HH Biotechnology 10Q 2009 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


T	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period June 30, 2009

¨	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 Presidential Building, No. 69 Heping North Street

Heping District, Shenyang 110003, Peoples Republic of China

(Address of Principal Executive Offices)

0086-24-22813888
(Issuer's telephone number)

Not Applicable
(Former name, address and fiscal year, if changed since last report)

Indicate by check mark whether the registrant (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 has submitted electronically and posted on its corporate Web site, 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 such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-3 of the Exchange Act). (check one)

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

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 July 31, 2009, there were 11,759,966 shares of common stock outstanding.

FORM 10-Q
GREAT CHINA INTERNATIONAL HOLDINGS, INC.


TABLE OF CONTENTS		Page



PART I.	Item 1. Financial Information	3

	Balance Sheet as of June 30, 2009 (Unaudited) and December 31, 2008	3

	Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2009 and 2008 (Unaudited)	4

	Statements of Cash Flows for the Six-Month Periods Ended June 30, 2009 and 2008 (Unaudited)	5

	Notes to the Financial Statements	6

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	22

	Item 4T. Controls and Procedures	23

PART II.	Other Information	23

	Item 6. Exhibits	23

	Signatures	24

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
(UNAUDITED)

	June 30,2009		December 31, 2008
ASSETS
Current assets:
Cash and equivalents	$	10,084,390	$	8,214,381
Accounts receivable, net		230,737		222,735
Other receivable, net		461,022		676,938
Properties held for resale		5,903,070		6,228,607

Total current assets		16,679,219		15,342,660

Property and equipment, net		49,507,665		51,063,104

Total assets	$	66,186,883	$	66,405,764

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Bank loans	$	19,296,838	$	19,317,925
Accounts payable and accrued expenses		4,258,547		4,404,447
Other payable		1,599,191		1,694,545
Payable to disposed subsidiaries		768,865		768,287
Commission payable		1,781,411		1,784,080
Advances from buyers		1,643,247		1,997,262
Taxes payable		9,266,777		9,107,260

Total current liabilities		38,614,876		39,073,807

Stockholders' equity:
Common stock, $.001 par value 50,000,000 shares
authorized, 11,759,966 issued and outstanding
as of June 30, 2009 and December 31, 2008		11,760		11,760
Additional paid in capital		4,566,156		4,566,156
Statutory reserve		638,128		638,128
Other comprehensive income		2,244,235		2,287,898
Retained earnings		20,111,728		19,828,016

Total stockholders' equity		27,572,007		27,331,957

Total liabilities and stockholders' equity	$	66,186,883	$	66,405,764

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

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE
INCOME FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)

	Three month periods ended						Six month periods ended
	2009			2008			2009			2008
Revenues
Real estate sales	$	299,320		$	743,298		$	480,376		$	2,218,685
Rental and management fee income		1,445,622			1,470,838			2,884,590			2,914,196
Total revenues		1,744,942			2,214,136			3,364,966			5,132,881

Cost of revenues		658,012			1,063,061			1,282,133			2,016,680
Gross profit		1,086,930			1,151,075			2,082,833			3,116,201

Operation expenses
Selling expenses		163,782			36,788			226,995			82,088
General and administrative
expenses		456,664			723,473			1,319,769			2,104,557
Depreciation and amortization		732,145			730,659			1,464,642			1,460,224

Total operation expenses		1,352,592			1,490,920			3,011,406			3,646,869

Loss from operations		(265,662	)		(339,844	)		(928,573	)		(530,668	)


Other income (expense)
Land leveling income (expense)		107,663			--			2,126,358			--
Gain on settlement of debt		--			--			--			1,075,843
Other income, net		171,156			4,843			314,079			(235,715	)
Gain on forgiveness of debt		--			--			--			--
Interest and finance costs		(488,887	)		(609,439	)		(969,422	)		(1,409,324	)

Total other income (expense)		(210,067	)		(604,596	)		1,471,015			(569,196	)

Income (loss) before income taxes		(475,729	)		(944,440	)		542,442			(1,099,865	)

Provision for income taxes		137			(202,900	)		258,729			(164,030	)

Net income (loss)		(475,867	)		(741,540	)		283,713			(935,834	)

Other comprehensive income (loss):
Foreign currency translation adjustment		4,367			493,543			(43,663	)		1,161,590

Net comprehensive income (loss)	$	(471,500	)	$	(247,997	)	$	240,050		$	225,755

Net income (loss) per share from continue operating
Basic	$	(0.04	)	$	(0.06	)	$	0.02		$	(0.08	)
Diluted	$	(0.04	)	$	0.06	)	$	0.02		$	(0.08	)

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

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

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)

	2009			2008
Cash flows from operating activities:
Net income (loss)	$	283,713		$	(935,834	)
Adjustments to reconcile net income (loss) to operating activities -
net cash provided by operating activities
Depreciation and amortization		1,464,642			1,460,224
Deferred tax assets		--			(164,030	)
Gain on interest expense waived		--			(1,075,843	)
Provision (recovery) for doubtful accounts		(3,764,579	)		149,427
Non-cash stock compensation expense		--			3,301
(Increase)/decrease in current assets:
Accounts receivable and other receivable		4,122,932			31,720,942
Advances to suppliers		(22,263	)	--
Prepaid expenses		(140,887	)		--
Properties held for resale		318,629			713,750
Increase/(decrease) in current liabilities:
Accounts payable and accrued expenses		(289,045	)		(22,392,727	)
Advances from buyers		(351,715	)		(168,530	)
Income and other taxes payable		167,089			(161,997	)

Net cash provided by operating activities		1,788,516			9,148,681

Cash flows from investing activities:
Purchases (disposal) of property & equipment		46,203			(46,217	)

Net cash provided by/(used in) investing activities from continuing operations		46,203			(46,217	)
Net cash used in investing activities from discontinued operation		--			--

Net cash provided by/(used in) investing activities		46,203			(46,217	)

Cash flows from financing activities:
Loan repayments		--			(8,643,184	)

Effect of exchange differences		35,290			481,386

Net increase in cash and cash equivalents	$	1,870,009		$	940,666

Cash and cash equivalents, beginning of period	$	8,214,381		$	10,044,579

Cash and cash equivalents, end of period	$	10,084,390		$	10,985,245

Supplemental disclosures of cash flow information:
Interest paid	$	249,665		$	75,420
Income taxes	$	--		$	1,106,490

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

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

1.	Description of business

Nature of organization

Great China International Holdings, Inc., (the “Company “) was incorporated in the State of Nevada on December 4, 1987, under the name of Quantus Capital, Inc., and in 1992, it changed its name to Red Horse Entertainment Corporation. On September 15, 2005, the Company changed its name to Great China International Holdings, Inc.

Beijing Xinchao Property Company Limited (“Beijing Xinchao”) was registered in Beijing on March 27, 2008. Beijing Xinchao was 100% owned by Shenyang Xinchao with a registered capital amounting to $4,255,440 (RMB 29,800,000) and a defined period of existence of 10 years. Beijing Xinchao was disposed of on May 2008 in the amount of $4,255,440 and no gain/loss was recognized in the disposal. The disposal amount was fully received as of December 31, 2008.

The Company engages in the development and sale of high quality real estate properties and developed residential and commercial properties includes Maryland building, President Buildings, Qiyuan new village, Peacock Garden, and Chenglong Garden. The Company also engages in rental of commercial buildings in the City of Shenyang, China. Shenyang Maryland, the Company’s indirect wholly-owned subsidiary, was one of the first private property developers and retailers in China.

2.	Summary of significant accounting policies

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company’s functional currency is the Chinese Renminbi (CNY); however the accompanying consolidated financial statements have been translated and presented in United States Dollars ($) on the basis set forth below.

The following is a summary of significant accounting policies:

Unaudited Interim Financial Information - The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results for any future period. These statements should be read in conjunction with the Company's audited financial statements and notes thereto for the fiscal year ended December 31, 2008. The results of the six month period ended June 30, 2009 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2009.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

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.

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 June 30, 2009 and December 31, 2008, the Company reserved $5,769,967 and $5,664,081 respectively.

Properties held for sale – The Company capitalizes as properties held for sale, the direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (i.e. engineering, surveying, landscaping, etc.) until the property reaches its intended use. As of June 30, 2009 and December 31, 2008, properties held for sale amounted to $5,903,070 and $6,228,607, respectively.

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.

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
	Leasehold improvements		20 years
	Equipment		5 years
	Motor vehicles		5 years
	Office furniture and fixtures		5 years

As of June 30, 2009 and December 31, 2008, Property, Plant & Equipment consist of the following:

	6-30-2009			12-31-2008
Building	$	63,151,520		$	63,220,533
Automobile		1,078,148			1,079,326
Office equipment & Furniture		422,916			409,965
Others		14,809			74,506

	$	64,667,393			64,784,330

Accumulated depreciation		(15,159,728	)		(13,721,226	)

Property and equipment, net	$	49,507,665		$	51,063,104

Depreciation expense for the six month periods ended June 30, 2009 and 2008 totaled $1,464,642 and $1,460,224 respectively.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

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 six month periods ended June 30, 2009, 2008 and 2007.

As of June 30, 2009 fixed assets totaling $27,637,370 have been pledged as securities to various banks in respect of borrowings totaling $19,296,838..

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.

As of June 30, 2009 and December 31, 2008, the Company had $0 and $35,177 construction-in-progress balance respectively.

Revenue Recognition

Real estate sales

Real estate sales are reported in accordance with the provisions of SFAS No. 66, “Accounting for Sales of Real Estate”. Profit from the sales of development properties, less 5% business tax, 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 rental income, less 5% business tax, is recognized on the straight-line basis over the terms of the tenancy agreements.

For land sales, the Company recognizes the revenue when title of the land development right is transferred and collectability is assured.

For the reimbursement on infrastructure costs, the Company recognizes the income (loss), which is at the fair market value agreed between the Company and the PRC government, when they enter into a binding agreement with the government agreeing on the reimbursement.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

Real Estate Capitalization and Cost Allocation

Real estate held for development or sale consists of residential and commercial units under construction and units completed.

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.

If the 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.

Capitalization of Interest

In accordance with SFAS 34, interest incurred during construction is capitalized to construction in progress. All other interest is expensed as incurred. Ended June 30, 2009, the Company did not have any interest need to be capitalized.

Other income

Other income consists of land leveling income, which was one-time service performed which was requested by our customers and gain on settlement of debt. These revenues are recognized when the services have been performed and the settled amount has been paid in accordance with the terms of the agreement.

Foreign currencies - The Company’s principal country of operations is in The People’s Republic of China. The financial position and results of operations of the Company are determined using the local currency (“Renminbi” or “Yuan”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

Assets and liabilities of the Company have been translated at year- end exchange rates, while revenues and expenses have been translated at average exchange rates in effect during the year. Resulting cumulative translation adjustments have been recorded as other comprehensive income (loss) as a separate component of stockholders' equity.

Equity 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.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

Earnings Per Share – Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and dilutive potential common shares outstanding during the period.

As of June 30, 2009 and 2008, 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.

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 June 30, 2009 and December 31,2008, 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.

Concentrations of business and credit risk – Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. 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.

Recent accounting pronouncements –

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”, which is an amendment of Accounting Research Bulletin (“ARB”) No. 51. This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement changes the way the consolidated income statement is presented, thus requiring consolidated net income to be reported at amounts that include the amounts attributable to both parent and the noncontrolling interest. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Based on current conditions, the Company does not expect the adoption of SFAS 160 to have a significant impact on its results of operations or financial position.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. Management does not believe the effect of this pronouncement on financial statements will have a material effect.

In May of 2008, FASB issued SFASB No.162, “The Hierarchy of Generally Accepted Accounting Principles”. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days following SEC approval. The Company does not believe this pronouncement will impact its financial statements.

In May 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60. The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The company does not believe this pronouncement will impact its financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning January 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after January 1, 2009.

On December 30, 2008 FASB issued FIN 48-3, “Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises”. This FSP defers the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for certain non-public enterprises as defined in paragraph 289, as amended, of FASB Statement No. 109, Accounting for Income Taxes, including non-public not-for-profit organizations. However, non-public consolidated entities of public enterprises that apply U. S. GAAP are not eligible for the deferral. Nonpublic enterprises that have applied the recognition, measurement, and disclosure provisions of Interpretation 48 in a full set of annual financial statements issued prior to the issuance of this FSP also are not eligible for the deferral. This FSP shall be effective upon issuance. The Company does not believe this pronouncement will impact its financial statements.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

On January 12, 2009 FASB issued FSP EITF 99-20-01, “Amendment to the Impairment Guidance of EITF Issue No. 99-20”. This FSP amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and other related guidance. The FSP is shall be effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The Company does not believe this pronouncement will impact its financial statements.

Reclassifications– Certain amounts in the 2008 financial statements have been reclassified to conform to the 2009 presentation. These reclassifications had on effect on previously reported results of operations or retained earnings.

3.	Properties held for resale

Properties held for resale at June 30, 2009 and December 31, 2008 by project are as follows:

	6-30-2008		12-31-2008
Qiyun New Village	$	789,692	$	854,183
Peacock Garden		175,988		176,180
Chenglong Garden		4,433,096		4,536,993
President Building		218,590		218,829
Maryland Building		268,174		268,575
Others		17,422		173,847

Total	$	5,903,070	$	6,228,607

The Company introduced a “Five-year Trial Accommodation Scheme” (the “Scheme”) to attract potential buyers when initial sales at the project did not meet expectations. Under the Scheme, property buyers were required to pay a 10% refundable deposit based on the sale price of the property or $7,321 (RMB50,000) and another 20%, based on the sale price of the property which is non-refundable, over 5 years by monthly installments, totaling 30% throughout the trial period. The remaining 70% of the consideration shall be due and payable immediately after the trial period when the property buyers exercise their option whether or not to complete the purchase. If the buyer chooses not to buy the property, the 10% refundable deposit or $7,321 (RMB 50,000) will be refunded to the buyers (less any unpaid rental due) and monthly installments received over the 5-year trial period will have been recognized as rental income in the year in which they arose.

As of June 30, 2009 and December 31, 2008, $604,017 and $668,305 worth of properties held for sale in Qiyun New Village were occupied by individuals who agreed to buy the properties without having fully paid the purchase consideration. $ 259,622 and $299,731 was included in advance from buyers for this Scheme as of June 30,2009 and December 31, 2008.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

4.	Accounts payable and accrued expenses

Accounts payable and accrued expenses consisted of following as of June 30, 2009 and December 31, 2008:

	06-30-2009		12-31-2008
Accounts payable	$	4,191,325	$	4,249,300
Payroll and welfare payable		50,014		97,367
Interest and other accrued expenses		17,208		57,780

Total	$	4,258,547	$	4,404,447

5.	Tax payables

Tax payables consist of the following as of June 30, 2009 and December 31, 2008:

	06-30-2009			12-31-2008
Income tax payable	$	6,476,271		$	5,857,279
Business tax		614,612			1,021,519
Land VAT payable		2,196,899			2,204,240
Other levies		(21,005	)		24,222

Total	$	9,266,777		$	9,107,260

6.	Payable to disposed subsidiary-restated

The balance payable to Loyal Best Property Development Limited (a previously disposed subsdiary) amounted to $768,865 and $768,287 as of June 30, 2009 and December 31, 2008, respectively.

7.	Short-term loans

Short-term loans as of June 30, 2009 and December 31, 2008 are comprised as follow:

Nature			06-30-2009
Bank loan	10-13-2009	10.395%		13,440,438
Bank loan	6-12-2010	8.775%		5,856,400
Total			$	19,296,838

Nature			12-31-2008
Bank loan	10-13-2009	10.395%		13,455,125
Bank loan	6-12-2009	9.477%		5,862,800
Total			$	19,317,925

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

The above loans are secured by fixed assets and land use rights the Company owned.

As of June 30, 2009 and 2008, the Company incurred interest expense amounting to $969,422 and $1,409,324 respectively.

On June 22, 2006 the Company entered into a settlement agreement with a bank with respect to $8,230,453 of past due notes. In accordance with the settlement agreement, $1,228,163 loan interest accrued as of December 31, 2007 may be waived if the Company repays the loan principle per the installments schedule. The Company is required to pay back the loan principal in a three step installments in which the entire bank loan will be paid off on September 20, 2008.

The Company paid three installments on time per the schedule of agreement. The outstanding interest for the said loan was partially waived by the bank in the amount of $1,006,722 based on the agreement and the Company paid off the rest amount to the bank as of December 31, 2008. The $1,006,722 waived interest expense was recognized as other income as of June 30, 2008.

8.	Statutory Reserve

In accordance with the Chinese Company Law, the Company has established a policy to reserve 10% of its annual net income as statutory reserve. When the accrued statutory reserve reached the 50% of capital, the company could select not to accrue any more. The Company accrued $0 and $11,491 during the six month periods ended June 30, 2009 and 2008.

9.	Stock Options

On January 31, 2008, the Company issued a non-incentive stock option for 10,000 shares to a non-employee director with an exercise price of $0.65 that will expire on January 31, 2010. The options vested and became exercisable over a term of two years.


Risk-free interest rate	2.00%
Expected life of the options	2 year
Expected volatility	121.79%
Expected dividend yield	0 %

On January 31, 2007, the Company issued a non-incentive stock option for 10,000 shares to a non-employee director with an exercise price of $4.65 which will expire on January 31, 2009. The options vested and became exercisable over a term of two years.


Risk-free interest rate	2.00%
Expected life of the options	2 year
Expected volatility	83.76%
Expected dividend yield	0 %

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

Options outstanding at June 30, 2009 and related weighted average price and intrinsic value is as follows:

Exercise Prices		Total Options Outstanding		Weighted Average Remaining Life (Years)		Total Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	0.65		10,000		0.29	$	0.33		7,083	$	0.33	$	1,000

A summary of option activity as of June 30, 2009, and changes during the periods then ended is presented below:

Options	Shares
Outstanding at December 1, 2007	20,000
Granted	--
Exercised	--
Forfeited or expired	10,000
Outstanding on June 30, 2009	10,000
Exercisable on June 30, 2009	7,083

10.	Disposal of subsidiaries and discontinuance of subsidiaries

Shenyang Xinchao Property Company Limited (“Shengyang Xinchao”) was registered on August 16, 2005 in Shenyang, Liaoning Province, in the PRC with a registered capital of $12,330,456 (RMB 100,000,000) and a defined period of existence of 11 years to August 15, 2016. Shenyang Yindu Property Company Limited (“Yindu”) was registered on August 16, 2005 in Shenyang, Liaoning Province, in the PRC with a registered capital of $6,615,228 (RMB 50,000,000) and a defined period of existence of 11 years to August 15, 2016. Xinchao and Yindu were formed to develop a certain tract of property located in the Heping District of Shenyang, and will feature a construction area of almost 500,000 square meters with a linear site area of approximately 101,000 square meters. The local government of Heping District of Shenyang received back the land use rights of the Xita project because of new developing plan of the district. Heping District refunded the land usage right paid by Xinchao and reimbursed the development cost incurred by Xinchao. The Company decided to discontinue Shenyang Xinchao and Yindu on October 2008. As of December 15, 2008, the operations of Shenyang Xinchao and Yindu were discontinued. As of June 30,2009, 70% of the assets and the liabilities are to be transferred to Shenyang Maryland International Industry Co., Limited ,the other 30% of the assets and the liabilities to Silver strand.

Beijing Xinchao was registered in Beijing on March 27, 2008, which was 100% owned by Shenyang Xinchao with a registered capital amounting to $4,255,440 (RMB 29,800,000) and a defined period of existence of 10 years.

Sooner after Beijing Xinchao registered, the Company changed their business development plan in Beijing City and disposed Beijing Xinchao in May 2008 in the amount of $4,255,440 (RMB29,800,000). No gain/loss of the disposal was realized. Beijing Xinchao had no operation before disposal. The disposal amount was fully received as of December 31, 2008.

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

11.	Income Tax

The Company is registered in the State of Nevada and has operations in primarily three tax jurisdictions – the People’s Republic of China, Hong Kong and the United States. For operation in the US, the Company has incurred net accumulated operating losses for income tax purposes. The Company believes that it is more likely than not that these net accumulated operating losses will not be utilized in the future. Therefore, the Company has provided full valuation allowance for the deferred tax assets arising from the losses at these locations as of June 30, 2009. Accordingly, the Company has no net deferred tax assets.

The provision for income taxes from continuing operations on income consists of the following for the six month periods ended June 30,2009 and 2008:

The provision for income taxes from continuing operations on income consists of the following for the three month periods ended June 30,2009 and 2008:

	6-30-2009	6-30-2008

US current income tax expense (benefit)
Federal	$ --	$ --
State	--	--
HK current income tax expense	--	--
PRC current income tax expense	$ 258,729	$ (164,030)
Total provision for income tax	$ 258,729	$ (164,030)

The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations:


	6-30-2009	6-30-2008
Tax expense (credit) at statutory rate - federal	34%	34%
State tax expense net of federal tax	6%	6%
Changes in valuation allowance	(40%)	(40%)
Foreign income tax - HK	17.5%	17.5%
Valuation allowance	(17.5%)	(17.5%)
Foreign income tax benefit - PRC	25%	25%
Tax expense at actual rate	25%	25%

United States of America

As of June 30, 2009, the Company in the United States had approximately $41,835 in net operating loss carry forwards available to offset future taxable income. Federal net operating losses can generally be carried forward 20 years. The deferred tax assets for the United States entities at June 30, 2009 consists mainly of net operating loss carry forwards and were fully reserved as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the net deferred tax assets for operation in the US as of June 30, 2009 and December 31, 2008.


	6-30-2009	12-31-2008
Net operation loss carry forward	$ (512,635)	$ (470,800)
Total deferred tax assets	205,054	188,320
Less: valuation allowance	(205,054)	(188,320)
Net deferred tax assets	$ --	$ --

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

Hong Kong

As of June 30,2009, the Company in the Hong Kong had approximately $1,545,266 in net operating loss carry forwards available to offset future taxable income. There is no time limit for the losses to carry forward. The deferred tax assets for the Hong Kong entities at June 30, 2009 consists mainly of net operating loss carry forwards and were fully reserved as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the net deferred tax assets for operation in Hong Kong as of June 30, 2009 and December 31, 2008.


	6-30-2009	12-31-2008
Net operation loss carry forward	$ (1,669,542)	$ (124,276)
Total deferred tax assets	292,170	21,748
Less: valuation allowance	(292.170)	(21,748)
Net deferred tax assets	$ --	$ --

People’s Republic of China (PRC)

Pursuant to the PRC Income Tax Laws, the Company's subsidiary is generally subject to Enterprise Income Taxes ("EIT") at a statutory rate of 33%, which comprises 30% national income tax and 3% local income tax. The subsidiary is qualified as a new technology enterprises and under PRC Income Tax Laws, it subject to a preferential tax rate of 18%.

Beginning January 1, 2008, the new Enterprise Income Tax ("EIT") law will replace the existing laws for Domestic Enterprises ("DES") and Foreign Invested Enterprises ("FIEs"). The new standard EIT rate of 25% will replace the 33% rate currently applicable to both DES and FIEs. The two years tax exemption, three years 50% tax reduction tax holiday for production-oriented FIEs will be eliminated. The Company’s applicable EIT rate under new EIT law is 25% which was approved by local Tax department.

As of June 30,2009 and December 31, 2008, the Company’s PRC subsidiary had net operating loss carry forwards which can be carried forward 5 years to offset future taxable income. The deferred tax assets for Shenyang Maryland, Xinchao and Yindu at June 30,2009 consist mainly of net operating loss carry forwards and they were fully reserved as the management believes they are more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the net deferred tax assets for operation in PRC as of June 30,2009 and December 31, 2008.


	6-30-2009	12-31-2008
Net operation loss carry forward	$ (6,773,393)	$ (2,919,384)
Total deferred tax assets	1,693,348	858,978
Less: valuation allowance	(1,693,348)	(858,978)
Net deferred tax assets	$ --	$ --

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

Aggregate net deferred tax assets

The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of June 30, 2009 and December 31, 2008:


	6-30-2009	12-31-2008
Aggregate:
Total deferred tax assets	$ 2,190,572	$ 1,047,298
Less: valuation allowance	(2,190,572)	(1,047,298)
Net deferred tax assets	$ --	$ --

12.	Other comprehensive income

Balances of related after-tax components comprising accumulated other comprehensive income (loss), included in stockholders’ equity, at June 30, 2009 and December 31, 2008 are as follows:


Balance as of December 31, 2007	$ 1,468,546
Change for 2008	819,352

Balance as of December 31, 2008	2,287,898

Change in 2009	(43,663)
Balance as of June 30, 2009	$ 2,244,235

13.	Segment Information

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" 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 the years ended June 30,2009 and December 31, 2008, the Company is organized into two main business segments: (1) Property for sale, (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 for the years ended June 30,2009 and December 31, 2008:

GREAT CHINA INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2009

	6-30-2009			12-31-2008
Revenues from unaffiliated customers:
Selling of properties	$	480,376		$	3,679,044

Rental income & Management fee		2,884,590			6,011,176


Consolidated	$	3,364,966		$	9,690,220

Operating income (loss):
Selling of properties	$	(703,377	)	$	(85,684	)

Rental income & Management fee		214,533			(44,090	)
Corporation (1)		(439,729	)		(1,369,887	)


Consolidated	$	(928,573	)	$	(1,499,661	)

Net income (loss) before taxes:

Selling of properties	$	(1,712,401	)	$	(2,070,360	)

Rental income & Management fee		214,448			(44,330	)

Corporation (1)		2,040,440			3,927,009

Consolidated	$	542,487		$	1,812,319


Identifiable assets:
Selling of properties	$	6,455,594		$	6,685,110

Rental & Management fee		49,808,857			51,278,231
Corporation (1)		9,922,432			8,442,423


Consolidated	$	66,186,883		$	66,405,764

Depreciation and amortization:
Selling of properties	$	--		$	--

Rental & management fee		1,464,642			2,980,072

Corporation (1)		--			4,544

Consolidated	$	1,464,642		$	2,984,615

Capital expenditures:
Selling of properties	$	--		$	--

Rental & management fee		(21,389	)		75,949

Corporation (1)		(24,829	)		(128,640	)

Consolidated	$	(46,219	)	$	(52,691	)

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(1)	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. Factors that could have a material and adverse impact on actual results are described under “Part I, Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on March 31, 2009, as amended by Form 10-K/A filed April 3, 2009. 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.

(2)	Executive Summary

Great China International is a comprehensive real estate company with principal activities in real estate investment, development, sales and management. 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.

(3)	Results of Operations

Comparison of operations for June 30, 2009 with June 30, 2008:

The Company realized net income (before foreign currency translation adjustment) of $283,713 for the six months ended June 30, 2009 compared to a net loss of $(935,834) for the same period in 2008, representing an increase of $1,219,548 or 130.32%. Components which resulted in this increase are discussed below.

Sales revenues decreased by $1,767,915 or 34.44% to $3,364,966 for the six months ended June 30, 2009 compared to $5,132,881 for the corresponding period of 2008. This is attributable primarily to a decrease of $1,738,309, or 78.35%, real estate sales revenue because the number of units available for sale has decreased with developed projects entering the last stage of unit sales.

Cost of properties sold decreased by $734,547 or 36.42% for the six months ended June 30, 2009 compared to $2,016,680 for the same period in 2008. This was primarily attributable to the decrease of real estate sales discussed above.

Selling expenses increased by $144,907 or 176.53% to $226,995 for the six months ended June 30, 2009 compared to $82,088 for the same period in 2008. This increase was mainly a result of expenditures on new business development.

General and administrative expenses decreased by $784,788 or 37.29% to $1,319,769 for six months ended June 30, 2009 compared to $2,104,557 for the comparable period in 2008. The main factors were the decrease of consulting fees of RMB 2 million and effective measures to reduce the operating costs.

Land leveling income increased by $2,126,358 or 100% for the six months ended June 30, 2009 compared to $0 for June 30, 2008, because there is was no leveling operations and related income in the first two quarters of 2008.

Gain on settlement of debts decreased by $1,075,843 or 100% for the six months ended June 30, 2009, compared to the same period in 2008, due to the Company gain of $1,075,843 from disposal of debts of Shenyang Normal College in 2008, but there were no transactions in the first six months of 2009 that generated a gain on settlement of debt.

Other income, net increased by $549,794 or 233.25% for the six months ended June 30, 2009, compared to $(235,715) for the comparable period in 2008. This change is attributed to an increase in fees for parking and maintenance on developed projects during the first six months of 2009.

(4)	Cash Flow Discussion

Net cash flows provided by operating activities for the six months ended June 30, 2009 and 2008 were $1,788,516 and $9,148,681 respectively. The factors which resulted in this decrease are discussed below:

Net income increased by 130.32% to $283,713 for the six months ended June 30, 2009 compared to a net loss of $(935,834) for the corresponding period in 2008. Accounts receivable and other receivables decreased by $27,598,010 or 87% as a result of the Company collecting the receivable accounts related to disposal of a subsidiary in the first half of 2008.

Net cash flows provided by investing activities for the six months ended June 30, 2009 was $46,203 compared to $(46,217) of cash flow used in investing activities for the same period in 2008. The investing activity change was primarily due to the purchases of property and equipment of $46,217 in 2008, and construction in progress as adjusted to other assets for 2009.

Net cash flows used in financing activities for the six months ended June 30, 2009 was $0 compared to $(8,643,184) for the comparable period in 2008, which is attributable primarily to the fact there were no loan repayments in the first six months of 2009.

(5)	Liquidity and Capital Resources

Current liabilities exceeded current assets by $21,935,657 as of June 30, 2009. The working capital deficit was incurred primarily due to Short Term Loans of $19,296,838. 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 sympathetically and closely with borrowers for loan extension or restructuring for a shorter period 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 are often stuck in the situation, thus they are generally more tolerant than their counterparts in Western economies.

They will work hard to deal with the situation provided the borrowers are responsible and have good relationship with the lenders.

(6)	Contractual Obligations

The following table was a summary of the Company’s contractual obligations as of June 30, 2009:

	Total		Less than one year		1-3 Years		Thereafter

Short-Term Debt	$	19,296,838	$	19,296,838	$	--	$	--

Long-Term Debt		--		--		--		--

Amounts due to related parties		--		--		--		--

Total Contractual Cash Obligations	$	19,296,838	$	19,296,838	$	--	$	--

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Foreign Exchange Risk

While our reporting currency is the U.S. dollar, all of our consolidated revenues and consolidated costs and expenses are denominated in Renminbi (RMB). All of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between U.S. dollars and RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005, the RMB has not been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

Interest Rate Risk

We are primarily exposed to interest rate risk arising from short loans. As Great China International we must renegotiate these loans on an annual basis, changes in PRC banking or monetary policy may adversely affect results of operations.

Credit Risk

We have not experienced significant credit risk, as most of our customers are long-term customers with excellent payment records. We review our accounts receivable on a regular basis to determine if the allowance for doubtful accounts is adequate at each quarter-end. We only extend 30 to 90 day trade credit to our largest customers, which tend to be well-established and large businesses, and we rarely see accounts receivable go uncollected beyond 90 days and experienced minimal write-off of accounts receivable in the past.

Inflation Risk

Inflationary factors such as increases in the cost of raw material may adversely affect our investment projects. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our results of operations if the selling prices of our projects or services do not increase with these increased costs.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, Great China International’s management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, reassessed the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that Great China International’s disclosure controls and procedures were effective as of the end of the fiscal quarter on June 30, 2009, to ensure that information that is required to be disclosed by Great China International in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within Great China International to disclose information that is otherwise required to be set forth in its periodic reports.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2009, that have materially affected, or are likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits

Copies of the following documents are included or furnished as exhibits to this report pursuant to Item 601 of Regulation S-K.

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(b) and 18 U.S.C. Section 1350

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: August 14, 2009		By:		/s/ Jiang Peng
				Jiang Peng, Chairman of the Board (Principal Executive Officer)

Date: August 14, 2009		By:		/s/ Sun Dongqing
				Sun Dongqing, Chief Financial Officer (Principal Financial and Accounting Officer)

Positive
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Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Bad

HH Biotechnology (HHBT) Inactive 10-Q2009 Q2 Quarterly report

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