FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Form 10-Q that are not historical facts and are forward-looking statements, which can be identified by the use of terminology such as estimates, projects, plans, believes, expects, anticipates, intends, or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties, and other factors affecting our operations, market growth, services, products, and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events and conditions that may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation: our ability to attract and retain management, and to integrate and maintain technical information and management information systems; our ability to raise capital when needed and on acceptable terms and conditions; the intensity of competition; and general economic conditions.

All written and oral forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities, (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period and (iii) the reported amounts of revenues and expenses during each reporting period. We continually evaluate these estimates based on our own experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are inherently uncertain. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

When reading our financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgment and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.

Restatement of Financial Statements

On October 21, 2009, we determined that the Company will restate its financial statements for the quarter ended June 30, 2009 as reported on Form 10-Q filed August 12, 2009. Pursuant to a registration rights agreement entered into in connection with the Company's issuance of its 5.0% Senior Secured Convertible Debt, the Company is required to pay the investors of the debt certain late registration payments ("Late Payments") if the Company failed to file a registration statement within 60 days after the closing date of the transaction or if such registration statement failed to become effective by 90 calendar days, or 120 days if the registration statement is subject to a full review by the U.S. Securities and Exchange Commission. The Company commenced negotiations with the investors of the 5.0% Senior Secured Convertible Debt to waive the Late Payments in December 2008. The investors of the 5.0% Senior Secured Convertible Debt have thereafter decided to claim the Late Payments. Because the Company failed to accrue the Late Payments, the Company has decided to restate its financial statements for the quarter ended June 30, 2009 as reported on Form 10-Q to accrue the corresponding expenses. Prior to the restatement, the Company did not accrue the Late Payments. After the restatement, the Company will present the Late Payments as security registration expense.

Warrants and derivative liability

As of June 30, 2009, the Company has approximately $8.0 million of warrants liability and $6.5 million of fair value of embedded derivatives on the balance sheet, which is approximately 6.9% and 5.6% of the total liabilities, respectively.

We are using the Cox-Rubinstein-Ross ("CRR") Binomial Lattice Model to estimate the fair values of warrants liability and embedded derivatives. The CRR model depends on the following assumptions: the Company's common stock price underlying the warrants; strike price; conversion price; expected life; expected volatility; risk free interest rate; and dividend rate. We used the CRR Binomial Lattice Model for the past 3 years and we do not expect any significant changes to assumptions except for the common share price and the expected volatility.

We estimate the fair value of warrant liability and embedded derivatives every quarter and recognize the change of fair value as gain or loss in our current quarter consolidated statement of income. The fair values of warrants liability and embedded derivatives have changed during the past few years according to the valuation models and the fair values are positively related to the market share price movement and the volatility. During the three months ended June 30, 2009, our common stock price experienced large fluctuations with the price increasing from $1.20 on March 31, 2009 to $5.76 on June 30, 2009. The increase in stock price and expected volatility caused an increase in fair value for warrants. As a result, we recognized approximately $7.2 million as a change in fair value of warrants and $5.8 million as a change in fair value of embedded derivatives, which are all non-cash expenses.

The following table summarizes the fair value of warrant liability and embedded derivative as at various periods.

 (in million)                                           2008                                2009
                                            3rd Quarter       4th Quarter       1st Quarter       2nd Quarter

Warrants Liability                         $         2.2     $         1.1     $         0.9     $         8.0
Fair value of embedded derivatives         $         1.4     $         0.8     $         0.6     $         6.5

Real estate held for development or sale, intangible asset and deposits on land use rights

As of October 27, 2009, our market capitalization is approximately $115 million.

We evaluate the recoverability of our real estate developments taking into account several factors including, but not limited to, our plans for future operations, prevailing market prices for similar properties and projected cash flows.

We review real estate projects, whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, we measure impairment by comparing the carrying value to the estimated undiscounted future cash flows expected as a result from the use of the assets and their eventual disposition. If the total of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss based on the fair value of the assets.

Our significant judgments and estimates related to impairment include our determination if an event has occurred to warrant an impairment test. If a test is required, other significant judgments and estimates will include our expectations of future cash flows and the calculation of the fair value of the impaired assets.

When real estate costs are determined to be impaired, they are written down to their estimated net realizable value. The Company evaluates the carrying value for impairment based on the undiscounted future cash flows of the assets. Write-downs of real estate costs deemed impaired would be recorded as adjustments to the cost basis. There has been no impairment on the real estate inventories and no impairment loss has been recorded for the three and six months ended June 30, 2009 and 2008.

The following summarizes the components of real estate inventories as at June 30, 2009 and December 31, 2008:

                                                               June 30, 2009       December 31, 2008

Finished projects                                              $    9,132,754     $        10,181,827
Construction in progress                                           97,086,959              50,468,184

Total real estate held for development or sale                 $  106,219,713     $        60,650,011

According to the agreement with Baqiao District Government, at the beginning of each year, the Company will prepare the annual work plan and have it approved by Baqiao District Government. The annual work plan will include the detailed projects that will be started during that year and the Baqiao District Government is responsible for the land clearance. Due to the delay of land clearance progress, somecertain scheduled projects have been postponed. The Baqiao District Government acknowledged the delay and informed us of their intention to extend the agreement. Currently, we still have 348 acres land undeveloped, and $41.6 million in intangible assets. If we are not able to achieve the extension of the agreement withthe Baqiao District Government does not extend the agreement, we will have to write off the intangible assets from our balance sheet, which will affect our income statement in 2011.

Intangible asset

The Company's intangible asset is related to the exclusive rights to develop 487 acres land in the Baqiao area that the Company acquired during 2007. We assessed the fair value of this intangible asset based on the current-period operating cash flow and a projection of future cash flows. It is the Company's understanding that the cooperation agreement with Baqiao District Government will be extended after June 2011. Based on the prevailing market condition in Xi'an city we concluded that there is no impairment.

As of June 30, 2009 and December 31, 2008, intangible asset consists of the following:

                                     June 30, 2009        December 31, 2008
         Intangible acquired        $    47,280,980      $        47,334,342
         Accumulated amortization        (5,650,953 )             (1,290,682 )

         Intangible assets, net     $    41,630,027      $        46,043,660

The Company evaluates its intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Based on the estimated future cash flows, the Company records a write-down for impairments, if appropriate. For the three and six months ended June 30, 2009 and 2008, the Company has recorded $0 of impairment on the intangible asset.

The Company amortized the intangible asset based on the percentage of the profit margin realized over the total expected profit margin to be realized from 487 acre land in the Baqiao project. During fiscal 2007, the Company sold 18.5 acre land and the related profit margin realized on that sale represents 2.4% of total estimated profit margin on the whole 487 acre project, therefore the Company amortized $1,157,758 (2.4% ) of total intangible asset during fiscal 2007. This method is intended to match the pattern of amortization with the income-generating capacity of the intangible asset. For the year ended December 31, 2008, the Company has recorded $0 (2007 - $1,157,758) of amortization on the intangible asset. Amortization expense for the three months ended June 30, 2009 and 2008 amounted to $0. Amortization expense for the six months ended June 30, 2009 and 2008 amounted to $4,360,003 and $0, respectively. The amortization expense was capitalized in the real estate construction in progress.

Management re-evaluated the expected profit margin from the 487 acre land as at June 30, 2009 and recalculated the intangible amortization related to the 2008 land sales based on the new estimate. As a result, management found the difference resulted from change of estimate was not material. Therefore there was no adjustment made in the three and six months ended June 30, 2009 due to the change of accounting estimate of total profit margin in 487 acres land.

Deposits on land use rights

                                       June 30, 2009       December 31, 2008

        Deposits on land use rights        26,586,901              47,333,287

The Company conducts regular reviews of the deposits on land use right. After review and assessment, the Company concluded that there was no significant decrease in the market price and therefore no impairment write-down was required. The residential average sale price in Xi'an city was stable the fiscal quarter ended June 30, 2009 and according to the Xi'an Bureau of Statistics' data, the average sale price increased to 4,642RMB per square meter (approximately US$677 per square meter) from 4,496RMB in the first quarter 2009, and representing about 5% year-on-year growth.

Material trends and uncertainties that may impact our continuing operations

Changes in national and regional economic conditions, as well as local economic conditions where we conduct our operations and where prospective purchasers of our homes live, may result in more caution on the part of homebuyers and consequently fewer home purchases. According to the data from Xi'an Bureau of Statistics, Xi'an city's real estate transaction volume (in terms of sq. meter signed) decreased about 30% in 2008 compared to 2007. As currently all our projects are in Xi'an city, the downturn of the real estate market in Xi'an caused the decline of our operating revenues in 2008. Since 2009, we see the market sentiment has improved and the transaction volume has increased compared to same period of 2008. During the second quarter of 2009, our revenue increased approximately 70.7% over same period 2008.

Virtually all purchasers of our homes finance their acquisitions through lenders providing mortgage financing. A substantial increase in mortgage interest rates or unavailability of mortgage financing would adversely affect the ability of prospective homebuyers to obtain the financing they would need in order to purchase our homes, as well as adversely affect the ability of prospective move-up homebuyers to sell their current homes. For example, if mortgage financing became less available, demand for our homes could decline. A reduction in demand could also have an adverse effect on the pricing of our homes because we and our competitors may reduce prices in an effort to better compete for home buyers. A reduction in pricing could result in a decline in revenues and in our margins. We do not expect any substantial change of current mortgage policy and the prevailing mortgage rate in the near future.

The real estate development industry is capital intensive, and development requires significant up-front expenditures to acquire land and begin development. Accordingly, we incur substantial indebtedness to finance our homebuilding and land development activities. Although we believe that internally generated funds and current borrowing capacity will be sufficient to fund our capital and other expenditures (including land acquisition, development and construction activities), the amounts available from such sources may not be adequate to meet our needs. If such sources are not sufficient, we would seek additional capital in the form of debt or equity financing from a variety of potential sources, including bank financing and/or securities offerings. The availability of borrowed funds, to be utilized for land acquisition, development and construction, may be greatly reduced, and the lending community may require increased amounts of equity to be invested in a project by borrowers in connection with new loans. Failure to obtain sufficient capital to fund its planned capital and other expenditures could have a material adverse effect on our business.

In addition, regulatory requirements could cause us to incur significant liabilities and operating expenses and could restrict our business activities. We are subject to statutes and rules regulating, among other things, certain developmental matters, building and site design, and matters concerning the protection of health and the environment. Our operating expenses may be increased by governmental regulations such as building permit allocation ordinances and impact and other fees and taxes, which may be imposed to defray the cost of providing certain governmental services and improvements. Any delay or refusal from government agencies to grant us necessary licenses, permits and approvals could have an adverse effect on our operations.

As of June 30, 2009, we had $10,133,600 of cash and cash equivalents, a decrease of $27,291,740, compared with $37,425,340 of cash and cash equivalents as of December 31, 2008.

The Company believes that the combination of present capital resources, internally generated funds, and unused financing sources are more than adequate to meet cash requirements for the year 2009. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of land for the development of our future projects, through cash flow provided by operations and additional funds raised by future financings. Upon acquiring land for future development, we intend to raise funds to develop our projects by obtaining mortgage financing mainly from local banking institutions with which we have done business in the past. We believe that our relationships with these banks are in good standing and that our real estate will secure the loans needed. We believe that adequate cash flow will be available to fund our operations.

BUSINESS

China Housing & Land Development, Inc. (the "Company" or "we"), is a leading developer of residential and commercial properties in northwest China. The Company is based in Xi'an, the capital city of China's Shaanxi province. Since 1992, the Company has been engaged in the acquisition, development, management and sales of residential and commercial real estate properties and land through its subsidiaries in China.

The Company is the first and only Chinese real estate development company traded on NASDAQ.

By leveraging its background and capabilities, the Company has been able to capitalize on the supply of available land to develop residential and commercial properties, further increase Its brand recognition, and outperform its competitors in the development of medium sized residential and commercial real estate projects in greater Xi'an.

The Company is the leading non-government middle-and-upper income residential real estate development company in Xi'an.

Our Property Projects

We provide three fundamental types of real estate development products:

? High-rise apartment buildings, typically 19 to 33 stories high, usually constructed of steel-reinforced concrete, that are completed within approximately 24 months of securing all required permits.

? Mid-rise apartment buildings, typically 7 to 18 stories high, usually constructed of steel-reinforced concrete, that are completed within 12 to 18 months of securing all required permits.

? Low-rise apartment buildings and villas, typically 2 to 6 stories high, often constructed of steel-reinforced concrete, that are completed within approximately 12 months of securing all required permits.

Our projects can be classified into one of four stages of development:

? Projects in planning, where we have purchased the development and or land use rights for parcels of land as part of our project development pipeline. The completion of projects on these sites is subject to adequate financing, permits, licensing and certain market conditions;

? Projects in process, which include developments where we have typically secured the development and land use rights, and where the site planning, architecture, engineering and infrastructure work is in progress;

? Projects under construction, where the building construction has started but has not yet been completed; and

? Completed projects, where the construction has been finished and most of the units in the buildings have been sold, leased or rented.

Projects under construction

                                                    Actual or
                                    Actual or     Estimated Pre-
                                    Estimated          sale         Total Site                        Sold GFA by
                     Type of      Construction     Commencement        Area          Total GFA       June 30, 2009
 Project name       Projects         Period            Date            (m2)            (m2)              (m2)
  JunJing II      Multi-Family       Q3/2007
   Phase One      residential &     - Q3/2009            Q2/2008         39,524         136,012             104,662
                   Commercial
  JunJing II      Multi-Family       Q2/2009
   Phase Two      residential &     - Q2/2011            Q2/2009         29,800         112,556               2,456
                   Commercial
                  Multi-Family       Q2/2009
 Puhua Project    residential &     - Q3/2014            Q3/2009        192,582         610,000                   -
                   Commercial



                                                                         Contracted         Recognized
                                                                         Revenue by         Revenue by
                          Total          Number of       Estimated       June 30,            June 30,
                        Number of      Units sold by      Revenue           2009                2009
   Project name           Units        June 30, 2009    ($ millions)    ($ millions)        ($ millions)
    JunJing II                1,182             1,017           95.6             63.7                54.4
     Phase One
    JunJing II                1,015                22           94.1              1.9                 1.0
     Phase Two
   Puhua Project              5,000                 -          700.0                -                   -

JunJing II: JunJing II is located at 38 East Hujiamiao, Xi'an, with a total gross floor area ("GFA") of approximately 248,568 square meters. It is the first Canadian style residential community with "green and energy-saving" characteristics in Xi'an and has won the "National Energy Saving Project" award. The project is divided into 2 phases, namely JunJing II Phase One and JunJing II Phase Two. We started the construction of JunJing II Phase One in the third quarter of 2007 and started the pre-sale campaign in the second quarter of 2008.

As of June 30, 2009, our customers have signed pre-sale purchase agreements for apartments with purchase prices totaling $63.7 million, of which we have recognized $54.4 million in revenues, based on the percentage of completion method of accounting. Approximately $10 million of pre-sale payments were booked as advances from customers and will be recognized as revenues as construction advances.

The construction of Phase Two commenced in the second quarter of 2009 and pre-sales started within the same quarter. As of June 30, 2009, the contract revenue for Phase Two is $ 1.9 million, of which we have recognized $ 1.0 million in revenues. Revenue will continue to be recognized as construction advances.

Puhua: The Puhua project, the Company's 79 acre joint venture located in the Baqiao project, has a total land area of 192,582 square meters and an expected gross floor area of approximately 610,000 square meters. In November 2008, the Company entered into an agreement with Prax Capital China Real Estate Fund I, Ltd., to form a joint venture. The joint venture was formed in late 2008, subject to certain conditions and approvals, which have been satisfied. Prax Capital Real Estate Holdings Limited invested US$29.3 million in cash in the joint venture, the joint venture acquired the land use rights early in the first quarter of 2009, and the joint venture is proceeding with the project.

The construction of the Puhua project began in June 2009. The whole project, which consists of four phases, is expected to be completed in the third quarter of 2014, with estimated revenues of $700 million. We will begin accepting pre-sale purchase agreements during the third quarter of 2009. Revenue from the pre-sales will begin to be recognized upon the completion of the foundation.

Projects under planning and in process

                                                   Estimated Pre-
                                    Estimated           sale            Total Site                         Total
     Project           Type of    Construction      Commencement           Area          Total GFA       Number of
      name            Projects       Period             Date               (m2)            (m2)            Units
   Baqiao New           Land
   Development       Development   2009 - 2020                 N/A              N/A             N/A             N/A
      Zone
                    Multi-Family     Q3/2009
   JunJing III      residential &   - Q3/2011              Q3/2009            8,094          51,470             570
                     Commercial
                    Multi-Family     Q4/2009
   Park Plaza       residential &   - Q4/2013              Q1/2010           44,250         200,000           2,000
                     Commercial
                    Multi-Family     Q4/2010
   Golden Bay       residential &   - Q4/2014              Q1/2011          160,665         351,812             N/A
                     Commercial

Baqiao New Development Zone: On March 9, 2007, we entered into a Share Transfer Agreement with the shareholders of Xi'an New Land Development Co., Ltd. (New Land), under which the Company acquired 32,000,000 shares of New Land, constituting 100 percent equity ownership of New Land. This acquisition gave the Company the exclusive right to develop and sell 487 acres of land in the eastern part of Xi'an city. We believe this represents a major growth opportunity for the Company.

Xi'an has designated the Baqiao District as a major resettlement zone where the city expects an middle - to upper - income population of 900,000 to settle. The Xi'an government intends to create a successful development comparable to the . . .