HH BIOTECHNOLOGY HOLDINGS CO - FORM 10-K

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EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER - HH BIOTECHNOLOGY HOLDINGS CO	ex312k123113.htm
EX-32.1 - CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - HH BIOTECHNOLOGY HOLDINGS CO	ex321k123113.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER - HH BIOTECHNOLOGY HOLDINGS CO	ex311k123113.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x	Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended December 31, 2013, or

¨	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 Registrant as Specified in Its Charter)

Nevada	87-0450232
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

C Site 25-26F President Building, No. 69 Heping North Street

Heping District, Shenyang 110003, People’s Republic of China

(Address of Principal Executive Offices and Zip Code)

Registrant’s Telephone Number: 0086-24-22813888

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock, Par Value $0.001

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

¨ Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company

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

The aggregate market value of voting stock held by non-affiliates on June 28, 2013, based on the average bid and asked prices on that day was $291,453. As of March 31, 2014, the Registrant had outstanding 11,759,966 shares of common stock, par value $0.001.

Documents incorporated by reference: None.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K may contain certain “forward-looking” statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the Company’s expectations or beliefs, including but not limited to, statements concerning the Company’s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intent,” “could,” “estimate,” “might,” “plan,” “predict” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.

This annual report contains forward-looking statements, many assuming that the Company resolves its outstanding debt obligations and is able to continue as a going concern, including statements regarding, among other things, (a) negotiating settlement of our outstanding debt obligations, (b) our plans for developing or participating in the development of real estate projects, (c) our opportunities for participating in new real estate projects, (d) our growth strategies, (e) anticipated trends in our industry, (f) our future financing plans, (g) our anticipated need for working capital, (h) the impact of governmental regulation of the real estate industry in China, and (i) the availability of labor and materials for project development. These statements may be found under Item 1. “Business,” “Item 2. Properties” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this annual report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors and matters described in this annual report. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this annual report will in fact occur.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.

TABLE OF CONTENTS

ITEM NUMBER AND CAPTION	Page

Part I

1. Business	4

1A. Risk Factors	5

1B. Unresolved Staff Comments	5

2. Properties	5

3. Legal Proceedings	6

4. Mine Safety Disclosures	6

Part II

5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7

6. Selected Financial Data	7

7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	7

7A. Quantitative and Qualitative Disclosures About Market Risk	9

8. Financial Statements and Supplementary Data	9

9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	9

9A. Controls and Procedures	10

9B. Other Information	10

Part III

10. Directors, Executive Officers and Corporate Governance	10

11. Executive Compensation	11

12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	12

13. Certain Relationships and Related Transactions, and Director Independence	13

14. Principal Accountant Fees and Services	13

15. Exhibits and Financial Statement Schedules	14

PART I

ITEM 1. BUSINESS

General

Great China International Holdings, Inc. (the “Company,” “we,” or “Great China Holdings”), through its various indirect subsidiaries, has been engaged for more than 20 years in commercial and residential real estate investment, development, sales and/or management in the city of Shenyang, Liaoning Province, in the People’s Republic of China (“PRC”). We conduct all our operation in the People’s Republic of China through our direct and indirect wholly owned subsidiaries; Shenyang Maryland International Industry Company Limited and Silverstrand International Holdings Company Limited.

The Company is currently focused primarily on real estate leasing, management, and consulting activities in the city of Shenyang. There are no development projects underway at this time and no development projects were implemented during 2012. As a result of these circumstances, the Company focused on leasing and property management, which accounted for all of our revenue in 2012.

Leasing and Management Services

Our leasing and management services were conducted in 2013 primarily with respect to real estate projects we developed in prior years. The following is a description of those projects.

●

President Building comprises three blocks of commercial buildings, including two commercial towers, situated in Shenyang City, Heping North Street, which is the financial district of Shenyang. While the original intention was to sell the office space, management subsequently decided to retain the majority of the property for leasing purposes. The buildings maintain a high occupancy rate with tenants that are primarily international companies. Great China Holdings’ head office is situated on the 25th and 26th Floors of President Building.

When the President Building was built, it was one of the few commercial buildings in Shenyang that was positioned as premium commercial building. Over the years, a number of commercial buildings were built to fulfill an increasing demand. The President Building maintains its competitiveness mainly with its strong location at the financial center of Shenyang. Tenant satisfaction is closely monitored and maintained through surveys and regular networking meetings. Though minor renovations are ongoing in the Building, we anticipate no major renovations in the near future. The aggregate occupancy rate for the two towers at the end of 2012 and 2013 was 98.5% and 99.36%, respectively, ranked among the highest in Shenyang. The tenants as a whole are engaged in a variety of businesses, including real estate, foreign trade, investment, insurance, e-commerce, media, advertisement, and heath care.

●

Chenglong Garden, situated in Shenyang Huang Gu District, comprises 12 blocks of modern apartments consisting of 865 residential apartments, a number of retail shops and ancillary facilities including basement car parking facilities and parks. We lease the retail shops and related commercial space, which comprise approximately 3,198 square meters of commercial space.

●	The Maryland Building consists of 12,858 square meters, of which 11,310 have been sold and the remaining 1,548 square meters are held for leasing purposes.

City of Shenyang

Shenyang is a city of approximately 8.2 million people in Liaoning Province, located in northeastern China (Manchuria), approximately 435 miles northwest of Beijing. The largest city in northeast China, Shenyang is the economic, cultural, transportation and trade center of the region, there being eight industrial cities within a 150-kilometer radius of Shenyang. Shenyang’s Taoxian International Airport is the largest airport in northeast China, and the city also has developed railway and expressway networks. Shenyang is comprised of the following districts: (i) Heping District, better known as “Downtown”; (ii) Shen He District, just east of Downtown; (iii) Huang Gu District, situated directly north of Downtown; (iv) Da Dong District, located northeast of Downtown; (v) Tie Xi District; (vi) Yu Hong District; (vii) Dong Ling District; (viii) Su Jia Tun District; (ix) Hun Nan New District; and (x) Shen Bei New District.

Shenyang is rich in industrial resources. Manufactures include heavy machinery, tractors, motor vehicles, cables, machine tools (Shenyang has one of the largest machine-tool plants in China), transformers, textiles, chemicals, paper products, medicines, and cement. Copper, zinc, and lead are also smelted in the city. Shenyang is also the seat of Liaoning University, Northeastern University, China Medical University, Shenyang Conservatory of Music, and numerous other specialized institutes. In 2013, the gross domestic product in Shenyang increased by 8.8%, which is 1.1% higher than the national gross domestic product.

Shenyang has experienced rapid renovation in urbanization since the PRC Central Government launched the “Developing the North East” Policy in 2003, and priority was given to Shenyang in the Policy. Shenyang urbanization has led to rapid and steady development in both residential construction and consumption, indicating the likelihood that the Shenyang real estate market will continue to develop and expand. Various Shenyang governmental policies aimed at implementing law and regulations and developing a business law framework have attracted both domestic and overseas investors to invest in Shenyang.

In 2013, consumer spending in Shenyang reached RMB 318.61 billion. We believe this indicates Shenyang is a growing urban area with a consumer base that can sustain robust residential and commercial real estate development, sales, leasing and management. Though the current global economic slowdown has had an impact on China and Shenyang, we believe Shenyang will continue to develop at a pace faster than that of the national average.

Employees

The Company currently has 117 employees, 14 of whom are engaged in administration activities, and 103 of whom are engaged in property management activities.

Further Information and Reports

We are required to file with the Securities and Exchange Commission annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports of certain events on Form 8-K, and proxy and information statements disseminated to stockholders in connection with meetings of stockholders and other stockholder actions. Copies of these and any other materials we file with the Commission may be inspected without charge at the public reference facilities maintained by the Commission in Room 1580 – 100 F Street, N.E., Washington, D.C. 20549. Copies of all or any part of our filings may be obtained from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, upon payment of the prescribed fees. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company’s filings with the Commission are also available through its web site at http://www.sec.gov.

ITEM 1A. RISK FACTORS

Disclosure under this item is not required of a smaller reporting company.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

General

The Company, through Shenyang Maryland, was engaged in the business of developing residential and commercial real estate projects located in the city of Shenyang. In several of those projects the Company leases space for office and retail uses

●

President Building comprises three blocks of commercial buildings, including two commercial towers, situated in Shenyang City, Heping North Street, which is the financial district of Shenyang. While the original intention was to sell a majority of the office buildings, management subsequently decided to retain most of the properties for leasing purposes. The buildings maintain a high occupancy rate with tenants that are primarily international companies. Great China Holdings’ head office is situated on the 26th Floors of President Building.

●

●	The Maryland Building consists of 12,858 square meters, of which 11,310 have been sold and the remaining 1,548 square meters are held for leasing purposes.

The President Building

The Company’s President Building, which was completed in 2002, consists of three blocks of commercial towers, each built according to international construction standards, situated in Shenyang City, Heping North Street in the financial district of Shenyang. The project occupies an area of 8,126 square meters on a total construction area of 77,000 square meters, and represents an investment by the Company of RMB 582 million (approximately US$88.2 million). While the Company’s original intention was to sell a majority of the office buildings, management subsequently decided to retain most of the properties for leasing purposes. The buildings maintain a high occupancy rate with tenants who are mostly international companies. The Company’s head office is situated on the 25th and 26th Floors of President Building.

In June 2007, Shenyang Maryland closed funding under a loan agreement with Shenyang City Commercial Bank (Holdings) Co., Ltd. (Zhongshan Branch) (the “Bank”) whereby the Bank agreed to loan RMB 40,000,000, or approximately US$6,607,529, to Shenyang Maryland for use in connection with renovation of the President Building, repurchase of assets from the Industrial and Commercial Bank of China and other purposes. The principal amount of the loan bears interest at the rate of 8.775% per annum. The principal has not been repaid, while the accrued interest on the loan has been repaid on time. The principal on the loan was due on June 12, 2013, but was extended by the Bank to June 12, 2014, which was another in a series of annual extensions by the bank. In addition to this loan, the Company also owes approximately US$15,164,280, to the bank, as a result of financing transactions that occurred prior to 2007. This additional loan was due October 13, 2013, but was extended by the bank to October 13, 2014, which was another in a series of annual extensions by the bank. The principal amount of the loan bears interest at the rate of 10.395% per annum. The loan agreement provides that Shenyang Maryland must notify the Bank of certain material changes in its business that may occur during the term of the loan agreement, provides for penalties in the event of various events of default, and also provides that the amount of the Loan is secured by a pledge of property owned by Shenyang Maryland, including part of the President Building, as security for payment of the loan.

The total area of the President Building owned by the Company is 61,448.74 square meters, and the mortgaged area is 33,423.95 square meters. The realty tax for the President Building is 12% of the total rental income, and the total realty tax for the year 2013 was RMB 4,104,701 (approximately US$678,048). The mortgage details for the President Building are as follows:

Lender(bank)	Amount of loan (RMB: 000’s)	Guaranty (President Building)	Mortgaged Area
Commercial Bank of China Zhongshan Branch	131,800	Block A, 1st-2rd floor (axle 1-7)	2930.63
		Block A, 8th-9th floor	2195.72
		Block A, 11th –14th floor	4380.76
		Block A, 17th-26th floor	10925.20
		Block A, 3rd-4th floor, (axle 7-11)	5309.63
		Block C, 13th – 19th Floor	7682.01

Total mortgaged area			33,423.95

Qiyun New Village

Qiyun New Village is situated along the Nanyun Riverside and consists of 347 residential units. Qiyun New Village was introduced to the real estate market in 1999. The Company continues to hold approximately 2,186_ square meters of retail space and 157 square meters of parking space, which is held for lease.

The Maryland Building

The Maryland Building is 12,858 square meters in size of which 11,310 square meters have been sold and other remaining 1,548 square meters are held for leasing purposes.

ITEM 3. LEGAL PROCEEDINGS

We are the subject of certain legal matters that we consider incidental to our business activities. It is the opinion of management that the ultimate disposition of these matters will not have a material impact on our financial position, liquidity or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

The disclosure required by this Item 4 is not applicable to the Company’s business.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The common stock of Great China Holdings trades in the over-the-counter market under the symbol “GCIH.” The following table sets forth for the respective periods indicated the prices of the common stock in the over-the-counter market, as reported and summarized on the OTC Bulletin Board. Such prices are based on inter-dealer bid and ask prices, without markup, markdown, commissions, or adjustments and may not represent actual transactions.

Calendar Quarter Ended	High Bid ($)	Low Bid ($)

March 31, 2012	0.05	0.05
June 30, 2012	0.05	0.05
September 30, 2012	0.20	0.05
December 31, 2012	0.20	0.20

March 31, 2013	0.15	0.15
June 30, 2013	0.12	0.12
September 30, 2013	0.11	0.11
December 31, 2013	0.03	0.03

Dividends

We did not make any distributions to shareholders in 2012 or 2011. Our present intention is to retain any earnings for use in our business activities, so it is not expected that any dividends on the common stock will be declared and paid in the foreseeable future.

Security Holders

At March 31, 2014, there were approximately 157 holders of record of our common stock.

Equity Compensation Plans

As of December 31, 2013, there were no equity securities authorized for issuance under any of our compensation plans.

Repurchases of common stock

There were no repurchases of equity securities by Great China Holdings in the fourth quarter of 2013.

ITEM 6. SELECTED FINANCIAL DATA

Disclosure under this item is not required of a smaller reporting company.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Caution Regarding Forward-Looking Information

The following discussion and analysis should be read in conjunction with our consolidated financial statements prepared in accordance with accounting principles generally accepted in the USA. Unless otherwise indicated, references in this discussion to “we”, “our” and “us” are to Great China International Holdings, Inc., and its subsidiaries.

Any statements in this discussion that are not historical facts are forward-looking statements that involve risks and uncertainties; actual results may differ from the forward-looking statements. Sentences or phrases that use such words as “believes”, “anticipates”, “plans”, “may”, “hopes”, “can”, “will”, “expects”, “is designed to”, “with the intent”, “potential” and others indicate forward-looking statements, but their absence does not mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements. We do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Executive Summary

Great China International Holdings, through its various subsidiaries, is or has been engaged in commercial and residential real estate leasing, management, consulting, investment, development and sales. We conduct all our operation in the People’s Republic of China through our direct and indirect wholly owned subsidiaries; Shenyang Maryland International Industry Company Limited and Silverstrand International Holdings Company Limited.

Results of Operations

Comparison of operations for year ended December 31, 2013 and 2012:

The Company incurred a net loss of $1,814,398 for 2013, which is an improvement of $512,128, or 22%, compared with a net loss of $2,326,526 in the same period of 2012. Components resulting in this improvement are discussed below.

Sales revenues increased by $343,127 or 4.7% from $7,351,786 for 2012 to $7,694,913 for the same period of 2013. Rental income increased by $278,662 or 5.3% from $5,300,989 for the twelve months period ended December 31, 2012 to $5,579,651 for the same period of 2013, which is largely attributable to the Company increasing rental rates. Management fee income increased by $64,464 or 3.1% from $2,050,798 for the 2012 to $2,115,262 for the same period of 2013.

There is no significant change for the cost of revenue in 2013 compared to the same period of 2012, which were $6,451,615 and $6,291,369 in 2013 and 2012, respectively.

The gross margin for the rental business was 9.6% and 10.3% for 2013 and 2012 respectively. This decrease does not require a meaningful decrease in cost of revenue and remained stable. The gross margin for the management business was 33.6% and 25.1% for 2013 and 2012, respectively. This increase is mainly attributed to the cost decrease from maintenance in twelve-month period ended December 31, 2013 compared to the same period of 2012.

Selling expenses decreased by $4,324 from $56,650 for 2012 to $52,326 for 2013 compared with the same period. This decrease mainly attributed to the decrease of bonus for employees.

General and administrative expenses were $1,828,869 and $ 1,828,627 for 2013 and 2012 respectively, there is no significant change.

Depreciation expense decreased by $70,324 or 79.1% from $88,914 for 2012 to $18,590 for 2013. This decrease was mainly due to the fact depreciation had been accrued fully for some fixed assets in 2013.

Interest and finance costs decreased by $616,800 or 29.4% from $2,098,624 for 2012 to $1,481,824 for 2013, which is primarily a result of the Company received interest income $650,680 from loans to third parties in 2013,but there is no such income in 2012.

The Company earned $136,643 and $476,265 of income from disposal of parking lots in2013 and 2012 respectively, which decreased by $339,622 or 71.3% for 2013 compared with 2012.

Cash Flow Discussion

Net cash flows provided by operating activities for 2013 and 2012 were $1,692,781 and $765,571, respectively. The improvement in net cash flow amounted to $927,210 or 121.1%, which was due to the below factors:

The main factors as bellow:

·	the Company increased rental rates, which increased revenue by $278,662 in 2013 compared to the same period of 2012 and the company

·	the Company received more money from buyers in advance in 2013.

·	the Company accrued more tax payable for 2013 compared with 2012.

Net cash flows used in investing activities for the twelve-month periods ended December 31, 2013 and 2012 were not significant.

Net cash flows used in financing activities were $626,279 and $1,109,614 for 2013 and 2012, respectively, which is a result of the Company receiving $2,326,179 and $317,032 of loan repayments from Beijing Sihai Estate Company and increase of loan receivable of $2,952,458 and $1,426,646 to Beijing Sihai Estate Company for 2013 and 2012.

Liquidity and Capital Resources

Current liabilities exceeded current assets by $28,082,034 as of December 31, 2013. The Short Term Loans amounted to $21,771,809, the loan accounted for about 78.4% of the working capital deficit. They are bank loans due in June 2014 and October 2014, respectively, and secured by the Company’s real estate assets. It has become common practice in China, for banks and companies to renegotiate loan extensions on an annual basis. This is driven by the ever changing banking regulatory environment and a situation where banks are becoming more conservative.

Under the circumstances, most lending banks have usually worked closely with borrowers for loan extension or restructuring within the administrative guidelines of the government. As State policies are issued outside the control of the banks in China and form part of the macro and micro-economic measures, many bankers and their customers work together to deal with the situation provided the borrowers are responsible.

Contractual Obligations

The following table was a summary of the Company’s contractual obligations as of December 31, 2013:

	Total		Less than one year		1-3 Years		Thereafter
Short-Term Debt	$	21,771,809	$	21,771,809	$	-	$	-
Long-Term Debt								-
Amounts due to related parties		-		-		-		-
Construction commitments		-		-		-		-
Total Contractual Cash Obligations	$	21,771,809	$	21,771,809	$		$	-

Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2013-02, which requires entities to present information about significant items reclassified out of accumulated other comprehensive income (loss) by component either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. This ASU is effective for the Company in the first quarter of fiscal 2014. We do not expect the adoption will have a significant impact on our consolidated financial statements.

In March 2013, the FASB issued guidance on a parent company’s accounting for the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. This new guidance requires that the parent company releases any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The new guidance will be effective for us beginning July 1, 2014. The adoption of this pronouncement is not expected to have a material impact on the Company’s financial statements.

In July 2013, the Financial Accounting Standards Board, or FASB, issued a new accounting standard which will require the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the consolidated balance sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new standard requires adoption on a prospective basis in the first quarter of 2015; however, early adoption is permitted. We do not expect the adoption will have a significant impact on our consolidated financial statements.

Other pronouncements issued by the FASB or other authoritative accounting standards group with future effective dates are either not applicable or not significant to the consolidated financial statements of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosure under this item is not required of a smaller reporting company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Great China Holdings’ financial statements appear at the end of this report beginning with the Index to Financial Statements on page F-1, following page 15.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As required by Rule 13a-15 under the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of December 31, 2011.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use, or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the company's internal control over financial reporting was effective as of December 31, 2013. There were no changes in our internal control over financial reporting during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This Annual Report on form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the company to provide only management's report in this Annual Report.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting during the fourth quarter of the fiscal year ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and officers

Set forth in the table below are the names, ages and positions of our current directors and executive officers. None of our directors or executive officers has any family relationship to any other director or executive officer.

Name	Age	Position	Since

Jiang Peng	50	Chairman of the Board of Directors	2008
Sun Dongqing	43	Director and Chief Financial Officer	2008

All executive officers are elected by the board and hold office until their successors are duly elected and qualified. Each director is elected by the stockholders and serves until resignation or election of a successor by the stockholders.

Biographies

The following is information on the business experience of each of the officers..

Jiang Peng was appointed as a director and as Chairman of the Board in May 2008. Prior to this appointment, he had served in the previous five years as Chairman as General Manager of Shenyang Maryland, a subsidiary of Great China Holdings, where he played a key role in the development of several of our large real estate projects, including Chenglong Garden, Qiyun New Village and the President Building. Jiang Peng is the brother of our largest shareholder, Frank Jiang, and was formerly a Director of the Company from July 2005 to July 2006. Mr. Jiang’s long experience with the operations of the Company, specifically, and with the real estate business in the Shengyang market, generally, makes him particularly well qualified to serve as a director and manage the present operations and future development of the Company.

Sun Dongqing has served as a Director and as Chief Financial Officer since May 2008. She graduated from Northeast University in 1991 with a major in Accounting and began her career in 1992 with the Company’s affiliate, Maryland International Industry Co., Ltd. During the period 2003-2004, she was Chief Accountant of Shenyang Maryland International Industry Co., Ltd., real estate development branch, responsible for cost accounting, control, tax inspection and coordination with Shenyang Maryland’s subsidiaries. From 2005 until her appointment as our Chief Financial Officer, she was Financial Manager of Shenyang Maryland International Industry Co., Ltd. and President Building Management Centre, in charge of the affairs involving, among other things, domestic industry and commerce, taxation, and foreign exchange. Ms. Sun’s long experience with the operations of the Company her substantial education and experience with financial and tax matters related to the real estate business in the PRC make her well qualified to serve as a director and manage the present operations and future development of the Company.

Audit Committee; Financial Expert

The Board of directors has not established an audit committee, so the entire Board of Directors performs the functions associated with an audit committee, including, evaluating financial reporting matters, monitoring internal controls, compliance with internal financial policies, and engaging the registered independent accounting firm to audit the financial statements of Great China Holdings. None of our directors are independent under the definition set forth in Rule 5605(a)(2) of the NASDAQ Listing Rules. The Board of Directors has determined that Sun Dongqing is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K.

Director Nominations

The Board of Directors has not made any changes to the procedures by which security holders may recommend nominee’s to our Board of Directors.

Board Leadership Structure

Our Chairman of the Board also performs the functions and duties normally associated with a principal executive officer. The Board of Directors does not have a lead independent director. In light of the Company’s level of operations at present and its status as a smaller reporting company, the Board believes the Company’s current leadership structure is appropriate. All of our Board members are engaged directly and regularly in the operations of the Company, so we believe the Board is exposed to, or has the opportunity to discover and evaluate, all areas of meaningful risk pertaining to the Company’s operations and to manage those risks at acceptable levels for the Company.

Code of Ethics

Great China Holdings has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer, a copy of which will be provided to any person, free of charge, upon request. A request for a copy of the Code of Ethics should be in writing and sent to Ms. Lang Lang, Great China International Holdings, Inc., C Site 25-26F President Building, No. 69 Heping North Street, Heping District, Shenyang 110003, The People’s Republic of China.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors, and persons who beneficially own more than 10% of Great China Holdings’ common stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Executive officers, directors and greater than 10% beneficial owners are required by Securities and Exchange Commission regulations to furnish Great China Holdings with copies of all Section 16(a) forms they file. Based solely on Great China Holdings’ review of copies of such reports and representations from Great China Holdings’ executive officers and directors, and greater than ten-percent beneficial owners, Great China Holdings believes that its executive officers and directors complied with all Section 16(a) filing requirements during the fiscal year ended December 31, 2012.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

Name and Principal Position	Year	Salary($)	All Other Compensation($)	Total($)

Jiang Peng (1)	2013	132,151	--	132,151
Chairman of the Board	2012	128,409	--	128,409
	2011	127,107	--	127,107

Sun Dongqing, CFO (2)	2013	15,858	--	15,858
	2012	15,409	--	15,409
	2011	14,300	--	14,300

Discussion of Summary Compensation Table

For his service as Chairman of the Board, Mr. Jiang was paid a monthly salary of 66,667 RMB (approximately US$11,013) in 2013.

We entered into a standard form employment agreement with Sun Dongqing in 2008, which provided for an initial term of two years and has been renewed annually since 2010. Pursuant to the agreement the Company agreed to pay her a base salary of 8,000 RMB (approximately US$1,322) per month in 2013.

Outstanding Equity Awards

There are no outstanding equity awards held by our named executive officers at December 31, 2013.

Director Compensation Table

There was not compensation paid to our directors in addition to the amounts described above.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth as of March 31, 2014, the number and percentage of the outstanding shares of common stock which, according to the information supplied to Great China International, were beneficially owned by (i) each person who is currently a director, (ii) each executive officer, (iii) all current directors and executive officers as a group, and (iv) each person who, to our knowledge, is the beneficial owner of more than 5% of the outstanding common stock.

Name and Address	Number of Shares	Percent of Class

Frank Jiang C Site 25-26F President Building No. 69 Heping North Street, Heping District Shenyang 110003, People’s Republic of China	8,245,447(1)	70.1

Jiang Peng C Site 25-26F President Building No. 69 Heping North Street, Heping District Shenyang 110003, People’s Republic of China	1,085,745(2)	9.2

Sun Dongqing C Site 25-26F President Building No. 69 Heping North Street, Heping District Shenyang 110003, People’s Republic of China	0	-0-

All executive officers and directors as a group (2 persons)	9,331,192	79.3

(1) Includes 67,000 shares held indirectly by Frank Jiang’s wife.

(2) Includes 30,000 shares held indirectly by Jiang Peng’s wife.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence

None of our Directors have been determined to be independent under the definition set forth in Rule 5605(a)(2) of the NASDAQ Listing Rules.

Great China International has not adopted any policy regarding review of transactions with related persons beyond what is provided for in the Nevada Revised Statutes pertaining to corporations. The statutes provide that no contract or transaction between Great China International and one or more of its directors or officers, or between Great China International and any other corporation, firm, association, or other organization in which one or more of its directors or officers are directors or officers or are financially interested, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee that authorizes or approves the contract or transaction, or because their votes are counted for such purpose, provided that:

the material facts as to his, her, or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee and noted in the minutes, and the Board of Directors or committee, in good faith, authorizes the contract or transaction in good faith by the affirmative vote of a majority of disinterested directors, even though the disinterested directors are less than a quorum;

the material facts as to his, her, or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved or ratified in good faith by the majority of shares entitled to vote, counting the votes of the common or interested directors or officers; or

the contract or transaction is fair as to Great China International as of the time it is authorized or approved.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Great China Holdings paid or accrued the following fees in each of the prior two fiscal years to its principal accountant:

	Year ended		Year ended
	December 31, 2013		December 31, 2012
1. Audit fees	$	55,782	$	85,000
2. Audit-related fees		4,500		-0-
3. Tax fees		-0-		-0-
4. All other fees		-0-		-0-
Totals	$	60,282	$	85,000

Great China Holdings has no formal audit committee. However, as defined in Sarbanes-Oxley Act of 2002, the entire Board of Directors is Great China International’s de facto audit committee.

In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and Great China Holdings that might bear on the auditors’ independence as required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors’ independence. The Board also discussed with management, the internal auditors, if any, and Great China International’s independent auditors the quality and adequacy of Great China Holdings’ internal controls. The Board reviewed with the independent auditors their management letter on internal controls, if one was issued by Great China Holdings’ auditors.

The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees”.

The Board reviewed the audited consolidated financial statements of Great China Holdings as of and for the years ended December 31, 2013 and 2012, with management and the independent auditors. Management has the sole ultimate responsibility for the preparation of Great China International’s financial statements and the independent auditors have the responsibility for their examination of those statements.

Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved Great China International’s audited financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended December 31, 2013, for filing with the Securities and Exchange Commission.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K:

Exhibit No.	Title of Document
3.1	Articles of Incorporation (1)

3.2	Articles of Amendment effective September 15, 2005 (2)

3.3	Bylaws (1)

10.1	Loan Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (2)

10.2	Loan Pledge Agreement dated June 18, 2007 between Shenyang Maryland International Industry Co., Ltd. and Shenyang City Commercial Bank (Holdings) Co., Ltd, Zhongshan Branch (2)

10.3	Employment Agreement executed on May 22, 2008 between Great China International Holdings, Inc. and Dongqing Sun (3)

14.1	Code of Ethics (4)

21.1	List of Subsidiaries (5)

31.1	Certification of Chief Executive Officer

31.2	Certification of Chief Financial Officer

32.1	Certifications of Chief Executive Officer and Chief Financial Officer

(1) These exhibits are incorporated herein by this reference to our registration statement on Form 10-SB, filed with the Securities and Exchange Commission on August 21, 1997.

(2) These exhibits are incorporated herein by this reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 25, 2007.

(3) This exhibit is incorporated herein by this reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 29, 2008.

(4) As stated elsewhere in this annual report, the Company makes its Code of Ethics available in the manner provided for in Item 406(c)(3) of Regulation S-K.

(5) This exhibit is incorporated herein by this reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on April 15, 2013.

SIGNATURES

In accordance with Section 13 or 15(d) of 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: April 15, 2014	By	/s/ Jiang Peng
		Jiang Peng, Chairman of the Board
		(Principal Executive Officer)


Date: April 15, 2014	By	/s/ Sung Dongqing
		Sung Dongqing, Chief Financial Officer
		(Principal Financial and Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: April 15, 2013	/s/ Jiang Peng
	Jiang Peng, Director


Date: April 15, 2013	/s/ Sung Dongqing
	Sung Dongqing, Director

INDEX TO FINANCIAL STATEMENTS

Consolidated Financial Statements

Great China International Holdings, Inc.

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Stockholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Great China International Holdings, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of Great China International Holdings, Inc. and subsidiaries, as of December 31, 2013 and December 31, 2012, and the related consolidated statements of operation, stockholders' equity, and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Great China International Holdings as of December 31, 2013 and 2012 and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012 in conformity with accounting principles generally accepted in the United States of America.

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit of $28,082,034 and $28,109,044 as of December 31, 2013 and 2012 respectively. In addition, the Company has incurred net loss in each of the two years in the period ended December 31, 2013 of $1,814,398 and $2,326,526 respectively. These factors as discussed in Note 3 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc.

Certified Public Accountants

Los Angeles, California

April 15, 2014

F-2

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2013 AND DECEMBER 31, 2012

		December 31, 2013		December 31, 2012

ASSETS
Current assets:
	Cash and cash equivalents	$	7,115,476	$	5,927,618
	Accounts receivable, net		9,280		-
	Other receivable, net		319,457		255,400
	Other current assets		16,877		22,916
	Total current assets		7,461,090		6,205,934

Long-term loan receivable			7,127,872		6,308,085
Property and equipment, net			227,457		229,061
Rental property, net			44,738,745		46,691,556

Total assets		$	59,555,164	$	59,434,635

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Bank loans	$	21,771,809	$	21,155,359
	Accounts payable		4,680,416		4,552,396
	Accrued expenses		7,671		57,337
	Other payable		2,230,340		2,114,703
	Payable to disposed subsidiaries		859,927		835,579
	Advances from tenants		1,359,868		1,244,753
	Taxes payable		4,633,092		4,354,853
	Total current liabilities		35,543,124		34,314,978

Stockholders' equity:
	Common stock, $.001 par value 50,000,000
	shares authorized, 11,759,966 issued and outstanding
	as of December 31, 2013 and December 31, 2012		11,760		11,760
	Additional paid in capital		4,566,156		4,566,156
	Statutory reserve		638,128		638,128
	Accumulated other comprehensive income		5,187,009		4,480,228
	Retained earnings		13,608,987		15,423,385

Total stockholders' equity			24,012,040		25,119,657

Total liabilities and stockholders' equity		$	59,555,164	$	59,434,635

The accompanying notes are integral part of these audited consolidated financial statements.

F-3

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME/(LOSS)

FOR THE YEAR ENDED DECEMBER 31, 2013 AND 2012

		December 31,
		2013		2012
Revenues

	Rental income	$	5,579,651	$	5,300,989
	Management fee income		2,115,262		2,050,798
	Total revenues		7,694,913		7,351,786

Cost of revenues

	Rental cost		5,046,524		4,754,751
	Management fee cost		1,405,091		1,536,618
	Total cost		6,451,615		6,291,369
	Gross profit		1,243,298		1,060,417

Operation expenses
	Selling expenses		52,326		56,650
	General and administrative expenses		1,828,869		1,828,627
	Depreciation and amortization		18,590		88,914
	Total operation expenses		1,899,785		1,974,191

Loss from operations			(656,487)		(913,774)

Other income (expense)

	Disposal of parking lots income		136,643		476,265
	Other income, net		187,270		209,606
	Interest and finance costs		(1,481,824)		(2,098,624)

	Total other expense		(1,157,911)		(1,412,752)

Loss before income taxes			(1,814,398)		(2,326,526)

Provision for income taxes			-		-

Net loss			(1,814,398)		(2,326,526)

Other comprehensive loss:
	Foreign currency translation adjustment		706,781		223,985

Comprehensive loss		$	(1,107,617)		(2,102,541)

Net loss per share
	Basic	$	( 0.09)	$	(0.18)
	Diluted	$	(0.09)	$	(0.18)

Weighted average number of shares outstanding
	Basic		11,759,966		11,759,966
	Diluted		11,759,966		11,759,966

The accompanying notes are integral part of these audited consolidated financial statements.

F-4

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED STOCKHOLDERS' EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2013, 2012 AND 2011

							Accumulated				Retained
					Additional		Other				Earnings/		Total
	Common Stock				Paid in		Comprehensive		Statutory		(Accumulated		Stockholders'
	Shares		Amount		Capital		Income		Reserve		Deficit)		Equity
Balance, December 31, 2011	11,759,966	$	11,760	$	4,566,156	$	4,256,243	$	638,128	$	17,749,911	$	27,222,198

Net loss for the year ended December 31, 2012	-		-		-		-		-		(2,326,526)		(2,326,526)
													-
Foreign currency translation adjustment	-		-		-		223,985		-		-		223,985
													-
Balance, December 31, 2012	11,759,966	$	11,760	$	4,566,156	$	4,480,228	$	638,128	$	15,423,385	$	25,119,657

Net loss for the year ended December 31, 2013	-		-		-		-		-		(1,814,398)		(1,814,398)

Foreign currency translation adjustment	-		-		-		706,781		-		-		706,781

Balance, December 31, 2013	11,759,966	$	11,760	$	4,566,156	$	5,187,009	$	638,128	$	13,608,987	$	24,012,040
The accompanying notes are integral part of these audited consolidated financial statements.

F-5

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2013 AND 2012

		DECEMBER 31
		2013			2012

Cash flows from operating activities:
Net loss		$	(1,814,398	)	$	(2,326,526)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net cash provided by operating activities
	Depreciation and amortization		3,331,955			3,311,883
	Provision for doubtful accounts		99,229			-

Changes in operating assets and liabilities:
	Accounts receivable and other receivable		(165,476)			(15,098)
	Advances to suppliers		1,356			8,718
	Other current assets		6,604			-
	Accounts payable and accrued expenses		6,793			(59,497)
	Advances from buyers		77,643			(94,936)
	Income and other taxes payable		149,075			(58,974)

Net cash provided by operating activities		$	1,692,781		$	765,571

Cash flows used in investing activities:
	Purchase of property & equipment		(17,012)			(12,060)

Net cash used in investing activities			(17,012)			(12,060)

Cash flows from financing activities:
	Loans repayment from the borrowing parties		1,675,499			317,032
	Increase of loan receivable		(2,952,458)			(1,426,646)
	Interest payment from the borrowing parties		650,680			-

Net cash used in financing activities			(626,279)			(1,109,614)

Effect of exchange differences			138.368			(10,779)

Net increase in cash and cash equivalents		$	1,187,858		$	(366,882)

Cash and cash equivalents, beginning of period		$	5,927,618		$	6,294,500

Cash and cash equivalents, end of period		$	7,115,476		$	5,927,618

Supplemental disclosures of cash flow information:
	Interest paid	$	2,136,207		$	2,098,752
	Income taxes	$	-		$	-

The accompanying notes are integral part of these audited consolidated financial statements.

F-6

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.	Description of business

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. The Company, through its various subsidiaries, is engaged in commercial and residential real estate leasing, management, consulting, investment, development and sales in the city of Shenyang, Liaoning Province, in the People’ Republic of China (“PRC”).

2.	Summary of significant accounting policies

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances within the Company are eliminated in consolidation.

Use of estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires 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.

Foreign currency translation

The Company uses the United States dollar for financial reporting purposes. The Company’s subsidiaries maintain their books and records in their functional currency - Chinese Yuan Renminbi (CNY), being the primary currency of the economic environment in which their operations are conducted. All assets and liabilities are translated at the current exchange rate, stockholder’s equity are translated at the historical rates and income statement and statement of cash flows items are translated at the average exchange rate for the period. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet. The resulting translation adjustments are reported under other comprehensive as a component of shareholders’ equity.

Cash and cash equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.

Allowance for doubtful accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and other receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of December 31, 2013 and December 31, 2012, the Company reserved $1,868,025 and $1,717,221 respectively, for other receivable bad debt, and $723,282 and $702,802, respectively, for accounts receivable bad debt. The Company also reserved $2,064,853 and $2,006,388 respectively for loans receivable.

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 over useful lives as follows:

Buildings	8-26 years
Equipment	5 years
Automobile	5 years
Office furniture and fixtures	5 years

Repairs and maintenance costs are normally charged to the statement of operations and other comprehensive income 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 as of December 31, 2013 and December 31, 2012 respectively.

F-7

Properties held for rental

Properties include buildings held for rental and land use rights, which are being depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-line basis over 20-26 years. As of December 31, 2013 and December 31, 2012, net property held for rental amounted to $44,738,745 and $46,691,556 respectively. Accumulated depreciation of rental properties amounted to $30,957,503 as of December 31, 2013 and $26,861,418 as of December 31, 2012.

Revenue recognition

Rental income and management fee income – The Company recognizes the rental income on the straight-line basis over the terms of the tenancy agreements. The management fee, including the service fee mainly for property management, maintenance and repair, and security, is recognized quarterly over the terms of the tenancy agreements.

Real estate sales – Revenue from the sales of development properties is recognized by the full accrual method when the sale is consummated. A sale is not considered consummated until (1) the parties are bound by the terms of a contract, (2) all consideration has been exchanged, (3) any permanent financing of which the seller is responsible has been arranged, (4) all conditions precedent to closing have been performed, (5) the seller does not have substantial continuing involvement with the property, and (6) the usual risks and rewards of ownership have been transferred to the buyer. Sales transactions not meeting all the conditions of the full accrual method are accounted for using the deposit method of accounting. Under the deposit method, all costs are capitalized as incurred, and payments received from the buyer are recorded as a deposit liability.

Real estate capitalization and cost allocation – Real estate held for development or sale is stated at cost or estimated net realizable value, whichever is lower. Costs include land and land improvements, direct construction costs and development costs, including predevelopment costs, interest on indebtedness, real estate taxes, insurance, construction overhead and indirect project costs. Selling and advertising costs are expensed as incurred. Total estimated costs of multi-unit developments are allocated to individual units based upon specific identification methods.

Impairment – If real estate is determined to be impaired, it will be written down to its fair market value. Real estate held for development or sale costs include the cost of land use rights, land development and home construction costs, engineering costs, insurance costs, wages, real estate taxes, and interest related to development and construction. All costs are accumulated by specific projects and allocated to residential and commercial units within the respective projects. The Company leases the land for the residential unit sites under land use rights with various terms from the government of the PRC. The Company evaluates the carrying value for impairment based on the undiscounted future cash flows of the assets. Write-downs of inventory deemed impaired would be recorded as adjustments to the cost basis. No depreciation is provided for construction in progress.

Other income

Other income consists of land leveling income, parking lot income, cleaning income and etc. This income was recognized as the services were performed and the settled amount has been paid in accordance with the terms of the agreement.

Loss per share

Basic loss per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted loss 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 December 31, 2013 and December 31, 2012, respectively, 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 as the effect of options outstanding at that time was anti- dilutive.

Income taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

F-8

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the difference are expected to affect taxable income.

The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized.

Concentrations of business and credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash and cash equivalents, accounts receivable and other receivables arising from its normal business activities. The Company places its cash and cash equivalents in what it believes to be credit-worthy financial institutions. The Company maintains large sums of cash in two major banks in China. The aggregate balance in such accounts as of December 31, 2013 was $ 7,044,518. There is no insurance securing these deposits in China. The Company has a diversified customer base, most of which are in China.

The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Statement of cash flows

Cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

Recent accounting pronouncements

Reclassifications

Certain amounts in the 2012 financial statements may have been reclassified to conform to the 2013 presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.

3.	Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. The Company has a working capital deficit of $28,082,034 and $28,109,044 as of December 31, 2013 and December 31, 2012, respectively. In addition, the Company has incurred net loss in each of the two years in the period ended December 31, 2013 of $1,814,398 and $2,326,526 respectively. As the Company has limited cash flow from operations, its ability to maintain normal operations is dependent upon obtaining adequate cash to finance its overhead, sales and marketing activities. Additionally, in order for the Company to meet its financial obligations, including salaries, debt service and operations, it has maintained substantial short term bank loans that have historically been renewed each year. The Company’s ability to meet its cash requirements for the next twelve months largely depends on the bank loans that involve interest expense requirements that reduce the amount of cash we have for our operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.

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The Company is in the process of obtaining informal assurance from our current lender that our short term loans will continue to be renewed and further opening dialog with the lender to convert the short term loans to long term loans. Additionally, the Company is assessing its ability to increase rental rates for its leasing business in order to generate additional revenue. Further, the Company is continuing to focus efforts on cost containment to reduce general and administrative expenses. With its relevant hands-on expertise, the Company also plans to expand operations to include property management. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

4.	Loans receivable

The company entered into series of collateralized loan agreements with third parties from 2009, the total loan receivable is $7,127,872 and $6,308,085 as of December 31, 2013 and December 31, 2012, respectively.

During 2011, the Company entered into a collateralized loan agreement with Beijing Sihai Real Estate Development Ltd., pursuant to which the Company loaned $2,748,693, due on November 29, 2013 and then resigned the agreement at the same terms due on November 29, 2015. The loan bears interest at a variable rate based on the Peoples’ Bank of China lending rate applicable to the period plus 10%. $321,022 of repayment from Beijing Sihai Real Estate Development Ltd was received during 2012 first quarter and then the Company loaned $1,444,599 to Beijing Sihai Estate Development Ltd on November 30, 2012 again. In 2013, the company has recollected $2,362,191 and then loan $2,998,166 again to Beijing Sihai Real Estate Development Ltd. The loan receivable from Beijing Sihai Real Estate Development Ltd was $4,650,049 and $3,900,419 as of December 31, 2013 and December 31, 2012, respectively.

During 2011, the Company entered into a collateralized loan agreement with Shenyang Landing Concrete Ltd. Company, pursuant to which, the Company loaned $2,477,823, due on March 27, 2013.The loan bears interest at a variable rate based on the Peoples’ Bank of China lending rate applicable to the period. On November 30, 2011 the Company, along with Shenyang Landing Concrete Ltd reassigned the loan amount to and Kaiyuan Hongyun Concrete Admixture Ltd. with the same terms due on November 30, 2013. In August 15, 2013 the loan agreement extended to August 15 2015 at the same terms.

During 2009, the Company entered into an uncollateralized loan agreement with Zhongxin Guoan Ltd., pursuant to which the Company loaned $2,064,853, due on October 30, 2011. The loan bore interest at a variable rate based on the Peoples’ Bank of China lending rate applicable to the period. Subsequent to the issuance of the loan, the Company determined that the loan was uncollectible and recorded a reserve on the entire loan amount. Therefore this loan is not included in the loans receivable on the balance sheet. During the fourth quarter of 2011, this loan was reassigned to Shenyang Konggang New City Investment Development Ltd., who is working on a development project with Zhongxin Guoan Ltd. The loan remains uncollateralized and is now due on October 30, 2015. The loan bears interest at a variable rate based on the Peoples’ Bank of China lending rate applicable to the period.

5.	Property and equipment

Property, Plant & Equipment consisted of the following:

	December 31, 2013		December 31, 2012
Building	$	16,205	$	15,746
Automobile		1,216,429		1,181,987
Office equipment & Furniture		593,868		562,240
		1,826,502		1,759,973
Accumulated depreciation		(1,599,045)		(1,530,913)
Property and equipment, net	$	227,457	$	229,061

The Company recorded depreciation expense relating to properties held for rental, as well as property and equipment amounting to $3,329,954 and $3,308,464 for the months ended December 31, 2013 and 2012, respectively, of which, $18,590 and $88,914 were recorded as general and administrative expense, respectively.

As of December 31, 2013, fixed assets and rental property totaling $31,182,080were pledged as security for various bank loans totaling $21,771,809.

6.	Accrued expenses

Accrued expenses consisted of the following:

	December 31, 2013		December 31, 2012
Payroll and welfare payable	$	3,866	$	4,043
Accrued expenses		3,805		53,294
Total	$	7,671	$	57,337

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7.	Other payables

Other payables consisted of the following:

	December 31, 2013		December 31, 2012
Customer guarantee deposit	$	1,158,647	$	1,090,677
Customer deposit for property decoration		14,016		14,422
Miscellaneous payable		1,057,677		1,009,604
Total	$	2,230,340	$	2,114,703

8.	Tax payables

Tax payables consisted of the following:

	December 31, 2013		December 31, 2012
Income tax payable in Mainland China	$	1,485,776	$	1,230,221
Business tax		662,066		669,202
Land VAT payable		2,478,669		2,408,488
Other levies		6,581		46,942
Total	$	4,633,092	$	4,354,853

9.	Payable to disposed subsidiary

The Company had amounts due to a Loyal Best, a previously disposed of entity, as of December 31, 2013 and December 31, 2012 in the amount of $859,927 and $835,579, respectively.

10.	Loan Payable

Loans payable (including accrued interest) consisted of the following:

Nature	Due on	Interest per Annum	December 31, 2013		December 31, 2012
Bank loan	6-12-2014	8.775%	$	6,607,529	$	6,420,443
Bank loan	10-13-2014	10.395%		15,164,280		14,734,916

Less current portion				21,771,809		21,155,359
			$	-	$	-

The above loans are secured by Company rental properties.

As of December 31, 2013 and 2012, the Company’s incurred interest expense to $2,137,019 and $2,098,753 respectively.

11.	Statutory reserve

As stipulated by the Company Law of the People’s Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:

i.	Making up cumulative prior years’ losses, if any;

ii.	Allocations to the “Statutory Surplus Reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital;

iii.

Allocations of 5% to 10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “Statutory Common Welfare Fund”, which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and statutory common welfare fund is no longer required per the new cooperation law executed in 2006; and

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iv.	Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting.

The Company did not contribute to statutory reserve for the period ended December 31, 2013 and 2012, respectively, due to the net loss incurred for its Chinese operation.

12.	Segment information

ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

During 2013 and 2012, the Company was organized into two main business segments: (1) Property for sale, and (2) Rental income and Income of management fee of commercial buildings. The following table presents a summary of operating information and certain year-end balance sheet information as of year ended of December 31, 2013 and 2012, respectively.

			December 31
			2013		2012
Revenues from unaffiliated customers:
	Rental income & Management fee			7,694,913		7,351,786
		Consolidated	$	7,694,913	$	7,351,786
Operating loss:
	Rental income & Management fee			(589,503)		(812,859)
	Corporation (1)			(66,984)		(100,915)
		Consolidated	$	(656,487)	$	(913,774)
Net loss before taxes:
	Rental income & Management fee			(2,070,909)		(2,907,759)
	Corporation (1)			256,511		581,233
		Consolidated	$	(1,814,398)	$	(2,326,526)
Identifiable assets:
	Rental income & Management fee			49,138,570		50,376,743
	Corporation (1)			10,416,595		9,057,892
		Consolidated	$	59,555,164	$	59,434,635
Depreciation and amortization:
	Rental income & Management fee
	Corporation (1)			3,331,955		3,311,883
		Consolidated	$	3,331,955	$	3,311,883
Capital expenditures:
	Rental income & Management fee			17,012		12,060
	Corporation (1)
		Consolidated	$	17,012	$	12,060

(1). Unallocated loss from Operating income (loss) and Net income before provision for income taxes are primarily related to general corporate expenses.

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