U.S. SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A [ X ]
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
        March 31, 2006 [     ]
     TRANSITION REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File No.
0-23015 GREAT CHINA
INTERNATIONAL HOLDINGS, INC.(Exact name of small business issuer as specified in its
charter) Nevada
     
     87-0450232(State or Other Jurisdiction of
        Incorporation or Organization)
     
     (IRS Employer Identification No.)  C Site 25-26F
Presidential Building, No. 69 Heping North StreetHeping District,
Shenyang 110003, Peoples Republic of China(Address of Principal Executive Offices)  0086-24-22813888
(Issuers telephone number)  Not Applicable
(Former name, address and fiscal year, if changed since last report)  Check whether the issuer (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the issuer was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [    ] Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes [    ] No [ X ] State the number of shares
outstanding of each of the issuers classes of common equity: As of March 31, 2006, there were 11,097,466 shares of common stock outstanding. Transitional Small
Business Format:  Yes [    ]  No [ X ]




FORM 10-QSBGREAT CHINA INTERNATIONAL HOLDINGS, INC. INDEX PagePART I.
     Item 1.  Financial Information
     3Balance Sheet as of March 31, 2006 (Unaudited)
     3Statements of Operations for the Three MonthsEnded March 31, 2006 and 2005 (Unaudited)
     5Statements of Cash Flows for the Three MonthsEnded March 31, 2006 and 2005 (Unaudited)
     6Notes to the Financial Statements
     7Item 2.  Managements Discussion and Analysis orPlan of Operation
     14Item 3.  Controls and Procedures
     17PART II.
     Other Information
     17Item 2.  Unregistered Sales of Securities and Use of Proceeds
     17Item 5.  Other Information
     17Item 6.  Exhibits
     17Signatures
     18 In the
 original  filing  of this  report  on  Form  10-QSB  Great  China  International
 Holdings,  Inc.,  accidentally  omitted  from administrative  expenses  reported in the
 consolidated  statement of operations for the  three-months  ended March 31, 2006,
 non-cash stock  compensation  expense in the amount of $180,711  arising from
 compensatory  options issued in March 2006. This amended report is filed to correct the
omission. 2




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                   CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                                   MARCH 31, 2006 ASSETS Current assets:Cash and equivalents
     $1,663,781Accounts receivableTrade, net of allowance of $1,120,950
     585,275Refunds due from contractors
     5,045,443Advances to suppliers
     3,862,759Advances to employees
     242,379Properties held for resale
     16,232,187Prepaid expenses
     86,285Loan costs, net of amortization of $192,340
     547,487Total current assets
     28,265,596Property and equipment:Land and buildings
     39,205,436Motor vehicles
     699,547Office furniture and equipment
     255,40440,160,387Less accumulated depreciation, depletion, and amortization
     (4,339,626
        )35,820,761Construction in progress
     4,459,969Total assets
     $68,546,326 See accompanying notes to the condensed consolidated financial
statements. 3




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                                  CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                                                   MARCH 31, 2006 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:Accounts payable and accrued expenses
     $1,904,770Deposits held
     896,570Advances from buyers
     3,030,989Taxes payable
     337,091Short-term loans
     58,708,696Current portion of long-term debt
     442,088Total current liabilities
     65,320,204Long term debt, net of current portion shown above
     2,468,454Total liabilities
     67,788,658Stockholders' equity:Common stock,  $.001 par value 50,000,000 shares authorized,11,097,466 issued and outstanding at March 31, 2006
     11,098Additional paid in capital
     1,731,589Retained earnings
     851,910Accumulated other comprehensive income
     257,531Total stockholders' equity before advances offset
     2,852,128Advances to directors and affiliated companies
     (2,094,460
        )Total stockholders' equity, net of advances offset
     757,668Total liabilities and stockholders' equity
     $68,546,326 See accompanying notes to the condensed consolidated financial statements. 4




GREAT CHINA INTERNATIONAL HOLDINGS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005 2006
      
     2005RevenuesSales
        
        
     $1,742,966
        
     
     $334,991Rental income
        
        
     
        940,104
        
     
     820,493Total revenues
     2,683,070
        
     
     1,155,484Cost of Sales
     1,962,361
        
     
     682,464Gross profit
     720,709
        
     
     473,020Selling, General and Administrative Expenses:Operating and selling expenses
     39,850
        
     
     115,582Administrative expenses
     769,637
        
     
     280,656Depreciation
     132,237
        
     
     117,803Total expenses
     941,724
        
     
     514,041(Loss) from operations
     (221,015
        )
     
     (41,021
        )Other income (expense)Other income
     15,223
        
     
     2,197Gain on disposal of fixed assets
     103,043
        
     
     --Interest and finance costs
     (1,331,177
        )
     
     (1,042,048
        )Total other income (expense)
     (1,212,911
        )
     
     (1,039,851
        )Income before income taxes
     (1,433,926
        )
     
     (1,080,872
        )Provision for income taxes
     --
        
     
     --Net (loss)
     (1,433,926
        )
     
     (1,080,872
        )Other comprehensive income (loss):Foreign currency translation adjustment
     57,792
        
     
     --Total comprehensive income (loss)
     $(1,376,134
        )
     
     $(1,080,872
        )Basic and diluted net income (loss) per common share
     $(0.13
        )
     
     $(0.10
        )Weighted average basic and diluted shares outstanding
     11,097,466
        
     
     10,557,406 See accompanying notes to the condensed consolidated financial statements. 5




GREAT CHINA INTERNATIONAL HOLDINGS, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                 FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005 2006
     
     2005Cash flows from operating activities:Net income (loss)
     $(1,433,926
        )
     
     $(1,080,872
        )Adjustments to reconcile net income to operating activities -Depreciation, depletion and amortization
     460,194
        
     
     385,267Foreign currency translation adjustment
     57,792
        
     
     --Gain on disposal of fixed assets
     (103,043
        )
     
     --Non-cash stock compensation expense
        
        
     
        180,711
        
     
     
        --Changes in assets and liabilities:(Increase) decrease in -Accounts receivable and other receivable
     (304,234
        )
     
     930,525Advances to suppliers
     (5,241,075
        )
     
     358,672Refunds due from contractors
     (1,508,751
        )
     
     --Prepaid expenses
     1,237,103
        
     
     --Accounts payable and other payables
     512,850
        
     
     5,448,844Advances from buyers
     213,433
        
     
     3,611,412Properties held for resale
     673,254
        
     
     (4,182,407
        )Restricted cash
     482,548
        
     
     796,338Income and other taxes payable
     (317,678
        )
     
     (387,241
        )Net cash provided by (used in) operating activities
     (5,090,822
        )
     
     5,880,538Cash flows from investing activities:(Purchase) of fixed assets
     (434,726
        )
     
     (1,165,098
        )Transfer of fixed assets
     198,511
        
     
     --Net cash (used in) investing activities
     (236,215
        )
     
     (1,165,098
        )Cash flows from financing activities:Loan repayments
     (2,945,039
        )
     
     (878,583
        )Advances to directors and affiliated companies
     (960,950
        )
     
     (1,075,328
        )Net cash provided by (used in) financing activities
     (3,905,989
        )
     
     (1,953,911
        )Net increase (decrease) in cash and cash equivalents
     (9,233,026
        )
     
     2,761,529Cash and cash equivalents, beginning of period
     10,896,807
        
     
     819,441Cash and cash equivalents, end of period
     $1,663,781
        
     
     $3,580,970Supplemental disclosures of Cash Flow information:Interest paid, net of capitalized amounts
     $959,807
        
     
     $1,146,142Income taxes paid
     $--
        
     
     $-- See accompanying notes to the condensed consolidated financial statements. 6




GREAT CHINA INTERNATIONAL
HOLDINGS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS MARCH 31, 2006 1.    Description of business Nature of organization Great China International Holdings, Inc., (the Company )
was incorporated in the State of Nevada on        December 4, 1987, under the name of
Quantus Capital, Inc., and in 1992, it changed its name to Red Horse        Entertainment
Corporation. Effective July 5, 2005, the Company completed the acquisition of
Silverstrand        International Holdings Limited (Silverstrand), a Hong Kong limited
liability company, by issuing        10,102,333 shares of its common voting stock to the
former stockholders of Silverstrand in exchange for        all of the capital stock of
Silverstrand. For financial reporting purposes the acquisition was treated as        a
recapitalization of Silverstrand. On September 15, 2005, the Company changed its name to
Great China        International Holdings, Inc. Prior to its acquisition of Silverstrand,
the Company was not engaged in        active business operations. Silverstrand was incorporated on September 30, 2004 in
Hong Kong Special Administrative Region, in the        Peoples Republic of China with an
authorized capital of $12,820,513 divided in 100 million ordinary        shares of par
value $0.12 per share. During October of 2004, Silverstrand acquired all of the
outstanding capital of Shenyang Maryland for        $5,000,000, payable to its former
owners as follows:   Jiang Fang as to $4,350,000;   Jiang Peng as to $500,000; and,   Pay $50,000 to each of Dang Jing Shi, Li
Guang Hua and Wang Li Rong This transaction was treated as a recapitalization of
Shenyang Maryland for financial reporting purposes        and the excess purchase was
treated as dividends to shareholders. On November 23, 2004
the Ministry of Commerce and Business Registration issued a business registration
       certificate approving Shenyang Maryland reclassification to a wholly owned foreign
enterprise. Pursuant to several
agreements dated December 8, 2005 and December 28, 2005, the Company, through its
       subsidiaries, agreed to acquire in 2006 a 100% interest in the land for the Xita
Project. First, pursuant        to a sale and purchase agreement dated December 8, 2005,
subsequently amended on December 28, 2005, the        Company agreed to acquire, through
Shenyang Maryland, 70 percent of the equity interest in Shenyang        Xinchao
Development Co. Ltd. (Xinchao), a Sino-Foreign joint venture corporation that owns
approximately        66 percent of the land for the Xita Project, from Shenyang Yunfeng
Real Estate Development Co., Lt.        (Yunfeng). The Company agreed to acquire the
remaining 30 percent equity interest in Xinchao through        Silverstrand from I.R.E.
Corporation Limited (I.R.E.), an unrelated Singapore corporation, pursuant an
       agreement dated December 28, 2005. The remaining approximately 34% interest in the land for
the Xita Project is held by Shenyang Yindu        Property Co., Ltd. (Yindu), also a
Sino-Foreign joint venture. Pursuant to agreements dated December 28,        2005,
Shenyang Maryland agreed to acquire a 70 percent interest in Yindu from Yungfeng, and
Silverstrand        agreed to acquire a 30% interest in Yindu from I.R.E. Following the
closing of these transactions, which        is expected to occur in the second quarter of
2006, the Company will hold, through its subsidiaries, 100        percent interest in the
land comprising the Xita Project. Shenyang Xin Chao Property Company Limited (Xin Chao) was
registered on August 16, 2005 in Shenyang, Liaoning Province, in the Peoples
Republic of China with a registered capital of $12,330,456 (Rmb.100,000,000) and a defined period of existence of 11 years to August 15, 2016. Xin Chao was
formed to develop a certain tract of property located in the Heping District of Shenyang, and will feature a
construction area of almost 500,000 square meters with an occupying area of approximately 101,000 square
meters. Shenyang Xin Chao Property Company Limited (Xin Chao) was registered on August 16, 2005 in Shenyang,
       Liaoning Province, in the Peoples Republic of China with a registered capital of $12,330,456. 7




(Rmb.100,000,000) and
a defined period of existence of 11 years to August 15, 2016. Xin Chao was formed to
       develop a certain tract of property located in Xi Ta district of Shenyang, China. The Company engages
in the development and sale of high quality private residential properties and
       commercial building for lease in the City of Shenyang, China. Shenyang Maryland,
the Companys indirect        wholly-owned subsidiary, was one of the first private
property developers and retailers in China, and,        according to the statistical
information on sales of construction area as published by Shenyang        Statistical
Authority, Shenyang Maryland was the ninth largest private property developer in Shenyang
City        in 2004. For the three months ended March 31, 2006, the proceeds from the
sales of properties constituted        51 percent of the total revenue, with the
remaining revenue consisting primarily of rental income. For the        three months
ended March 31, 2005, there were no sales of properties and revenues consisted primarily
of        rental income. As of March 31, 2006, 75 percent of the available units had been
sold and 17 percent were        leased. 2.    Going
concern The Company was in
default on $43,739,943 of bank loans as of March 31, 2006. These loans are treated as a
       current liability (Note 8) and as a result the Company had a working capital
deficit of $37,054,608 as of        March 31, 2006. The Companys ability to continue as
a going concern is dependent on the ability to        renegotiate an extension of the
bank debt maturities. The financial
statements do not give effect to any adjustments which would be necessary should the
Company        be unable to continue as a going concern and therefore be required to
realize its assets and discharge its        liabilities in the normal course of business
at amounts different from those reflected in these financial        statements. 3.    Summary
of significant accounting policies The financial
statements are prepared in accordance with accounting principles generally accepted in
the        United States of America and the following is a summary of significant
accounting policies: Consolidation policy All
significant inter-company transactions and balances within the Company are
eliminated in consolidation. Cash and equivalents The
Company considers all highly liquid debt instruments purchased with maturity
period of three months or less to be cash equivalents. The carrying amounts
reported in the accompanying consolidated balance sheet for cash and cash
equivalents approximate their fair value. Substantially all of the Companys cash
is held in the PRC and is not protected by FDIC or any other form of insurance. Accounts receivable-
Provision is made against accounts receivable to the extent which they are
considered to be doubtful. Accounts receivable in the balance sheet is stated net
of such provision. As of March 31, 2006, the provision for doubtful debts amounted
to $1,120,950. Intangible assets Intangible
assets represent land use rights in the Peoples Republic of China and are stated
at costs or valuation less accumulated amortization. Amortization is calculated on a
straight-line basis to write off the cost over the lease term of the land use
rights. Related companies A
related company is a company in which a director has a beneficial interest in and in
which the Company has significant influence. Deferred Income Revenues
from the sale of goods or services is recognized on time apportionment basis when
goods are delivered or services are rendered. Receipts in advance for goods to be
delivered or services to be rendered in the subsequent year are carried forward as
deferred revenue. Properties held for
sale Properties held for sale are comprised of properties held for sale and
repossessed properties held for resale and are stated at the lower of cost or net
realizable value. Cost includes acquisition costs of land use rights, development
expenditures, interest costs and any overhead costs incurred in bringing the
developed properties to their present location and condition. Net realizable value
is determined by reference to management estimates based on prevailing market
       conditions. Management evaluates the market value of its properties on an annual
basis by comparing        selling prices of its properties with those of other equivalent
properties in the vicinity offered by        other developers. 8




Management reduces
the estimated market value by anticipated selling expenses and        associated taxes to
derive the net realizable value. Property and
equipment Property and equipment is being depreciated over the estimated useful lives
of the related assets. Depreciation is computed on the straight-line basis for
both financial and income tax reporting purposes over useful lives as follows: Building and land use rights
     8-26 yearsEquipment
     5 yearsMotor vehicles
     5 yearsOffice furniture and fixture
     5 years Repairs and
maintenance costs are normally charged to the statement of operations in the year in
which        they are incurred. In situations where it can be clearly demonstrated that
the expenditure has resulted in        an increase in the future economic benefits
expected to be obtained from the use of the asset, the        expenditure is capitalized
as an additional cost of the asset. Property and
equipment are evaluated annually for any impairment in value. Where the recoverable
amount of        any property and equipment is determined to have declined below its
carrying amount, the carrying amount        is reduced to reflect the decline in value.
There were no property and equipment impairments recognized        during the three
months ended March 31, 2006. As of March 31, 2006
fixed assets totaling $37,371,819 have been pledged as securities to various banks in
       respect of borrowings totaling $58,708,696 and mortgage loans of $2,910,542. Construction-in-progress Properties currently under development are accounted for as
construction-in-progress. Construction-in-progress is recorded at acquisition
cost, including land rights cost, development expenditure, professional fees and
the interest expenses capitalized during the course of construction for the
purpose of financing the project. Upon completion and readiness for use of the
project, the cost of construction-in-progress is to be transferred to properties
held for sale. Construction-In-Progress
is valued at the lower of cost or market. Management evaluates the market value        of
its properties on a quarterly basis by comparing selling prices of its properties with
those of other        equivalent properties in the vicinity offered by other developers
reduced by anticipated selling costs and        associated taxes. In the case of
construction in progress, management takes into consideration the        estimated cost
to complete the project when making the lower of cost or market calculation. Income Recognition Revenue
from the sale of properties is recognized when the following four criteria are
met: (1) a sale is consummated (2) the buyers initial and continuing investments are
adequate to demonstrate a commitment to pay for the property, (3) the sellers
receivable is not subject to future subordination and (4) the seller has
transferred to the buyer the usual risks and rewards of ownership in a transaction
that is in substance a sale and does not have a substantial continuing involvement with
the property. Rental and building
management income comprises rental and building management income from Qiyun New
       Garden and President Building. Rental income is recognized on an accrual basis. Interest income is
recognized when earned, taking into account the average principal amounts outstanding
       and the interest rates applicable. Cost of sales The
cost of sales includes the carrying amount of the properties being sold and the
business taxes paid by the Company in connection with the sales. Business taxes
included in cost of sales were $274,266 and $82,417 for the three months ended
March 31, 2006 and 2005. In addition, cost of sales related to rental properties
includes depreciation expense of $327,957 and $267,464 for the three months ended
March 31 2006 and 2005, respectively. Foreign currencies-
The Companys principal country of operations is in The Peoples Republic of China.
The financial position and results of operations of the Company are determined
using the local currency (Renminbi or Yuan) as the functional currency. The
results of operations denominated in foreign currency are translated at the
average rate of exchange during the reporting period. Assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the market
rate of exchange ruling at that date. The registered equity capital denominated in
the functional currency is translated at the 9




historical rate of
exchange at the time of capital contribution. All translation        adjustments
resulting from the translation of the financial statements into the reporting currency (US
       Dollars) are dealt with as an exchange fluctuation reserve in shareholders equity. Historically the
local currencys exchange rate had been tied to the US Dollar at a rate of approximately
       8.28 Yuan per US Dollar. Effective July 21, 2005, the Yuan was revalued to an
effective exchange rate of        approximately 8.11 Yuan per US Dollar. Subsequent to
the revaluation the Yuan has been allowed to float        within a specified range. As of
March 31, 2006 the exchange rate was 8.02 Yuan per US Dollar. Taxation Taxation
on overseas profits has been calculated on the estimated assessable profits for the
year at the rates of taxation prevailing in the countries in which the Company
operates. Provision for The Peoples Republic of China enterprise income tax is
calculated at the prevailing rate based on the estimated assessable profits less
available tax relief for losses brought forward. Enterprise income tax Under the Provisional
Regulations of The Peoples Republic of China Concerning Income Tax on Enterprises
       promulgated by the State Council and which came into effect on January 1, 1994,
income tax is payable by        enterprises at a rate of 33% of their taxable income.
Preferential tax treatment may, however, be granted        pursuant to any law or
regulations from time to time promulgated by the State Council. Enterprise income tax
(EIT) is provided on the basis of the statutory profit for financial reporting
       purposes, adjusted for income and expense items, which are not assessable or
deductible for income tax        purposes. Value added tax The Provisional
Regulations of The Peoples Republic of China Concerning Value Added Tax promulgated by
       the State Council came into effect on January 1, 1994. Under these regulations and
the Implementing Rules        of the Provisional Regulations of the PRC Concerning Value
Added Tax, value added tax is imposed on goods        sold in or imported into the PRC
and on processing, repair and replacement services provided within the        PRC. Value added tax
payable in The Peoples Republic of China is charged on an aggregated basis at a rate of
       13% or 17% (depending on the type of goods involved) on the full price collected
for the goods sold or, in        the case of taxable services provided, at a rate of 17%
on the charges for the taxable services provided,        but excluding, in respect of
both goods and services, any amount paid in respect of value added tax        included in
the price or charges, and less any deductible value added tax already paid by the
taxpayer on        purchases of goods and services in the same financial year. Deferred taxes Deferred
taxes are accounted for at the current tax rate in respect of timing differences
between profit as computed for taxation purposes and profit as stated in the
accounts to the extent that a liability or asset is expected to be payable or
receivable in the foreseeable future. Earnings Per Share Basic
earnings per share is computed by dividing net income by the weighted-average
number of common shares outstanding during the period. Diluted earnings per share
is computed by dividing net income by the weighted-average number of common shares
and dilutive potential common shares outstanding during the period. As of March 31,
2006, there were no outstanding securities or other contracts to issue common
stock, such as options, warrants or conversion rights, which would have a dilutive
effect on earnings per share. For presentation purposes, earning per share for 2006 and
2005 were computing assuming the reorganization and conversion of debt that took
place in connection with the reorganization that occurred on January 1, 2004. Fair value of
financial instruments The carrying amounts of certain financial instruments, including
cash, accounts receivable, commercial notes receivable, other receivables,
accounts payable, commercial notes payable, accrued expenses, and other payables
approximate their fair values as at March 31, 2006, because of the relatively
short-term maturity of these instruments. Use of estimates The
preparation of financial statements in accordance with generally accepted
accounting principles require management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and reported 10




amounts of revenues
and expenses during the reporting period. Actual results could        differ from those
estimates.  Stock based compensation In December 2004, the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 123(R), Share-Based Payment. SFAS 123(R) replaces
SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting
Principles Board(APB) Opinion No. 25, Accounting for Stock Issued to Employees.
Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standard No. 123(R), Share-Based Payment, (SFAS No. 123(R)), using the modified
prospective transition method. SFAS No. 123(R) requires equity-classified share-based
payments to employees, including grants of employee stock options, to be valued at
fair value on the date of grant and to be expensed over the applicable vesting
period. Under the modified prospective transition method, share-based awards granted or
modified on or after January 1, 2006, are recognized in compensation expense over
the applicable vesting period. Also, any previously granted awards that are not
fully vested as of January 1, 2006 are recognized as compensation expense over the
remaining vesting period. No retroactive or cumulative effect adjustments were
required upon The Companys adoption of SFAS No. 123(R). Prior to adopting SFAS No. 123(R), The Company accounted
for its fixed-plan employee stock options using the intrinsic-value based method
prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, (APB No. 25) and related interpretations. This method required
compensation expense to be recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price. Had the Company elected the
fair value provisions of SFAS No. 123(R), The Companys 2005 net earnings and net
earnings per share would not have differed from the amounts actually reported as no
share-based payments were made during this period. As a result of adopting SFAS No. 123(R) on January 1,
2006, the Companys net loss for the three-month period ended March 31, 2006 was
$180,711 greater than if the Company had continued to account for share-based compensation
under APB No. 25. Prior to the adoption of SFAS No. 123(R), The Company presented
all tax benefits of deductions resulting from the exercise of stock options as
operating cash inflows in the statement of cash flows. SFAS No. 123(R) requires the cash
inflows resulting from tax deductions in excess of the compensation expense
recognized for those stock options (excess tax benefits) to be classified as
financing cash inflows. The Company did not report any excess tax benefits as
financing cash inflows for the three months ended March 31, 2006. Unrecognized compensation expense as of March 31, 2006
related to outstanding stock options was $668,462. The fair value of each option grant is estimated for
disclosure purposes on the date of grant using the Black-Scholes       option-pricing
model with the expected lives equal to the vesting period. The weighted average
contractual life of the unvested       options at March 31, 2006 was 6.92 years. A summary of the status of stock options and related
activity for the three month period ended March 31, 2006 is presented       below: Shares
     AverageExercise Price
     Contractual LifeOptions outstanding at December 31, 2005
     
     
     
        
        
     
        --
        
     
        --
        
     
        --Granted(1)
        
        
     
        
        
     
        572,491
        
     
        $ 6.00
        
     
        6.92Exercised
        
        
     
        
        
     
        --
        
     
        --
        
     
        --Options outstanding at March 31, 2006
        
        
     
        
        
     
        572,491
        
     
        $ 6.00
        
     
        6.92 (1) On March 3, 2006 the Company issued to its Chief
Executive Officer options to purchase 572,491 of the common stock of Great       China at
a purchase price of $6.00 per share.  The options vest in five equal increments beginning
with the date of issuance in       March 2006 and the following four anniversary dates.
The options are exercisable over a term of five years from the date of       vesting. There were no options outstanding as of March 31, 2005. 11




Recent accounting pronouncements SFAS 151, SFAS 152,
SFAS 153 and SFAS 154 SFAS No. 151, Inventory Costs - an amendment of ARB No. 4 and
SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions - an amendment of
FASB Statements No. 66 and 67, SFAS No. 153, Exchange of Non-monetary Assets - an
amendment of APB Opinion No. 29 and SFAS No. 154, Accounting Changes and Error
Corrections - a replacement of APB No. 20 and SFAS 3 were recently issued. SFAS No. 123(R),
151, 152, 153 and 154 have no current applicability to the Company and have no effect on
the consolidated financial statements. Reclassifications Certain
amounts in the 2005 financial statements have been reclassified to conform to the
2006 presentation. 4.    Concentrations of business and
credit risk Substantially all of
the Companys bank accounts are in banks located in the PRC and are not covered by
       any type of protection similar to that provided by the FDIC on funds held in U.S.
banks. The Company provides
credit in the normal course of business. The Company performs ongoing credit
       evaluations of its customers and clients and maintains allowances for doubtful
accounts based on factors        surrounding the credit risk of specific customers and
clients, historical trends, and other information.        Accounts receivable totaling
$442,056 as of March 31, 2006, were collateralized by real estate. 5.    Cash and equivalents At March 31, 2006 the
Company held no restricted cash balances. Pledged bank deposits, which are now
unrestricted, bear interest at 0.06% per month and in accordance with the terms
and conditions of the banking facilities agreed with banks to provide mortgage
loan facilities to buyers of properties developed by the Company, the Company
agreed to place guarantee fund deposits of not less than 5% to 10% of the total
outstanding mortgage loans extended to property buyers and to guarantee the repayments
of the mortgage loans, As of March 31, 2006, the bank had released the Company
from its loan guarantees, and the formerly restricted funds have been transferred
to an unrestricted bank account at the same bank. Substantially all of
the Companys cash is held in financial institutions in China and are not protected
       by FDIC insurance or any other form of guaranteed payment. 6.    Properties
held for resale Properties held for
resale at March 31, 2006 by project is as follows: March 31, 2006Qiyun New Village
     
     
     $
        3,262,804Peacock Garden
     500,661Chenglong Garden
     9,357,412President Building
     2,732,616Maryland Building
     228,564Others
     150,130Total
     $16,232,187 As of March 31, 2006
the carrying values of stock of properties of $761,503 have been pledged as security
       for the Companys bank loans and mortgage loans. 12




7.    Amounts
due from/(to) directors and related parties The amounts due
from/(to) directors and related parties at March 31, 2006 are as follows: Amounts due from/(to) directorsFrank Jiang Fang
     $(6,480,785
        )(6,480,785
        )Amounts due from/(to) related companiesLaoning  Concrete Co.
     99,169Shenyang Concrete Co.
     828,633YunFeng Real Estate Development Co., Ltd.
     5,114,811Shenyang Jitian Property Company Limited
     2,532,6328,575,245Amounts due from related parties, net
     $2,094,460 Amounts due from/(to)
related companies are unsecured, interest free and have no fixed repayment terms. 8.    Short-term
loans March 31, 2006Bank loansSecured
     $58,708,696 At March 31, 2006,
all bank loans were treated as short-term because all bank loans have matured and
       negotiations are not settled as to an extension of the due dates of the bank loans. There have been
numerous instances of events of defaults arising from the non-payments of interest and
       principals on a timely basis in accordance with the terms of the loan agreements
with two of the banks.        While these events of defaults have eventually been
remedied to an extent, no apparent demands have been        made by the banks to
foreclose on the secured borrowings. The Directors of the Company are still in
       discussion with the banks to approve
the roll-over of the terms and tenure of the secured and unsecured        loans.
Management remains confident that the bank negotiations will end in an extension to bank
debt        maturities. 9.    Long-term
debts  secured March 31, 2006Long term debts:Mortgage loans
     $2,910,542Less: Current portion of long-term debts
     (442,088
        )Long-term debts
     $2,468,454 13




Maturities of
long-term debt including mortgage loans for each of the next five years and thereafter
are as follows: Amount2006
     
     
     $
        442,0882007
     442,0882008
     442,0882009
     442,0882010
     322,882Thereafter
     819,308$2,910,542 10.   Commitments As of March 31, 2006
the Company had $5,548,705 commitments for capital expenditures for contractual
       commitments of the construction projects. Item
2.    Managements Discussion and Analysis or Plan of Operation (1)    Caution Regarding Forward-Looking Information When used in this
report, the words may, will, expect, anticipate, continue, estimate, project,intend, and
similar expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 regarding events, conditions, and financial trends that may affect
the Companys future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included within
the forward-looking statements as a result of various factors. These risks and
uncertainties, many of which are beyond our control, include (i) the sufficiency of
existing capital resources and the Companys ability to raise additional capital to
fund cash requirements for future operations; (ii) volatility of the stock market; and
(iii) general economic conditions. Although the Company believes the expectations
reflected in these forward-looking statements are reasonable, such expectations may prove
to be incorrect. (2)    Plan of Operations The Companys
principal activities are investment holdings, property development, sales and property
management and its principal country of operations is in The Peoples Republic of
China (PRC). The operations are
conducted primarily though its wholly owned subsidiary, Shenyang Maryland International
Industry Company Limited. As of March 31, 2006, the Company had five real estate projects
in which it either was selling units and/or leasing units. Qiyun New Village is
situated along the Nanyun Riverside and consists of 352 residential units. Peacock Garden is
situated in Shenyang City, He Ping Bei Da Street, is in the commercial district of
Shenyang. Construction was completed in November 2000 and Peacock Garden comprises of 225
low-density residential apartments. President Building
comprises three blocks of commercial towers situated in Shenyang City, He Ping Bei Da
Street, which is the financial district of Shenyang. While the original intention was to
sell a majority of the office buildings, management intends to retain this as their flagship
property and a number of units were leased. The Companys head office is situated on the
25th and 26th Floors of President Building. Chenglong Garden,
situated in Shenyang Huang Gu District, comprises 12 blocks of modern apartments
consisting of 779 residential apartments, a number of retail shops and ancillary
facilities including basement car parking facilities and parks. 14




The Maryland Building
consists of 43 units and is 13,070 sq. meters in size. All of these units are held for
rental purposes. In 2006 the Company
commenced the planning of the Xita City Development Project, which will be one of the
first developments of the Company since 2004.  The project is located in the north side of
Shi Fu Da Road, He Ping District, Shenyang City.  Construction is planned to begin during
2006 and is expected to be completed in 2008. On February 27, 2006,
Shenyang Jitian Property Co. Ltd. (Jitian), a subsidiary of the Company, was
confirmed as the highest bidder in a public auction of approximately 420,317 m2 of land
designated for residential and commercial development in Chessboard Mountain
International Tourism Development District, Shenyang City. The total purchase price for
the property is approximately USD $56.7 million. On May 12, 2006, bank financing required
to complete acquisition of the property was obtained through a third party, which
resulted in title to the property being procured and pledged to the bank to secure the
financing.  As is customary in the PRC, the final terms of the financing will be set
forth in the final loan documents, which generally follow delivery of the title deed as
security and funding of the loan by approximately two weeks.  The Company intends to
pursue early development of the project with a view
to beginning pre-sale activity before the end of 2006, which provides the funding
necessary for project construction. The Company plans to
raise additional capital though private placements of stock and to continue development
of additional real estate projects. (3)    
Results of Operations Comparison of
operations for the three months ended March 31, 2006 with the three months ended March
31, 2005: The Company had a $353,054 or a 33% increase in net loss to $(1,433,926) during the three months ended March 31, 2006 from
$(1,080,872) for the comparable period in 2005. Components of sales and expenses resulting in this increase in net loss are discussed
below. Sales revenues
increased by $1,407,975 or 420% quarter-on-quarter to $1,742,966 for the quarter ended
March 31, 2006 compared to the corresponding quarter in 2005 of $334,991. The reasons for
the favorable variance in sales revenues for the quarter ended March 31, 2006 were as
follows: -        Increases
in sales of Qiyun New Village by $131,564; -        Increases
in sales of Chenglong Garden by $1,225,680; -        Increases
in building management fee income by $50,731 or 15%; -        Increases
in rental income of President Building by $61,394 or 12%; -        Increases
in gross floor area sold by 1,992.17 square meters quarter-on-quarter to 1,992.17 square
meters for the quarter ended March 31, 2006 compared to the same corresponding period of
0 square meters in 2005; -         The
number of units sold increased by 8 units quarter-on-quarter to 8 units for the quarter
ended March 31, 2006 compared to the same corresponding period of 0 units in 2005; Cost of properties
sold increased by $1,279,897 or 188% quarter-on-quarter to $1,962,361 for the quarter
ended March 31, 2006 compared to the same corresponding quarter in 2005 of $682,464.
Quarter-on-quarter increases in sales revenue as noted above were primary factors
contributing to the increase. Gross profit
increased by $247,689 or approximately 52% quarter-on-quarter to $720,709 for the quarter
ended March 31, 2006 compared to the same corresponding quarter in 2005 of $473,020. Gross profit margin
decreased to 27% for the quarter ended March 31, 2006 compared to 41% for the same
corresponding quarter in 2005. The variance was principally due to a greater proportion
of gross profit arising from sales of properties with its associated cost of properties,
along with a relatively small increase in rental income revenue. 15




Selling expenses
decreased by $75,732 or 66% to $39,850 during the quarter ended March 31, 2006 from
$115,582 during the same period in 2005. This decrease is primarily due to
expiration of certain advertising contracts, resulting in a decrease of $88,285 in
advertising expenses. Administrative  expense  increased by $488,981 or 174% to $769,637 during the three months ended March 31, 2006 from $280,656 during the
same  period in 2005.  The  increase  is due  primarily  related to an  increase  in  consultation  fees of  $34,094,  an  increase  in
entertainment  expenses of $36,615,  an increase in office expenses of $14,182,  an increase in travel expense of $23,155,  an increase
in sundry  expense of $82,003,  and an  increase in the  salaries  and wages of  $30,263.  Additionally  there was an increase in stock
based  compensation  expense of $180,711 due to the  implementation of SFAS 123(R) and the issuance of employee stock options during the
quarter. Depreciation expense
increased by $14,434 or 12% to $132,237 for the quarter ended March 31, 2006, compared to
$117,803 for the corresponding period in 2005 due primarily to increased depreciable
assets balances during 2006. Interest and
financing costs increased by $289,129 or 28% to $1,331,177 for the quarter ended March
31, 2006, compared to $1,042,048 for the corresponding period in 2005. The increase is
primarily due to an increase in interest  expenses on bank
borrowings and loan closing costs in relation to a bank borrowing of $14,796,548 made
during December 2005. Net loss  increased by $353,054 or 33%  quarter-on-quarter  to  $(1,433,926)  for the quarter ended March 31, 2006 compared to the same
corresponding  quarter in 2005 of $(1,080,872).  The unfavorable variance in net loss was mainly due to significant  increases in costs
of sales, administrative expenses, and finance costs. (4)    Liquidity
and Capital Resources During the three
months ended March 31, 2006, the Company used $5,090,822 of cash in operating activities,
compared to $5,880,538 of cash provided by operating activities for the same period ended
March 31, 2005. Current period activity was primarily the result of advances to suppliers
and construction contractors. During the three
months ended March 31, 2006, the Company used $236,215 in investing activities compared
to $1,165,098 used in the same period ended March 31, 2005.  Current period activity was
as result of the purchase of fixed assets and transfers of stock properties to fixed
assets. During the three
months ended March 31, 2006, the Company used $3,905,989 for financing activities
compared to $1,953,911 used in the same period ended March 31, 2005.  Current period
activity was a result of the repayment of debt totaling $2,945,039 and advances to
directors and affiliated companies of $960,950. At March 31, 2006,
the Companys had negative working capital of $37,054,608 and was in default on
$43,739,943 of bank loans. The Companys ability to continue as a going concern is
contingent upon its ability to renegotiate these obligations, to continue to generate
funds through its operations, and raise additional funds through equity or debt
financings. There can be no assurance that these efforts will be successful. (5)    Contractual
Obligations The following table
is a summary of the Companys contractual obligations as of March 31, 2006: Total
     
     Less Than OneYear
     
     1-3 Years
     
     ThereafterShort-Term Debt
     
     
     
        58,708,696
        
     
     
        58,708,696Long-Term Debt
     2,910,542
        
     
     442,088
        
     
     1,326,264
        
     
     1,142,190Total Contractual Cash Obligations
     $61,619,238
        
     
     $59,150,784
        
     
     $1,326,264
        
     
     $1,142,190 16




Item 3.    Controls and
Procedures As of March 31, 2006
an evaluation was performed under the supervision and with the participation of Great
China's management, including the Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of Great China's disclosure controls and
procedures.  Based on that evaluation, Great China's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that Great China's disclosure
controls and procedures were effective.  There have been no significant changes in Great
China's internal controls or in other factors that could significantly affect internal
controls subsequent to the date of the evaluation. PART II. OTHER INFORMATION Item
2.    Unregistered Sales of Securities and Use of Proceeds As previously
reported on Form 8-K, the Company began offering in February 2006 up to 1,500,000 shares
of common stock at a price of US$4.00 per share to prospective private investors outside
the United States in reliance on the safe harbor from registration under the Securities
Act of 1933 set forth in Regulation S adopted thereunder. The Company closed the offering
at the end of April 2006 after selling 762,500  shares of its common stock at a total
purchase price of $3,050,000. The Company paid to a broker located in Hong Kong a fee
equal to 15% of the funds raised for its assistance with the placement. The Company
agreed to file within 90 days following the closing of the offering a registration
statement under the Securities Act of 1933 to permit the purchasers to resell their
shares. The shares were sold in reliance on the exemption from registration under the
Securities Act of 1933 set forth in Regulation S. Item
5.    Other Information On February 27, 2006,
Shenyang Jitian Property Co. Ltd. (Jitian), a subsidiary of the Company, was
confirmed as the highest bidder in a public auction of approximately 420,317 m2 of land
designated for residential and commercial development in Chessboard Mountain
International Tourism Development District, Shenyang City. The total purchase price for
the property is approximately USD $56.7 million. On May 12, 2006, bank financing required
to complete acquisition of the property was obtained through a third party, which
resulted in title to the property being procured and pledged to the bank to secure the
financing.  As is customary in the PRC, the final terms of the financing will be set
forth in the loan documents issued by the lending bank, which generally follow delivery
of the title deed as security and funding of the loan by approximately two weeks.  The
Company intends to pursue early development of the project with a view to beginning
pre-sale activity before the end of 2006, which provides the funding necessary for
project construction. Item
6.    Exhibits. Exhibits:  Copies of
the following documents are included or furnished as exhibits to this report pursuant to
Item 601 of Regulation S-B. Exhibit No.
     SEC Ref.No.
        Title of Document31.1
     31
     The certification of chief executive officer required by
  Rule 13a-14(a) or Rule 15d-14(a)31.2
     31
     The certification of chief financial officer required by
  Rule 13a-14(a) or Rule 15d-14(a)32.1
     31
     The certifications required by Rule 13a-14(b) or
  Rule 15d-14(b) and 18 U.S.C. Section 1350 17




SIGNATURES In
accordance with the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized. Great China International
Holdings, Inc. Date: June 15, 2006
     
     By:
     
     /s/ Deng Zhi RenDeng Zhi Ren, Chief Executive Officer(Principal Financial Officer)   Date: June 15, 2006
     
     By:
     
     /s/ Cheng Shui San LawrenceCheng Shui San Lawrence, Chief Financial Officer(Principal Financial and Accounting Officer) 18