-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kq6jHUlObIpvhUkHW2dah1Ul7/wuzXbC2Z9fTxDwRUQH0NMYqfhdUOnEOjrbVqju RnrTBDrB3QewA4a0Sq9g1A== 0001144204-06-051555.txt : 20061207 0001144204-06-051555.hdr.sgml : 20061207 20061206174817 ACCESSION NUMBER: 0001144204-06-051555 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061207 DATE AS OF CHANGE: 20061206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINO-American Development CORP CENTRAL INDEX KEY: 0001000686 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 841286065 STATE OF INCORPORATION: CO FISCAL YEAR END: 0616 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26760 FILM NUMBER: 061260906 BUSINESS ADDRESS: STREET 1: SUITE 905, 102-4369 MAIN STREET CITY: WHISTLER STATE: A1 ZIP: V0N 1B4 BUSINESS PHONE: 604-902-0178 MAIL ADDRESS: STREET 1: SUITE 905, 102-4369 MAIN STREET CITY: WHISTLER STATE: A1 ZIP: V0N 1B4 FORMER COMPANY: FORMER CONFORMED NAME: XERION ECOSOLUTIONS GROUP INC DATE OF NAME CHANGE: 20030507 FORMER COMPANY: FORMER CONFORMED NAME: IMMULABS CORP DATE OF NAME CHANGE: 20001031 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN RESORTS INC DATE OF NAME CHANGE: 19950915 10QSB 1 v059714_10qsb.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-QSB
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2006
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from ______________ to _____________
 
Commission File Number: 0-26760

SINO-AMERICAN DEVELOPMENT CORPORATION
(Exact name of small business issuer as specified in its charter)

Nevada
  
20-5065416
(State or other jurisdiction
  
(IRS Employer Identification Number)
of incorporation or organization)
    

1427 West Valley Boulevard
Suite 101
Alhambra, CA 91803
(Address of principal executive offices)

(604) 902 0178
(Issuer's telephone number)

n/a
(Former name, former address and former fiscal year, if changed since last report)
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (of for such shorter period than 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 o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No o
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date as of December 5, 2006, 28,416,500 shares.
 
Transitional Small Business Disclosure Format (check one): Yes o No x
 
SINO-AMERICAN DEVELOPMENT CORPORATION

 
 
 
1
2
3
4
   
12
   
16
   
 
16
16
16
16
16
16
17
 
-i-
 
 
SINO-AMERICAN DEVELOPMENT CORPORATION
  
 
September 30, 2006
  
(Unaudited)
  
       
       
ASSETS
      
       
Current Assets
      
Cash and equivalents
  
$
1,781,452
  
Accounts receivable, net of allowance of $418,737
    
282,539
 
Properties held for resale
    
9,266,104
 
 Total Current Assets
    
11,330,095
 
         
Land held for development
    
4,826,378
 
Property and equipment, net of accumulated depreciation
    
3,483,789
 
   
$
19,640,262
  
         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
        
         
Current Liabilities
        
Accounts payable and accrued expenses
  
$
841,209
  
Accrued construction costs
    
7,649,776
 
Advances from buyers
    
2,944,470
 
Enterprise taxes payable
    
774,015
 
Other taxes payables
    
1,748,028
 
Short-term loans
    
3,323,194
 
 Total Current Liabilities
    
17,280,692
 
         
Long-term liabilities
    
88,626
 
Long-term loans, net of current portion
    
641,978
 
Minority Interest
    
230,197
 
         
Stockholders' Equity
        
Common stock, par value $0.001, 150,000,000 shares authorized,
        
 28,415,230 shares issued and outstanding at
        
 September 30, 2006
    
28,415
 
Additional paid in capital
    
5,946,588
 
Retained deficit
    
(3,170,376
)
Accumulated other comprehensive income
    
301,625
 
 Total stockholders' equity before advances offset
    
3,106,252
 
         
Advances to directors
    
(1,707,483
)
 Total stockholders' equity, net of advances offset
    
1,398,769
 
 
$
19,640,262
  
         
         
See accompanying summary of accounting policies and notes to the condensed financial statements.

-1-
 
SINO-AMERICAN DEVELOPMENT CORPORATION
(Unaudited)
 
   
Three months ending
  
Nine months ending
  
   
September 30,
  
September 30,
  
   
2006
  
2005
  
2006
  
 2005
  
                    
Sales revenues
  
$
6,524,081
  
$
983,575
  
$
11,409,809
  
$
6,176,916
  
Cost of properties sold
    
6,397,059
   
610,287
   
11,263,593
    
4,744,786
 
Gross profit
    
127,022
   
373,288
   
146,216
    
1,432,130
 
                           
Selling, general and administrative expense
                          
Selling expenses
    
121,293
   
219,175
   
294,882
    
568,164
 
Depreciation expense
    
35,198
   
40,962
   
136,574
    
115,677
 
Impairment loss
    
982,786
   
—
    
4,225,949
    
—
  
General and administrative expenses
    
537,225
   
487,921
   
1,605,506
    
1,055,720
 
     
1,676,502
   
748,058
   
6,262,911
    
1,739,561
 
                           
Income (Loss) from operations
    
(1,549,480
)
  
(374,770
)
  
(6,116,695
)
  
(307,431
)
                           
Other income (expense)
                          
Other revenues (expense)
    
18,746
   
(9,482
)
  
25,321
    
24,505
 
Interest and finance costs
    
(89,997
)
  
(133,021
)
  
(222,732
)
  
(249,369
)
     
(71,251
)
  
(142,503
)
  
(197,411
)
  
(224,864
)
                           
Net (loss) before income taxes and minority interest
    
(1,620,731
)
  
(517,273
)
  
(6,314,106
)
  
(532,295
)
(Provision for) benefit from income taxes
    
(307,906
)
  
(40,906
)
  
(549,750
)
  
656,140
 
                           
Net income(loss) before minority interest
    
(1,928,637
)
  
(558,179
)
  
(6,863,856
)
  
123,845
 
Minority interest in (earnings) loss
    
93,907
   
13,796
   
235,084
    
(12,065
)
                           
Net income (loss)
  
$
(1,834,730
)
$
(544,383
)
$
(6,628,772
)
$
111,780
  
                           
Other comprehensive income(loss)
  
$
(281,086
)
$
193,522
  
$
38,916
  
$
193,522
  
                           
Total comprehensive income (loss)
  
$
(2,115,816
)
$
(350,861
)
$
(6,589,856
)
$
305,302
  
                           
Basic and diluted income (loss) per share
  
$
(0.06
)
$
(0.02
)
$
(0.23
)
$
—
  
                           
Basic and diluted comprehensive income (loss) per share
  
$
(0.07
)
$
(0.01
)
$
(0.23
)
$
0.01
  
                           
Basic and diluted weighted average shares outstanding
    
28,415,230
   
28,415,230
   
28,415,230
    
28,415,230
 
                           
                           
See accompanying summary of accounting policies and notes to the condensed financial statements.

-2-
 
SINO-AMERICAN DEVELOPMENT CORPORATION
  
 
(Unaudited)
  
           
   
Nine months ended
  
   
September 30,
  
   
2006
  
2005
  
Cash Flows From Operating Activities
          
Net Income (Loss)
  
$
(6,628,772
)
$
111,780
  
Adjustments to reconcile net loss to net cash provided by
              
operating activities
              
Depreciation
    
136,574
   
115,677
 
Minority interest
    
(235,084
)
  
12,066
 
Impairment of properties
    
4,225,949
   
—
  
Changes in
              
Accounts receivable, net and other receivable
    
312,246
   
97,589
 
Properties held for resale
    
(583,678
)
  
(11,161
)
Advances to suppliers
    
196,637
   
(11,610
)
Construction-in-progress
    
—
    
(208,783
)
Accounts payable and other payables
    
6,044,029
   
433,778
 
Advances from buyers
    
(2,508,748
)
  
(666,508
)
Income and other taxes payable
    
845,276
   
(606,936
)
Net Cash Flows Provided (Used) By Operating Activities
    
1,804,429
   
(734,108
)
               
Cash Flows From Investing Activities
              
Purchase of land held for development
    
—
    
(4,803,651
)
Purchases/transfer of fixed assets
    
(783,970
)
  
(78,575
)
Net Cash Provided (Used) by Investing Activities
    
(783,970
)
  
(4,882,226
)
               
Cash Flows from Financing Activities
              
Loan proceeds
    
425,820
   
6,774,402
 
Principal loans repayments
    
(1,784,549
)
  
(666,155
)
Minority interest in capital contributions
    
—
    
69,901
 
Advances to directors and affiliated companies
    
(777,538
)
  
(1,582,237
)
Net Cash Provided (Used) by Financing Activities
    
(2,136,267
)
  
4,595,911
 
               
Foreign currency translation adjustment
    
38,916
   
193,522
 
               
(Decrease) in Cash
    
(1,076,892
)
  
(826,901
)
Cash at Beginning of Year
    
2,858,344
   
4,251,678
 
Cash at End of Period
  
$
1,781,452
  
$
3,424,777
  
               
Supplemental disclosure of cash flow information
              
Interest Paid in Cash
  
$
222,732
  
$
245,031
  
Properties transferred from construction-in-progess
              
to properties held for sale
  
$
8,221,620
  
$
—
  
               
               
See accompanying summary of accounting policies and notes to the condensed financial statements.

-3-
 
SINO-AMERICAN DEVELOPMENT CORPORATION


1.
DESCRIPTION OF BUSINESS

ORGANIZATIONAL STRUCTURE

SINO-American Development Corporation, (the "Company") was originally incorporated in Colorado in 1985 as Gemini Ventures, Inc. The name was changed in 1989 to Solomon Trading Company, Ltd., in 1994 to the Voyageur First, Inc., in 1995 to North American Resorts, Inc., in 2000 to Immulabs Corp. Effective March 28, 2003, as filed with the State of Colorado, the Company changed its name to Xerion EcoSolutions Group Inc. and was engaged in the business of developing gold extraction technology for the mining industry until it became inactive in 2004.

In October of 2005, the Company entered into a stock exchange agreement with Town House Land Limited ("Town House") whereby the Company issued stock equal to 98.75% in its ownership in exchange for 100% of the ownership interest in Town House.

This transaction was treated as a recapitalization of Town House for financial reporting purposes.

On May 31, 2006, the shareholders elected to reincorporate the Company from the state of Colorado to the state of Nevada and to change the name to SINO-American Development Corporation.  The Company also approved an eight for one reverse stock split which reduced the number of shares outstanding from 227,321,840 to 28,415,230.   The effect of this reverse stock split has been reflected retroactively for all periods included in these financial statements.

Town House Land (formerly: Hong Kong Window of the World Apparel Co., Limited) was incorporated in Hong Kong, as a private limited liability company on August 13, 2001 with an authorized capital of $64,103 (HK$500,000) divided into 500,000 ordinary shares of par value $0.12 (HK$1.00) each. Town House Land Limited ("Town House Land") changed to its present name on August 13, 2003. On August 15, 2003, Town House Land acquired 97% of the outstanding registered capital of Wuhan Town House Land. Terms of the transaction call for Town House Land to pay $1,602,564 in cash plus the contribution of an additional $5,857,488 in share capital in Town House Land as consideration for the acquisition of the 97% interest in Wuhan Town House's registered capital. For financial reporting purposes, Wuhan Town House was considered to be the acquiring entity and the additional cash consideration paid was treated as a distribution to members. Town House Land had no operations prior to this reverse acquisition and there was substantially no change in ownership from that of Wuhan Town House as a result of this transaction.

At September 30, 2006 Town House Land held 97% of the registered capital of Wuhan Town House, directly held 100% of the equity in Town House Land (Miami) Corporation and indirectly 97% of the equity in Town House Land (USA) Inc. Collectively hereinafter, Town House Land, Wuhan Town House, Town House Land (Miami) Corporation and Town House Land (USA), Inc., are referred to as "the Company".

Wuhan Town House Land Limited ("Wuhan Town House") (formerly: Wuhan Pacific Real Estate Development Company Limited) was registered as a formal third level property Company in Hubei Province, in the People's Republic of China as a limited liability company (in which investors' potential losses are limited to their capital contributions) on December 18, 1995 with a registered capital of $1,207,729 (Rmb. 10,000,000) and a defined period of existence of 14 years to December 18, 2009. To meet the qualifications of third level property company, the company must (1) have registered capital of Rmb.10,000,000, (2) have engineering and staff of not less that 12 people, (3) should have completed at least 50,000 square meters of accumulated development area, and (4) have a 100% passing rate in construction quality and 10% ranked as excellent.

Subsequent recapitalizations during 2000 increased Wuhan Town House's registered capital to $6,038,647 and changed its classification to a second level property company. To meet the qualifications of a second level property company, the company must (1) have registered capital of Rmb. 40,000,000, (2) have engineering and management staff of not less than 24 people, (3) should have completed 150,000 square meters of accumulated areas completed within three years, (4) 100% pass rate in construction quality with 10% ranked as excellent, and (5) at least three years experience in property development. On August 15, 2003, Wuhan Town House entered into a reverse merger agreement with Town House Land Limited ("Town House Land").

On October 10, 2003 Wuhan City Foreign Investment Bureau approved the registration of Wuhan Town House Land as a Sino Foreign Joint Investment Enterprise with a defined period of existence of 20 years to October 27, 2023.

-4-

Pursuant to the approval of Wuhan City Industrial and Commercial Administrative Bureau on February 20, 2004 Wuhan Pacific Real Estate Development Company Limited changed its name to Wuhan Town House Land Limited.

Town House Land (USA) Inc. ("Town House USA") was incorporated in California on March 4, 2004 and owns real estate which it is holding for development. Town House Land is a wholly owned subsidiary of Wuhan Town House.

Town House Land (Miami) Corporation ("Town House Miami") was incorporated in Florida on November 18, 2004 and owns real estate which it is holding for development. Town House Miami is a wholly owned subsidiary of Wuhan Town House.

The Company's principal activity is the development and sale of commercial and residential real estate. The Company's principal country of operations through September 30, 2006 was The People's Republic of China ("PRC"), however, the Company held substantial real estate holdings in the United States as of that date which it plans to develop in the near future.

2.
GOING CONCERN

The Company had a working capital deficit of $5,950,597 as of September 30, 2006. The Company’s ability to continue as a going concern is dependent on the ability to renegotiate an extension of the bank debt maturities and to obtain a profitable level of operations. These issues raise doubts about the Company’s ability to continue as a going concern. Management is in the process of attempting to raise additional capital through debt and equity offerings.

The financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in the normal course of business at amounts different from those reflected in these financial statements.

3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies:

BASIS OF PRESENTATION - The accompanying condensed consolidated financial statements have been prepared in compliance with Regulation S-B and U.S. generally accepted accounting principles, but do not include all of the information and disclosures required for audited financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-KSB for the year ended December 31, 2005. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods presented. Operating results for the nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

The factors discussed in Footnote 2 above raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
CONSOLIDATION POLICY - The consolidated financial statements include the accounts of the Company, Town House, Wuhan Town House, Town House USA, and Town House Miami. All significant inter-company transactions and balances within the Company are eliminated on consolidation.

CASH AND EQUIVALENTS - The Company considers all highly liquid debt instruments purchased with maturity period of three months or less to be cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheet for cash and cash equivalents approximate their fair value. The Company has restricted cash in accordance with the loan covenants. As of September 30, 2006 there were no restrictions on the Company’s cash balances.

ACCOUNTS RECEIVABLE - The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. Accounts receivable in the balance sheet is stated net of such provision.

PROPERTIES HELD FOR SALE - Properties held for sale are comprised of properties held for sale and repossessed properties held for resale and are stated at the lower of cost or net realizable value. Cost includes acquisition costs of land use rights, development expenditure, interest and any overhead costs incurred in bringing the developed properties to their present location and condition.

Net realizable value is determined by reference to management estimates based on prevailing market conditions.

PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost and are being depreciated over the estimated useful lives of the related assets. Depreciation is computed on the straight-line basis for both financial and income tax reporting purposes over useful lives net of a 5% salvage value as follows:

Building and land rights
    
40 years
  
Equipment
    
5 years
  
Motor vehicles
    
5-8 years
  
Office furniture and fixtures
    
5 years
  

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

-5-

Property and equipment are evaluated annually for any impairment in value. Where the recoverable amount of any property and equipment is determined to have declined below its carrying amount, the carrying amount is reduced to reflect the decline in value. There were no property and equipment impairments recognized during the nine months ended September 30, 2006 and 2005.

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 costs, development expenditures, and professional fees 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.

RELATED COMPANIES - A related company is a company in which a director has beneficial interests in and in which the Company has significant influence.

INCOME RECOGNITION - Revenue from the sale of properties is recognized when the following four criteria are met: (1) a sale is consummated, (2) the buyers initial and continuing investments are adequate to demonstrate a commitment to pay for the property, (3) the seller's receivable is not subject to future subordination, and (4) the seller has transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property.

Interest income is recognized when earned, taking into account the average principal amounts outstanding and the interest rates applicable.

COST OF PROPERTIES SOLD - The cost of goods sold includes the carrying amount of the properties being sold and the business taxes paid by the Company in connection with the sales. Business taxes included in cost of sales were $571,719 and $339,222 for the nine months ended September 30, 2006 and 2005, respectively.

ADVERTISING - Advertising costs are expensed as incurred. During the nine months ended September 30, 2006 and 2005, the Company incurred advertising expenses of $73,783 and $327,116 respectively.

FOREIGN CURRENCIES - These financial statements have been prepared in U.S. dollars. The functional currencies for Town House and Wuhan Pacific are the "Hong Kong dollar" and "Renminbi" or "Yuan", respectively. Nonmonetary assets and liabilities are translated at historical rates, monetary assets and liabilities are translated at the exchange rates in effect at the end of the year, and income statement accounts are translated at average exchange rates.

TAXATION - Taxation on overseas profits has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the countries in which the Company operates.

Provision for The People's Republic of China enterprise income tax is calculated at the prevailing rate based on the estimated assessable profits less available tax relief for losses brought forward.

Enterprise income tax

Under the Provisional Regulations of The People's Republic of China ("PRC")Concerning Income Tax on Enterprises promulgated by the State Council and which came into effect on January 1, 1994, income tax is payable by enterprises at a rate of 33% of their taxable income. Preferential tax treatment may, however, be granted pursuant to any law or regulations from time to time promulgated by the State Council. For the years ended December 31, 2005 and 2004, the Company has been granted the privilege of computing the gross profit margins on real estate development sales at 15% of sales and computed the enterprise income tax at 33% on only 15% of sales. During 2005, the Company was able to settle its 2004 and prior years enterprise tax liabilities with the PRC taxing authorities for substantially less than the prevailing statutory rate resulting in the recognition of a net income tax benefit of $656,140 during the nine months ended September 30, 2005.

Enterprise income tax ("EIT") is provided on the basis of the statutory profit for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax purposes.

RETIREMENT BENEFIT COSTS - According to The People's Republic of China regulations on pension, the Company contributes to a defined contribution retirement plan organized by municipal government in the province in which the Company was registered and all qualified employees are eligible to participate in the plan. Contributions to the plan are calculated at 20% or 26% of the employees' salaries above a fixed threshold amount and the employees contribute 6% while the Company contributes the balance contribution of 14% or 20%. The Company has no other material obligation for the payment of retirement benefits beyond the annual contributions under this plan.

-6-

For the nine months ended September 30, 2006 and 2005, the Company's pension cost charged to the statements of operations under the plan amounted to $5,159 and $6,530, respectively.

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 of September 30, 2006 because of the relatively short-term maturity of these instruments.

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 September 30, 2006 and 2005, there were no outstanding securities or other contracts to issue common stock, such as options, warrants or conversion rights, which would have a dilutive effect on earnings per share. For presentation purposes, earnings per share for 2006 and 2005 were computing assuming the reorganization occurred on January 1, 2004.

On May 31, 2006 the Company approved an eight for one reverse stock split which reduced the number of shares outstanding from 227,321,840 to 28,415,230. The effect of this reverse stock split has been reflected retroactively for all periods included in these financial statements.

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. The most significant estimates related to allowance for uncollectible accounts receivable, depreciation, costs to complete construction in progress, taxes, and contingencies. Estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

RECENT ACCOUNTING PRONOUNCEMENTS - SFAS 123(R), SFAS 151, SFAS 152, SFAS 153 and SFAS 154 - SFAS 123 (R), Share Based Payment replaces SFAS 123, Accounting for Stock-Based Compensation, SFAS No. 151, Inventory Costs - an amendment of ARB No. 4 and SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67, SFAS No. 153, Exchange of Non-monetary Assets - an amendment of APB Opinion No. 29 and SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB No. 20 and SFAS 3 were recently issued. SFAS No. 123(R), 151, 152, 153 and 154 have no current applicability to the Company and have no effect on the consolidated financial statements.

In February 2006, the FASB issued Statement No. 155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”), which amends FASB Statements No. 133 and 140. This Statement permits fair value remeasurement for any hybrid financial instrument containing an embedded derivative that would otherwise require bifurcation, and broadens a Qualified Special Purpose Entity’s (“QSPE”) permitted holdings to include passive derivative financial instruments that pertain to other derivative financial instruments. This Statement is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year beginning after September 15, 2006. This Statement has no current applicability to the Company’s financial statements. Management plans to adopt this Statement on January 1, 2007 and it is anticipated that the initial adoption of this Statement will not have a material impact on the Company’s financial position, results of operations, or cash flows.

In June 2006, the FASB issued Interpretation 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the law is uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after December 15, 2006. This Statement has no current applicability to the Company’s financial statements. Management plans to adopt this Statement on January 1, 2007 and it is anticipated that the initial adoption of FIN 48 will not have a material impact on the Company’s financial position, results of operations, or cash flows.
 
In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. Management is assessing the impact of the adoption of this Statement.
 
In September 2006, the FASB issued Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS No. 158”), an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158

-7-

requires (a) recognition of the funded status (measured as the difference between the fair value of the plan assets and the benefit obligation) of a benefit plan as an asset or liability in the employer’s statement of financial position, (b) measurement of the funded status as of the employer’s fiscal year-end with limited exceptions, and (c) recognition of changes in the funded status in the year in which the changes occur through comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure the plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. This Statement has no current applicability to the Company’s financial statements. Management plans to adopt this Statement on December 31, 2006 and it is anticipated the adoption of SFAS No. 158 will not have a material impact to the Company’s financial position, results of operations, or cash flows. 
 
In September 2006, the Securities Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB No. 108”). SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to beginning of year retained earnings and disclose the nature and amount of each individual error being corrected in the cumulative adjustment. SAB No. 108 will be effective beginning January 1, 2007 and it is anticipated that the initial adoption of SAB No. 108 will not have a material impact on the Company’s financial position, results of operations, or cash flows.

RECLASSIFICATIONS - Certain amounts in the 2005 financial statements have been reclassified to conform to the 2006 presentation.

4.
CONCENTRATIONS OF BUSINESS AND CREDIT RISK

At September 30, 2006, the Company had $1,732,976 cash in banks located in The People's Republic of China ("PRC") and these balances are not covered by any type of protection similar to that provided by the FDIC on funds held in United States banks.

Substantially all of the Company's operations are in the PRC other than three significant real estate holdings in the United States.

The Company provides credit in the normal course of business. The Company performs ongoing credit evaluations of its customers and clients and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers and clients, historical trends, and other information. Accounts receivable totaling $282,539 and $791,321 as of September 30, 2006 and 2005, respectively, were collateralized by real estate.

5.
ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable consist of the following as of September 30, 2006:

Accounts receivable
  
$
705,506
  
Less: Provision for doubtful debts
    
(422,967
)
Accounts receivable net of provision for doubtful debts
  
$
282,539
  

6.
PROPERTIES HELD FOR RESALE

As of September 30, 2006, the Company had the following properties held for resale:

General Garden
  
$
13,597
  
Diamond Mansion Phase I Residential
    
28,968
  
Diamond Mansion Phase I Commercial
    
1,518,621
  
Diamond Mansion Phase 2
    
120,269
  
Gutian Apartments
    
224,813
  
Wuhan Town House Plaza
    
199,876
  
YiChang Town House Plaza Commercial
    
2,157,690
  
YiChang Town House Plaza Residential
    
4,907,573
  
Other
    
94,697
  
Total
  
$
9,226,104
  

-8-
 
During the quarter ended June 30, 2006, management determined that the unsold commercial properties located on floors one through five of the Diamond Mansion, Phase One should be converted to residential properties as the commercial space was not selling.  This resulted in impairment in value of $2,289,176 on these properties as residential properties have a significantly lower retail value than commercial properties.

During the quarter ended June 30, 2006 the Company revised its cost estimates to complete the YiChang Town House Plaza project.  These upward revisions resulted in an increase in cost of sales during the second quarter to reflect both additional cost associated with sales made in the first quarter as well as costs incurred on sales during the second quarter. 
 
During the quarter ended September 30, 2006 the Company revised its sales revenues estimates related to the Yi Chang Town House Plaza project. Based on these revised estimates an impairment of $979,918 was recorded.
 
7.
PROPERTIES AND EQUIPMENT

Properties and equipment as of September 30, 2006, stated at cost less accumulated depreciation and amortization, consist of:
 
Land use rights and buildings
  
$
3,156,624
  
Plant and machineries
    
30,934
  
Motor vehicles
    
683,366
  
Office equipment
    
203,675
  
Furniture and fixtures
    
30,497
  
     
4,105,096
  
Less: Accumulated depreciation and amortization
    
(621,307
)
   
$
3,483,789
  

As of September 30, 2006, the Company owned three tracts of land located in the United States which it was holding for development. The cost basis in this land at September 30, 2006 was $4,826,378. At September 30, 2006, substantially all of this land was pledged as collateral on various loans.

8.
CONSTRUCTION-IN-PROGRESS

During the first quarter of 2006, the Company decided to abandon the Jing Qi project which had been long delayed waiting for the Province to build access roads. This resulted in an impairment loss of $956,855.

9.
ADVANCES FROM BUYERS

Advances from buyers represented deposits from residential property buyers and which procedures for the transfer of ownership of the property purchased have not been completed as of the balance sheets date. The deposits from such property buyers for residential properties to be transferred in the subsequent years are carried forward as deferred revenue. Included in advances from buyers is $1,484,470 of deposits that are for property in the redevelopment of a portion of the Diamond Mansion project by Wuhan Pacific Shopping Mall Limited. The allocation of these deposits between the Company and Wuhan Pacific will be made when the redevelopment is complete.

10.
TRANSACTIONS WITH RELATED PARTIES

Amounts due from/(to) directors at September 30, 2006 are as follows:
 
Fang Zhong (Director)
  
$
1,704,623
  
Hu Min (Director)
    
45,420
  
Fang Wei Jun (Director)
    
39,010
  
Fang Wei Feng (Director)
    
(81,570
)
   
$
1,707,483
  

-9-
 
The amounts due are unsecured, interest free and have no fixed repayment terms. For financial reporting purposes, the net balance due from directors has been reflected as an offset against stockholders equity.

During the nine months ended September 30, 2006 Fang Zhong received $700,113 in advances from the Company. Of these advances, $669,038 went to Wuhan Pacific Shopping Mall Limited pursuant to a guarantee of Fang Zhong.

11.
TAXES PAYABLE

Tax payables at September 30, 2006 consist of the following:

Business tax
  
$
1,748,028
  
Other taxes
    
774,015
  
   
$
2,522,043
  

12.
SHORT-TERM LOANS

The Company had the following short-term loans at September 30, 2006:

Town House Land (Miami) short-term bank loan,
     
secured by real estate property in the United
      
States, interest at 1% over prime (8.250% at
      
December 31, 2005), principal due on
      
December 31, 2006.
    
800,000
  
Wuhan Town House short-term bank loan,
        
secured by corporate guarantee, interest
        
at 6.696% paid periodically, principal due on
        
December 31, 2007.
    
641,978
  
Wuhan Town House short-term bank loan,
        
secured by YiChang Project land use rights,
        
interest at 115% of the national rate(5.85% at
       
September 30, 2006), principal due based upon
       
a percentage of sales through December 20, 2006.
    
1,047,980
  
Town House Land (USA) short-term bank loan,
        
secured by real estate property in the United
        
States, interest at Far East Bank Prime Rate
        
Plus 1% (9.25% at September 30, 2006) paid
        
periodically, principal due on
        
January 1, 2007.
    
760,000
  
Town House Land (Miami) short-term loan from a
        
financial institution, secured by real property,
        
interest at Far East Bank Prime Rate plus 1%
        
(9.25% at September 30, 2006) paid periodically,
        
principal due on January 1, 2007.
    
100,000
  
Wuhan Town House short-term bank loan,
        
Secured by YiChang Project land use rights,
        
interest at 115% of national rate
        
(5.85% at September 30, 2006) paid
        
periodically, principal due based upon a
        
percentage of sales through February 28, 2007.
    
189,394
  
         
Indirect financing
    
425,820
  
   
$
3,965,172
  
Less current portion
    
(3,323,194
)
Long-term notes
  
$
641,978
  

-10-
 
13.
EQUITY

On May 31, 2006, the shareholders elected to reincorporate the Company from the state of Colorado to the state of Nevada and to change the name to SINO-American Development Corporation.  The Company also approved an eight for one reverse stock split which reduced the number of shares outstanding from 227,321,840 to 28,415,230.   The effect of this reverse stock split has been reflected retro actively for all periods included in these financial statements.

The Common Stock retained a par value of $.001 per share but the Authorized Capital was reduced from 300,000,000 shares to 150,000,000 shares.  The preferred stock, of which there was none outstanding at September 30, 2006 was changed to a par value of $.001 per share from no par.

14.
INCOME TAX

Provision for the People's Republic of China enterprise income tax ("EIT") is calculated at the prevailing rate based on the estimated assessable profits less available tax relief for losses carried forward.

For the nine months ended September 30, 2006 and 2005, the Company has been granted the privilege of computing the gross profit margins on real estate development sales at 15% of sales and computed the enterprise income tax at 33% on only 15% of sales.

EIT is provided on the basis of the statutory profit for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax purposes.

A reconciliation of EIT tax at the statutory rate to the Company's effective rate is as follows:

   
2006
  
2005
  
           
Computed tax at Federal statutory rate of 34%
  
$
(2,024,001
)
$
(180,980
)
Difference primarily attributable to EIT tax
              
assessed on gross real estate sales and
              
adjustments to prior years tax liabilities
              
based on assessments from the PRC taxing
              
authorities
    
2,573,751
    
837,120
  
Provision for (benefit from) income taxes
  
$
549,750
 
 $  (656,140
)

15.
COMMITMENTS

As of September 30, 2006 the Company had contractual commitments of lease expenditures of $6,818; and an advertising commitment of $22,927.

During January of 2005, the Company and Fang Zhong entered into a three year commitment to advance up to Rmb. 30,000,000 ($3,699,137) to Wuhan Pacific Shopping Mall Limited. Fang Zhong has personally guaranteed the repayment of these advances. As of September 30, 2006, the Company had advanced a total of $3,278,774 to Wuhan Pacific Shopping Mall Limited, all of which was treated as a repayment/advance of funds to Fang Zhong.

-11-


This Form 10-QSB contains forward-looking statements that involve substantial risks of uncertainties. You can identify these statements by forward-looking words such as "may", "will", "expect", "plans", "intends", "anticipate", "believe", "estimate" and "continue" or similar words and are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should read statements that contain these words carefully because they discuss its future expectations, contain projections of its future results of operations or of its financial condition or state other "forward-looking" information. The Company believes that it is important to communicate its future expectations to its investors. However, there may be events in the future that the Company is not able to accurately predict or control. The factors listed above in the section captioned "Risk Factors", as well as any differ materially from the expectations the Company describe in its forward-looking statements.

Results of Operations

Comparison of operations for the three months ended September 30, 2006 with the three months ended September 30, 2005:

Revenues

Sales revenues increased by $5,540,506 or 563%, in 2006 from $983,575 in 2005 to $6,524,081 in 2006. The favorable variance in sales revenue was mainly attributable to sale of 2 commercial units and 243 residential units from YiChang Town House Plaza.

 
o
Sales of residential properties were $6,222,746 for the three months ended September 30, 2006.
 
 
o
Sales of commercial properties were $301,335 for the three months ended September 30, 2006.

Cost of Goods Sold

Cost of properties sold increased to $6,397,059 for the three months ended September 30, 2006 from $610,287 during the comparable period in 2005. This increase is due primarily to a 642% increase in the gross floor area sold.

Operating and other expenses

Selling expenses decreased by $97,882, or 45%, to $121,293 in 2006 from $219,175 in 2005, primarily as a result of the following:

 
o
Advertising expenses decreased by $97,586 or 63%, due to the cessation of advertising to stimulate sales of the Wuhan Town House Plaza, which began its sales campaign in the quarter ended September 30, 2005.

Administrative expenses increased by $49,304 or 10%, to $537,225 in 2006 from $528,883 in 2005, primarily as a result of the following:

 
o
Salaries of administrative staff increased by $118,570 or 205%, due to an increase in bonuses and average monthly salaries.

 
o
Legal and professional fees increased by $63,309, or 142%, as a result of increases legal services during 2006.

 
o
Other tax expenses decreased by $24,422, or 46% as a result of decreases in stamp duty, property duty and licenses duty paid.

 
o
Audit fees decreased by $83,063, or 66% as a result of audit fees related to our reverse acquisition incurred in 2005.

Depreciation expense decreased by $5,764, or 14%, to $35,198 in 2006 from 40,962 in 2005. This decrease is primarily attributable to the full depreciation of certain assets during 2006.

Interest and finance costs decreased by $43,024, or 32%, to $89,997 in 2006 from $133,021 in 2005. This decrease is primarily a result of a decrease in outstanding balances related to short term loans coupled with bank handling charges.
 
Impairment loss
 
An impairment loss of $979,918 was recorded related to the Yi Chang Town House Plaza project due to revised estimates of the expected sales proceeds from this project.
 
 
-12-
 
Comparison of operations for the nine months ended September 30, 2006 with the nine months ended September 30, 2005:

Revenues
 
Sales revenues increased by $5,232,893 or 85%, in 2006 from $6,176,916 in 2005 to $11,409,809 during the comparable period in 2006.

 
o
Sales of residential properties were $10,532,779 for the nine months ended September 30, 2006. The percentage of residential sales to total sales was 92% for 2006.

 
o
Sales of commercial properties were $877,030 for the nine months ended September 30, 2006. The percentage of commercial sales to total sales was 8% 2006.

 
o
Sales totaled 29,376 square meters in 2006 as compared to 13,997 square meters in 2005 or an increase of 110%.

Cost of Goods Sold

Cost of properties sold increased to $11,263,593 for the nine months ended September 30, 2006 from $4,744,786 during the comparable period in 2005. This increase is primarily due to an increase in the properties sold as previously discussed. This is also due to the fact that the Company revised its cost estimates to complete the YiChang Town House Plaza project.  This upward revision resulted in a substantial increase in cost of sales during the second quarter to reflect both additional cost associated with sales made in the first quarter as well as costs incurred on sales during the second and third quarters.  Management anticipates that it will be able to recover its costs in remaining unsold and uncompleted units on this project.

Operating and other expenses

Selling expenses decreased by $273,282, or 48%, to $294,882 in 2006 from $568,164 in 2005, primarily as a result of the following:

 
o
Advertising expenses decreased by $253,333, or 77%, due to the cessation of advertising to stimulate sales of the Wuhan Town House Plaza, which began its sales campaign in 2005.

Administrative expenses increased by $549,786, or 52%, to $1,605,506 in 2006 from $1,055,720 in 2005, primarily as a result of the following:

 
o
Salaries of administrative staff increased by $363,111, or 178%, due to an increase in bonuses and average monthly salaries.

 
o
Legal and professional fees increased by $196,241, or 269%, as a result of increases legal services during 2006.

 
o
Other tax expenses increased by $44,964, or 73% as a result of increases in stamp duty, property duty and licenses duty paid.

 
o
Rental expense increased $37,700, or 109%, as a result of new offices established in Miami and additional sales office in Yichang.

Depreciation expense

Depreciation expense increased by $20,897, or 18%, to $136,574 in 2006 from $115,677 in 2005. This increase is primarily attributable to the purchase of additional assets during 2005.

Impairment losses

Impairment loss of $956,855 due to the termination of the Jing Qi project. The Jing Qi project has been suspended for many years waiting for the construction of a public road near the project. Because the status of the road construction could not be determined with any degree of certainty the Company has canceled the project.

Impairment loss of $2,286,308 due to the fact that management determined that the unsold commercial properties located on floors one through five of the Diamond Mansion, Phase One should be converted to residential properties as the commercial space was not selling.  This resulted in impairment in the amount of $2,286,308 on these properties as residential properties have a significantly lower retail value than commercial properties.
 
An impairment loss of $979,918 was recorded related to the Yi Chang Town House Plaza project due to revised estimates of the expected sales proceeds from this project.
 
-13-

Interest and Finance costs

Interest and finance costs decreased by $26,637, or 11%, to $222,732 in 2006 from $249,369 in 2005. This decrease is primarily a result of a decrease in outstanding balances related to short term loans coupled with bank handling charges.

Liquidity and Capital Resources

As of September 30, 2006, the Company had a working capital deficit of $5,950,597. The Company had a working capital deficit of $5,950,597 as of September 30, 2006. The Company’s ability to continue as a going concern is dependent on the ability to renegotiate an extension of the bank debt maturities and to obtain a profitable level of operations. These issues raise doubts about the Company’s ability to continue as a going concern. Management is in the process of attempting to raise additional capital through debt and equity offerings.

Cash flows

Operating

Net cash flow provided by operating activities increased by $2,538,527, or 346%, to $1,804,429 in 2006 from $(734,108) in 2005. This increase is primarily attributable to the addition of accounts payable partially offset by decreases in advances from buyers.

Investing

Cash used in investing activities decreased $4,098,256 to $783,970 in 2006 from $4,882,226 in 2005. This decrease is primarily attributable to the acquisition of properties in 2005.

Financing

The Company has net loan repayments of $1,358,729 in 2006 compared to net borrowing of $6,108,247 in 2005. This change is primarily a result of completing projects and paying down financing. The Company paid cash advances to directors and affiliated companies of $777,538 in 2006.

Critical Accounting Policies

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and the following is a summary of significant accounting policies:

Consolidation policy - The consolidated financial statements include the accounts of the Company, Town House, Wuhan Town House, Town House USA, and Town House Miami. All significant inter-company transactions and balances within the Company are eliminated on consolidation.

Cash and equivalents - The Company considers all highly liquid debt instruments purchased with maturity period of three months or less to be cash equivalents. The carrying amounts reported in the accompanying consolidated balance sheet for cash and cash equivalents approximate their fair value. The Company has restricted cash in accordance with the loan covenants.

At September 30, 2006, the Company had $1,732,976 cash in banks located in the People's Republic of China ("PRC") and these balances are not covered by any type of protection similar to that provided by the FDIC on funds held in United States banks.

Accounts receivable - The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. Accounts receivable in the balance sheet is stated net of such provision.

Related companies - A related company is a company in which a director has beneficial interests in and in which the Company has significant influence.

Properties held for sale - Properties held for sale are comprised of properties held for sale and repossessed properties held for resale and are stated at the lower of cost or net realizable value. Cost includes acquisition costs of land use rights, development expenditure, interests and any overhead costs incurred in bringing the developed properties to their present location and condition.

Net realizable value is determined by reference to management estimates based on prevailing market conditions.

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 costs, development expenditures, professional fees and 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.

Income Recognition - Revenue from the sale of properties is recognized when the following four criteria are met: (1) a sale is consummated, (2) the buyers initial and continuing investments are adequate to demonstrate a commitment to pay for the property,

-14-

(3) the seller's receivable is not subject to future subordination, and (4) the seller has transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property.

Interest income is recognized when earned, taking into account the average principal amounts outstanding and the interest rates applicable.

Cost of properties sold - The cost of goods sold includes the carrying amount of the properties being sold and the business taxes paid by the Company in connection with the sales.

Advertising - Advertising costs are expensed as incurred.

Foreign currencies - These financial statements have been prepared in U.S. dollars. The functional currencies for Town House and Wuhan Pacific are the "Hong Kong dollar" and "Renminbi" or "Yuan", respectively. Nonmonetary assets and liabilities are translated at historical rates, monetary assets and liabilities are translated at the exchange rates in effect at the end of the year, and income statement accounts are translated at average exchange rates.

Taxation - Taxation on overseas profits has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the countries in which the Company operates.

Provision for The People's Republic of China enterprise income tax is calculated at the prevailing rate based on the estimated assessable profits less available tax relief for losses brought forward.

Enterprise income tax

Under the Provisional Regulations of The People's Republic of China ("PRC")Concerning Income Tax on Enterprises promulgated by the State Council and which came into effect on January 1, 1994, income tax is payable by enterprises at a rate of 33% of their taxable income. Preferential tax treatment may, however, be granted pursuant to any law or regulations from time to time promulgated by the State Council. For the nine months ended September 30, 2006 and 2005, the Company has been granted the privilege of computing the gross profit margins on real estate development sales at 15% of sales and computed the enterprise income tax at 33% on only 15% of sales. During 2005, the Company was able to settle its 2004 and prior years enterprise tax liabilities with the PRC taxing authorities for substantially less than the prevailing statutory rate resulting in the recognition of a net income tax benefit during the nine months ended September 30, 2005 of $656,140.

Enterprise income tax ("EIT") is provided on the basis of the statutory profit for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax purposes.

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 of Juen 30, 2006 because of the relatively short-term maturity of these instruments.

Use of estimates - The preparation of financial statements in accordance with generally accepted accounting principles require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates related to allowance for uncollectible accounts receivable, depreciation, costs to complete construction in progress, taxes, and contingencies. Estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

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, 2006 and 2005, there were no outstanding securities or other contracts to issue common stock, such as options, warrants or conversion rights, which would have a dilutive effect on earnings per share. For presentation purposes, earning per share for 2006 and 2005 were computing assuming the reorganization occurred on January 1, 2004.

On May 31, 2006 the Company approved an eight for one reverse stock split which reduced the number of shares outstanding from 227,321,840 to 28,415,230. The effect of this reverse stock split has been reflected retroactively for all periods included in these financial statements.

-15-
 
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) as of the end of period covered by this quarterly report (the "Evaluation Date"). Based on such evaluation, such officer has concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective.
 
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING. During the most recent fiscal quarter, there have not been any significant changes in the Company's internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect internal controls over financial reporting.
 
 
 
None.
 
 
None
 
 
None
 
 
None.
 
 
None
 

 
Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a) promulgated under the Securities and Exchange Act of 1934, as amended
     
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Executive Officer)
 
-16-
 
 
In accordance with the requirements of the Securities Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
SINO-AMERICAN DEVELOPMENT CORPORATION
 
December 5, 2006

/s/ Fang Zhong
Fang Zhong President, Chief Executive Officer and Director

-17-
 
 EX-31 2 ex-31.htm EX 31
EXHIBIT 31
 
CERTIFICATION
 
I, Fang Zhong, certify that:
 
1.    I have reviewed this Form 10-QSB quarterly report for the period ended September 30, 2006, of SINO-American Development Corporation.
 
2.    Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.    Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
 
4.    The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
 
a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
 
b)    evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
 
c)    presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
5.    The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
 
a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
 
b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
 
6.    The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
December 5, 2006

/s/ Fang Zhong
Fang Zhong, Chief Executive Officer and President
 
EX-32 3 ex-32.htm EX 32
EXHIBIT 32
 
CERTIFICATION PURSUANT TO 18 U.S.C., ss.1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report on Form 10-QSB of SINO-American Development Corporation (the "Company") for the quarter ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer and President, and the Treasurer and principal financial officer of the Company, hereby certify pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.    The information contained in the Report fairly presents in all material respects the financial condition and results of operations of SINO-American Development Corporation.
 
Dated: December 5, 2006
 
/s/ Fang Zhong
Fang Zhong, Chief Executive Officer,
President and Chief Financial Officer
 
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