# U.S. SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-QSB

|      |                                                                                        
|----- | ---------------------------------------------------------------------------------------
|[ X ] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|      |                                                                                        

| |                                                          
| | ---------------------------------------------------------
| | For the quarterly period ended
        September 30, 2005
| |                                                          

|        |                                                                                                 
|------- | ------------------------------------------------------------------------------------------------
|[     ] | 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)
|--------------------------------------------

|11828
La Grange Avenue, Los Angeles, CA 90025
(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 November 10, 2005, there were 10,997,466 shares of common stock outstanding.

Transitional Small
Business Format:  Yes [    ]  No [ X ]



---



FORM 10-QSB

GREAT CHINA
INTERNATIONAL HOLDINGS, INC.

INDEX

Page

|         |                                                                                                                |   
|-------- | -------------------------------------------------------------------------------------------------------------- | --
|PART I.  | Item 1.   Financial Information                                                                                | 3 
|         | Balance Sheets as of September 30, 2005 (Unaudited) and
December 31, 2004                                      | 3 
|         | Statements of Operations for the Three Months and   
Nine Months Ended September 30, 2005 and 2004 (Unaudited) | 5 
|         | Statements of Cash Flows for the Nine Months Ended
September 30, 2005 and 2004 (Unaudited)                     | 6 
|         | Notes to the Financial Statements                                                                              | 8 
|         | Item 2.   Management's Discussion and Analysis or
Plan of Operation                                            | 20
|         | Item 3.  Controls and Procedures                                                                               | 24
|PART II. | Other Information                                                                                              |   
|         | Item 2.  Unregistered Sales of Securities and Use of Proceeds                                                  | 24
|         | Item 6.  Exhibits                                                                                              | 25
|         | Signatures                                                                                                     | 26
|         |                                                                                                                |   

2

---



GREAT CHINA
INTERNATIONAL HOLDINGS, INC.CONSOLIDATED
BALANCE SHEET SEPTEMBER
30, 2005(UNAUDITED)

ASSETS

|                                                                     | 
|-------------------------------------------------------------------- | 
|Current assets:                                                      | 
|Cash and equivalents                                                 | 
|Restricted cash                                                      | 
|Accounts receivable and other receivables, net                       | 
|Properties held for resale                                           | 
|Raw materials                                                        | 
|Amounts due from related parties, net                                | 
|Other tax refundables                                                | 
|                                                                     | 
|Total current assets                                                 | 
|Property and equipment-net of accumulated depreciation of $3,661,458 | 
|                                                                     | 
|Total assets                                                         | 
|                                                                     | 

See accompanying notes to financial
statements.

3

---



GREAT CHINA
INTERNATIONAL HOLDINGS, INC.CONSOLIDATED BALANCE SHEETSEPTEMBER 30, 2005(UNAUDITED)

LIABILITIES AND
STOCKHOLDERS EQUITY

|                                                   | 
|-------------------------------------------------- | 
|Current liabilities:                               | 
|Accounts payable and                               | 
|accrued expenses                                   | 
|Advances from buyers                               | 
|Tax payable                                        | 
|Short-term loans                                   | 
|Current portion of long-term debt                  | 
|                                                   | 
|Total current liabilities                          | 
|Long term debt, net of current portion shown above | 
|                                                   | 
|Total liabilities                                  | 
|                                                   | 
|Stockholders' equity:                              | 
|Share capital                                      | 
|Capital reserves                                   | 
|Retained earnings                                  | 
|Accumulated other                                  | 
|comprehensive income                               | 
|                                                   | 
|Total stockholders' equity                         | 
|                                                   | 
|Total liabilities and                              | 
|stockholders' equity                               | 
|                                                   | 

See
accompanying notes to financial statements.

4

---



GREAT CHINA
INTERNATIONAL HOLDINGS, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004(UNAUDITED)

|                                        | Three Months EndedSeptember 30, | Nine Months EndedSeptember 30,
|--------------------------------------- | ------------------------------- | ------------------------------
|
|Revenues                                |                                 |                               
|Sales                                   |                                 |                               
|Rental income                           |                                 |                               
|                                        |                                 |                               
|Total revenues                          |                                 |                               
|                                        |                                 |                               
|Cost of Properties Sold                 |                                 |                               
|                                        |                                 |                               
|Gross profit                            |                                 |                               
|                                        |                                 |                               
|Selling, General and Administrative     |                                 |                               
|Expenses:                               |                                 |                               
|Selling expenses                        |                                 |                               
|Administrative expenses                 |                                 |                               
|Other operating expenses                |                                 |                               
|Depreciation                            |                                 |                               
|                                        |                                 |                               
|Total expenses                          |                                 |                               
|                                        |                                 |                               
|Income from operations                  |                                 |                               
|                                        |                                 |                               
|Other income (expense)                  |                                 |                               
|Interest and finance costs              |                                 |                               
|                                        |                                 |                               
|Total other income (expense)            |                                 |                               
|                                        |                                 |                               
|Income before income taxes              |                                 |                               
|Provision for income taxes              |                                 |                               
|                                        |                                 |                               
|Net income (loss)                       |                                 |                               
|Other comprehensive income:             |                                 |                               
|Foreign currency translation            |                                 |                               
|adjustment                              |                                 |                               
|                                        |                                 |                               
|Total comprehensive income              |                                 |                               
|                                        |                                 |                               
|Basic and diluted net income (loss) per |                                 |                               
|common share                            |                                 |                               
|                                        |                                 |                               
|Weighted average basic and diluted      |                                 |                               
|shares outstanding                      |                                 |                               
|                                        |                                 |                               

See
accompanying notes to financial statements.

5

---



GREAT CHINA
INTERNATIONAL HOLDINGS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2005 AND 2004(UNAUDITED)

|                                                     | Nine Months EndedSeptember 30,
|---------------------------------------------------- | ------------------------------
|
|Cash flows from operating activities:                |                               
|Net income                                           |                               
|Adjustments to reconcile net income to operating     |                               
|activities -                                         |                               
|Depreciation                                         |                               
|Foreign currency translation adjustment              |                               
|Reduction in provision for doubtful accounts         |                               
|Changes in assets and liabilites:                    |                               
|(Increase) decrease in -                             |                               
|Accounts receivable and other receivable             |                               
|Amounts due from related parties, net                |                               
|Advances to suppliers                                |                               
|Raw materials                                        |                               
|Accounts payable and other payables                  |                               
|Advances from buyers                                 |                               
|Properties held for resale                           |                               
|Other taxes refundable                               |                               
|Restricted cash                                      |                               
|Income and other taxes payable                       |                               
|                                                     |                               
|Net cash provided by operating activities            |                               
|                                                     |                               
|Cash flows from investing activities:                |                               
|Purchase/(transfer) of fixed assets                  |                               
|Transfer from construction-in-progress               |                               
|                                                     |                               
|Net cash (used in) investing activities              |                               
|                                                     |                               
|Cash flows from financing activities:                |                               
|Borrowings                                           |                               
|Loan repayments                                      |                               
|Dividends paid                                       |                               
|                                                     |                               
|Net cash provided by (used in) financing activities  |                               
|                                                     |                               
|Net increase (decrease) in cash and cash equivalents |                               
|Cash and cash equivalents, beginning of period       |                               
|                                                     |                               
|Cash and cash equivalents, end of period             |                               
|                                                     |                               
|Supplemental disclosures of Cash Flow information:   |                               
|Interest paid, net of capitalized amounts            |                               
|                                                     |                               
|Income taxes paid                                    |                               
|                                                     |                               
|Transfer of stock of properties to fixed assets      |                               
|                                                     |                               

6

---



SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:

During the nine months ended
September 30, 2005, the Company transferred 22 units of the President Building to fixed
assets at a cost of $1,414,658 from properties held for resale.

During the nine months ended
September 30, 2004, the Company transferred 120 units of the President Building to fixed
assets at a cost of $6,335,842 from properties held for resale

During the nine months ended
September 30, 2005, $72,000 of long-term debt was converted into 440,060 shares of common
stock

See
accompanying notes to financial statements.

7

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 1.     Description of
business

Nature
of organization

| | On July 18, 2005, Great China International Holdings, Inc., formerly Red Horse Entertainment
Corporation, completed the acquisition of Silverstrand International Holdings Limited
(Silvertstrand) The effective date of the acquisition was July 5, 2005. Red
Horse issued 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 o f Silverstrand.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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. Silverstrand is the holding company
of Shenyang Maryland International Industry Company Limited (formerly: Shenyang
Malilan Audio Equipment Company, Limited).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Liaoning
Trust Certified Public Accountants Company Limited reported that as of April 6, 2005
Shenyang Foreign Trade, Economic Bureau and Trade and Commerce Administrative Bureau
(Registration No. [2004] 553) approved the reclassification of Shenyang Maryland as a
wholly owned foreign enterprise and issued business registration certificate (No.
111103721 (1-1)) to Shenyang Maryland with a registered capital of $5,000,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
completion of the registered capital transfers, Shenyang Maryland would be reclassified
from a non-foreign investment enterprise to a wholly owned foreign enterprise. In
accordance with the terms and conditions of the above agreement, the Vendors shall receive
their relative share of the consideration from Silverstrand of $5,000,000 in three
installments:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 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,

| | 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Description
of business

| | 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).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 2.    Going concern

| | The
Company was in default on $43,877,928 of bank loans as of September 30, 2005. These loans
are treated as a current liability (Note 14) and as a result the Company had a working
capital deficit of $(25,504,027) as of September 30, 2005. 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:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash
and equivalents TheCompany considers all highly liquid debt instruments
purchased with maturity period of three months or less to be cash equivalents. The
carrying amounts reported in the accompanying consolidated balance sheet for cash and cash
equivalents approximate their fair value. The Company has restricted cash in accordance
with the loan covenants equal to 10% of debt and accrued interest that has been guaranteed
by the Company. As of September 30, 2005 mortgage loans guaranteed by the Company were
$4,807,800.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 September 30, 2005, the provision for doubtful debts amounted to
$293,601.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 the director has
beneficial interests in and in which the Company has significant influence.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | Receipts
in advance 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
expenditure, interests and any overhead costs incurred in bringing the developed
properties to their present location and condition.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

| | 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. Management reduces the estimated
market value by anticipated selling expenses and associated taxes to derive the net
realizable value.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Legal
capital reserve  Capital reserve represents that amount of reserve appropriated
from the net distributable profit after income tax in each period when a net profit after
operations is generated. In accordance with the provisions of the Companys
Memorandum and Articles of Association, the Company is required to appropriate 10% of the
net distributable profit after enterprises income tax to capital reserve.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | One-half
of the capital reserve may be used for staff welfare payments and the balance one-half may
be transferred back to the statement of operations to mitigate the losses from operations.
The Company shall not be required to appropriate any amount to capital reserve when the
balance standing in capital reserve is equal to or exceeds 50% of the registered capital.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 years
|----------------------------- | ----------
|Equipment                     | 5 years   
|Motor vehicles                | 5 years   
|Office furniture and fixtures | 5 years   

| | Repairs
and maintenance costs are normally charged to the statement of operations in the year in
which they are incurred. In situations where it can be clearly demonstrated that the
expenditure has resulted in an increase in the future economic benefits expected to be
obtained from the use of the asset, the expenditure is capitalized as an additional cost
of the asset.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Property
and equipment are evaluated annually for any impairment in value. Where the recoverable
amount of any property and equipment is determined to have declined below its carrying
amount, the carrying amount is reduced to reflect the decline in value. There were no
property and equipment impairments recognized during the nine months ended September 30,
2005 or 2004.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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. At September 30, 2005 there was no construction
in progress.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

| | Contingent
Liabilities and Contingent Assets  A contingent liability is a possible
obligation that arises from past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Company. It can also be a present obligation arising from past events that
is not recognized because it is not probable that outflow of economic resources will be
required or the amount of obligation cannot be measured reliably.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
contingent liability is not recognized but is disclosed in the notes to the financial
statements. When a change in the probability of an outflow occurs so that outflow is
probable, they will then be recognized as a provision.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Substantial
sales taking place for residential properties required a guarantee by the Company of the
debt incurred by the buyer in the sale. Such sales cannot be recognized under United
States generally accepted accounting principles and accordingly the Company was required
to restate prior year earnings by reducing retained earnings by approximately $1,642,000
and increasing properties held for sale by approximately $7,748,000 and advances from
buyers by approximately $9,390,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
contingent asset is a possible asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain events not
wholly within the control of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Contingent
assets are not recognized but are disclosed in the notes to the financial statements when
an inflow of economic benefits is probable. When inflow is virtually certain, an asset is
recognized.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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
income comprises rental 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 properties sold  The cost of goods sold includes the carrying amount of the
properties being sold and the business taxes paid by the Company in connection with the
sales. Business taxes included in cost of sales were $762,415 and $1,738,232 for the nine
months ended September 30, 2005 and 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

| | 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 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 September
30, 2005 the exchange rate was 8.11 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

| | 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 September 30, 2005, because of the relatively
short-term maturity of these instruments.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Use
of estimates  The preparation of financial statements in accordance with
generally accepted accounting principles require management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recent
accounting pronouncements  In May 2003, the Financial Accounting Standards Board
issued SFAS No. 150 Accounting for Certain Financial Instruments with
Characteristics of both Liability and Equity. This standard establishes standards for how
an issuer classifies and measures certain financial instruments with characteristics of
both liabilities and equity. As of December 31, 2004, the Company had no financial
instruments with these characteristics.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2003, the Financial Accounting Standards Board issued SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments and for hedging
actives under FASB No. 133, Accounting for Derivative Instruments and Hedging
Activities.As of December 31, 2004, the Company had no derivative or hedging
activities.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November 2004, the FASB issued SFAS No. 151, Inventory Costs  an amendment of ARB
No. 43, Chapter 4. SFAS No. 151 requires that certain abnormal costs associated with the
manufacturing, freight, and handling costs associated with inventory be charged to current
operations in the period in which they are incurred. The adoption of SFAS 151 had no
impact on the Companys financial position, results of operations, or cash flows.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued a revision of SFAS No. 123, Share-Based Payment. The
statement establishes standards for the accounting for transactions in which an entity
exchanges its equity investments for goods and services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are based on the
fair value of the entitys equity instruments or that may be settled by the issuance
of those equity instruments. The statement does not change the accounting guidance for
share-based payments with parties other than employees.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
statement requires a public entity to measure the cost of employee service received in
exchange for an award of equity instruments based on the grant-date fair value of the
award (with limited exception). That cost will be recognized over the period during which
an employee is required to provide service in exchange for the award (usually the vesting
period). A public entity will initially measure the cost of employee services received in
exchange for an award of liability instrument based on its current fair value; the fair
value of that award will be remeasured subsequently at each reporting date through the
settlement date. Changes in fair value during the requisite service period will be
recognized as compensation over that period.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

| | The
grant-date for fair value of employee share options and similar instruments will be
estimated using option-pricing models adjusted for the unique characteristics of these
instruments. The statement is effective for the quarter beginning January 1, 2006.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets-amendment of
APB Opinion No. 29. SFAS No. 153 eliminates the exception to fair value for exchanges of
similar productive assets and replaces it with a general exception for exchange
transactions that do not have commercial substance, defined as transactions that are not
expected to result in significant changes in the cash flows of the reporting entity. This
statement is effective for exchanges of nonmonetary assets occurring after June 15, 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets-amendment of
APB Opinion No. 29. Statement 153 eliminates the exception to fair value for exchanges of
similar productive assets and replaces it with a general exception for exchanged
transactions that do not have a commercial substance, defined as transactions that are not
expected to result in significant changes in the cash flows of the reporting entity. This
statement is effective for exchanges of non-monetary assets occurring after September 15,
2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20 and FASB Statement No. 3. Statement 154 requires
retrospective application to prior periods financial statements of changes in
accounting principle, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. The statement is effective for accounting
changes and corrections of errors made in fiscal years beginning after December 15, 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Management
believes adoption of these new statements will not have any significant effect on the
Companys financial condition or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reclassifications
Certain amounts in the 2004 financial statements have been reclassified to
conform to the 2005 presentation.
| | -------------------------------------------------------------------------------------------------------------------------------

14

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# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 5.    Cash and equivalents

|                      | September 30,2005
|--------------------- | -----------------
|Restricted cash:      |                  
|Pledged bank deposits |                  
|                     
|Non-restricted cash:  |                  
|Cash on hand          |                  
|Bank deposits         |                  
|                     
|                      |                  
|                     

| | Pledged
bank deposits, which are restricted, 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 properties buyers and to guarantee the repayments
of the mortgage loans. The guarantee fund shall be restricted until such time as the
Company is released from these loan guarantees.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 6.    Accounts receivable,
other receivables and prepayments

Accounts
receivable consists of the following:

|                                      | September 30, 2005
|------------------------------------- | ------------------
|Trade accounts receivable             |                   
|Cash advances to staff                |                   
|Other debtors                         |                   
|Other loan - unsecured                |                   
|Less: Provision for doubtful accounts |                   
|                                      |                   
|                                     
|Total accounts receivable             |                   
|                                     

# 7.    Properties held for
resale

A
break down of properties held for resale by project is as follows:

|                   | September 30, 2005
|------------------ | ------------------
|Qiyun New Village  |                   
|Peacock Garden     |                   
|Chenglong Garden   |                   
|President Building |                   
|Maryland Building  |                   
|Others             |                   
|                  
|Total              |                   
|                  

| | As
of September 30, 2005, carrying values of properties held for resale of $14,402,027 have
been pledged to secure short-term borrowings and mortgage loans. See Notes 14 and 15.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

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# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 8.    Properties and
equipment

Properties
and equipment, stated at cost less accumulated depreciation and amortization, consist of:

|                                                | September 30, 2005
|----------------------------------------------- | ------------------
|Land use rights and buildings                   |                   
|Furniture and fixtures                          |                   
|Motor vehicles                                  |                   
|Office equipment                                |                   
|Leasehold improvements                          |                   
|                                               
|                                                |                   
|Less: Accumulated depreciation and amortization |                   
|                                               
|                                                |                   
|                                               

| | As
of September 30, 2005 fixed assets of $16,300,507 have been pledged to secure short-term
and mortgage secured borrowings. See Notes 14 and 15.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

# 9.    Accounts payable and
accrued expenses

Accounts
payable and accrued expenses consist of the following:

|                 | September 30, 2005
|---------------- | ------------------
|Accounts payable |                   
|Other payables   |                   
|Accrued expenses |                   
|Interest payable |                   
|                
|                 |                   
|                

# 10.    Advances from buyers

| | Advances
from buyers represent purchase deposits from residential property buyers and loan
guarantees treated as deferral of sales revenues until the Company has been released from
this obligation at September 30, 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 11.    Amounts due from/(to)
directors and related parties

The
amounts due from/(to) directors and related parties at September 30, 2005 are as follows:

Amounts due
from/(to) directors

|                                          | 
|----------------------------------------- | 
|Frank Jiang Fang                          | 
|Jiang Peng                                | 
|Dang Jing Shi                             | 
|Li Guang Hua                              | 
|Wang Li Rong                              | 
|                                         
|                                          | 
|                                         
|Amounts due from/(to) related companies   | 
|Liaoning Maryland Concrete Co., Ltd.      | 
|Shenyang Sheng Ji Construction Co., Ltd.  | 
|YunFeng Real Estate Development Co., Ltd. | 
|Shenyang Peng Yuan Concrete Mfy           | 
|                                         
|                                          | 
|                                         
|Amounts due from related parties, net     | 
|                                         

| | Amounts due to directors are unsecured, interest free and arose principally in connection with the
Equity Transfer Agreement dated October 18, 2004 described in Note 1.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amounts
due from/(to) related companies are unsecured, interest free and have no fixed repayment
terms.

|           | September 30, 2005
|---------- | ------------------
|Bank loans |                   
|Secured    | $    43,877,928   
|           |                   

| | At September 30, 2005, 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2004, and on into the period ended September 30, 2005, there
were 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

---



# GREAT CHINA
INTERNATIONAL HOLDINGS, INC.NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 2005

# 13.    Long-term debts
 secured

|                                         | September 30, 2005
|---------------------------------------- | ------------------
|Long term debts:                         |                   
|Mortgage loans                           |                   
|Less: Current portion of long-term debts |                   
|                                        
|Long-term debts                          |                   
|                                        

Maturities
of the long-term debts including mortgage loans for each of the next five years and
thereafter are as follows:

|           | Amount
|---------- | ------
|2005       |       
|2006       |       
|2007       |       
|2008       |       
|2009       |       
|Thereafter |       
|          
|           |       
|          

# 14.    Capital Stock

| | At September 30, 2005, the authorized capital of the Company consists of 50,000 shares of
authorized common shares with a par value of $.001. Following the acquisition of
Silverstrand (See Note 1), there were 10,557,406 shares of Red Horse common stock
outstanding, and options and convertible notes outstanding to acquire an additional
540,060 shares. In August 2005, convertible notes totaling $72,000 were converted in
440,060 shares of common stock, increasing total outstanding shares to 10,997,466 at
September 30, 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 15.    Commitments

| | As
of September 30, 2005, the Company had no commitments for capital expenditures for
contractual commitments of the construction projects.
| | -------------------------------------------------------------------------------------------------------------------------------------------

| | As
of September 30, 2005, the Company has entered into a legal consulting agreement for
Liaoning Zhong Shi Da Solicitors Company to provide legal advisory services totaling
$246,656 for the remainder of 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

---



# Item 2.
Managements Discussion and Analysis or Plan of Operation

ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS

(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 September 30, 2005, 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 flag ship 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.

The Maryland Building consists of 43
units and is 13,070 sq meters in size. All of these units are held for rental purposes.

The Company plans to raise additional
capital though private placements of stock and to commence development of additional real
estate projects.

20

---



(3) Results of Operations

Comparison of operations for the
three months ended September 30, 2005 with the three months ended September 30, 2004:

during the three months ended
September 30, 2005 from $1,259,082 for the comparable period in 2004. Components of sales
and expenses resulting in this increase in net income are discussed below.

Sales revenues decreased by
$3,119,915 or 39% quarter-on-quarter to $4,910,244 for the quarter ended September 30,
2005 compared to the same corresponding quarter in 2004 of $8,030,159. The reasons of the
unfavorable variance in sales revenues for the third quarter ended September 30, 2005 were
as follows:

-     Decreases
in sales of Chenglong Garden by $2,218,692, or 37%;

-     Decreases
in sales of Qiyun New Village of $797,643, or 57%;

-     No
sales were made with respect to President Building and Peacock Garden;

-     Decreases in gross floor area sold by 7,466 square meters quarter-on-quarter to
4,793 square meters for the quarter ended September 30, 2005 compared to the same
corresponding period of 12,259 square meters in 2004;

-    The number of units sold decreased by 50 units or 71% quarter-on-quarter to 20units for the quarter ended September 30, 2005 compared to the same corresponding
period of 70 units in 2004;

-     No new
properties from new development project was introduced in the quarter ended September 30,
2005

Cost of properties sold decreased by
$2,673,240 or 41% quarter-on-quarter to $3,783,097 for the quarter ended September 30,
2005 compared to the same corresponding quarter in 2004 of $6,456,337. Quarter-on-quarter
decreases in sales revenue as noted above were primary factors contributing to the
decrease.

Gross profit decreased by $161,431 or
approximately 7% quarter-on-quarter to $2,070,840 for the quarter ended September 30, 2005
compared to the same corresponding quarter in 2004 of $2,232,271.

Gross profit margin increased to 35%
for the quarter ended September 30, 2005 compared to 25% for the same corresponding
quarter in 2004. The variance was principally due to an increase in rental income revenue.

Selling expenses decreased by $95,788
or 66% to $50,237 during the quarter ended September 30, 2005 from $146,025 during the
same period in 2004. This decrease is mainly primarily due to cancellation of certain
newspaper advertisements, resulting in a decrease of $34,751 in advertising expenses.

Administrative expense decreased by
$21,573 or 10% to $196,069 during the three months ended September 30, 2005 from $217,642
during the same period in 2004. The decrease is due primarily related to an increase in
consultation fees of $283,218 and a decrease in the provision for doubtful accounts to a
credit balance of $366,293.

21

---



Depreciation expense increased by
$378,155 or 682% to $433,568 for the quarter ended September 30, 2005, compared to $55,413
for the corresponding period in 2004.

Interest and financing costs
increased by $416,246 or 80% to $935,696 for the quarter ended September 30, 2005,
compared to $519,450 for the corresponding period in 2004. The increase is primarily
related to the results of an accrual adjustment affecting the expense for the quarter
ended September 30, 2004.

Net income decreased by $911,257 or
72% quarter-on-quarter to $347,825 for the quarter ended September 30, 2005 compared to
the same corresponding quarter in 2004 of $1,259,082. The unfavorable variance in net
income was mainly due to a decrease in gross profit by $161,431 and an increases in
depreciation of $378,155 and interest and finance costs of $416,246.

Comparison of operations for the nine
months ended September 30, 2005 compared with the nine months ended September 30, 2004:

The Company had a $199,062 or a 20%
decrease in net income to $793,169 during the nine months ended September 30, 2005 from
$992,231 for the comparable period in 2004. Components of sales and expenses resulting in
this increase in net income are discussed below.

Sales revenues decreased by
$6,542,578 or 34% quarter-on-quarter to $12,669,073 for the quarter ended September 30,
2005 compared to the same corresponding quarter in 2004 of $19,211,651. The reasons of the
unfavorable variance in sales revenues for the third quarter ended September 30, 2005 were
as follows:

-     Decreases
in sales of Chenglong Garden by $5,512,313, or 37%;

-     Decreases
in sales of Qiyun New Village of $1,199,681, or 36%;

-     No sales
were made with respect to President Building and Peacock Garden;

-     Decreases in gross floor area sold by 10,656 square meters period-on-period to
20,521 square meters for the nine months ended September 30, 2005 compared to the
same corresponding period of 31,177 square meters in 2004;

-     The number of units sold decreased by 120 units or 55% period-on-period to 98units for the nine months ended September 30, 2005 compared to the same corresponding
period of 218 units in 2004;

-     No new
properties from new development project was introduced in the quarter ended September 30,
2005

Cost of properties sold decreased by
$5,295,063 or 34% period-on-period to $10,085,646 for the nine months ended September 30,
2005 compared to the same corresponding period in 2004 of $15,380,709. The decreases in
sales revenue as noted above were primary factors contributing to the decrease.

Gross profit decreased by $661,604 or
10% period-on-period to $5,674,687 for the nine months ended September 30, 2005 compared
to the same corresponding period in 2004 of $6,336,291. Gross profit margin increased to
36% for the quarter ended September 30, 2005 compared to 29% for the same corresponding
quarter in 2004. The variance was principally due to an increase in rental income revenue.

22

---



Selling expenses decreased by
$195,304 or 52% to $180,289 during the nine months ended September 30, 2005 from $375,593
during the same period in 2004. This decrease is mainly primarily due to the following:

-     Cancellation
of certain newspaper advertisements, resulting in a decrease of $21,803 in advertising
expenses;

| |  | Decrease in showroom decoration expense by $174,098 due to disposal of decorations and
furniture in one of four showroom apartments.
| | - | ------------------------------------------------------------------------------------------------------------------------------------

Administrative expense increased by
$65,325 or 12% to $590,069 during the nine months ended September 30, 2005 from $525,744
during the same period in 2004. The increase is primarily related to the following:

-     Increase
of $135,694 in salaries and wages due to an increase in the number of staff by 70
employees, or 32%;

-     Property
taxes decreased by $233,297 in relation to decrease in sales;

-     An
increase in consultation fees of $275,972, and

 A reduction in the provision
for doubtful accounts totaling $405,051.

Depreciation expense decreased by
$77,250 or 6% to $1,208,285 for the nine months ended September 30, 2005, compared to
$1,285,535 for the corresponding period in 2004.

Interest and financing costs
decreased by $344,125 or 12% to $2,632,068 for the nine months ended September 30, 2005,
compared to $2,976,193 for the corresponding period in 2004. The increase is primarily
related to lower interest paid on lower average outstanding debt.

Net income decreased by $199,062 or
20% to $793,169 for the nine months ended September 30, 2005 compared to the same
corresponding period in 2004 of $992,231. The unfavorable variance in net income was
mainly due to a decrease in gross profit by $661,604, an increase in selling expenses of
$195,304 and a decrease in interest and finance costs of $344,125.

(4) Liquidity and Capital
Resources

During the nine months ended
September 30, 2005, the Company generated $3,582,900 of cash through operating activities,
which was primarily the result of the sales of properties held for sale and the collection
of accounts receivable. These items were partially offset by additional funds provided to
related parties and the payments of accounts payable.

During the nine months ended
September 30, 2005, the Company used $1,401,352 in investing activities primarily in
connection with the purchase of fixed assets.

During the nine months ended
September 30, 2005, the Company used $1,694,068 for financing activities. This consisted
of cash outflows for the repayment of debt totaling $1,909,842 and the payment of
dividends of $163,826. These items were partially offset by additional borrowings of
$451,600

23

---



At September 30, 2005, the
Companys had negative working capital of $25,504,027 and was in default on
$43,877,928 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 September 30, 2005:

|                                   | Total | Less Than One
Year | 1-3 Years | Thereafte 
|---------------------------------- | ----- | ------------------ | --------- | ----------
|Legal advisory services            |       |                    | $         | 246,656   
|Equity transfer agreement          |       |                   
|                                   |       |                    |           | 2,000,000 
|Short-Term Debt                    |       |                    |           | 43,877,928
|                                  
|Long-Term Debt                     |       |                   
|                                   |       |                    |           | 5,916,564 
|                                  
|Total Contractual Cash Obligations |       |                    | $         | 52,041,148
|                                  

# Item 3. Controls and
Procedures

As of September 30, 2005 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

On
August 12, 2005, Wayne M. Rogers and Jack M. Gertino, former officers and directors of
Great China, exercised their right to convert convertible notes in the aggregate principal
amount of $72,000 to common stock of Great China. As a result of the conversion, Great
China issued to each of these persons 220,030 shares of the restricted common stock of
Great China. The shares were issued in reliance on the exemption from registration set
forth in Section 3(a)(9) and/or 4(2) of the Securities Act of 1933. No broker-dealer
participated in the transaction and no commission was paid to any person.

24

---



# 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 Document                                                                         
|31.1        | 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        | 32           | The certifications required by Rule 13a-14(b) or Rule 15d-14(d) and 18 U.S.C. Section 1350

25

---



# 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: November 12, 2005 |  | By: |  | /s/ Jiang Fang                                  | 
|                        |  |     |  | Jiang FangChief Executive and Financial Officer | 

|                        |  |     |  |                                     | 
|----------------------- |  | --- |  | ----------------------------------- | 
|Date: November 12, 2005 |  | By: |  | /s/ Wang Li Rong                    | 
|                        |  |     |  | Wang Li RongChief Financial Officer | 

26

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