| Item 1.01 | | Entry into a Material Definitive Agreement |
Great China International Holdings, Inc. (the “Company”), through its wholly-owned subsidiary, Silverstrand International Holdings Limited (“Silverstrand”), has entered into a letter of intent dated May 31, 2007 to acquire for US$24,510,000 all of the issued share capital of Loyal Best Property Development Limited (“Loyal Best”), a Hong Kong limited company, from Gentle Knight Limited (“GKL”), an unrelated third party.
Loyal Best is the sole owner of an entity called Shenyang Loyal Best Hunnan Property Development Limited (“Shenyang Loyal Best”), a wholly owned foreign enterprise that is a party to a Confirmation Letter of Auction with respect to a parcel of land located at the center area of Hunnan New Zone in the city of Shenyang, China (the “Project”).
Pursuant to the terms of the letter of intent, GKL is required to provide Silverstrand with specified due diligence documents with respect to Shenyang Loyal Best within three business days. Silverstrand then has 14 days to complete all due diligence with respect to the proposed acquisition. Within eight business days of the date of the letter of intent, Silverstrand is required to pay US$2,580,000 by way of a deposit (the “Deposit”) on the total purchase price for Loyal Best. If Silverstrand fails to timely make the Deposit, Silverstrand has agreed to pay HKD$300,000 (approximately US$38,422) as liquidated damages and the letter of intent will be void.
Assuming satisfactory completion of due diligence, the parties have agreed to execute a definitive agreement with respect to the acquisition no later than 21 days following execution of the letter of intent. If Silverstrand fails to complete its due diligence within the time period specified or fails to execute the definitive agreement, the Deposit will be forfeited. The Deposit is refundable if the due diligence process reveals undisclosed liabilities, and will be applied to the total purchase price if the due diligence process is satisfactory to Silverstrand and Silverstrand signs the definitive agreement. If Shenyang Loyal Best or the Project is sold to a third party after execution of the definitive agreement, GKL has agreed to pay Silverstrand double the Deposit as compensation. The parties intend to close the proposed purchase and sale by July 31, 2007.
| Item 4.01 | | Changes in Registrant’s Certifying Accountant |
On June 1, 2007, the Company’s certifying accountant, Murrell, Hall, McIntosh & Co PLLP (the “Accountant”) resigned as the Company’s independent auditor. The resignation was due to business reasons and was not due to any disagreement between the Accountant and the Company and its management.
The Company’s management represents as follows:
(a) There have been no disputes between management and the Accountant, and the Accountant’s contained no adverse opinion or disclaimer of opinion, and was not qualified or modified as to audit scope, accounting principles, or uncertainties, except for the issue of “going concern,” for the last two fiscal years or any later interim period through the date hereof. In the auditors' report for the fiscal years ended December 31, 2006 and 2005, the last two years for which the auditor issued a report, the auditor expressed doubts about the Company's ability to “continue as a going concern.”
(b) During the Company's two most recent fiscal years and any subsequent interim period through the date hereof, there were no disagreements with the Accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
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