated, the high and low
sales prices of our Common Shares and our Warrants on the Nasdaq National Market
and the Nasdaq Small Cap Market as of September 2002.

<TABLE>
<CAPTION>
                            SALES PRICE (US$)
                 -------------------------------------
                  COMMON SHARES            WARRANTS
                 ----------------       --------------
                 HIGH        LOW        HIGH      LOW
                 -----      -----       ----      ----
<S>              <C>        <C>         <C>       <C>
April 2002        0.65       0.42       0.20      0.15
May 2002          0.57      0.391       0.17      0.13
June 2002         0.54       0.30       0.18      0.12
July 2002        0.399       0.26       0.12      0.03
August 2002      0.261       0.15       0.07      0.05
Sept 2002         0.24      0.201       0.05      0.05
</TABLE>


ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

     The following presents a description of the terms and provisions of our
Restated Memorandum and Articles of Association.


     GENERAL

     We were incorporated in the Cayman Islands on January 6, 1999 and operate
under the Cayman Islands Companies Law (2000 Revision).

     Our corporate objectives and purpose are unrestricted.


     DIRECTORS

     There are no membership qualifications for directors unless so fixed by the
Company in a general meeting. Further, there are no share ownership
qualifications for directors.

     A director who is in any way, whether directly or indirectly, interested in
a contract or proposed contract with the Company shall declare the nature of his
interest at a meeting of the directors. A general notice given to the directors
by any director to the effect that he is a shareholder of any specified company
or firm and is to be regarded as interested in any contract which may thereafter
be made with that company or firm shall be deemed a sufficient declaration of
interest in regard to any contract so made. A director may vote in respect of
any contract or proposed contract or arrangement notwithstanding that he may be
interested therein and if he does so, his vote shall be counted and he may be
counted in the quorum at any meeting of the directors at which any such contract
or proposed contract or arrangement shall come before the meeting for
consideration.

     The directors may exercise all the powers of the Company to borrow money
and to mortgage or change its undertaking, property and uncalled capital or any
part thereof, to issue debentures, debenture stock and other securities whenever
money is borrowed or as security for any debt, liability, or obligation of the
Company or of any third party.

                                       63
<PAGE>

     RIGHTS, PREFERENCES AND RESTRICTIONS OF EACH CLASS OF SHARES

     All Common Shares have one vote on all matters to be voted on by the
shareholders. Directors do not stand for reelection at staggered intervals and
cumulative voting is not required. Subject to preferences that may be applicable
to any issued preferred share, the holders of Common Shares are entitled to
receive ratably such dividend, if any, as may be declared from time to time by
the directors out of funds legally available under the Cayman Islands Companies
Law (1998 Revision). There is no provision for the lapse of any dividend
entitlement. Holders of Common Shares have no pre-emptive, conversion or other
registration or subscription rights. There are no redemption or sinking fund
provisions available to Common Shares. In the event of liquidation, dissolution
or winding up of the Company, the holders of Common Shares are entitled to share
ratably in all assets remaining after payment of liabilities, subject to the
prior distribution right of Preferred Shares, if any.

     The board has authority, without further action by the shareholders, to
issue preferred Shares in one or more series and to fix the designations,
rights, preferences, privileges, and relative participating, optional or special
rights and the qualifications, limitations or restrictions thereof, including
dividend rights, conversion rights, voting rights, terms of redemption and
liquidation preferences, any or all of which may be greater than the rights
associated with Common Shares. The board may not issue preferred shares for
three years after the effective date of the offering without the consent of the
underwriter.


     CHANGE IN THE RIGHTS OF SHAREHOLDERS

     The rights attached to any class, unless otherwise provided by the terms of
issue of the shares of that class, may be varied with the consent in writing of
the holders of two-thirds of the issued shares of that class, or with the
sanction of a special resolution passed at a separate general meeting of the
holders of the shares of the class.


     GENERAL MEETINGS OF SHAREHOLDERS

     The directors may, whenever they think fit, convene a general meeting of
the Company. General meetings may also be convened upon the written request of
Shareholders holding a majority of the outstanding Common Shares generally
entitled to vote. General meetings shall also be convened on the written request
of any two of our Shareholders deposited at our Registered Office specifying the
objects of the meeting and signed by the requisitionists; and if the directors
do not within twenty-one days from the date of deposit of the requisition
proceed duly to convene the meeting, the requisitionists themselves may convene
the general meeting in the same manner, as nearly as possible, as that in which
meetings may be convened by the directors, and all reasonable expenses incurred
by the requisitionists as a result of the failure of the directors shall be
reimbursed to them by the Company.


     LIMITATIONS ON THE RIGHT TO OWN SHARES

     There are no limitations on the right to own our shares.

                                       64
<PAGE>

     LIMITATIONS ON TRANSFER OF SHARES

     There are no provisions in our Memorandum or Articles of Association, that
would have an effect of delaying, deferring or preventing a change in control
and that would operate only with respect to a merger, acquisition or corporate
restructuring involving. Please see Risk Factors - Our Board of Directors has
the authority to issued preferred shares having rights and preferences which are
more favorable than our Common Shares.


     DISCLOSURE OF SHAREHOLDER OWNERSHIP

     There are no provisions within our charter documents governing the
ownership threshold above which shareholder ownership must be disclosed.


     CHANGES IN CAPITAL

     We may from time to time by Ordinary Resolution increase the share capital
by such sum, to be divided into shares of such amount, as the resolution shall
prescribe. The new shares shall be subject to the same provisions with reference
to the payment of calls, lien, transfer, transmission, forfeiture and otherwise
as the shares in the original share capital. The Company may by Ordinary
Resolution:

     (a)  consolidate and divide all or any of its share capital into shares of
          larger amount than its existing shares;

     (b)  sub-divide its existing shares, or any of them into shares of smaller
          amount than is fixed by the Memorandum of Association, subject
          nevertheless to the provisions of Section 12 of the Cayman Islands
          Companies Law (2000 Revision);

     (c)  cancel any shares which, at the date of the passing of the resolution,
          have not been taken or agreed to be taken by any person.

     The Company may by Special Resolution reduce its share capital and any
capital redemption reserve in any manner authorized by law.


     DIFFERENCES IN CORPORATE LAW

     The Cayman Islands Companies Law (2000 Revision) is modeled after that of
England but does not follow recent United Kingdom statutory enactments and
differs from laws applicable to United States corporations and their
shareholders. Set forth below is a summary of the significant differences
between the provisions of the Companies Law (2000 Revision) applicable to New
China Homes and the laws applicable to companies incorporated in the United
States and their shareholders.

     Mergers and Similar Arrangements. Cayman Islands law does not provide for
mergers as that expression is understood under United States corporate law.
However, there are statutory provisions that facilitate the reconstruction and
amalgamation of companies, provided that the arrangement in question is approved
by a majority in number of each class of shareholders and creditors with whom
the arrangement is to be made, and who must in addition represent three-fourths
in value of each such class of shareholders or creditors, as the case may be,
that are present and voting either in person or by proxy at a meeting, or
meetings convened for that purpose. The convening of the meetings and
subsequently the arrangement must be sanctioned by the Grand Court of the Cayman
Islands. While a dissenting shareholder would have the right to express to the
court the view that the transaction ought not to be approved, the court can be
expected to approve the arrangement if it satisfies itself that:

                                       65
<PAGE>

-    the statutory provisions as to majority vote have been complied with;

-    the shareholders have been fairly represented at the meeting in question;

-    the arrangement is such as a businessman would reasonably approve; and

-    the arrangement is not one that would more properly be sanctioned under
     some other provision of the Companies Law (2000 Revision).

     When a take-over offer is made and accepted by holders of 90% of the shares
within four months, the offeror may, within a two month period, require the
holders of the remaining shares to transfer such shares on the terms of the
offer. An objection can be made to the Grand Court of the Cayman Islands but
this is unlikely to succeed unless there is evidence of fraud, bad faith or
collusion.

     If the arrangement and reconstruction is thus approved, the dissenting
shareholder would have no rights comparable to appraisal rights, which would
otherwise ordinarily be available to dissenting shareholders of United States
corporations, providing rights to receive payment in cash for the judicially
determined value of the shares.

     Shareholders' Suits. Our Cayman Islands' counsel is not aware of any
reported class action or derivative action having been brought in a Cayman
Islands court. In principle, the Company itself will normally be the proper
plaintiff and a derivative action may not be brought by a minority shareholder.
However, based on English authorities, which would in all likelihood be of
persuasive authority in the Cayman Islands, exceptions to the foregoing
principle apply in circumstances in which:

-    a company is acting or proposing to act illegally or ultra vires;

-    the act complained of, although not ultra vires, could be effected only if
     authorized by more than a simple majority vote;

-    the individual rights of the plaintiff shareholder have been infringed or
     are about to be infringed; or

-    those who control the company are perpetrating a fraud on the minority.

     Issues Requiring Ordinary Resolutions. The following actions in respect of
exempted companies incorporated under the Companies Law are required by the
Companies Law to be passed by ordinary resolution, simple majority:

-    the alteration of conditions of the memorandum of association in respect of
     share capital (Section 13(1));

-    the power of a company to issue shares at a discount (Section 35(1)(a));

-    if the Articles of Association do not authorize the manner of purchase, the
     manner of purchase on redemption or repurchase of shares (Section 37(d));

-    power to direct where an inspector's report be sent (Section 66(3));

-    to wind up the company voluntarily under the Companies Law (Section 132);

-    appointment of liquidator of voluntary winding up and sanctioning of the
     continuance of powers of directors following the appointment of a
     liquidator (Section 136);

-    disposal of company books, accounts and documents on a voluntary winding up
     (Section 158); and

-    registration of a company by continuation (Section 220(2)).

                                       66
<PAGE>

     Issues for which Cayman Islands law requires approval by a super majority
of votes by Shareholders. The following actions in respect of exempted companies
incorporated under the Companies Law are required by the Companies Law to be
passed by special resolution, as such phrase is defined in the Law and varied by
the articles of association of each such company:

-    the alteration of the memorandum of association (Section 10);

-    the reduction of share capital (Section 14);

-    the alteration or addition to the articles of association (Section 24);

-    the changing of the name of the company (Section 31);

-    the adoption and effect of Articles of Association (Section 25(2));

-    the appointment, pursuant to the provisions of Sections 64 to 68, of an
     inspector to examine the affairs of the company (Section 67);

-    requiring the court to wind up the company under the Law (Section 94);

-    to wind the company up voluntarily under the Law (Section 132(b));

-    to, inter alia, delegate to creditors the power to appoint a liquidator in
     a voluntary winding up, filling any vacancy among liquidators and entry
     into arrangements in respect of a liquidator's powers in a voluntary
     winding up (Section 138);

-    to sanction arrangements between a company being voluntarily wound up and
     its creditors (Section 139);

-    the sanctioning of any general scheme of liquidation proposed by a
     liquidator (Section 163);

-    the sanctioning of any compromise proposed by a liquidator (Section 164);

-    the sanctioning of certain other matters proposed by a liquidator of the
     Law (Section 165); and

-    the making of amendments to Memorandum and Articles of Association upon
     registration by way of continuation (Section 222).

     With respect to the super majority percentage under Cayman Islands law for
the purposes of passing special resolutions, Section 60 of the Companies Law
provides that a resolution is a special resolution when:

(a)  "it has been passed by a majority of not less than two-thirds (or such
     greater number as may be specified in the articles of association of the
     company) of such members as, being entitled to do so, vote in person or,
     whether proxies are allowed, by proxy at a general meeting of which notice
     specifying the intention to propose the resolution as a special resolution
     has been duly given; or

(b)  if so authorized by its articles of association, it has been approved in
     writing by all of the members entitled to vote at a general meeting of the
     company in one or more instruments each signed by one or more of the
     members aforesaid, and the effective date of the special resolution so
     adopted shall be the date on which the instrument or the last of such
     instruments, if more than one, is executed."

     In relation to whether there are matters which require approval by a
majority of shareholders in excess of two thirds, Section 86(2) of the Companies
Law requires that where a members meeting has been convened by the court to
approve a court sanctioned compromise or arrangement between a company and its
members, or of a class of member, as the case may be, a majority in number of
the members representing seventy-five percent in value of the members, or of a
class of member, as the case may be, must approve such compromise or
arrangement. Additionally Section 88(1) of the Law requires that in certain
circumstances the power to acquire shares of dissentient shareholders may be
given where approved by the holders of not less than ninety percent in value of
the shares affected.

                                       67
<PAGE>

     Indemnification. Cayman Islands law does not, other than as set forth
hereafter, limit the extent to which a company's organizational documents may
provide for indemnification of officers and directors, except to the extent any
such provision may be held by the Cayman Islands courts to be contrary to public
policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime. Our organizational documents provide for
indemnification of officers and directors for losses, damages, costs and
expenses incurred in their capacities as such, except if they acted in a
willfully negligent manner or defaulted in any action against them.

     Insofar as indemnification or liability arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

     Inspection of Books and Records. Holders of our Common Shares will have no
general right under Cayman Islands law to inspect or obtain copies of our list
of shareholders or our corporate records. However, we will provide our
shareholders with annual audited financial statements.


EXCHANGE CONTROLS

     China's government imposes control over the convertibility of Renminbi into
foreign currencies. Under the current unified floating exchange rate system, the
PBOC publishes a daily exchange rate for Renminbi, or the PBOC Exchange Rate,
based on the previous day's dealings in the inter-bank foreign exchange market.
Financial institutions authorized to deal in foreign currency may enter into
foreign exchange transactions at exchange rates within an authorized range above
or below the PBOC Exchange Rate according to market conditions.

     Pursuant to the Foreign Exchange Control Regulations issued by the State
Council on April 1, 1996 and the Administration of Settlement, Sale and Payment
of Foreign Exchange Regulations which came into effect on July 1, 1996 regarding
foreign exchange control, or the Regulations, conversion of Renminbi into
foreign exchange by foreign investment enterprises for current account items,
including the distribution of dividends and profits to foreign investors of
joint ventures, is permissible. Foreign investment enterprises are permitted to
remit foreign exchange from their foreign exchange bank account in China on the
basis of, inter alia, the terms of the relevant joint venture contracts and the
board resolutions declaring the distribution of the dividend and payment of
profits. Conversion of Renminbi into foreign currencies and remittance of
foreign currencies for capital account items, including direct investment,
loans, security investment, is still subject to the approval of the State
Administration of Foreign Exchange, or SAFE, in each such transaction. On
January 14, 1997, the State Council amended the Foreign Exchange Control
Regulations and added, among other things, an important provision, as Article 5
provides that the State shall not impose restrictions on recurring international
payments and transfers.

     Under the Regulations, foreign investment enterprises are required to open
and maintain separate foreign exchange accounts for different types of foreign
exchange transactions, and the permitted scope of receipts and expenditures for
such accounts is limited to the type of foreign exchange transactions designated
for such accounts. In addition, foreign investment enterprises may only buy,
sell and/or remit foreign currencies at those banks authorized to conduct
foreign exchange business upon the production of valid commercial documents and,
in the case of capital account item transactions, document approval from the
SAFE.

     Currently, foreign investment enterprises are required to apply to SAFE for
foreign exchange registration certificates for foreign investment enterprises.
With such foreign exchange registration certificates, which are

                                       68
<PAGE>

granted to foreign investment enterprises, upon fulfilling specified conditions
and which are subject to review and renewal by SAFE on an annual basis, or with
the foreign exchange sales notices from the SAFE, which are obtained on a
transaction-by-transaction basis, FIEs may enter into foreign exchange
transactions at banks authorized to conduct foreign exchange business to obtain
foreign exchange for their needs.


TAXATION

     The following is a summary of the tax laws of China, the Cayman Islands and
the United States which are material to our business and are relevant to the
purchase, ownership or sale of your Common Shares. This summary does not take
into account or discuss the tax laws of any jurisdiction other than China, the
Cayman Islands or the United States. We recommend that you consult with your own
professional advisers if you have any doubt as to the tax implications of
purchasing, holding or disposing your Common Shares.

     The following statements disclose the material tax consequences relating to
your purchase of our Common Shares. This discussion, however, is not intended to
be exhaustive or to be a complete statement of the relevant laws. It is based on
the laws in force as of the date of this Annual Report and subject to any
changes in law occurring after that date, which changes could be made on a
retroactive basis.


TAXATION IN CHINA RELEVANT TO THE COMPANY

          INCOME TAX

     Any foreign investment enterprise, which may be in the form of any equity
joint venture, co-operative joint venture or wholly foreign-owned enterprise,
carrying on business in China will be subject to China Foreign Investment
Enterprise and Foreign Enterprise Income Tax Law.

     Foreign investment enterprises which have their head offices in China are
regarded as Chinese residents for income tax purposes and all income from
sources both within and outside China is subject to income tax in China. This
tax is levied on net income and operating costs and expenses may be deducted in
the calculation of the taxable income. Moreover, foreign investment enterprises
may, when paying tax on their consolidated income, deduct from the tax payable
the income tax that they have paid outside China on income derived from sources
outside China subject to limitations imposed by the relevant tax law. Foreign
investment enterprises, including enterprises involved in property development
in China, are therefore generally required to pay income tax at a flat rate of
30% plus a local income tax rate of 3%, on their taxable income. However,
foreign investment enterprises established and carrying on the business of
property development in Special Economic Zones of China, or SEZs, are entitled
to be taxed at a reduced rate of 15% on income derived from property development
within the SEZs. We currently have no income other than from sources in China.

     The profits or dividends received by us from a foreign investment
enterprise are free from income tax in our hands, since profits of foreign
investment enterprises remitted from China enjoy total exemption from income
tax. We currently have no income from any foreign investment enterprises.

     Chinese-sourced income directly received by foreign companies which do not
have a legal establishment in China, including gains from the transfer of
property, is subject to an income tax of 10% which is collected on a withholding
basis. Gains derived from the transfer of property, such as building structures,
attached facilities and land use rights located in China are deemed to be
Chinese-sourced income. The 10% withholding tax is reduced to

                                       69

<PAGE>

10% if the income is received from sources in the SEZs, the Economic and
Technological Development Zones or the Old Districts in the 14 Coastal Port
Cities. However, as a property developer established in China, we are not
subject to this withholding tax.


          BUSINESS TAX

     Chinese business tax is payable in respect of certain business activities
in China as set out in the Provisional Regulations of People's Republic of China
Concerning Business Tax. The activities to which the business tax applies
include construction, leases and sales of real estate properties in China. The
tax is a turnover tax charged on gross revenue. No deduction of the tax incurred
on purchased services or materials is allowed. However, deductions from gross
revenue are allowed for subcontracting fees paid among the transportation,
tourism and construction industries. The rate of business tax payable by our
property sale and leasing business is 5% multiplied by the proceeds from the
sale of our real estate/immovable properties in China.


          LAND APPRECIATION TAX

     Land appreciation tax is applicable to those entities or individuals upon
the transfer of land use rights and its attachment where a gain is generated.
This tax is calculated based on the appreciated portion of the real estate
property. The applicable marginal tax rate progresses from 30% to 60% based on
the ratio of appreciated portion to the original cost. A full exemption is
available for individual owners that assign their personal residence of five
years or more. For personal residence of more than three years but less than
five years, a 50 percent reduction of the land appreciation tax is available.

     For property developers, an additional 20% of deductible expenses may be
further deducted in the calculation of land appreciation amount. Deductible
expenses include the land use right fee incurred and other costs associated with
acquiring such right, costs associated with property development, such as a
removal fee, construction cost, basic infrastructure cost, and indirect
development cost, as well as sales expenses, management expenses and finance
expenses. Land appreciation tax is assessed on a completion basis. Net profit is
assessed after the completion of each phase to derive the tax liability.


          REGISTRATION FEES

     There are several registration procedures a house buyer has to go through
to complete the home buying process. Each involves a small fee payable by the
home buyer, including a stamp duty of 0.05% of the purchasing price, a transfer
fee of 0.5% of the house price, a deed tax of 3% of the purchasing price and a
registration service fee of RMB 3.00 per square meter of the house. On July 22,
1999, the deed tax was been reduced to 1.5% of the purchase price. Paying these
fees secure the proper registration of the real estate title to the purchaser
and thus is borne entirely by the home buyers and has no effect on us.


          PERSONAL TAX REBATE

     Shanghai has adopted a personal income tax rebate program. During the
period from June 1, 1998 to May 31, 2003, qualified home buyers may use the
purchase amount of their commodity residence units to offset their individual
taxable income. This tax rebate program requires the taxpayer to first pay off
their income tax without considering the effect of the rebate program based on
their total taxable income. The designated taxation department then refunds the
rebatable portion of individual income tax to the qualified home buyers. The
maximum

                                       70

<PAGE>
amount of the taxable income that can be offset may not exceed the net amount
paid by the home buyer in the purchase or exchange of commodity residence units,
inclusive of mortgage loan interest.


          URBAN REAL ESTATE TAX

     Foreign investment enterprises engaged in the development of and investment
in real estate in China are required to pay urban real estate tax on land and
buildings owned by them in urban areas in China. The tax is charged at a rate of
1.2% based on the original value of the property discounted by 10% to 30%. If no
original value is available, the tax chargeable is determined by the relevant
local tax authorities with reference to the value of the other properties of a
similar nature. Where the property is rented, the tax may be charged at a rate
of 12% of the rental income received in respect of such property, depending on
local regulations. We understand this tax will soon be replaced by a real estate
tax which is of a similar nature and is currently paid by domestic Chinese
companies.

          LAND USE FEES

     According to local government regulations and provisions specified in the
contract for the grant of state-owned land use rights, land users may be
required to pay for using the state-owned land in the form of land use fees.


          URBAN LAND USE TAX

     Urban land use tax is charged to residential, agricultural and business
land users. The land use tax rate is determined based on the land area involved
and is assessed by the local tax authorities on an annual basis. This tax is
currently not applicable to foreign investment enterprises.


          STAMP DUTY

     Persons who have executed or received dutiable documents within China are
subject to stamp duty. Dutiable documents include contracts or documents of a
contractual nature, for the sale of goods, the undertaking of processing work,
the contracting of construction and engineering projects, the lease of property,
and technology, as well as transfer of property. A stamp tax by each party to
the stampable documents at the rate of 0.05% is payable in respect of transfer
of properties based on the contractual price of the property transferred and at
the rate of 0.1% of the total amount of rent in respect of the leasing of
properties.


TAXATION IN THE CAYMAN ISLANDS

     The Cayman Islands currently levy no taxes on individuals or companies
based upon profits, income, gains or appreciations and there is no taxation in
the nature of inheritance tax or estate duty. There are no other taxes levied by
the Government of the Cayman Islands except stamp duties which may be
applicable, from time to time, on instruments executed in or brought within the
jurisdiction of the Cayman Islands. The Cayman Islands is not party to any
double tax treaties.

                                       71

<PAGE>

UNITED STATES FEDERAL INCOME TAXATION

     The following discussion addresses the material United States federal
income tax consequences of the ownership of Common Shares held as a capital
asset by a "U.S. Investor." A "U.S. Investor" means a person who is any of the
following:

-    a citizen or resident of the United States;

-    a corporation or partnership created or organized in or under the laws of
     the United States or any political subdivision thereof;

-    an estate the income of which is subject to U.S. federal income taxation
     regardless of its source;

-    a trust that is subject to the supervision of a court within the United
     States and the control of one or more U.S. persons; or

-    a trust that had a valid election in effect under applicable U.S. Treasury
     regulations to be treated as a U.S. person.

     The summary does not address the United States federal income tax treatment
of the following types of investors:

-    life insurance companies;

-    tax-exempt investors;

-    banks;

-    broker-dealers;

-    U.S. investors who own or that hold 10% or more of our voting shares;

-    investors who hold our Common Shares as part of straddles, hedging,
     integrated or conversion transaction; and

-    persons whose "functional currency" is not the U.S. dollar.

     Each type of investor listed above may be subject to tax rules that differ
significantly from those summarized below. You are advised to consult your own
tax adviser with respect to your particular circumstances and with respect to
the effects of state, local or foreign tax laws to which you may be subject.

     Dividends. Subject to the discussion in Passive Foreign Investment Company
Status below, in the event that a U.S. Investor receives a distribution other
than pro rata distributions of Common Shares or rights with respect to Common
Shares, on the Common Shares, such U.S. Investor will be required to include the
distribution in gross income as a taxable dividend to the extent such
distribution is paid from current or accumulated earnings and profits of the
Company as determined for United States federal income tax purposes.
Distributions in excess of the current and accumulated earnings and profits of
the Company will first be treated, for United States federal income tax
purposes, as a nontaxable return on capital to the extent of the U.S. Investor's
basis in the Common Shares and thereafter as gain from the sale or exchange of a
capital asset. Dividends paid by the Company will not be eligible for the
corporate dividends received deduction. The amount of any distribution of
property other than cash will be the fair market value of such property on the
date of distribution.

     Dividends will constitute foreign source income for foreign tax credit
limitation purposes. The limitation on foreign taxes eligible for credit is
calculated separately with respect to specific classes of income. For this
purpose, dividends distributed by the Company with respect to Common Shares will
be "passive income" or "financial services income." Special rules apply to
individuals whose foreign source income during the taxable year consists
entirely of "qualified passive income" and whose creditable foreign taxes paid
or accrued during the taxable year do not exceed $300 ($600 in the case of a
joint return). Further, in particular circumstances, a U.S. Investor that (i)
has held Common Shares for less than a specified minimum period during which it
is not protected from risk of loss, (ii) is obligated to make payments related
to the dividends or (iii) holds the Common Shares in arrangements in which the
U.S. Investor's expected economic profit, after non-U.S. taxes, is insubstantial
will not be allowed a foreign tax credit for foreign taxes imposed with respect
to dividends paid on Common Shares.

                                       72

<PAGE>
     Disposition of Shares. Subject to the discussion on Passive Foreign
Investment Company Status below, gain or loss realized by a U.S. Investor on the
sale or other disposition of the Common Shares will be subject to United States
federal income tax as capital gain or loss in an amount equal to the difference
between such U.S. Investor's basis in the Common Shares and the amount realized
on the disposition. Such capital gain or loss will be long-term capital gain or
loss if the U.S. Investor has held the Common Shares for more than one year at
the time of the sale or exchange. Gain or loss realized by a U.S. Investor will
be treated as U.S. source gain or loss for U.S. foreign tax credit purposes.

     Passive Foreign Investment Company Status. We may be a passive foreign
investment company, or a PFIC, for our 2000 taxable year or for future taxable
years. We will be classified as a PFIC if, after the application of "look
through" rules, either (1) 75% or more of the gross income of the Company in a
taxable year is passive income, or (2) the average percentage of assets by value
of the Company in a taxable year which produce or are held for the production of
passive income (which includes cash) is at least 50%. The determination of
whether or not we are a PFIC will be made annually based upon the composition of
our income and assets, including goodwill, from time to time. In calculating
goodwill, we will value our total assets based on our total market value
determined using the then share trading price of our Common Shares and will make
a number of assumptions regarding the amount of this value allocable to
goodwill. Because the determination of goodwill will be based on the price of
our shares, it is subject to change. We believe our valuation approach is
reasonable. However, it is possible that the Internal Revenue Service will
challenge the valuation of our goodwill, which may result in us being classified
as PFIC. In addition, the composition of our income and assets will be affected
by the extent to which we spend the cash we have raised (which is a passive
asset for purposes of the PFIC asset test discussed above) on acquisitions and
capital expenditures. We intend, however, to conduct our business activities in
an effort to reduce the risk of our classification as a PFIC.

     Because the PFIC determination is made at the end of each taxable year, we
cannot determine in advance whether we will be considered a PFIC for the 2001
taxable year or for any future taxable year. If we become a PFIC at any time, we
will notify all U.S. Investors who have been at any time a record shareholder by
mail within 60 days of the end of our taxable year ending March 31.

     Special U.S. tax rules apply to U.S. Investors of interest in a PFIC.
Subject to the discussion of the mark-to-market election and Qualified Electing
Fund election below, if we were a PFIC for any taxable year during which a U.S.
Investor held Common Shares, such U.S. Investor would be subject to special tax
rules regardless of whether the Common Shares continue to constitute stock in a
PFIC with respect to:

-    any "excess distribution" by us to the U.S. Investor, which means any
     distributions received by the U.S. Investor on the Common Shares in a
     taxable year that are greater than 125% of the average annual distributions
     received by the U.S. Investor in the three preceding taxable years, or the
     U.S. Investor's holding period for the Common Shares, if shorter; and
-    any gain realized on the sale or other disposition, including a pledge, of
     Common Shares.

Under these special tax rules:

-    the excess distribution or gain would be allocated ratably over the U.S.
     Investor's holding period for the Common Shares;

                                       73
<PAGE>
-    the amount allocated to the current taxable year and any taxable year prior
     to the first taxable year in which the Company is a PFIC would be treated
     as ordinary income;
-    the amount allocated to each of the other years would be taxed as ordinary
     income at the highest tax rate in effect for that year; and
-    the interest charge applicable to underpayments of tax would be imposed
     with respect to the resulting tax attributable to each prior year in which
     the Company was a PFIC to recover the deemed benefit from the deferred
     payment of the tax attributable to each year.

     If the Company is a PFIC in any year, a U.S. Investor would be required to
make an annual return on Internal Revenue Service Form 8621 regarding
distributions received with respect to the Common Shares and any gain realized
on the disposition of the Common Shares.

     Under the Tax Legislation enacted in 1997, a U.S. Investor of a PFIC is
allowed to make a mark-to-market election with respect to the stock of the PFIC,
provided that such stock is "marketable" within the meaning of the Code. The
Common Shares will be "marketable" as long as it remains listed on the Nasdaq
National Market or Nasdaq Small Cap Market. If the election is made a U.S.
Investor would be required to mark-to-market the stock each taxable year and
recognize ordinary gain for any increase in market value for such taxable year
and would be allowed to recognize an ordinary loss for any decrease in such
market value to the extent of prior gain. The adjusted basis in the stock of the
PFIC would be adjusted to reflect such gain or loss. The mark-to-market election
will be effective for the taxable year for which the election is made and all
subsequent taxable years, unless the Common Shares cease to be regularly traded
on a designated exchange or the IRS consents to the revocation of the election.

     Alternatively, a U.S. Investor can make an election to include annually its
pro rata share of a PFICs earnings and net capital gains currently in income
each year. This election is referred to as a "Qualified Electing Fund" or "QEF"
election. To make a QEF election you will need to have an annual information
statement from the PFIC setting forth the earnings and capital gains for the
year. If we were to become a PFIC, we would supply the PFIC annual information
statement to any shareholder or former shareholder who requests it. In general,
a U.S. Investor must make a QEF election on or before the due date for filing
its income tax return for the first year to which the QEF election will apply.
Under temporary U.S. treasury regulations effective January 2, 1998, U.S.
Investors will be permitted to make retroactive elections in particular
circumstances, including if the U.S. Investor had a reasonable belief that the
foreign corporation was not a PFIC and filed a protective election. As discussed
above, we will notify U.S. Investors if we become a PFIC within 60 days of the
end of our taxable year ending on December 31. This notice should provide U.S.
Investors with a calendar tax year with sufficient time to make the QEF
election. However, U.S. Investors (in particular those with a tax year other
than the calendar year) should consult their own tax advisors as to the
consequences of making a protective QEF election or other consequences of the
QEF election.

     If we are a PFIC in any year, you should consult with your tax adviser as
to whether to make a mark-to-market or QEF election.

     Information Reporting and Backup Withholding. Dividends paid in the United
States may be subject to the information reporting requirements of the U.S.
Internal Revenue Code of 1986, as amended, or the Code. Under existing
regulations, such dividends are not subject to backup withholding. Under
proposed regulations, however, such dividends are subject to backup withholding
at the rate of 31% unless the holder provides a taxpayer identification number
on a properly completed Form W-9 or otherwise establishes an exemption. Any
amounts withheld under the backup withholding rules from a payment to a U.S.
Investor will be refunded or credited against such U.S. Investor's U.S. federal
income tax liability, if any, provided that the required information is
furnished to the Internal Revenue Service.

                                       74
<PAGE>
ENFORCEABILITY OF CIVIL LIABILITIES AND CERTAIN FOREIGN ISSUER CONSIDERATIONS

     We are a Cayman Islands company. We are incorporated in the Cayman Islands
because of the following benefits associated with being a Cayman Islands
company:

     -    political and economic stability;
     -    an effective judicial system;
     -    a favorable tax system;
     -    the absence of exchange control or currency restrictions; and
     -    the availability of professional and support services.

     However, the Cayman Islands has a less developed body of securities laws as
compared to the United States and provides protections for investors to a lesser
extent. In addition, Cayman Islands companies do not have standing to sue before
the federal courts of the United States.

     A substantial majority of our assets are located outside the United States.
In addition, a majority of our directors and officers are nationals and/or
residents of countries other than the United States, and all or a substantial
portion of our or such persons' assets are located outside the United States. As
a result, it may be difficult for you to effect service of process within the
United States upon us or such persons or to enforce against them or against us,
judgment obtained in United States courts, including judgments predicated upon
the civil liability provisions of the securities laws of the United States or
any state thereof. We have appointed CT Corporation System, 1633 Broadway, New
York, New York 10019, as our agent for service of process in the United States.

     Our legal counsel has advised us that there is uncertainty as to whether
the courts of the Cayman Islands or China would (1) recognize or enforce
judgments of United States courts obtained against us or such persons predicated
upon the civil liability provisions of the securities laws of the United States
or any state thereof; or (2) be competent to hear original actions brought in
each respective jurisdiction, against us or such persons predicated upon the
securities laws of the United States or any state thereof.

     Our legal counsel has advised us that the recognition and enforcement of
foreign judgments are provided for in China Civil Procedures Law. A Chinese
court may recognize and enforce foreign judgments based on treaties between
China and the country where the judgment is made, or if reciprocity exits
between the jurisdictions.

     Our legal counsel has further advised us that a final and conclusive
judgment in federal or state courts of the United States under which a sum of
money is payable, other than a sum payable in respect of taxes, fines, penalties
or similar charges, may be subject to enforcement proceedings as a debt in the
Courts of the Cayman Islands under the common law doctrine of obligation.

                                       75
<PAGE>
     There are no treaties between China or the Cayman Islands and the United
States providing for the reciprocal enforcement of foreign judgments. However,
the courts of China and the Cayman Islands may accept a foreign judgment as
evidence of a debt due. An action may be commenced in China or the Cayman
Islands for recovery of this debt. A Cayman Islands court will only accept a
foreign judgment as evidence of a debt due, if:

     -    the judgment is for a settled amount in a civil matter;
     -    the judgment is final and conclusive and has not been stayed or
          satisfied in full;
     -    the judgment is not directly or indirectly for the payment of foreign
          taxes, penalties, fines or charges of a like nature (in this regard, a
          Cayman Islands court is unlikely to accept a judgment of an amount
          obtained by doubling, trebling or otherwise multiplying a sum assessed
          as compensation for the loss or damages sustained by the person in
          whose favor the judgment was given);
     -    the judgment was not obtained by actual or constructive fraud or
          duress;
     -    the foreign court has taken jurisdiction on grounds that are
          recognized by common law rules as to conflict of laws in the Cayman
          Islands;
     -    the proceedings in which the judgment was obtained were not contrary
          to natural justice (i.e., the concept of fair adjudication);
     -    the proceedings in which the judgment was obtained, the judgment
          itself and the enforcement of the judgment are not contrary to the
          public policy of the Cayman Islands;
     -    the person against whom the judgment is given is subject to the
          jurisdiction of the Cayman Islands courts; and
     -    the judgment is not on a claim for contribution in respect of damages
          awarded by a judgment that does not satisfy the foregoing.

     In addition, a Chinese court will only accept a foreign judgment as
evidence of a debt due if it concludes, after reviewing the judgment in
accordance with the international treaties concluded or acceded to by China or
with the principle of reciprocity, that the judgment does not contradict with
the basic principles of the Chinese law and does not violate any state
sovereignty, security and social and public interests of China.

     Enforcement of a foreign judgment in the Cayman Islands or China may also
be limited or otherwise affected by applicable bankruptcy, insolvency,
liquidation, arrangement, moratorium or similar laws relating to or affecting
creditors' rights generally and will be subject to a statutory limitation of
time within which proceedings may be brought.


DOCUMENTS ON DISPLAY

     We have previously filed with the Commission our registration statement on
Form F-1 and prospectus under the Securities Act of 1933, as amended, with
respect to our Common Shares and Warrants.

     We are subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended, or the Exchange
Act. Under the Exchange Act, we are required to file reports and other
information with the Securities and Exchange Commission. Specifically, we will
be required to file annually a Form 20-F no later than six months after the
close of each fiscal year, which is March 31. Copies of reports and other
information, when so filed, may be inspected without charge and may be obtained
at prescribed rates at the public reference facilities maintained by the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Securities and
Exchange Commission in New York, New York and Chicago, Illinois. The public may
obtain information regarding the Washington, D.C. Public Reference Room by
calling the Commission at 1-800-SEC-0330. The public may also view this Annual
Report and our prospectus at the Commission's web site at www.sec.gov. As a
foreign private issuer, we are exempt from the rules under the Exchange act
prescribing the furnishing and content of quarterly reports and proxy
statements, and officers, directors and principal shareholders are exempt from
the reporting and short-swing profit recovery provisions contained in Section 16
of the Exchange Act.

                                       76
<PAGE>
     Our financial statements have been prepared in accordance with US GAAP.

     We will furnish our shareholders with annual reports, which will include a
review of operations and annual audited consolidated financial statements
prepared in conformity with US GAAP.


ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See Item 5 Operating and Financial Review and Prospects -- Interest Rates
and Inflation Rates.

     The Company is exposed to fluctuations in interest rates and currency
exchange rates primarily with respect to borrowings. Under its current policies,
the Company does not use interest rate derivative instruments to manage exposure
to interest rate changes.


EXCHANGE RATE INFORMATION

     The consolidated financial statements of the Company are prepared in Hong
Kong dollars. The financial statements of foreign subsidiaries are translated
into Hong Kong dollars in accordance with SFAS No. 52.

     The Hong Kong dollars and Renminbi are tied to and allowed to fluctuate
within a narrow range against the value of the U.S. dollars. There is currently
restriction on the flow of Renminbi, between the PRC and the United States.
Substantially, all our revenue and expenses are denominated in Renminbi, thus we
do not believe that it is necessary to enter into derivatives contracts to hedge
our exposure to either Hong Kong or United States dollars currency.


FOREIGN CURRENCY RISK

     As of March 31, 2002, the Company has no open forward contracts or option
contracts. The Company's cash on hand as of March 31, 2002 was HK$3.5 million of
which HK$1.5 million equivalent (US$200,000) was held in US dollars deposit.


INTEREST RATE FLUCTUATIONS

     There have been no significant changes in the exposure to change in
interest rates for the year ended March 31, 2002. The Company's exposure to
interest rates is limited as the Company does not have variable rate and
long-term borrowings. The Company is subject to variable interest rates on the
bank deposits that are cash. As of March 31, 2002, a hypothetical 10% immediate
increase or decrease in interest rates would increase or decrease our annual
interest expense and income by approximately HK$356,000 and HK$45,000,
respectively.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable

                                       77
<PAGE>
                                     PART II


ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable


ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS


USE OF PROCEEDS

     The following Use of Proceeds information relates to the registration
statement on Form F-1 (File No. 333-10746), or the Registration Statement, for
our initial public offering of 2,000,000 Common Shares and 2,000,000 Warrants.
Our Registration Statement was declared effective by the Commission on March 8,
2000. Barron Chase Securities, Inc., our managing underwriter, exercised its
over-allotment option in full, 300,000 Common Shares and 300,000 Warrants, on
March 22, 2000.

     Each Warrant entitles the registered holder to purchase, at any time
through March 8, 2005, one Common Share at a price of US$ 5.75 per share,
subject to adjustment under certain circumstances.

     We received net proceeds of approximately US$ 10.61 million from our IPO,
taking into account the managing underwriter's exercise of its over-allotment
option as well as underwriting discounts of US$ 1.2 million, but not taking into
account transaction expenses of approximately US$ 1.6 million.


ITEM 15. RESERVED

     Not Applicable.


ITEM 16. RESERVED

     Not Applicable


ITEM 17. FINANCIAL STATEMENTS

     Not Applicable

                                       78
<PAGE>
                                    PART III


ITEM 18. FINANCIAL STATEMENTS

     The following consolidated financial statements for New China Homes, Ltd.
and its subsidiaries are included at the end of this Annual Report:

<TABLE>
<S>                                                                                             <C>
         Independent auditors' report..................................................................F-2
         Consolidated statements of operations for the years ended
          March 31, 2000, 2001 and 2002................................................................F-3
         Consolidated balance sheets at March 31, 2001 and 2002........................................F-4
         Consolidated statements of cash flows for the years ended
          March 31, 2000, 2001 and 2002..........................................................F-5 - F-6
         Consolidated statements of changes in stockholders'
          equity for the years ended March 31, 2000, 2001 and 2002.....................................F-7
         Notes to consolidated financial statements.............................................F-8 - F-29
</TABLE>


ITEM 19.  EXHIBITS
--------  --------
<TABLE>
<S>           <C>
Exhibit 4.1   Letter agreement dated 26th September 2001, amending the Sales
              and Purchase Agreement dated March 30, 2001 by and between New
              China Homes Limited and Wonder China Investments Limited in
              connection with the sale of Top Trend Developments Limited, by
              extending the Promissory Notes Payment date to 31st March 2002.

Exhibit 4.2   Letter agreement dated 4th March 2002, amending the Sales and
              Purchase Agreement dated March 30, 2001 by and between New China
              Homes Limited and Wonder China Investments Limited in connection
              with the sale of Top Trend Developments Limited, by extending the
              Promissory Notes Payment date to September 30, 2002.

Exhibit 4.3   Termination letter dated October 2, 2002, in respect of the
              Sales and Purchase Agreement dated March 30, 2001 by and between
              New China Homes Limited and Wonder China Investments Limited in
              connection with the sale of Top Trend Developments Limited, as
              amended.

Exhibit 99.1  Certification pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 99.2  Certification pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

                                       79
<PAGE>
                                   SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on its behalf.



                                            NEW CHINA HOMES, LTD.



                                            /s/ Peggy Pui Ki Ng
                                            ------------------------------
Date: 28 January 2003                       Name:  Peggy Pui Ki Ng
                                            Title: Chief Executive Officer

                                       80
<PAGE>

                              NEW CHINA HOMES, LTD.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<S>                                                                        <C>
Independent auditors' report.........................................             F-2

Consolidated statements of operations for the years ended
 March 31, 2000, 2001 and 2002.......................................             F-3

Consolidated balance sheets at March 31, 2001 and 2002...............             F-4

Consolidated statements of cash flows for the years ended
 March 31, 2000, 2001 and 2002.......................................       F-5 - F-6

Consolidated statements of changes in stockholders' equity
 for the years ended March 31, 2000, 2001 and 2002...................             F-7

Notes to consolidated financial statements...........................      F-8 - F-29
</TABLE>

                                      F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
New China Homes, Ltd.

We have audited the accompanying consolidated balance sheets of New China Homes,
Ltd. (the "Company") and subsidiaries as of March 31, 2001 and 2002, and the
related consolidated statements of operations, cash flows, and changes in
stockholders' equity for each of the three years in the period ended March 31,
2002, all expressed in Hong Kong dollars. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of New China Homes, Ltd. and
subsidiaries as of March 31, 2001 and 2002, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
2002, in conformity with accounting principles generally accepted in the United
States of America.

Our audits also comprehended the translation of Hong Kong dollar amounts into
U.S. dollar amounts and, in our opinion, such translation has been made in
conformity with the basis stated in Note 2. Such U.S. dollar amounts are
presented solely for the convenience of readers in the United States of America.


/s/ Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
Hong Kong
September 25, 2002 (October 2, 2002 as to note 19)

                                      F-2
<PAGE>
                              NEW CHINA HOMES, LTD.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                        Year ended March 31,
                                                               -------------------------------------------------------------------
                                                                   2000               2001               2002              2002
                                                               -----------        -----------        -----------        ----------
                                                                    HK$                HK$                HK$              US$
                                                                                                                         (note 2)
<S>                                                            <C>                <C>                <C>                <C>
Revenues:
  Home sales.............................................      174,073,893        167,845,159         72,665,615         9,316,104
  Interest income........................................          271,363             23,446                688                88
  Other income...........................................          397,586          1,139,411            456,632            58,543
                                                               -----------        -----------        -----------        ----------
  Total revenues.........................................      174,742,842        169,008,016         73,122,935         9,374,735
                                                               -----------        -----------        -----------        ----------
Cost and expenses:
  Cost of home sales (includes interest
   capitalized and released upon sales of homes
   2000: HK$2,684,925; 2001: HK$3,840,479;
   2002: HK$994,621).....................................      140,794,776        137,486,290         65,323,224         8,374,772
  Selling, general and administrative expenses
   (includes impairment loss of HK$13,000,000
   in 2002)..............................................       21,575,462         32,322,282         61,469,407         7,880,693
                                                               -----------        -----------        -----------        ----------
  Total cost and expenses................................      162,370,238        169,808,572        126,792,631        16,255,465
                                                               -----------        -----------        -----------        ----------
Income (loss) before minority interests and
 income taxes............................................       12,372,604           (800,556)       (53,669,696)       (6,880,730)
Income tax provision (note 3)............................       (7,508,689)        (5,712,188)        (2,320,628)         (297,517)
                                                               -----------        -----------        -----------        ----------
Income (loss) before minority interests..................        4,863,915         (6,512,744)       (55,990,324)       (7,178,247)
Minority interests.......................................          263,568            202,750           (618,198)          (79,255)
                                                               -----------        -----------        -----------        ----------
Net income (loss)........................................        4,600,347         (6,715,494)       (55,372,126)       (7,098,992)
                                                               ===========        ===========        ===========        ==========
Earnings (loss) per share - basic and diluted............             0.44              (0.53)             (5.48)            (0.70)
                                                               ===========        ===========        ===========        ==========
Weighted average number of shares - basic................       10,538,630         12,700,000         10,100,000        10,100,000
Effect of dilutive potential common shares:
  Warrants...............................................           36,696                  -                  -                 -
  Stock options..........................................              141                  -                  -                 -
                                                               -----------        -----------        -----------        ----------
Weighted average number of shares - diluted..............       10,575,467         12,700,000         10,100,000        10,100,000
                                                               ===========        ===========        ===========        ==========
</TABLE>


                 See notes to consolidated financial statements

                                      F-3
<PAGE>
                              NEW CHINA HOMES, LTD.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                   March 31,
                                                                            ------------------------------------------------------
                                                                                2001                  2002                  2002
                                                                            -----------           -----------           ----------
                                                                                 HK$                   HK$                  US$
                                                                                                                         (note 2)
<S>                                                                         <C>                   <C>                   <C>
ASSETS
Cash and cash equivalents...........................................          5,064,469             3,511,261              450,162
Restricted cash (note 4)............................................          8,945,022             2,253,658              288,931
Trade and other accounts receivable, net............................         40,978,692            11,908,005            1,526,667
Due from related parties (note 9)...................................          2,759,831                     -                    -
Other prepaid taxes (note 5)........................................          2,116,000             2,162,000              277,179
Prepaid expenses and other assets...................................          6,028,141             2,978,358              381,840
Land and lots under development and
 completed homes (note 6)...........................................        203,248,529           177,127,602           22,708,666
Property, equipment and construction-in-progress,
 net (note 7).......................................................         71,999,076            59,525,191            7,631,436
Deferred consulting costs...........................................          2,178,153                     -                    -
                                                                            -----------           -----------           ----------
TOTAL ASSETS........................................................        343,317,913           259,466,075           33,264,881
                                                                            ===========           ===========           ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Bank borrowings (note 8)............................................         75,474,353            41,882,981            5,369,613
Due to related parties (note 9).....................................         13,899,849            25,218,206            3,233,103
Customer deposits...................................................          2,315,445               975,603              125,077
Trade accounts payable and accrued expenses
 (note 10)..........................................................         50,004,010            41,277,889            5,292,035
Income taxes payable................................................         22,142,547            29,146,429            3,736,723
Deferred income taxes (note 3)......................................          5,063,341                     -                    -
                                                                            -----------           -----------           ----------
TOTAL LIABILITIES...................................................        168,899,545           138,501,108           17,756,551
                                                                            -----------           -----------           ----------
MINORITY INTERESTS..................................................          2,216,535             1,646,523              211,092
                                                                            -----------           -----------           ----------
COMMITMENTS AND CONTINGENCIES (note 12)
STOCKHOLDERS' EQUITY
Preferred shares US$1 par value, authorized
 5,000,000 shares and none issued and fully paid
 at March 31, 2001 and 2002 (note 11)...............................                  -                     -                    -
Common shares US$1 par value, authorized
 50,000,000 shares, issued and fully paid
 12,700,000 shares at March 31, 2001 and
 10,100,000 shares at March 31, 2002................................         98,425,000            78,275,000           10,035,257
Additional paid-in capital..........................................         57,697,964            76,755,306            9,840,424
Retained earnings (accumulated deficit).............................         18,731,755           (36,640,371)          (4,697,483)
Cumulative translation adjustment...................................         (2,652,886)              928,509              119,040
                                                                            -----------           -----------           ----------
Total stockholders' equity..........................................        172,201,833           119,318,444           15,297,238
                                                                            -----------           -----------           ----------
LIABILITIES AND STOCKHOLDERS' EQUITY................................        343,317,913           259,466,075           33,264,881
                                                                            ===========           ===========           ==========
</TABLE>

                 See notes to consolidated financial statements

                                      F-4
<PAGE>
                              NEW CHINA HOMES, LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                   Year ended March 31,
                                                              -------------------------------------------------------------
                                                                  2000            2001             2002              2002
                                                                  ----            ----             ----              ----
                                                                HK$               HK$              HK$               US$
                                                                                                                  (note 2)
<S>                                                           <C>            <C>               <C>               <C>

Cash flows from operating activities:
  Net income (loss)....................................         4,600,347      (6,715,494)     (55,372,126)      (7,098,992)
  Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
    Depreciation.......................................           727,992       1,505,194        1,588,056          203,597
    Loss on disposal of property and equipment.........                 -         110,005          239,104           30,655
    Impairment loss on property, equipment and
     construction-in-progress..........................                 -               -       13,000,000        1,666,667
    Minority interests.................................           263,568         202,750         (618,198)         (79,255)
    Amortization of deferred consulting costs..........         2,201,217       2,208,130        2,178,153          279,250
    Consultant services................................         4,940,628               -                -                -
    Amortization of consultant services................          (554,345)              -       (1,092,658)        (140,084)
    Provision for (written back of) bad debts..........           981,783         776,957         (574,472)         (73,650)
    Deferred income taxes..............................         1,354,369         (87,654)               -                -
Changes in operating assets and liabilities:
  Trade and other accounts receivable..................        10,478,867     (30,015,090)      30,096,842        3,858,570
  Advances to suppliers................................           828,908               -                -                -
  Prepaid expenses and other assets....................          (648,590)     (3,102,860)       3,159,970          405,124
  Land and lots under development and
   completed homes.....................................       (34,220,585)    (34,927,078)      30,477,226        3,907,337
  Customer deposits....................................        (5,529,882)     (8,765,334)      (1,365,010)        (175,001)
  Trade accounts payable and accrued expenses..........       (18,154,184)     33,653,977       (9,397,924)      (1,204,863)
  Due to/from related parties..........................        10,886,728     (72,444,590)       6,625,774          849,458
  Income taxes payable.................................         6,154,320       5,799,842        1,349,112          172,963
  Other taxes payable..................................        (2,973,861)              -                -                -
                                                               ----------    ------------      -----------       ----------
  Net cash (used in) provided by
   operating activities................................       (18,662,720)   (111,801,245)      20,293,849        2,601,776
                                                               ----------    ------------      -----------       ----------

Cash flows from investing activities:
  Purchase of property, equipment and
   expenditure on construction-in-progress.............       (17,081,875)    (23,984,753)      (1,677,138)        (215,018)
  Proceeds from disposal of property, equipment
   and construction-in-progress........................                 -         467,400          888,830          113,953
  Placing of restricted cash...........................       (25,306,748)              -                -                -
  Receipt of restricted cash...........................         5,295,680      14,715,893        6,789,430          870,440
  Advances to related parties..........................       (39,753,387)              -       (1,295,129)        (166,042)
                                                               ----------    ------------      -----------       ----------
  Net cash (used in) provided by investing
   activities.........................................        (76,846,330)     (8,801,460)       4,705,993          603,333
                                                               ----------    ------------      -----------       ----------
</TABLE>

                 See notes to consolidated financial statements

                                      F-5

<PAGE>
                              NEW CHINA HOMES, LTD.

                CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

<TABLE>
<CAPTION>
                                                                                  Year ended March 31,
                                                            ---------------------------------------------------------------
                                                               2000              2001             2002              2002
                                                            -----------     ------------       -----------       ----------
                                                                HK$               HK$              HK$               US$
                                                                                                                  (note 2)
<S>                                                         <C>             <C>                <C>               <C>
Cash flows from financing activities:
  Increase in bank borrowings..........................     121,240,602      122,084,000        34,780,000        4,458,974
  Repayment of bank borrowings.........................     (91,916,886)    (109,740,445)      (70,012,118)      (8,975,913)
  Advances from related parties........................      57,336,825       37,819,215         8,505,368        1,090,432
  Issuance of common shares and warrants...............      69,489,681                -                 -                -
                                                            -----------     ------------       -----------       ----------
  Net cash provided by (used in)
   financing activities................................     156,150,222       50,162,770       (26,726,750)      (3,426,507)
                                                            -----------     ------------       -----------       ----------
Net increase (decrease) in cash and
 cash equivalents......................................      60,641,172      (70,439,935)       (1,726,908)        (221,398)
Effect of foreign exchange rate changes................          90,875         (424,854)          173,700           22,269
Cash and cash equivalents, beginning of year...........      15,197,211       75,929,258         5,064,469          649,291
                                                            -----------     ------------       -----------       ----------
Cash and cash equivalents, end of year.................      75,929,258        5,064,469         3,511,261          450,162
                                                            ===========     ============       ===========       ==========
Supplemental cash flow information:
Cash paid during the year for:
  Income taxes.........................................               -                -          (971,516)        (124,553)
                                                            ===========     ============       ===========       ==========
  Interest.............................................       3,395,303        5,111,192         3,559,502          456,346
  Interest capitalized.................................      (3,395,303)      (5,111,192)       (3,559,502)        (456,346)
                                                            -----------     ------------       -----------       ----------
  Interest (net of amount capitalized).................               -                -                 -                -
                                                            ===========     ============       ===========       ==========

Non cash transactions:
  Conversion of payable to holding company to
   common shares (note 1)..............................      74,004,750                -                 -                -
                                                            ===========     ============       ===========       ==========

  Common shares issued to consultants (note 1).........       6,587,500                -                 -                -
                                                            ===========     ============       ===========       ==========
  Cancellation of common shares (Note 1)...............               -                -        20,150,000        2,583,333
                                                            ===========     ============       ===========       ==========
</TABLE>

                 See notes to consolidated financial statements

                                      F-6

<PAGE>
                              NEW CHINA HOMES, LTD.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                   Retained
                                            Common shares         Additional       earnings     Cumulative        Total
                                     --------------------------    paid-in      (accumulated   translation    stockholders'
                                       Shares          Amount       capital       deficit)      adjustment       equity
                                     ----------     -----------   ----------    ------------   -----------    -------------
                                                         HK$          HK$            HK$            HK$             HK$
<S>                                  <C>            <C>           <C>           <C>             <C>           <C>
Balance at April 1, 1999..........        1,000           7,750    1,647,000      20,846,902        69,082      22,570,734
Shares issued to Far East (note 1)    9,549,000      74,004,750            -               -             -      74,004,750
Shares issued to consultants
 (note 1)........................       850,000       6,587,500    4,940,628               -             -      11,528,128
Amortization of consultant
 services........................             -               -     (554,345)              -             -        (554,345)
Shares and warrants issued in
 conjunction with initial public
 offering net of offering costs of
  HK$21,863,444..................     2,300,000      17,825,000   51,664,681               -             -      69,489,681
Net income.......................             -               -            -       4,600,347             -       4,600,347
Translation adjustment...........             -               -            -               -       387,716         387,716
                                     ----------     -----------   ----------     -----------    ----------     -----------
Balance at March 31, 2000........    12,700,000      98,425,000   57,697,964      25,447,249       456,798     182,027,011
Net loss.........................             -               -            -      (6,715,494)            -     (6,715,494)
Translation adjustment...........             -               -            -               -    (3,109,684)     (3,109,684)
                                     ----------     -----------   ----------     -----------    ----------     -----------
Balance at March 31, 2001........    12,700,000      98,425,000   57,697,964      18,731,755    (2,652,886)    172,201,833
Net loss.........................             -               -            -     (55,372,126)            -     (55,372,126)
Amortisation of consultant
 services........................             -               -   (1,092,658)              -             -      (1,092,658)
Cancellation of shares...........    (2,600,000)    (20,150,000)  20,150,000               -             -               -
Translation adjustment...........             -               -            -               -     3,581,395       3,581,395
                                     ----------     -----------   ----------     -----------    ----------     -----------
Balance at March 31, 2002........    10,100,000      78,275,000   76,755,306     (36,640,371)      928,509     119,318,444
                                     ==========     ===========   ==========     ===========    ==========     ===========

                                                        US$           US$             US$           US$             US$
US$ equivalent - balance at
 March 31, 2002 (note 2).........                    10,035,257    9,840,424      (4,697,483)      119,040      15,297,238
                                                    ===========   ==========     ===========    ==========     ===========
</TABLE>

                 See notes to consolidated financial statements

                                      F-7
<PAGE>
                             NEW CHINA HOMES, LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS

     New China Homes, Ltd (the "Company") was incorporated in the Cayman Islands
     on January 6, 1999 as a wholly owned subsidiary of Far East Consortium
     Limited ("Far East"). Its ultimate holding company is Far East Consortium
     International Limited ("Far East Consortium"), a company incorporated in
     the Cayman Islands and listed on the Stock Exchange of Hong Kong Limited.

     In August 2001, the Company moved its common shares and warrants from
     Nasdaq National Market to the Nasdaq Small Cap Market.

     For the years ended March 31, 2001 and 2002, the Company have experienced a
     net loss of HK$6,715,494 and HK$55,372,126, or US$7,098,992, respectively,
     from operations. In addition, the Company had net current liabilities
     outstanding as of March 31, 2002. These factors raise substantial doubt as
     to the Company's ability to continue as a going concern. The Company has
     received a commitment of support from Far East Consortium, which management
     believes will allow the Company to meet its financial obligations when due
     and allow it continue as a going concern.

     On April 2, 1999, the Company entered into management service agreements
     with four consultants (the "Consultants") for a three year period effective
     on that date. In consideration, these parties were paid a total of
     US$850,000 in cash which was required under these agreements to be used in
     exchange for the issuance of a total of 850 shares at a price of US$1,000
     per share, which were also issued on that date.

     On April 2, 1999 the Company also issued 9,549 shares at US$1,000 per share
     to Far East for cash of US$9,549,000, which has been used to offset the
     payable to Far East, which amounted to US$9,795,997 at March 31, 1999.

     In preparation for the initial public offering of common shares by the
     Company, on August 10, 1999 the Company effected a recapitalization whereby
     the common shares and preferred shares authorized were increased to
     50,000,000 and 5,000,000, respectively, from 50,000 common shares and no
     preferred shares, respectively. The Company further allotted and credited
     as fully paid 9,540,450 common shares to Far East and a total of 849,150
     common shares to the above mentioned consultants at a par value of US$1
     each by utilizing the additional paid-in capital recorded in the April 1999
     issues of shares and US$999 from retained earnings. This stock split is
     reflected in the accompanying financial statements for each period
     presented and earnings per share has been computed after adjusting for the
     stock split. On the same date, the Company changed its name from China
     Homes, Limited to New China Homes, Ltd.

     On March 10, 2000, the Company was listed on Nasdaq National Market with a
     total offering of 2,300,000 common shares and 2,300,000 warrants.

     The consulting agreements between the Company and the Consultants dated
     April 2, 1999 and the share cancellation agreement dated September 29, 1999
     between the Company and Far East establish net income thresholds for the
     first and second years amounting to US$10 million and US$20 million,
     respectively, following the closing date (the "Closing Date") of the public
     offering of the Company's common shares and in each of these two years, 25%
     of the Company's common shares held by the Consultants and Far East are
     subject to redemption and cancellation by the Company in the event the net
     income thresholds are not met. For the year ended March 31, 2001, the first
     year following the Closing Date, the Company incurred a net loss of
     HK$6,715,494, or US$860,962, thereby falling under the US$10 million
     threshold. Accordingly, 2.6 million common shares were subsequently
     cancelled pursuant to these agreements.

                                      F-8
<PAGE>
                             NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


1.   ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS - continued

     For the year ended March 31, 2002, the second year following the Closing
     Date, the Company incurred a net loss of HK$55,372,126, or US$7,098,992,
     thereby falling under the US$20 million threshold. As a result, an
     additional 25% of the Company's common shares held by the Consultants and
     Far East were cancelled effective as of April 1, 2002.

     The Company operates principally through a subsidiary incorporated in the
     Hong Kong Special Administrative Region ("Hong Kong") of the People's
     Republic of China ("China") and a subsidiary in Shanghai, China.

     At March 31, 2002, the Company had the following subsidiaries:

          Far East Consortium China Investments Limited (incorporated in Hong
          Kong) - 100% owned.

          Shanghai Chingchu Property Development Company Limited ("Chingchu")
          (incorporated in China) - 98.2% owned by Far East Consortium China
          Investments Limited. Chingchu is registered as a Sino-foreign equity
          joint venture with limited liability for a period of 70 years from
          April 24, 1997 to April 23, 2067.

          Top Trend Development Limited ("Top Trend") (incorporated in the
          British Virgin Island) - 100% owned by the Company and principally
          engaged in investment holding.

          Chingchu (Shanghai) Real Estate Co., Ltd. ("Real Estate")
          (incorporated in China) - 100% owned by the Top Trend. Real Estates is
          registered as a wholly foreign owned investment with limited liability
          for a period of 15 years from January 20, 2000 to January 19, 2015.

     On March 30, 2001, the Company entered an agreement with Wonder China
     Investments Limited ("Wonder China"), a wholly-owned subsidiary of Far
     East, disposing of its 100% interest in Top Trend which owns a shopping
     centre under development, through Real Estate, located within Chingchu
     California Garden. Under the terms of this agreement, the Company agreed to
     sell to Wonder China the entire issued share capital of Top Trend and a
     debt in the approximate amount of HK$18,414,717 advanced as a shareholder
     loan by the Company to Top Trend, in exchange for HK$1,280,000 in cash paid
     (the "Deposit") as of March 30, 2001 and a HK$126,720,000 promissory note
     (the "Promissory Note"). As of March 31, 2001, the Company had only
     received an amount of HK$1,280,000 from Wonder China out of a total
     consideration of HK$128,000,000; accordingly, this transaction had been
     accounted for using the deposit method. During 2001 and 2002, the Company
     did not recognize any revenue or profit on the sale, did not record a note
     receivable due from Wonder China and continued to include the operating
     results, cash flows and financial condition of Top Trend in the
     accompanying consolidated financial statements. Cash received from Wonder
     China is reported as a deposit received included in due to related parties
     in the accompanying balance sheets as of March 31, 2001 and 2002. The
     transaction was subsequently terminated, refer to note 19 for details.

                                      F-9
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


1.   ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS - continued

     The Company, through its Hong Kong subsidiary, owns Chingchu which is
     developing a property in Shanghai for the sale of residential housing in a
     development area known as Chingchu California Gardens. The Company is
     currently dependent on this project for its earnings and its revenues and
     profitability may be affected by a number of factors including local market
     conditions, regulatory approvals, availability of financing to the Company
     and prospective purchasers of Chingchu's real estates.

     Accounting principles generally accepted in the United States of America
     ("US GAAP") differ from those used in the statutory accounts of its
     subsidiaries in China, which are prepared in accordance with the accounting
     principles and the relevant financial regulations applicable to the joint
     venture as established by the Ministry of Finance of China.

     The dividends from the Company will be declared based on the profits
     reported in the statutory financial statements of the subsidiaries. No
     dividends had been declared for the three years ended March 31, 2002.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of consolidated financial statements - The accompanying financial
     statements have been prepared in conformity with US GAAP.

     Principles of consolidation - The consolidated financial statements include
     the assets, liabilities, revenues and expenses of all subsidiaries. All
     material intercompany transactions and balances have been eliminated in
     consolidation.

     Cash and cash equivalents - Cash and cash equivalents include cash on hand,
     cash accounts, interest bearing savings accounts, and time certificates of
     deposit with maturity of three months or less when purchased.

     Land and lots under development and completed homes - Land and lots under
     development and completed homes comprise of land at cost, construction
     costs, interest costs and attributable profit to date, less sales proceeds
     received and receivable and provision for possible losses to write down to
     fair value. The estimates utilized in calculating fair value of land, lots
     under development and completed homes require significant judgment relating
     to the level of sales prices, rate of new home sales, amount of marketing
     costs and price discounts needed in order to stimulate sales, rate of
     increase in the cost of building materials and labor, introduction of
     building code modifications, and level of consumer confidence in the
     economy. Accordingly, it is likely that changes in estimates will occur.
     However, these changes in estimates are not expected to be material. During
     the years ended March 31, 2000, 2001 and 2002 there were no provisions made
     for impairment of these assets.

                                      F-10
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     Costs related to development of land or construction are capitalized. The
     cost of land and construction is allocated to sales based on area methods
     such as specific identification as allocation based on relative value is
     impracticable. Construction costs include all subcontractors, direct
     material and labor costs, and utility connection rights as well as indirect
     costs related to subcontract or performance, such as indirect labor and
     supplies. Indirect costs that do not clearly relate to development or
     construction, including general and administrative expenses, are charged to
     expense as incurred. Real estate taxes, insurance and interest are
     capitalized only during the period in which activities necessary to get the
     property ready for its intended use are in progress.

     Completed homes are held for sale and stated at the lower of cost or fair
     value less costs to sell and are reported net of valuation reserves.

     Property, equipment and construction-in-progress - Property and equipment
     are stated at cost. Depreciation and amortization is provided using the
     straight line method based on the estimated useful lives of the property
     and equipment, after taking into account their residual value, being 5 to
     15 years. No impairment existed at March 31, 2002 or March 31, 2001.

     Construction-in-progress represents the common facilities of Chingchu
     California Gardens which are currently under construction. These facilities
     will be retained by the Company as fixed assets upon completion of the
     construction. The cost includes interest arising from borrowings used to
     finance these assets during the period of construction. Interest
     capitalized was HK$938,062 in 2000, HK$730,495 in 2001 and HK$787,843 in
     2002. The Company intends to retain ownership of the common facilities and
     either operate them or eventually sell the amenities. This has yet to be
     decided. The Company assesses the need, if any, for an impairment
     adjustment based on the fair value of the amenities using an undiscounted
     cash flow model. Upon completion, the common facilities will be depreciated
     over a period of 15 years. During the year ended March 31, 2002, impairment
     loss amounting to HK$13,000,000 has been provided for the
     construction-in-progress.

     Deferred consulting costs - Deferred consulting costs represents those
     costs paid to four consultants in respect of management service agreements
     as discussed in note 1. These costs shall be recognized over the periods of
     the service and any unearned portion shall be shown as an asset in the
     balance sheet.

     Income taxes - The charge/credit for income taxes is based on the results
     for the year as adjusted for items which are non-assessable or disallowed.
     Temporary differences arise from the recognition for tax purposes of
     certain items of income and expense in a different accounting period from
     that in which they are recognized in the financial statements. The tax
     effect of temporary differences, computed under the liability method, is
     recognized as deferred taxation in the financial statements. A valuation
     allowance is provided to the extent realisation of deferred tax assets is
     not considered as more likely than not.

                                      F-11
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     Allowance for warranties - Homes sold are provided with a two-year warranty
     against certain building defects as stipulated in China building
     regulations. This is covered by a warranty from the contractors who have
     built the homes. The Company does not record any warranty costs. A portion
     of the amounts to be paid to the contractors is withheld by the Company to
     cover any potential liability under this warranty. Historically, excess
     cash retained by the Company was adequate to cover the warranty
     liabilities.

     Recognition of revenue - When homes are sold in advance of completion,
     profit recognized is calculated under a percentage of completion method
     when construction has progressed beyond the preliminary stage. Each phase
     is accounted for on an individual building-by-building basis. The
     percentage used is the proportion of construction cost (including land and
     common costs allocated) incurred at the balance sheet date to estimated
     total construction cost. Revenues recognized on this basis are limited to
     the amount of sales proceeds received and receivable.

     Foreign currency translation - Assets and liabilities denominated in
     currencies other than the respective functional currency are translated at
     year end exchange rates, while revenues and expenses are translated at
     average exchange rates during the year. Gains or losses from such foreign
     currency transactions are included in net income and amounted to a loss of
     HK$191,672 in 2000, a gain of HK$55,655 in 2001 and a loss of HK$879,725 in
     2002.

     On consolidation, the financial statements of the Chinese operations are
     translated from Renminbi, the functional currency, into Hong Kong dollars.
     Accordingly, all assets and liabilities are translated at the exchange rate
     prevailing at the balance sheet date and all income and expenditure items
     are translated at the average rates for each of the years. Adjustments
     arising from translating the foreign currency financial statements are
     reported as a separate component of stockholders' equity.

     Earnings (loss) per share - Basic earnings (loss) per share was computed
     based on a weighted average number of shares outstanding of 10,538,630 in
     2000, 12,700,000 in 2001 and 10,100,000 in 2002. Basic earnings (loss) per
     share for 2000, 2001 and 2002 is equal to diluted earnings per share. For
     2000, diluted earnings per share reflected potential dilution that could
     occur if the stock options and warrants issued were converted into common
     shares, unless the effects are antidilutive. Basic earnings per share for
     2000 is equal to diluted earnings per share since the dilutive effect of
     the share options and warrants is insignificant. For 2001 and 2002, the
     share options and warrants were excluded from the diluted weighted average
     number of shares as their effect were antidilutive.

     For 2001 and 2002, warrants were excluded from the diluted weighted average
     number of shares as their effect were antidilutive.

     Use of estimates - The preparation of financial statements in conformity
     with US GAAP requires management to make estimates and assumptions that
     affect the reported amounts of assets and liabilities and disclosures of
     contingent assets and liabilities at the date of the financial statements
     and the reported amounts of revenues and expenses during the reporting
     period. Actual results could differ from those estimates.

                                      F-12
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     Business risk - Any substantial change in economic conditions, interest
     rates, currency exchange rates or significant price fluctuation related to
     the real estate industry could affect the Company's operations and have a
     material impact on the Company's business. In addition, the Company is
     subject to competition from other entities engaged in the business of
     building homes throughout China.

     Accounting Principles Recently Issued and Not Yet Adopted

     In June 2001, Statement of Financial Accounting Standards ("SFAS") No. 142,
     "Goodwill and Other Intangible Assets" was issued. The provisions of this
     statement are required to be applied starting with fiscal years beginning
     after December 15, 2001. This statement is required to be applied at the
     beginning of an entity's fiscal year and to be applied to all goodwill and
     other intangible assets recognized in its financial statements at that
     date. The statement requires that goodwill and certain other intangibles
     with an indefinite life, as defined in the standard, no longer be
     amortized. However, goodwill and such intangibles would have to be assessed
     each year to determine whether an impairment loss had occurred. Any
     impairment recognized upon adoption would be recorded as a change in
     accounting principle. Future impairments would be recorded in income from
     continuing operations. The statement provides specific guidance for testing
     goodwill for impairment. Based upon current information, management
     believes there has been no impairment of the carrying amount of assts the
     Company has of the report date, as a result, management expects there to be
     no effect on the financial position or results of operations of the
     Company.

     In August 2001, the Financial Accounting Standards Board ("FASB") issued
     SFAS No. 143, "Accounting for Asset Retirement Obligations". This statement
     addresses the diverse accounting practices for obligations associated with
     the retirement of tangible long-lived assets and the associated asset
     retirement costs. The Company will be required to adopt this standard on
     April 1, 2003. Management is assessing, but has not yet determined, the
     impact that SFAS No. 143 will have, if any, on its financial position and
     results of operations.

     The FASB also issued SFAS No. 144, "Accounting for the Impairment or
     Disposal of Long-Lived Assets", that is applicable to financial statements
     issued for fiscal years beginning after December 15, 2001. The FASB's new
     rules on asset impairment supersede SFAS No. 121, "Accounting for the
     Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
     of", and portions of APB Opinion No. 30, "Reporting the Results for
     Operations". The statement requires a single accounting model for
     long-lived assets to be disposed of and significantly changes the criteria
     that would have to be met to classify an asset as held-for-sale.
     Classification as held-for-sale is an important distinction since such
     assets are not depreciated and are stated at the lower of fair value and
     carrying amount. The statement also requires expected future operating
     losses from discontinued operations to be recorded in the periods in which
     the losses are incurred, rather than as of the measurement date as
     previously required. The Company will be required to adopt this standard on
     April 1, 2002. Management is assessing, but has not yet determined, the
     impact that SFAS No. 144 will have, if any, on its financial position and
     results of operations.

                                      F-13
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
     4, 44 and 64, Amendment to FASB Statement 13, and Technical Corrections".
     One of the major changes of this statement is to change the accounting for
     the classification of gains and losses from the extinguishment of debt.
     Upon adoption the Company will follow Accounting Principles Board Opinions
     No. 30, Reporting the Results of Operations - Reporting the Effects of
     Disposal of a Segment of a Business, and Extraordinary, Unusual and
     Infrequently Occurring Events and Transactions in determining whether such
     extinguishment of debt may be classified as extraordinary. The provisions
     of this statement related to the rescission of FASB Statement 4 shall be
     applied in fiscal years beginning after May 15, 2002 with early application
     encouraged. Management is assessing, but has not yet determined, the impact
     that SFAS No. 145 will have, if any, on its financial position and results
     of operations.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
     Associated With Exit or Disposal Activities", which addresses financial
     accounting and reporting for costs associated with exit or disposal
     activities and nulifies Emerging Issues Task Force ("EITF") Issue No. 94-3
     "Liability Recognition for Certain Employee Termination Benefits and Other
     Costs to Exit an Activity (including Certain Costs Incurred in a
     Restructuring.) SFAS No. 146 requires that a liability for a cost
     associated with an exit or disposal activity be recognized when the
     liability is incurred. This statement also establishes that fair value is
     the objective for initial measurement of the liability. The provisions of
     SFAS No. 146 are effective for exit or disposal activities that are
     initiated after December 31, 2002. Management is assessing, but has not yet
     determined, the impact that SFAS No. 146 will have, if any, on its
     financial position and results of operations.

     Convenience translation into United States Dollars - The consolidated
     financial statements of the Company are expressed in Hong Kong Dollars. The
     translations of Hong Kong dollar amounts into United States dollars are
     included solely for the convenience of the readers and have been made at a
     rate of HK$7.8 to US$1, the approximate rate of exchange on March 31, 2002.
     Such translations should not be construed as representations that the Hong
     Kong dollar amounts could be converted into United States dollars, at that
     rate or any other rate.

                                      F-14
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


3.   INCOME TAXES

     CAYMAN ISLANDS:

     The  Company is not taxed in the Cayman Islands where it is incorporated.

     HONG KONG:

     The Company's subsidiary incorporated in Hong Kong is subject to Hong Kong
     taxation on its trading activities conducted in Hong Kong at 16%. Under the
     current Hong Kong laws, dividends and capital gains arising from the
     realization of investments are not subject to income taxes and no
     withholding tax is imposed on payments of dividends by Hong Kong
     incorporated subsidiaries to the Company.

     CHINA:

     Under the existing Chinese tax regulations, the sales of real estate in
     advance of completion is subject to provisional income tax. Income tax is
     calculated based on the 33% of the assessable profits arising in China.

     The components of income (loss) before minority interests and income taxes
     are as follows:

<TABLE>
<CAPTION>
                                                                                          March 31,
                                                              ---------------------------------------------------------------------
                                                                 2000               2001                 2002                2002
                                                              ----------         -----------         -----------         ----------
                                                                  HK$                HK$                  HK$                US$
                                                                                                                          (note 2)
<S>                                                           <C>                <C>                 <C>                 <C>
China ...............................................         22,083,728          15,969,458         (35,703,389)        (4,577,357)
Hong Kong ...........................................         (9,711,124)        (16,770,014)        (17,966,307)        (2,303,373)
                                                              ----------         -----------         -----------         ----------
                                                              12,372,604            (800,556)        (53,669,696)        (6,880,730)
                                                              ==========         ===========         ===========         ==========
</TABLE>

     The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                   Year ended March 31,
                                                   ---------------------------------------------------------------------------------
                                                      2000                    2001                    2002                   2002
                                                   ----------              ----------              ----------              --------
                                                       HK$                     HK$                     HK$                    US$
                                                                                                                           (note 2)
<S>                                                <C>                     <C>                     <C>                     <C>
China:
  Current ............................             (6,154,320)             (5,799,842)             (2,320,628)             (297,517)
  Deferred ...........................             (1,354,369)                 87,654                       -                     -
                                                   ----------              ----------              ----------              --------
                                                   (7,508,689)             (5,712,188)             (2,320,628)             (297,517)
                                                   ==========              ==========              ==========              ========
</TABLE>

                                      F-15
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


3.   INCOME TAXES - continued

     A reconciliation between the provision for income taxes computed by
     applying the China statutory tax rate of 33% for each period to income
     (loss) before minority interests and income taxes and the actual provision
     for income taxes is as follows:

<TABLE>
<CAPTION>
                                                                                       Year ended March 31,
                                                               --------------------------------------------------------------------
                                                                  2000               2001                2002               2002
                                                               ----------         ----------          ----------          ---------
                                                                   HK$                HK$                 HK$                US$
                                                                                                                          (note 2)
<S>                                                            <C>                <C>                 <C>                 <C>
Standard income tax rate applied to
 (income) loss before minority
 interests and income taxes ...........................        (4,082,959)           264,813          17,711,000          2,270,641
Effect of no benefit attributable to
 tax loss for Hong Kong operations ....................        (2,997,691)        (5,534,734)         (5,928,881)          (760,113)
Interest expense not deductible in
 Hong Kong ............................................          (206,980)          (277,950)            (94,243)           (12,082)
Expenses not deductible in China ......................          (193,254)          (164,317)         (4,848,076)          (621,549)
Increase in valuation allowance .......................                 -                  -          (6,839,800)          (876,897)
Effect of tax law change relating to
 prior years (Note) ...................................                 -                  -          (2,320,628)          (297,517)
Other .................................................           (27,805)                 -                   -                  -
                                                               ----------         ----------          ----------          ---------
Income taxes ..........................................        (7,508,689)        (5,712,188)         (2,320,628)          (297,517)
                                                               ==========         ==========          ==========          =========
</TABLE>


     Note: In accordance with a new Chinese tax regulation issued in
           December 2001, the calculation of taxable profit of companies
           in the real estate industry was clarified and the taxable
           profit should be based on the actual accrual basis. This
           change resulted in an additional tax obligation relating to
           fiscal year 2001 of HK$3,816,581 and an over provision of
           HK$1,495,953 prior to fiscal year 2001. There amounts were
           recorded in 2002.

     The  components of deferred tax liability (asset) are as follows:

<TABLE>
<CAPTION>
                                                                                           2001             2002             2002
                                                                                         ---------       ----------        --------
                                                                                            HK$              HK$              US$
                                                                                                                           (note 2)
<S>                                                                                      <C>             <C>               <C>
Deferred tax liability (asset):
Difference in income recognition for home sales ..................................       5,063,341                -               -
Tax losses .......................................................................               -       (2,549,800)       (326,897)
Impairment loss of property, equipment and
 construction-in-progress ........................................................               -       (4,290,000)       (550,000)
                                                                                         ---------       ----------        --------
Deferred tax (asset) liability before valuation
 allowance .......................................................................       5,063,341       (6,839,800)       (876,897)
Valuation allowance ..............................................................               -        6,839,800         876,897
                                                                                         ---------       ----------        --------
Net deferred tax liability .......................................................       5,063,341                -               -
                                                                                         =========       ==========        ========
</TABLE>

                                      F-16
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


4.   RESTRICTED CASH

     Chingchu has entered into agreements with certain banks in respect of
     mortgage loans provided to home buyers of Chingchu California Gardens. In
     accordance with those agreements, Chingchu deposits either 10% of the
     consideration of the properties sold and financed under the mortgage loans
     or between 10% and 20% of the amount of financing provided as a guarantee
     for settlement of the mortgage installments. Should mortgagors fail to pay
     mortgage installments, the bank can draw down the deposits up to the amount
     of mortgage installments not paid during the period from the mortgage
     drawdown to the date of releasing such guarantees. The guarantees will be
     released when the property title deeds are passed to banks as security for
     the respective mortgage loans. At March 31, 2001 and 2002, deposits of
     HK$4,511,030 and HK$697,638, respectively, were placed with banks to
     guarantee the above agreements.

     At March 31, 2001 and 2002, deposits of HK$4,433,992 and HK$1,556,020
     respectively, had been pledged with banks as security for short-term bank
     borrowings.


5.   OTHER PREPAID TAXES

<TABLE>
<CAPTION>
                                                                                             March 31,
                                                                           --------------------------------------------
                                                                             2001              2002              2002
                                                                           ---------         ---------         --------
                                                                              HK$               HK$               US$
                                                                                                               (note 2)
<S>                                                                        <C>               <C>               <C>
     Provisional land appreciation tax........................             2,116,000         2,162,000         277,179
                                                                           =========         =========         =======
</TABLE>

     In accordance with the Land Appreciation Tax Law of China, all legal
     entities and individuals receiving income from the transfer of state-owned
     land use rights or buildings and their attached facilities are subject to
     land appreciation tax.

     Land appreciation tax is charged on the appreciated amount at the
     applicable rate. The amount of appreciation is calculated on the basis of
     sales proceeds received less deductible items. Deductible items include
     fees for land use rights acquisition, development costs and expenses for
     new buildings and facilities and other deductions as prescribed by the
     Ministry of Finance in China. The applicable rates are progressive ranging
     from 30% to 60% depending on the percentage of the appreciated amount over
     deductible costs.

     In accordance with the Land Appreciation Tax Law, the Company, being a
     taxpayer involved in real estate development, is entitled to an additional
     deduction equal to 20% of the aggregate of land use rights acquisition
     costs and land development costs, as defined in the law, in computing the
     land appreciation tax.

     In addition, as the Company sells ordinary standard residential apartments,
     as defined in the relevant regulations, the Company is exempted from land
     appreciation tax if the appreciated amount over the deductible cost is less
     than 20%. If the amount of the appreciated amount exceeds the deductible
     costs by more than 20%, the entire amount of the appreciation will be
     subject to land appreciation tax as stated above. The Company had made a
     provisional payment to the relevant Tax Bureau in 2000. In accordance with
     the above rule, the land appreciation tax will be finalized with the
     relevant tax bureau upon completion of the Chingchu California Gardens.
     According to the information available and management's estimates as of
     March 31, 2002, management believes that the Company is not liable for Land
     Appreciation Tax and the full amount of tax paid amounting to HK$2,116,000
     (Rmb2,300,000) will be refunded upon completion of the whole project.

                                      F-17
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


6.   LAND AND LOTS UNDER DEVELOPMENT AND COMPLETED HOMES

     In May 1997, the Company's subsidiary, Chingchu, commenced construction of
     a residential community called Chingchu California Gardens on a site in
     Shanghai, China. The project is being developed and sold on a phase basis
     and a total of 7 phases are planned for development. The planned
     development period spans from 1997 to 2008, during which approximately
     8,000 units are to be constructed in a planned area of approximately
     1,334,000 square meters. As at March 31, 2002, the Company has obtained the
     land use rights which represent the legal ownership of five plots of land
     for the development of Phases 1 through 5. This represents approximately
     604,300 square meters.

     After obtaining the pre-sales certificates from the Shanghai House and Land
     Administration Bureau, sales of units in Phase 2, Phase 3 and Phase 4
     commenced during the years ended March 31, 1999, 2000 and 2001,
     respectively, and sales of units in Phase 5 commenced during the year ended
     March 31, 2002.

     At the balance sheet dates, land and lots under development and completed
     houses comprised:

<TABLE>
<CAPTION>
                                                                                                    March 31,
                                                                            --------------------------------------------------------
                                                                                2001                   2002                  2002
                                                                            -----------            -----------            ----------
                                                                                 HK$                    HK$                   US$
                                                                                                                           (note 2)
<S>                                                                         <C>                    <C>                    <C>
         Completed homes .......................................             79,986,412             26,557,251             3,404,776
         Land held under 70 years lease,
          at cost ..............................................             44,785,684             41,171,419             5,278,387
         Construction costs of lots under
          development ..........................................             78,476,433            109,398,932            14,025,503
                                                                            -----------            -----------            ----------
                                                                            203,248,529            177,127,602            22,708,666
                                                                            ===========            ===========            ==========
</TABLE>


         As of March 31, 2002, included above are completed homes and land and
         lots under development amounting to HK$4,600,360 (2001: HK$26,753,600)
         and HK$30,136,400 (2001: HK$26,763,600), respectively, which have been
         pledged as security for the bank borrowings.

         As common in the construction industry, contractors may from time to
         time make additional claims for work done beyond the amounts specified
         in the construction contracts. The Company has received such additional
         claims amounting to approximately HK$15 million relating to
         construction work carried out by contractors prior to March 31, 2001
         (inclusive of the amounts of HK$14 million set out in note 12). Such
         claims are subject to negotiation between the Company and the
         contractors, and failing negotiation, arbitration by an independent
         quantity surveyor. Of this amount, approximately HK$5.9 million related
         to work encompassed by the construction contract which has not been
         paid by Chingchu, has been recorded as a liability in the accompanying
         financial statement as of March 31, 2002.

                                      F-18
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


7.   PROPERTY, EQUIPMENT, AND CONSTRUCTION-IN-PROGRESS, NET

     Property, equipment and construction-in-progress consists of the following:

<TABLE>
<CAPTION>
                                                                                                      March 31,
                                                                                 ---------------------------------------------------
                                                                                    2001                 2002                 2002
                                                                                 ----------           ----------           ---------
                                                                                     HK$                  HK$                  US$
                                                                                                                            (note 2)
<S>                                                                              <C>                  <C>                  <C>
         At cost:
         Land and building ...........................................           34,362,242           35,309,247           4,526,827
         Construction-in-progress ....................................           33,770,017           22,944,902           2,941,654
         Machinery and equipment .....................................               37,260               38,070               4,882
         Furniture and fixtures ......................................            1,349,641            1,390,486             178,268
         Motor vehicles ..............................................            4,107,200            2,475,260             317,341
         Electric equipment ..........................................            1,115,838            1,150,876             147,547
                                                                                 ----------           ----------           ---------
         Total .......................................................           74,742,198           63,308,841           8,116,519
         Less:
         Accumulated depreciation and amortization ...................            2,743,122            3,783,650             485,083
                                                                                 ----------           ----------           ---------
         Net book value ..............................................           71,999,076           59,525,191           7,631,436
                                                                                 ==========           ==========           =========
</TABLE>

     Depreciation and amortization expense for the years ended March 31, 2000,
     2001 and 2002 was HK$727,992, HK$1,505,194 and HK$1,588,056, respectively.


8.   BANK BORROWINGS

<TABLE>
<CAPTION>
                                                                                               March 31,
                                                                   -----------------------------------------------------------------
                                                                      2001                        2002                       2002
                                                                   ----------                  ----------                  ---------
                                                                       HK$                         HK$                        US$
<S>                                                                <C>                         <C>                         <C>
Short term ......................................                  69,598,000                  41,882,981                  5,369,613
Long term .......................................                   5,876,353                           -                          -
                                                                   ----------                  ----------                  ---------
                                                                   75,474,353                  41,882,981                  5,369,613
                                                                   ==========                  ==========                  =========
</TABLE>

     The weighted average interest rate on long term borrowings was 6.95% as of
     March 31, 2001. At March 31, 2002, the Company and its subsidiaries did not
     have any unutilised facilities.

                                      F-19
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


8.   BANK BORROWINGS - continued

     As at March 31, 2001 and 2002, short-term bank borrowings are bearing
     interest at approximately 6.0% and 6.4%, respectively, per annum. As of
     March 31, 2001, the long term bank borrowings were bearing interest at US
     dollar prime rate plus 2% per annum.

     The bank borrowings are secured by:

     (i)   guarantee given by the holding company of the minority shareholder of
           Chingchu at no cost to the Company;
     (ii)  guarantee give by a subsidiary of Far East at no cost to the Company;
     (iii) cash deposit (note 4);
     (iv)  land and lots under development of Chingchu (note 6); and
     (v)   completed homes of Chingchu (note 6).

     Total interest costs incurred, expensed and capitalized relating to bank
     borrowings were:

<TABLE>
<CAPTION>
                                                                                                   March 31,
                                                                            -------------------------------------------------------
                                                                               2000           2001           2002            2002
                                                                            ----------     ----------      ---------      ---------
                                                                                HK$            HK$            HK$             US$
                                                                                                                          (note 2)
<S>                                                                         <C>            <C>             <C>            <C>
         Interest capitalized at beginning of the year:
           Land and lots under development .............................     4,301,952      4,265,394      2,656,924        340,631
           Completed homes .............................................        70,857        257,714      1,720,700        220,603
           Construction-in-progress ....................................     1,404,619      1,964,698      2,612,555        334,943
                                                                            ----------     ----------      ---------      ---------
           Total interest capitalization ...............................     5,777,428      6,487,806      6,990,179        896,177
                                                                            ==========     ==========      =========      =========
         Interest capitalized at beginning
          of the year ..................................................     5,777,428      6,487,806      6,990,179        896,177
         Plus interest incurred ........................................     3,395,303      5,111,192      3,559,502        456,346
         Less interest expensed as cost of
          home sales ...................................................    (2,684,925)    (3,840,479)      (994,621)      (127,516)
         Less interest transferred to property
          and equipment ................................................             -       (768,340)             -              -
                                                                            ----------     ----------      ---------      ---------
         Interest capitalized at end of the year .......................     6,487,806      6,990,179      9,555,060      1,225,007
                                                                            ==========     ==========      =========      =========
         Interest capitalized at end of the year:
           Land and lots under development .............................     4,265,394      2,656,924      5,472,390        701,588
           Completed homes .............................................       257,714      1,720,700        625,370         80,176
           Construction-in-progress ....................................     1,964,698      2,612,555      3,457,300        443,243
                                                                            ----------     ----------      ---------      ---------
           Total interest capitalization ...............................     6,487,806      6,990,179      9,555,060      1,225,007
                                                                            ==========     ==========      =========      =========
</TABLE>

                                      F-20
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


9.   RELATED PARTY TRANSACTIONS

     At the balance sheet dates the Company and its subsidiaries had balances
     with the following parties:

<TABLE>
<CAPTION>
                                                                                                           March 31,
                                                                                         -------------------------------------------
                                                                             Notes          2001             2002             2002
                                                                             -----       ----------       ----------       ---------
                                                                                             HK$              HK$             US$
                                                                                                                           (note 2)
<S>                                                                          <C>         <C>              <C>              <C>
         Due from related parties:
           Subsidiaries of Far East
            Consortium ...............................................       (i)          2,759,831                -               -
                                                                                         ==========       ==========       =========
         Due to related parties:
           Subsidiaries of Far East
            Consortium ...............................................       (i)          1,653,900        1,577,578         202,254
           Far East ..................................................       (ii)         5,312,661       13,933,522       1,786,349
           Party related to the minority
            shareholder of Chingchu ..................................       (iii)        6,933,288        9,707,106       1,244,500
                                                                                         ----------       ----------       ---------
                                                                                         13,899,849       25,218,206       3,233,103
                                                                                         ==========       ==========       =========
</TABLE>

     (i)  The amounts due from/to related companies represent unsecured advances
          which are interest free and repayable on demand.

     (ii) The amount is unsecured, interest free and has no fixed repayment
          terms.

                                      F-21
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


9.   RELATED PARTY TRANSACTIONS - continued

     (iii) At March 31, 2001, the amount due to the party related to the
           minority shareholder of Chingchu represented payables for land fees
           amounting to HK$6,933,288. Transactions in each year with this party,
           which are included in the land and construction costs of Chingchu
           California Gardens, are as follows.

<TABLE>
<CAPTION>
                                                                               Year ended March 31,
                                                                  ---------------------------------------------
                                                                     2001              2002              2002
                                                                  ----------         ---------        ---------
                                                                      HK$               HK$              US$
                                                                                                      (note 2)

<S>                                                               <C>                <C>              <C>
      Land fees and costs.............................            20,187,321                 -                -
      External infrastructure costs...................             9,782,091                 -                -
                                                                  ----------         ---------        ---------
                                                                  29,969,412                 -                -
                                                                  ==========         =========        =========
</TABLE>


     The average amount due to the party related to the minority shareholder
     during the year ended March 31, 2001 and 2002 was HK$13,361,396 and
     HK$11,190,039, respectively. The party related to the minority shareholder
     did not charge the Company any interest during the years ended March 31,
     2001 and 2002.

     At March 31, 2002, the amount due to the related party represented
     unsecured advances which are interest free and repayable on demand.


10.  TRADE ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Components of trade accounts payable and accrued expenses are as follows:

<TABLE>
<CAPTION>
                                                                                                    March 31,
                                                                                 -----------------------------------------------
                                                                                    2001               2002              2002
                                                                                 ----------         ----------         ---------
                                                                                     HK$                HK$               US$
                                                                                                                       (note 2)
<S>                                                                              <C>                <C>                <C>
     Trade accounts payable ............................................         37,268,496         19,775,038         2,535,261
     Business tax payable ..............................................          4,771,968          4,742,817           608,053
     Accrued expenses ..................................................          7,963,546         16,710,034         2,148,721
                                                                                 ----------         ----------         ---------
                                                                                 50,004,010         41,277,889         5,292,035
                                                                                 ==========         ==========         =========
</TABLE>

                                      F-22
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


10.  TRADE ACCOUNTS PAYABLE AND ACCRUED EXPENSES - continued

     During the year ended March 31, 2002, a new regulation has been imposed by
     the Chinese government such that the property developers have to contribute
     an amount calculated based on the floor area of the properties developed to
     the Chinese government as maintenance charges of the properties. During the
     year ended March 31, 2002, an amount of approximately HK$10,708,000 has
     been recognized in the consolidated statements of operations as a component
     of selling, general and administrative expenses of which an amount of
     HK$5,851,000 is unpaid as of March 31, 2002 and is included in accrued
     expenses. Included in the maintenance charges of HK$10,708,000,
     HK$1,694,000, HK$2,038,000 and HK$893,000 relate to properties sold for the
     year ended March 31, 2000, 2001 and 2002, respectively. The remaining
     balance of HK$6,083,000 relates to properties sold before April 1, 1999.


11.  STOCKHOLDERS' EQUITY

     Warrants

     In conjunction with the initial public offering of its shares, the Company
     issued 2,300,000 warrants. Each warrant entitles the holder thereof to
     purchase, at any time up to March 7, 2005, one common share at a price of
     US$5.75 per share, after which date the warrants will expire.

     The warrants are subject to redemption by the Company, at the option of the
     Company, at US$0.25 per warrant, upon 30 days' prior written notice, if the
     closing bid price, as reported on the Nasdaq National Market, or the
     closing sale price, as reported on a national or regional securities
     exchange, as applicable, of the common shares for 30 consecutive trading
     days ending within ten days of the notice of redemption of the warrants
     averages in excess of US$10.00 per share, subject to adjustment. In the
     event the Company exercises the right to redeem the warrants, such warrants
     will be exercisable until the close of business on the date of redemption
     stated in such notice. If any warrant called for redemption is not
     exercised by such time, it will cease to be exercisable and the holder will
     be entitled only to the redemption price. No warrants were redeemed during
     2000, 2001 or 2002.

     In addition to the warrants issued in conjunction with the initial public
     offering, the Company issued to the managing underwriter and/or persons
     related to the managing underwriter, for nominal consideration, warrants to
     purchase up to 200,000 common shares at an exercise price of $8.25 per
     share and warrants to purchase up to 200,000 additional warrants at an
     exercise price of $0.20625 per warrant (collectively refer to as
     "Underwriter warrants"). Both warrants are exercisable for a five-year
     period commencing on March 8, 2000. Each warrant to purchase common shares
     is exercisable at an exercise price of $9.4875 per share.

     The Underwriter Warrants contain net issuance provisions permitting the
     holders thereof to elect to exercise the Underwriter Warrants in whole or
     in part and instruct the Company to withhold from the securities issuable
     upon exercise, a number of securities, valued at the current fair market
     value on the date of exercise, to pay the exercise price. Such net exercise
     provision has the effect of requiring the Company to issue common shares
     without a corresponding increase in capital. A net exercise of the
     Underwriter Warrants will have the same dilutive effect on interests of our
     shareholders as will a cash exercise. The Underwriter Warrants do not
     entitle the holders thereof to any rights as a shareholder of the Company
     until the Underwriter Warrants are exercised and common shares are
     purchased thereunder.

                                      F-23
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


11.  STOCKHOLDERS' EQUITY - continued

     Preferred Shares

     The Company has the authority without further vote or action by the
     shareholders to issue up to 5,000,000 preferred shares in one or more
     series and to fix the number of preferred shares constituting any such
     series, the voting powers, designations, preferences and relative
     participation, optional or other special rights and qualifications,
     limitations or restrictions thereof, including the dividend rights and
     dividend rate, terms of redemption (including sinking fund provisions),
     redemption price or prices, and conversion rights and liquidation
     preferences of the preferred shares constituting any series. The issuance
     of preferred shares by the Company could adversely affect the rights of the
     holders of common shares. For example, such issuance could result in a
     class of securities outstanding that would have preferences with respect to
     voting rights and dividends, and in liquidation, over the common shares,
     and could (upon conversion or otherwise) enjoy all of the rights of the
     common shares.

     The Company may issue preferred shares with voting or conversion rights
     that could adversely affect the voting power of the holders of common
     shares. There are no agreements or understandings for the issuance of
     preferred shares and the Company has no present intention to issue
     preferred shares. The Company has agreed for three years from March 8, 2000
     not to issue any preferred shares without the underwriter's consent.


12.  COMMITMENTS AND CONTINGENCIES

     OPERATING LEASES

     The Company and its subsidiaries lease office and employee accommodation
     under various operating leases. Rental expense under operating leases was
     HK$175,566 in 2000, HK$279,748 in 2001 and HK$304,358 in 2002. At March 31,
     2002, the Company and its subsidiaries were committed under operating
     leases requiring minimum rentals as follows:

<TABLE>
<CAPTION>
                                                                                                           HK$                 US$
                                                                                                         -------            --------
                                                                                                                            (note 2)
<S>                                                                                                      <C>                <C>
2003 .......................................................................................             262,080              33,600
2004 .......................................................................................             198,198              25,410
2005 .......................................................................................             208,104              26,680
2006 .......................................................................................             198,627              25,465
                                                                                                         -------             -------
                                                                                                         867,009             111,155
                                                                                                         =======             =======
</TABLE>

                                      F-24
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


12.  COMMITMENTS AND CONTINGENCIES - continued

     CAPITAL EXPENDITURE

     At March 31, 2002, the Company had contracted for expenditure of
     approximately HK$87,723,000 in respect of land and lots under development
     relating to Chingchu California Gardens which is expected to be expended
     within the next two years. The Company has authorized but not yet
     contracted for additional expenditure on Chingchu California Gardens of
     approximately HK$216,576,000.

     GUARANTEES

     The Company has given guarantees in respect of mortgage loans provided to
     the buyers of Chingchu California Gardens as disclosed in note 4.

     At March 31, 2001 and 2002, the total amount of mortgages outstanding which
     are subject to these guarantees was approximately HK$74 million and HK$27
     million, respectively.

     DEVELOPMENT COST

     In July 2001, Chingchu was sued by a contactor working for it to develop
     Phase III of Chingchu California Garden. The contractor alleges that
     Chingchu owes it approximately HK$14 million for work performed. Of this
     amount, approximately HK$3.8 million (net of HK$2.1 million due from this
     contractor) related to work encompassed by the construction contract which
     has not been paid by Chingchu, which has been recorded as a liability in
     the accompanying financial statement as of March 31, 2002. The remaining
     HK$10.2 million relates to additional charges sought by the contractor. In
     August 2001, Chingchu filed a counter-suit seeking approximately HK$10.6
     million from the contractor asserting that it failed to comply with certain
     specifications of the construction contract and sought damages for the
     contractor's delay in completing the project. Both the contractor's suit
     and Chingchu's counter-suit are pending in a PRC court. The PRC court has
     ordered that certain assets of the Company be frozen, including 43 units in
     the Chingchu California Garden Project with a carrying value of HK$13.7
     million, as well as receivables of approximately HK$1.7 million. The
     ultimate outcome of these matters is uncertain.

     TAX PAYMENTS

     Under the existing China tax regulations, the sale of real estate in
     advance of completion is subject to business tax and income tax. The
     Company has accrued the full amount of business tax and foreign enterprises
     income tax pursuant to the relevant tax regulations. The Company, however,
     has not made payments on account of the tax liability based on the informal
     understanding that it has reached with the relevant tax authority allowing
     the payments to be delayed until the whole project is completed. In the
     absence of any formal approval from the relevant tax authority, the Company
     may be liable for delinquent charges of approximately HK$23,256,000 and
     HK$36,414,000 at March 31, 2001 and 2002, respectively.

                                      F-25
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


13.  EMPLOYEE BENEFITS

     In accordance with local government regulations, Chingchu is required to
     make contributions to a defined contribution retirement fund which is
     administered by the Labour Bureau of the local government. Chingchu is
     required to contribute 25.5% of the total salary into the fund. Chingchu
     has no obligation for the pension payments or any post-retirement benefits
     beyond the annual contributions described above. Chingchu's contributions
     for the years ended March 31, 2000, 2001 and 2002 were HK$280,412,
     HK$280,891 and HK$257,607, respectively.

     According to the Mandatory Provident Fund ("MPF") legislation regulated by
     the Mandatory Provident Fund Scheme Authority in Hong Kong, with effect
     from December 1, 2000, the Company is required to participate in an MPF
     Scheme operated by approved trustees in Hong Kong and to make contributions
     for its eligible employees. The contributions borne by the Company are
     calculated at 5% of the salaries and wages (monthly contribution is limited
     to 5% of HK$20,000 for each eligible employee) as calculated under the MPF
     legislation. The contributions made for the year ended March 31, 2001 and
     2002 were HK$4,000 and HK$24,500, respectively.


14.  CONCENTRATION OF CREDIT RISK

     The Company maintains its cash and cash equivalents with banks and
     financial institutions in China. All sales are made to Chinese domestic
     home buyers.

     During the year ended March 31, 2002, an amount of approximately HK$14
     million (2000 and 2001: Nil) has been written off against other receivable
     and amount due from related party directly. Of this amount, HK$8 million
     represented the balance of the investment cost in a Sino-foreign equity
     joint venture which the Company withdrew this investment during the year
     ended March 31, 2001 and the Company has been unable to collect this amount
     from the counter party during 2002. In addition, HK$2 million and HK$4
     million represented the amount due from a contractor and a related party,
     respectively.

                                      F-26
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


14.  CONCENTRATION OF CREDIT RISK - continued

     Details of movements of the allowance for doubtful account of trade
     receivable for the years ended March 31, 2000, 2001 and 2002 are as
     follows:

<TABLE>
<CAPTION>
                                                                            2000            2001             2002             2002
                                                                           -------       ---------        ---------         -------
                                                                             HK$             HK$              HK$              HK$
<S>                                                                        <C>           <C>              <C>               <C>
         At beginning of year ......................................             -         981,783        1,758,740         225,479
         Bad debt expense ..........................................       981,783         776,957                -               -
         Amount written back .......................................             -               -         (574,472)        (73,650)
                                                                           -------       ---------        ---------         -------
         At end of year ............................................       981,783       1,758,740        1,184,268         151,829
                                                                           =======       =========        =========         =======
</TABLE>


15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amount of cash and cash equivalents, accounts receivable,
     short-term bank borrowings, customer deposits and accounts payable, accrued
     expenses and amounts due to/from related companies approximate fair value
     because of the short maturities of these instruments. The carrying value of
     long-term bank borrowings approximates their fair value as the related
     interest rate is equivalent to current market rates.


16.  STOCK OPTION PLAN

     In August 1999, the Company adopted a 1999 Stock Option and Restricted
     Stock Purchase Plan (the "Plan"). Under the Plan, the compensation
     committee of the board of directors has complete discretion to determine
     which eligible individuals are to receive option grants, the number of
     shares subject to each grant, the status of any granted option, the vesting
     schedule to be in effect for the option grant and maximum term for which
     any granted option is to remain outstanding. Each option granted under the
     Plan has a maximum term of 10 years.

     A summary of stock option activity is as follows:

<TABLE>
<CAPTION>
                                                                                                                 Weighted
                                                                                             Number               average
                                                                                            of shares         exercise price
                                                                                            ---------         --------------
                                                                                                                    US$
<S>                                                                                         <C>               <C>
         Outstanding at April 1, 1999.................................................              -                     -
           Granted....................................................................        140,000                   7.5
           Exercised..................................................................              -                     -
           Lapsed.....................................................................              -                     -
                                                                                              -------                   ---
         Outstanding at March 31, 2000 and 2001.......................................        140,000                   7.5
           Lapsed ....................................................................         40,000                   7.5
                                                                                              -------                   ---
         Outstanding at March 31, 2002................................................        100,000                   7.5
                                                                                              =======                   ===
</TABLE>

                                      F-27
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


16.  STOCK OPTION PLAN - continued

<TABLE>
<CAPTION>
                                                                                                         March 31, 2002
                                                                                                         --------------
<S>                                                                                                      <C>
         Options available for grant.............................................................             600,000
         Options exercisable.....................................................................             100,000
         Options exercisable weighted average exercise price.....................................              US$7.5
</TABLE>

     Additional stock plan information

     In accordance with SFAS No. 123, Accounting for Stock-Based Compensation,
     the Company applied Accounting Principles Board Opinion 25 and related
     interpretations in accounting for its stock option plans, and accordingly
     does not record compensation costs unless the exercise price is less than
     the fair market value of shares at the grant date. If the Company had
     elected to recognize compensation cost based on the fair value of the
     option granted at the grant date as prescribed by SFAS No. 123, net income
     (loss) and income (loss) per share would have been reduced to the pro forma
     amounts shown below:

<TABLE>
<CAPTION>
                                                                                                March 31,
                                                                     --------------------------------------------------------------
                                                                        2000              2001             2002             2002
                                                                     ---------        ---------        ----------        ----------
                                                                         HK$               HK$              HK$              US$
                                                                                                                          (note 2)
<S>                                                                  <C>              <C>              <C>               <C>
         As reported
           Net income (loss) ..................................       4,600,347       (6,715,494)      (55,372,126)      (7,098,992)
           Income (loss) per share - basic
            and diluted .......................................            0.44            (0.53)            (5.48)           (0.70)
         Pro forma
           Net loss ...........................................      (1,421,403)               -                 -                -
           Loss per share - basic and diluted .................           (0.13)               -                 -                -
</TABLE>

     There were no stock options granted in the years ended March 31, 2001 and
     2002. Under SFAS No. 123, the fair value of stock-based awards to employees
     is calculated using option pricing models, even though such models were
     developed to estimate the fair value of freely tradable, fully transferable
     options without vesting restrictions, which significantly differ from the
     Company's stock option awards. These models also require subjective
     assumptions, including future stock price volatility and expected time to
     exercise, which greatly affect the calculated values.

     The Company's calculations were made using the Black-Scholes option pricing
     models with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                                              Year ended March 31, 2000
                                                                                              -------------------------
<S>                                                                                           <C>
         Dividend yield......................................................                               -
         Expected volatility.................................................                             57%
         Risk-free interest rate.............................................                           6.44%
         Expected life of option following vesting (in months)...............                             120
</TABLE>

     The valuations of the computed weighted average fair values of option
     grants under SFAS No. 123 in 2000 was US$5.55.

                                      F-28
<PAGE>
                              NEW CHINA HOMES, LTD.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued


17.  COMPREHENSIVE INCOME (LOSS)

     SFAS No. 130, Reporting Comprehensive Income, requires that an enterprise
     report, by major components and as a single total, the change in net assets
     during the period from non-owner sources. The reconciliation of net income
     (loss) to comprehensive income (loss) is as follows:

<TABLE>
<CAPTION>
                                                                                          Years ended March 31,
                                                                       ------------------------------------------------------------
                                                                          2000           2001             2002              2002
                                                                       ---------      ----------       -----------       ----------
                                                                           HK$            HK$              HK$               US$
                                                                                                                          (note 2)
<S>                                                                    <C>            <C>              <C>               <C>
         Net income (loss) ......................................      4,600,347      (6,715,494)      (55,372,126)      (7,098,992)
         Changes in other comprehensive
          income:
           Translation adjustments ..............................        387,716      (3,109,684)        3,581,395          459,153
                                                                       ---------      ----------       -----------       ----------
         Total comprehensive income (loss) ......................      4,988,063      (9,825,178)      (51,790,731)      (6,639,839)
                                                                       =========      ==========       ===========       ==========
</TABLE>


18.  SEGMENT INFORMATION

     The Company operates in one business segment, which is the sale of real
     estate developments and sales are from one geographical region, China.


19.  SUBSEQUENT EVENT

     As stated in note 1 to the consolidated financial statements, the Company
     entered an agreement with Wonder China to dispose of its 100% interest in
     Top Trend, which owns a shopping center under development. The parties had
     delayed completion of the transaction until March 31, 2002. On or about
     March 31, 2002, the warranty was still not fulfilled and the parties had
     agreed to extend the due date of the Promissory Note to September 30, 2002
     and delayed the completion of the transaction until September 30, 2002. On
     or about September 30, 2002, the warranty was still not fulfilled and the
     parties mutually agreed to terminate the transaction. As of October 2,
     2002, the transaction was terminated, the Promissory Note was cancelled and
     the Company is obligated to refund to Wonder China the Deposit. The parties
     have agreed to waive any and all claims against the other in connection
     with the termination of the transaction.

                                      F-29

<PAGE>
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Peggy Pui Ki Ng, certify that:

1.   I have reviewed this annual report on Form 20-F of New China Homes, Ltd.;

2.   Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.   Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial date and have
          identified for the registrant's auditors any auditors any material
          weaknesses in internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

                                       81
<PAGE>
6.   The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: 28 January 2003
     .................

                                            /s/ Peggy Pui Ki Ng
                                            ------------------------------------
                                            Peggy Pui Ki Ng
                                            Chief Executive Officer

                                       82
<PAGE>
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Denny Chi Hing Chan, certify that:

1.   I have reviewed this annual report on Form 20-F of New China Homes, Ltd.;

2.   Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

3.   Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):

     a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial date and have
          identified for the registrant's auditors any auditors any material
          weaknesses in internal controls; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

                                       83
<PAGE>
6.   The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




Date: 28 January 2003
     .................

                                            /s/ Denny Chi Hing Chan
                                            ------------------------------------
                                            Denny Chi Hing Chan
                                            Chief Financial Officer

                                       84
<PAGE>
                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT NUMBER      DESCRIPTION
--------------      -----------
<S>                 <C>
Exhibit 4.1         Letter agreement dated 26th September 2001, amending the
                    Sales and Purchase Agreement dated March 30, 2001 by and
                    between New China Homes Limited and Wonder China Investments
                    Limited in connection with the sale of Top Trend
                    Developments Limited, by extending the Promissory Notes
                    Payment date to 31st March 2002.

Exhibit 4.2         Letter agreement dated 4th March 2002, amending the Sales
                    and Purchase Agreement dated March 30, 2001 by and between
                    New China Homes Limited and Wonder China Investments Limited
                    in connection with the sale of Top Trend Developments
                    Limited, by extending the Promissory Notes Payment date to
                    September 30, 2002.

Exhibit 4.3         Termination letter dated October 2, 2002, in respect of the
                    Sales and Purchase Agreement dated March 30, 2001 by and
                    between New China Homes Limited and Wonder China Investments
                    Limited in connection with the sale of Top Trend
                    Developments Limited, as amended.

Exhibit 99.1        Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 99.2        Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>