UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





(Mark
One)


FORM
10-K





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





For
the fiscal year ended December 31, 2008




or





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





For
the transition period from _____________to ______________





Commission
file number  000-51516





UNIVERSAL
TRAVEL GROUP


(Exact
name of registrant as specified in its charter)





Nevada
            90-0296536State or other jurisdiction of
              Incorporation or organization
            (I.R.S. Employer
              Identification No.)





2008
Shennan Road, Hualian Center, Room 301-309, Shenzhen, The People’s Republic of
China


(Address
of principal executive offices) (Zip Code)





Registrant’s
telephone number, including area code 011-86-
755-836-68489




Securities
registered pursuant to Section 12(b) of the Act:





Title
      of each class
                
                Name
      of each exchange on which registered





Securities
registered pursuant to section 12(g) of the Act:





Common
Stock, $0.001 par value per share


Preferred
Stock, $0.001 par value per share


(Title of
class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


o
Yes           x No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.   x
Yes           o No








Note– Checking the box above
will not relieve any registrant required to file reports pursuant to Section 13
or 15(d) of the Exchange Act from their obligations under those
Sections.





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


x
Yes           oNo





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o
            
            Accelerated
      filer oNon-accelerated
      filer o
      (Do not check if a smaller reporting company)
            
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).


o Yes                    x  No





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.




Note.—If a determination as to
whether a particular person or entity is an affiliate cannot be made without
involving unreasonable
effort and expense, the aggregate market value of the common stock held by
non-affiliates may be calculated on the basis of assumptions reasonable under
the circumstances, provided that the assumptions are set forth in this
Form.





The
aggregate market value of the voting and non-voting common stock of the issuer
held by non-affiliates as of  March  12, 2009 was
approximately $16,538,602.94 (24,684,482 shares of common
stock)  based upon the closing price of the common stock as quoted by
Nasdaq OTC Bulletin Board on such date.





APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. o Yes  o No





(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.





As
of  March 12, 2009, there are presently 41,619,966  shares
of common stock, par value $0.001 issued and outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE





List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).









PART
I





Item
1.    Business.




History
and Organization





We were
incorporated on January 28, 2004, pursuant to the laws of the state of
Nevada.





On March
15, 2006, we entered into an Acquisition Agreement and Plan of Merger (the
"Acquisition Agreement") with TAM of Henderson, Inc. ("TAM"), whereby TAM
acquired all of our outstanding shares of Common
Stock from our then sole stockholder and simultaneously merged with and into the
Company, with the Company as the surviving corporation.





On June
20, 2006, Mr. Xiao Jun ("Jun"), our former officer and director, acquired from
the then-majority-shareholder of our Company 8,000,000 shares of our Common
Stock, for an aggregate purchase price of $435,000 (the "Stock Transaction").
After giving effect to such acquisition, Jun held 8,000,000 of the 10,450,000
shares of our Common Stock then issued and outstanding, constituting, in the
aggregate, 77% of the then issued and outstanding shares of Common Stock of the
Company. In connection with his acquisition of shares in the Company, Jun was
appointed as our Chief Executive Officer.





On July
12, 2006 , we consummated the transaction contemplated by the Agreement and Plan
of Merger, dated as of June 26, 2006 (the "Merger Agreement"), by and among the
Company, Merger Sub of Tam, Inc. ("Merger Subsidiary"), a wholly owned
subsidiary of us, Full Power Enterprise Global Limited (“Full Power”), and the
shareholders of Full Power. In accordance with the Merger Agreement, Merger
Subsidiary merged with and into Full Power, Merger Subsidiary ceased to exist
and Full Power was the surviving entity (the "Merger Transaction").





The Full
Power Shareholders received 20,000,000 shares of Common Stock in exchange for
all of the issued and outstanding shares of Full Power. As a result of the
Merger Transaction, Full Power became the Company's wholly owned subsidiary.
Full Power owns all of the issued and outstanding capital stock
of  Shenzhen Yu Zhi Lu Aviation Service Company
Limited  (“YZL”).





In
connection with the Merger Transaction, Jiangping Jiang (who, prior to the
Merger Transaction was a shareholder of Full Power), Xin Zhang and Hoi-Yui Lee
were appointed to our Board of Directors and Jun resigned from all positions
with us.





Business
Overview





With the
acquisition of Full Power and hence YZL, we shifted our business to the online
travel service industry in the People’s Republic of China (“PRC”). YZL, a
company organized under the laws of the PRC, is primarily engaged in the
business of providing domestic and international airline ticketing services and
cargo transportation agency services. Additionally, YZL provides hotel
reservations, packaged tours, and air delivery services both online
and  through customer representative offices. YZL also owns an
aviation network (www.cnutg.com) that provides a complete air ticket sales
network.





During
2007, we made several acquisitions, which expanded our scope of
business.





On April
10, 2007, we acquired Shenzhen Speedy Dragon Enterprise Limited ("SSD") in
exchange for 714,285 shares of our shares of Common Stock and an interest-free
promissory note in the principal amount of $3,000,000, payable no later than
April 10, 2008.  The note has been repaid in full.










SSD,
located in Shenzhen City, is a cargo logistics company providing commercial,
point-to-point parcel and container transportation services within the PRC. It
also operates as an international and domestic freight forwarding agency for
Chinese civil aviation companies and provides railway and express delivery
services. SSD relies upon independent delivery services with more than 200
vehicles and manages leased and owned warehouses totaling 40,000 square meters
(approximately 430,556 square feet), which it uses to stage, transfer, and store
packages in transit. During 2007, air cargo for which SSD arranged
transportation accounted for approximately 30% of the total air cargo market in
Shenzhen, China.





On August
6, 2007, we acquired Xi'an Golden Net Travel Serve Service Company Limited
("XGN") in exchange for 151,765 shares of our Common Stock and interest-free
promissory notes in the aggregate principal amount of $1,542,000, payable no
later than August 6, 2008. The note has been repaid in full.





XGN was
established in 2001 and focuses on the domestic tourism market. It provides air
tickets, train tickets and other travel-related services including servicing
individuals and groups attending conferences and exhibitions, making travel
arrangements for business studies, academic exchanges, travel adventures,
cultural education, sports competition, and theatrical performances. XGN also
specializes in central plains tours of Xi'an. Since 2005, XGN has
formed  joint ventures with other travel agencies in Tibet, Xinjiang,
Shanxi and Inner Mongolia that focus on western plains routes.





In August
8, 2007, we acquired Shanghai Lanbao Travel Service Company Limited ("SLB") in
exchange for 600,000 shares of our Common Stock and interest-free promissory
notes in the aggregate principal amount of $2,828,000, payable no later than
August 8, 2008. The note has been repaid in full.





SLB was
established in 2002 and its core business focus is a centralized real-time
booking system providing consumers and travel related businesses with hotel
bookings, air ticket and tourism information via the internet and mobile phone
text-messaging technology. It owns and manages the award winning China Booking
Association website, http://www.cba-hotel.com/, which receives approximately
200,000 visitors daily.





In
October 29, 2007, we acquired Foshan Overseas International Travel Service Co.,
Ltd. ("FOI") in exchange for 1,122,986 shares of our Common Stock and
interest-free promissory notes in the aggregate principal amount of $3,153,500,
payable no later than October 29, 2008.   This note has been
repaid in full.





FOI was
established in 1990. Its core business focuses on both domestic and
international tourism, as well as packaged airfare, hotel and conference
reservations with ground transportation within the PRC. For three consecutive
years, FOI has been recognized as one of the 100 outstanding enterprises by the
China Tourism Bureau and in 2004 was voted one of the most credible enterprises
in the country. Last year it served more than 120,000 people with packaged tours
and conferences.





Sources
of Revenue





We have
four lines of business, namely (i) air-ticketing, (ii) hotel reservations, (iii)
packaged tours and (iv) air cargo agency services.





Air-ticketing





We earn a
commission for each air ticket sold. Our commission varies depending on the
season but it averages approximately 6% of each ticket sold.





Our
subsidiary, YZL (Shenzhen Yu Zhi Lu Aviation Service Company Limited) has
contracted with Chinese domestic airlines such as Air China, China Southern
Airlines and China Eastern Airlines and  34 international airlines
such as United Airlines, Cathay Pacific and Virgin Airlines to sell Chinese
domestic and international air tickets.  YZL holds the “First Class
Air-Ticketing Agency” license from the General Administration of Civil Aviation
of China (“CAAC”).  YZL has been in operation for more than ten
years.










Our
customers can make air-tickets enquiries via our web-sites - www.cnutg.com, and
www.cnutg.com.cn.  Further,
we are also able to attend to our customers through our customer
representatives, our company offices and our franchises.





We
maintain an 800 square meters call center in Shenzhen and our call center has
100 seats to handle customer enquiries. We share commission with our
franchises.  The share varies according to business seasonality and
varies from 1% in our favor to 3%.





Hotel
Reservations





We
generate revenue from paid hotel bookings in the form of
commissions.





Our
subsidiaries, YZL and SLB (Shanghai Lanbao Travel Service Company Limited) have
contracted with 2,000 hotels and 7,000 hotels, respectively.  SLB has
established a China Booking Association comprising more than 1,000 travel
agencies who share more than 200,000 hotel resources
internationally.





Our
customers are able to enquire via SLB's website (www.cba-hotel.com).  Additionally,
SLB maintains a 100 square meters call center in Shanghai and the call center
has 20 seats to handle hotel reservation enquiries.





Package
Tours





Our
subsidiaries, XGN (Xi'an Golden Net Travel Serve Service Company Limited) and
FOI (Foshan Overseas International Travel Service Co., Ltd.) are involved in the
packaged tour business.  We contract with traffic service providers,
accommodation provides and leisure service providers to purchase air tickets,
train and coach tickets, accommodation and leisure or entertainment packages in
bulk and then resell them to our customers with a mark-up.FOI maintains 9 company
offices around the Guangzhou area, and XGN maintains 3 company offices in
Xi'an.





Air Cargo
Business





We are
through our subsidiary, SSD (Shenzhen Speedy Dragon Enterprise Limited) involved
in the air cargo business. We basically broker air cargo spaces and resell them
to local logistic companies to generate revenue.  We have contracts
with Chinese domestic airlines like China Southern Airlines, Air China, and
Shenzhen Airlines and offer cargo spaces to over 52 major domestic cities in the
PRC.  Our customers are charged based on the class and weight of goods
shipped.





Insurance





We
presently have Directors and Officers insurance with AIG.  The policy
is for a term of one year commencing June 23, 2008 to June 23, 2009 for an
aggregate liability of $5,000,000.   We have paid a premium of
$42,436 for the policy.  We do not have any other
insurance.





Intellectual
Property





We have
applied to register the following trademarks with the Trademark Bureau of the
State Administration for Industry & Commerce:





Trademark
                        
                        Class
                        
                        RegistrantUTG
                        
                        16,
      39, 43
                        
                        Shenzhen
      Yu Zhi Lu Aviation Service Company LimitedTRIPEASY
                        
                        39,
      42
                        
                        Shenzhen
      Yu Zhi Lu Aviation Service Company
Limited








We,
through our subsidiary, XGN, have the  “古都之旅” trademark
registered under Class 39 with the Trademark Burean of the State Administration
for Industry & Commerce.  The term of the registration is valid
from January 7, 2005 through to January 6, 2015.




Class 16
(Paper goods and printed matter) covers paper, cardboard and goods made from
these materials, not included in other classes; printed matter; bookbinding
material; photographs; stationery; adhesives for stationery or household
purposes; artists' materials; paint brushes; typewriters and office requisites
(except furniture); instructional and teaching material (except apparatus);
plastic materials for packaging (not included in other classes); playing cards;
printers' type; printing blocks.




Class 39
covers transport, packaging and storage of goods and travel
arrangements.




Class 42
(Computer, scientific & legal) covers scientific and technological services
and research and design relating thereto: industrial analysis and research
services; design and development of computer hardware and software; legal
services.




Class 43
(Hotels and Restaurants) covers services for providing food and drink; temporary
accommodations.





We have
also registered the following domain names:





Domain Name
                        
                        Owner
                        
                        Registration
                          Date
                        
                        Expiration Datewww.cnutg.com
                        
                        Shenzhen
      Yuzhilu Aviation Service Company Ltd
                        
                        2006-05-05
                        
                        2011-05-05www.cnutg.com.cn
                        
                        Shenzhen
      Yuzhilu Aviation Service Company Ltd
                        
                        2006-07-27
                        
                        2013-07-27www.cnutg.cn
                        
                        Shenzhen
      Yuzhilu Aviation Service Company Ltd
                        
                        2006-07-27
                        
                        2012-07-27www.cnutg.net
                        
                        Shenzhen
      Yuzhilu Aviation Service Company Ltd
                        
                        2006-07-27
                        
                        2012-07-27www.cnutg.net.cn
                        
                        Shenzhen
      Yuzhilu Aviation Service Company Ltd
                        
                        2006-07-27
                        
                        2012-07-27





Customers





Our
customer base is very diversified and numerous.  Almost all our
customers are individuals and none of our customers comprise more than 1% of our
revenue.  The loss of any one of our customer will not have a material
adverse effect on any segment of our business or our business, as a
whole.





Revenue
Breakdown





Packaged
Tours





Below is
a breakdown the number of sales of our packaged tours for the past three
years:





Year
                      
                      Visitors
                      
                      
                      Number
      of visitors multiplied by
                        the number of days comprising the
      tour2006
                      
                      
                      65,981
                      
                      
                      
                      238,9242007
                      
                      
                      93,984
                      
                      
                      
                      364,6762008
                      
                      
                      139,242
                      
                      
                      
                      521,270










Air-ticketing





Below is
a breakdown of the number of air tickets sold for the past three
years:




Year
                  
                  Number of Tickets2006
                  
                  
                  601,
      0002007
                  
                  
                  1,084,0002008
                  
                  
                  1,720,000





Hotel
Reservations





Below is
a breakdown of the number of hotel room nights booked through us for the past
three years:





Year
                  
                  Number of Room Nights2006
                  
                  
                  352,0002007
                  
                  
                  680,0002008
                  
                  
                  1,466,000





Cargo





Below is
a breakdown of the volume of cargo shipped through us for the past three
years.





Year
                  
                  Tons2006
                  
                  
                  8692007
                  
                  
                  3,6122008
                  
                  
                  2,089





Suppliers





Our major
suppliers for our air-ticketing and air cargo business are mainly the PRC
domestic airlines.  We contract directly and individually with each
hotel and supplier of the various components of our packaged tours.





We do not
have long term contracts with any one of our suppliers.  We typically
sign one year contracts, which renew for successive one-year terms unless
earlier terminated by either party.  The main terms of such contracts
would typically comprise terms pertaining to authorizations, trade deposits and
payment method.





We are
not dependent on any one supplier and most of our suppliers are competitors
against each other within their own industry.  Accordingly, we are
able to choose the supplier with the most favorable terms to contract with and
because such terms vary from time to time, our list of suppliers constantly
changes too.





Our
online reservation database is managed in-house and we are not dependent on a
third party service provider to maintain our database and ensure that it is
stable and secure.





Sales
and Marketing





We
advertise our services for the general public through roadside billboards,
brochures, internet ads, cell phone message ads, newspapers and magazines
ads.





Sales and
marketing for the past three years account for very small percentage of our
revenue, and as our TRIPEASY Travel Service
Kiosks will be serving as an effective media platform in the coming years and a
marketing tool for us, we believe our sales and marketing expenses will not
increase materially.








Below is
the breakdown of sales and marketing expenses for our various subsidiaries for
the past year:





Subsidiary
                      
                      Amount (RMB)/ (US$)Foshan
      Overseas International Travel Service Co., Ltd.
                      
                      119,669
      / $17,496Shenzhen
      Speedy Dragon Enterprise Limited
                      
                      11,000
      / $1,608Shenzhen
      Yu Zhi Lu Aviation Service Company Limited
                      
                      870,000
      / $127,193 (Media Advertisement expenses)862,000 /
      $126,024  (Airport Marketing expenses)Shanghai
      Lanbao Travel Service Company Limited
                      
                      15,000
      / $2,192 (Advertisements)
                        25,000
      / $3,655 (Website)
                        17,000
      / $2,486
(Promotions)





We
anticipate that our sales and marketing expenses for fiscal year 2009 would
remain roughly the same.





Competition





Our main
competitors in China in the online booking industry for air-tickets and hotel
reservations include Ctrip.com International, Ltd. and eLong, Inc.





It is
very difficult to assess our competitors in the packaged tour business as there
are numerous packaged tour providers in the PRC that operate different routes
every year.





Our main
competitors for the cargo agency business stem from the direct sales departments
operated by the various airlines companies themselves.





Many of
our competitors, particularly those engaged in the online booking industry, are
better established than us, are more widely known to consumers, and have larger
infrastructures and greater capital resources.





Our
Competitive Advantage





We
believe that we have the following advantages over our competitors:





·
            our
      business model and sources of revenue are diversified in that we are
      involved in the air ticketing, hotel reservations, packaged tours, and air
      cargo agency businesses and any negative impact on one line of business
      may buffered by our other lines of
businesses;





·
            our
      businesses and presence are spread out throughout the PRC, which makes us
      less susceptible to a total loss or interruption to our business in the
      event of a natural calamity; and





·
            we
      plan to roll out more of the TRIPEASY Travel Service
      Kiosks (“Kiosks”) in 2009 in certain selected cities in the
      PRC.  The Kiosks would enable our customer to make travel
      related inquiries and book their travel without a computer or an internet
      connection.  They should appeal to computer users who do not
      make travel related transactions over the internet from their computers
      and non-computer owners.





Our
Future Goals and Expansion Plans





We are planning a nationwide
rollout of theTRIPEASYTravel Service Kioskswithin the next two years. The Kiosks will be located everywhere
including hotels, office buildings, banks, shopping malls and MTR stations. The
Company will promote the Kiosks via local media such as newspapers, billboards
and internet ads, including its own award-winning website, www.cnutg.com, as
well as other related websites, which will in turn further the Company’s brand
recognition. The Kiosks themselves will provide a strong media platform to
strengthen Universal Travel Group’s franchise. Additionally, the Kiosks’
interface will feature the same look, feel and functionality as Universal Travel
Group’s new website, www.cnutg.com.cn,
which integrates the Company’s diversified services into a new platform with
selected value- added features and functionality.








The
Kiosks are interactive terminals placed in strategically targeted public areas.
They will enable convenient, fast and easy to use, real-time air ticketing
inquiries, reservations and purchases, as well as hotel and tour reservations.
The Kiosks will provide full 360° views of hotels and travel destinations and
accept payment via bank cards, debit cards and VISA. According to Credit Suisse
Research, the number of domestic travelers in the PRC that use online travel
services continues to rise, accounting for 16% of users in 2007, up from 12% in
2005. The Company initially plans to introduce the Kiosks in selected major
cities in the PRC, with approximately 600 Kiosks to be rolled out in 2009. Major
cities such as Shanghai and Shenzhen have a higher proportion of people using
online travel services as compared to the rest of the PRC, representing 23% and
20% of the users in 2007, respectively. According to the China Internet Network
Information Center, the PRC is the world’s largest market for internet users.
Despite this, 95% of internet users still do not make purchases over the
internet. The TRIPEASY Kiosks will eliminate the need for a personal computer or
online access in order to make travel arrangements and are specifically targeted
at this demographic of users.





Our beta
testing of the Kiosks has shown promising results. The TRIPEASY Kiosks will
serve, together with our website and call center, to integrate our air ticket
sales, hotel room sales, and packaged tours businesses. We are working on a
cost-effective way for a potential rollout by bundling it with Byte Power (CQ)
Info Tech Limited's (a subsidiary of Byte Power Group Limited - ASE: BPG.AX)
E-Kiosks. This will allow us to enter a new market in Chongqing quickly and
efficiently.





Employees





At the
current time, in addition to our officers, we have approximately 200 full-time
employees. None of our employees is a member of a union and our relationships
with our employees are generally satisfactory. In accordance with Chinese Labor
Law, we provide social security and medical insurance to all our
employees.





Government
Regulations




General
Regulation of Businesses




Air-ticketing.
The air-ticketing business is subject to the supervision of China National
Aviation Transportation Association, or CNATA, and its regional branches. Prior
to March 31, 2006, the principal regulation governing air-ticketing in China is
the Administration on Civil Aviation Transporting Marketing Agency Business
Regulations (1993). The said regulation was abolished by PRC government on
January 24, 2008. Currently the principal regulation governing air-ticketing in
the PRC is the Rules on Cognizance of Qualification for Civil Aviation
Transporting Marketing Agencies (2006) which became effective on March 31,
2006.




Under
these regulations, prior to May 19, 2005, an air-ticketing agency was required
to obtain a permit from CAAC or its regional branch in every city in which the
agency propose to conduct its air-ticketing business. On and after May 19, 2005,
any entity that wishes to conduct the air-ticketing business in the PRC must
apply for an air-ticketing permit from CNATA. The regulations provide for a
transitional grace period for air-ticketing agencies that have obtained a valid
license from CAAC or its regional branch prior to the promulgation of the new
rules. These agencies are permitted to use their original licenses until such
licenses expire.




Travel
Agency. The travel industry is subject to the supervision of the China
National Tourism Administration and local tourism administrations. The principal
regulations governing travel agencies in the PRC include:




·
            
            Administration
      of Travel Agencies Regulations (1996), as amended in December 2001;
      and





·
            
            Administration
      of Travel Agencies Regulations Implementing Rules
  (2001).









Under
these regulations, a travel agency must obtain a license from the China National
Tourism Administration to conduct cross-border travel business, and a license
from the provincial-level tourism administration to conduct domestic travel
agency business.




Advertising.
The State General Administration of Industry and Commerce is responsible for
regulating advertising activities in the PRC. The principal regulations
governing advertising (including online advertising) in China
include:





·
            
            Advertising
      Law (1994);





·
            
            Administration
      of Advertising Regulations (1987);
and





·
            
            Implementing
      rules of the Administration of Advertising Regulations
    (2004).




Under
these regulations, any entity conducting advertising activities must obtain an
advertising permit from the local Administration of Industry and
Commerce.




Value-added
Telecommunications Business and Online Commerce. Our provision of
travel-related content on our websites is subject to PRC laws and regulations
relating to the telecommunications industry and Internet, and regulated by
various government authorities, including the Ministry of Information Industry
and the State General Administration of Industry and Commerce. The principal
regulations governing the telecommunications industry and Internet
include:




·
            
            Telecommunications
      Regulations (2000);





·
            
            The
      Administrative Measures for Telecommunications Business Operating Licenses
      (2001); and





·
            
            The
      Internet Information Services Administrative Measures
    (2000).





Under
these regulations, Internet content provision services are classified as
value-added telecommunications businesses, and a commercial operator of such
services must obtain a value-added telecommunications business license from the
appropriate telecommunications authorities to conduct any commercial value-added
telecommunications operations in the PRC.




With
respect to online commerce, there are no specific PRC laws at the national level
governing online commerce or defining online commerce activities, and no
government authority has been designated to regulate online commerce. There are
existing regulations governing retail business that require companies to obtain
licenses to engage in the business. However, it is unclear whether these
existing regulations will be applied to online commerce.




Regulation
of Foreign Currency Exchange and Dividend Distribution




Foreign Currency
Exchange. The principal regulation governing foreign currency exchange
in  the PRC is the Foreign Currency Administration Rules (1996), as
amended. Under these Rules, RMB is freely convertible for trade and
service-related foreign exchange transactions, but not for direct investment,
loan or investment in securities outside China unless the prior approval of the
State Administration for Foreign Exchange of the People’s Republic of
China is obtained.









Pursuant
to the Foreign Currency Administration Rules, foreign investment enterprises in
the PRC may purchase foreign currency without the approval of the State
Administration for Foreign Exchange of the PRC for trade and service-related
foreign exchange transactions by providing commercial documents evidencing these
transactions. They may also retain foreign exchange (subject to a cap approved
by the State Administration for Foreign Exchange of the PRC) to satisfy foreign
exchange liabilities or to pay dividends. In addition, if a foreign company
acquires a company in the PRC, the acquired company will also become a foreign
investment enterprise. However, the relevant PRC government authorities may
limit or eliminate the ability of foreign investment enterprises to purchase and
retain foreign currencies in the future. In addition, foreign exchange
transactions for direct investment, loan and investment in securities outside
the PRC are still subject to limitations and require approvals from the State
Administration for Foreign Exchange of the PRC.




Dividend
Distribution. The principal regulations governing distribution of
dividends of wholly foreign-owned companies include:




·
            
            The
      Foreign Investment Enterprise Law (1986), as amended in October
      2000;





·
            
            Administrative
      Rules under the Foreign Investment Enterprise Law
  (2001);





·
            
            Company
      Law of the PRC (2005); and





·
            
            Enterprise
      Income Tax Law and its Implementation Rules
  (2007).




Under
these regulations, foreign investment enterprises in the PRC may pay dividends
only out of their accumulated profits, if any, determined in accordance with PRC
accounting standards and regulations. In addition, wholly foreign-owned
enterprises in the PRC are required to set aside at least 10% of their
respective accumulated profits each year, if any, to fund certain reserve funds,
unless such reserve funds have reached 50% of their respective registered
capital. These reserves are not distributable as cash dividends.




Under the
new EIT Law, dividends, interests, rent, royalties and gains on transfers of
property payable by a foreign-invested enterprise in the PRC to its foreign
investor who is a non-resident enterprise will be subject to a 10% withholding
tax, unless such non-resident enterprise’s jurisdiction of
incorporation has a tax treaty with the PRC that provides for a reduced rate of
withholding tax.




Under the
new EIT Law, an enterprise established outside the PRC with its “de facto
management body” within the PRC is
considered a resident enterprise and will be subject to the enterprise income
tax at the rate of 25% on its worldwide income. The “de facto
management body” is defined as the
organizational body that effectively exercises overall management and control
over production and business operations, personnel, finance and accounting, and
properties of the enterprise. It remains unclear how the PRC tax authorities
will interpret such a board definition.




According
to the new EIT law, enterprises that currently enjoy a preferential tax rate
will transition to the statutory enterprise income tax rate of 25% over five
years.  The applicable tax rate will increase to 18% for 2008, 20% in
2009, 22% in 2010, 24% in 2011 and 25% in 2012.  Enterprises who are
currently subject to an enterprise income tax rate of 24% will have their rates
increased to 25% in 2008.




The
current tax rates of our various subsidiaries are: for YZL (Shenzhen Yu Zhi Lu
Aviation Service Company Limited ), 15%; for SSD (,Shenzhen Speedy Dragon
Enterprise Limited) 15%, for SLB (Shanghai Lanbao Travel Service Company
Limited, 33%, for  XGN (Xi'an Golden Net Travel Serve Service Company
Limited), 33% and for FOI (Foshan Overseas International Travel Service Co.,
Ltd.), 33%. For 2008, these rates will be adjusted to 18%, 18%, 25%, 25% and 25%
respectively.







Notwithstanding
the foregoing provision, the new EIT Law also provides that, if a resident
enterprise directly invests in another resident enterprise, the dividends
received by the investing resident enterprise from the invested enterprise are
exempted from income tax, subject to certain conditions.




Moreover,
under the new EIT Law, foreign ADS holders may be subject to a 10% withholding
tax upon dividends payable by a Chinese entity and gains realized on the sale or
other disposition of ADSs or ordinary shares, if such income is sourced from
within the PRC and we are classified as a PRC resident enterprise.





Approvals,
licenses and certificates





We have
received the following licenses and approvals:





·
            “First
      Class Air-Ticketing Agency” awarded by the CAAC and IATA to
      YZL;


·
            “Second
      Class Air Cargo Agency” awarded by the CAAC and IATA to
    SSD;


·
            “International
      Travel Agency” awarded by the China Travel Bureau to FOI;
    and


·
            “Domestic
      Travel Agency” awarded by the China Travel Bureau to
  XGN.








Item
1A.           Risk
Factors.




The
reader should carefully consider each of the risks described below. If any of
the following risks described below should occur, our business, financial
condition or results of operations could be materially adversely affected and the
trading price of our Common Stock could decline significantly.





An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information contained
in this prospectus before deciding to invest in our Common Stock.





Risks
Related to the Company





Risks
associated with business declines or disruptions in the travel industry
generally could reduce our revenue.





A large
part of our revenue is driven by the trends that occur in the travel industry in
the PRC, including the hotel, airline and packaged-tour industries. As the
travel industry is highly sensitive to business and personal discretionary
spending levels, it tends to decline during general economic downturns. Other
adverse trends or events that tend to reduce travel and are likely to reduce our
revenue include the following:





·
            an
      outbreak of political or economic unrest in
  China;





·
            a
      recurrence of SARS or any other serious contagious
    diseases;





·
            increased
      prices in the hotel, airline, or other  travel-related
      industries;





·
            increased
      occurrence of travel-related
accidents;





·
            outbreak
      of war or conflict in the Asia-Pacific
region;





·
            increases
      in terrorism or the occurrence of a terrorist attack  in the
      Asia-Pacific region;





·
            poor
      weather conditions; and





·
            natural
      disasters.










We could
be severely affected by changes in the travel industry and will, in many cases,
have little or no control over those changes. As a result of any of these
events, our operating results and financial conditions could be materially and
adversely affected.





Loss
of key personnel could affect our ability to successfully grow our
business.





We are
highly dependent upon the services of our senior management team. The permanent
loss for any of the key executives could have a material adverse effect upon our
operating results.





Our
management is comprised almost entirely of individuals residing in the PRC with
very limited English skills





Our
management is comprised almost entirely of individuals born and raised in the
PRC. As a result of differences in culture, educational background and business
experiences, our management may analyze, evaluate and present business
opportunities and results of operations differently from the way they are
analyzed, evaluated and presented by management teams of public companies in
Europe and the United States. In addition, our management has very limited
skills in English. Consequently, it is possible that our management team will
emphasize or fail to emphasize aspects of our business that might customarily be
emphasized in a different manner by comparable public companies from different
geographical and political areas.





Our
management is not familiar with the United States securities laws.





Our
management and the former owners of the businesses we acquire are generally
unfamiliar with the requirements of the United States securities laws and may
not appreciate the need to devote the resources necessary to comply with such
laws. A failure to adequately respond to applicable securities laws could lead
to investigations by the Securities and Exchange Commission and other regulatory
authorities that could be costly, divert management's attention and disrupt our
business.





Our
operating history is not an adequate basis to judge our future
prospects.





We have
encountered and will continue to encounter risks and difficulties frequently
experienced by companies in evolving industries such as the travel service
industry in the PRC. Some of the risks relate to our ability to:





·
            attract
      and retain customers and encourage our customers to engage in repeat
      transactions;





·
            retain
      our existing agreements with travel suppliers such as hotels and airlines
      and to expand our service offerings on satisfactory terms with our travel
      suppliers;





·
            operate,
      support, expand and develop our operations, our call center, our website,
      and our communications and other
systems;





·
            diversify
      our sources of revenue;





·
            maintain
      effective control of our expenses;
and





·
            respond
      to changes in our regulatory
environment.





If we are
not successful in addressing any or all of these risks, our business may be
materially affected in an adverse manner.










The
travel industry in China is seasonal.





Our
business travel operations experience seasonal fluctuations, reflecting seasonal
variations in demand for travel services. During the first quarter, demand for
travel services generally declines in the PRC and the number of
bookings flattens or decreases, in part due to a slowdown in business activity
during the Chinese New Year holiday. Demand for travel services generally peaks
during the second half of the year and there may be seasonal luctuations
in allocations of travel services made available to us by travel suppliers.
Consequently, our revenue  may fluctuate from quarter to
quarter.





Our
business depends on the technology infrastructure of third parties.





We rely
on third-party computer systems and other service providers, including the
computerized reservation systems of airlines and hotels to make reservations and
confirmations. Other third parties provide, for instance, our back-up data
center, telecommunications access lines, significant computer systems and
software licensing, support and maintenance service and air-ticket delivery. Any
interruption in these or other third-party services or deterioration in their
performance could impair the quality of our service.





Risks
Related to our Common Stock





There
is a limited public market for our Common Stock.





There is
currently a limited public market for our Common Stock. Holders of our Common
Stock may, therefore, have difficulty selling their Common Stock, should they
decide to do so. In addition, there can be no assurances that such markets will
continue or that any shares of Common Stock, which may be purchased, may be sold
without incurring a loss. Any such market price of the Common Stock may not
necessarily bear any relationship to our book value, assets, past operating
results, financial condition or any other established criteria
of value, and may not be indicative of the market price for the Common Stock in
the future. Further, the market price for the Common Stock may be volatile
depending on a number of factors, including business performance, industry
dynamics, and news announcements or changes in general economic
conditions.





Ownership
of our Common Stock is concentrated.





Our
Common Stock is owned by a relatively small number of holders, some of whom have
business relationships in the PRC. A determination by any of such holders to
sell all or a substantial portion of its holdings could depress the trading
price of our Common Stock.





We
have not and do not anticipate paying any dividends on our Common
Stock.





We have
paid no dividends on our Common Stock to date and it is not anticipated that any
dividends will be paid to holders of our Common Stock in the foreseeable future.
While our future dividend policy will be based on the operating results and
capital needs of the business, it is currently anticipated that any earnings
will be retained to finance our future expansion and for the implementation of
our business plan. As an investor, you should take note of the fact that a lack
of a dividend can further affect the market value of our stock, and could
significantly affect the value of any investment in our Company.





We
will incur significant costs as a result of operating as a public company and
our management will be required to devote substantial time to compliance
requirements.





As a
public company we incur significant legal, accounting and other expenses under
the Sarbanes-Oxley Act of 2002, together with rules implemented by the
Securities and Exchange Commission and applicable market regulators. These rules
impose various requirements on public companies, including requiring certain
corporate governance practices. Our management and other personnel will need to
devote a substantial amount of time to these compliance
requirements.





In
addition, the Sarbanes-Oxley Act requires, among other things, that we maintain
effective internal controls for financial reporting and disclosure controls and
procedures. In particular, commencing in 2007, we must perform system and
process evaluations and testing of our internal controls over financial
reporting to allow management to report on the effectiveness of our internal
controls over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act. Our testing may reveal deficiencies in our internal controls
over financial reporting that are deemed to be material weaknesses. Compliance
with Section 404 may require that we incur substantial accounting expenses and
expend significant management efforts. If we are not able to comply with the
requirements of Section 404 in a timely manner, or if our accountants later
identify deficiencies in our internal controls over financial reporting that are
deemed to be material weaknesses, the market price of our stock could decline
and we could be subject to sanctions or investigations by the SEC or other
applicable regulatory authorities.








Our
Board of Directors has the authority, without stockholder approval, to issue
preferred stock with terms that may not be beneficial to common stock
holders.





Our
Amended and Restated Articles of incorporation authorizes the issuance of
preferred shares which may be issued with dividend, liquidation, voting and
redemption rights senior to our Common Stock without prior approval by the
stockholders. The Preferred Stock may be issued for such consideration as may be
fixed from time to time by the Board of Directors. The Board of Directors may
issue such shares of Preferred Stock in one or more series, with such
designations, preferences and rights or qualifications, limitations or
restrictions thereof as shall be stated in the resolution of
resolutions.





The
issuance of preferred stock could adversely affect the voting power and other
rights of the holders of common stock. Preferred stock may be issued quickly
with terms calculated to discourage, make more difficult, delay or prevent a
change in control of our Company or make removal of management more difficult.
As a result, the Board of Directors' ability to issue preferred stock may
discourage the potential hostile acquirer, possibly resulting in beneficial
negotiations. Negotiating with an unfriendly acquirer may result in, among other
things, terms more favorable to us and our stockholders. Conversely, the
issuance of preferred stock may adversely affect any market price of, and the
voting and other rights of the holders of the Common Stock. We presently have
no


plans to
issue any preferred stock.





Our
Common Stock is subject to the Penny Stock Regulations




Our
Common Stock and will likely be subject to the SEC's “penny stock” rules to the
extent that the price remains less than $5.00. Those rules, which require
delivery of a schedule explaining the penny stock market and the associated
risks before any sale, may further limit your ability to sell your
shares.




The SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share. Our Common Stock,
when and if a trading market develops, may fall within the definition of penny
stock and subject to rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000, or annual incomes exceeding $200,000 or $300,000, together with
their spouse).




For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's prior written consent to the transaction. Additionally, for any
transaction, other than exempt transactions, involving a penny stock, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the `penny stock` rules may restrict the ability of broker-dealers
to sell our Common Stock and may affect the ability of investors to sell their
Common Stock in the secondary market.








As
an issuer of “penny stock” the protection provided by the federal securities
laws relating to forward-looking statements does not apply to us and as a result
we could be subject to legal action.





Although
federal securities laws provide a safe harbor for forward-looking statements
made by a public company that files reports under the federal securities laws,
this safe harbor is not available to issuers of penny stocks. As a result, if we
are a penny stock, we will not have the benefit of this safe harbor protection
in the event of any legal action based upon a claim that the material provided
by us contained a material misstatement of fact or was misleading in any
material respect because of our failure to include any statements necessary to
make the statements not misleading. Such an action could hurt our financial
condition.





For more
information about penny stocks, contact the Office of Filings, Information and
Consumer Services of the U.S. Securities and Exchange Commission, 100 F Street,
N.E., Washington, D.C. 20549, or by telephone at 1-800-732-0330.




The
issuance of shares through our stock compensation plans may dilute the value of
existing stockholders and may affect the market price of our stock.




Although
we do not have an option or other equity-based incentive plan at present, in the
future we may use stock options, stock grants and other equity-based incentives,
to provide motivation and compensation to our officers, employees and key
independent consultants. The award of any such incentives will result in an
immediate and potentially substantial dilution to our existing stockholders and
could result in a decline in the value of our stock price. The exercise of these
options and the sale of the underlying shares of common stock and the sale of
stock issued pursuant to stock grants may have an adverse effect upon the price
of our stock.





Risks
Related to Doing Business in The People’s Republic of China





It
may be difficult for our stockholders to enforce their rights against the
Company or its officers or directors.





Because
our principal assets are located outside of the United States and some of our
directors and all of our executive officers reside outside of the United States,
it may be difficult for you to enforce your rights based on the United States
Federal securities laws against us and our officers and directors in the United
States or to enforce judgments of United States courts against us or them in the
People's Republic of China.





In
addition, our operating subsidiaries and substantially all of our assets are
located outside of the United States. You will find it difficult to enforce your
legal rights based on the civil liability provisions of the United States
Federal securities laws against us in the courts of either the United States or
the People's Republic of China and, even if civil judgments are obtained in
courts of the United States, to enforce such judgments in the courts of the
People's Republic of China. In addition, it is unclear if extradition treaties
in effect between the United States and the People's Republic of China would
permit effective enforcement against us or our officers and directors of criminal
penalties, under the United States Federal securities laws or
otherwise.





Our
business operations take place primarily in the PRC. Because Chinese laws,
regulations and policies are continually changing, our operations will face
numerous risks.





Because
our operations primarily take place outside of the United States and are subject
to Chinese laws, regulations and policies affecting any change of Chinese laws
may adversely affect our business, such as exchange controls and currency
restrictions, currency fluctuations and devaluations, changes in local economic
conditions, changes in Chinese laws and regulations, exposure to possible
expropriation or other Chinese government actions, and unsettled political
conditions. These factors may have a material adverse effect on our operations
or on our business, results of operations and financial condition.





China's
economy differs from the economies of most developed countries in many respects,
including substantial governmental regulation, development, growth rate, control
of foreign exchange, significant restrictions on property rights, taxation
levels, and permitted allocation of resources. While the People's Republic of
China economy has experienced significant growth in the past 20 years, growth
has been uneven across different regions and among various economic sectors of
China. The government of the People's Republic of China has implemented various
measures to encourage economic development and guide the allocation of
resources, which may or may not achieve the desired results or stated goals.
Some of these measures may benefit the overall economy of People's Republic
of China, but may also have a negative effect on us or on the economy in
general. For example, our financial condition and results of operations may be
adversely affected by government control over capital investments or changes in
tax regulations that are applicable to us. Since early 2004, the government of
the People's Republic of China has implemented certain measures to control the
pace of economic growth. Such measures may cause a decrease in the level of
economic activity in the People’s Republic of China, which could adversely
affect our results of operations and financial condition.










Limitations
on Chinese economic market reforms may discourage foreign investment in Chinese
businesses.





The value
of investments in Chinese businesses could be adversely affected by political,
economic and social uncertainties in China. The economic reforms in China in
recent years are regarded by China's central government as a way to introduce
economic market forces into China. Given the overriding desire of the central
government leadership to maintain stability in China amid rapid social and
economic changes in the country, the economic market reforms of recent years
could be slowed, or even reversed.





We
face economic risks in doing business in the PRC.





As a
developing nation, the PRC's economy is more volatile than that of developed
Western industrial economies. It differs significantly from that of the U.S. or
a Western European country in such respects as structure, level of development,
capital reinvestment, resource allocation and self-sufficiency. Only in recent
years has the Chinese economy moved from what had been a command economy through
the 1970s to one that during the 1990s encouraged substantial private economic
activity. In 1993, the Constitution of China was amended to reinforce such
economic reforms. The trends of the 1990s indicate that future policies of the
Chinese government will emphasize greater utilization of market forces. For
example, in 1999 the Government announced plans to amend the Chinese Constitution
to recognize private property, although private business will officially remain
subordinated to the state-owned companies, which are the mainstay of the Chinese
economy. However, there can be no assurance that, under some
circumstances, the government's pursuit of economic reforms will not be
restrained or curtailed. Actions by the central government of the PRC could have
a significant adverse effect on economic conditions in the country as a whole
and on the economic prospects for our Chinese operations.





Any
slowdown of economic growth in the PRC could have a negative effect on our
business. There can be no assurance that the growth of the economy in the PRC
will continue or that any slowdown will not have a negative effect on our
business.





Our
online business relies on the existence of an
adequate  telecommunications infrastructure for continued growth of
China's internet market.





Although
private sector Internet service providers currently exist in the PRC, almost all
access to the Internet is maintained through a network owned by China Netcom
under the regulatory supervision of China's Ministry of Information Industry. In
addition, the national networks in the PRC connect to the Internet through a
government-controlled international gateway. This international gateway is the
only channel through which a domestic Chinese user can connect to the
international Internet network. We rely on this infrastructure and China Netcom
to provide data communications capacity, primarily through local
telecommunications lines. We cannot assure you that this infrastructure will be
further developed. In addition, we will have no access to alternative networks
and services, on a timely basis if at all, in the event of any infrastructure
disruption or failure. The Internet infrastructure in the PRC may not support
the demands associated with continued growth in Internet usage.





We
may suffer currency exchange losses if the Renminbi depreciates relative to the
U.S. Dollar.





Our
reporting currency is the U.S. dollar. However, a substantial portion of our
assets and revenues are denominated in the Chinese currency, Renminbi, commonly
referred to as RMB. Our assets and revenues expressed in our U.S. dollar
financial statements will decline in value of the Renminbi depreciates relative
to the U.S. dollar. Any such depreciation could adversely affect the market
price of our Common Stock. Very limited hedging transactions are available in
the PRC to reduce our exposure to exchange rate fluctuations and we do not
intend to engage in any such transactions. In addition, our currency exchange
losses may be magnified by Chinese exchange control regulations that restrict
our ability to convert Renminbi into U.S. Dollars.








We
may not be able to freely convert Renminbi into foreign currency.





A portion
of our revenues and operating expenses will be denominated in Renminbi while a
portion of our capital expenditures are denominated in U.S.
dollars.





Under
current Chinese regulations, the payment of dividends, trade and service-related
foreign transactions to a foreign investor of a foreign-invested enterprise is
treated as a "current account" payment for which the approval of the State
Administration of Foreign Exchange is not required. However, in order to
distribute dividends we may be required to file documentation to a designated
foreign exchange bank. The Bank must certify that all requirements have been
met, such as payment of taxes, directors' approval and a capital verification
report issued by an accounting firm. If a foreign-invested enterprise dissolves,
a return of capital, which includes foreign direct investment, is treated as a
"capital account" payment. This typically requires approval of the State
Administration of Foreign Exchanges' in addition to the filing of
documentation.





We may
currently convert Renminbi for transactions under the "current account" without
the approval of the State Administration of Foreign Exchange for settlement of
"current account" transactions, including payment of dividends,
by providing commercial documents evidencing these transactions. They may also
retain foreign exchange in their current accounts (subject to a ceiling approved
by the State Administration of Foreign Exchange) to satisfy foreign exchange
liabilities or to pay dividends. However, the relevant Chinese governmental
authorities may limit or eliminate the ability to purchase and retain foreign
currencies in the future. Such change of policy would materially and adversely
affect our business, financial condition and results of operations.





The
Chinese legal and judicial system may negatively impact foreign
investors.





In 1982,
the National Peoples Congress amended the Constitution of China to authorize
foreign investment and guarantee the "lawful rights and interests" of foreign
investors in the PRC. However, the PRC's system of laws is not yet
comprehensive. The legal and judicial systems in the PRC are still rudimentary,
and enforcement of existing laws is inconsistent. Many judges in the PRC lack
the depth of legal training and experience that would be expected of a judge in
a more developed country. Because the Chinese judiciary is relatively
inexperienced in enforcing the laws that do exist, anticipation of judicial
decision-making is more uncertain than would be expected in a more developed
country. It may be impossible to obtain swift and equitable enforcement of
laws  that do exist, or to obtain enforcement of the judgment of one
court by a court of another jurisdiction. The PRC's legal system is based on
written statutes; a decision by one judge does not set a legal precedent that is
required to be followed by judges in other cases. In addition, the
interpretation of Chinese laws may be varied to reflect domestic political
changes.





The
promulgation of new laws, changes to existing laws and the pre-emption of local
regulations by national laws may adversely affect foreign investors. However,
the trend of legislation over the last 20 years has significantly enhanced the
protection of foreign investment and allowed for more control by foreign parties
of their investments in Chinese enterprises. There can be no assurance that a
change in leadership, social or political disruption, or unforeseen
circumstances affecting the PRC’s political, economic or social life, will not
affect the Chinese government's ability to continue to support and pursue these
reforms. Such a shift could have a material adverse effect on our business and
prospects.








The
practical effect of the Peoples Republic of China legal system on our business
operations in the PRC can be viewed from two separate but intertwined
considerations. First, as a matter of substantive law, the Foreign Invested
Enterprise laws provide significant protection from government interference. In
addition, these laws guarantee the full enjoyment of the benefits of corporate
Articles and contracts to Foreign Invested Enterprise participants. These laws,
however, do impose standards concerning corporate formation and governance,
which are not qualitatively different from the general corporation laws of the
several states. Similarly, the Peoples Republic of China accounting laws mandate
accounting practices, which are not consistent with U.S. Generally Accepted
Accounting Principles. The PRC's accounting laws require that an annual
"statutory audit" be performed in accordance with the PRC accounting standards
and that the books of account of Foreign Invested Enterprises are maintained in
accordance with Chinese accounting laws. Article 14 of the Peoples Republic of
China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned
Enterprise to submit certain periodic fiscal reports and statements to designate
financial and tax authorities, at the risk of business license revocation.
Second, while the enforcement of substantive rights may appear less clear than
United States procedures, the Foreign Invested Enterprises and Wholly
Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same
status as other Chinese registered companies in business-to-business dispute
resolution. Generally, the Articles of Association provide that all business
disputes pertaining to Foreign Invested Enterprises are to be resolved by the
Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden,
applying Chinese substantive law. Any award rendered by this arbitration
tribunal is, by the express terms of the respective Articles of Association,
enforceable in accordance with the "United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards (1958)." Therefore, as a practical
matter, although no assurances can be given, the Chinese legal infrastructure,
while different in operation from its United States counterpart, should not
present any significant impediment to the operation of Foreign Invested
Enterprises.





Item
1B.            Unresolved
Staff Comments.




Not applicable.




Item
2.   Properties.




All land
in the PRC is owned by the government and cannot be sold to any individual or
entity. Instead, the government grants landholders a "land use right" after a
purchase price for such "land use right" is paid to the government. The "land
use right" allows the holder the right to use the land for a specified long-term
period of time and enjoys all the incidents of ownership of the land. The
following are the details regarding Universal travel Group’s
land  use rights with regard to the land that it
uses  in its business.





Our
principal executive offices are located at Shennan Road, Hualian Center Room 301
- 304, Shenzhen, People's Republic of China. The offices contain approximately
8,600 square feet of usable space and are subject to a lease which expires
October 2010. The monthly rent payable for these offices is $5,400.





In
addition to our headquarters, YZL  maintains offices at the locations
listed below which require aggregate monthly payments of $14,760.





1.
            Baoan
      Airport Branch: BT61-62, Area B, Shenzhen Baoan
  Airport.


2.
            Fuyong
      Branch: No. 129. Bai Shi Sha Blvd, Fuyong Zhen, Shenzhen
    City.


3.
              Longhua
      Zhuojing Branch: No.11 Sheng Di Long Quan, Ban Ren Min Bei Road, Longhua
      Blvd, Shenzhen City.


4.
              Xinzhou
      Branch: 1st Floor Business Center, Chu Tian Hotel, Hubei Building, Bin He
      Road, Shenzhen City.


5.
            No.
      2008 Shennan Road, Hua Lian Building Suite 305-309, Shenzhen
      City.





FOI
maintains 9 offices around the Guangzhou, which aggregate monthly rental amounts
to $4,430;




XGN
maintains 3 offices in Xi’an and the aggregate monthly rent amounts to
$707;




SLB
maintains its main office in Shanghai and its monthly rent is
$5,630;




SSD’s
headquarters are in Shenzhen Baoan Airport and its monthly rent is
$4,379.




We plan
to expand our operations and lease more office space in the near
future.  We anticipate that our monthly rental expenses will increase
to about  $50,000, including the rentals for our TRIPEASY Travel Service
Kiosks.









Item
3.   Legal Proceedings.




We know
of no material, active, pending or threatened proceeding against us or our
subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or
defendant in any material proceeding or pending litigation.





Item
4. Submission of Matters to a Vote of Security Holders.




None.




PART
II




Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of


Equity
Securities.




Market
Information





Our
common stock is traded on the OTC Bulletin Board under the symbol “UTVG.OB”.
Prior to August 21, 2006, the date we changed our name from TAM of Henderson,
Inc. to Universal Travel Group, our Common Stock was quoted under the symbol
"TMHN.OB".





The
prices set forth below reflect the quarterly high and low bid price information
for shares of our Common Stock for the periods indicated. These quotations are
taken from the OTC Bulletin Board. They reflect inter-dealer prices, without
retail markup, markdown or commission, and may not represent actual
transactions.







Calendar Quarter
                  
                  Low Bid
                  
                  
                  High Bid2007
      First Quarter
                  
                  $
                  0.40
                  
                  
                  $
                  1.802007
      Second Quarter
                  
                  $
                  1.57
                  
                  
                  $
                  3.602007
      Third Quarter
                  
                  $
                  1.85
                  
                  
                  $
                  4.082007
      Fourth Quarter
                  
                  $
                  2.75
                  
                  
                  $
                  5.722008
      First Quarter
                  
                  $
                  1.45
                  
                  
                  $
                  3.822008
      Second Quarter
                  
                  $
                  1.12
                  
                  
                  $
                  2.862008
      Third Quarter
                  
                  $
                  0.87
                  
                  
                  $
                  1.652008
      Fourth Quarter
                  
                  $
                  0.45
                  
                  
                  $
                  1.10




Holders
of Securities




As of
March 12, 2009, there were approximately 37 holders of record of our Common
Stock, including shares held in street name by brokerage firms.  The
holders of Common Stock are entitled to one vote for each share held of record
on all matters submitted to a vote of stockholders.  Holders of the
Common Stock have no preemptive rights and  no right to convert their
Common Stock into any other securities.  There are no redemption or
sinking fund provisions applicable to the Common Stock.





Our
Common Stock is covered by a Commission rule that imposes additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors, which are generally
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. For transactions covered by the rule, the broker-dealer must
make a special suitability determination for the purchaser and transaction prior
to the sale. Consequently, the rule may affect the ability of broker-dealers to
sell our securities and also may affect the ability of purchasers of our Common
Stock to sell their shares in the secondary market. It may also cause fewer
broker-dealers to be willing to make a market in our common stock, and it may
affect the level of news coverage we receive.










Dividends





We have
not declared or paid any cash dividends on our Common Stock since our inception,
and our board of directors currently intends to retain all earnings for use in
the business for the foreseeable future. Any future payment of dividends will
depend upon our results of operations, financial condition, cash requirements
and other factors deemed relevant by our board of directors. There are currently
no restrictions that limit our ability to declare cash dividends on our Common
Stock and we do not believe that there are any that are likely to do so in the
future.





Securities
Authorized for Issuance Under Equity Compensation Plans





In
January 2007,  we adopted the Universal Travel Group 2007 Equity
Incentive Plan. In the first quarter of 2007, we issued 3,770,000 shares of our
Common Stock pursuant to the Plan for services rendered from October 2, 2006,
through February 28, 2007.  At the time of issuance the 3,770,000
shares were valued at $1,583,400, of which $950,040 was charged against earnings
in 2006 and $633,360 was charged against earnings for 2007.





There are
no longer any shares available for issuance pursuant to the Universal Travel
Group 2007 Equity Incentive Plan.





During
2007 we issued options to purchase 100,000 shares to each of three newly
appointed directors. The options are exercisable for a period of approximately
10 years from the date of issuance and are exercisable at prices of $1.95; $2.85
and $3.75, respectively. All three directors have to date ceased to be directors
of the Company.  Accordingly, only an aggregate of options to purchase
66,666  shares of our Common Stock has vested amongst these three
ex-directors.





Additionally,
on June 24, 2008, we granted an option to purchase 100,000 shares of our Common
Stock to our newly appointed director, Yizhao Zhang.  His option is
exercisable for a period of approximately 10 years from the date of issuance and
is exercisable at $1.52 per share.The
option holder has no voting or dividend rights. We record the expense of the
stock options over the related vesting period. The options were valued using the
Black-Scholes option-pricing model at the model at the date of grant stock
option pricing.





In
January 2009, we adopted the Universal Travel Group 2009 Incentive Stock
Plan.  On January 20, 2009, we issued options to purchases 6,000,000
shares of Common Stock to our Chief Executive Officer, Ms. Jiangping Jiang at an
exercise price of $1.28.  The remaining options to purchase 600,000
shares of Common Stock were issued on the same date to various employees at an
exercise price of $0.90.  The term of each option was for 10
years.  The options vest in six annual equal
installments.  However, in the event (i) the Company reports an after
tax Net Income of $14,000,000  in its Annual Report on Form 10-K filed with
the SEC for its fiscal year 2008, then options to purchase one-third of the
shares granted shall vest and become immediately exercisable and each grantee of
such options shall be entitled to exercise his/her options rateably, (ii) 
the Company reports an after tax Net Income of $18,000,000  in its Annual
Report on Form 10-K filed with the SEC for its fiscal year 2009, then options to
purchase another one-third of the shares  granted shall vest and
become immediately exercisable and each grantee of such options shall be
entitled to exercise his/her options rateably and (iii) the Company reports an
after tax Net Income of $22,000,000  in its Annual Report on Form 10-K
filed with the SEC for its fiscal year 2010, then options to purchase another
one-third of the shares granted shall vest and become immediately exercisable
and each grantee of such options shall be entitled to exercise his/her options
rateably.   As of the date of this Annual Report, all the
6,600,000 options to purchase our Common Stock under the Universal Travel Group
2009 Incentive Stock Plan have been issued and there are no longer any shares
available for issuance under the said Plan.





The
following table provides information as of the date hereof our outstanding
equity compensation plans and
arrangements.








Equity
Compensation Plan Information








Plan
      Category
                        
                        Number
      of securities to be
                          issued
      upon exercise of
                          outstanding
      options,
                          warrants
      and rights
                          (a)
                        
                        
                        Weighted
      average exercise
                          price
      of outstanding
                          options,
      warrants and
                          rights
                          (b)
                        
                        
                        Number
      of securities
                          remaining
      available for
                          future
      issuance under
                          equity
      compensation plans
                          (excluding
      securities
                          reflected
      in column (a))
                          (c)Equity
      compensation plans approved by security holders
                        
                        
                        6,600,000
                        
                        
                        $
                        1.24
                        
                        
                        
                        0Equity
      compensation plans not approved by security holders
                        
                        
                        166,666
                        
                        
                        $
                        2.232
                        
                        
                        
                        0Total
                        
                        
                        166,666
                        
                        
                        $
                        2.232
                        
                        
                        
                        0





Warrants





On August
28, 2008, we  entered into a Securities Purchase Agreement with Access
America Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller Capital
Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter, LLC, MARed
Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce, Fenner &
Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to the Buyers
4,588,708 shares of Common Stock and warrants to purchase 2,294,356 shares of
Common Stock for an aggregate purchase price of $7,112,500.   The
Financing closed on August 29, 2008.





Each
warrant has an Exercise Price of $2.71 and a term of 5 years from the date of
issuance. We shall have the right at any time, on written notice given not less
than forty five (45) days prior to the Redemption Date (which is the date the
warrants are to be redeemed), to redeem the outstanding warrants at the
Redemption Price of one cent ($.01) per share of Common Stock issuable upon
exercise of the warrants, provided (i) the Market Price (as defined in the
warrant) of the Common Stock shall equal or exceed $8.13 for at least thirty
(30) Trading Days prior to the call for redemption by the Company, (ii) the
shares of Common Stock are trading on a recognized U.S. share exchange, which
shall mean the New York Stock Exchange, the American Stock Exchange or the
Nasdaq Stock Market (including the Global Select, Global and Capital Markets)
and (iii) we are current in all our reporting obligations under the Securities
Exchange Act of 1934. All warrants must be redeemed if any warrants are
redeemed.





We may
only exercise the right of redemption of the warrants if a registration
statement covering the sale by the holder(s) of the shares of Common Stock
issuable upon exercise of the warrants is current and effective on each day in
the period commencing on the first day of call for redemption and ending sixty
(60) days after the Redemption Date. In the event that, at any time subsequent
to the date on which the warrants are called for redemption and before the
Redemption Date, the shares of Common Stock issuable upon exercise or conversion
of the warrants are not subject to a current and effective registration
statement, our right to call the warrants for redemption shall terminate with
respect to all warrants that have not then been exercised or converted. The
Redemption Date shall be postponed for two (2) Trading Days for each day after
the warrants are called for redemption that the Market Price of the Common Stock
is less than the $8.13; provided, however, that if the Market Price shall be
less than $8.13 for ten (10) consecutive Trading Days or fifteen (15) Trading
Days during the period from the date the warrants are called for redemption to
the Redemption Date, our right to redeem any warrants not theretofore exercised
or converted shall terminate, subject to the right of the Company to call the
remaining warrants for redemption.





If we
were to sell or issue Common Stock at a price which is less than the Exercise
Price then in effect, or warrants, options, convertible debt or equity
securities with an exercise price per share or a conversion price which is less
than the Exercise Price then in effect, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the aggregate
consideration received or receivable for the issuance of such additional shares
would purchase at the Exercise Price then in effect, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares (including a pro forma adjustment
as though all such options, warrants and other convertible securities had been
exercised or converted). Such adjustment shall be made successively whenever
such an issuance is made. An adjustment shall not result in any change in the
number of shares of Common Stock issuable upon exercise of this
Warrant.









Penny
Stock Regulations





Our
shares of Common Stock are subject to the "penny stock" rules of the Securities
Exchange Act of 1934 and various rules under this Act. In general terms, "penny
stock" is defined as any equity security that has a market price less than $5.00
per share, subject to certain exceptions. The rules provide that any equity
security is considered to be a penny stock unless that security is registered
and traded on a national securities exchange meeting specified criteria set by
the SEC, issued by a registered investment company, and excluded from the
definition on the basis of price (at least $5.00 per share), or based on the
issuer's net tangible assets or revenues. In the last case, the issuer's net
tangible assets must exceed $3,000,000 if in continuous operation for at least
three years or $5,000,000 if in operation for less than three years, or the
issuer's average revenues for each of the past three years must exceed
$6,000,000.





Trading
in shares of penny stock is subject to additional sales practice requirements
for broker-dealers who sell penny stocks to persons other than established
customers and accredited investors. Accredited investors, in general, include
individuals with assets in excess of $1,000,000 or annual income exceeding
$200,000 (or $300,000 together with their spouse), and certain institutional
investors. For transactions covered by these rules, broker-dealers must make a
special suitability determination for the purchase of the security and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, the rules
require the delivery, prior to the first transaction, of a risk disclosure
document relating to the penny stock. A broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative,
and current quotations for the security. Finally, monthly statements must be
sent disclosing recent price information for the penny stocks. These rules may
restrict the ability of broker-dealers to trade or maintain a market in our
Common Stock, to the extent it is penny stock, and may affect the ability of
shareholders to sell their shares.





Purchases
of Equity Securities by the Company and Affiliated Purchasers





During
the fourth quarter of our fiscal year ended December 31, 2008, neither we nor
any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange
Act) purchased any shares of our Common Stock, the only class of our outstanding
equity securities registered pursuant to section 12 of the Exchange
Act.





Recent
Sales of Unregistered Securities




The
following sets forth recent sales by the Company of unregistered securities
during the fiscal year ended December 31, 2008:





On
February 4, 2008, we received a commitment for $3.5 million in financing from
three Chinese financial institutions, namely Total Shine Group Limited, Victory
High Investments Limited and Think Big Trading Limited, in exchange for
1,301,481 shares of our Common Stock, a price of $2.70 per share. The proceeds
were to be used exclusively to reduce debt from past acquisitions. The funds
were to be paid in three installments: $600,000 was paid upon execution of the
equity financing agreement, $1,400,000 is to be paid no later than February 28,
2008 and the balance of $1,514,000 is to be paid no later than ten days after
the filing of our Annual report. The first round of financing closed on February
7, 2008.  Proceeds from the first closing amounting to $599,994 were
paid directly to the shareholders of  Foshan Overseas International
Travel Service Co., Ltd. (FOI) to satisfy an amount due to them under a note and
we issued 222,222 shares of our Common Stock to Total Shine Group Limited,
Victory High Investments Limited and Think Big Trading Limited.  On
May 7, 2008 we terminated the equity financing agreement with the financial
institutions due to their failure to provide the remaining amounts according to
the agreement.










On August
28, 2008, we entered into a Securities Purchase Agreement with Access America
Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller Capital
Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter, LLC, MARed
Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce, Fenner &
Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to the Buyers
4,588,708 shares of common stock, of the Company and warrants to purchase
2,294,356 shares of common stock for an aggregate purchase price of $7,112,500.
Each warrant has an exercise price of $2.71 and a term of 5 years from the date
of issuance.





The
private placements were exempt from registration under the Securities Act under
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder because
the securities were offered only to nine purchasers, all of which were
accredited investors, no general advertisement of the sale of securities was
made, and all other requirements of the exemption were satisfied.





The
following sets forth recent sales by the Company of unregistered securities
during the fiscal year ending December 31, 2007:





On April
10, 2007, we, Full Power Enterprise Global Limited ("Full Power"), Shenzhen Yu
Zhi Lu Aviation Service Company Limited (“YZL”), Shenzhen Speedy Dragon
Enterprise Limited (“SSD”) and Song, entered into a share exchange agreement
pursuant to which YZL acquired 100% of SSD in a stock and cash transaction
valued at approximately US $4,000,000. Under the share exchange agreement, in
exchange for his shares in SSD, Song received both stock consideration and cash
consideration. The stock consideration consisted of


714,285
newly issued shares of our Common Stock.





On August
6, 2007, pursuant to a share exchange agreement, in exchange for the shares of
Xi'an Golden Net Travel Serve Service Company Limited (“XGN”), we issued to the
shareholders of XGN an aggregate of 151,765 shares of our Common Stock, which
were divided proportionally among the shareholders in accordance with their
respective ownership interests in XGN immediately before the closing of the
share exchange agreement.





On August
8, 2007, pursuant to a share exchange agreement, in exchange for the shares of
Shanghai Lanbao Travel Service Company Limited (“SLB”), we issued to the
shareholders of SLB an aggregate of 600,000 shares of our Common Stock, which
were divided proportionally among the shareholders in accordance with their
respective ownership interests in SLB immediately before the closing of the
share exchange agreement.





On
October 29, 2007, pursuant to a share exchange agreement, in exchange for the
shares of Foshan Overseas International Travel Service Co., Ltd. (“FOI”), we
issued to the shareholders of FOI an aggregate of 1,122,986 shares of our Common
Stock, which were divided proportionally among the shareholders in accordance
with their respective ownership interests in FOI immediately before the closing
of the share exchange agreement.





The
shares of the our Common Stock were issued to Song and the shareholders without
registration under Section 5 of the Securities Act in reliance on the exemption
from registration contained in Section 4(2) of the Securities Act.Specifically,
(1) we had determined that Song and the shareholders are knowledgeable and
experienced in finance and business matters and thus they are able to evaluate
the risks and merits of acquiring our securities; (2) Song and the shareholders
have advised us that they are able to bear the economic risk of purchasing our
common stock; (3) we have provided Song the shareholders with access to the type
of information normally provided in a prospectus; and (4) we did not use any
form of public solicitation or general advertising in connection with the
issuance of the shares.





In
addition, the shares of our Common Stock were issued to Song and the
shareholders without registration under Section 5 of the Securities Act, in
reliance on the exemption from registration contained in Regulation S under the
Securities Act.      We believe that the issuance
of our Common Stock to Song and the shareholders (the "Offshore Shareholders")
constituted an offshore transaction. Each of the Offshore Shareholders is a
resident of China. At the time the Registrant offered to issue its shares to the
Offshore Shareholders, each of the Offshore Shareholders was located in China.
Furthermore, at the time we issued our Common Stock to the Offshore
Shareholders, we reasonably believed that each of the Offshore Shareholders was
outside the United States. As a result, we believed that these facts enable us
to also rely on Regulation S for an exemption from the registration requirements
of Section 5 of the Securities Act with respect to the issuances to the Offshore
Shareholders.








The
following sets forth recent sales by the Company of unregistered securities
during the fiscal year ended December 31, 2006:





None.





No
underwriter was involved in any of the above issuances of securities. All of the
above securities were issued in reliance upon the exemptions set forth in
Section 4(2) of the Securities Act on the basis that they were issued under
circumstances not involving a public offering.





Other
than the securities mentioned above, we have not issued or sold any securities
without registration for the past three years from the date of this registration
statement.




Item
6. Selected Financial Data.




The
following selected consolidated financial data presented below are derived from
our Consolidated Financial Statements and related Notes of the Company, and
should be read in connection with those statements, some of which are included
herein.The
information set forth below is not necessarily indicative of future results and
should be read in conjunction with Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”




UNIVERSAL
      TRAVEL GROUPCONSOLIDATED
      STATEMENTS OF INCOMEFOR
      THE THREE YEARS ENDED DECEMBER 31,




2008
                                                                        
                                                                        
                                                                        2007
                                                                        
                                                                        
                                                                        2006Gross
      revenues,
                                                                        
                                                                        $
                                                                        76,759,411
                                                                        
                                                                        
                                                                        $
                                                                        44,294,853
                                                                        
                                                                        
                                                                        $
                                                                        10,013,788Cost
      of services
                                                                        
                                                                        
                                                                        51,555,991
                                                                        
                                                                        
                                                                        
                                                                        29,519,012
                                                                        
                                                                        
                                                                        
                                                                        4,594,376Gross
      Profit
                                                                        
                                                                        
                                                                        25,203,420
                                                                        
                                                                        
                                                                        
                                                                        14,775,841
                                                                        
                                                                        
                                                                        
                                                                        5,419,412Selling,
      general and administrative expenses
                                                                        
                                                                        
                                                                        6,128,553
                                                                        
                                                                        
                                                                        
                                                                        3,229,526
                                                                        
                                                                        
                                                                        
                                                                        1,353,434Stock
      based compensation
                                                                        
                                                                        
                                                                        207,588
                                                                        
                                                                        
                                                                        
                                                                        945,903
                                                                        
                                                                        
                                                                        
                                                                        950,040Total
      expenses
                                                                        
                                                                        
                                                                        6,336,141
                                                                        
                                                                        
                                                                        
                                                                        4,175,429
                                                                        
                                                                        
                                                                        
                                                                        2,303,474Income
      from operations
                                                                        
                                                                        
                                                                        18,867,279
                                                                        
                                                                        
                                                                        
                                                                        10,600,412
                                                                        
                                                                        
                                                                        
                                                                        3,115,938Other
      Income (Expense)Loss
      on disposal of assets
                                                                        
                                                                        
                                                                        1,105
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Other
      income
                                                                        
                                                                        
                                                                        (8,402
                                                                        )
                                                                        
                                                                        
                                                                        (25,105
                                                                        )
                                                                        
                                                                        
                                                                        (36,383
                                                                        )Interest
      income
                                                                        
                                                                        
                                                                        (39,416
                                                                        )
                                                                        
                                                                        
                                                                        (3,293
                                                                        )
                                                                        
                                                                        
                                                                        (11,994
                                                                        )Interest
      expense
                                                                        
                                                                        
                                                                        106,163
                                                                        
                                                                        
                                                                        
                                                                        80,847
                                                                        
                                                                        
                                                                        
                                                                        2,754Total
      Other Income (Expense)
                                                                        
                                                                        
                                                                        59,450
                                                                        
                                                                        
                                                                        
                                                                        52,449
                                                                        
                                                                        
                                                                        
                                                                        (45,623
                                                                        )Income
      before income taxes
                                                                        
                                                                        
                                                                        18,807,829
                                                                        
                                                                        
                                                                        
                                                                        10,547,963
                                                                        
                                                                        
                                                                        
                                                                        3,161,561Provision
      for income taxes
                                                                        
                                                                        
                                                                        4,275,652
                                                                        
                                                                        
                                                                        
                                                                        1,852,069
                                                                        
                                                                        
                                                                        
                                                                        603,083Net
      income
                                                                        
                                                                        $
                                                                        14,532,177
                                                                        
                                                                        
                                                                        $
                                                                        8,695,894
                                                                        
                                                                        
                                                                        $
                                                                        2,558,478Net
      income per common shareBasic
                                                                        
                                                                        $
                                                                        .38
                                                                        
                                                                        
                                                                        $
                                                                        .26
                                                                        
                                                                        
                                                                        $
                                                                        .07Diluted
                                                                        
                                                                        $
                                                                        .37
                                                                        
                                                                        
                                                                        $
                                                                        .
      .26
                                                                        
                                                                        
                                                                        $
                                                                        .07Weighted
      average common shares outstandingBasic
                                                                        
                                                                        
                                                                        38,562,155
                                                                        
                                                                        
                                                                        
                                                                        33.629,518
                                                                        
                                                                        
                                                                        
                                                                        30,450,000Diluted
                                                                        
                                                                        
                                                                        38,744,392
                                                                        
                                                                        
                                                                        
                                                                        33,779,518
                                                                        
                                                                        
                                                                        
                                                                        30,450,000










UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
BALANCE SHEETS


DECEMBER
31, 2008 and 2007





2008
                    
                    
                    2007ASSETSCurrent
      AssetsCash
      and cash equivalents
                    
                    $
                    16,204,531
                    
                    
                    $
                    2,671,684Accounts
      receivable, net
                    
                    
                    10,715,206
                    
                    
                    
                    5,403,820Other
      receivables and deposits, net
                    
                    
                    141,413
                    
                    
                    
                    1,297,426Refundable
      acquisition deposit
                    
                    
                    -
                    
                    
                    
                    1,453,050Due
      from shareholder
                    
                    
                    -
                    
                    
                    
                    1,444,818Trade
      deposit
                    
                    
                    6,737,521
                    
                    
                    
                    2,650,744Advances
                    
                    
                    438,468
                    
                    
                    
                    616,861Escrow
      deposits
                    
                    
                    762,800
                    
                    
                    
                    -Prepaid
      expenses
                    
                    
                    319,257
                    
                    
                    
                    713,668Total
      Current Assets
                    
                    
                    35,319,196
                    
                    
                    
                    16,252,071Property
      & equipment, net
                    
                    
                    273,340
                    
                    
                    
                    127,393Intangible
      assets
                    
                    
                    307,335
                    
                    
                    
                    18,626Goodwill
                    
                    
                    13,526,809
                    
                    
                    
                    13,526,80914,107,484
                    
                    
                    
                    13,672,828Total
      Assets
                    
                    $
                    49,426,680
                    
                    
                    $
                    29,924,899LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesNotes
      payable – bank
                    
                    $
                    -
                    
                    
                    $
                    1,288,554Note
      payable – others
                    
                    
                    -
                    
                    
                    
                    1,576,750Accounts
      payable and accrued expenses
                    
                    
                    2,219,156
                    
                    
                    
                    3,604,666Customer
      deposits
                    
                    
                    1,047,250
                    
                    
                    
                    1,132,886Income
      tax payable
                    
                    
                    1,759,402
                    
                    
                    
                    664,995Total
      Current Liabilities
                    
                    
                    5,025,808
                    
                    
                    
                    8,267,851Stockholders'
      EquityCommon
      stock, $.001 par value, 70,000,000 shares authorized, 41,619,966 and
      36,809,036 issued and outstanding
                    
                    
                    41,621
                    
                    
                    
                    36,810Additional
      paid in capital
                    
                    
                    15,833,368
                    
                    
                    
                    8,601,534Other
      comprehensive income
                    
                    
                    1,520,166
                    
                    
                    
                    545,164Statutory
      reserve
                    
                    
                    372,144
                    
                    
                    
                    372,144Retained
      earnings
                    
                    
                    26,633,573
                    
                    
                    
                    12,101,396Total
      Stockholders' Equity
                    
                    
                    44,400,872
                    
                    
                    
                    21,657,048Total
      Liabilities and Stockholders' Equity
                    
                    $
                    49,426,680
                    
                    
                    $
                    29,924,899







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




Forward-Looking
Statements: No Assurances Intended





In
addition to historical information, this Annual Report contains forward-looking
statements, which are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or
similar expressions. These forward-looking statements represent Management’s
belief as to the future of Universal Travel Group.  Whether those
beliefs become reality will depend on many factors that are not under
management’s control.  Many risks and uncertainties exist that could
cause actual results to differ materially from those reflected in these
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking
statements.





Business
Overview





We are a
travel services provider in the People’s Republic of China engaged in providing
air ticketing and hotel booking services as well as domestic and international
packaged tourism services throughout the People’s Republic of China via both the
internet and customer representatives.





Under the
theme "Wings towards a more colorful life", our core services revolve around
travel services but we also provide  air cargo agency services through
our subsidiary, SSD.





In 2007,
we completed the acquisitions of SSD,  XGN, which specializes in
domestic packaged tour services,  SLB, which specializes in hotel
reservations and FOI, which  handles both domestic and international
travel inquiries.





In 2008,
we successfully integrated our packaged tours, air-ticketing and hotel
reservation businesses onto our newly developed on-line
platform,  which provides rich and comprehensive travel information to
primarily leisure travelers.





In
October 2008, we successfully rolled out our TRIPEASY Kiosks. We believe that
the Kiosks are innovate self-service terminals capable of handling a full range
of booking services including packaged tours through a secured built-in payment
function that  accepts all major Chinese bank cards.  As of
the end of fiscal year 2008, we had 20 Kiosks manufactured and operating through
a pilot program, and based on the initial interest of the concept industry-wide,
we plan to roll additional TRIPEASY Kiosks at selected locations.





Major
Factors Affecting the Travel Industry





A variety
of factors affect the travel industry in the People’s Republic of China, and we
shall be discussing these together with an analysis of our results of operations
and financial condition.





Some of
these factors include:





(i)
            Growth
      in the Domestic Economy and Demand for Travel Services in the People’s
      Republic of China.





We expect
that our financial results will continue to be affected by the overall growth of
the domestic economy and demand for travel services in the People’s Republic of
China and internationally.





According
to the statistics from the website of the National Bureau of Statistics of
China, the People’s Republic of China’s gross domestic product (or “GDP”)
increased from RMB13.6 trillion (US$1.7 trillion) in 2003 to RMB24.7 trillion
(US$3.4 trillion) in 2007, representing a compound annual growth rate of 16%.
China's GDP increased from RMB24.7 trillion (US$3.4 trillion) in 2007 to RMB30.1
trillion (US$4.3 trillion) in 2008, representing a annual growth rate of 9%. Per
capita, GDP rose from RMB10,542 (US$1,273) in 2003 to RMB18,665 (US$2,559) in
2007, representing a 15% compound annual growth rate; and from 2007 to 2008,
grew from RMB18,665(US$2,559) to RMB22,609(US$3,308), representing year over
year growth of 21%.





Such
unprecedented growth has led to a significant increase in the demand for travel
services.





According
to statistics from the website of the National Tourism Administration of
People's Republic of China, domestic tourism expenditure grew from RMB344.2
billion (US$41.6 billion) in 2003 to RMB777.1 billion (US$106.5 billion) in
2007, representing a compound annual growth of 23%. Expenditure increased from
RMB777.1 billion (US$106.5 billion) in 2007 to RMB874.9 billion (US$120.0
billion) in fiscal 2008, representing year over year growth of
12.6%.  These figures include a 1.4% year over year decline in inbound
travel volume totaling $13.0 billion, which was affected by the global
recession.





The
number of outbound travelers (from the PRC to other countries) totaled
4.6million in 2008, an increase of 11.9% due to among other factors, the
depreciation of foreign currencies versus the RMB.





According
to the statistics from the website of the Civil Aviation Administration of
China, domestic passenger transportation volume grew 3.3% in 2008 compared to
2007; and domestic air cargo volume grew 0.3% in 2008 versus 2007. Notably,
fiscal 2008 was a period that saw several major events take hold including, but
not limited to, the snow storms that battered numerous parts of the country
throughout the Lunar New Year holiday period, the Tibetan political crisis, the
major Sichuan earthquake and the Beijing Olympic
games.  Notwithstanding the unexpected events or drastic fluctuations
in the social and economic environment, we believe that demand for travel
services in the People’s Republic of China should continue to increase at a
healthy rate over the next several years as the overall economy and per capita
income continue to grow and show improvements.





(ii)
            Seasonality
      in the Travel Service Industry.





The
domestic travel services industry is characterized by seasonal fluctuations, and
accordingly, our revenue patterns may vary from quarter to quarter. Since
inception, revenue generated during the latter half of each calendar year has
generally been higher than in the first half, due primarily to the fact that the
latter half coincides with the peak domestic business and leisure travel.
However, given that the central government modifies public holiday policies from
time to time, and the fact that the Lunar New Year vacation period falls on
varying days each year, seasonality is subject to minor inconsistencies on a
comparable year over year basis. For example, the government authorized three
new 3-day public holiday period during calendar 2008 to incentive domestic
travel, and has further plans to further increase holiday periods in both 2009
and 2010.  Such seasonality is difficult to discern throughout our
operating history as our revenue stream has evolved and become more diversified
as a result of our decision to gain scale through acquisitions, particularly
over the last several years. Going forward, however, we anticipate that
seasonality within our overall business will more closely relate to industry
standards, as we focus more on organic growth, particularly with respect to
theTRIPEASY Kiosk
rollout, and less so on acquisitive expansion.





(iii)
            Disruptions
      in the Travel Industry.





Because
travel patterns are typically sensitive to inclement weather, one-time events
and as previously mentioned, seasonality issues, travelers tend to modify their
travel plans in advance or in many cases with minimal notice depending on the
situation foreseen or unforeseen.





Examples
of specific events that occurred during 2008 and hence altered travel patterns
include:





•
            snow
      storms which affected a large part of the country during the Lunar New
      Year Holiday period;





•
            the
      summer Olympics in August, which led to an increase in both travel product
      offerings as well as hotel, airline and other travel-related
      pricing;





•
            the
      major earthquakes in May 2008 and the aftermath which heavily affected
      travel in the Sichuan area;





•
            the
      threat of terrorist attacks and increased security over international
      events, which affected our cargo agency business;
  and





•
            a
      sharp downturn throughout the major international financial centers such
      as the United States and Europe.




RESULTS
OF OPERATIONS





THREE
MONTHS ENDED DECEMBER 31, 2008 AND 2007





The
following table presents certain consolidated statement of operations
information derived from the consolidated statements of income for the three
months ended December 31, 2008 and 2007.





Revenue
Segment Analysis:





Three months ended
                    December 31, 2008
                  
                  
                  Three months ended
                    December 31, 2007
                  
                  
                  Increase /
                    (Decrease)
                  
                  
                  PercentageRevenue
                  
                  $
                  29,434,725
                  
                  
                  $
                  17,495,408
                  
                  
                  
                  11,939,317
                  
                  
                  
                  68.2
                  %Cost
      of services
                  
                  
                  (19,090,311
                  )
                  
                  
                  (12,099,577
                  )
                  
                  
                  (6,990,734
                  )
                  
                  
                  57.8
                  %Gross
      Profit
                  
                  
                  10,344,414
                  
                  
                  
                  5,395,831
                  
                  
                  
                  4,948,583
                  
                  
                  
                  91.7
                  %Selling,
      General and Administration
                  
                  
                  (2,103,832
                  )
                  
                  
                  (1,007,119
                  )
                  
                  
                  (1,096,713
                  )
                  
                  
                  108.9
                  %Stock
      based compensation
                  
                  
                  (51,786
                  )
                  
                  
                  (312,543
                  )
                  
                  
                  260,757
                  
                  
                  
                  -83.4
                  %Income
      from operations
                  
                  
                  8,188,796
                  
                  
                  
                  4,076,169
                  
                  
                  
                  4,112,627
                  
                  
                  
                  100.9
                  %Other
      income
                  
                  
                  (1,461
                  )
                  
                  
                  25,105
                  
                  
                  
                  (26,566
                  )
                  
                  
                  -105.8
                  %Interest
      income
                  
                  
                  17,535
                  
                  
                  
                  (14,490
                  )
                  
                  
                  32,025
                  
                  
                  
                  -221.0
                  %Interest
      expenses
                  
                  
                  (27,638
                  )
                  
                  
                  (38,123
                  )
                  
                  
                  10,485
                  
                  
                  
                  -27.5
                  %Provision
      for income taxes
                  
                  
                  (1,850,938
                  )
                  
                  
                  (724,763
                  )
                  
                  
                  (1,126,175
                  )
                  
                  
                  155.4
                  %Net
      income
                  
                  $
                  6,326,293
                  
                  
                  $
                  3,323,898
                  
                  
                  
                  3,002,395
                  
                  
                  
                  90.3
                  %




For the
three months ended December 31, 2008:




Air-ticketing
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                Cargo Agency
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                Hotel
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                Travel
                
                
                Percentage
                  of Revenue
                  (%)
                
                
                TotalRevenue
                
                
                5,082,405
                
                
                
                17.3
                %
                
                
                2,417,551
                
                
                
                8.2
                %
                
                
                3,775,754
                
                
                
                12.8
                %
                
                
                18,159,015
                
                
                
                61.7
                %
                
                
                29,434,725Cost
      of Services
                
                
                (252,502
                )
                
                
                1.3
                %
                
                
                (2,087,509
                )
                
                
                10.9
                %
                
                
                (1,005,907
                )
                
                
                5.3
                %
                
                
                (15,744,393
                )
                
                
                82.4
                %
                
                
                (19,090,311
                )Gross
      Profit
                
                
                4,829,904
                
                
                
                46.7
                %
                
                
                330,042
                
                
                
                3.2
                %
                
                
                2,769,847
                
                
                
                26.8
                %
                
                
                2,414,621
                
                
                
                23.3
                %
                
                
                10,344,414





For the
three months ended December 31, 2007:





Air-ticketing
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                Cargo Agency
                
                
                Percentage
                  of Revenue
                  (%)
                
                
                Hotel
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                Travel
                
                
                Percentage
                  of
                  Revenue
                  (%)
                
                
                TotalRevenue
                
                
                2,055,915
                
                
                
                11.8
                %
                
                
                5,081,455
                
                
                
                29.0
                %
                
                
                1,467,664
                
                
                
                8.4
                %
                
                
                8,890,374
                
                
                
                50.8
                %
                
                
                17,495,408Cost
      of Services
                
                
                (102,141
                )
                
                
                0.8
                %
                
                
                (3,649,736
                )
                
                
                30.2
                %
                
                
                (466,834
                )
                
                
                3.9
                %
                
                
                (7,880,866
                )
                
                
                65.1
                %
                
                
                (12,099,577
                )Gross
      Profit
                
                
                1,953,774
                
                
                
                36.2
                %
                
                
                1,431,719
                
                
                
                26.5
                %
                
                
                1,000,830
                
                
                
                18.5
                %
                
                
                1,009,508
                
                
                
                18.8
                %
                
                
                5,395,831





Revenue





Revenue
for the three months ended December 31, 2008 was $29,434,725 compared to
$17,495,408 for the same period in 2007, an increase of approximately 68.2%.
This increase was primarily due to the successful integration and cross selling
among our  newly diversified business segments that increased the
group’s competitiveness versus our rivals, as well as an increase in public
holiday periods i.e. the Chinese National Day vacation period increased from 3
days to 7 days, easing  of foreign travel restrictions on October 29,
2008 and air cargo security restrictions, reduced air fuel surcharges and a
favorable year over  year comparison with respect to timing of the
Lunar New Year Holiday period.





Revenue
from air-ticketing was $5,082,405 for the three months ended December 31, 2008
compared to $2,055,915 for the same period last year, an increase of
approximately 147.2%. Revenue generated by the air cargo agency segment for the
three months ended December 31, 2008 decreased 52.4% year over year to
$2,417,551 from $5,081,455. Revenue generated by hotel reservations and bookings
for the three month period totaled $3,775,754  versus $1,467,664, a
year over increase of approximately 157.3%. Revenue generated through
packaged  travel services for the three months ended December 31, 2008
was $18,159,0 15, compared to $8,890,374 3 for the same period 2007, an increase
of approximately 104.3%.




Gross
Profit




Gross
profit for the three months ended December 31, 2008 was $10,344,414 compared to
$5,395,831 for the three months ended December 31, 2007, an increase of
approximately 91.7%. The increase in gross profit partially reflects then
Company’s success in implementing its online strategy, an increase in packaged
tour services as a percentage of overall revenue and to a lesser
degree,  the rollout of our TRIPEASY Kiosks, which have
relatively lower variable costs associated with it.





Gross
margin for three months ended December 31, 2008 came in at 35.1% , a 430bp
improvement over the 30.8% the Company posted in the same period last
year.





Selling, General and
Administrative Expenses





Selling,
general and administrative expenses for three months ended December 31, 2008
totaled $2,103,832 compared to $1,007,119 for three months ended December 31,
2007, an increase of approximately 108.9%.





Selling,
general and administrative expenses reflected 7.1% of revenue versus 5.76% last
year, primarily reflecting the significant increase in year over year sales
volume as well as enhanced marketing and research and development expenditure
geared towards increasing brand awareness and service quality.





Stock
based compensation reflects standard options issuance to U.S independent
directors.  The year over year decline in interest expense to $27,638
from $38,123 reflects the decrease in bank loans outstanding.





Net
Income





Net
income for the three months ended December 31, 2008 grew 90.3% year over year to
$6,326,293 representing 21.5% of revenue, compared to $3,323,898 or 19.0% of
revenue for the three months ended December 31, 2007.





The
increase in net income reflects the previously mentioned growth in our overall
operating platform, continued strength within the PRC domestic tourism market
and cost synergies associated with our online strategy and integration of
acquired businesses.





FISCAL
YEAR ENDED DECEMBER 31, 2008 AND 2007




The
following table presents certain consolidated statement of operations
information derived from the consolidated statements of income for the fiscal
year ended December 31, 2008 and same period 2007.





Revenue
Segment Analysis:




2008
                  
                  
                  2007
                  
                  
                  Increase
      /
                    (Decrease)
                  
                  
                  PercentageRevenue
                  
                  $
                  76,759,411
                  
                  
                  $
                  44,294,853
                  
                  
                  
                  32,464,558
                  
                  
                  
                  73.3
                  %Cost
      of services
                  
                  
                  (51,555,991
                  )
                  
                  
                  (29,519,012
                  )
                  
                  
                  (22,036,979
                  )
                  
                  
                  74.7
                  %Gross
      Profit
                  
                  
                  25,203,420
                  
                  
                  
                  14,775,841
                  
                  
                  
                  10,427,579
                  
                  
                  
                  70.6
                  %Selling,
      General  and Administration
                  
                  
                  (6,128,553
                  )
                  
                  
                  (3,229,526
                  )
                  
                  
                  (2,899,027
                  )
                  
                  
                  89.8
                  %Stock
      based compensation
                  
                  
                  (207,588
                  )
                  
                  
                  (945,903
                  )
                  
                  
                  738,315
                  
                  
                  
                  -78.1
                  %Income
      from operations
                  
                  
                  18,867,279
                  
                  
                  
                  10,600,412
                  
                  
                  
                  8,266,867
                  
                  
                  
                  78.0
                  %Other
      income
                  
                  
                  (7,297
                  )
                  
                  
                  (25,105
                  )
                  
                  
                  17,808
                  
                  
                  
                  -70.9
                  %Interest
      income
                  
                  
                  (39,416
                  )
                  
                  
                  (3,293
                  )
                  
                  
                  (36,123
                  )
                  
                  
                  1097
                  %Interest
      expenses
                  
                  
                  106,163
                  
                  
                  
                  80,847
                  
                  
                  
                  25,316
                  
                  
                  
                  31.3
                  %Provision
      for income taxes
                  
                  
                  (4,275,652
                  )
                  
                  
                  (1,852,069
                  )
                  
                  
                  (2,423,583
                  )
                  
                  
                  130.9
                  %Net
      income
                  
                  $
                  14,532,177
                  
                  
                  $
                  8,695,894
                  
                  
                  
                  5,836,283
                  
                  
                  
                  67.1
                  %




For the
fiscal year ended December 31, 2008




Air-ticketing
                        
                        
                        Percentage
                          of Revenue
                          (%)
                        
                        
                        Cargo
                          Agency
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        Hotel
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        Travel
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        TotalRevenue
                        
                        
                        12,333,527
                        
                        
                        
                        16.1
                        %
                        
                        
                        10,937,573
                        
                        
                        
                        14.2
                        %
                        
                        
                        8,340,519
                        
                        
                        
                        10.9
                        %
                        
                        
                        45,147,792
                        
                        
                        
                        58.8
                        %
                        
                        
                        76,759,411Cost
      of Services
                        
                        
                        (622,069
                        )
                        
                        
                        1.2
                        %
                        
                        
                        (9,347,312
                        )
                        
                        
                        18.1
                        %
                        
                        
                        (2,649,716
                        )
                        
                        
                        5.1
                        %
                        
                        
                        (38,936,894
                        )
                        
                        
                        75.5
                        %
                        
                        
                        (51,555,991
                        )Gross
      Profit
                        
                        
                        11,711,458
                        
                        
                        
                        46.5
                        %
                        
                        
                        1,590,261
                        
                        
                        
                        6.3
                        %
                        
                        
                        5,690,803
                        
                        
                        
                        22.6
                        %
                        
                        
                        6,210,898
                        
                        
                        
                        24.6
                        %
                        
                        
                        25,203,420









For the
fiscal year ended December 31, 2007




Air-ticketing
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        Cargo
                          Agency
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        Hotel
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        Travel
                        
                        
                        Percentage
                          of
                          Revenue
                          (%)
                        
                        
                        TotalRevenue
                        
                        
                        7,811,823
                        
                        
                        
                        17.6
                        %
                        
                        
                        20,687,488
                        
                        
                        
                        46.7
                        %
                        
                        
                        2,383,129
                        
                        
                        
                        5.4
                        %
                        
                        
                        13,412,412
                        
                        
                        
                        30.3
                        %
                        
                        
                        44,294,853Cost
      of Services
                        
                        
                        (453,086
                        )
                        
                        
                        1.5
                        %
                        
                        
                        (16,483,027
                        )
                        
                        
                        55.8
                        %
                        
                        
                        (764,774
                        )
                        
                        
                        2.6
                        %
                        
                        
                        (11,818,125
                        )
                        
                        
                        40.0
                        %
                        
                        
                        (29,519,012
                        )Gross
      Profit
                        
                        
                        7,358,737
                        
                        
                        
                        49.8
                        %
                        
                        
                        4,204,461
                        
                        
                        
                        28.5
                        %
                        
                        
                        1,618,355
                        
                        
                        
                        11.0
                        %
                        
                        
                        1,594,287
                        
                        
                        
                        10.8
                        %
                        
                        
                        14,775,841





Revenue





Revenue
for fiscal year 2008 totaled $76,759,411 compared to $44,294,853 in the same
period last year, reflecting a year over year increase of approximately73.3%.
The increase was attributable to both organic growth, as well as our expansion
into, successful integration and cross selling of the Company’s newly
diversified business segments related to packaged tours and hotel booking
services through the acquisitions of Xi’an Golden Net Travel Service Company
Limited, Shanghai Lanbao Travel Service Company Limited and Foshan Overseas
International Travel Service Co., Ltd.





Gross
Profit





Gross profit for the fiscal year 2008
was $25,203,420 compared to $14,775,841 for the fiscal year 2007, an increase of
approximately 70.6%. The increase in gross profit reflects the aforementioned
integration of business lines onto our online platform and higher percentage of
packaged tour revenue.





Gross
margin was 32.8% versus 33.4%, the decrease of which was primarily due to the
acquisition of lower margin businesses in 2008.





Selling, General and
Administrative Expenses





Selling, general and administrative
expenses for fiscal year 2008 totaled $6,128,553 compared to $3,229,526 for
fiscal year 2007, reflecting approximately 7.98% and 7.29% of total revenue,
respectively.  The year over year increase in selling, general and
administrative expenses is a result of acquisitions of  Xi’an Golden
Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
Limited and Foshan Overseas International Travel Service Co., Ltd. made during
late 2007 and carried into 2008.





Interest
expense for the year totaled $106,163 compared to $80,847 for the fiscal year
2007, an increase of approximately 31.3% as a result of a new short term bank
loan that was eventually  paid off in August 2008.





Net
Income





Net
income was $14,532,177 or 18.9% of revenue for the fiscal year 2008, compared to
$8,695,894 or 19.6% of revenue for the fiscal year 2007. The absolute an
increase  reflects the overall  continued growth in most of
our operating segments both on an organic and acquisitive basis.





The
decrease as a percentage of revenue reflects the acquisitions of lower margin
businesses as previously noted.








We
believe a more meaningful comparison can be drawn by comparing results for the
three months ended December 31, 2008 with the three months ended September 30,
2008 as both periods reflect full integration of the acquired hotel reservations
and travel packaged services businesses.





LIQUIDITY
AND CAPITAL RESOURCES





Cash and Cash
Equivalent





Cash and
liquidity needs have been funded primarily through cash flows from operations,
short-term borrowings, and a private investment of equity securities. At the end
of December 31, 2008, cash and cash equivalents totaled $16,204,531, while
working capital, current assets of $35,319,196 less current liabilities of
$5,025,808 came in at $ $30,293,388. We believe that our current liquidity
profile and cash from operations, which totaled $6,765,484 will be sufficient to
meet our operating needs in fiscal 2009.





Capital
expenditure





Total
capital expenditure for the fiscal year ended December 31, 2008 was $192,436,
mainly to purchase fixed assets, such as machinery and equipment. Management
may, from time to time, increase such expenditure to support new initiatives and
developments such as the rollout of our  TRIPEASY Travel Service
Kiosks, which management estimates could cost up to $6,000,000 should its
year-end 2009 target of 600 additional Kiosks be met.





Working Capital
Requirements





As
previously mentioned, cash flow from operations and short term financing have
been adequate to meet our cash needs and we believe this will be the case for at
least the next 12 months. However, our actual working capital needs will still
be dependent upon several key factors, including but not limited to,
the  competitive environment, acquisition opportunities, new business
development initiatives, and the availability of credit, none of which can be
predicted with certainty. As a result, the need for additional capital may
arise, which may require the issuance of debt or equity if necessary, assurances
of which may or may not be available on terms acceptable to us.





Off Balance Sheet
Arrangements





We have
never entered into any off-balance sheet financing arrangements, have never
established any special purpose entities to fulfill such obligations and have
not made any debt or related commitments to other entities.





Critical
Accounting Policies and Estimates





Basis
of consolidation





The
consolidated financial statements include the accounts of Universal Travel Group
and our wholly owned subsidiaries: Shenzhen Yu Zhi Lu Aviation Service Co., Ltd,
Shenzhen Speedy Dragon Enterprises Limited, Shanghai Lanbao Travel Service Co.,
Ltd, Xi’an Golden Net Travel Serve Services, Ltd., Foshan  Overseas
International Travel Service Co. Ltd. and Full Power Enterprise Global Limited
collectively referred to herein as the “Company”.  All material
inter-company accounts, transactions and profits have been eliminated in
consolidation.





Use
of estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.





Cash
and cash equivalents





Cash and
cash equivalents include cash on hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.





Accounts
receivable





We
maintain reserves for potential credit losses on accounts receivable. Allowance
for doubtful accounts amounted to $ 210,139 and $ 73,115 as at December 31, 2008
and 2007 respectively.





Property,
plant & equipment





Property
and equipment are stated at cost. Expenditure for maintenance and repairs is
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets over the estimated useful lives.





Long-lived
assets





We
adopted statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-lived Assets (SFAS 144), which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed of, and the Accounting and
Reporting Provisions of APB Opinion No. 30, Reporting the Results of Operations
for a Disposal of a Segment of a Business. We periodically evaluate the carrying
value of long-lived assets to be held and used in accordance with SFAS
144.  SFAS 144 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets carrying amounts. In that event, a loss is recognized based on the
amount by which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is determined in
a similar manner, except that fair market values are reduced for the cost of
disposal. Based on its review, we believe that, as of December 31,2008 there
were no significant impairments of our long-lived assets.





Fair
value of financial instruments





Statement
of Financial Accounting Standard No. 107, disclosures about fair value of
financial instruments, requires that we disclose estimated fair values of
financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.





Revenue
recognition





Our
revenue recognition policies are in compliance with Staff Accounting Bulletin
(SAB) 104. Revenue is recognized at the date the price is fixed or determinable,
the delivery is completed, no other significant obligations of the Company exist
and collectibility is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.





Advertising





Advertising
expenses consist primarily of costs of promotion for corporate image and product
marketing and costs of direct advertising. We expense all advertising costs as
incurred.





Income
taxes





We
utilize SFAS No. 109, Accounting for Income Taxes, which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.





Intangibles





Intangible
assets are amortized using the straight-line method over their estimated period
of benefit. Evaluation of the recoverability of intangible assets is made
annually to take into account events or circumstances that warrant revised
estimates of useful lives or that indicate that impairment exists. All of our
intangible assets are subject to amortization. No impairments of intangible
assets have been identified during any of the periods presented.





Reporting
Currency and Translation





Our  functional
currency is Renminbi (“RMB”); however, the reporting currency is the United
States dollar ("USD"). Our assets and liabilities have been translated into
dollars using the exchange rate at the  balance sheet date. The
average exchange rate for the period has been used to translate revenue and
expenses. Translation adjustments are reported separately and accumulated in a
separate component of equity (cumulative translation adjustment).





Foreign
Operations





All of
the Company's operations and assets are located in the People’s Republic of
China. The Company may be adversely affected by possible political or economic
events in this country. The effect of these factors cannot be accurately
predicted.





Item
7A. Quantitative and Qualitative Disclosures About Market Risk.




Not
Applicable.




Item
8. Financial Statements and Supplementary Data.








UNIVERSAL
TRAVEL GROUP





CONSOLIDATED
FINANCIAL STATEMENTS





DECEMBER
31, 2008





TABLE OF
CONTENTS





Report
      of Independent Registered Public Accounting Firm
                  F-1Consolidated
      Balance Sheets
                  F-2Consolidated
      Statements of Income
                  F-3Consolidated
      Statements of Cash Flows
                  F-4Consolidated
      Statements of Stockholders’ Equity
                  F-5Notes
      to Consolidated Financial Statements
                  F-6
      - F-20





MORGENSTERN,
SVOBODA & BAER, CPA’s, P.C.




CERTIFIED
PUBLIC ACCOUNTANTS


40
Exchange Place, Suite 1820


New York,
N.Y.10005


TEL:  (212)
925-9490


FAX:
(212) 226-9134


E-MAIL:  MSBCPAS@gmail.com




Report of Independent
Registered Public Accounting Firm





Board of
Directors and Stockholders of


Universal
Travel Group





We have
audited the accompanying balance sheets of Universal Travel Group as of
December, 31 2008 and 2007, and the related statements of income, stockholders’
equity and comprehensive income, and cash flows for each of the years in the
three-year period ended December 31, 2008.





Universal
Travel Group’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based on
our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Universal Travel group as of
December 31, 2008 and 2007, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.




/s/Morgenstern,
Svoboda & Baer CPA’s P.C.


Certified
Public Accountants





New York,
N.Y.


March 3,
2009


F-1




UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
BALANCE SHEETS


DECEMBER
31, 2008 and 2007




2008
                  
                  
                  2007ASSETSCurrent
      AssetsCash
      and cash equivalents
                  
                  $
                  16,204,531
                  
                  
                  $
                  2,671,684Accounts
      receivable, net
                  
                  
                  10,715,206
                  
                  
                  
                  5,403,820Other
      receivables and deposits, net
                  
                  
                  141,413
                  
                  
                  
                  1,297,426Refundable
      acquisition deposit
                  
                  
                  -
                  
                  
                  
                  1,453,050Due
      from shareholder
                  
                  
                  -
                  
                  
                  
                  1,444,818Trade
      deposit
                  
                  
                  6,737,521
                  
                  
                  
                  2,650,744Advances
                  
                  
                  438,468
                  
                  
                  
                  616,861Escrow
      deposits
                  
                  
                  762,800
                  
                  
                  
                  -Prepaid
      expenses
                  
                  
                  319,257
                  
                  
                  
                  713,668Total
      Current Assets
                  
                  
                  35,319,196
                  
                  
                  
                  16,252,071Property
      & equipment, net
                  
                  
                  273,340
                  
                  
                  
                  127,393Intangible
      assets
                  
                  
                  307,335
                  
                  
                  
                  18,626Goodwill
                  
                  
                  13,526,809
                  
                  
                  
                  13,526,80914,107,484
                  
                  
                  
                  13,672,828Total
      Assets
                  
                  $
                  49,426,680
                  
                  
                  $
                  29,924,899LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesNotes
      payable – bank
                  
                  $
                  -
                  
                  
                  $
                  1,288,554Note
      payable – others
                  
                  
                  -
                  
                  
                  
                  1,576,750Accounts
      payable and accrued expenses
                  
                  
                  2,219,156
                  
                  
                  
                  3,604,666Customer
      deposits
                  
                  
                  1,047,250
                  
                  
                  
                  1,132,886Income
      tax payable
                  
                  
                  1,759,402
                  
                  
                  
                  664,995Total
      Current Liabilities
                  
                  
                  5,025,808
                  
                  
                  
                  8,267,851Stockholders'
      EquityCommon
      stock, $.001 par value, 70,000,000 shares authorized, 41,619,966 and
      36,809,036 issued and outstanding
                  
                  
                  41,621
                  
                  
                  
                  36,810Additional
      paid in capital
                  
                  
                  15,833,368
                  
                  
                  
                  8,601,534Other
      comprehensive income
                  
                  
                  1,520,166
                  
                  
                  
                  545,164Statutory
      reserve
                  
                  
                  372,144
                  
                  
                  
                  372,144Retained
      earnings
                  
                  
                  26,633,573
                  
                  
                  
                  12,101,396Total
      Stockholders' Equity
                  
                  
                  44,400,872
                  
                  
                  
                  21,657,048Total
      Liabilities and Stockholders' Equity
                  
                  $
                  49,426,680
                  
                  
                  $
                  29,924,899





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


F-2




UNIVERSAL
TRAVEL GROUP
 CONSOLIDATED
STATEMENTS OF INCOME
 FOR
THE THREE YEARS ENDED DECEMBER 31,


2008
                                      
                                      
                                      2007
                                      
                                      
                                      2006Gross
      revenues
                                      
                                      $
                                      76,759,411
                                      
                                      
                                      $
                                      44,294,853
                                      
                                      
                                      $
                                      10,013,788Cost
      of services
                                      
                                      
                                      51,555,991
                                      
                                      
                                      
                                      29,519,012
                                      
                                      
                                      
                                      4,594,376Gross
      Profit
                                      
                                      
                                      25,203,420
                                      
                                      
                                      
                                      14,775,841
                                      
                                      
                                      
                                      5,419,412Selling,
      general and administrative expenses
                                      
                                      
                                      6,128,553
                                      
                                      
                                      
                                      3,229,526
                                      
                                      
                                      
                                      1,353,434Stock
      based compensation
                                      
                                      
                                      207,588
                                      
                                      
                                      
                                      945,903
                                      
                                      
                                      
                                      950,040Total
      expenses
                                      
                                      
                                      6,336,141
                                      
                                      
                                      
                                      4,175,429
                                      
                                      
                                      
                                      2,303,474Income
      from operations
                                      
                                      
                                      18,867,279
                                      
                                      
                                      
                                      10,600,412
                                      
                                      
                                      
                                      3,115,938Other
      Income (Expense)Loss
      on disposal of assets
                                      
                                      
                                      1,105
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Other
      income
                                      
                                      
                                      (8,402
                                      )
                                      
                                      
                                      (25,105
                                      )
                                      
                                      
                                      (36,383
                                      )Interest
      income
                                      
                                      
                                      (39,416
                                      )
                                      
                                      
                                      (3,293
                                      )
                                      
                                      
                                      (11,994
                                      )Interest
      expense
                                      
                                      
                                      106,163
                                      
                                      
                                      
                                      80,847
                                      
                                      
                                      
                                      2,754Total
      Other Income (Expense)
                                      
                                      
                                      59,450
                                      
                                      
                                      
                                      52,449
                                      
                                      
                                      
                                      (45,623
                                      )Income
      before income taxes
                                      
                                      
                                      18,807,829
                                      
                                      
                                      
                                      10,547,963
                                      
                                      
                                      
                                      3,161,561Provision
      for income taxes
                                      
                                      
                                      4,275,652
                                      
                                      
                                      
                                      1,852,069
                                      
                                      
                                      
                                      603,083Net
      income
                                      
                                      $
                                      14,532,177
                                      
                                      
                                      $
                                      8,695,894
                                      
                                      
                                      $
                                      2,558,478
 Net
      income per common shareBasic
                              
                              $
                              .38
                              
                              
                              $
                              .26
                              
                              
                              $
                              .07Diluted
                              
                              $
                              .37
                              
                              
                              $
                              .
      .26
                              
                              
                              $
                              .07Weighted
      average common shares outstandingBasic
                              
                              
                              38,562,155
                              
                              
                              
                              33.629,518
                              
                              
                              
                              30,450,000Diluted
                              
                              
                              38,744,392
                              
                              
                              
                              33,779,518
                              
                              
                              
                              30,450,000




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


F-3


UNIVERSAL
      TRAVEL GROUPCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE YEARS ENDED DECEMBER 31,
 
 2008
                                                                          
                                                                          
                                                                          2007
                                                                          
                                                                          
                                                                          2006CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                                                                          
                                                                          $
                                                                          14,532,177
                                                                          
                                                                          
                                                                          $
                                                                          8,695,894
                                                                          
                                                                          
                                                                          $
                                                                          2,558,478Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                                                          
                                                                          
                                                                          72,118
                                                                          
                                                                          
                                                                          
                                                                          88,792
                                                                          
                                                                          
                                                                          
                                                                          48,031Provision
      for doubtful accounts
                                                                          
                                                                          
                                                                          137,024
                                                                          
                                                                          
                                                                          
                                                                          42,900
                                                                          
                                                                          
                                                                          
                                                                          -Stock
      based compensation
                                                                          
                                                                          
                                                                          207,588
                                                                          
                                                                          
                                                                          
                                                                          945,903
                                                                          
                                                                          
                                                                          
                                                                          950,040Loss
      on asset disposal
                                                                          
                                                                          
                                                                          1,105
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -(Increase)
      / decrease in assets:Accounts
      receivable
                                                                          
                                                                          
                                                                          (5,448,410
                                                                          )
                                                                          
                                                                          
                                                                          (1,816,023
                                                                          )
                                                                          
                                                                          
                                                                          (18,788
                                                                          )Other
      receivable
                                                                          
                                                                          
                                                                          1,156,013
                                                                          
                                                                          
                                                                          
                                                                          (546,172
                                                                          )
                                                                          
                                                                          
                                                                          (661,158
                                                                          )Advances
                                                                          
                                                                          
                                                                          178,393
                                                                          
                                                                          
                                                                          
                                                                          1,214,697
                                                                          
                                                                          
                                                                          
                                                                          (1,831,558
                                                                          )Due
      from shareholder
                                                                          
                                                                          
                                                                          1,444,818
                                                                          
                                                                          
                                                                          
                                                                          747,471
                                                                          
                                                                          
                                                                          
                                                                          642,608Prepaid
      expenses
                                                                          
                                                                          
                                                                          (289,026
                                                                          )
                                                                          
                                                                          
                                                                          4,896
                                                                          
                                                                          
                                                                          
                                                                          (26,061
                                                                          )Trade
      deposits
                                                                          
                                                                          
                                                                          (4,086,777
                                                                          )
                                                                          
                                                                          
                                                                          (1,177,822
                                                                          )
                                                                          
                                                                          
                                                                          (397,041
                                                                          )Customer
      deposits
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          34,004
                                                                          
                                                                          
                                                                          
                                                                          (15,298
                                                                          )Escrow
      deposits
                                                                          
                                                                          
                                                                          (762,800
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Increase
      / (decrease) in current liabilities:Accounts
      payable and accrued expenses
                                                                          
                                                                          
                                                                          (1,385,510
                                                                          )
                                                                          
                                                                          
                                                                          (1,504,385
                                                                          )
                                                                          
                                                                          
                                                                          76,406Customer
      deposits
                                                                          
                                                                          
                                                                          (85,636
                                                                          )
                                                                          
                                                                          
                                                                          275,247
                                                                          
                                                                          
                                                                          
                                                                          -Income
      tax payable
                                                                          
                                                                          
                                                                          1,094,407
                                                                          
                                                                          
                                                                          
                                                                          97,657
                                                                          
                                                                          
                                                                          
                                                                          106,973Total
      Adjustments
                                                                          
                                                                          
                                                                          (7,766,693
                                                                          )
                                                                          
                                                                          
                                                                          (1,592,835
                                                                          )
                                                                          
                                                                          
                                                                          (1,125,846
                                                                          )Net
      cash provided by(used in) operating activities
                                                                          
                                                                          
                                                                          6,765,484
                                                                          
                                                                          
                                                                          
                                                                          7,103,059
                                                                          
                                                                          
                                                                          
                                                                          1,432,632CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property & equipment
                                                                          
                                                                          
                                                                          (192,436
                                                                          )
                                                                          
                                                                          
                                                                          (57,930
                                                                          )
                                                                          
                                                                          
                                                                          (60,406
                                                                          )Purchase
      of  intangibles
                                                                          
                                                                          
                                                                          (316,106
                                                                          )
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Proceeds
      from asset disposals
                                                                          
                                                                          
                                                                          663
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Acquisition
      deposits
                                                                          
                                                                          
                                                                          1,453,050
                                                                          
                                                                          
                                                                          
                                                                          1,428,773
                                                                          
                                                                          
                                                                          
                                                                          (1,580,740
                                                                          )Paid
      for acquisition – net of cash acquired
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (10,008,642
                                                                          )
                                                                          
                                                                          
                                                                          -Net
      cash used by Investing activities
                                                                          
                                                                          
                                                                          945,171
                                                                          
                                                                          
                                                                          
                                                                          (8,637,799
                                                                          )
                                                                          
                                                                          
                                                                          (1,641,146
                                                                          )CASH
      FLOWS FROM FINANCING ACTIVITIES(Repayments)Proceeds
      from bank loan – net
                                                                          
                                                                          
                                                                          (1,288,554
                                                                          )
                                                                          
                                                                          
                                                                          1,288,554
                                                                          
                                                                          
                                                                          
                                                                          -Proceeds
      of equity financing
                                                                          
                                                                          
                                                                          7,712,494
                                                                          
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          -Note
      payable – others
                                                                          
                                                                          
                                                                          (1,576,750
                                                                          )
                                                                          
                                                                          
                                                                          1,576,750
                                                                          
                                                                          
                                                                          
                                                                          -Net
      cash provided by financing activities
                                                                          
                                                                          
                                                                          4,847,190
                                                                          
                                                                          
                                                                          
                                                                          2,865,304
                                                                          
                                                                          
                                                                          
                                                                          -Effect
      of exchange rate changes on cash and cash equivalents
                                                                          
                                                                          
                                                                          975,002
                                                                          
                                                                          
                                                                          
                                                                          297,565
                                                                          
                                                                          
                                                                          
                                                                          89,763Net
      change in cash and cash equivalents
                                                                          
                                                                          
                                                                          13,532,847
                                                                          
                                                                          
                                                                          
                                                                          1,628,129
                                                                          
                                                                          
                                                                          
                                                                          (118,751
                                                                          )Cash
      and cash equivalents, beginning balance
                                                                          
                                                                          
                                                                          2,671,684
                                                                          
                                                                          
                                                                          
                                                                          1,043,555
                                                                          
                                                                          
                                                                          
                                                                          1,162,306Cash
      and cash equivalents, ending balance
                                                                          
                                                                          $
                                                                          16,204,531
                                                                          
                                                                          
                                                                          $
                                                                          2,671,684 $
                                                                          
                                                                          
                                                                          
                                                                          1,043,555SUPPLEMENTAL
      DISCLOSURES:Cash
      paid during the year for:Interest
      payments
                                                                          
                                                                          $
                                                                          106,163
                                                                          
                                                                          
                                                                          $
                                                                          80,847 $
                                                                          
                                                                          
                                                                          
                                                                          2754Income
      Taxes
                                                                          
                                                                          $
                                                                          3,181,245
                                                                          
                                                                          
                                                                          $
                                                                          1,450,924
                                                                          
                                                                          
                                                                          $
                                                                          496,110Other
      non-cash transactionsPurchased
      Goodwill
                                                                          
                                                                          $
                                                                          -
                                                                          
                                                                          
                                                                          $
                                                                          (13,526,809
                                                                          )
                                                                          
                                                                          $
                                                                          -Fair
      value of assets purchased less cash acquired
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          (2,178,333
                                                                          )
                                                                          
                                                                          
                                                                          -Acquisition
      financed with stock issuance
                                                                          
                                                                          
                                                                          -
                                                                          
                                                                          
                                                                          
                                                                          5,696,500
                                                                          
                                                                          
                                                                          
                                                                          -Acquisition
      paid for with cash – net of acquired
                                                                          
                                                                          $
                                                                          -
                                                                          
                                                                          
                                                                          $
                                                                          (10,008,642
                                                                          )
                                                                          
                                                                          $
                                                                          -
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
  UNIVERSAL
TRAVEL GROUP
 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 FOR
THE THREE YEARS ENDED DECEMBER 31, 2008
 Common
      Stock
                                                      
                                                      
                                                      Additional
      Paid
                                                      
                                                      
                                                      Other
                                                          Comprehensive
                                                      
                                                      
                                                      Retained
                                                      
                                                      
                                                      Statutory
                                                      
                                                      
                                                      Total
                                                        Stockholders’Shares
                                                      
                                                      
                                                      Amount
                                                      
                                                      
                                                      In
      Capital
                                                      
                                                      
                                                      Income
                                                      
                                                      
                                                      Earnings
                                                      
                                                      
                                                      Reserve
                                                      
                                                      
                                                      EquityBalance
      December 31, 2005
                                                      
                                                      
                                                      30,450,000
                                                      
                                                      
                                                      $
                                                      30,450
                                                      
                                                      
                                                      $
                                                      332,013
                                                      
                                                      
                                                      $
                                                      14,048
                                                      
                                                      
                                                      $
                                                      883,995
                                                      
                                                      
                                                      $
                                                      -
                                                      
                                                      
                                                      $
                                                      1,260,506Foreign
      currency translation adjustments
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      89,763
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      89,763Income
      for the year ended 12/31/2006
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      2,558,478
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      2,558,478Balance
      December 31, 2006
                                                      
                                                      
                                                      30,450,000
                                                      
                                                      
                                                      
                                                      30,450
                                                      
                                                      
                                                      
                                                      332,013
                                                      
                                                      
                                                      
                                                      103,811
                                                      
                                                      
                                                      
                                                      3,442,473
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      3,908,747Stock
      Paid for Acquisitions
                                                      
                                                      
                                                      2,589,036
                                                      
                                                      
                                                      
                                                      2,590
                                                      
                                                      
                                                      
                                                      5,593,910
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      5,696,500Foreign
      currency translation adjustments
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      441,353
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      441,353Stock
      Based Compensation
                                                      
                                                      
                                                      3,770,000
                                                      
                                                      
                                                      
                                                      3,770
                                                      
                                                      
                                                      
                                                      1,579,630
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      1,583,400Warrants
      issued
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      995,981
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      995,981Reflect
      acquisition
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      335,173
                                                      
                                                      
                                                      
                                                      335,173Transfer
      to statutory reserve
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (36,971
                                                      )
                                                      
                                                      
                                                      36,971
                                                      
                                                      
                                                      
                                                      -Income
      for the year ended 12/31/2007
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      8,695,894
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      8,695,894BalanceDecember
      31, 2007
                                                      
                                                      
                                                      36,809,036
                                                      
                                                      
                                                      
                                                      36,810
                                                      
                                                      
                                                      
                                                      8,601,534
                                                      
                                                      
                                                      
                                                      545,164
                                                      
                                                      
                                                      
                                                      12,101,396
                                                      
                                                      
                                                      
                                                      372,144
                                                      
                                                      
                                                      
                                                      21,657,048Foreign
      currency translation adjustments
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      975,002
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      975,002Forfeited
      options
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (683,437
                                                      )
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      (683,437
                                                      )Stock
      Based Compensation
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      207,588
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      207,588Equity
                                                      
                                                      
                                                      222,222
                                                      
                                                      
                                                      
                                                      222
                                                      
                                                      
                                                      
                                                      599,772
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      599,994Financings
                                                      
                                                      
                                                      4,588,708
                                                      
                                                      
                                                      
                                                      4,589
                                                      
                                                      
                                                      
                                                      7,107,911
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      7,112,500Warrants
      issued
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      14,532,177
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      
                                                      14,532,177Income
      for the year ended 12/31/2008Balance
      December 31, 2008
                                                      
                                                      
                                                      41,619,966
                                                      
                                                      
                                                      $
                                                      41,621
                                                      
                                                      
                                                      $
                                                      15,833,368
                                                      
                                                      
                                                      $
                                                      1,520,166
                                                      
                                                      
                                                      $
                                                      26,633,573
                                                      
                                                      
                                                      $
                                                      372,144
                                                      
                                                      
                                                      $
                                                      44,400,872
  The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
1 - ORGANIZATION
 
 Universal
Travel Group was incorporated on January 28, 2004 under the laws of the State of
Nevada. Full Power Enterprise Global Limited – BVI was incorporated under the
laws of the British Virginia Islands. Shenzhen Yuzhilu Aviation Service Co., Ltd
was incorporated on March 9, 1998 under the laws of the Peoples Republic of
China (PRC). Shenzhen Speedy Dragon Enterprises Limited was incorporated in
August of 2002 under the laws of the Peoples Republic of China (PRC), Xian
Golden Net Travel Serve Services was incorporated on July 25, 2001 under the
laws of the Peoples Republic of China, Xian City, Shanghai Lanbao Travel Service
Co., Ltd, was established in 2002 under the laws of Shanghai China. Foshan
Overseas International Travel Service Co., Ltd. was incorporated in
1990  under the laws of the Peoples Republic of China. Full Power
Enterprise Global Limited owns 100% of the Shenzhen Yuzhilu Aviation Service
Co., Ltd. Collectively the seven corporations are referred to herein as the
Company.
 
 The
Company is now engaged in the travel business, including airline ticketing,
hotel reservation services and air cargo transportation services, technological
solutions to travel reservations, and tour planning and tour guide
services.
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of
Presentation
 
 The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America.
The Company's functional currency is the Chinese Renminbi; however the
accompanying consolidated financial statements have been translated and
presented in United States Dollars.
 
 Translation
Adjustment
 
 As of
December 31, 2008 and December 31, 2007 the accounts of Universal Travel Group
were maintained, and its financial statements were expressed, in Chinese Yuan
Renminbi (CNY). Such financial statements were translated into U.S. Dollars
(USD) in accordance with Statement of Financial Accounts Standards (SFAS) No.
52, Foreign Currency Translation with the CNY as the functional currency.
According to the Statement, all assets and liabilities were translated at the
current exchange rate, stockholders equity are translated at the historical
rates and income statement items are translated at the average exchange rate for
the period. The resulting translation adjustments are reported under other
comprehensive income in accordance with SFAS No. 130, Reporting Comprehensive
Income as a component of shareholders equity. Transaction gains and losses are
reflected in the income statement.
 
 Use of
Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Universal Travel Group
and its wholly owned subsidiaries Shenzhen Yuzhilu Aviation Service Co., Ltd,
Shenzhen Speedy Dragon Enterprises Limited, Shanghai Lanbao Travel Service Co.,
Ltd, Xian Golden Net Travel Serve Services, Ltd., Foshan Overseas International
Travel Service Co. Ltd. and Full Power Enterprise Global Limited collectively
referred to herein as the Company. All material inter-company accounts,
transactions and profits have been eliminated in consolidation.
  F-6
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Risks and
Uncertainties
 
 The
Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history, foreign currency exchange rates and the volatility of
public markets.
 
 Contingencies
 
 Certain
conditions may exist as of the date the financial statements are issued. These
conditions may result in a future loss to the Company but which will only be
resolved when one or more future events occur or fail to occur. The Company’s
management and legal counsel assess such contingent liabilities, and such
assessment inherently involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are pending against the Company
or unasserted claims that may result in such proceedings, the Company’s legal
counsel evaluates the perceived merits of any legal proceedings or unasserted
claims as well as the perceived merits of the amount of relief sought or
expected to be sought.
 
 If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material would be
disclosed.
 
 Loss
contingencies considered to be remote by management are generally not disclosed
unless they involve guarantees, in which case the guarantee would be
disclosed.
 
 Cash and Cash
Equivalents
 
 Cash and
cash equivalents include cash on hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.
 
 Accounts
Receivable
 
 The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves. Terms of the sales vary. Reserves are recorded
primarily on a specific identification basis. Allowance for doubtful accounts
amounted to $ 210,139 and $73,115 as of December 31, 2008 and December 31, 2007,
respectively.
  F-7
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Property, Plant &
Equipment
 
 Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives of:
 
 Furniture
      and Fixtures
                    5
      yearsTransportation
      equipment
                    5
      yearsOffice
      equipment
                    5
      yearsLeasehold
      Improvements
                    5 –
      10 years
 
 As of
December 31, 2008 and 2007  Property, Plant & Equipment consist of
the following:
 
 2008
                    
                    
                    2007Furniture
      & fixture
                    
                    $
                    18,247
                    
                    
                    $
                    18,247Transportation
      equip
                    
                    
                    183,024
                    
                    
                    
                    301,308Office
      equipment
                    
                    
                    358,761
                    
                    
                    
                    177,004Leasehold
      improve
                    
                    
                    31,374
                    
                    
                    
                    31,374602,085
                    
                    
                    
                    527,933Accumulated
      depreciation
                    
                    
                    (328,745
                    )
                    
                    
                    (400,540
                    )273,340
                    
                    
                    
                    127,393
 
 Goodwill
 
 Goodwill
represents the excess cost of a business acquisition over the fair value of the
net assets acquired.  In accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (Statement
142), indefinite-life identifiable intangible assets and goodwill are not
amortized. Under the provisions of Statement 142, we are required to perform an
annual impairment test of our goodwill. Goodwill impairment is determined using
a two-step process.  The first step of the goodwill impairment test is
used to identify potential impairment by comparing the fair value of a reporting
unit, which we define as our business segments, with its net book value or
carrying amount including goodwill. If the fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is considered not
impaired and the second step of the impairment test is
unnecessary.  If the carrying amount of a reporting unit exceeds its
fair value, the second step of the goodwill impairment test compares the implied
fair value of the reporting unit's goodwill with the carrying amount of that
goodwill. If the carrying amount of the reporting unit's goodwill exceeds the
implied fair value of that goodwill, an impairment loss is recognized in an
amount equal to that excess.  The implied fair value of goodwill is
determined in the same manner as the amount of goodwill recognized in a business
combination.  The fair value of the reporting unit is allocated to all
of the assets and liabilities of that unit including any unrecognized intangible
assets as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit was the purchase price paid to acquire the
reporting unit.  See Note 8, Purchase of Subsidiary, for additional
information regarding goodwill.
  F-8
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Long-Lived
Assets
 
 The
Company adopted Statement of Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets (SFAS 144), which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of Operations
for a Disposal of a Segment of a Business. The Company periodically evaluates
the carrying value of long-lived assets to be held and used in accordance with
SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets carrying amounts. In that event, a loss is recognized based on the
amount by which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is determined in
a similar manner, except that fair market values are reduced for the cost of
disposal. Based on its review, the Company believes that, as of December 31,
2008 and December 31, 2007 there were no significant impairments of its
long-lived assets.
 
 Fair Value of Financial
Instruments
 
 Statement
of financial accounting standard No. 107, Disclosures about Fair Value of
Financial Instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
 
 Revenue
Recognition
 
 The
Company’s revenue recognition policies are in compliance with Staff accounting
bulletin (SAB) 104. Revenue is recognized at the date the price is fixed or
determinable, the delivery is completed, no other significant obligations of the
Company exist and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue.
 
 Advertising
 Advertising
expenses consist primarily of costs of promotion for corporate image and product
marketing and costs of direct advertising. The Company expenses all advertising
costs as incurred.
 
 Income
Taxes
 The
Company utilizes SFAS No. 109, Accounting for Income Taxes, which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
 
 Statement of Cash
Flows
 In
accordance with SFAS No. 95, Statement of Cash Flows, cash flows from the
Company’s operations is based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash flows will
not necessarily agree with changes in the corresponding balances on the balance
sheet.
  F-9
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Intangibles
 Intangible
assets are amortized using the straight-line method over their estimated period
of benefit. Evaluation of the recoverability of intangible assets is made
annually to take into account events or circumstances that warrant revised
estimates of useful lives or that indicate that impairment exists. All of our
intangible assets are subject to amortization. No impairments of intangible
assets have been identified during any of the periods presented. The Company’s
intangible assets consist primarily of map of hotels and scenic spots used for
marketing purposes. These definitive lived intangible assets are being amortized
over their useful lives.  Expenditures of $316,107 were capitalized in
2008 and will be amortized over a 3 year life.  The Company recorded
amortization expense for definitive lived intangible assets of $8,771for the
year ended December 31, 2008 and will record approximately $105,369, $105,369,
and $96, 588  over the next three years, respectively .
 
 Concentration of Credit
Risk
 Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be
credit-worthy financial institutions. The Company has a diversified customer
base, most of which are in China. The Company controls credit risk related to
accounts receivable through credit approvals, credit limits and monitoring
procedures. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk, establishes an
allowance, if required, for uncollectible accounts and, as a consequence,
believes that its accounts receivable credit risk exposure beyond such allowance
is limited.
 
 Recent accounting
pronouncements
 
 In July
2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting for
uncertainty in Income Taxes - an interpretation of FASB Statement 109” (“FIN No.
48”). FIN 48 clarifies the accounting for Income Taxes by prescribing the
minimum recognition threshold a tax position is required to meet before being
recognized in the financial statements. It also provides guidance on
derecognition, measurement, classification, interest and penalties, accounting
in interim periods, disclosure and transition and clearly scopes income taxes
out of SFAS No. 5, “ Accounting for Contingencies”. FIN 48 is effective for
fiscal years beginning after December 15, 2006. Based on the Company’s
evaluation of this issue, the adoption of this accounting requirement has no
effect on the Company’s financial statements.
 
 In
September, 2006, FASB issued SFAS 157 ‘Fair Value Measurements’.  This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands
 disclosures
about fair value measurements.  This Statements applies under other
accounting pronouncements that require or permit fair value measurements, the
Board having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute.  Accordingly, this
Statement does not require any new fair value measurements.  However,
for some entities, the application of this Statement will change current
practice.  This Statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Based on the Company’s evaluation of this issue, the
adoption of this accounting requirement has no effect on the Company’s financial
statements.
 
 In
February, 2007, FASB issued SFAS 159 ‘The Fair Value Option for Financial Assets
and Financial Liabilities’ – Including an Amendment of FABS Statement No.
115.  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. This statement is
expected to expand the use of fair value measurement, which is consistent with
the Board’s long-term measurement objectives for accounting for financial
instruments.  This statement is effective as of the beginning of an
entity’s first fiscal year that begins after November 15, 2007.  Based
on the Company’s evaluation of this issue, the adoption of this accounting
requirement has no effect on the Company’s financial
statements.
  F-10
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the noncontrolling (minority) interest in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company’s fiscal year
beginning October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.
 
 In March
2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. Management is
currently evaluating the effect of this pronouncement on financial
statements.
 
 On May 8,
2008, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 162, The Hierarchy of Generally
Accepted Accounting Principles, which will provide framework for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles
(GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the GAAP
hierarchy for nongovernmental entities will move from auditing literature to
accounting literature.  The Company is currently assessing the impact
of SFAS No. 162 on its financial position and results of
operations.
 
 Merger and Corporate
Restructure
 
 On June
26, 2006 the company entered into an agreement and plan of merger with Full
Power Enterprises Global Limited, a holding company that owns all of the issued
and outstanding shares of Shenzhen YuzhiLu Aviation Service Company Limited, the
operating Company. In substance the agreement is a recapitalization of Shenzhen
YuzhiLu Aviation Service Company’s capital structure.
 
 For
accounting purposes, the company accounted for the transaction as a reverse
acquisition and with Full Power Enterprises Global Limited being the surviving
entity. The Company did not recognize goodwill or any intangible assets in
connection with the transaction. Prior to the Agreement, the company was an
inactive corporation with no significant assets and liabilities.
 
 Note
3 – TRADE DEPOSITS AND
ADVANCES
 
 Trade
deposits represents amount held by Airlines and deposits. As of December 31,
2008 and 2007 the Company had paid $6,737,521 and $2,650,744 as trade deposits
respectively.
 
 The
Company has entered into a co-operation agreement with an unrelated company, to
assist that company in their business development by participating in that
business operations and providing working capital funding. As
of  December 31, 2008 and 2007 the Company has advanced this company
$438,468 and  $616,861 respectively.
 
 Note
4 - COMPENSATED
ABSENCES
 
 Regulation
45 of local PRC labor law entitles employees to annual vacation leave after 1
year of service. In general all leave must be utilized annually, with proper
notification. Any unutilized leave is cancelled.
  F-11
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
5 - INCOME
TAXES
 
 The
Company through its subsidiary Shenzhen Yuzhilu Aviation Service Co., Ltd. is
governed by the Income Tax Laws of the PRC. Operations in the United States of
America have incurred net accumulated operating losses for income tax
purposes.
 
 Pursuant
to the PRC Income Tax Laws, the Enterprise Income Tax (EIT) the Company has a
statutory rate of 25%.
 
 The
following is a reconciliation of income tax expense as of December 31, 2008 and
2007.
 
 2008
                        
                        
                        2007Current
                        
                        $
                        4,275,652
                        
                        
                        $
                        1,852,069Deferred
                        
                        
                        -
                        
                        
                        
                        -Total
                        
                        $
                        4,275,652
                        
                        
                        $
                        1,852,069
 
 Note
6 - COMMITMENTS
 
 The
Company leases various office facilities under month-to-month arrangements.
Rental expense for leases consisted of $ 339,032 and $184,552 for years ended
December 31, 2008 and 2007 respectively. The Company has future minimum lease
obligations as of December 31, 2008 as follows:
 
 2009
                    
                    $
                    242,4852010
                    
                    $
                    110,4592011
                    
                    $
                    16,5652012
                    
                    $
                    14,3292013
                    
                    $
                    14,329Thereafter
                    
                    $
                    30,858Total
                    
                    $
                    429,025
 
 Pursuant
to the Securities Purchase Agreement entered into on August 28, 2008, the
Company and the Buyers in this Agreement entered into a Lock Up Agreement. Under
the Lock-Up Agreement, the Principal Shareholder agreed that she would not sell
any of the Lock-Up Shares, 5,000,000 shares of Common Stock
and  options to purchase 2,000,000 shares of Common Stock, and shall
not transfer such shares for twelve (12) months.
 
 Note
7 – NOTES
PAYABLE
 
 The
following table summarizes notes payable as of December 31, 2008:
 
 Lender
                            Due
      Date
                            Interest
      Rate
                            
                            OutstandingChina
      Construction Bank
                            July
      29, 2008
                            8.55%
      per Annum
                            
                            $
                            -0-
 
 On
September 20, 2007, the Company entered into a share exchange agreement with
Foshan Overseas International Travel Service Co.,Ltd. (“FOI”), ,and the
shareholders of FOI. The shareholders of FOI received a promissory note from the
Company totaling $3,153,500. The promissory note bears no interest, with a
maturity date of one year. Balance at December 31, 2008 and 2007 was $-0-
and  $ 1,576,750 respectively.
  F-12
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
8 – COMMON
STOCK
 
 In
January 2007 the company adopted the Universal Travel Group 2007 Equity
Incentive Plan. Under the terms of this Plan the Company issued 3,770,000 shares
of the Company’s stock, valued at $1,583,400, for services rendered during the
period from October 2, 2006 through February 28, 2007. As of June 30, 2007 the
financial Statements include a charge $633,360 with the remaining $950,040 being
expensed as of December 31, 2006.
 
 Pursuant
to a share exchange agreement, the Company issued 714,285 shares of newly issued
shares of Common Stock to the former shareholders of Shenzhen Speedy Dragon
Enterprises Limited. The shares were valued at $1,000,000, which was the fair
value of the shares at the date of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.
 
 On April
10, 2007 the Company consummated the acquisition of a 100% interest in Shenzhen
Speedy Dragon Enterprises Limited ("SSD") for a cash and stock transaction
valued at approximately US$4 million. This amount is included in the cost of net
assets and goodwill purchased.
 
 The stock
consideration consisted of 714,285 newly issued shares of the Registrant’s
common stock, which were given to SSD’s sole Shareholder immediately before the
completion of the Share Exchange Transaction. The cash consideration consisted
of $3,000,000 in cash and payable no later than the first anniversary of the
Merger Transaction. The obligation to pay the cash consideration is evidenced by
a interest-free promissory notes between the Registrant and  the SSD
Shareholder.
 
 SSD is
engaged in the business of air freight forwarding. The purchase price was
determined based on arms' length negotiations between Universal Travel Group and
the shareholder of SSD.
 
 The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:
 
 Cash
      acquired
                      
                      $
                      17,800Loans
      receivable
                      
                      
                      90,096Loans
      shareholder
                      
                      
                      251,184Property
      Plant & Equipment
                      
                      
                      22,995Goodwill
                      
                      
                      3,630,539Total
      assets acquired
                      
                      
                      4,012,614Liabilities
      assumedAccounts
      & Income Taxes payable
                      
                      
                      3,587Other
      payable
                      
                      
                      9,026Total
                      
                      $
                      4,000,000
 
 The
excess of purchase price over tangible assets acquired and liabilities assumed
of $3,630,359 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.
 
 Prior to
the acquisition, Shenzhen Speedy Dragon Enterprises Limited prepared its
financial statements under accounting principles generally accepted in the
United States of America.
 
 Pursuant
to a share exchange agreement, the Company issued 151,765 shares of newly issued
shares of Common Stock to the former shareholders of Xian Golden Net Travel
Serve Services, Inc. The shares were valued at $258,000, which was the fair
value of the shares at the date the of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.
  F-13
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
8 – COMMON STOCK
(CONTINUED)
 
 On August
6, 2007 the Company consummated the acquisition of a 100% interest in Xian
Golden Net Travel Serve Services, Inc. ("XGN") for a cash and stock transaction
valued at approximately US$1.8 million. This amount is included in the cost of
net assets and goodwill purchased.
 
 The stock
consideration consisted of 151,765 newly issued shares of the Registrant’s
common stock, which were given to XGN’s Shareholders immediately before the
completion of the Share Exchange Transaction. The cash consideration consisted
of $1,542,000 in cash and payable no later than the first anniversary of the
Merger Transaction. The obligation to pay the cash consideration is evidenced by
a interest-free promissory notes between the Registrant and  the XGN’s
Shareholders.
 
 XGN is
engaged in the business of Chinese domestic tourism. The purchase price was
determined based on arms' length negotiations between Universal Travel Group
and  the shareholders of XGN.
 
 The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:
 
 Cash
      acquired
                      
                      $
                      45,356Accounts
      Receivable
                      
                      
                      142,462Loans
      Shareholder
                      
                      
                      1,075,504Property
      Plant & Equipment
                      
                      
                      773Goodwill
                      
                      
                      764,895Total
      assets acquired
                      
                      
                      2,028,990Liabilities
      assumedAccounts
      & Income Taxes payable
                      
                      
                      131,875Other
      payable
                      
                      
                      97,115Total
                      
                      $
                      1,800,000
 
 The
excess of purchase price over tangible assets acquired and liabilities assumed
of $764,895 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.
 
 Prior to
the acquisition, Xian Golden Net Travel Serve Services, Inc. prepared its
financial statements under accounting principles generally accepted in the
United States of America.
 
 Pursuant
to a share exchange agreement, the Company issued 600,000 shares of newly issued
shares of Common Stock to the former shareholders of Shanghai Lanbao Travel
Services Co., Ltd. The shares were valued at $1,092,000, which was the fair
value of the shares at the date of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.
 
 On August
8, 2007, the Company consummated the acquisition of a 100% interest in Shanghai
Lanbao Travel Services Co., Ltd. ("SLB") for a cash and stock transaction valued
at approximately US$3.92 million. This amount is included in the cost of net
assets and goodwill purchased.
 
 The stock consideration consisted of
600,000 newly issued shares of the Registrant’s common stock immediately before
the completion of the Share Exchange Transaction. The cash consideration
consisted of $2,828,000 in cash and payable no later than the first anniversary
of the Merger Transaction. The obligation to pay the cash consideration is
evidenced by interest-free promissory notes between the Registrant and each of
the SLB Shareholders.
  F-14
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
8 – COMMON STOCK
(CONTINUED)
 
 SLB is
engaged in the business of real time booking of travel related products via the
internet. The purchase price was determined based on arms' length negotiations
between Universal Travel Group and the shareholders of SLB.
 
 The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:
 
 Cash
      acquired
                      
                      $
                      28,510Accounts
      Receivable
                      
                      
                      1,265,352Loans
      shareholders
                      
                      
                      178,665Property
      Plant & Equipment
                      
                      
                      9,376Goodwill
                      
                      
                      3,081,799Total
      assets acquired
                      
                      
                      4,563,702Liabilities
      assumedAccounts
      & Income Taxes payable
                      
                      
                      566,809Other
      payable
                      
                      
                      76,893Total
                      
                      $
                      3,920,000
 
 The
excess of purchase price over tangible assets acquired and liabilities assumed
of $3,081,799 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
seperability criterion as required under SFAS 141.
 
 Prior to
the acquisition, Shanghai Lanbao Travel Services Co., Ltd. prepared its
financial statements under accounting principles generally accepted in the
United States of America.
 
 Pursuant
to a share exchange agreement, the Company issued 1,122,986 shares of newly
issued shares of Common Stock and a promissory note to the former shareholders
of Foshan Overseas International Travel Service Co., Ltd.. The shares were
valued at $ 3,346,500, which was the fair value of the shares at the date of
exchange agreement. This amount is included in the cost of net assets and
goodwill purchased.
 
 On
September 20, 2007, the Company consummated the acquisition of a 100% interest
in Foshan Overseas International Travel Service Co., Ltd. ("FOI") for a cash and
stock transaction valued at approximately US$6.5 million. This amount is
included in the cost of net assets and goodwill purchased.
 
 The stock
consideration consisted of 1,122,965 newly issued shares of the Registrant’s
common stock, immediately before the completion of the Share Exchange
Transaction. The cash consideration consisted of $3,153,000 due immediately
before the completion of the Share Exchange Transaction and payable no later
than the first anniversary of the Merger Transaction. The obligation to pay the
cash consideration is evidenced by two interest-free promissory notes between
the Registrant and each of the FOI Shareholders.
 
 FOI is
engaged in the business of domestic and international travel inquiries as well
as corporate travel, offering specialized packages that include national and
international air ticket booking, hotel reservations, conference center
reservations and rental cars. The purchase price was determined based on arms'
length negotiations between Universal Travel Group and the shareholders of
FOI.
  F-15
  UNIVERSAL
TRAVEL GROUP
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008
 
 Note
8 – COMMON STOCK
(CONTINUED)
 
 The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:
 
 Cash acquired
                      
                      $
                      423,292Accounts
      Receivable
                      
                      
                      2,204,094Loans
      Shareholders
                      
                      
                      686,936Trade
      Deposits
                      
                      
                      513,317Prepaid
      Expenses
                      
                      
                      3,285Property
      Plant & Equipment
                      
                      
                      42,244Goodwill
                      
                      
                      6,049,576Total
      assets acquired
                      
                      
                      9,922,744Liabilities
      assumedAccounts
      & Income Taxes payable
                      
                      
                      3,126,718Other payable
                      
                      
                      296,026Total
                      
                      $
                      6,500,000
 
 The
excess of purchase price over tangible assets acquired and liabilities assumed
of $6,049,576 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.
 
 Prior to
the acquisition, Foshan Overseas International Travel Service Co., Ltd. prepared
its financial statements under accounting principles generally accepted in the
United States of America.
 
 On August
28, 2008, Universal Travel Group (the “Company”) entered into a Securities
Purchase Agreement with Access America Fund, LP, Chinamerica Fund LP, Pope
Investments II LLC, Heller Capital Investments, LLC, CGM as C/F Ronald I. Heller
IRA, Investment Hunter, LLC, MARed Investments, High Capital Funding, LLC, and
Merrill Lynch, Pierce, Fenner & Smith, FBO Beau L. Johnson (collectively,
the “Buyers”) to sell to the Buyers 4,588,708 shares of common stock, par value
$0.001 of the Company (“Common Stock”) and warrants to purchase 2,294,356 shares
of Common Stock for an aggregate purchase price of $7,112,500 (the
“Financing”).
 
 Note
9 – STOCK WARRANTS,
OPTIONS, AND COMPENSATION
 
 On
February 4, 2008, under the terms of an equity financing commitment, the company
issued 222,222 shares of common stock at the closing price of
$2.70.  The proceeds of $599,994 were paid directly to the
shareholders of Foshan Overseas International Travel Service Co, for amount due
them under Note obligation of the company.
 
 On May 7,
2007, the Company issued, to a newly appointed Board member, an option grant to
purchase 100,000 shares of common stock at the closing price at $ 1.95. The
exercisable period is two years from issuance. On June 23, 2008, upon
resignation, Board member has forfeited all options.
 
 On
September 6, 2007, the Company issued, to a newly appointed Board member, an
option grant to purchase 100,000 shares of common stock at the closing price at
$ 2.85. The options are exercisable until June 1, 2017. On June 23, 2008, upon
resignation, Board member has forfeited 66,667 options.
  F-16


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
9 – STOCK WARRANTS,
OPTIONS, AND COMPENSATION (CONTINUED)





On
December 7, 2007, the Company issued, to another newly appointed Board member,
an option grant to purchase 100,000 shares of common stock at the closing price
of $ 3.75. The options are exercisable until November 1, 2017.


Stock
options— The option holder has no voting or dividend rights. The company records
the expense of the stock options over the related vesting period. The options
were valued using the Black-Scholes option-pricing model at the model at the
date of grant stock option pricing. On May 28, 2008, upon resignation, Board
member has forfeited 66,667 options.





On June
24, 2008, the Company issued, to another newly appointed Board member, an option
grant to purchase 100,000 shares of common stock at the closing price of $ 1.52.
The options are exercisable until July 1, 2018. Stock options— The option holder
has no voting or dividend rights. The company records the expense of the stock
options over the related vesting period. The options were valued using the
Black-Scholes option-pricing model at the model at the date of grant stock
option pricing.





Year
      endedDecember
      31, 2008Expected
      Volatility
                    
                    
                    100
                    %Expected
      term (in years)Richard
      P. Randall
                    
                    
                    8.4James
      Treacy
                    
                    
                    8.8Yizhao
      Zhang
                    
                    
                    9.5Expected
      dividends
                    
                    
                    -Risk-free
      rate of return (weighted average)
                    
                    
                    2.92
                    %Weighted
      average grant-date fair value
                    
                    $
                    1.52-3.75





Expected
volatility is based on the historical volatility of the Company’s stock price.
The expected term represents the estimated average period of time that the
options remain outstanding. No dividend payouts were assumed, as the Company has
no plans to declare dividends during the expected term of the stock options. The
risk-free rate of return reflects the weighted average interest rate offered for
zero coupon treasury bonds over the expected term of the options. Based upon
this calculation and pursuant to, as EITF 96-18, the Company recorded a service
period expense of $207,588 for the year ending December 31, 2008.





Total
                    
                    
                    Exercise
                      Price
                    
                    
                    Remaining
                      Life
                    
                    
                    Aggregate
                      Intrinsic
                      ValueOutstanding,
      December 31, 2007
                    
                    
                    300,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Granted
      in 2008
                    
                    
                    100,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Forfeited
      in 2008
                    
                    
                    (233,334
                    )Exercised
      in 2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Outstanding,
      December 31, 2008
                    
                    
                    166,666
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -




F-17




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
9 – STOCK WARRANTS,
OPTIONS, AND COMPENSATION (CONTINUED)





Pursuant
to the Securities Purchase Agreement entered into On August 28, 2008, the
Company issued warrants to purchase 2,294,356 shares of Common Stock. The unit
purchase price was $1.55 per Common Share and a related Warrant for the purchase
of one-half a Common Share, times the number of Common Shares purchased. Market
Value of the Company’s stock on August 28, 2008 was $1.35. Accordingly
approximately $45,887 of the amount recorded as additional paid in capital for
the transaction is attributable to the sale these warrants.  Each
warrant has an Exercise Price of $2.71 and a term of 5 years from the date of
issuance.





Note
10 - OTHER
COMPREHENSIVE INCOME





Balances
of related after-tax components comprising accumulated other comprehensive
income, included in stockholders equity, at December 31, 2008 and 2007 are as
follows:








Foreign Currency TranslationAdjustment
                    
                    
                    Accumulated OtherComprehensive IncomeBalance
      December 31, 2006
                    
                    
                    103,811
                    
                    
                    
                    103,811Changes
      for year ended December 31, 2007
                    
                    
                    441,353
                    
                    
                    
                    441,353Balance
      December 31, 2007
                    
                    $
                    545,164
                    
                    
                    $
                    545,164Changes
      for year ended December 31, 2008
                    
                    
                    975,002
                    
                    
                    
                    975,002Balance
      at December 31, 2008
                    
                    $
                    1,520,166
                    
                    
                    $
                    1,520,166





Note
11 - CURRENT
VULNERABILITY DUE TO CERTAIN RISK FACTORS





The
Company’s operations are carried out in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, and by the general state
of the PRC's economy. The Company’s business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.





Note
12 – MAJOR CUSTOMERS
AND CREDIT RISK





The
Company derives a portion of its income from various Airlines. Most revenue is
cleared thru IATA, a centralized reporting platform.





Note
13 – ESCROW
DEPOSITS





Pursuant
to the Securities Purchase Agreement entered into On August 28, 2008, the
Company agreed that it will deposit $500,000 of the proceeds in escrow to pay
the fees and expenses in connection with a public relations and investor
relations campaign. The Company also agreed that it engage a Chief Financial
Officer who shall be fluent in English and Mandarin, who understands and has a
working knowledge of United States generally accepted accounting principles, who
has had significant responsibility for the preparation and filing of quarterly,
annual and current reports with the SEC and who has experience working with or
in United States capital market participants. The Company agreed that it would
deposit $600,000 of the proceeds in escrow under the Escrow Agreement, to be
released only upon the dual signatures of the CEO of the Company and the
representative of the Buyers designated in the Escrow Agreement following the
engagement of a Chief Financial Officer. As of December 31, 2008 $337,200 has
been prepaid out of this escrow account in connection with the public and
investor relations campaign for services covering a one year period. This
prepayment is being amortized accordingly.




F-18




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
14 -   SEGMENT
INFORMATION





We
separately operate and prepare accounting and other financial reports to
management for five major business organizations (Shenzhen Yuzhilu Aviation
Service Co., Ltd., Shenzhen Speedy Dragon Enterprises Limited , Shanghai Lanboa
Travel Service Co., Ltd., Foshan International Travel Service Co., Ltd., and
Xian Golden Net Travel Serve Services. Each of the individual operating
companies corresponds to different product groups.  As required by
SFAS 131 we have identified five reportable segments.





The
following tables’ present summarized information by segment:




Year Ended December 31, 2008Shenzhen
                                                          Yuzhilu
                                                          Aviation
                                                          Service
                                                          Co., Ltd.
                                                        
                                                        
                                                        Shenzhen
                                                          Speedy
                                                          Dragon
                                                          Enterprises
                                                          Limited
                                                        
                                                        
                                                        Shanghai
                                                          Lanboa
                                                          Travel
                                                          Service
                                                          Co., Ltd.
                                                        
                                                        
                                                        Foshan
                                                          International
                                                          TravelService
                                                          Co., Ltd.
                                                        
                                                        
                                                        Xian
                                                          Golden
                                                          Net Travel
                                                          Serve
                                                          Services
                                                        
                                                        
                                                        Other
                                                        
                                                        
                                                        TotalSales,
      net
                                                        
                                                        $
                                                        12,333,527
                                                        
                                                        
                                                        $
                                                        10,937,573
                                                        
                                                        
                                                        $
                                                        8,340,519
                                                        
                                                        
                                                        $
                                                        27,549,267
                                                        
                                                        
                                                        $
                                                        17,598,524
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        76,759,411Cost
      of sales
                                                        
                                                        $
                                                        622,069
                                                        
                                                        
                                                        $
                                                        9,347,312
                                                        
                                                        
                                                        $
                                                        2,649,716
                                                        
                                                        
                                                        $
                                                        23,942,757
                                                        
                                                        
                                                        $
                                                        14,994,137
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        51,555,991Gross
      profit
                                                        
                                                        $
                                                        11,711,458
                                                        
                                                        
                                                        $
                                                        1,590,261
                                                        
                                                        
                                                        $
                                                        5,690,803
                                                        
                                                        
                                                        $
                                                        3,606,510
                                                        
                                                        
                                                        $
                                                        2,604,387
                                                        
                                                        
                                                        $
                                                        -
                                                        
                                                        
                                                        $
                                                        25,203,420Income
      from operations
                                                        
                                                        $
                                                        7,839,219
                                                        
                                                        
                                                        $
                                                        950,170
                                                        
                                                        
                                                        $
                                                        5,032,193
                                                        
                                                        
                                                        $
                                                        3,176,248
                                                        
                                                        
                                                        $
                                                        2,334,366
                                                        
                                                        
                                                        $
                                                        (464,917
                                                        )
                                                        
                                                        $
                                                        18,867,279Total
      assets
                                                        
                                                        $
                                                        24,303,306
                                                        
                                                        
                                                        $
                                                        3,075,033
                                                        
                                                        
                                                        $
                                                        7,402,560
                                                        
                                                        
                                                        $
                                                        5,917,701
                                                        
                                                        
                                                        $
                                                        4,225,493
                                                        
                                                        
                                                        $
                                                        4,502,586
                                                        
                                                        
                                                        $
                                                        49,426,680




Year Ended December 31, 2007Sales,
      net
                                                                              
                                                                              $
                                                                              16,760,039
                                                                              
                                                                              
                                                                              $
                                                                              11,739,272
                                                                              
                                                                              
                                                                              $
                                                                              2,383,129
                                                                              
                                                                              
                                                                              $
                                                                              4,863,423
                                                                              
                                                                              
                                                                              $
                                                                              8,548,989
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              44,294,853Cost
      of sales
                                                                              
                                                                              $
                                                                              7,574,559
                                                                              
                                                                              
                                                                              $
                                                                              9,631,553
                                                                              
                                                                              
                                                                              $
                                                                              764,774
                                                                              
                                                                              
                                                                              $
                                                                              4,250,872
                                                                              
                                                                              
                                                                              $
                                                                              7,297,253
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              29,519,012Gross
      profit
                                                                              
                                                                              $
                                                                              9,185,480
                                                                              
                                                                              
                                                                              $
                                                                              2,107,719
                                                                              
                                                                              
                                                                              $
                                                                              1,618,355
                                                                              
                                                                              
                                                                              $
                                                                              612,551
                                                                              
                                                                              
                                                                              $
                                                                              1,251,735
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              14,775,841Income
      from operations
                                                                              
                                                                              $
                                                                              7,170,695
                                                                              
                                                                              
                                                                              $
                                                                              1,396,464
                                                                              
                                                                              
                                                                              $
                                                                              1,396,557
                                                                              
                                                                              
                                                                              $
                                                                              491,187
                                                                              
                                                                              
                                                                              $
                                                                              1,091,411
                                                                              
                                                                              
                                                                              $
                                                                              (945,903
                                                                              )
                                                                              
                                                                              $
                                                                              10,600,411Total
      assets
                                                                              
                                                                              $
                                                                              17,797,460
                                                                              
                                                                              
                                                                              $
                                                                              2,297,301
                                                                              
                                                                              
                                                                              $
                                                                              2,597,624
                                                                              
                                                                              
                                                                              $
                                                                              4,414,204
                                                                              
                                                                              
                                                                              $
                                                                              2,134,873
                                                                              
                                                                              
                                                                              $
                                                                              683,436
                                                                              
                                                                              
                                                                              $
                                                                              29,924,899




Year Ended December 31, 2006Sales,
      net
                                                                              
                                                                              $
                                                                              10,013,788
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              10,013,788Cost
      of sales
                                                                              
                                                                              $
                                                                              4,594,376
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              4,594,376Gross
      profit
                                                                              
                                                                              $
                                                                              5,419,412
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              5,419,412Income
      from operations
                                                                              
                                                                              $
                                                                              4,065,978
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              (950,040
                                                                              
                                                                              
                                                                              $
                                                                              3,115,938Total
      assets
                                                                              
                                                                              $
                                                                              7,563,826
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              7,563,826




F-19




Note
15 -   SUBSEQUENT
EVENTS





On
January 20, 2009, pursuant to the Securities Purchase agreement entered into on
August 28, the Company enacted the Universal Travel Group 2009 Incentive Stock
Option Plan entitles the grant of up to 6,600,000 shares of common stock of
Universal Travel Group, par value $0.001 to certain employees of the Company
either as stock or stock options, and the subsequent exercise of any stock
options. Aggregate value at the grant date was $.89 per share or
$5,874,000.





February
13, 2009, also pursuant to the Securities Purchase Agreement entered into on
August 28, 2008, the holders of a majority of the Company’s outstanding shares
of Common Stock (the “Majority Shareholders”), agreed to effect a three-for-one
(3:1) reverse split (“Reverse Split”) of the Company’s issued and outstanding
shares of common stock, which would decrease the number of outstanding common
stock from 41,619,966 to 13,873,322.





On
February 17, 2009 the Company appointed a new Chief Financial Officer, Jing Xie,
pursuant to an employment agreement dated February 17, 2009 and the appointment
was effective that date. The Company has received $600,000 from the proceeds of
the Financing in escrow under the Escrow Agreement as a result of Mr. Xie’s
engagement as the Company’s Chief Financial Officer.





F-20




Item
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure.




None.




Item
9A. Controls and Procedures.




Evaluation
of Disclosure Controls and Procedures





The
Company maintains a set of disclosure controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports filed
under the Securities Exchange Act, is recorded, processed, summarized and
reported within the time periods specified by the SEC's rules and forms.
Disclosure controls are also designed with the objective of ensuring that this
information is accumulated and communicated to the Company's management,
including the Company's chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.




Based
upon their evaluation as of the end of the period covered by this report, the
Company's chief executive officer and chief financial officer concluded that,
the Company's disclosure controls and procedures are effective to ensure that
information required to be included in the Company's periodic SEC filings is
recorded, processed, summarized, and reported within the time periods specified
in the SEC rules and forms.





Management’s
Report on Internal Control over Financial Reporting





The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company’s internal control system
was designed to provide reasonable assurance to our management and Board of
Directors regarding the preparation and fair presentation of published financial
statements.





The
Company’s management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2008. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated
Framework. Based on its assessment the Company’s management believes
that, as of December 31, 2008, the Company’s internal control over financial
reporting is effective based on those criteria.





This
annual report does not include an attestation report of the Company’s registered
accounting firm regarding internal control over financial reporting. The
management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission.




Changes
in Internal Control over Financial Reporting





No
changes in the Company's internal control over financial reporting have come to
management's attention during the Company's last fiscal quarter that have
materially affected, or are likely to materially affect, the Company's internal
control over financial reporting.





Limitations
on Controls





Management
does not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all error and fraud. Any
control system, no matter how well designed and operated, is based upon certain
assumptions and can provide only reasonable, not absolute, assurance that its
objectives will be met. Further, no evaluation of controls can provide absolute
assurance that misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, within the Company have been
detected.









Item
9B. Other Information.




None.




PART
III




Item
10. Directors, Executive Officers and Corporate Governance.




The
following are our officers and directors as of the date of this prospectus. All
our officers and directors are residents of the PRC and, therefore, it may be
difficult for investors to effect service of process within the U.S. upon them
or to enforce judgments against them obtained from the U.S. courts.




The following table sets forth certain
information concerning our directors and executive officers:




Directors and Executive
      Officers
            
            Position/Title
            
            AgeJiangping
      Jiang
            
            Chief
      Executive Officer, Chairman
            
            47Jing
      Xie
            
            Secretary,
      Chief Financial Officer and a director
            
            27Hujie
      Gao
            
            Vice
      President of Corporate Finance and a director
            
            28Yizhao
      Zhang
            
            Director
            
            39Jiduan
      Yuan
            
            Director
            
            64Lizong
      Wang
            
            Director
            
            44Liquan
      Wang
            
            Director
            
            37




The following is a summary of the
biographical information of our directors and officers:




Jiangping Jiang, 47, has been
serving as our Chairwoman and Chief Executive Officer since July 12, 2006. Prior
to founding the Yu Zhi Lu Aviation Service Company, in 1998, Jiangping Jiang
held positions in the airline industry and in government. From 1991 to 1998, she
was the manager of Shenzhen International Airlines Agency. From 1982-1991, she
served as a member of the Chongqing municipal government planning committee.
From 1979 to 1982, she was employed by Chengdu airport.





Jing Xie, 27,  has
been serving as our director and Secretary since December 29,
2006.  From March 2005 to December 29, 2006, he served as a Deputy
General Manager of Shenzhen Yu Zhi Lu Aviation Service Company Limited. Mr. Xie
has a Doctor of Business Administration from People's University of China; and
he graduated from Economics & Business Faculty, University of Sydney,
located in Sydney, Australia, with a Bachelor of Commerce degree, major in
Accounting and E-Commerce in 2005. Mr.Xie is also a member of Association of
Credited Chartered Accountants.  Mr. Xie was appointed our Chief
Financial Officer with effective from February 17, 2009.





Hujie Gao, 28 , has been our
Vice President of Corporate Finance  since 2005. From 2002 – 2005, he
was a Senior General Accountant for Hubei Da Xin Accounting firm.  Mr.
Gao is experienced in many different industries, having audited several Chinese
public companies, including Shandong Yanfa Industry, Lu Neng Tai Shan Group, and
etc.   Mr. Gao has a Bachelor of Economics from Wuhan
University.











Yizhao Zhang, 39, graduated
with a Bachelor of Economic Science from Fudan University in 1992. He then
participated in a Master of Science Program at Ecole des Hautes Etudes
Commerciales (HEC), l’Universite de Montreal in Montreal, Canada. In 2003, he
graduated with a Master of Business Administration from the State University of
New York, Buffalo. Mr. Zhang is presently the Chief Financial Officer of
Energroup Holdings Corp.  Prior to May 2008, he was Chief Financial
Officer in Beijing and Tokyo for Asia Media Co. Ltd, a company listed on the
Tokyo Stock Exchange. From May 2007 through May 2008, he was Chief Financial
Officer of Shengtai Pharmaceutical Inc., an OTCBB company. From April 2006
through December 2006, he was the Deputy Chief Financial Officer of China
Natural Resources, Inc., a NASDAQ-listed company and from April 2005 through
April 2006, he was the vice president and senior manager in Chinawe Asset
Management Consultancy Limited, a US public company which mainly manages
non-performing loan assets in China. He was a financial consultant with
Hendrickson Asset Management Assistance LLP from January 2004 through November
2004. Prior to that he worked as a portfolio manager and foreign exchange and
common stock trader with the South Financial Service Corporation from
1993-1999.  Mr. Zhang is a Certified Public Accountant, certified by
the Delaware State Board of Accountancy, member of American Institute of
Certified Public Accountant (AICPA) and a Chartered Financial
Analyst.





Jiduan Yuan, 64, is a
postgraduate, senior economist and an expert with the China Civil Aviation. From
1965 to 1992 Mr. Yuan worked in the Guangzhou Civil Aviation Management Bureau,
holding the positions of Transportation Service Director and Vice Chief
Economist. From 1992 to 1999 he worked in the South Center Aviation Management
Bureau, where his positions included Enterprise Management Director, Communist
Committeeman and Vice President.





Lizong Wang, 44, is an
experienced strategic consultant with over 10 years of experience as an
independent director for numerous companies, whose expertise encompasses
leadership and advisory services to business and political organizations.
Currently, he serves as an independent director of the Rui De Feng Agrochemical
Company, Ltd. and 3NOD Co., Ltd., the first KOSDAQ Chinese company. Since 2001,
he has also been serving as Secretary General of Guangdong High Tech Industry
Chamber of Commerce, Deputy Secretary General of Guangdong Private Enterprise
Cultural Association, and Deputy Secretary General of Shenzhen Tax
Administration. In these positions, his responsibilities include providing
information, financial consulting, fundraising techniques, and investment
services to more than 6,000 members.





Liquan Wang, 37, has an MBA,
is a Certified Public Accountant and Senior Partner of Shenzhen Hongxin CPA. Mr.
Wang is an expert in General Financial Administration and building of complete
and cost effective internal control systems. He has extensive executive
experience in corporate strategy, budgeting and tax administration. From August
1994 to January 1999 he served as an accountant and vice head of the financial
department at Liaoning Industrial Manufacture Projecting Co., Ltd. (Shanghai
Stock Exchange: 600758). From February 1999 to April 2004 he served as financial
manager of Shenzhen Guisu Enterprise Development Co., Ltd. (Shanghai Stock
Exchange: 600722). From May 2004 to date Mr. Wang has been a Partner of Shenzhen
Hongxin CPA.





The
directors will serve until our next annual meeting, or until their successors
are duly elected and qualified. The officers serve at the pleasure of the
Board.




Save as
otherwise reported above, none of our directors hold directorships in other
reporting companies.




Save for
Yizhao Zhang, Jiduan Yuan, Lizong Wang and Liquan Wang,  none of our
directors is an “independent director” under the Rules of NASDAQ, Marketplace
Rule 4200(a)(15).





There are
no family relationships among our directors or officers.





To our
knowledge, during the last five years, none of our directors and executive
officers (including those of our subsidiaries) has:





·
              Had a bankruptcy
      petition filed by or against any business of which such person was a
      general partner or executive officer either at the time of the bankruptcy
      or within two years prior to that
time.











·
              Been convicted
      in a criminal proceeding or been subject to a pending criminal proceeding,
      excluding traffic violations and other minor
  offenses.





·
              Been subject to
      any order, judgment or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking
      activities.





·
              Been found by a
      court of competent jurisdiction (in a civil action), the SEC, or the
      Commodities Futures Trading Commission to have violated a federal or state
      securities or commodities law, and the judgment has not been reversed,
      suspended or vacated.





Audit
Committee and Audit Committee Financial Expert





Our board
of directors established an audit committee in May 2007. The audit committee is
responsible for (i) recommending independent accountants to the Board, (ii)
reviewing our financial statements with management and the independent
accountants, (iii) making an appraisal of our audit effort and the effectiveness
of our financial policies and practices and (iv) consulting with management and
our independent accountants with regard to the adequacy of internal accounting
controls.    Our audit committee members are Yizhao Zhang,
Jiduan Yuan and Liquan Wang.





Our board
of directors has determined that it has an "audit committee financial expert" as
defined by Item 401(h) of Regulation S-K as promulgated by the Securities and
Exchange Commission. Our audit committee financial expert is Yizhao Zhang. The
directors who serve on the audit committee are "independent" directors based on
the definition of independence in the listing standards of the National
Association of Securities Dealers. Our Board of Directors has adopted a written
charter for the Audit Committee. The Charter is not currently available on our
website.





Compensation
Committee





Our board
of directors established a compensation committee in June 2008.





The
compensation committee of the board of directors is responsible for (i)
determining the general compensation policies, (ii) establishing compensation
plans, (iii) determining senior management compensation and (iv) administering
our stock option plans. The members of the compensation committee currently are
Jiduan Yuan, Lizong Wang and Liquan Wang with Liquan Wang as its
chairman.





Our board
of directors have adopted a written compensation committee
charter.  The charter is currently not available on our website. The
directors who serve on the compensation committee are "independent" directors
based on the definition of independence in the listing standards of the National
Association of Securities Dealers.





Nominating
Committee





Our board of directors established a
nominating committee in June 2008.





The
purpose of the nominating committee of the board of directors is to assist the
board of directors in identifying and recruiting qualified individuals to become
board members and select director nominees to be presented for board and/or
stockholder approval. The members of the nominating committee currently are
Lizong Wang, Jiduan Yang and Liquan Wang and Lizong Wang is the chairman of the
nominating committee.










The
directors who serve on the nominating committee are "independent" directors
based on the definition of independence in the listing standards of the National
Association of Securities Dealers. The nominating committee has a written
charter. The charter is not currently available on our website. The nominating
committee will consider qualified director candidates recommended by
stockholders if such recommendations for director are submitted in writing to
our Secretary at Universal Travel Group, 3/F Hualian Building, No. 2008 Shennan
Road Central, Fulian District, Shenzhen, People’s Republic of China 518031,
provided such recommendation has been made in accordance with the relevant
by-laws.





At this
time, no additional specific procedures to propose a candidate for consideration
by the nominating committee, nor any minimum criteria for consideration of a
proposed nomination to the board, have been adopted.




Compliance with Section 16(a) of
Exchange Act





Section
16(a) of the Exchange Act requires our executive officers and directors and
persons who own more than 10% of a registered class of our equity securities to
file with the SEC initial statements of beneficial ownership, reports of changes
in ownership and annual reports concerning their ownership of our common stock
and other equity securities, on Form 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the SEC
regulations to furnish our company with copies of all Section 16(a) reports they
file.





Based
solely on our review of the copies of such reports received by us and on written
representations by our officers and directors regarding their compliance with
the applicable reporting requirements under Section 16(a) of the Exchange Act,
we believe that, with respect to the fiscal year ended December 31, 2008, our
officers and directors, and all of the persons known to us to own more than 10%
of our common stock, filed all required reports on a timely basis.








Item
11. Executive Compensation.




The following table sets forth information with respect to the
compensation of each of the named executive officers for services provided in
all capacities to the Company and its subsidiaries in the fiscal years
ended


December
31, 2008 and 2007  in their capacity as such officers.  Ms.
Jiang who is also the Chairwoman and director of the Company receives no
additional compensation for her services in her capacity as director. No other
executive officer or former executive officer received more than $100,000 in
compensation in the fiscal years reported below.





Name
      and
                                      Principal
                                      Position
                                    
                                    Fiscal
                                      Year
                                    
                                    Salary
      ($)
                                    
                                    
                                    Bonus
      ($)
                                    
                                    
                                    Stock
                                      Awards
                                      ($)
                                    
                                    
                                    Option
                                      Awards
                                      ($)
                                    
                                    
                                    Non-equity
                                      Incentive
      Plan
                                      Compensation
                                      ($)
                                    
                                    
                                    Change
      in
                                      Pension
                                      Value
      and
                                      Nonqualified
                                      Deferred
                                      Compensation
                                      Earnings
      ($)
                                    
                                    
                                    All
      Other
                                      Compensation
                                      ($)
                                    
                                    
                                    Total
      ($)Jiangping
      Jiang Chief Executive Officer(principal executive officer)
                                    
                                    2008
                                      2007
                                    
                                    $
                                      $
                                    9,230
                                      9,230
                                    
                                    
                                    $
                                      $
                                    1,411
                                      1,411
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    $
                                      $
                                    10,641
                                      10,641Hujie
      Gao
                                      Vice
      President of Corporate Finance(principal financial
    officer)(1)
                                    
                                    2008
                                      2007
                                    
                                    $
                                      $
                                    5,384
                                      5,384
                                    
                                    
                                    $
                                      $
                                    461
                                      461
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    $
                                      $
                                    5,845
                                      5,845Jing
      Xie
                                      Chief
      Financial Officer (principal financial officer) (1)
                                    
                                    2008
                                      2007
                                    
                                    $
                                      $
                                    11,034
                                      7,947
                                    
                                    
                                    $
                                      $
                                    849
                                      795
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    
                                    —
                                      —
                                    
                                    
                                    $
                                      $
                                    11,883
                                      8,742





(1)
            Mr.
      Jing Xie assumed the position of our Chief Financial Officer with effect
      from February 17, 2009 and accordingly, is our principal financial officer
      from that date.









Outstanding
Equity Awards at 2008 Fiscal Year End





There
were no option exercises or options outstanding in 2008.




Employment
Agreements




Mr. Xie’s
appointment as our Chief Financial Officer is set forth in an employment
agreement between Mr. Xie and us dated  February 17,
2009.  Under that agreement, Mr. Xie is to receive compensation
consisting of the following: (i) an  annual salary of $30,000, (ii)
eligibility to receive bonus compensation and stock options or other
equity-based incentives as the discretion of the compensation committee of the
Board of Directors, and (iii) medical and dental insurance, (iv)social
insurance.





Apart
from Mr. Xie, there are no current employment agreements between the Company and
its executive officers. Our executive officers have agreed to work without
remuneration until such time as we receive sufficient revenues necessary to
provide proper salaries to the officer and compensate the director for
participation.





Compensation Discussion and
Analysis





We strive
to provide our named executive officers (as defined in Item 402 of Regulation
S-K) with a competitive base salary that is in line with their roles and
responsibilities when compared to peer companies of comparable size in similar
locations.





It is not
uncommon for PRC private companies in the PRC to have base salaries as the sole
form of compensation. The base salary level is established and reviewed based on
the level of responsibilities, the experience and tenure of the individual and
the current and potential contributions of the individual. The base salary is
compared to the list of similar positions within comparable peer companies and
consideration is given to the executive’s relative experience in his or her
position.  Base salaries are reviewed periodically and at the time of
promotion or other changes in responsibilities.





We plan
to implement a more comprehensive compensation program, which takes into account
other elements of compensation, including, without limitation, short and long
term compensation, cash and non-cash, and other equity-based compensation such
as stock options. We expect that this compensation program will be comparable to
the programs of our peer companies and aimed to retain and attract talented
individuals.





We will
also consider forming a compensation committee to oversee the compensation of
our named executive officers. The majority of the members of the compensation
committee would be independent directors.










Director
Compensation





Mr.
Yizhao Zhang’s compensation as director of the Company is set forth in an
appointment letter with the Company dated June 24, 2008. He is being paid a
monthly fee of $2,000. He has also been granted options to purchase a total of
100,000 shares of Common Stock of the Company, par value $0.001 at $1.52 per
share. Options to purchase 33,333 shares may be exercised immediately, options
to purchase an additional 33,333 shares may be exercised commencing July 1,
2009, and options to purchase the remaining 33,334 shares may be exercised
commencing July 1, 2010, provided that in the case of the options to vest in
2009 and 2010 Mr. Zhang is still a director of or otherwise engaged by the
Company. The options may be exercised until July 1, 2018.





The
following table sets forth a summary of compensation paid to Messrs. Yizhao
Zhang  during the fiscal year ended December 31,
2008:





Name
                  
                  Fees earned or paid
                    in cash
                  
                  
                  Option awards
                  
                  
                  All other compensation
                  
                  
                  TotalYizhao
      Zhang
                  
                  $
                  12,000
                  
                  
                  $
                  70,616
                  
                  
                  
                  N/A
                  
                  
                  $
                  82,617





On January 20, 2009, Mr. Jiduan Yuan
and Mr. Lizong Wang were each granted options to purchase 100,000 shares of our
Common Stock and  Mr Liquan Wang was granted options to purchase
30,000 shares of our Common Stock under the Universal Travel Group 2009
Incentive Stock Plan.  The options have an exercise price of $0.90 and
a term of 10 years. The options vest in six annual equal
installments.  However, in the event (i) the Company reports an after
tax Net Income of $14,000,000  in its Annual Report on Form 10-K filed with
the SEC for its fiscal year 2008, then options to purchase one-third of the
shares granted shall vest and become immediately exercisable and each grantee of
such options shall be entitled to exercise his/her options rateably, (ii) 
the Company reports an after tax Net Income of $18,000,000  in its Annual
Report on Form 10-K filed with the SEC for its fiscal year 2009, then options to
purchase another one-third of the shares  granted shall vest and
become immediately exercisable and each grantee of such options shall be
entitled to exercise his/her options rateably and (iii) the Company reports an
after tax Net Income of $22,000,000  in its Annual Report on Form 10-K
filed with the SEC for its fiscal year 2010, then options to purchase another
one-third of the shares granted shall vest and become immediately exercisable
and each grantee of such options shall be entitled to exercise his options
rateably.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.




The
following table sets forth certain information with respect to the beneficial
ownership of our voting securities by (i) any person or group owning more than
5% of any class of voting securities, (ii) each director, (iii) our chief
executive officer  and (iv) all executive officers and directors as a
group as of  March 10, 2009.




Title of Class
                                            
                                            Name
      and Address of
                                              Beneficial Owner
                                            
                                            Amount
      and Nature of
                                              Beneficial Ownership (1)
                                            
                                            
                                            Percentage of Common
                                              Stock (1)Owner
      of More than 5% of ClassCommon
      Stock
                                            
                                            Pope
      Investments II LLC
                                            
                                            
                                            4,935,484
                                            
                                            
                                            
                                            13.86
                                            %5100
      Poplar Avenue,
                                              Suite
      805, Memphis, TN 38137Warrant
                                            
                                            Pope
      Investments II LLC
                                            
                                            
                                            967,742
                                            (2)5100
      Poplar Avenue, Suite
                                              805,
      Memphis, TN 38137








Directors
      and Executive OfficersJiangping
      Jiang
                                                                          
                                                                          
                                                                          12,000,000
                                                                          
                                                                          
                                                                          
                                                                          28.83
                                                                          %Common
      Stock
                                                                          
                                                                          3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Yizhao
      Zhang
                                                                          
                                                                          
                                                                          33,333
                                                                          (3)
                                                                          
                                                                          
                                                                          
                                                                          *3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Jing
      Xie
                                                                          
                                                                          
                                                                          —
                                                                          
                                                                          
                                                                          
                                                                          —3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Hujie
      Gao
                                                                          
                                                                          
                                                                          —
                                                                          
                                                                          
                                                                          
                                                                          —3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Jiduan
      Yuan
                                                                          
                                                                          
                                                                          —
                                                                          
                                                                          
                                                                          
                                                                          —3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Lizong
      Wang
                                                                          
                                                                          
                                                                          —
                                                                          
                                                                          
                                                                          
                                                                          —3F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Common
      Stock
                                                                          
                                                                          Liquan
      Wang
                                                                          
                                                                          
                                                                          —
                                                                          
                                                                          
                                                                          
                                                                          —3/F
      Hualian Building, No.
                                                                            2008
      Shennan Road
                                                                            Central,Fulian
      District, Shenzhen,
                                                                            People’s
      Republic of
                                                                            China
      518031Officers
      and Directors as a group
                                                                          
                                                                          
                                                                          12,033,333
                                                                          
                                                                          
                                                                          
                                                                          28.89
                                                                          %




*Represents
less than 1%









(1)              In
determining beneficial ownership of our Common Stock as of a given date, the
number of shares shown includes shares of Common Stock which may be acquired on
exercise of warrants or options or conversion of convertible securities within
60 days of that date. In determining the percent of Common Stock owned by a
person or entity on March 10, 2009, (a) the numerator is the number of shares of
the class beneficially owned by such person or entity, including shares which
may be acquired within 60 days on exercise of warrants or options and conversion
of convertible securities, and (b) the denominator is the sum of (i) the total
shares of Common Stock outstanding on March 10, 2009 (22,112,500), and (ii) the
total number of shares that the beneficial owner may acquire upon conversion of
the preferred and on exercise of the warrants and options. Unless otherwise
stated, each beneficial owner has sole power to vote and dispose of its
shares.





(2)           On
August 28, 2008, we  entered into a Securities Purchase Agreement with
Access America Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller
Capital Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter,
LLC, MARed Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce,
Fenner & Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to
the Buyers 4,588,708 shares of Common Stock and warrants to purchase 2,294,356
shares of Common Stock for an aggregate purchase price of
$7,112,500.   The Financing closed on August 29, 2008. Pope
Investments II LLC received 4,935,484 shares of our Common Stock and a warrant
to purchase 967,742 shares of our Common Stock.  The warrant has an
exercise price of $2.71 and a term of 5 years from the date of
issuance.





(3)              Represents
shares issuable pursuant to options which are currently exercisable. Excludes
66,667 shares of Common Stock underlying options not exercisable within 60 days
of this report.





Item
13. Certain Relationships and Related Transactions, and Director
Independence.




Except
for the ownership of our securities, and except as set forth below, none of the
directors, executive officers, holders of more than five percent of the
Company’s outstanding common stock, or any member of the immediate family of any
such person have, to our knowledge, had a material interest, direct or indirect,
in any transaction or proposed transaction which may materially affect the
Company.




·
            In
      connection with the merger of our Company and Full Power, Ms. Jiang, then
      a shareholder of Full Power was issued 11,800,000 shares of our Common
      Stock; and





·
            In
      connection with the Financing, Ms. Jiangping Jiang entered into (i) a Make
      Good Securities Escrow Agreement with the Company, the Buyers and
      Sichenzia Ross Friedman Ference LLP, as escrow agent dated August 28,
      2008, (ii) an Escrow Agreement with the Company, the Buyers and Sichenzia
      Ross Friedman Ference LLP, as escrow agent dated August 28, 2008 and (iii)
      a Lock-Up Agreement dated August 28, 2008 with the
  Company.





Director
Independence.





The OTC Bulletin Board, on which our
Common Stock is currently traded, does not maintain director independence
standards, however, Messrs. Zhang, Wang, Yuan and Wang qualify as independent
directors under the guidelines of the Rules of NASDAQ, Marketplace Rule
4200(a)(15).










Item
14. Principal Accounting Fees and Services.




In
connection with our change in control effective pursuant to a merger
transaction, as disclosed as disclosed on our Current Report on Form 8-K filed
on July 12, 2006, our Board of Directors approved the engagement of Morgenstern,
Svoboda, & Baer, CPA's, P.C. for all audit and permissible non-audit
services,


and
dismissed Moore & Associates, Chartered the Company's prior certifying
accountant, in each case effective as of June 23, 2006.





Our Audit
Committee annually reviews the audit and permissible non-audit services
performed by our principal accounting firm and reviews and approves the fees
charged by our principal accounting firm. Our Audit Committee has considered the
role of Morgenstern, Svoboda, & Baer in providing tax and audit services and
other permissible non-audit services to us and has concluded that the provision
of such services, if any, was compatible with the maintenance of such firm's
independence in the conduct of its auditing functions.





During
fiscal years 2007 and 2008, the aggregate fees which we paid to or were billed
by Morgenstern, Svoboda & Baer, CPA's P.C. and Moore & Associates for
professional services were as follows:





Fiscal
      year ended December 31,2008
                    
                    
                    2007Audit
      fees
                    
                    $
                    161,000
                    
                    
                    $
                    54,000Audit-related
      fees
                    
                    $
                    0
                    
                    
                    $
                    193,000Tax
      fees
                    
                    $
                    0
                    
                    
                    $
                    0All
      other fees
                    
                    $
                    0
                    
                    
                    $
                    0









PART
IV




Item
15. Exhibits, Financial Statement Schedules.





Exhibit
                    Footnote
                  
                  Exhibit No.
                  
                  Description(1)
                  
                  2.1
                  
                  Agreement
      and Plan of Merger between TAM of Henderson, Inc. and the
      Company(2)
                  
                  3.1
                  
                  Articles
      of Incorporation(3)
                  
                  3.2
                  
                  By-laws(4)
                  
                  3.3
                  
                  Articles
      of Merger between TAM of Henderson, Inc. and Company(5)
                  
                  3.4
                  
                  Amended
      and Restated Articles of Incorporation, changing our name from Tam of
      Henderson, Inc. to Universal Travel Group(6)
                  
                  4.1
                  
                  2007
      Equity Incentive Plan(7)
                  
                  4.2
                  
                  Form
      of Warrant(8)
                  
                  10.1
                  
                  Shareholder
      Agreement between Registrant and Doreen E. Zimmerman(9)
                  
                  10.2
                  
                  Share
      Purchase Agreement between Marcus Luna, Esq. representing a certain
      selling shareholder of Company  and Xiao Jun(10)
                  
                  10.3
                  
                  Agreement
      and Plan of Merger by and among Registrant, Full Power Enterprise Global
      Limited ("Full Power"), and the shareholders of Full
  Power.(11)
                  
                  10.4
                  
                  Share
      Exchange Agreement among the Company, Full Power Enterprise Global
      Limited, Shenzhen Yu Zhi Lu Aviation Service Company Limited, Shenzhen
      Speedy Dragon Enterprise Limited and the  shareholders of
      Shenzhen Speedy Dragon Enterprise Limited(12)
                  
                  10.5
                  
                  Share
      Exchange Agreement among Company, Shenzhen Yu Zhi Lu Aviation Service
      Company Limited, Xi'an Golden Net Travel Serve Service Company Limited,
      and the shareholders of Xi'an Golden Net Travel Serve Service Company
      Limited(13)
                  
                  10.6
                  
                  Share
      Exchange Agreement among Company, Shenzhen Yu Zhi Lu Aviation Service
      Company Limited, Shanghai Lanbao Travel Service Company Limited, and the
      shareholders of Shanghai Lanbao Travel Service Company
    Limited(14)
                  
                  10.7
                  
                  Agreement
      by and between Company and Richard P. Randall(15)
                  
                  10.8
                  
                  Share
      Exchange Agreement among Company, Shenzhen Yu Zhi Lu  Aviation
      Service Company Limited, Foshan Overseas International  Travel
      Service Co., Ltd., and the shareholders of Foshan
      Overseas  International Travel Service Co.,
  Ltd.(16)
                  
                  10.9
                  
                  Share
      Exchange Agreement among Company, Shenzhen Yu Zhi LuAviation
      Service Company Limited, Tianjin Golden DragonInternational
      Travel Service Co., Ltd., and the shareholders ofTianjin
      Golden Dragon International Travel Service Co., Ltd.,(17)
                  
                  10.10
                  
                  Agreement
      by and between Registrant and James Treacy(18)
                  
                  10.11
                  
                  Subscription
      Agreement by and among Company and Total Shine Group Limited, Victory High
      Investments and Think Big Trading Limited(19)
                  
                  10.12
                  
                  Rescission
      And Release Agreement by and among Company,  Shenzhen Yu Zhi Lu
      Aviation Service Company Limited, a wholly  owned subsidiary of
      Registrant, Tianjin Golden Dragon  International Travel Service
      Co., Ltd., and the shareholders of Tianjin Golden Dragon International
      Travel Service Co., Ltd(20)
                  
                  10.12
                  
                  Securities
      Purchase Agreement dated August 28, 2008 between the Company and the
      Buyers(21)
                  
                  10.13
                  
                  Make
      Good Securities Escrow Agreement dated August 28, 2008 between the
      Company, the Buyers, the Principal Shareholder and the Escrow
      Agent(22)
                  
                  10.14
                  
                  Escrow
      Agreement dated August 28, 2008 between the Company, the Buyers, the
      Principal Shareholder and the Escrow
Agent










(23)
                  
                  10.15
                  
                  Registration
      Rights Agreement between the Company and the Buyers dated August 28,
      2009(24)
                  
                  10.16
                  
                  Lock-Up
      Agreement between Company and the Principal Shareholder dated August 28,
      2008.(25)
                  
                  21.1
                  
                  List
      of Subsidiaries31.1
                  
                  Certification
      of the Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
                  
                  Certification
      of the Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
                  
                  Certification
      of the Principal Executive Officer pursuant to U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
                  
                  Certification
      of the Principal Financial Officer pursuant to U.S.C. Section 1350 as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002




(1)
            Incorporated
      herein by reference to Exhibit 2.1 to the Company’s  Current
      Report on Form 8-K filed on March 20,
2006.





(2)
              Incorporated
      herein by reference to Exhibit 3.1 to the Company’s Registration Statement
      on Form10SB12G
      filed on September 6, 2005.





(3)
            Incorporated
      herein by reference to Exhibit 3.2 to the Company’s Registration Statement
      on Form 10SB12G filed on September 6,
2005.





(4)
            Incorporated
      herein by reference to Exhibit 3.3 to the Company’s Current Report on Form
      8-K filed on March 27, 2006.





(5)
            Incorporated
      herein by reference to Exhibit 3.1 to the Company’s Current Report on Form
      8-K filed on August 23, 2006.





(6)
              Incorporated
      herein by reference to Exhibit 4.1 to the Company’s Registration Statement
      on FormS-8
      (No. 333-140130) declared effective on January 22,
  2007.





(7)
            Incorporated
      by reference to Exhibit 4.1 on the  Company’s Current Report on
      Form 8-K filed on September 3,
2008.





(8)
            Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Registration
      Statement on Form 10SB12G filed on September 6,
  2005.





(9)
            Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on June 22, 2006.





(10)
            Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on June 27, 2006.





(11)
            Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on April 12, 2007.





(12)
            Incorporated
      herein by  reference to Exhibit 10.1 to the Company’s Current
      Report on Form 8-K filed on August 7,
2007.





(13)
              Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filedon
      August 10, 2007.









(14)
              Incorporated
      herein by reference to Exhibit 10.1 to the Company’s Current Report on
      Form 8-K filed on September 10,
2007.





(15)
            Incorporated
      herein by  reference to Exhibit 10.1 to the Company’s Current
      Report on Form 8-K filed on September 25,
2007.





(16)
              Incorporated
      herein by reference to Exhibit 10.1 to  Company’s Current Report
      on Form 8-K filed on October 23,
2007.





(17)
              Incorporated herein by
      reference to Exhibit 10.1 to Company’s Current Report on Form 8-K filed on
      December 12,  2007.





(18)
            Incorporated
      herein by reference to Exhibit 99.1 to Company’s Current Report on Form
      8-K filed onFebruary
      11, 2008.





(19)
            Incorporated
      herein by reference to Exhibit 99.1 to Company’s Current Report on Form
      8-K filed on February 15, 2008.





(20)
            Incorporated
      by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
      filed on September 3, 2008.





(21)
            Incorporated
      by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K
      filed on September 3, 2008.





(22)
            Incorporated
      by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
      filed on September 3, 2008.





(23)
            Incorporated
      by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K
      filed on September 3, 2008.





(24)
            Incorporated
      by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K
      filed on September 3, 2008.





(25)
            Incorporated
      by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K
      filed on March 31, 2008









SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





UNIVERSAL
      TRAVEL GROUPBy:
                  /s/ Jiangping JiangJiangping
      JiangChief
      Executive Officer (principal executive officer)Date:By:
                  /s/ Jing XieJing
      XieChief  Financial
      Officer (principal accounting and financial officer)Date:





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.




Name and Title
              
              Date/s/ Jiangping Jiang
              
              March  12,
      2009By:
      Jiangping JiangChief
      Executive Officer and Director(principal
      executive officer)/s/ Jing Xie
              
              March
      12, 2009By:
      Jing XieChief
      Financial Officer, Secretary and a director
                (principal
      accounting and financial officer)/s/ Yizhao Zhang
              
              March
      12, 2009By:
      Yizhao ZhangDirector/s/ Hujie Gao
              
              March
      12, 2009By:
      Hujie GaoVice
      President of Corporate Finance and a director/s/ Liquan Wang
              
              March
      12, 2009By:
      Liquan WangDirector









/s/ Jiduan Yuan
              
              March
      12, 2009By:
      Jiduan YuanDirector/s/ Lizong Wang
              
              March
      12, 2009By:
      Lizong WangDirector