SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                                October 18, 2005
                               ------------------
                                 Date of Report
                       (Date of earliest event reported)


                         Xerion EcoSolutions Group Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                         Suite 905, 102-4369 Main Sreet
                           Whistler, BC Canada V0N 1B4
               ---------------------------------------------------
                    (Address of principal executive offices)


                                  604.902.0178
               --------------------------------------------------
              (Registrant's telephone number, including area code)


                                       N/A
         --------------------------------------------------------------
         (Former name and former address, if changed since last report)


         Colorado                       0-27351                  84-1286065
----------------------------        ---------------         --------------------
(State or other jurisdiction          (Commission             (I.R.S. Employer
     of Incorporation)                File Number)           Identification No.)


Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing  obligation  of  registrant  under any of the
following provisions:

|_|   Written  communications  pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting  material pursuant to Rule 14a-12(b) under the Exchange Act (17
      CFR 240.14a-12(b))

|_|   Pre-commencement  communications  pursuant  to  Rule  14d-2(b)  under  the
      Exchange Act (17 CFR 240.14d-2(b))

<PAGE>

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

Information  included  in this Form 8-K may contain  forward-looking  statements
within the meaning of Section 27A of the  Securities  Act and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act").  This
information may involve known and unknown risks, uncertainties and other factors
which  may cause the  actual  results,  performance  or  achievements  of Xerion
EcoSolutions Group Inc. ("Xerion") and Town House Land Limited ("Town House") to
be materially  different from the future  results,  performance or  achievements
expressed  or  implied  by  any  forward-looking   statements.   Forward-looking
statements,  which involve  assumptions  and describe  Xerion's and Town House's
future plans, strategies and expectations,  are generally identifiable by use of
the  words  "may,"  "should,"  "expect,"  "anticipate,"  "estimate,"  "believe,"
"intend" or  "project"  or the  negative of these words or other  variations  on
these words or comparable terminology.  Forward-looking  statements are based on
assumptions  that may be  incorrect,  and  there  can be no  assurance  that any
projections or other  expectations  included in any  forward-looking  statements
will  come to pass.  Xerion's  and Town  House's  actual  results  could  differ
materially from those expressed or implied by the forward-looking  statements as
a result of various  factors.  Except as required  by  applicable  laws,  Xerion
undertakes no obligation to update publicly any  forward-looking  statements for
any reason,  even if new information  becomes available or other events occur in
the future.

Section 1 - Registrant's Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

General.  Xerion  EcoSolutions  Group Inc.  ("Xerion") entered into a definitive
Stock Exchange  Agreement (the "Agreement")  under which Town House Land Limited
("Town  House") will be acquired by Xerion in  consideration  of the issuance of
common  stock  of  Xerion  representing  ninety-seven  percent  (97%)  ownership
interest of Xerion to the owners of Town House.

The closing of the Agreement is conditioned upon, among other things,  customary
closing  conditions,  including the  satisfaction  of both Xerion and Town House
with their due diligence investigations of the other party. If the closing under
the Agreement occurs, it is expected to occur on or about October 31, 2005.

No  assurances  can be given that the  Agreement  will close or, if the  closing
occurs,  as to the final  terms of the  Agreement.  A copy of the  Agreement  is
attached  to this Form 8-K  current  report as Exhibit  2.1 and is  incorporated
herein by reference  as though fully set forth  herein.  The  foregoing  summary
description of the Agreement and the  transactions  contemplated  thereby is not
intended to be complete and is qualified in its entirety by the complete text of
the Agreement.

                                    BUSINESS

        The  principal  business   operations  of  Town  House  is  real  estate
development.  Its operations are conducted by and through its subsidiaries,  (i)
Wuhan Pacific Real Estate Development  Company Limited ("Wuhan Pacific") located
in Hong Kong,  in The People's  Republic of China (the  "PRC"),  (ii) Town House
(Miami)  Corporation,  a Florida  corporation,  and (iii)  Town House Land (USA)
Inc., a California corporation.

        The  principal  executive  offices  of Town  House  in the PRC is at 128
Gloucester Road, Wanchai,  Hong Kong, the People's Republic of China;  telephone
011-852-2517-783.  The principal  executive  offices of Town House in the United
States is

        The corporate organization of Town House is as follows:

                              ---------------------
                                   Town House
                              ---------------------
                                       |
--------------------------------------------------------------------------------
          |                            |                             |
---------------------         ---------------------        ---------------------
  Town House (Miami)           Wuhan Pacific Real             Town House Land
     Corporation               Estate Development            (USA) Corporation
---------------------           Company Limited            ---------------------
                              ---------------------

        Town House is a limited  liability company organized in 2003 in the Hong
Kong Special Administrative Region in the PRC, as a holding company.

        Town  House  owns 97% of Wuhan  Pacific  which  was  organized  in Hubei
Province in the PRC as a limited liability company in 1995. Substantially all of
the assets and  operations of Town House in the PRC are conducted  through Wuhan
Pacific.

        Town House  Miami  Corporation  is a Florida  corporation  organized  on
_______, 2005.

Wuhan Pacific Real Estate Development Company Limited

        Wuhan Pacific is one of the first privately owned property developers in
Wuhan City in the PRC and is one of the  largest  property  developers  in Wuhan
City, based on a list of top 100 property development  enterprises in Wuhan City
in terms of gross floor area ("GFA"),  published by the Wuhan Statistics  Bureau
and  the  Development  Research  Center.  It  had  engaged  principally  in  the
development  and  sale  of  high  quality  commercial  and  private  residential
properties  catering to the  middle-class  residential  property market in Wuhan
City and in Yi Chang.

        Wuhan Pacific's  portfolio of properties under development are currently
all located in Wuhan City and Yi Chang, and target different segments within the
mass residential property market, including young white color employees,  middle
to senior  managers  in  enterprises,  entrepreneurs  and  families  with  young
children.  These upwardly  mobile people  represent the emerging middle class in
Wuhan City and are a growing source of demand in the mass  residential  property
market.

        As of June 30, 2005,  Wuhan Pacific reports that it has equity interests
in six property  development  projects in Wuhan City, with an approximate GFA of
200,000 square meters and an aggregate site area of approximately 100,566 square
meters.  Wuhan Pacific has obtained land use rights  certificates  in respect of
each of these six property development projects. In addition,  Wuhan Pacific has
not yet obtained land use rights certificates in respect of, but has interest in
and plans to develop a further five  projects in Wuhan City with an  approximate
GFA of 252,000 square meters and an aggregate site area of approximately  70,000
square meters. Since the relevant land use rights certificates have not yet been
issued or obtained,  no commercial  value has been assigned to any of these five
additional  projects or in the  calculation of their adjusted net tangible asset
value.

        Wuhan Pacific aims to further  solidify its position in Wuhan City,  and
also plans to expand its focus on property  business to Yi Chang.  Wuhan Pacific
also indicates that it will pursue quality business  opportunities in other fast
growing cities in China, if market conditions are appropriate.

        Wuhan  Pacific  was  organized  as a limited  liability  company  in The
People's  Republic of China ("PRC") on December 18, 1995. The primary purpose of
Wuhan  Pacific  was real estate  development  including  apartments,  retail and
commercial facilities,  and mixed use buildings.  The principal executive office
of Wuhan  Pacific  is  located at No. 250  Jianghan  Road,  32 Diamond  Mansion,
Jiang'an District, Wuhan City, Hubei Province in the PRC.

<PAGE>

Property Development

        Wuhan Pacific is principally  engaged in the design and  construction of
luxury apartment  buildings and mixed use buildings in the City of Wuhan and the
City of Yi Chang in the  PRC.  The  apartments  are  primarily  held for sale to
middle income to upper level income customers.  Certain properties  developed by
Wuhan Pacific are mixed-use  properties  that also include retail and commercial
floors on the lower levels of the buildings.

Information Concerning Wuhan City

        Wuhan City,  located in inland  China,  has played an important  role of
connecting  the east with the west,  the south with the north in the PRC.  Wuhan
City, with an urban  population of  approximately 8 million,  ranks as the sixth
city among the top 25 cities in the PRC with favorable development potential. In
2001, the GDP of the city reached 134.8 billion Yuan (US$0.12 per one Yuan),  or
12% higher than 2000;  and the annual income of citizens of Wuhan City was 7,304
Yuan, or an increase of 8% over 2000.

        Located  at  the  middle  reaches  of  the  Yangtze  River,  Wuhan  is a
thoroughfare to nine provinces in the PRC. The Beijing-Guangzhou Railway and the
Yangtze  River  intersect  in  Wuhan  City.  The  Beijing-Kowloon   Railway  and
Wuhan-Guangzhou  Railway  also  connect  in the  city.  The  Beijing-Zhuhai  and
Shanghai-Chengdu  super  highway  also  cross  at Wuhan  City.  In  addition,  a
high-speed  railway  along  the  Yangtze  River  is  in  the  process  of  being
constructed. This high-speed road, railway and river transportation methods make
Wuhan a transportation hub.

        Wuhan is the largest  logistics and  commercial  center in inland China.
Commodities  can easily be  transported  to 5 provinces  around  Wuhan,  such as
Hunan,  Jiangxi,  Anhui, Henan and Sichuan,  which have a combined population of
nearly  400  million.   There  are   presently   more  than  10,000   commercial
organizations, 105,000 business branches, and 8 department stores in Wuhan City.

        As an important  industrial  base in China,  Wuhan City has a very solid
foundation in either high-tech industry or traditional manufacturing.  Along the
88  kilometer  ring  of the  city,  a  series  of  industrial  zones  have  been
established,  such as China Optical Valley, Sino-Citroen Automobile City, Taiwan
Business Zone and Yangluo  Development  Zone. With 33 different sectors and more
than 30,000 industrial  enterprises,  Wuhan City has businesses encompassing all
industries,  including  iron and steel,  automobile,  machinery,  petrochemical,
optical telecom,  Chinese and western medicine,  biology  engineering,  textile,
garment, food industry, etc.

        Wuhan City is a  technology  research  and  education  center,  with its
research and education capacity ranked third in the country,  behind Beijing and
Shanghai.  There are 35 universities in the city, serving  approximately 300,000
students.  There are 736 science  research  institutes  and 10 national  labs in
Wuhan City.

        In resent  years,  Wuhan  Municipal  Government  has focused on policies
favoring an open business  environment  and  environmental  renovation,  and the
investment environment of Wuhan City has been continuously improved. A series of
important   infrastructure   projects   have  been   finished,   such  as  Wuhan
International Airport,  Airport Super Highway, No. 1 Yangtze River Bridge, No. 3
Yangtze River Bridge,  an extensive  telephone  system,  a water plant,  a power
plant and a waist water treatment plant.

Market

        The  principal  market  of Town  House for its real  estate  development
activities has been in the City of Wuhan and Yi Chang in the PRC.

        The  City of  Wuhan  is an  ancient  city  and is the  capital  of Hubei
Province in central  China.  Wuhan is the sixth  largest  city in the PRC with a
population  of  approximately  8,000,000.  Wuhan is an important  transportation
center on the Jianhan Plain, sitting at the confluence of the Yangtze River, the
Hanjiang River,  and its longest branch - the Hansui River. The City of Wuhan is
comprised of three cities: Hanyang, Wuchang and Hankou.

<PAGE>

        Because of the  significant  economic  growth and development of central
China,  the  City  of  Wuhan  has  experienced   increasing  demand  for  luxury
residential properties and for retail and commercial space. The concept of mixed
use  buildings  with  retail and  commercial  space on the street  level and the
lowest  floors  with  luxury  apartment  units on the  higher  floors has become
increasingly  popular in the PRC. As a result,  recent building activity of Town
House has been designed with the mixed use concept as principal objective.

        Town  House  is  in  competition  with  other  real  estate  development
companies  in the City of  Wuhan,  some of which  are  larger  and have  greater
financial resources than Town House.

Government Regulation

        Wuhan  Pacific's  projects are subject to various laws and  governmental
regulations, such as zoning regulations, relating to its business operations and
project developments.  It must obtain and keep current various licenses, permits
and regulatory  approvals for its development  projects.  Wuhan Pacific believes
that it is in compliance with all laws, rules and regulations  applicable to its
projects  and that such laws,  rules and  regulations  do not  currently  have a
material impact on its operations.  Due to the increasing  levels of development
in the areas of China where it currently operates, it is possible that new laws,
rules  and/or  regulations  may be adopted  that could  affect  Wuhan  Pacific's
projects or proposed projects.  The enactment of such laws, rules or regulations
in  the  future  could  have  a  negative  impact  on its  projected  growth  or
profitability, which could decrease its projected revenues or increase its costs
of doing business.

Employees

        As of June 30, 2005,  Town House had  approximately  150  employees.  No
employee group is covered under a collective  bargaining  agreement.  Town House
and Wuhan Pacific believe their relationship with their employees is good.

Legal Proceedings

        Town House and its  subsidiaries  are not a party to, nor are any of our
respective  properties the subject of, any material pending legal or arbitration
proceedings.

Management of Town House

        Directors  and  Officers.   The  following   table  sets  forth  certain
information  regarding the executive  officers and directors of Town House.  All
officers serve at the pleasure of the Board of Directors.  Directors serve until
the election and qualification of their successors.

Name                        Age                Position
----                        ---                --------

Fang Zhong                   39         Chairman, Director, Chief Executive
                                        Officer and President

Lou Yun Fang                 46         Director, Executive Vice President-Chief
                                        Financial Officer and Treasurer

Fang Wei Feng                33         Director

Fang Wei Jun                 37         Director

Hu Min                       24         Director

        The following is information of the business experience of each director
and officer.

        Mr. Fang Zhong is the  founder  and has been the  Chairman of the Board,
Chief  Executive  Officer and President of Town House since its  organization in
2003. From 1995 to the present,  he has been the Chief  Executive  Officer and a
director of Wuhan Pacific which is the  principal  operating  subsidiary of Town
House.  Mr. Fang Zhong  received  Bachelor of Science  degree in industrial  and
domestic  architecture from the Wuhan Institute of Urban  Construction.  He also
participated in the MBA program at Northern Jiaotong University. He has received
various awards, including "Young Entrepreneur in Central-south Area" of the PRC,
and "One of Ten Excellent Young  Entrepreneurs  Leading  Private  Enterprises in
Wuhan".  He also  holds  various  significant  positions  such  as the  Standing
Director Hubei Physical Culture Foundation, Deputy to Jiang'an District People's
Congress,  a  Standing  Member  to  Jiang'an  District  Political   Consultative
Conference, and the Vice Chairman of Jiang'an District Young People Association,
etc.

        Mr. Luo Yun Fang became a director,  the Executive Vice  President-Chief
Financial  Officer and  Treasurer of Town House in 2003. He has been the general
manager of Wuhan  Pacific since 1998. He has more than 20 years of experience in
financial  and  administration  management.  He  received a Bachelor  of Science
degree in 1980 from the Hunan Financial  University,  and received an MBA degree
from Northern  Jiaotong  University  in 2001.  Mr. Luo Yun Fang also holds other
positions,  such as an editor of the Financial Periodical in the PRC; Consultant
and Standing  Director of Chinese  Finance and Tax  website;  member of standing
committee and member of executive  committee of Wuhan  Industrial and Commercial
Association and Wuhan General Commerce Association.

        Mr.  Fang Wei Feng has been  employed  as the  manager of the  materials
department and construction  operations  responsible for  construction  material
purchases  and  distribution,   since  1996.  He  became  a  director  and  Vice
President-Construction Operations of Town House in 2003.

        Mr. Fan Wei Jun has been  employed  as the  manager  of the  engineering
department  of Wuhan  Pacific,  since  2000.  He has been an  employee  of Wuhan
Pacific for over ten (10) years.  He became the General Manager of Operations of
Town House in 2003. He attended Zhengzhou College and graduated in 1985.

        Ms. Hu Min has been  employed  as the Human  Resources  Manager of Wuhan
Pacific since 2000. She graduated from Wuhan University in 2001.

        Mr. Fang Zhong is married to Ms. Hu Min. Fang Zhong,  Fang Wei Feng, and
Fang Wei Jun are siblings. Luo Yun Fang is a cousin to all of these siblings.

Item 7.01 Regulation FD Disclosure.

A press release dated  October 24, 2005,  discussing  the Agreement is furnished
herewith  as  Exhibit  99.10  and  is  incorporated  herein  by  reference.  The
information  contained in this Item 7.01, including the accompanying exhibit, is
being  furnished  and shall not be deemed  "filed" for purposes of Section 18 of
the Securities  Exchange Act of 1934, as amended  ("Exchange Act"), or otherwise
subject to the liability of that section. The information contained in this Item
7.01, including the accompanying exhibit, shall not be incorporated by reference
into any filing under the  Securities  Act of 1933, as amended,  or the Exchange
Act, whether made before or after the date hereof,  except as shall be expressly
set forth by specific reference in such filing.

<PAGE>

Item 9.01 Financial Statements and Exhibits.

        (a)     Financial statements of business acquired:

                The following  financial  statements are provided with this Form
                8-K current report:

                1. The audited  consolidated  financial statements of Town House
                Land Limited for its fiscal year ended December 31, 2004; and

                2. The unaudited consolidated financial statements of Town House
                Land Limited for the six months ended June 30, 2005.

<PAGE>

                             TOWN HOUSE LAND LIMITED
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003


<PAGE>

                     TOWN HOUSE LAND LIMITED AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                           PAGE

               Independent Auditors' Report..............................      1
               Consolidated Balance Sheets,
                  December 31, 2004 and 2003.............................      2
               Consolidated Statements of Operations,
                  For the Years Ended December 31, 2004 and 2003.........      3
               Consolidated Statements of Members' Equity
                  For the Years Ended December 31, 2004 and 2003.........      4
               Consolidated Statements of Cash Flows
                  For the Years Ended December 31, 2004 and 2003......... 5 to 6
               Notes to the Consolidated Financial Statements............7 to 21


<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND MEMBERS OF
TOWN HOUSE LAND COMPANY LIMITED
(Incorporated in Hong Kong with limited liability)

We have audited the accompanying  consolidated balance sheets of Town House Land
Limited and  subsidiaries  (the  "Company") as of December 31, 2004 and 2003 and
the related consolidated statements of operations, statements of members' equity
and cash flows for the years then ended. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). The Company is not required to have,
nor were we engaged to perform,  an audit of its internal control over financial
reporting.  Our audit included  consideration of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness  of the  Company's  internal  control  over  financial  reporting.
Accordingly,  we express no such opinion.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Town House Land
Limited and  subsidiaries  as of  December  31, 2004 and 2003 and the results of
their  operations  and cash flows for the years then  ended in  conformity  with
accounting principles generally accepted in the United States of America.


Oklahoma City, Oklahoma
May 11, 2005


                                       1
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)

<TABLE>
<CAPTION>
                                                               2004         2003
                                                           -----------   -----------
<S>                                                        <C>           <C>
                                     ASSETS
 Current Assets:
  Cash and equivalents                                     $ 4,251,678   $ 1,159,310
  Restricted cash                                                   --       203,659
  Accounts receivable, net                                   1,013,244     3,251,307
  Properties held for resale                                 4,293,627     8,342,484
  Advances to suppliers                                         38,142       407,189
  Deferred offering costs                                           --       280,891
  Construction-in-progress - current                         6,161,736     2,311,819
                                                           -----------   -----------

    Total current assets                                    15,758,427    15,956,659
                                                           -----------   -----------

Property and Equipment - net of accumulated depreciation     2,950,831     1,057,200
                                                           -----------   -----------

Construction-in-Progress - non-current                         931,433       931,433
                                                           -----------   -----------

                                                           $19,640,691   $17,945,292
                                                           ===========   ===========

                        LIABILITIES AND MEMBERS' EQUITY

Current Liabilities:

  Accounts payable and accrued expenses                    $ 1,753,935   $   419,656
  Advances from buyers                                       1,230,058       728,391
  Amounts due to directors                                   2,077,849     2,709,075
  Enterprise taxes payable                                   1,843,334     1,006,201
  Other tax payables                                         1,342,573       400,441
  Short-term loans                                                  --       791,063
  Current portion of long-term debt                             66,033     2,253,201
                                                           -----------   -----------

    Total current liabilities                                8,313,782     8,308,028
                                                           -----------   -----------

Long-Term Debt - net of current portion shown                  816,509       906,686
                                                           -----------   -----------

Minority Interest                                              383,057       308,695
                                                           -----------   -----------

Members' Equity:
  Share capital                                                 62,180        62,180
  Additional paid-in capital                                 5,857,936     5,857,936
  Capital reserve                                            1,316,042       997,928
  Retained profit                                            2,891,185     1,503,839
                                                           -----------   -----------

    Total members' equity                                   10,127,343     8,421,883
                                                           -----------   -----------

                                                           $19,640,691   $17,945,292
                                                           ===========   ===========
</TABLE>

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


                                       2
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)

<TABLE>
<CAPTION>
                                                           2004            2003
                                                       ------------    ------------
<S>                                                    <C>             <C>
Sales Revenues                                         $ 17,346,745    $  9,080,701

Cost of Properties Sold                                  11,315,090       5,319,978
                                                       ------------    ------------

Gross Profit                                              6,031,655       3,760,723
                                                       ------------    ------------

Selling General and Administrative Expenses:

  Selling expenses                                        1,381,007         439,006
  Depreciation expense                                       80,709          69,664
  General and administrative expenses                     1,701,640         101,308
                                                       ------------    ------------
                                                          3,163,356         609,978
                                                       ------------    ------------
Income from Operations                                    2,868,299       3,150,745
                                                       ------------    ------------

Other Income (expense)

   Other revenues                                            42,909          14,065
   Interest and finance costs                              (272,721)       (326,849)
                                                       ------------    ------------
                                                           (229,812)       (312,784)
                                                       ------------    ------------

Net Income before Income Taxes and Minority Interest      2,638,487       2,837,961
Provision for Income Taxes                                 (858,665)       (179,798)
                                                       ------------    ------------

Net Income before Minority Interest                       1,779,822       2,658,163
Minority Interest in Earnings                               (74,362)        (80,325)
                                                       ------------    ------------

Net Income                                             $  1,705,460    $  2,577,838
                                                       ============    ============
</TABLE>

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


                                       3
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)

<TABLE>
<CAPTION>
                                                                                                                Total
                                                                                                               members'
                                                 Additional                                                   equity and
                                      Share       Paid-in       Capital       Retained          Minority       Minority
                                      capital     Capital       Reserve      Profit/(Loss)      Interest       Interest
                                    ---------  ------------  ------------   --------------   -------------  -------------
<S>                                 <C>        <C>           <C>            <C>              <C>            <C>
 Balance at December 31, 2002       $  62,180  $  5,795,308  $    519,260   $    1,007,233   $     228,370  $   7,612,351
 Net income for the year
   ended December 31, 2003                 --            --            --        2,577,838          80,325      2,658,163

 Distribution to members                             62,628                     (1,602,564)                    (1,539,936)

 Transfer to capital reserve               --            --       478,668         (478,668)                             -
                                    ---------  ------------  ------------   --------------   -------------  -------------
                                       62,180                     997,928        1,503,839         308,695      8,730,578
 Balance at December 31, 2003                     5,857,936
 Net income for the year
   ended December 31, 2004                 --            --            --        1,705,460          74,362      1,779,822

 Transfer to capital reserve               --            --       318,114         (318,114)            --              --
                                    ---------  ------------  ------------   --------------   -------------  -------------
 Balance at December 31, 2004       $  62,180  $  5,857,936  $  1,316,042   $    2,891,185   $     383,057  $  10,510,400
                                    =========  ============  ============   ==============   =============  =============
</TABLE>

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


                                       4
<PAGE>

                        TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                (Expressed in US dollars)

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
Cash flows from operating activities

   Net income                                                           $ 1,705,460    $ 2,577,838
Adjustments to reconcile net profit to net cash provided
  by operating activities

  Depreciation                                                               80,709         69,664
  Minority interest in earnings                                              74,362         80,325

Changes in:

  Restricted cash                                                           203,659       (201,617)
  Accounts receivable, net and other receivables                          2,238,063     (2,798,591)
  Properties held for resale                                              4,048,857      4,331,189
  Advances to suppliers                                                     369,047       (407,189)
  Construction-in-progress                                               (3,849,917)      (678,556)
  Deferred offering cost                                                    280,891       (280,891)
  Accounts payable and other payables                                     1,334,279        303,955
  Amounts due to directors                                                 (631,226)     1,288,042
  Advances from buyers                                                      501,667     (1,116,625)
  Deferred tax expenses                                                     837,133        179,798
  Other tax payables                                                        942,132        253,058
                                                                        -----------    -----------

Net cash provided by operating activities                                 8,135,116      3,600,400
                                                                        -----------    -----------

Cash flows from investing activities

 Purchases of fixed assets                                               (1,974,340)        (9,331)
                                                                        -----------    -----------

Net cash (used in) investing activities                                  (1,974,340)        (9,331)
                                                                        -----------    -----------

Cash flows from financing activities
  Loan proceeds                                                              20,415      1,292,271
  Principal loans repayments                                             (3,088,823)    (2,484,096)
  Member capital contributions                                                   --         62,628
  Distribution to members                                                        --     (1,602,564)
                                                                        -----------    -----------

Net cash (used in) financing activities                                  (3,068,408)    (2,731,761)
                                                                        -----------    -----------

Net increase in cash                                                      3,092,368        859,308
Cash at beginning of year                                                 1,159,310        300,002
                                                                        -----------    -----------

Cash at end of year                                                     $ 4,251,678    $ 1,159,310
                                                                        ===========    ===========
</TABLE>


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


                                       5
<PAGE>

                        TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

            Supplemental Disclosure of Consolidated Statement of Cash Flows
                              Year ended December 31, 2004
                               (Expressed in US dollars)

                                                         2004             2003
                                                       --------         --------

Supplemental Disclosure of Cash Flow information

Interest paid                                          $246,107         $395,134
                                                       ========         ========
Enterprise income taxes paid                           $ 21,522         $633,656
                                                       ========         ========

Supplemental disclosure of non-cash investing and financing activities:

During the year ended December 31, 2004, the Company transferred car park spaces
in Diamond Mansion Phase 2, at cost of $1,420,080 from  construction-in-progress
to fixed assets.

During the year ended December 31, 2003, the Company  transferred  two floors of
the  commercial  complex  in  Diamond  Mansion  Phase 1, at a net book  value of
$1,929,295 from property and equipment to properties held for resale.

During 2003, the Members of 97% of the registered  capital of Wuhan  transferred
their  interests  to Town House Land  Limited  ("Town  House") in a  transaction
treated as a recapitalization of Wuhan. In connection with that acquisition, the
former Wuhan members,  who became members in Town House, were to receive cash of
$1,602,564,  $62,628 of which was used to repay  balances due from  directors by
Town House prior to the  acquisition  and the balance was treated as an increase
in payables to directors at December 31, 2003.

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


                                       6
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS

      Organizational Structure

      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 lease 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 is 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").

      At December 31, 2004 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".

      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.

      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.


                                       7
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS - Continued

      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.

      The Company's principal activity is the development and sale of commercial
      and residential real estate. The Company's principal country of operations
      is The People's Republic of China ("PRC").

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant accounting policies:

      Consolidation  Policy - The consolidated  financial statements include the
      accounts of Town House and Wuhan Town House from  August 15, 2003  forward
      and Town House Land  (Miami)  Corporation  and Town House Land (USA) Inc.,
      since  their  incorporation.  Prior to  August  15,  2003,  the  financial
      statements  reflect the  activity of Wuhan Town House as adjusted  for the
      effects of the recapitalization of August 15, 2003.

      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.

      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,  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.

      Capital  Reserve -  Capital  reserve  represents  that  amount of  reserve
      appropriated  from the net  distributable  profit after income tax in each
      year when a net profit after  operations is generated.  In accordance with
      the provisions of the Company's  Memorandum  and Articles of  Association,
      the Company is required to appropriate 15% of the net distributable profit
      after enterprises income tax to capital reserve.

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


                                       8
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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 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.

      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 years ended December 31, 2004 and 2003.

      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 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.  As of December 31, 2004,  one
      construction  project is reflected as long-term as further development has
      ceased until such time as new access roads are completed by the Wuhan City
      Government.  Management  anticipates  these roads will be completed in the
      second  half of 2005 at which  time  construction  should  resume  on this
      project.

      Related  Companies - A related  company is a company in which the 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  $1,128,870  and $403,922 for the years ended December 31, 2004
      and 2003, respectively.


                                       9
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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. There were no material  translation gains or losses during
      the years ended December 31, 2004 and 2003 as the Renminbi was tied to the
      U.S. Dollar during the time period covered in these financial statements.

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

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

      Enterprise income tax

      Under  the  Provisional  Regulations  of The  People's  Republic  of China
      Concerning Income Tax on Enterprises  promulgated by the State Council and
      which  came into  effect on  January  1,  1994,  income  tax is payable by
      enterprises  at a rate of 33% of their taxable  income.  Preferential  tax
      treatment may, however, be granted pursuant to any law or regulations from
      time to time promulgated by the State Council. For the year ended December
      31,  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.

      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.

      For the years ended December 31, 2004 and 2003, the Company's pension cost
      charged to the statements of operations  under the plan amounted to $5,974
      and $1,814, 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  December  31,  2004  because  of the  relatively  short-term
      maturity of these instruments.


                                       10
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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

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

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

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

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

      The  grant-date  for fair value of  employee  share  options  and  similar
      instruments will be estimated using option-pricing models adjusted for the
      unique characteristics of these instruments.


                                       11
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      The statement is effective for the quarter beginning January 1, 2006.

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

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

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      Substantially  all of the Company's  bank accounts are in banks located in
      the People's  Republic of China ("PRC") and are not covered by any type of
      protection  similar  to that  provided  by the FDIC on  funds  held in U.S
      banks.

      Substantially all of the Company's operations are in the PRC.

      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 $1,064,981 and $2,054,320
      as of December 31, 2004 and 2003,  respectively,  were  collateralized  by
      real estate.

4.    CASH AND EQUIVALENTS

      As of December 31, 2004 and 2003,  the Company had the following  cash and
      cash equivalents:

                                                     December 31,
                                              --------------------------
                                                 2004            2003
                                              ----------      ----------
      Restricted cash:

           Pledged deposits                   $       --      $  203,659
                                              ==========      ==========

        Cash and equivalents:
           Cash on hand                       $   44,492      $    2,922
           Banks deposits                      4,207,186       1,156,388
                                              ----------      ----------

                                              $4,251,678      $1,159,310
                                              ==========      ==========

      The pledged bank deposits, which were restricted, carried interest ranging
      from  0.6% to  0.825%  per  month  and in  accordance  with the  terms and
      conditions  of the  banking  facilities  agreed  with a  bank  to  provide
      mortgage  loan  facilities  to  buyers  of  properties  developed  by  the
      subsidiary,  Wuhan Pacific,  which agreed to place guarantee fund deposits
      of not less than 18% of the total  outstanding  mortgage loans extended to
      properties buyers and to guarantee the repayments of the mortgage loans.


                                       12
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

4.    CASH AND CASH EQUIVALENTS, Continued

      The guarantee  fund shall be restricted  while the mortgage loans extended
      to properties buyers shall remain outstanding

5.    ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

      Accounts  receivable and other receivables  consist of the following as of
      December 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                        December 31,
                                                                  -----------------------
                                                                     2004         2003
                                                                  ----------   ----------
<S>                                                               <C>          <C>
        Accounts receivable                                       $1,180,573   $3,195,074
        Less: Provision for doubtful debts                           455,593           --
                                                                  ----------   ----------

        Accounts receivable net of provision for doubtful debts      724,980    3,195,074
                                                                  ----------   ----------

        Other receivables:
           Staff advances                                             48,066        4,590
           Utilities and other deposits                              159,729       15,097
           Others                                                     80,469       36,546
                                                                  ----------   ----------

        Other receivables                                            288,264       56,233
                                                                  ----------   ----------

                                                                  $1,013,244   $3,251,307
                                                                  ==========   ==========
</TABLE>

6.    PROPERTIES HELD FOR RESALE

      As of December 31, 2004 and 2003, the Company had the following properties
      held for resale:

                                                        December 31,
                                                 -----------------------
                                                     2004        2003
                                                 ----------   ----------

        Properties held for resale               $4,293,626   $8,205,945
        Repossessed properties held for resale           --      136,539
                                                 ----------   ----------

                                                 $4,293,626   $8,342,484
                                                 ==========   ==========

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

                                                       December 31,
                                                 -----------------------
                                                     2004        2003
                                                 ----------   ----------

        General Garden                           $   13,006   $1,959,277
        Garden of Eden                                   --      183,395
        Diamond Mansion Phase I Residential          27,708    1,124,313
        Diamond Mansion Phase I Commercial        3,592,628    4,466,830
        Diamond Mansion Phase 2                     445,246           --
        Gutian Apartments                           215,039      608,669
                                                 ----------   ----------

        Total                                    $4,293,627   $8,342,484
                                                 ==========   ==========


                                       13
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

6.    PROPERTIES HELD FOR RESALE, Continued

      As of December 31, 2004 and 2003, the carrying values of inventories of $0
      and  $2,775,494,  respectively,  have been pledged as  securities  for the
      Company's long-term bank loans.

7.    PROPERTIES AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                  December 31,
                                                          --------------------------
                                                              2004           2003
                                                          -----------    -----------
<S>                                                       <C>            <C>
        Land use rights and buildings                     $ 2,495,038    $ 1,074,957
        Plant and machineries                                  29,590          1,981
        Motor vehicles                                        535,116         94,769
        Office equipment                                      172,068         87,695
                                                          -----------    -----------

                                                            3,231,812      1,259,402
        Less: Accumulated depreciation and amortization      (280,981)      (202,202)
                                                          -----------    -----------

                                                          $ 2,950,831    $ 1,057,200
                                                          ===========    ===========
</TABLE>

      During 2004 and 2003, properties totaling $1,420,080 and $0, respectively,
      were transferred from  construction-in-progress to property and equipment.
      During the years ended December 31, 2004 and 2003,  properties totaling $0
      and  $1,929,295,  net  of  accumulated  depreciation  of $0  and  $94,149,
      respectively,  were  transferred from property and equipment to properties
      held for resale.

8.    CONSTRUCTION-IN-PROGRESS

      Construction-in-progress   represents   two   combined   residential   and
      commercial  project.  Construction-in-progress  represents the cost of the
      land use  rights,  capitalized  interest  expenses,  related  pre-approval
      capital  expenditures  and government  approval fees. A breakdown on these
      costs by project is as follows:

                                                             December 31,
                                                       -----------------------
                                                          2004         2003
                                                       ----------   ----------
        Current

        Diamond Mansion Phase II Commercial Project    $       --   $2,311,819
        Diamond Mansion Phase II - Additional floors       24,123           --
        Sanyang Apartments                              2,953,576           --
        YiChang Town House Plaza                        3,184,037           --
                                                       ----------   ----------

                                                        6,161,736    2,311,819
                                                       ----------   ----------

        Non-Current
        Jing Qi Project                                   931,433      931,433
                                                       ----------   ----------

                                                       $7,093,169   $3,243,251
                                                       ==========   ==========


                                       14
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

8.    CONSTRUCTION-IN-PROGRESS, Continued

      Official  approval for the  construction  of Diamond  Mansion Phase II was
      received in 2003 and the  construction  was  completed in September  2004,
      while  the   construction  of  the  Jing  Qi  Project  was   strategically
      temporarily  suspended until the completion of the  construction of a main
      road near the site of the  project  by the Wuhan  City  Government.  As at
      December 16, 2004,  construction  to the road is still  incomplete and the
      Jing Qi Project has been further postponed.

      The Company had already  completed one half of the  construction  works of
      Town  House  Plaza   (formerly   Sanyang   Apartments)  and  expected  the
      construction  will be completed  by the end of 2005.  The Company had also
      already  started  the  foundation  work of Yi Chang  Project.  The capital
      expenditures in respect of the Yi Chang Project  comprised land use rights
      of  $1,660,628   and  purchases  of   construction   materials  and  other
      expenditures  totaling $92,219 as of December 31, 2004.  Several approvals
      for  construction  works  are  still  pending  from  relevant   government
      departments and the processes usually take time.

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 at 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.

10.   TRANSACTIONS WITH RELATED PARTIES

      Amounts  due  from/(to)  directors  at  December  31, 2004 and 2003 are as
      follows:

<TABLE>
<CAPTION>
                                              December 31
      Name                            ----------------------------      Maximum Outstanding     Security
                                          2004            2003          Balance During Year       Held
                                      -------------   ------------      -------------------     --------
<S>                                   <C>              <C>                   <C>                  <C>
      Fang Zhong (Director)           $ (2,022,604)    $(2,399,320)          $(2,399,321)         none
      Hu Min (Director)                      5,970         (41,667)                5,970          none
      Luo Yun Fang (Director)               17,409         (46,108)               17,409          none
      Fang Wei Jun (Director)                 (440)        (48,077)              (48,077)         none
      Fang Hui (Deceased)                     (440)        (48,077)              (48,077)         none
      Fang Wei Feng (Director)             (77,744)       (125,826)             (125,826)         none
                                      -------------   ------------

                                      $ (2,077,849)   $ (2,709,075)
                                      =============   =============
</TABLE>

      The amounts due are unsecured,  interest free and have no fixed  repayment
      terms.


                                       15
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

11.  OTHER TAXES PAYABLE

      Other tax payables consist of the following:

                                                      December 31,
                                               -------------------------
                                                  2004           2003
                                               ----------     ----------

        City construction tax                  $   79,012     $   17,748
        Business tax                            1,137,910        336,985
        Food price balancing tax                   22,609          9,666
        Education surcharge                        33,552          7,296
        Flood control tax                          21,751          4,990
        Education development tax                  21,225          9,766
        Other taxes                                26,514         13,990
                                               ----------     ----------

                                               $1,342,573     $  400,441
                                               ==========     ==========

12.   SHORT-TERM LOANS

      The Company had the following short-term loans at December 31, 2004 and
      2003:

                                                     December 31,
                                              --------------------------
                                                2004              2003
                                              --------          --------

        Secured                               $     --          $428,744
        Unsecured                                   --           362,319
                                              --------          --------

                                              $     --          $791,063
                                              ========          ========

      Other  short-term loan of $428,744 was secured by the Yi Chang project and
      was fully paid as of December 31, 2004.

      Other  short-term loan was unsecured,  carried interest at 5.04% per annum
      and was  repayable  within three months if the lender was not appointed as
      the main contractor to the Yi Chang Project.  As a  pre-condition  for the
      unsecured short-term loan of $362,319,  at December 31, 2003, a subsidiary
      company,  Wuhan  Town  House,  had  agreed to  appoint  the lender as main
      contractor  to Yi Chang  construction  project  and should the  subsidiary
      company  fails to appoint the lender as main  contractor,  the  subsidiary
      company had agreed to make a penalty payment of $36,232 to the lender. The
      lender was appointed as the main contractor to the Yi Chang Project.


                                       16
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.   LONG-TERM DEBT

      The  Company had the  following  long-term  debt at December  31, 2004 and
      2003:

<TABLE>
<CAPTION>
                                                        December 31, 2004                  December 31, 2003
                                                    ------------------------           ------------------------
                                                    Current        Long-term           Current        Long-term
                                                    -------        ---------           -------        ---------
<S>                                               <C>            <C>             <C>               <C>
      6.534% note payable to a bank,
      interest payable quarterly with
      principal due September 2004, secured
      by Diamond Mansion Phase I                  $       --     $         --    $    1,207,729    $          --

      6.534% note payable to a bank,
      interest payable quarterly with
      principal due December 2004, secured
      by Diamond Mansion Phase I                          --               --           966,184               --

      6.03% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        2,304            3,992             2,083            6,377

      7.2% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        3,432            4,683             5,133            8,322

      7.2% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2014, secured by property                        1,335           15,070             1,578           16,247

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        1,658            2,066             1,510            3,851
</TABLE>


                                       17
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.   LONG-TERM DEBT, Continued

<TABLE>
<CAPTION>
                                                        December 31, 2004                 December 31, 2003
                                                     ------------------------          ------------------------
                                                     Current        Long-term          Current        Long-term
                                                     -------        ---------          -------        ---------
<S>                                                    <C>              <C>              <C>             <C>
      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2010, secured by property                        2,149            6,093            2,838           12,301

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2010, secured by property                          933            5,265              795            6,283

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2011, secured by property                          916            6,553              990            7,353

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2012, secured by property                           --               --            3,417           24,842

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2015, secured by property                        1,497           19,166            1,645           20,469

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2016, secured by property                        1,625           22,668            2,013           23,816

      5.58% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2020, secured by property                        2,565           58,609            3,599           60,104

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2025, secured by property                          903           33,375            1,498           33,675
</TABLE>


                                       18
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.  LONG-TERM DEBT, Continued

<TABLE>
<CAPTION>
                                                           December 31, 2004                   December 31, 2003
                                                       -------------------------            -----------------------
                                                       Current         Long-term            Current       Long-term
                                                       -------         ---------            -------       ---------
<S>                                                     <C>              <C>                <C>            <C>
      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2030, secured by property                     --                --               523          14,225

      4.65% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2026, secured by property                  1,189            40,240             1,836          40,668

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2012, secured by property                  3,517            27,520             7,488          47,271

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2013, secured by property                  8,922            76,441            10,266          83,545

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2018, secured by property                 15,339           264,482            18,368         274,007

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2022, secured by property                  5,047           134,083             7,609         136,453

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2023, secured by property                  3,006            82,098             4,589          83,374
</TABLE>


                                       19
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.  LONG-TERM DEBT, Continued

<TABLE>
<CAPTION>
                                                        December 31, 2004                 December 31, 2003
                                                 ------------------------------    ------------------------------
                                                    Current         Long-term         Current         Long-term
                                                 ------------    --------------    --------------    ------------
<S>                                              <C>             <C>               <C>               <C>
     7.65% note payable to a bank, monthly
     installments of principal and
     interest, due on various dates
     through 2006, secured by property                  1,845             1,541             1,510           3,502

     Hire purchase                                      7,851            12,564                 -               -
                                                 ------------    --------------    --------------    ------------

                                                 $     66,033    $      816,509    $    2,253,201    $    906,686
                                                 ============    ==============    ==============    ============
</TABLE>

      As of December 31, 2004 and 2003, bank loans are secured by a legal charge
      over the  Wuhan  Town  House's  land use  rights  and  buildings  totaling
      $509,401 and  $522,463,  respectively,  and stock of  properties  held for
      resale of $0 and $2,775,494, respectively. According to the land use right
      certificates, the security was discharged / released on November 20, 2003.

      During the year ended December 31, 2003, the 2nd and 3rd Floors of Diamond
      Mansion  Phase I were  pledged  in respect  of a  short-term  bank loan of
      $2,415,459  (Rmb.20,000,000),  and which loan was  repaid  before the year
      then ended. According to the land use right certificates, the security was
      discharged / released on February 4, 2004.

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

                                                                 Amount
                                                                --------
        2005                                                    $ 66,033
        2006                                                      14,105
        2007                                                      10,741
        2008                                                       6,093
        2009                                                          --
        Thereafter                                               785,570
                                                                --------
                                                                $882,542
                                                                ========

14.   CAPITAL

                                                        December 31,
                                                   --------------------
                                                     2004        2003
                                                   --------    --------
      Authorized, issued and outstanding:

        500,000 ordinary share at HK$1.00 each     $ 64,103    $ 64,103
        Less minority interest                       (1,923)     (1,923)
                                                   --------    --------

                                                   $ 62,180    $ 62,180
                                                   ========    ========

      Town House Land Limited  (formerly  Hong Kong Window of the World  Apparel
      Co., Limited) (the "Company") was registered as in Hong Kong, as a limited
      liability company on August 13, 2001 with a registered  capital of $64,103
      (HK $500,000).


                                       20
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

14.   CAPITAL, Continued

      Based on the Certificate of  Incorporation  on Change of Name dated August
      3, 2003, the Company  changed its name from `Hong Kong Window of the World
      Apparel Co., Limited' to `Town House Land Limited'.

15.   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 year  ended  December  31,  2004 and 2003,  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:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                             -----------------------
                                                                2004         2003
                                                             ----------   ----------
<S>                                                          <C>          <C>
        Computed at the statutory rate                       $1,119,877   $  936,527
        Tax effect of special tax rate granted during 2004      156,445     (756,729)
                                                             ----------   ----------

        Tax at effective rate                                $  963,432   $  179,798
                                                             ==========   ==========
</TABLE>

16.   COMMITMENTS

      As of December 31, 2004 and 2003, the Company had contractual  commitments
      of  the  construction   projects   totaling   $3,588,183  and  $1,660,721,
      respectively,  and commitments for rental,  capital  expenditures for land
      use rights, plant and machineries totaling $3,943 and $0, respectively.

      During the year ended  December  31, 2004,  the Company is leasing  office
      space was set up for  salesmen to meet  customers in Shanghai and Wenzhou.
      The Company had  commitments  to make  payments for leasing of this office
      totaling $38,275 through December 31, 2005.


                                       21
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)

                                     ASSETS

Current assets:
     Cash and equivalents                                            $ 5,105,515
     Accounts receivable, net                                          1,289,932
     Properties held for sale                                          5,837,017
     Prepaid and other assets                                            695,399
     Construction-in-progress - current                                  107,285
                                                                     -----------

              Total current assets                                    13,035,148

Land held for development                                              4,767,303
Property and equipment-net of accumulated depreciation of $355,696     2,912,585
Construction-in-progress - non-current                                 5,188,061
                                                                     -----------

Total assets                                                         $25,903,097
                                                                     ===========

                         LIABILITIES AND MEMBERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses                           $ 2,303,525
     Advances from buyers                                                872,257
     Amounts due to directors, net                                     1,726,316
     Enterprise taxes payable                                          1,068,215
     Other taxes payable                                               1,450,368
     Short-term loans                                                  3,822,345
     Current portion of long-term debt                                     7,851
                                                                     -----------

Total current liabilities                                             11,250,877
                                                                     -----------

Long term debt, net of current portion shown                           3,389,894
                                                                     -----------

Minority interest                                                        476,896
                                                                     -----------

Stockholders' equity:
     Share capital                                                        64,103
     Additional paid-in capital                                        5,857,936
     Capital reserve                                                   1,316,042
     Retained earnings                                                 3,547,349
                                                                     -----------

Total members' equity                                                 10,785,430
                                                                     -----------

Total liabilities and members' equity                                $25,903,097
                                                                     ===========


                 See accompanying notes to financial statements.
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                                       June 30,
                                                              --------------------------
                                                                  2005           2004
                                                              -----------    -----------
<S>                                                           <C>            <C>
Sales Revenues                                                $ 5,193,341    $ 4,157,687
Cost of Properties Sold                                         4,134,499      1,999,155
                                                              -----------    -----------

     Gross profit                                               1,058,842      2,158,532
                                                              -----------    -----------


Selling, General and Administrative Expenses:
     Selling expenses                                             348,989        298,147
     General and administrative expenses                          567,800        317,006
     Depreciation                                                  74,714         28,201
                                                              -----------    -----------

     Total expenses                                               991,503        643,354
                                                              -----------    -----------

     Income from operations                                        67,339      1,515,178
                                                              -----------    -----------

Other income (expense)
     Other revenues                                                33,987         (5,614)
     Interest and finance costs                                  (116,348)       (18,275)
                                                              -----------    -----------

     Total other income (expense)                                 (82,361)       (23,889)
                                                              -----------    -----------

Net Income (Loss) before Income Taxes and Minority Interest       (15,022)     1,491,289
(Provision for) Benefit from Income Taxes                         697,046       (208,087)
                                                              -----------    -----------

Net Income before Minority Interest                               682,024      1,283,202
Minority Interest in Earnings                                     (25,861)       (39,861)
                                                              -----------    -----------

Net Income                                                    $   656,163    $ 1,243,341
                                                              ===========    ===========

Weighted average basic and diluted shares outstanding             500,000        500,000
                                                              ===========    ===========

Basic and diluted net income per common share                 $      1.31    $      2.49
                                                              ===========    ===========
</TABLE>


                 See accompanying notes to financial statements.
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                   June 30,
                                                                          --------------------------
                                                                              2005          2004
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
Cash flows from operating activities:
Net income                                                                $   656,163    $ 1,243,341
Adjustments to reconcile net income to cash flows provided
     by operating activities
      Depreciation                                                             74,714         30,003
      Minority interest in earnings                                            25,861         39,861

Changes in assets and liabilites:
(Increase) decrease in -

      Restricted cash                                                              --       (403,041)
      Accounts receivable, net and other receivables                         (436,417)       997,296
      Properties held for resale                                           (1,543,391)     1,591,033
      Prepaid and other assets                                               (497,526)          (650)
      Construction-in-progress                                              1,797,823     (3,395,769)
      Accounts payable and other payables                                     549,590       (129,343)
      Advances from buyers                                                   (357,801)     2,425,880
      Deferred tax expenses                                                  (775,119)       220,329
      Other taxes payable                                                     107,795         64,534
                                                                          -----------    -----------

Net cash provided by (used in) operating activities                          (398,308)     2,683,474
                                                                          -----------    -----------

Cash flows from investing activities:
      Purchase of land held for development                                (4,767,303)            --
      Purchase/(transfer) of fixed assets                                     (36,468)      (233,324)
                                                                          -----------    -----------

Net cash provided by (used in) investing activities                        (4,803,771)      (233,324)
                                                                          -----------    -----------

Cash flows from financing activities:
      Minority interest in capital contributions                               69,901             --
      Amounts due to directors                                               (351,533)      (775,525)
      Loan proceeds                                                         6,427,793             --
      Principle loan repayments                                               (90,245)      (615,887)
                                                                          -----------    -----------

Net cash provided by (used in) financing activities                         6,055,916     (1,391,412)
                                                                          -----------    -----------

Net increase (decrease) in cash and cash equivalents                          853,837      1,058,738

Cash and cash equivalents, beginning of period                              4,251,678      1,159,310
                                                                          -----------    -----------

Cash and cash equivalents, end of period                                  $ 5,105,515    $ 2,218,048
                                                                          ===========    ===========


Supplemental disclosures of cash flow information:
      Interest paid, net of capitalized amounts                           $   395,134    $   151,125
                                                                          ===========    ===========

      Enterprise income taxes paid                                        $        --    $        --
                                                                          ===========    ===========
</TABLE>

Supplemental disclosure of non-cash investing and financing activities:

      During the six months  ended June 30,  2005,  the  Company  exchanged  two
      residential units of Diamond Mansion for advertising valued at $122,322.

      During  the six  months  ended  June 30,  2005,  the  Company  transferred
      $4,210,681  of  construction  expenditures  for the YiChang  Project  from
      current construction-in-progress to noncurrent construction-in-progress.


                 See accompanying notes to financial statements.
<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS

      Organizational Structure

      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 than 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").

      At December  31, 2004 and June 30,  2005,  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".

      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.

      The Company's principal activity is the development and sale of commercial
      and residential real estate.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant accounting policies:

      Consolidation  Policy - The consolidated  financial statements include the
      accounts of Town House and Wuhan Town House from  August 15, 2003  forward
      and Town House Land  (Miami)  Corporation  and Town House Land (USA) Inc.,
      since  their  incorporation.  Prior to  August  15,  2003,  the  financial
      statements  reflect the  activity of Wuhan Town House as adjusted  for the
      effects of the recapitalization of August 15, 2003.

      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 a 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.

      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,  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.

      Capital  Reserve -  Capital  reserve  represents  that  amount of  reserve
      appropriated  from the net  distributable  profit after income tax in each
      year when a net profit after  operations is generated.  In accordance with
      the provisions of the Company's  Memorandum  and Articles of  Association,
      the Company is required to appropriate a portion of the net  distributable
      profit  after  enterprises  income  tax to  capital  reserve.  The  amount
      appropriated is determined on an annual basis by the Board of Directors.

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

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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 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.

      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 years ended December 31, 2004 and 2003,
      or the six months ended June 30, 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 cost,  development
      expenditure,  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.  As of June  30,  2005,  two
      construction  projects are reflected as long-term as  construction on both
      projects has been delayed.

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

      Revenue  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  $296,663  and  $210,189 for the six months ended June 30, 2005
      and 2004, respectively.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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. There were no material  translation gains or losses during
      the years  ended June 30,  2005 and 2004 as the  Renminbi  was tied to the
      U.S. Dollar during the time period covered in these financial statements.

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

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

      Enterprise Income Tax - Under the Provisional  Regulations of The People's
      Republic of China Concerning Income Tax on Enterprises  promulgated by the
      State Council and which came into effect on January 1, 1994, income tax is
      payable  by  enterprises  at a  rate  of  33%  of  their  taxable  income.
      Preferential tax treatment may, however, be granted pursuant to any law or
      regulations  from time to time  promulgated by the State Council.  For the
      year ended  December 31, 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.

      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.

      For the six months  ended June 30, 2005 and 2004,  the  Company's  pension
      cost charged to the  statements of  operations  under the plan amounted to
      $4,818 and $3,171, 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  December  31,  2004  because  of the  relatively  short-term
      maturity of these instruments.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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

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

      The  grant-date  for fair value of  employee  share  options  and  similar
      instruments will be estimated using option-pricing models adjusted for the
      unique characteristics of these instruments.

      The statement is effective for the quarter beginning January 1, 2006.

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

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

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      Significant amounts of the Company's bank accounts are in banks located in
      the People's  Republic of China ("PRC") and are not covered by any type of
      protection  similar  to that  provided  by the FDIC on  funds  held in U.S
      banks.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK - Continued

      The  Company  has  real  estate  in the PRC and in the  United  States  of
      America.  Through June 30, 2005,  the Company had  generated no income and
      very  few  expenses  associated  with  its U.S.  real  estate  development
      activities.

      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 $1,333,978 and $2,055,902
      as of June 30, 2005 and 2004,  respectively,  were  collateralized by real
      estate.

4.    ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

      Accounts  receivable and other receivables  consist of the following as of
      June 30, 2005:

      Accounts receivable                        $ 1,333,978
      Less: Provision for doubtful debts            (455,592)
                                                 -----------

      Accounts receivable net of provision for
        doubtful debts                               878,386
                                                 -----------

      Other receivables:
        Staff advances                               135,569
        Loans to third parties                       120,419
        Others                                       155,558
                                                 -----------
                                                 $ 1,289,932
                                                 ===========


5.    PROPERTIES HELD FOR SALE

      As of June 30, 2005,  the Company had the  following  properties  held for
      sale:

      Properties held for sale                 $5,837,017
      Repossessed properties held for resale           --
                                               ----------
                                               $5,837,017
                                               ==========


      As of June 30, 2005,  the carrying value of inventory of $636,721 has been
      pledged as collateral on a short-term bank loan.

6.    LAND HELD FOR DEVELOPMENT

      At June 30, 2005, the Company held three parcels of land for  development,
      as follows:

      Las Vegas, Nevada         $1,156,348
      Chino Hills, California    2,007,111
      Fontana, California        1,603,844
                                ----------
                                $4,767,303
                                ==========

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

7.    PROPERTIES AND EQUIPMENT

      Properties and equipment, stated at cost less accumulated depreciation and
      amortization, consist of the following at June 30, 2005:

      Land use rights and buildings        $ 2,502,964
      Plant and machineries                     29,590
      Motor vehicles                           561,113
      Office equipment                         174,614
                                           -----------
      Less: Accumulated depreciation and     3,268,281
        amortization                          (355,696)
                                           -----------
                                           $ 2,912,585
                                           ===========

      At June 30, 2005,  fixed assets with a carrying  value of $1,603,844  were
      pledged as collateral to a bank with respect to an outstanding loan.

8.    CONSTRUCTION-IN-PROGRESS

      Construction-in-progress   represents   three  combined   residential  and
      commercial projects.  Construction-in-progress  represents the cost of the
      land use  rights,  capitalized  interest  expenses,  related  pre-approval
      capital  expenditures  and government  approval fees. A breakdown on these
      costs by project is as follows:

      Current
      Diamond Mansion Phase 2   $  107,285
                                ==========

      Non-Current
      Yi Chang Project           4,256,628
      Jing Qi Project              931,433
                                ----------

                                $5,188,061
                                ==========


      Due to a change in business strategy,  construction costs of $4,256,628 on
      the     YiChang     project     was     transferred     to     non-current
      construction-in-progress   in  2005,  with  construction  expected  to  be
      completed by the end of 2006.

      Construction of the Jing Qi Project has been  temporarily  suspended until
      the  completion  of the  construction  of a main road near the site of the
      project by the Wuhan City Government. As of June 30, 2005, construction to
      the road is still  incomplete and,  although the Company  anticipates that
      the road will be completed by the end of 2005, re-start of construction on
      Jing Qi  remains  uncertain  due to  circumstances  beyond  control of the
      Company.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

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  sheet  date.  The
      deposits  from such  property  buyers  for  residential  properties  to be
      transferred  in the  subsequent  years are  carried  forward  as  deferred
      revenue.

10.   TRANSACTIONS WITH RELATED PARTIES

      Net amounts due from/ (to) directors at June 30, 2005, are as follows:

      Name                       June 30, 2005
      ------------------------   -------------
      Fang Zhong (Director)        $(1,671,077)
      Hu Min (Director)                  5,970
      Luo Yun Fang (Director)           17,409
      Fang Wei Jun (Director)             (440)
      Fang Hui (Deceased)                 (440)
      Fang Wei Feng (Director)         (77,744)
                                 -------------
                                   $(1,726,316)
                                 =============


      The amounts due are unsecured,  interest free and have no fixed  repayment
      terms.

11.   SHORT-TERM LOANS

      The Company had the following short-term loans at June 30, 2005:

                                                                      Amount
                                                                    ----------
      Secured:
      Wuhan Town House short-term bank loan, partially secured by
      residential units of Town House Plaza (39 units valued at
      $636,721 at June 30, 2005), interest at 120% of the Chinese
      national rate paid periodically, principle due on February
      1, 2006                                                       $1,570,048

      Wuhan Town House short-term bank loan, secured by corporate
      guarantee, interest at 6.696% paid periodically, principle
      due on December 31, 2005                                         792,297

      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% (7.0% at June 30, 2005) paid
      periodically, principle due on May 1, 2006                       760,000

      Town House Land short-term loan from a financial
      institution, secured by 433,000 shares of Town House Land
      stock issued to a director, interest at 20% paid
      periodically, principle due on October 25, 2005                  700,000
                                                                    ----------
                                                                    $3,822,345
                                                                    ==========

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

12.   LONG-TERM DEBT

      The Company had the following long-term debt at June 30, 2005:

                                                  Current     Long-term
                                                 ----------   ----------
      Note payable to a bank for construction
      development, interest at 115% of the
      Chinese national rate paid monthly,
      principle due December 20, 2006, secured
      by Yi Chang construction-in-progress       $       --   $3,381,643

      Hire purchase                                   7,851        8,251
                                                 ----------   ----------

                                                 $    7,851   $3,389,894
                                                 ==========   ==========


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

                     Amount
                   ----------
      2006         $3,389,894
      2007                 --
      2008                 --
      2009                 --
      2010                 --
      Thereafter           --
                   ----------
                   $3,389,894
                   ==========


13.   CAPITAL

      Authorized, issued and outstanding:

        500,000 ordinary share at $.12 (HK$1.00) each   $64,103
                                                        =======

      Town House Land Limited  (formerly  Hong Kong Window of the World  Apparel
      Co.,  Limited) (the  "Company")  was registered in Hong Kong, as a limited
      liability company on August 13, 2001 with a registered  capital of $64,103
      (HK $500,000).

      Based on the Certificate of  Incorporation  on Change of Name dated August
      3, 2003, the Company  changed its name from "Hong Kong Window of the World
      Apparel Co., Limited" to "Town House Land Limited".

14.   INCOME TAX

      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. For
      the six month periods  ended June 30, 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.

<PAGE>

                    TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

15.   COMMITMENTS

                                                        As of Jun 30, 05
                                                        ----------------
      Capital Commitments (Wuhan Town House):
        Estimated (Fifth floor - Diamond Mansion II)    $        371,000
        Contracted and authorized  (Jing Qi Project)              42,880
        Contracted and authorized  (Yichang Project)             543,000
                                                        ----------------

                                                        $        956,880
                                                        ================

      Operating Commitments (Town House Land(Miami)):
        Lease commitment                                $         75,210
        Advertising commitment                                    26,280
                                                        ----------------

                                                        $        101,490
                                                        ================


      In 2004 the Company elected to suspend construction on the Jing Qi project
      temporarily until the main road currently under  construction by the local
      government is completed.  As of June 30, 2005,  construction  on this main
      road  has  not  been  completed.  The  Company  has  agreed  with  certain
      contractors for an extension of contractual  payments due to the deferment
      of construction on the project.

<PAGE>

        (b)     Pro forma financial information:  The unaudited consolidated pro
                forma financial statements of Xerion EcoSolutions Group Inc. and
                of Town House Land  Limited for the six month  period ended June
                30, 2005.

                         XERION ECOSOLUTIONS GROUP, INC.
                             PROFORMA BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)

                                     ASSETS

<TABLE>
<CAPTION>
                                                        Xerion        Town House    Adjustments     Proforma
                                                     ------------    ------------   -----------   ------------
<S>                                                  <C>             <C>            <C>            <C>
Current assets:
     Cash and equivalents                            $     11,577    $  5,105,515   $        --   $  5,117,092
     Accounts receivable, net                                  --       1,289,932            --      1,289,932
     Properties held for sale                                  --       5,837,017            --      5,837,017
     Prepaid and other assets                                  --         695,399            --        695,399
     Construction-in-progress                                  --         107,285            --        107,285
                                                     ------------    ------------   -----------   ------------

            Total current assets                           11,577      13,035,148            --     13,046,725

Land held for development                                   3,367       4,767,303            --      4,770,670
Property and equipment, net                                    --       2,912,585                    2,912,585
Construction-in-progress - non-current                         --       5,188,061            --      5,188,061
                                                     ------------    ------------   -----------   ------------

Total assets                                         $     14,944    $ 25,903,097   $        --   $ 25,918,041
                                                     ============    ============   ===========   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses           $    180,466    $  2,303,525   $        --   $  2,483,991
     Advances from buyers                                      --         872,257            --        872,257
     Amounts due to directors                              13,234       1,726,316            --      1,739,550
     Enterprise taxes payable                                  --       1,068,215            --      1,068,215
     Other taxes payable                                       --       1,450,368            --      1,450,368
     Short-term loans                                          --       3,822,345            --      3,822,345
     Current portion of long-term debt                         --           7,851            --          7,851
                                                     ------------    ------------   -----------   ------------

Total current liabilities                                 193,700      11,250,877            --     11,444,577

Long term debt, net of current portion shown above             --       3,389,894            --      3,389,894
                                                     ------------    ------------   -----------   ------------

Total liabilities                                         193,700      14,640,771            --     14,834,471
                                                     ------------    ------------   -----------   ------------

Minority interest                                              --         476,896            --        476,896
                                                     ------------    ------------   -----------   ------------

Stockholders' equity:
     Common stock                                           2,842          64,103            --         66,945
     Preferred stock                                           --              --            --             --
     Additional paid in capital                        10,014,413       5,857,936            --     15,872,349
     Capital reserve                                           --       1,316,042            --      1,316,042
     Donated capital                                      126,000              --            --        126,000
     Retained earnings                                (10,322,011)      3,547,349            --     (6,774,662)
                                                     ------------    ------------   -----------   ------------

Total stockholders' equity                               (178,756)     10,785,430            --     10,606,674
                                                     ------------    ------------   -----------   ------------

Total liabilities and stockholders' equity           $     14,944    $ 25,903,097   $        --   $ 25,918,041
                                                     ============    ============   ===========   ============
</TABLE>

<PAGE>

                         XERION ECOSOLUTIONS GROUP, INC.
                        PROFORMA STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2005
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Xerion        Town House      Adjustments     Proforma
                                                        ------------    ------------    -------------   ------------
<S>                                                     <C>             <C>             <C>             <C>
Sales Revenues                                          $         --    $  5,193,341    $          --   $  5,193,341
Cost of Properties Sold                                           --       4,134,499               --      4,134,499
                                                        ------------    ------------    -------------   ------------

    Gross profit                                                  --       1,058,842               --      1,058,842
                                                        ------------    ------------    -------------   ------------


Selling, General and Administrative Expenses:
    Selling expenses                                              --         348,989               --        348,989
    General and administrative expenses                       36,961         567,800               --        604,761
    Depreciation                                               1,469          74,714               --         76,183
                                                        ------------    ------------    -------------   ------------

    Total expenses                                            38,430         991,503               --      1,029,933
                                                        ------------    ------------    -------------   ------------

    Income from operations                                   (38,430)         67,339               --         28,909
                                                        ------------    ------------    -------------   ------------

Other income (expense)
    Other revenues                                                --          33,987               --         33,987
    Interest and finance costs                                    --        (116,348)              --       (116,348)
                                                        ------------    ------------    -------------   ------------

    Total other income (expense)                                  --         (82,361)              --        (82,361)
                                                        ------------    ------------    -------------   ------------

    Loss from continuing operations                          (38,430)             --               --        (38,430)
                                                        ------------    ------------    -------------   ------------

Income before income taxes                                   (38,430)        (15,022)              --        (53,452)
(Provision for) benefit from income taxes                         --         697,046               --        697,046
                                                        ------------    ------------    -------------   ------------

Net Income before Minority Interest                          (38,430)        682,024               --        643,594
Minority Interest in Earnings                                     --         (25,861)              --        (25,861)
                                                        ------------    ------------    -------------   ------------

Net income (loss)                                       $    (38,430)   $    656,163    $          --   $    617,733
                                                        ============    ============    =============   ============

Weighted average basic and diluted shares outstanding      2,841,523         500,000                      28,415,230
                                                        ============    ============    =============   ============

Basic and diluted net income (loss) per common share    $      (0.01)   $       1.31                    $       0.02
                                                        ============    ============    =============   ============
</TABLE>

<PAGE>

                         XERION ECOSOLUTIONS GROUP, INC.
                        PROFORMA STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Xerion        Town House      Adjustments      Proforma
                                                                 ------------    ------------    -------------   ------------
<S>                                                              <C>             <C>             <C>             <C>
Sales Revenues                                                   $         --    $  4,157,687    $          --   $  4,157,687
Cost of Properties Sold                                                    --       1,999,155               --      1,999,155
                                                                 ------------    ------------    -------------   ------------

    Gross profit                                                           --       2,158,532               --      2,158,532
                                                                 ------------    ------------    -------------   ------------


Selling, General and Administrative Expenses:
    Selling expenses                                                       --         298,147               --        298,147
    General and administrative expenses                                55,515         317,006               --        372,521
    Business development                                                3,307              --               --          3,307
    Depreciation                                                           --          28,201               --         28,201
                                                                 ------------    ------------    -------------   ------------

    Total expenses                                                     58,822         643,354               --        702,176
                                                                 ------------    ------------    -------------   ------------

    Income from operations                                            (58,822)      1,515,178               --      1,456,356
                                                                 ------------    ------------    -------------   ------------

Other income (expense)
    Other revenues                                                         --          (5,614)              --         (5,614)
    Interest and finance costs                                             --         (18,275)              --        (18,275)
                                                                 ------------    ------------    -------------   ------------

    Total other income (expense)                                           --         (23,889)              --        (23,889)
                                                                 ------------    ------------    -------------   ------------

    Loss from continuing operations                                   (58,822)             --               --        (58,822)
                                                                 ------------    ------------    -------------   ------------

Income before income taxes                                            (58,822)      1,491,289               --      1,432,467
(Provision for) benefit from income taxes                                  --        (208,087)              --       (208,087)
                                                                 ------------    ------------    -------------   ------------

Net Income before Minority Interest                                   (58,822)      1,283,202               --      1,224,380
Minority Interest in Earnings                                              --         (39,861)              --        (39,861)
                                                                 ------------    ------------    -------------   ------------

Net income (loss)                                                $    (58,822)   $  1,243,341    $          --   $  1,184,519
                                                                 ============    ============    =============   ============

Basic and diluted net income (loss) per common share             $      (0.02)   $       2.49                    $       0.04
                                                                 ============    ============    =============   ============

Weighted average basic and diluted shares outstanding               2,841,523         500,000                      28,415,230
                                                                 ============    ============    =============   ============
</TABLE>

<PAGE>

        (c)     Exhibits

                2.1     Exchange  Agreement  between Xerion  EcoSolutions  Group
                        Inc.,  a  Colorado  corporation,  and  Town  House  Land
                        Limited,  a limited  liability company under the Company
                        Law of The People's  Republic of China (the "PRC"),  and
                        each member of Town House dated October 19, 2005.

                23.1    Consent  of  Murrell  Hall  McIntosh  &  Co.,   P.L.L.C.
                        independent registered public accounting firm.

                99.1    Form of press release.

<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

Date: October 24, 2005                 Xerion EcoSolutions Group Inc.
                                       a Colorado corporation


                                       By:
                                          --------------------------------------
                                          Ben Traub
                                          Chief Executive Officer and President

<PAGE>

                                 EXHIBIT INDEX

Exhibit No.     Description of Exhibit
-----------     ----------------------

   2.1          Exchange  Agreement  between Xerion  EcoSolutions  Group Inc., a
                Colorado  corporation  ("Xerion"),  and Town House Land  Limited
                ("Town House"),  a limited liability company organized under the
                Company Law of The People's  Republic of China (the "PRC"),  and
                each member of Town House dated October 19, 2005.

   23.1         Consent of Murrell  Hall  McIntosh  & Co.,  P.L.L.C. independent
                registered public accounting firm.

   99.1         Form of press release.
{"company-data": {"conformed-name": "XERION ECOSOLUTIONS GROUP INC", "cik": "0001000686", "assigned-sic": "1000", "irs-number": "841286065", "state-of-incorporation": "CO", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-26760", "film-number": "051157839"}, "business-address": {"street1": "SUITE 905, 102-4369 MAIN STREET", "city": "WHISTLER", "state": "A1", "zip": "V0N 1B4", "phone": "604-902-0178"}, "mail-address": {"street1": "SUITE 905, 102-4369 MAIN STREET", "city": "WHISTLER", "state": "A1", "zip": "V0N 1B4"}, "former-company": [{"former-conformed-name": "IMMULABS CORP", "date-changed": "20001031"}, {"former-conformed-name": "NORTH AMERICAN RESORTS INC", "date-changed": "19950915"}]}
SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                                October 18, 2005
                               ------------------
                                 Date of Report
                       (Date of earliest event reported)

                         Xerion EcoSolutions Group Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                         Suite 905, 102-4369 Main Sreet
                           Whistler, BC Canada V0N 1B4
               ---------------------------------------------------
                    (Address of principal executive offices)

                                  604.902.0178
               --------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
         --------------------------------------------------------------
         (Former name and former address, if changed since last report)

         Colorado                       0-27351                  84-1286065
----------------------------        ---------------         --------------------
(State or other jurisdiction          (Commission             (I.R.S. Employer
     of Incorporation)                File Number)           Identification No.)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing  obligation  of  registrant  under any of the
following provisions:

|_|   Written  communications  pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting  material pursuant to Rule 14a-12(b) under the Exchange Act (17
      CFR 240.14a-12(b))

|_|   Pre-commencement  communications  pursuant  to  Rule  14d-2(b)  under  the
      Exchange Act (17 CFR 240.14d-2(b))
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995

Information  included  in this Form 8-K may contain  forward-looking  statements
within the meaning of Section 27A of the  Securities  Act and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act").  This
information may involve known and unknown risks, uncertainties and other factors
which  may cause the  actual  results,  performance  or  achievements  of Xerion
EcoSolutions Group Inc. ("Xerion") and Town House Land Limited ("Town House") to
be materially  different from the future  results,  performance or  achievements
expressed  or  implied  by  any  forward-looking   statements.   Forward-looking
statements,  which involve  assumptions  and describe  Xerion's and Town House's
future plans, strategies and expectations,  are generally identifiable by use of
the  words  "may,"  "should,"  "expect,"  "anticipate,"  "estimate,"  "believe,"
"intend" or  "project"  or the  negative of these words or other  variations  on
these words or comparable terminology.  Forward-looking  statements are based on
assumptions  that may be  incorrect,  and  there  can be no  assurance  that any
projections or other  expectations  included in any  forward-looking  statements
will  come to pass.  Xerion's  and Town  House's  actual  results  could  differ
materially from those expressed or implied by the forward-looking  statements as
a result of various  factors.  Except as required  by  applicable  laws,  Xerion
undertakes no obligation to update publicly any  forward-looking  statements for
any reason,  even if new information  becomes available or other events occur in
the future.

Section 1 - Registrant's Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

General.  Xerion  EcoSolutions  Group Inc.  ("Xerion") entered into a definitive
Stock Exchange  Agreement (the "Agreement")  under which Town House Land Limited
("Town  House") will be acquired by Xerion in  consideration  of the issuance of
common  stock  of  Xerion  representing  ninety-seven  percent  (97%)  ownership
interest of Xerion to the owners of Town House.

The closing of the Agreement is conditioned upon, among other things,  customary
closing  conditions,  including the  satisfaction  of both Xerion and Town House
with their due diligence investigations of the other party. If the closing under
the Agreement occurs, it is expected to occur on or about October 31, 2005.

No  assurances  can be given that the  Agreement  will close or, if the  closing
occurs,  as to the final  terms of the  Agreement.  A copy of the  Agreement  is
attached  to this Form 8-K  current  report as Exhibit  2.1 and is  incorporated
herein by reference  as though fully set forth  herein.  The  foregoing  summary
description of the Agreement and the  transactions  contemplated  thereby is not
intended to be complete and is qualified in its entirety by the complete text of
the Agreement.

                                    BUSINESS

        The  principal  business   operations  of  Town  House  is  real  estate
development.  Its operations are conducted by and through its subsidiaries,  (i)
Wuhan Pacific Real Estate Development  Company Limited ("Wuhan Pacific") located
in Hong Kong,  in The People's  Republic of China (the  "PRC"),  (ii) Town House
(Miami)  Corporation,  a Florida  corporation,  and (iii)  Town House Land (USA)
Inc., a California corporation.

        The  principal  executive  offices  of Town  House  in the PRC is at 128
Gloucester Road, Wanchai,  Hong Kong, the People's Republic of China;  telephone
011-852-2517-783.  The principal  executive  offices of Town House in the United
States is

        The corporate organization of Town House is as follows:

                              ---------------------
                                   Town House
                              ---------------------
                                       |
--------------------------------------------------------------------------------
          |                            |                             |
---------------------         ---------------------        ---------------------
  Town House (Miami)           Wuhan Pacific Real             Town House Land
     Corporation               Estate Development            (USA) Corporation
---------------------           Company Limited            ---------------------
                              ---------------------

        Town House is a limited  liability company organized in 2003 in the Hong
Kong Special Administrative Region in the PRC, as a holding company.

        Town  House  owns 97% of Wuhan  Pacific  which  was  organized  in Hubei
Province in the PRC as a limited liability company in 1995. Substantially all of
the assets and  operations of Town House in the PRC are conducted  through Wuhan
Pacific.

        Town House  Miami  Corporation  is a Florida  corporation  organized  on
_______, 2005.

Wuhan Pacific Real Estate Development Company Limited

        Wuhan Pacific is one of the first privately owned property developers in
Wuhan City in the PRC and is one of the  largest  property  developers  in Wuhan
City, based on a list of top 100 property development  enterprises in Wuhan City
in terms of gross floor area ("GFA"),  published by the Wuhan Statistics  Bureau
and  the  Development  Research  Center.  It  had  engaged  principally  in  the
development  and  sale  of  high  quality  commercial  and  private  residential
properties  catering to the  middle-class  residential  property market in Wuhan
City and in Yi Chang.

        Wuhan Pacific's  portfolio of properties under development are currently
all located in Wuhan City and Yi Chang, and target different segments within the
mass residential property market, including young white color employees,  middle
to senior  managers  in  enterprises,  entrepreneurs  and  families  with  young
children.  These upwardly  mobile people  represent the emerging middle class in
Wuhan City and are a growing source of demand in the mass  residential  property
market.

        As of June 30, 2005,  Wuhan Pacific reports that it has equity interests
in six property  development  projects in Wuhan City, with an approximate GFA of
200,000 square meters and an aggregate site area of approximately 100,566 square
meters.  Wuhan Pacific has obtained land use rights  certificates  in respect of
each of these six property development projects. In addition,  Wuhan Pacific has
not yet obtained land use rights certificates in respect of, but has interest in
and plans to develop a further five  projects in Wuhan City with an  approximate
GFA of 252,000 square meters and an aggregate site area of approximately  70,000
square meters. Since the relevant land use rights certificates have not yet been
issued or obtained,  no commercial  value has been assigned to any of these five
additional  projects or in the  calculation of their adjusted net tangible asset
value.

        Wuhan Pacific aims to further  solidify its position in Wuhan City,  and
also plans to expand its focus on property  business to Yi Chang.  Wuhan Pacific
also indicates that it will pursue quality business  opportunities in other fast
growing cities in China, if market conditions are appropriate.

        Wuhan  Pacific  was  organized  as a limited  liability  company  in The
People's  Republic of China ("PRC") on December 18, 1995. The primary purpose of
Wuhan  Pacific  was real estate  development  including  apartments,  retail and
commercial facilities,  and mixed use buildings.  The principal executive office
of Wuhan  Pacific  is  located at No. 250  Jianghan  Road,  32 Diamond  Mansion,
Jiang'an District, Wuhan City, Hubei Province in the PRC.
Property Development

        Wuhan Pacific is principally  engaged in the design and  construction of
luxury apartment  buildings and mixed use buildings in the City of Wuhan and the
City of Yi Chang in the  PRC.  The  apartments  are  primarily  held for sale to
middle income to upper level income customers.  Certain properties  developed by
Wuhan Pacific are mixed-use  properties  that also include retail and commercial
floors on the lower levels of the buildings.

Information Concerning Wuhan City

        Wuhan City,  located in inland  China,  has played an important  role of
connecting  the east with the west,  the south with the north in the PRC.  Wuhan
City, with an urban  population of  approximately 8 million,  ranks as the sixth
city among the top 25 cities in the PRC with favorable development potential. In
2001, the GDP of the city reached 134.8 billion Yuan (US$0.12 per one Yuan),  or
12% higher than 2000;  and the annual income of citizens of Wuhan City was 7,304
Yuan, or an increase of 8% over 2000.

        Located  at  the  middle  reaches  of  the  Yangtze  River,  Wuhan  is a
thoroughfare to nine provinces in the PRC. The Beijing-Guangzhou Railway and the
Yangtze  River  intersect  in  Wuhan  City.  The  Beijing-Kowloon   Railway  and
Wuhan-Guangzhou  Railway  also  connect  in the  city.  The  Beijing-Zhuhai  and
Shanghai-Chengdu  super  highway  also  cross  at Wuhan  City.  In  addition,  a
high-speed  railway  along  the  Yangtze  River  is  in  the  process  of  being
constructed. This high-speed road, railway and river transportation methods make
Wuhan a transportation hub.

        Wuhan is the largest  logistics and  commercial  center in inland China.
Commodities  can easily be  transported  to 5 provinces  around  Wuhan,  such as
Hunan,  Jiangxi,  Anhui, Henan and Sichuan,  which have a combined population of
nearly  400  million.   There  are   presently   more  than  10,000   commercial
organizations, 105,000 business branches, and 8 department stores in Wuhan City.

        As an important  industrial  base in China,  Wuhan City has a very solid
foundation in either high-tech industry or traditional manufacturing.  Along the
88  kilometer  ring  of the  city,  a  series  of  industrial  zones  have  been
established,  such as China Optical Valley, Sino-Citroen Automobile City, Taiwan
Business Zone and Yangluo  Development  Zone. With 33 different sectors and more
than 30,000 industrial  enterprises,  Wuhan City has businesses encompassing all
industries,  including  iron and steel,  automobile,  machinery,  petrochemical,
optical telecom,  Chinese and western medicine,  biology  engineering,  textile,
garment, food industry, etc.

        Wuhan City is a  technology  research  and  education  center,  with its
research and education capacity ranked third in the country,  behind Beijing and
Shanghai.  There are 35 universities in the city, serving  approximately 300,000
students.  There are 736 science  research  institutes  and 10 national  labs in
Wuhan City.

        In resent  years,  Wuhan  Municipal  Government  has focused on policies
favoring an open business  environment  and  environmental  renovation,  and the
investment environment of Wuhan City has been continuously improved. A series of
important   infrastructure   projects   have  been   finished,   such  as  Wuhan
International Airport,  Airport Super Highway, No. 1 Yangtze River Bridge, No. 3
Yangtze River Bridge,  an extensive  telephone  system,  a water plant,  a power
plant and a waist water treatment plant.

Market

        The  principal  market  of Town  House for its real  estate  development
activities has been in the City of Wuhan and Yi Chang in the PRC.

        The  City of  Wuhan  is an  ancient  city  and is the  capital  of Hubei
Province in central  China.  Wuhan is the sixth  largest  city in the PRC with a
population  of  approximately  8,000,000.  Wuhan is an important  transportation
center on the Jianhan Plain, sitting at the confluence of the Yangtze River, the
Hanjiang River,  and its longest branch - the Hansui River. The City of Wuhan is
comprised of three cities: Hanyang, Wuchang and Hankou.
Because of the  significant  economic  growth and development of central
China,  the  City  of  Wuhan  has  experienced   increasing  demand  for  luxury
residential properties and for retail and commercial space. The concept of mixed
use  buildings  with  retail and  commercial  space on the street  level and the
lowest  floors  with  luxury  apartment  units on the  higher  floors has become
increasingly  popular in the PRC. As a result,  recent building activity of Town
House has been designed with the mixed use concept as principal objective.

        Town  House  is  in  competition  with  other  real  estate  development
companies  in the City of  Wuhan,  some of which  are  larger  and have  greater
financial resources than Town House.

Government Regulation

        Wuhan  Pacific's  projects are subject to various laws and  governmental
regulations, such as zoning regulations, relating to its business operations and
project developments.  It must obtain and keep current various licenses, permits
and regulatory  approvals for its development  projects.  Wuhan Pacific believes
that it is in compliance with all laws, rules and regulations  applicable to its
projects  and that such laws,  rules and  regulations  do not  currently  have a
material impact on its operations.  Due to the increasing  levels of development
in the areas of China where it currently operates, it is possible that new laws,
rules  and/or  regulations  may be adopted  that could  affect  Wuhan  Pacific's
projects or proposed projects.  The enactment of such laws, rules or regulations
in  the  future  could  have  a  negative  impact  on its  projected  growth  or
profitability, which could decrease its projected revenues or increase its costs
of doing business.

Employees

        As of June 30, 2005,  Town House had  approximately  150  employees.  No
employee group is covered under a collective  bargaining  agreement.  Town House
and Wuhan Pacific believe their relationship with their employees is good.

Legal Proceedings

        Town House and its  subsidiaries  are not a party to, nor are any of our
respective  properties the subject of, any material pending legal or arbitration
proceedings.

Management of Town House

        Directors  and  Officers.   The  following   table  sets  forth  certain
information  regarding the executive  officers and directors of Town House.  All
officers serve at the pleasure of the Board of Directors.  Directors serve until
the election and qualification of their successors.

Name                        Age                Position
----                        ---                --------

Fang Zhong                   39         Chairman, Director, Chief Executive
                                        Officer and President

Lou Yun Fang                 46         Director, Executive Vice President-Chief
                                        Financial Officer and Treasurer

Fang Wei Feng                33         Director

Fang Wei Jun                 37         Director

Hu Min                       24         Director

        The following is information of the business experience of each director
and officer.

        Mr. Fang Zhong is the  founder  and has been the  Chairman of the Board,
Chief  Executive  Officer and President of Town House since its  organization in
2003. From 1995 to the present,  he has been the Chief  Executive  Officer and a
director of Wuhan Pacific which is the  principal  operating  subsidiary of Town
House.  Mr. Fang Zhong  received  Bachelor of Science  degree in industrial  and
domestic  architecture from the Wuhan Institute of Urban  Construction.  He also
participated in the MBA program at Northern Jiaotong University. He has received
various awards, including "Young Entrepreneur in Central-south Area" of the PRC,
and "One of Ten Excellent Young  Entrepreneurs  Leading  Private  Enterprises in
Wuhan".  He also  holds  various  significant  positions  such  as the  Standing
Director Hubei Physical Culture Foundation, Deputy to Jiang'an District People's
Congress,  a  Standing  Member  to  Jiang'an  District  Political   Consultative
Conference, and the Vice Chairman of Jiang'an District Young People Association,
etc.

        Mr. Luo Yun Fang became a director,  the Executive Vice  President-Chief
Financial  Officer and  Treasurer of Town House in 2003. He has been the general
manager of Wuhan  Pacific since 1998. He has more than 20 years of experience in
financial  and  administration  management.  He  received a Bachelor  of Science
degree in 1980 from the Hunan Financial  University,  and received an MBA degree
from Northern  Jiaotong  University  in 2001.  Mr. Luo Yun Fang also holds other
positions,  such as an editor of the Financial Periodical in the PRC; Consultant
and Standing  Director of Chinese  Finance and Tax  website;  member of standing
committee and member of executive  committee of Wuhan  Industrial and Commercial
Association and Wuhan General Commerce Association.

        Mr.  Fang Wei Feng has been  employed  as the  manager of the  materials
department and construction  operations  responsible for  construction  material
purchases  and  distribution,   since  1996.  He  became  a  director  and  Vice
President-Construction Operations of Town House in 2003.

        Mr. Fan Wei Jun has been  employed  as the  manager  of the  engineering
department  of Wuhan  Pacific,  since  2000.  He has been an  employee  of Wuhan
Pacific for over ten (10) years.  He became the General Manager of Operations of
Town House in 2003. He attended Zhengzhou College and graduated in 1985.

        Ms. Hu Min has been  employed  as the Human  Resources  Manager of Wuhan
Pacific since 2000. She graduated from Wuhan University in 2001.

        Mr. Fang Zhong is married to Ms. Hu Min. Fang Zhong,  Fang Wei Feng, and
Fang Wei Jun are siblings. Luo Yun Fang is a cousin to all of these siblings.

Item 7.01 Regulation FD Disclosure.

A press release dated  October 24, 2005,  discussing  the Agreement is furnished
herewith  as  Exhibit  99.10  and  is  incorporated  herein  by  reference.  The
information  contained in this Item 7.01, including the accompanying exhibit, is
being  furnished  and shall not be deemed  "filed" for purposes of Section 18 of
the Securities  Exchange Act of 1934, as amended  ("Exchange Act"), or otherwise
subject to the liability of that section. The information contained in this Item
7.01, including the accompanying exhibit, shall not be incorporated by reference
into any filing under the  Securities  Act of 1933, as amended,  or the Exchange
Act, whether made before or after the date hereof,  except as shall be expressly
set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.

        (a)     Financial statements of business acquired:

                The following  financial  statements are provided with this Form
                8-K current report:

                1. The audited  consolidated  financial statements of Town House
                Land Limited for its fiscal year ended December 31, 2004; and

                2. The unaudited consolidated financial statements of Town House
                Land Limited for the six months ended June 30, 2005.
TOWN HOUSE LAND LIMITED
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
TOWN HOUSE LAND LIMITED AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                           PAGE

               Independent Auditors' Report..............................      1
               Consolidated Balance Sheets,
                  December 31, 2004 and 2003.............................      2
               Consolidated Statements of Operations,
                  For the Years Ended December 31, 2004 and 2003.........      3
               Consolidated Statements of Members' Equity
                  For the Years Ended December 31, 2004 and 2003.........      4
               Consolidated Statements of Cash Flows
                  For the Years Ended December 31, 2004 and 2003......... 5 to 6
               Notes to the Consolidated Financial Statements............7 to 21
INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND MEMBERS OF
TOWN HOUSE LAND COMPANY LIMITED
(Incorporated in Hong Kong with limited liability)

We have audited the accompanying  consolidated balance sheets of Town House Land
Limited and  subsidiaries  (the  "Company") as of December 31, 2004 and 2003 and
the related consolidated statements of operations, statements of members' equity
and cash flows for the years then ended. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). The Company is not required to have,
nor were we engaged to perform,  an audit of its internal control over financial
reporting.  Our audit included  consideration of internal control over financial
reporting as a basis for designing audit  procedures that are appropriate in the
circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on the
effectiveness  of the  Company's  internal  control  over  financial  reporting.
Accordingly,  we express no such opinion.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Town House Land
Limited and  subsidiaries  as of  December  31, 2004 and 2003 and the results of
their  operations  and cash flows for the years then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

Oklahoma City, Oklahoma
May 11, 2005

                                       1
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)
2004         2003
                                                           -----------   -----------
ASSETS
 Current Assets:
  Cash and equivalents                                     $ 4,251,678   $ 1,159,310
  Restricted cash                                                   --       203,659
  Accounts receivable, net                                   1,013,244     3,251,307
  Properties held for resale                                 4,293,627     8,342,484
  Advances to suppliers                                         38,142       407,189
  Deferred offering costs                                           --       280,891
  Construction-in-progress - current                         6,161,736     2,311,819
                                                           -----------   -----------

    Total current assets                                    15,758,427    15,956,659
                                                           -----------   -----------

Property and Equipment - net of accumulated depreciation     2,950,831     1,057,200
                                                           -----------   -----------

Construction-in-Progress - non-current                         931,433       931,433
                                                           -----------   -----------

                                                           $19,640,691   $17,945,292
                                                           ===========   ===========

                        LIABILITIES AND MEMBERS' EQUITY

Current Liabilities:

  Accounts payable and accrued expenses                    $ 1,753,935   $   419,656
  Advances from buyers                                       1,230,058       728,391
  Amounts due to directors                                   2,077,849     2,709,075
  Enterprise taxes payable                                   1,843,334     1,006,201
  Other tax payables                                         1,342,573       400,441
  Short-term loans                                                  --       791,063
  Current portion of long-term debt                             66,033     2,253,201
                                                           -----------   -----------

    Total current liabilities                                8,313,782     8,308,028
                                                           -----------   -----------

Long-Term Debt - net of current portion shown                  816,509       906,686
                                                           -----------   -----------

Minority Interest                                              383,057       308,695
                                                           -----------   -----------

Members' Equity:
  Share capital                                                 62,180        62,180
  Additional paid-in capital                                 5,857,936     5,857,936
  Capital reserve                                            1,316,042       997,928
  Retained profit                                            2,891,185     1,503,839
                                                           -----------   -----------

    Total members' equity                                   10,127,343     8,421,883
                                                           -----------   -----------

                                                           $19,640,691   $17,945,292
                                                           ===========   ===========
The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       2
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)
2004            2003
                                                       ------------    ------------
Sales Revenues                                         $ 17,346,745    $  9,080,701

Cost of Properties Sold                                  11,315,090       5,319,978
                                                       ------------    ------------

Gross Profit                                              6,031,655       3,760,723
                                                       ------------    ------------

Selling General and Administrative Expenses:

  Selling expenses                                        1,381,007         439,006
  Depreciation expense                                       80,709          69,664
  General and administrative expenses                     1,701,640         101,308
                                                       ------------    ------------
                                                          3,163,356         609,978
                                                       ------------    ------------
Income from Operations                                    2,868,299       3,150,745
                                                       ------------    ------------

Other Income (expense)

   Other revenues                                            42,909          14,065
   Interest and finance costs                              (272,721)       (326,849)
                                                       ------------    ------------
                                                           (229,812)       (312,784)
                                                       ------------    ------------

Net Income before Income Taxes and Minority Interest      2,638,487       2,837,961
Provision for Income Taxes                                 (858,665)       (179,798)
                                                       ------------    ------------

Net Income before Minority Interest                       1,779,822       2,658,163
Minority Interest in Earnings                               (74,362)        (80,325)
                                                       ------------    ------------

Net Income                                             $  1,705,460    $  2,577,838
                                                       ============    ============
The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       3
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                            (Expressed in US dollars)
Total
                                                                                                               members'
                                                 Additional                                                   equity and
                                      Share       Paid-in       Capital       Retained          Minority       Minority
                                      capital     Capital       Reserve      Profit/(Loss)      Interest       Interest
                                    ---------  ------------  ------------   --------------   -------------  -------------
Balance at December 31, 2002       $  62,180  $  5,795,308  $    519,260   $    1,007,233   $     228,370  $   7,612,351
 Net income for the year
   ended December 31, 2003                 --            --            --        2,577,838          80,325      2,658,163

 Distribution to members                             62,628                     (1,602,564)                    (1,539,936)

 Transfer to capital reserve               --            --       478,668         (478,668)                             -
                                    ---------  ------------  ------------   --------------   -------------  -------------
                                       62,180                     997,928        1,503,839         308,695      8,730,578
 Balance at December 31, 2003                     5,857,936
 Net income for the year
   ended December 31, 2004                 --            --            --        1,705,460          74,362      1,779,822

 Transfer to capital reserve               --            --       318,114         (318,114)            --              --
                                    ---------  ------------  ------------   --------------   -------------  -------------
 Balance at December 31, 2004       $  62,180  $  5,857,936  $  1,316,042   $    2,891,185   $     383,057  $  10,510,400
                                    =========  ============  ============   ==============   =============  =============
The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       4
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                (Expressed in US dollars)
2004           2003
                                                                        -----------    -----------
Cash flows from operating activities

   Net income                                                           $ 1,705,460    $ 2,577,838
Adjustments to reconcile net profit to net cash provided
  by operating activities

  Depreciation                                                               80,709         69,664
  Minority interest in earnings                                              74,362         80,325

Changes in:

  Restricted cash                                                           203,659       (201,617)
  Accounts receivable, net and other receivables                          2,238,063     (2,798,591)
  Properties held for resale                                              4,048,857      4,331,189
  Advances to suppliers                                                     369,047       (407,189)
  Construction-in-progress                                               (3,849,917)      (678,556)
  Deferred offering cost                                                    280,891       (280,891)
  Accounts payable and other payables                                     1,334,279        303,955
  Amounts due to directors                                                 (631,226)     1,288,042
  Advances from buyers                                                      501,667     (1,116,625)
  Deferred tax expenses                                                     837,133        179,798
  Other tax payables                                                        942,132        253,058
                                                                        -----------    -----------

Net cash provided by operating activities                                 8,135,116      3,600,400
                                                                        -----------    -----------

Cash flows from investing activities

 Purchases of fixed assets                                               (1,974,340)        (9,331)
                                                                        -----------    -----------

Net cash (used in) investing activities                                  (1,974,340)        (9,331)
                                                                        -----------    -----------

Cash flows from financing activities
  Loan proceeds                                                              20,415      1,292,271
  Principal loans repayments                                             (3,088,823)    (2,484,096)
  Member capital contributions                                                   --         62,628
  Distribution to members                                                        --     (1,602,564)
                                                                        -----------    -----------

Net cash (used in) financing activities                                  (3,068,408)    (2,731,761)
                                                                        -----------    -----------

Net increase in cash                                                      3,092,368        859,308
Cash at beginning of year                                                 1,159,310        300,002
                                                                        -----------    -----------

Cash at end of year                                                     $ 4,251,678    $ 1,159,310
                                                                        ===========    ===========
The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       5
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

            Supplemental Disclosure of Consolidated Statement of Cash Flows
                              Year ended December 31, 2004
                               (Expressed in US dollars)

                                                         2004             2003
                                                       --------         --------

Supplemental Disclosure of Cash Flow information

Interest paid                                          $246,107         $395,134
                                                       ========         ========
Enterprise income taxes paid                           $ 21,522         $633,656
                                                       ========         ========

Supplemental disclosure of non-cash investing and financing activities:

During the year ended December 31, 2004, the Company transferred car park spaces
in Diamond Mansion Phase 2, at cost of $1,420,080 from  construction-in-progress
to fixed assets.

During the year ended December 31, 2003, the Company  transferred  two floors of
the  commercial  complex  in  Diamond  Mansion  Phase 1, at a net book  value of
$1,929,295 from property and equipment to properties held for resale.

During 2003, the Members of 97% of the registered  capital of Wuhan  transferred
their  interests  to Town House Land  Limited  ("Town  House") in a  transaction
treated as a recapitalization of Wuhan. In connection with that acquisition, the
former Wuhan members,  who became members in Town House, were to receive cash of
$1,602,564,  $62,628 of which was used to repay  balances due from  directors by
Town House prior to the  acquisition  and the balance was treated as an increase
in payables to directors at December 31, 2003.

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

                                       6
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS

      Organizational Structure

      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 lease 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 is 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").

      At December 31, 2004 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".

      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.

      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.

                                       7
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS - Continued

      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.

      The Company's principal activity is the development and sale of commercial
      and residential real estate. The Company's principal country of operations
      is The People's Republic of China ("PRC").

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant accounting policies:

      Consolidation  Policy - The consolidated  financial statements include the
      accounts of Town House and Wuhan Town House from  August 15, 2003  forward
      and Town House Land  (Miami)  Corporation  and Town House Land (USA) Inc.,
      since  their  incorporation.  Prior to  August  15,  2003,  the  financial
      statements  reflect the  activity of Wuhan Town House as adjusted  for the
      effects of the recapitalization of August 15, 2003.

      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.

      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,  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.

      Capital  Reserve -  Capital  reserve  represents  that  amount of  reserve
      appropriated  from the net  distributable  profit after income tax in each
      year when a net profit after  operations is generated.  In accordance with
      the provisions of the Company's  Memorandum  and Articles of  Association,
      the Company is required to appropriate 15% of the net distributable profit
      after enterprises income tax to capital reserve.

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

                                       8
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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 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.

      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 years ended December 31, 2004 and 2003.

      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 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.  As of December 31, 2004,  one
      construction  project is reflected as long-term as further development has
      ceased until such time as new access roads are completed by the Wuhan City
      Government.  Management  anticipates  these roads will be completed in the
      second  half of 2005 at which  time  construction  should  resume  on this
      project.

      Related  Companies - A related  company is a company in which the 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  $1,128,870  and $403,922 for the years ended December 31, 2004
      and 2003, respectively.

                                       9
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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. There were no material  translation gains or losses during
      the years ended December 31, 2004 and 2003 as the Renminbi was tied to the
      U.S. Dollar during the time period covered in these financial statements.

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

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

      Enterprise income tax

      Under  the  Provisional  Regulations  of The  People's  Republic  of China
      Concerning Income Tax on Enterprises  promulgated by the State Council and
      which  came into  effect on  January  1,  1994,  income  tax is payable by
      enterprises  at a rate of 33% of their taxable  income.  Preferential  tax
      treatment may, however, be granted pursuant to any law or regulations from
      time to time promulgated by the State Council. For the year ended December
      31,  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.

      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.

      For the years ended December 31, 2004 and 2003, the Company's pension cost
      charged to the statements of operations  under the plan amounted to $5,974
      and $1,814, 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  December  31,  2004  because  of the  relatively  short-term
      maturity of these instruments.

                                       10
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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

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

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

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

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

      The  grant-date  for fair value of  employee  share  options  and  similar
      instruments will be estimated using option-pricing models adjusted for the
      unique characteristics of these instruments.

                                       11
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      The statement is effective for the quarter beginning January 1, 2006.

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

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

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      Substantially  all of the Company's  bank accounts are in banks located in
      the People's  Republic of China ("PRC") and are not covered by any type of
      protection  similar  to that  provided  by the FDIC on  funds  held in U.S
      banks.

      Substantially all of the Company's operations are in the PRC.

      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 $1,064,981 and $2,054,320
      as of December 31, 2004 and 2003,  respectively,  were  collateralized  by
      real estate.

4.    CASH AND EQUIVALENTS

      As of December 31, 2004 and 2003,  the Company had the following  cash and
      cash equivalents:

                                                     December 31,
                                              --------------------------
                                                 2004            2003
                                              ----------      ----------
      Restricted cash:

           Pledged deposits                   $       --      $  203,659
                                              ==========      ==========

        Cash and equivalents:
           Cash on hand                       $   44,492      $    2,922
           Banks deposits                      4,207,186       1,156,388
                                              ----------      ----------

                                              $4,251,678      $1,159,310
                                              ==========      ==========

      The pledged bank deposits, which were restricted, carried interest ranging
      from  0.6% to  0.825%  per  month  and in  accordance  with the  terms and
      conditions  of the  banking  facilities  agreed  with a  bank  to  provide
      mortgage  loan  facilities  to  buyers  of  properties  developed  by  the
      subsidiary,  Wuhan Pacific,  which agreed to place guarantee fund deposits
      of not less than 18% of the total  outstanding  mortgage loans extended to
      properties buyers and to guarantee the repayments of the mortgage loans.

                                       12
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

4.    CASH AND CASH EQUIVALENTS, Continued

      The guarantee  fund shall be restricted  while the mortgage loans extended
      to properties buyers shall remain outstanding

5.    ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

      Accounts  receivable and other receivables  consist of the following as of
      December 31, 2004 and 2003:
December 31,
                                                                  -----------------------
                                                                     2004         2003
                                                                  ----------   ----------
Accounts receivable                                       $1,180,573   $3,195,074
        Less: Provision for doubtful debts                           455,593           --
                                                                  ----------   ----------

        Accounts receivable net of provision for doubtful debts      724,980    3,195,074
                                                                  ----------   ----------

        Other receivables:
           Staff advances                                             48,066        4,590
           Utilities and other deposits                              159,729       15,097
           Others                                                     80,469       36,546
                                                                  ----------   ----------

        Other receivables                                            288,264       56,233
                                                                  ----------   ----------

                                                                  $1,013,244   $3,251,307
                                                                  ==========   ==========
6.    PROPERTIES HELD FOR RESALE

      As of December 31, 2004 and 2003, the Company had the following properties
      held for resale:

                                                        December 31,
                                                 -----------------------
                                                     2004        2003
                                                 ----------   ----------

        Properties held for resale               $4,293,626   $8,205,945
        Repossessed properties held for resale           --      136,539
                                                 ----------   ----------

                                                 $4,293,626   $8,342,484
                                                 ==========   ==========

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

                                                       December 31,
                                                 -----------------------
                                                     2004        2003
                                                 ----------   ----------

        General Garden                           $   13,006   $1,959,277
        Garden of Eden                                   --      183,395
        Diamond Mansion Phase I Residential          27,708    1,124,313
        Diamond Mansion Phase I Commercial        3,592,628    4,466,830
        Diamond Mansion Phase 2                     445,246           --
        Gutian Apartments                           215,039      608,669
                                                 ----------   ----------

        Total                                    $4,293,627   $8,342,484
                                                 ==========   ==========

                                       13
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

6.    PROPERTIES HELD FOR RESALE, Continued

      As of December 31, 2004 and 2003, the carrying values of inventories of $0
      and  $2,775,494,  respectively,  have been pledged as  securities  for the
      Company's long-term bank loans.

7.    PROPERTIES AND EQUIPMENT

      Properties and equipment, stated at cost less accumulated depreciation and
      amortization, consist of:
December 31,
                                                          --------------------------
                                                              2004           2003
                                                          -----------    -----------
Land use rights and buildings                     $ 2,495,038    $ 1,074,957
        Plant and machineries                                  29,590          1,981
        Motor vehicles                                        535,116         94,769
        Office equipment                                      172,068         87,695
                                                          -----------    -----------

                                                            3,231,812      1,259,402
        Less: Accumulated depreciation and amortization      (280,981)      (202,202)
                                                          -----------    -----------

                                                          $ 2,950,831    $ 1,057,200
                                                          ===========    ===========
During 2004 and 2003, properties totaling $1,420,080 and $0, respectively,
      were transferred from  construction-in-progress to property and equipment.
      During the years ended December 31, 2004 and 2003,  properties totaling $0
      and  $1,929,295,  net  of  accumulated  depreciation  of $0  and  $94,149,
      respectively,  were  transferred from property and equipment to properties
      held for resale.

8.    CONSTRUCTION-IN-PROGRESS

      Construction-in-progress   represents   two   combined   residential   and
      commercial  project.  Construction-in-progress  represents the cost of the
      land use  rights,  capitalized  interest  expenses,  related  pre-approval
      capital  expenditures  and government  approval fees. A breakdown on these
      costs by project is as follows:

                                                             December 31,
                                                       -----------------------
                                                          2004         2003
                                                       ----------   ----------
        Current

        Diamond Mansion Phase II Commercial Project    $       --   $2,311,819
        Diamond Mansion Phase II - Additional floors       24,123           --
        Sanyang Apartments                              2,953,576           --
        YiChang Town House Plaza                        3,184,037           --
                                                       ----------   ----------

                                                        6,161,736    2,311,819
                                                       ----------   ----------

        Non-Current
        Jing Qi Project                                   931,433      931,433
                                                       ----------   ----------

                                                       $7,093,169   $3,243,251
                                                       ==========   ==========

                                       14
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

8.    CONSTRUCTION-IN-PROGRESS, Continued

      Official  approval for the  construction  of Diamond  Mansion Phase II was
      received in 2003 and the  construction  was  completed in September  2004,
      while  the   construction  of  the  Jing  Qi  Project  was   strategically
      temporarily  suspended until the completion of the  construction of a main
      road near the site of the  project  by the Wuhan  City  Government.  As at
      December 16, 2004,  construction  to the road is still  incomplete and the
      Jing Qi Project has been further postponed.

      The Company had already  completed one half of the  construction  works of
      Town  House  Plaza   (formerly   Sanyang   Apartments)  and  expected  the
      construction  will be completed  by the end of 2005.  The Company had also
      already  started  the  foundation  work of Yi Chang  Project.  The capital
      expenditures in respect of the Yi Chang Project  comprised land use rights
      of  $1,660,628   and  purchases  of   construction   materials  and  other
      expenditures  totaling $92,219 as of December 31, 2004.  Several approvals
      for  construction  works  are  still  pending  from  relevant   government
      departments and the processes usually take time.

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 at 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.

10.   TRANSACTIONS WITH RELATED PARTIES

      Amounts  due  from/(to)  directors  at  December  31, 2004 and 2003 are as
      follows:
December 31
      Name                            ----------------------------      Maximum Outstanding     Security
                                          2004            2003          Balance During Year       Held
                                      -------------   ------------      -------------------     --------
Fang Zhong (Director)           $ (2,022,604)    $(2,399,320)          $(2,399,321)         none
      Hu Min (Director)                      5,970         (41,667)                5,970          none
      Luo Yun Fang (Director)               17,409         (46,108)               17,409          none
      Fang Wei Jun (Director)                 (440)        (48,077)              (48,077)         none
      Fang Hui (Deceased)                     (440)        (48,077)              (48,077)         none
      Fang Wei Feng (Director)             (77,744)       (125,826)             (125,826)         none
                                      -------------   ------------

                                      $ (2,077,849)   $ (2,709,075)
                                      =============   =============
The amounts due are unsecured,  interest free and have no fixed  repayment
      terms.

                                       15
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

11.  OTHER TAXES PAYABLE

      Other tax payables consist of the following:

                                                      December 31,
                                               -------------------------
                                                  2004           2003
                                               ----------     ----------

        City construction tax                  $   79,012     $   17,748
        Business tax                            1,137,910        336,985
        Food price balancing tax                   22,609          9,666
        Education surcharge                        33,552          7,296
        Flood control tax                          21,751          4,990
        Education development tax                  21,225          9,766
        Other taxes                                26,514         13,990
                                               ----------     ----------

                                               $1,342,573     $  400,441
                                               ==========     ==========

12.   SHORT-TERM LOANS

      The Company had the following short-term loans at December 31, 2004 and
      2003:

                                                     December 31,
                                              --------------------------
                                                2004              2003
                                              --------          --------

        Secured                               $     --          $428,744
        Unsecured                                   --           362,319
                                              --------          --------

                                              $     --          $791,063
                                              ========          ========

      Other  short-term loan of $428,744 was secured by the Yi Chang project and
      was fully paid as of December 31, 2004.

      Other  short-term loan was unsecured,  carried interest at 5.04% per annum
      and was  repayable  within three months if the lender was not appointed as
      the main contractor to the Yi Chang Project.  As a  pre-condition  for the
      unsecured short-term loan of $362,319,  at December 31, 2003, a subsidiary
      company,  Wuhan  Town  House,  had  agreed to  appoint  the lender as main
      contractor  to Yi Chang  construction  project  and should the  subsidiary
      company  fails to appoint the lender as main  contractor,  the  subsidiary
      company had agreed to make a penalty payment of $36,232 to the lender. The
      lender was appointed as the main contractor to the Yi Chang Project.

                                       16
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.   LONG-TERM DEBT

      The  Company had the  following  long-term  debt at December  31, 2004 and
      2003:
December 31, 2004                  December 31, 2003
                                                    ------------------------           ------------------------
                                                    Current        Long-term           Current        Long-term
                                                    -------        ---------           -------        ---------
6.534% note payable to a bank,
      interest payable quarterly with
      principal due September 2004, secured
      by Diamond Mansion Phase I                  $       --     $         --    $    1,207,729    $          --

      6.534% note payable to a bank,
      interest payable quarterly with
      principal due December 2004, secured
      by Diamond Mansion Phase I                          --               --           966,184               --

      6.03% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        2,304            3,992             2,083            6,377

      7.2% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        3,432            4,683             5,133            8,322

      7.2% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2014, secured by property                        1,335           15,070             1,578           16,247

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2007, secured by property                        1,658            2,066             1,510            3,851
17
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.   LONG-TERM DEBT, Continued
December 31, 2004                 December 31, 2003
                                                     ------------------------          ------------------------
                                                     Current        Long-term          Current        Long-term
                                                     -------        ---------          -------        ---------
5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2010, secured by property                        2,149            6,093            2,838           12,301

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2010, secured by property                          933            5,265              795            6,283

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2011, secured by property                          916            6,553              990            7,353

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2012, secured by property                           --               --            3,417           24,842

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2015, secured by property                        1,497           19,166            1,645           20,469

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2016, secured by property                        1,625           22,668            2,013           23,816

      5.58% notes payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2020, secured by property                        2,565           58,609            3,599           60,104

      5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates through
      2025, secured by property                          903           33,375            1,498           33,675
18
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.  LONG-TERM DEBT, Continued
December 31, 2004                   December 31, 2003
                                                       -------------------------            -----------------------
                                                       Current         Long-term            Current       Long-term
                                                       -------         ---------            -------       ---------
5.58% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2030, secured by property                     --                --               523          14,225

      4.65% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2026, secured by property                  1,189            40,240             1,836          40,668

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2012, secured by property                  3,517            27,520             7,488          47,271

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2013, secured by property                  8,922            76,441            10,266          83,545

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2018, secured by property                 15,339           264,482            18,368         274,007

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2022, secured by property                  5,047           134,083             7,609         136,453

      5.04% note payable to a bank, monthly
      installments of principal and
      interest, due on various dates
      through 2023, secured by property                  3,006            82,098             4,589          83,374
19
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

13.  LONG-TERM DEBT, Continued
December 31, 2004                 December 31, 2003
                                                 ------------------------------    ------------------------------
                                                    Current         Long-term         Current         Long-term
                                                 ------------    --------------    --------------    ------------
7.65% note payable to a bank, monthly
     installments of principal and
     interest, due on various dates
     through 2006, secured by property                  1,845             1,541             1,510           3,502

     Hire purchase                                      7,851            12,564                 -               -
                                                 ------------    --------------    --------------    ------------

                                                 $     66,033    $      816,509    $    2,253,201    $    906,686
                                                 ============    ==============    ==============    ============
As of December 31, 2004 and 2003, bank loans are secured by a legal charge
      over the  Wuhan  Town  House's  land use  rights  and  buildings  totaling
      $509,401 and  $522,463,  respectively,  and stock of  properties  held for
      resale of $0 and $2,775,494, respectively. According to the land use right
      certificates, the security was discharged / released on November 20, 2003.

      During the year ended December 31, 2003, the 2nd and 3rd Floors of Diamond
      Mansion  Phase I were  pledged  in respect  of a  short-term  bank loan of
      $2,415,459  (Rmb.20,000,000),  and which loan was  repaid  before the year
      then ended. According to the land use right certificates, the security was
      discharged / released on February 4, 2004.

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

                                                                 Amount
                                                                --------
        2005                                                    $ 66,033
        2006                                                      14,105
        2007                                                      10,741
        2008                                                       6,093
        2009                                                          --
        Thereafter                                               785,570
                                                                --------
                                                                $882,542
                                                                ========

14.   CAPITAL

                                                        December 31,
                                                   --------------------
                                                     2004        2003
                                                   --------    --------
      Authorized, issued and outstanding:

        500,000 ordinary share at HK$1.00 each     $ 64,103    $ 64,103
        Less minority interest                       (1,923)     (1,923)
                                                   --------    --------

                                                   $ 62,180    $ 62,180
                                                   ========    ========

      Town House Land Limited  (formerly  Hong Kong Window of the World  Apparel
      Co., Limited) (the "Company") was registered as in Hong Kong, as a limited
      liability company on August 13, 2001 with a registered  capital of $64,103
      (HK $500,000).

                                       20
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                            (Expressed in US dollars)

14.   CAPITAL, Continued

      Based on the Certificate of  Incorporation  on Change of Name dated August
      3, 2003, the Company  changed its name from `Hong Kong Window of the World
      Apparel Co., Limited' to `Town House Land Limited'.

15.   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 year  ended  December  31,  2004 and 2003,  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:
December 31,
                                                             -----------------------
                                                                2004         2003
                                                             ----------   ----------
Computed at the statutory rate                       $1,119,877   $  936,527
        Tax effect of special tax rate granted during 2004      156,445     (756,729)
                                                             ----------   ----------

        Tax at effective rate                                $  963,432   $  179,798
                                                             ==========   ==========
16.   COMMITMENTS

      As of December 31, 2004 and 2003, the Company had contractual  commitments
      of  the  construction   projects   totaling   $3,588,183  and  $1,660,721,
      respectively,  and commitments for rental,  capital  expenditures for land
      use rights, plant and machineries totaling $3,943 and $0, respectively.

      During the year ended  December  31, 2004,  the Company is leasing  office
      space was set up for  salesmen to meet  customers in Shanghai and Wenzhou.
      The Company had  commitments  to make  payments for leasing of this office
      totaling $38,275 through December 31, 2005.

                                       21
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)

                                     ASSETS

Current assets:
     Cash and equivalents                                            $ 5,105,515
     Accounts receivable, net                                          1,289,932
     Properties held for sale                                          5,837,017
     Prepaid and other assets                                            695,399
     Construction-in-progress - current                                  107,285
                                                                     -----------

              Total current assets                                    13,035,148

Land held for development                                              4,767,303
Property and equipment-net of accumulated depreciation of $355,696     2,912,585
Construction-in-progress - non-current                                 5,188,061
                                                                     -----------

Total assets                                                         $25,903,097
                                                                     ===========

                         LIABILITIES AND MEMBERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses                           $ 2,303,525
     Advances from buyers                                                872,257
     Amounts due to directors, net                                     1,726,316
     Enterprise taxes payable                                          1,068,215
     Other taxes payable                                               1,450,368
     Short-term loans                                                  3,822,345
     Current portion of long-term debt                                     7,851
                                                                     -----------

Total current liabilities                                             11,250,877
                                                                     -----------

Long term debt, net of current portion shown                           3,389,894
                                                                     -----------

Minority interest                                                        476,896
                                                                     -----------

Stockholders' equity:
     Share capital                                                        64,103
     Additional paid-in capital                                        5,857,936
     Capital reserve                                                   1,316,042
     Retained earnings                                                 3,547,349
                                                                     -----------

Total members' equity                                                 10,785,430
                                                                     -----------

Total liabilities and members' equity                                $25,903,097
                                                                     ===========

                 See accompanying notes to financial statements.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)
Six Months Ended
                                                                       June 30,
                                                              --------------------------
                                                                  2005           2004
                                                              -----------    -----------
Sales Revenues                                                $ 5,193,341    $ 4,157,687
Cost of Properties Sold                                         4,134,499      1,999,155
                                                              -----------    -----------

     Gross profit                                               1,058,842      2,158,532
                                                              -----------    -----------

Selling, General and Administrative Expenses:
     Selling expenses                                             348,989        298,147
     General and administrative expenses                          567,800        317,006
     Depreciation                                                  74,714         28,201
                                                              -----------    -----------

     Total expenses                                               991,503        643,354
                                                              -----------    -----------

     Income from operations                                        67,339      1,515,178
                                                              -----------    -----------

Other income (expense)
     Other revenues                                                33,987         (5,614)
     Interest and finance costs                                  (116,348)       (18,275)
                                                              -----------    -----------

     Total other income (expense)                                 (82,361)       (23,889)
                                                              -----------    -----------

Net Income (Loss) before Income Taxes and Minority Interest       (15,022)     1,491,289
(Provision for) Benefit from Income Taxes                         697,046       (208,087)
                                                              -----------    -----------

Net Income before Minority Interest                               682,024      1,283,202
Minority Interest in Earnings                                     (25,861)       (39,861)
                                                              -----------    -----------

Net Income                                                    $   656,163    $ 1,243,341
                                                              ===========    ===========

Weighted average basic and diluted shares outstanding             500,000        500,000
                                                              ===========    ===========

Basic and diluted net income per common share                 $      1.31    $      2.49
                                                              ===========    ===========
See accompanying notes to financial statements.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)
Six Months Ended
                                                                                   June 30,
                                                                          --------------------------
                                                                              2005          2004
                                                                          -----------    -----------
Cash flows from operating activities:
Net income                                                                $   656,163    $ 1,243,341
Adjustments to reconcile net income to cash flows provided
     by operating activities
      Depreciation                                                             74,714         30,003
      Minority interest in earnings                                            25,861         39,861

Changes in assets and liabilites:
(Increase) decrease in -

      Restricted cash                                                              --       (403,041)
      Accounts receivable, net and other receivables                         (436,417)       997,296
      Properties held for resale                                           (1,543,391)     1,591,033
      Prepaid and other assets                                               (497,526)          (650)
      Construction-in-progress                                              1,797,823     (3,395,769)
      Accounts payable and other payables                                     549,590       (129,343)
      Advances from buyers                                                   (357,801)     2,425,880
      Deferred tax expenses                                                  (775,119)       220,329
      Other taxes payable                                                     107,795         64,534
                                                                          -----------    -----------

Net cash provided by (used in) operating activities                          (398,308)     2,683,474
                                                                          -----------    -----------

Cash flows from investing activities:
      Purchase of land held for development                                (4,767,303)            --
      Purchase/(transfer) of fixed assets                                     (36,468)      (233,324)
                                                                          -----------    -----------

Net cash provided by (used in) investing activities                        (4,803,771)      (233,324)
                                                                          -----------    -----------

Cash flows from financing activities:
      Minority interest in capital contributions                               69,901             --
      Amounts due to directors                                               (351,533)      (775,525)
      Loan proceeds                                                         6,427,793             --
      Principle loan repayments                                               (90,245)      (615,887)
                                                                          -----------    -----------

Net cash provided by (used in) financing activities                         6,055,916     (1,391,412)
                                                                          -----------    -----------

Net increase (decrease) in cash and cash equivalents                          853,837      1,058,738

Cash and cash equivalents, beginning of period                              4,251,678      1,159,310
                                                                          -----------    -----------

Cash and cash equivalents, end of period                                  $ 5,105,515    $ 2,218,048
                                                                          ===========    ===========

Supplemental disclosures of cash flow information:
      Interest paid, net of capitalized amounts                           $   395,134    $   151,125
                                                                          ===========    ===========

      Enterprise income taxes paid                                        $        --    $        --
                                                                          ===========    ===========
Supplemental disclosure of non-cash investing and financing activities:

      During the six months  ended June 30,  2005,  the  Company  exchanged  two
      residential units of Diamond Mansion for advertising valued at $122,322.

      During  the six  months  ended  June 30,  2005,  the  Company  transferred
      $4,210,681  of  construction  expenditures  for the YiChang  Project  from
      current construction-in-progress to noncurrent construction-in-progress.

                 See accompanying notes to financial statements.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

1.    DESCRIPTION OF BUSINESS

      Organizational Structure

      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 than 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").

      At December  31, 2004 and June 30,  2005,  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".

      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.

      The Company's principal activity is the development and sale of commercial
      and residential real estate.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The following is a summary of significant accounting policies:

      Consolidation  Policy - The consolidated  financial statements include the
      accounts of Town House and Wuhan Town House from  August 15, 2003  forward
      and Town House Land  (Miami)  Corporation  and Town House Land (USA) Inc.,
      since  their  incorporation.  Prior to  August  15,  2003,  the  financial
      statements  reflect the  activity of Wuhan Town House as adjusted  for the
      effects of the recapitalization of August 15, 2003.

      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 a 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.

      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,  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.

      Capital  Reserve -  Capital  reserve  represents  that  amount of  reserve
      appropriated  from the net  distributable  profit after income tax in each
      year when a net profit after  operations is generated.  In accordance with
      the provisions of the Company's  Memorandum  and Articles of  Association,
      the Company is required to appropriate a portion of the net  distributable
      profit  after  enterprises  income  tax to  capital  reserve.  The  amount
      appropriated is determined on an annual basis by the Board of Directors.

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

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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 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.

      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 years ended December 31, 2004 and 2003,
      or the six months ended June 30, 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 cost,  development
      expenditure,  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.  As of June  30,  2005,  two
      construction  projects are reflected as long-term as  construction on both
      projects has been delayed.

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

      Revenue  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  $296,663  and  $210,189 for the six months ended June 30, 2005
      and 2004, respectively.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

      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. There were no material  translation gains or losses during
      the years  ended June 30,  2005 and 2004 as the  Renminbi  was tied to the
      U.S. Dollar during the time period covered in these financial statements.

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

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

      Enterprise Income Tax - Under the Provisional  Regulations of The People's
      Republic of China Concerning Income Tax on Enterprises  promulgated by the
      State Council and which came into effect on January 1, 1994, income tax is
      payable  by  enterprises  at a  rate  of  33%  of  their  taxable  income.
      Preferential tax treatment may, however, be granted pursuant to any law or
      regulations  from time to time  promulgated by the State Council.  For the
      year ended  December 31, 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.

      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.

      For the six months  ended June 30, 2005 and 2004,  the  Company's  pension
      cost charged to the  statements of  operations  under the plan amounted to
      $4,818 and $3,171, 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  December  31,  2004  because  of the  relatively  short-term
      maturity of these instruments.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

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

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

      The  grant-date  for fair value of  employee  share  options  and  similar
      instruments will be estimated using option-pricing models adjusted for the
      unique characteristics of these instruments.

      The statement is effective for the quarter beginning January 1, 2006.

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

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

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK

      Significant amounts of the Company's bank accounts are in banks located in
      the People's  Republic of China ("PRC") and are not covered by any type of
      protection  similar  to that  provided  by the FDIC on  funds  held in U.S
      banks.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

3.    CONCENTRATIONS OF BUSINESS AND CREDIT RISK - Continued

      The  Company  has  real  estate  in the PRC and in the  United  States  of
      America.  Through June 30, 2005,  the Company had  generated no income and
      very  few  expenses  associated  with  its U.S.  real  estate  development
      activities.

      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 $1,333,978 and $2,055,902
      as of June 30, 2005 and 2004,  respectively,  were  collateralized by real
      estate.

4.    ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

      Accounts  receivable and other receivables  consist of the following as of
      June 30, 2005:

      Accounts receivable                        $ 1,333,978
      Less: Provision for doubtful debts            (455,592)
                                                 -----------

      Accounts receivable net of provision for
        doubtful debts                               878,386
                                                 -----------

      Other receivables:
        Staff advances                               135,569
        Loans to third parties                       120,419
        Others                                       155,558
                                                 -----------
                                                 $ 1,289,932
                                                 ===========

5.    PROPERTIES HELD FOR SALE

      As of June 30, 2005,  the Company had the  following  properties  held for
      sale:

      Properties held for sale                 $5,837,017
      Repossessed properties held for resale           --
                                               ----------
                                               $5,837,017
                                               ==========

      As of June 30, 2005,  the carrying value of inventory of $636,721 has been
      pledged as collateral on a short-term bank loan.

6.    LAND HELD FOR DEVELOPMENT

      At June 30, 2005, the Company held three parcels of land for  development,
      as follows:

      Las Vegas, Nevada         $1,156,348
      Chino Hills, California    2,007,111
      Fontana, California        1,603,844
                                ----------
                                $4,767,303
                                ==========
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

7.    PROPERTIES AND EQUIPMENT

      Properties and equipment, stated at cost less accumulated depreciation and
      amortization, consist of the following at June 30, 2005:

      Land use rights and buildings        $ 2,502,964
      Plant and machineries                     29,590
      Motor vehicles                           561,113
      Office equipment                         174,614
                                           -----------
      Less: Accumulated depreciation and     3,268,281
        amortization                          (355,696)
                                           -----------
                                           $ 2,912,585
                                           ===========

      At June 30, 2005,  fixed assets with a carrying  value of $1,603,844  were
      pledged as collateral to a bank with respect to an outstanding loan.

8.    CONSTRUCTION-IN-PROGRESS

      Construction-in-progress   represents   three  combined   residential  and
      commercial projects.  Construction-in-progress  represents the cost of the
      land use  rights,  capitalized  interest  expenses,  related  pre-approval
      capital  expenditures  and government  approval fees. A breakdown on these
      costs by project is as follows:

      Current
      Diamond Mansion Phase 2   $  107,285
                                ==========

      Non-Current
      Yi Chang Project           4,256,628
      Jing Qi Project              931,433
                                ----------

                                $5,188,061
                                ==========

      Due to a change in business strategy,  construction costs of $4,256,628 on
      the     YiChang     project     was     transferred     to     non-current
      construction-in-progress   in  2005,  with  construction  expected  to  be
      completed by the end of 2006.

      Construction of the Jing Qi Project has been  temporarily  suspended until
      the  completion  of the  construction  of a main road near the site of the
      project by the Wuhan City Government. As of June 30, 2005, construction to
      the road is still  incomplete and,  although the Company  anticipates that
      the road will be completed by the end of 2005, re-start of construction on
      Jing Qi  remains  uncertain  due to  circumstances  beyond  control of the
      Company.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

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  sheet  date.  The
      deposits  from such  property  buyers  for  residential  properties  to be
      transferred  in the  subsequent  years are  carried  forward  as  deferred
      revenue.

10.   TRANSACTIONS WITH RELATED PARTIES

      Net amounts due from/ (to) directors at June 30, 2005, are as follows:

      Name                       June 30, 2005
      ------------------------   -------------
      Fang Zhong (Director)        $(1,671,077)
      Hu Min (Director)                  5,970
      Luo Yun Fang (Director)           17,409
      Fang Wei Jun (Director)             (440)
      Fang Hui (Deceased)                 (440)
      Fang Wei Feng (Director)         (77,744)
                                 -------------
                                   $(1,726,316)
                                 =============

      The amounts due are unsecured,  interest free and have no fixed  repayment
      terms.

11.   SHORT-TERM LOANS

      The Company had the following short-term loans at June 30, 2005:

                                                                      Amount
                                                                    ----------
      Secured:
      Wuhan Town House short-term bank loan, partially secured by
      residential units of Town House Plaza (39 units valued at
      $636,721 at June 30, 2005), interest at 120% of the Chinese
      national rate paid periodically, principle due on February
      1, 2006                                                       $1,570,048

      Wuhan Town House short-term bank loan, secured by corporate
      guarantee, interest at 6.696% paid periodically, principle
      due on December 31, 2005                                         792,297

      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% (7.0% at June 30, 2005) paid
      periodically, principle due on May 1, 2006                       760,000

      Town House Land short-term loan from a financial
      institution, secured by 433,000 shares of Town House Land
      stock issued to a director, interest at 20% paid
      periodically, principle due on October 25, 2005                  700,000
                                                                    ----------
                                                                    $3,822,345
                                                                    ==========
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

12.   LONG-TERM DEBT

      The Company had the following long-term debt at June 30, 2005:

                                                  Current     Long-term
                                                 ----------   ----------
      Note payable to a bank for construction
      development, interest at 115% of the
      Chinese national rate paid monthly,
      principle due December 20, 2006, secured
      by Yi Chang construction-in-progress       $       --   $3,381,643

      Hire purchase                                   7,851        8,251
                                                 ----------   ----------

                                                 $    7,851   $3,389,894
                                                 ==========   ==========

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

                     Amount
                   ----------
      2006         $3,389,894
      2007                 --
      2008                 --
      2009                 --
      2010                 --
      Thereafter           --
                   ----------
                   $3,389,894
                   ==========

13.   CAPITAL

      Authorized, issued and outstanding:

        500,000 ordinary share at $.12 (HK$1.00) each   $64,103
                                                        =======

      Town House Land Limited  (formerly  Hong Kong Window of the World  Apparel
      Co.,  Limited) (the  "Company")  was registered in Hong Kong, as a limited
      liability company on August 13, 2001 with a registered  capital of $64,103
      (HK $500,000).

      Based on the Certificate of  Incorporation  on Change of Name dated August
      3, 2003, the Company  changed its name from "Hong Kong Window of the World
      Apparel Co., Limited" to "Town House Land Limited".

14.   INCOME TAX

      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. For
      the six month periods  ended June 30, 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.
TOWN HOUSE LAND LIMITED AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                            (Expressed in US dollars)

15.   COMMITMENTS

                                                        As of Jun 30, 05
                                                        ----------------
      Capital Commitments (Wuhan Town House):
        Estimated (Fifth floor - Diamond Mansion II)    $        371,000
        Contracted and authorized  (Jing Qi Project)              42,880
        Contracted and authorized  (Yichang Project)             543,000
                                                        ----------------

                                                        $        956,880
                                                        ================

      Operating Commitments (Town House Land(Miami)):
        Lease commitment                                $         75,210
        Advertising commitment                                    26,280
                                                        ----------------

                                                        $        101,490
                                                        ================

      In 2004 the Company elected to suspend construction on the Jing Qi project
      temporarily until the main road currently under  construction by the local
      government is completed.  As of June 30, 2005,  construction  on this main
      road  has  not  been  completed.  The  Company  has  agreed  with  certain
      contractors for an extension of contractual  payments due to the deferment
      of construction on the project.
(b)     Pro forma financial information:  The unaudited consolidated pro
                forma financial statements of Xerion EcoSolutions Group Inc. and
                of Town House Land  Limited for the six month  period ended June
                30, 2005.

                         XERION ECOSOLUTIONS GROUP, INC.
                             PROFORMA BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)

                                     ASSETS
Xerion        Town House    Adjustments     Proforma
                                                     ------------    ------------   -----------   ------------
Current assets:
     Cash and equivalents                            $     11,577    $  5,105,515   $        --   $  5,117,092
     Accounts receivable, net                                  --       1,289,932            --      1,289,932
     Properties held for sale                                  --       5,837,017            --      5,837,017
     Prepaid and other assets                                  --         695,399            --        695,399
     Construction-in-progress                                  --         107,285            --        107,285
                                                     ------------    ------------   -----------   ------------

            Total current assets                           11,577      13,035,148            --     13,046,725

Land held for development                                   3,367       4,767,303            --      4,770,670
Property and equipment, net                                    --       2,912,585                    2,912,585
Construction-in-progress - non-current                         --       5,188,061            --      5,188,061
                                                     ------------    ------------   -----------   ------------

Total assets                                         $     14,944    $ 25,903,097   $        --   $ 25,918,041
                                                     ============    ============   ===========   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses           $    180,466    $  2,303,525   $        --   $  2,483,991
     Advances from buyers                                      --         872,257            --        872,257
     Amounts due to directors                              13,234       1,726,316            --      1,739,550
     Enterprise taxes payable                                  --       1,068,215            --      1,068,215
     Other taxes payable                                       --       1,450,368            --      1,450,368
     Short-term loans                                          --       3,822,345            --      3,822,345
     Current portion of long-term debt                         --           7,851            --          7,851
                                                     ------------    ------------   -----------   ------------

Total current liabilities                                 193,700      11,250,877            --     11,444,577

Long term debt, net of current portion shown above             --       3,389,894            --      3,389,894
                                                     ------------    ------------   -----------   ------------

Total liabilities                                         193,700      14,640,771            --     14,834,471
                                                     ------------    ------------   -----------   ------------

Minority interest                                              --         476,896            --        476,896
                                                     ------------    ------------   -----------   ------------

Stockholders' equity:
     Common stock                                           2,842          64,103            --         66,945
     Preferred stock                                           --              --            --             --
     Additional paid in capital                        10,014,413       5,857,936            --     15,872,349
     Capital reserve                                           --       1,316,042            --      1,316,042
     Donated capital                                      126,000              --            --        126,000
     Retained earnings                                (10,322,011)      3,547,349            --     (6,774,662)
                                                     ------------    ------------   -----------   ------------

Total stockholders' equity                               (178,756)     10,785,430            --     10,606,674
                                                     ------------    ------------   -----------   ------------

Total liabilities and stockholders' equity           $     14,944    $ 25,903,097   $        --   $ 25,918,041
                                                     ============    ============   ===========   ============
XERION ECOSOLUTIONS GROUP, INC.
                        PROFORMA STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2005
                                   (UNAUDITED)
Xerion        Town House      Adjustments     Proforma
                                                        ------------    ------------    -------------   ------------
Sales Revenues                                          $         --    $  5,193,341    $          --   $  5,193,341
Cost of Properties Sold                                           --       4,134,499               --      4,134,499
                                                        ------------    ------------    -------------   ------------

    Gross profit                                                  --       1,058,842               --      1,058,842
                                                        ------------    ------------    -------------   ------------

Selling, General and Administrative Expenses:
    Selling expenses                                              --         348,989               --        348,989
    General and administrative expenses                       36,961         567,800               --        604,761
    Depreciation                                               1,469          74,714               --         76,183
                                                        ------------    ------------    -------------   ------------

    Total expenses                                            38,430         991,503               --      1,029,933
                                                        ------------    ------------    -------------   ------------

    Income from operations                                   (38,430)         67,339               --         28,909
                                                        ------------    ------------    -------------   ------------

Other income (expense)
    Other revenues                                                --          33,987               --         33,987
    Interest and finance costs                                    --        (116,348)              --       (116,348)
                                                        ------------    ------------    -------------   ------------

    Total other income (expense)                                  --         (82,361)              --        (82,361)
                                                        ------------    ------------    -------------   ------------

    Loss from continuing operations                          (38,430)             --               --        (38,430)
                                                        ------------    ------------    -------------   ------------

Income before income taxes                                   (38,430)        (15,022)              --        (53,452)
(Provision for) benefit from income taxes                         --         697,046               --        697,046
                                                        ------------    ------------    -------------   ------------

Net Income before Minority Interest                          (38,430)        682,024               --        643,594
Minority Interest in Earnings                                     --         (25,861)              --        (25,861)
                                                        ------------    ------------    -------------   ------------

Net income (loss)                                       $    (38,430)   $    656,163    $          --   $    617,733
                                                        ============    ============    =============   ============

Weighted average basic and diluted shares outstanding      2,841,523         500,000                      28,415,230
                                                        ============    ============    =============   ============

Basic and diluted net income (loss) per common share    $      (0.01)   $       1.31                    $       0.02
                                                        ============    ============    =============   ============
XERION ECOSOLUTIONS GROUP, INC.
                        PROFORMA STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2004
                                   (UNAUDITED)
Xerion        Town House      Adjustments      Proforma
                                                                 ------------    ------------    -------------   ------------
Sales Revenues                                                   $         --    $  4,157,687    $          --   $  4,157,687
Cost of Properties Sold                                                    --       1,999,155               --      1,999,155
                                                                 ------------    ------------    -------------   ------------

    Gross profit                                                           --       2,158,532               --      2,158,532
                                                                 ------------    ------------    -------------   ------------

Selling, General and Administrative Expenses:
    Selling expenses                                                       --         298,147               --        298,147
    General and administrative expenses                                55,515         317,006               --        372,521
    Business development                                                3,307              --               --          3,307
    Depreciation                                                           --          28,201               --         28,201
                                                                 ------------    ------------    -------------   ------------

    Total expenses                                                     58,822         643,354               --        702,176
                                                                 ------------    ------------    -------------   ------------

    Income from operations                                            (58,822)      1,515,178               --      1,456,356
                                                                 ------------    ------------    -------------   ------------

Other income (expense)
    Other revenues                                                         --          (5,614)              --         (5,614)
    Interest and finance costs                                             --         (18,275)              --        (18,275)
                                                                 ------------    ------------    -------------   ------------

    Total other income (expense)                                           --         (23,889)              --        (23,889)
                                                                 ------------    ------------    -------------   ------------

    Loss from continuing operations                                   (58,822)             --               --        (58,822)
                                                                 ------------    ------------    -------------   ------------

Income before income taxes                                            (58,822)      1,491,289               --      1,432,467
(Provision for) benefit from income taxes                                  --        (208,087)              --       (208,087)
                                                                 ------------    ------------    -------------   ------------

Net Income before Minority Interest                                   (58,822)      1,283,202               --      1,224,380
Minority Interest in Earnings                                              --         (39,861)              --        (39,861)
                                                                 ------------    ------------    -------------   ------------

Net income (loss)                                                $    (58,822)   $  1,243,341    $          --   $  1,184,519
                                                                 ============    ============    =============   ============

Basic and diluted net income (loss) per common share             $      (0.02)   $       2.49                    $       0.04
                                                                 ============    ============    =============   ============

Weighted average basic and diluted shares outstanding               2,841,523         500,000                      28,415,230
                                                                 ============    ============    =============   ============
(c)     Exhibits

                2.1     Exchange  Agreement  between Xerion  EcoSolutions  Group
                        Inc.,  a  Colorado  corporation,  and  Town  House  Land
                        Limited,  a limited  liability company under the Company
                        Law of The People's  Republic of China (the "PRC"),  and
                        each member of Town House dated October 19, 2005.

                23.1    Consent  of  Murrell  Hall  McIntosh  &  Co.,   P.L.L.C.
                        independent registered public accounting firm.

                99.1    Form of press release.
SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

Date: October 24, 2005                 Xerion EcoSolutions Group Inc.
                                       a Colorado corporation

                                       By:
                                          --------------------------------------
                                          Ben Traub
                                          Chief Executive Officer and President
EXHIBIT INDEX

Exhibit No.     Description of Exhibit
-----------     ----------------------

   2.1          Exchange  Agreement  between Xerion  EcoSolutions  Group Inc., a
                Colorado  corporation  ("Xerion"),  and Town House Land  Limited
                ("Town House"),  a limited liability company organized under the
                Company Law of The People's  Republic of China (the "PRC"),  and
                each member of Town House dated October 19, 2005.

   23.1         Consent of Murrell  Hall  McIntosh  & Co.,  P.L.L.C. independent
                registered public accounting firm.

   99.1         Form of press release.