FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

|(Mark One)
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|x         
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Commission file number 000-30264

TEDA TRAVEL GROUP, INC.(Exact name of small business issuer in its charter)

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|---------------------------------------------------------------- |  | --------------------------------------
|Delaware                                                         |  | 11-3177042                            
|                                                                 |  |                                       
|(State or other jurisdiction of
  incorporation or organization) |  | (I.R.S. Employer Identification
  No.)
|                                                                 |  |                                       
|Suite
  2102, Chinachem Century Tower                            |  |                                       
|178
  Gloucester Road, Wanchai, Hong Kong                        |  | N/A                                   
|                                                                 |  |                                       
|(Address of principal executive
  offices)                       |  | (Zip Code)                            

Issuers telephone number: (011) (852) 2833-2186

Securities Registered Under Section 12(b) of
the Exchange Act:None

Securities Registered Under Section 12(g) of
the Exchange Act:Common Stock, $0.001 par value(Title of class)

Check whether
the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the past 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.  Yes xNo  o

Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of the
Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.   o

State
issuers revenues for most recent fiscal year: 
$568,391

The number of
shares of the Registrants common stock, par value $0.001 per share,
outstanding as of March 30, 2005 held by non-affiliates was 8,015,929 shares.
All executive officers and directors of the registrant have been deemed, solely
for the purpose of the foregoing calculation, to be affiliates of the
registrant. The aggregate market value of the common equity held by non-affiliates as of March 30, 2005
was $14,027,875.

As of March 30, 2005, there
were 21,667,887 shares of the issuers common stock, $.001 par value,
outstanding.

Documents Incorporated by Reference: 
None.

Transitional Small Business Format. 
Yes o   No x

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NOTE
REGARDING FORWARD LOOKING STATEMENTS

All statements
contained in this Form 10-KSB, other than statements of historical facts, that
address future activities, events or developments are forward-looking
statements, including, but not limited to, statements containing the words
believe, anticipate, expect and words of similar import. These statements
are based on certain assumptions and analyses made by us in light of our
experience and our assessment of historical trends, current conditions and
expected future developments as well as other factors we believe are
appropriate under the circumstances. However, whether actual results will
conform to the expectations and predictions of management is subject to a
number of risks and uncertainties that may cause actual results to differ
materially.

We are also subject to risks
detailed herein or detailed from time to time in the Companys filings with the
United States Securities and Exchange Commission.

Consequently,
all of the forward-looking statements made in this Form 10-KSB are qualified by
these cautionary statements and there can be no assurance that the actual
results anticipated by management will be realized or, even if substantially realized,
that they will have the expected consequences to or effects on our business
operations.

As used in
this Form 10-KSB, unless the context requires otherwise, we or us or the
Company means Teda Travel Incorporated and its subsidiaries.

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|         |                                                                                          |  | Page No.
|         |                                                                                          |  |         
|         |                                                                                          |  |          |    | 
|PART I   |                                                                                          |  | 1        |   
|Item 1.  | Business                                                                                 |  |          | 1  | 
|Item 2.  | Properties                                                                               |  |          | 6  | 
|Item 3.  | Legal
  Proceedings                                                                      |  |          | 13 | 
|Item 4.  | Submission
  of Matters to a Vote of Security Holders                                    |  |          | 13 | 
|PART II  |                                                                                          |  | 14       |   
|Item 5.  | Market for
  Registrants Common Equity and Related Stockholder Matters                  |  |          | 14 | 
|Item 6.  | Managements
  Discussion and Analysis of Financial Condition and Results of Operation . |  |          | 15 | 
|Item 7.  | Financial
  Statements and Supplementary Data                                            |  |          | 21 | 
|Item 8.  | Changes In
  and Disagreements With Accountants on Accounting and Financial Disclosure   |  |          | 21 | 
|Item 8A. | Controls
  and Procedures                                                                |  |          | 21 | 
|PART III |                                                                                          |  | 22       |   
|Item 9.  | Directors
  and Executive Officers of Registrant                                         |  |          | 22 | 
|Item 10. | Executive
  Compensation                                                                 |  |          | 24 | 
|Item 11. | Security
  Ownership of Certain Beneficial Owners and Management                         |  |          | 24 | 
|Item 12. | Certain
  Relationships and Related Transactions                                         |  |          | 25 | 
|PART IV  |                                                                                          |  | 27       |   
|Item 13. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                         |  |          | 27 | 
|Item 14. | Principal
  Accountant Fees and Services.                                                |  |          | 27 | 



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PART I

ITEM
1.      DESCRIPTION OF BUSINESS.

GENERAL

The
Company is a Delaware corporation incorporated on September 10, 1993, currently
headquartered in Hong Kong SAR, Peoples Republic of China. It has since
engaged in various ventures and was led by numerous different management teams
for the last ten years. The Company was previously known as Acola Corp.
(Acola), which came into being on October 12, 2001. Acola was formed to
attempt to distribute an anti-cancer drug in Mexico, where it was unable to
secure enough capital to obtain the exclusive distribution rights to the drug
and has had no business since 2002.

On
March 10, 2004, Teda Travel Incorporated, a Florida Corporation (Teda
Florida), entered into a Share Exchange Agreement (Exchange Agreement) with
its wholly owned subsidiary, Teda Hotels Management Company Limited, a British
Virgin Islands Corporation (Teda BVI) and Acola. The Exchange Agreement set
forth certain terms and conditions of the exchange by which the entire issued
share capital of Teda BVI is transferred to that of Acola in exchange for
approximately return of 95.86% of the issued share capital of Acola. The
closing of the Transaction occurred on March 12, 2004, and hence Acola was then
effectively controlled by Teda Florida, although 9% of the issued share capital
of Acola was transferred to consultants as stock compensation, leaving Teda
Florida with 86% of the issued capital of Acola.. On the closing date, pursuant
to the Exchange Agreement, all of Acolas existing officers and directors,
except Mr. James N. Baxter, resigned and all the directors of Teda Florida were
elected on the Board of Acola. Mr. James N. Baxter resigned on March 30, 2004.
In order to better reflect the new operations of the Company, the Company
amended its certificate of incorporation to change its name to that of Teda
Travel Group, Inc. on April 20, 2004.

Prior
to the share exchange, the Company had no material operations.  The merger
was accounted for as a recapitalization of Teda BVI, as the shareholders of
Teda BVI acquired capital stock of the Company in a reverse acquisition.
 Accordingly, the assets and liabilities of Teda BVI were recorded at
historical cost as this was a capital transaction, and the shares of common
stock issued by the Company were reflected in the consolidated financial
statements with retroactive effect, as if the Company had been the parent
company from inception. The Companys former year-end date was June 30 and
currently assumes the year-end date of the acquirer of December 31.

On
January 27, 2005, the Board of Directors of Teda Florida authorized the
distribution of substantially all of the shares of Company common stock it owns
to the Teda Floridas shareholders (Stock Distribution).  The record
date for the distribution was January 29, 2005.   Teda Florida has distributed an aggregate of 17,853,300
Company common stock, such that a shareholder shall receive 0.717 share for
every share of Teda Florida common stock held as of the record date. Teda
Florida has retained the remaining 278 shares of the Companys common stock.

The
Company primarily earns its revenues through the provision of management
services, including training and consulting services, to hotels and resorts in
the Peoples Republic of China through its two wholly-owned operating
subsidiaries, Teda BVI, and Teda Hotels Management Limited, a Hong Kong
corporation; and a 60%-held subsidiary, Landmark International Hotel Group
Limited, acquired through acquisition that closed on November 8, 2004.

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The
Company is also an investor in real estate development projects in Asia.
 In January 2002, the Company acquired a 35% interest in a real estate
joint venture by the name of Tianjin Yide Real Estate Company Limited.
 The Companys co-venturer is a real estate developer by the name of
Tianjin Teda International Hotels Development Company Limited, a corporation
owned by the Tianjin provincial government and formed under the laws of the
Peoples Republic of China.  Through the real estate joint venture, the
Company owns a multi-use complex featuring apartment units for sale, as well as
a hotel and clubhouse.  For more
information about the Companys real estate joint venture,  please see
Item 2, Properties, in the Teda Travel Inc.s Annual Report on Form 10-KSB,
as filed with the United States Securities and Exchange Commission on April 14,
2004.

BUSINESS
BACKGROUND

T.E.D.A.
refers to Tianjin Economic and Technological Development Area, a special
economic zone that was created by the Peoples Republic of China in 1984, which
area is located approximately 180 kilometers southeast of Beijing and which has
attracted significant foreign investments. More than 3,300 foreign companies,
including 100 of the Fortune 500 companies, with a total investment exceeding
$15 billion conduct  business in this
special economic zone. Tianjin is one of the four municipalities under the
direct control of the Central government and is currently the largest port in northern
China.  Its historical GDP growth rate
has been comparable to that of Beijing and the nationwide growth rate of 9.5%
for the last several years.

In
2001, a group of Hong Kong hotel professionals, including members of the
current management of the Company, together with Tianjin Teda International
Hotel Development Limited, a corporation owned by the Tianjin provincial
government and formed under the laws of the Peoples Republic of China and a
joint venture partner of the Company (the Companys Joint Venture Partner),
formed Teda BVI for the purpose of establishing a premier nationwide hotel
chain business throughout Asia. The Companys Joint Venture Partner began its
hotel management business in 1997.

CURRENT
BUSINESS

The
Company currently engages in two types of businesses: hotel and resort
management and real estate development.

Hotel
and Resort Management

The
main business of the Company is providing hotel and resort management
services.  The Company receives monthly
management fees from hotels and resorts under management. The Company has
contractual arrangements to manage the following hotel properties in the
Peoples Republic of China:

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|Hotel Name                        | Star-rating | Number of rooms
|--------------------------------- | ----------- | ---------------
|Tianjin Teda Hotel
  & Club       | 5-star      | 236            
|Tianjin
  International Club      | 5-star      | 115            
|Kindlion Hotel (Shenzhen)         | 4-star      | 230            
|Urumqi Miramar Hotel              | 5-star      | 338            
|Xian Aururn
  International Hotel | 4-star      | 302            
|Changshan Tiansha
  Hotel         | 5-star      | 217            
|Spring Hotel
  (Beijing)          | 5-star      | 193            
|Hunan Yichang Hotel               | 4-star      | 80             
|Changsha Tianxin
  Court Hotel    | 3-star      | 85             
|Xian Diamond Plaza Hotel          | 4-star      | 339            
|Changsha Shuangtian
  Hotel       | 4-star      | 80             
|Changsha Hengxi Hotel             | 3-star      | 200            
|Dongguan Royal Bay
  Hotel        | 5-star      | 280            

There are a
total of 2,695 rooms in 13 hotels.  Terms
of our management agreements vary, but typically we earn a management fee,
which is comprised  of a base fee, which
is a percentage of the gross sales revenues of the hotel, and an incentive
management fee, which is based on the gross operating profits of the hotel.
Such agreements last generally for an initial term of 2 to 10 years.  For hotels that we manage, we are
responsible for hiring, training and supervising the managers and employees
required to operate the facilities and for purchasing supplies, for which we
generally are reimbursed by the hotel owners. As of December 31, 2004,
the Company received 100% of its revenues from its management of the above
hotel and resort properties. Properties
that we manage are regularly renovated to maintain their competitiveness. We
believe that these ongoing refurbishment programs are adequate to preserve the
competitive position and earning power of the hotels and properties.

Our
primary objectives are to increase the number of hotels under our management
mainly through acquisition of hotel management companies in Peoples Republic
of China, renew management contracts and, most importantly, provide quality
service and support to the hotels we manage in a way that enables them to
increase their profitability.

Hotels
under our management mainly cater to business-oriented travelers and generate
higher revenue during the summer and autumn months because of increased number
of conferences. During longer holidays like the Chinese New Year (around
February each year) and National Celebration Days (October 1), our business
tends to be slower, although we will market for leisure customers at preferred
room rates.  Therefore, any event that
disrupts travel patterns during the summer and autumn periods could have a
material adverse effect on our annual performance and consequently our annual
performance than if such events occurred in other periods.  We cannot predict whether these trends will
continue in the future.

On
November 8, 2004, the Company acquired a 60% equity interest in a hotel
management company known as Landmark International Hotel Group Limited
(Landmark), a company incorporated in British Virgin Islands. Landmark has
therefore become a majority interest-owned subsidiary of the Company. As of
December 31, 2004, Landmark manages a portfolio of 10 hotels which are included
as the list above.

Real
Estate Development

In
January 2002, the Company acquired a 35% equity interest in a real estate joint
venture by the name of Tianjin Yide Industrial Company Limited (formerly
Tianjin Yide Real Estate Company Limited), a Peoples Republic of China
corporation (the Real Estate Joint Venture). 
Through the Real Estate Joint

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Venture, the
Company owns a multi-use complex featuring 172 apartment units as well as a
hotel and clubhouse (the Complex). The Real Estate Joint Venture has sold 90%
of the apartment units of this Complex. 
As of December 31, 2004, it sold 169 apartment units.  The Company manages the hotel and clubhouse
of the Complex.  This hotel is one of
the properties managed by the Company as disclosed above.  In September 2003, the Real Estate Joint
Venture invested approximately $6,500,000 in a new real estate project in
Shunyi District, Beijing, Peoples Republic of China.  This project entails land acquisition of over 1,155 acres and a
subsequent plan to resell part of it and to establish a luxury chain of
apartments and hotels in the area.  See,
Item 2, Properties.  In November,
2004, the Real Estate Joint Venture invested another $1,800,000 to acquire a
60% equity interest in a new hotel-apartment project known as Oriental Garden
in Tianjin, Peoples Republic of China. This project entails a planned total
investment of approximately $21 million with a sellable area of approximately
24,000 square meters (sq.m)., which is expected to complete its construction by
end of this year.

PENDING 2005
ACQUISITIONS

Teda Resort Alliance Development Company
LimitedOn
August 18, 2004, the Company announced that it had agreed to acquire Teda
Resort Alliance Development Company Limited (TRAC) for approximately $386,200, of
which $280,872 payable in cash and $105,328 payable in restricted Company
common stock. TRAC provides timeshare services for customers in China, and is
the largest partner of RCI, the biggest timeshare operator in the world. It
currently has a customer base of over 4,000 members and has been growing due to
its vast choice of hotels and resorts available to its users. TRAC is noted as
a successful timeshare operator in China and is also an owner of eight hotel
properties in both China and South East Asia. It has a substantial network of
exclusive sales agents throughout China. The completion of the
transaction is subject to certain conditions, including approval by
shareholders and government approval. The Company expects to complete the acquisition in the
second quarter of 2005.

Shanghai Bowking Hotel Management Company
Limited.On January 4, 2005, the Company announced
that it had agreed to acquire Shanghai Bowking Hotel Management Company Limited
(Bowking) for approximately $242,200. Bowking has successfully managed more
than 12 similar hotel projects, and has established a well-known brand in
Peoples Republic of China with its bases in both Shanghai and Wuhan. It is
expected to be orchestrating the opening and operation of not fewer than 5
four-star to five-star hotels in China in 2005. The Company expects to
complete the acquisition in the second quarter of 2005.

MARKET
OVERVIEW

Hotel
and Travel Industry

The
travel industry is rapidly growing in China, surpassing the annual GDP growth
by approximately 50%.  According to
Chinas tenth five year plan (2000-2005), the Chinese government expected a 7%
compound annual growth rate of GDP.  In
2004 the actual GDP rate was over 9.5%, while the growth in travel industry was
about 14%.  We believe the growing
domestic market in tourism will boost the growth in the overall travel
industry.  An expanding middle class,
increasing disposable income, more free time and increased freedom of travel
within China will cause the dynamics of the tourism infrastructure to evolve.

The
World Travel Organization predicts that China will be the No. 1 global tourism
destination by 2020. According to the China National Tourism Administration,
business tourists currently account for 25% of all inbound arrivals, and this
sector is expected to grow to support the ever-expanding economy. The
consumption of international and domestic business travel in China has reached
$24 billion, a level similar to that of France and Germany.

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According
to CEIC Data Company Limited, there are over 4,000 three-star or better hotels
in China, of which 3-star hotels represent the largest segment (approximately
77%). Among such hotels, those having a 5-star ranking are less than 2% of
total star-rated hotels. Guangdong Province is the area where most star-rated
hotels are concentrated.  With the
growth in domestic wealth and the coming 2008 Olympic Games to be held in
Beijing, the demand for hotel rooms is expected to surge.

Real
Estate

Many industry
analysts are bullish on the long-term prospects of real estate prices in China.
Beijing, the capital city, is undergoing major expansion in properties in
preparation for the 2008 Olympic Games and in anticipation of an influx of
corporate headquarters.  In China, most
of the planned real estate construction projects must be finalized or be in the
final stages by 2006, as the government has banned construction cranes in
Beijings town centre from 2007 to avoid marring the skyline during the
Olympics. As a result, the growth in supply of real properties has been larger
than in prior years.

COMPETITION

Hotel
Management

We
encounter strong competition in the hotel management business. There are
roughly 160 hotel management companies in China, and they manage about a total
of 1,000 hotels.  These operators are primarily private
management firms, but also include several large global chains that operate
their own hotels and also franchise their brands, mostly in the upper-tier
market. On the other hand, according to the Hotel Benchmark Survey by
Deloitte, only about 10% of hotel supply in China is branded, and most of such
branded hotels sit within the first class and deluxe segment of the
industry.  Such segment is also highly
fragmented with hotel management companies which are only active in their own
city or province, with very limited capability to solicit contracts outside
their city or province. We believe that chain affiliation will increase as
local economies grow, as brand
awareness is high in China and hotel owners seek the economies of centralized
reservation systems and marketing programs. 
Management contracts are typically long-term in nature, but most allow
the hotel owner to replace the management firm if certain financial or
performance criteria are not met.

China
has been a major boost in the improved economic performance in Asia, and many
global hotel companies strive to establish a strong presence in the country.
However, they are mostly geared towards the upper-end of the market, serving
foreign travelers. Whilst the Company addresses the importance of the TEDA
brand to domestic guests who look for services more geared towards their needs,
we are filling the market segment that such global brands find more difficult
to penetrate.

Real
Estate

With respect
to our real estate development business, competition for successful real estate
developments in China is extreme at both local and foreign levels, and success
often depends on having suitable connections to secure preferred
locations.  The Company believes that it
can successfully compete in this area because of the following factors:

| | The ability
  to provide quality services and a reasonable price;                                   
|- | ----------------------------------------------------------------------------------------------------
|  |                                                                                                     
| | The ability
  to provide value-added services such as spa, meeting facilities and club
  facilities;
|  |                                                                                                     
| | Location of
  hotels and properties;                                                                

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|  |                                              
|- | ---------------------------------------------
| | Market presence;
  and                       
|  |                                              
| | The
  trustworthiness of the TEDA brand name.

ENVIRONMENTAL
REGULATIONS

The
Companys operations are subject to various environmental regulations. The
costs of compliance with said regulations have not been material in the past and
are not anticipated to be material in the future.

EMPLOYEES

As
of December 31, 2004, the Company and its subsidiaries employed
<<thirteen>> full-time employees. Relationships with our employees
are good.

ITEM
2.     DESCRIPTION OF PROPERTIES

The
Companys principal place of business is located at Suite 2102, Chinachem
Century Tower, 178 Gloucester Road, Wanchai, Hong Kong.  The office premises occupies approximately
1,300 square feet, and is leased through a related corporation for a term of
two years commencing on November 21, 2003 for an average monthly lease rental
of $2,325.

A
wholly-owned subsidiary of the Company, Teda Beijing Hotel Management Company,
also maintains an office in Beijing, Peoples Republic of China.

The
Company does not directly own any real estate. 
However, in January 2002, the Company acquired a 35% equity interest in
a real estate joint venture by the name of Tianjin Yide Industrial Company
Limited (formerly Tianjin Yide Real Estate Company Limited), a Peoples
Republic of China corporation (the Real Estate Joint Venture). The Companys
co-venturer is a real estate developer by the name of Tianjin Teda
International Hotels Development Company Limited, a corporation owned by the Tianjin
provincial government and formed under the laws of the Peoples Republic of
China (the Companys Joint Venture Partner). 
Through the Real Estate Joint Venture, the Company owns a multi-use
complex (the Real Estate Complex) located at No. 7-2 Fukang Road in the
prestigious Nankai District of Tianjin in the Peoples Republic of China. The
Companys Joint Venture Partner developed the Real Estate Complex and completed
construction during the third quarter of 2003. The Real Estate Complex features
172 apartment units totaling approximately 31,200 square meters, as well as a
hotel and clubhouse totaling approximately 30,100 square meters.  The Real Estate Joint Venture plans to sell
most of the apartment units of the Real Estate Complex, and as of December 31,
2004, it sold 169 of the 172  apartment
units.  Purchasers of the apartment
units typically make a 30% down payment upon signing of the sales agreement and
typically obtain a bank mortgage for the balance of the purchase price. The
Company manages the hotel and clubhouse of the Real Estate Complex, which the
Real Estate Joint Venture plans to retain as a long-term investment. The hotel
and clubhouse has experienced an occupancy rate of approximately 73.7% during
the current fiscal year.  During 2003,
the Real Estate Joint Venture invested approximately $6,500,000, in return of
15% equity interest, in a new venture which will redevelop 1,155 acre parcel of
land in Shunyi District, Beijing, Peoples Republic of China. The investment is
principally funded by short term loan made with financial institutions by the
Joint Venture itself. The parcel of land will be partly sold and partly
developed into a grand villa, hotel and golf course, with a total investment of
over $55 million.  The planning and
design of the project is in its final stage and it will seek approval from the
State Planning Committee after all such planning work is completed. In

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November,
2004, the Real Estate Joint Venture invested another $1,800,000 in
participating in 60% equity interest in a new hotel-apartment project known as
Oriental Garden in Tianjin, Peoples Republic of China. This project entails a
planned total investment of approximately $21 million with a sellable area of
approximately 24,000 sq.m., which is expected to complete its construction by
end of this year.

Two
of the three members of the board of directors of the Real Estate Joint Venture
are Zhi Ying Chang, the Chairwoman of the Board of the Company, and Godfrey
Chin Tong Hui, a Director and the Chief Executive Officer of the Company.

Zhi
Ying Chang, the Chairwoman of the Company, is also the General Manager of the
Companys Joint Venture Partner and as such is responsible for the day-to-day
management of, and business development for, the Companys Joint Venture
Partner. The Companys Joint Venture Partner is the beneficial owner of 8.12%
of the Company.  See, Item 11, Security
Ownership of Certain Beneficial Owners and Management.

With
respect to the apartment units of the Real Estate Complex, none of them are
subject to any liens, mortgages or other encumbrances until they are sold.  With respect to the hotel and clubhouse of
the Real Estate Complex, the Real Estate Joint Venture has a 50-year leasehold
interest, free of any liens, mortgages or other encumbrances.  The Real Estate Joint Venture does not have
any present intention of raising funds through any encumbrances on the Real
Estate Complex.  In the opinion of the
management of the Company, the Real Estate Complex is adequately covered by
insurance.

With
respect to the sale of the unsold apartment units and use of the hotel and
clubhouse of the Real Estate Complex, the Real Estate Joint Venture is facing
increasing competition as more apartments and hotels of international standards
are built in Tianjin.  However, the
Company believes that the Real Estate Joint Ventures properties will remain
competitive because of the desirable location and facilities of the Real Estate
Complex.

With
the exception of the new venture in Shunyi District and the Oriental Garden
project described above, the Company does not have any current plans to make
any material additional real estate investments, through the Real Estate Joint
Venture or otherwise. We are also not aware of any intention of the Real Estate
Joint Venture to make any material additional real estate investments.  However, the Company would likely consider
entering into additional real estate joint ventures and/or other real estate
investments if suitable opportunities arose in the future and the Company has
adequate resources to make such investments. 
With respect to its real estate investments, the Company has not placed
any limitations on the percentage of assets that it may invest in any one
investment, the types of investments that it may make or the manner in which it
may operate or finance investments. This investment policy may be changed by
the Board of Directors without a vote of the Companys security holders. The
Companys real estate investment policy is to acquire assets for both capital
gain and income, as determined by the Board of Directors of the Company, from
time to time, in its discretion.

The
Joint Venture is subject to customary business tax and income tax for both
services fees received and that of property sale proceeds received in the
Peoples Republic of China.

RISKS AND UNCERTAINTIES

We
are subject to various risks that could have a negative effect on the Company
and its financial condition. You should understand that these risks could cause
results to differ materially from those expressed in forward-looking statements
contained in this report and in other Company communications. Because there is
no way to determine in advance whether, or to what extent, any present
uncertainty will ultimately impact our business, you should give equal weight
to each of the following.

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The
travel industry is highly competitive, which may impact our ability to compete
successfully with other hotel and timeshare properties for customers. We generally operate in markets that contain
numerous competitors. Each of our hotel management companies competes with
major hotel chains and independent operators in regional markets. Our ability
to remain competitive and attract and retain business and leisure travelers
depends on our success in distinguishing the quality, value and efficiency of
our services from those offered by others. If we are unable to compete
successfully in these areas, this could limit our operating margins, diminish
our market share and reduce our earnings.

We
are subject to the range of operating risks common to the hotel, real estate
and travel-related industries.The profitability of the hotel, real estate and travel-related
industries that we operate in may be adversely affected by a number of factors,
including:

| | (1) | the availability of and
  demand for hotel rooms and apartments;                                                                                                            
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                             
| | (2) | International and regional
  economic conditions;                                                                                                                           
| |     |                                                                                                                                                                             
| | (3) | the desirability of
  particular locations and changes in travel patterns of domestic and foreign
  travelers;                                                              
| |     |                                                                                                                                                                             
| | (4) | taxes and government
  regulations that influence or determine wages, prices, interest rates, and
  other costs;                                                            
| |     |                                                                                                                                                                             
| | (5) | the availability of
  capital to allow us and potential hotel owners and joint venture partners to
  fund investments;                                                      
| |     |                                                                                                                                                                             
| | (6) | increases in wages and
  other labor costs, energy, mortgage interest rate, insurance, transportation
  and fuel, and other expenses central to the conduct of our business.

Any one or more of these
factors could limit or reduce the demand, and therefore the prices we are able
to obtain, for hotel rooms and corporate apartments.

The
uncertain pace of the lodging industrys recovery will continue to impact our
financial results and growth.Both the Company and the lodging industry were hurt by several events
occurring over the last few years, including Severe Acute Respiratory Syndrome
(SARS), and the terrorist attacks on New York and Washington. Business and
leisure travel decreased and remained depressed as some potential travelers
reduced or avoided discretionary travel in light of increased delays and safety
concerns and economic declines stemming from an erosion in consumer confidence.
Weaker hotel performance reduced management fees and gave rise to losses and
closures in connection with some hotels that we manage, which, in turn, has had
a material adverse impact on our financial performance. Although both the
lodging and travel industries are recovering, the pace, duration and full
extent of that recovery remain unclear. Accordingly, our financial results and
growth could be harmed if that recovery stalls or is reversed.

Our
lodging operations are subject to international and regional conditions.Although we conduct our business in Greater
China region, our activities are susceptible to changes in the performance of
international and  regional economies,
as foreign travelers constitute a fair percentage of hotel occupants. In recent
years, our business has been hurt by decreases in travel resulting from SARS
and downturns in economic conditions. Our future economic performance is
similarly subject to the uncertain magnitude and duration of the economic
growth in China, the prospects of improving economic performance in other

8

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regions, the unknown pace of
any business travel recovery that results, and the occurrence of any future
incidents in China in which we operate.

Our
growth strategy depends upon third-party owners/operators, and future
arrangements with these third parties may be less favorable. Our present growth strategy for development
of additional lodging facilities entails entering into and maintaining various
arrangements with property owners. The terms of our management agreements for
each of our lodging facilities are influenced by contract terms offered by our
competitors, among other things. We cannot assure you that any of our current
arrangements will continue. Moreover, we may not be able to enter into future
collaborations, or to renew or enter into agreements in the future, on terms
that are as favorable to us as those under existing collaborations and
agreements.

We
may have disputes with the owners of the hotels that we manage.Consistent with our focus on hotel
management, we generally do not own any of our lodging properties. The nature
of our responsibilities under our management agreements to manage each hotel
and enforce the standards required under the management  agreements may, in some instances, be
subject to interpretation and may give rise to disagreements. We seek to
resolve any disagreements in order to develop and maintain good relations with
current and potential hotel owners and joint venture partners, but have not
always been able to do so. Failure to resolve such disagreements may result in
litigation in the future.

Our
ability to grow is partly through additional future acquisitions. The process
of identifying, acquiring and integrating future acquisitions may constrain
valuable management resources, and our failure to effectively integrate future
acquisitions may result in the loss of key employees and the dilution of
stockholder value and have an adverse effect on our operating results.We have completed an acquisition and expect to
continue to pursue
strategic acquisitions in the future. Completing any potential future
acquisitions could cause significant diversions of management time and
resources. Financing for future acquisitions may not be available on favorable
terms, or at all. If we identify an appropriate acquisition candidate for our
businesses, we may not be able to negotiate the terms of the acquisition
successfully, finance the acquisition or integrate the acquired business,
technologies or employees into our existing business and operations. Future
acquisitions may not be well-received by the investment community, which may
cause our stock price to fluctuate. We cannot ensure that we will be able to
identify or complete any acquisition in the future.

Our
ability to grow our management systems is subject to the range of risks
associated with real estate investments. Our ability to sustain continued growth
through management agreements for new or existing hotels is affected, and may
potentially be limited, by a variety of factors influencing real estate
development generally. These include site availability, financing, planning,
zoning and other local approvals, and other limitations that may be imposed by
market and submarket factors, such as projected room occupancy, growth in demand
opposite projected supply, territorial restrictions in our management
agreements, costs of construction and anticipated room rate structure.

We
depend on capital to maintain hotels, and we may be unable to access capital
when necessary.In order
to fund the refurbishment and improvement of existing hotels, both the Company
and current and potential hotel owners must periodically spend money. The
availability of funds for new investments and maintenance of existing hotels
depends in large measure on capital markets and liquidity factors over which we
can exert little control.

In
the event of damage to or other potential losses involving properties that we
own or manage, potential losses may not be covered by insurance. We have comprehensive property and
liability insurance policies with coverage features and insured limits to the
hotels that we believe are customary. Market forces beyond our control may
nonetheless limit both the scope of property and liability insurance

9

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coverage that we can obtain
and our ability to obtain coverage at reasonable rates. There are certain types
of losses, generally of a catastrophic nature, such as earthquakes and floods
or terrorist acts that may be uninsurable or may be too expensive to justify insuring
against. As a result, we may not be successful in obtaining insurance without
increases in cost or decreases in coverage levels. In addition, we may carry
insurance coverage that, in the event of a substantial loss, would not be
sufficient to pay the full current market value or current replacement cost of
our lost investment or that of hotel owners, or in some cases could also result
in certain losses being totally uninsured. As a result, we could lose all, or a
portion of, the capital we have invested in a property, as well as the
anticipated future revenue from the property.

Risks
relating to acts of God, terrorist activity and war could reduce the demand for
lodging, which may adversely affect our revenues. Acts of God, such as natural disasters and
the spread of contagious diseases, in Peoples Republic of China where we own
and manage can cause a decline in the level of business and leisure travel and
reduce the demand for lodging. Wars (including the potential for war),
terrorist activity (including threats of terrorist activity), political unrest
and other forms of civil strife and geopolitical uncertainty can have a similar
effect. Any one or more of these events may reduce the overall demand for hotel
rooms and corporate apartments, or limit the prices that we are able to obtain
for them, both of which could adversely affect our revenues.

The
loss of key management personnel could harm our business and prospects.We depend on key
personnel who may not continue to work for us. Our success substantially
depends on the continued employment of certain executive officers and key
employees, particularly Zhi Ying Chang, Godfrey Chin Tong Hui, Hon Ming Wong
and Tim Gao. The loss of services of these or other key officers or employees
could harm our business. If any of these individuals were to leave our company,
we could face substantial difficulty in hiring qualified successors and could
experience a loss in productivity while any such successor obtains the
necessary training and experience.

Because
our assets are located overseas, stockholders may not receive distributions
that they would otherwise be entitled to if we were declared bankrupt or
insolvent.  Our
assets are, for the most part, located in the PRC.  Because the Companys assets are located overseas, the assets of
the Company may be outside of the jurisdiction of U.S. courts to administer if
the Company was the subject of an insolvency or bankruptcy proceeding.  As a result, if the Company was declared
bankrupt or insolvent, the Companys stockholders may not receive the
distributions on liquidation that they are otherwise entitled to under U.S.
bankruptcy law.

The
market for the companys common stock is illiquid.The Companys common stock is traded on
the Over-the-Counter Bulletin Board.  It
is thinly traded compared to larger more widely known companies in its
industry.  Thinly traded common stock
can be more volatile than stock trading in an active public market.  The Company cannot predict the extent to
which an active public market for its common stock will develop or be
sustained.

Risks related to doing business in the PRC

Our
operations are primarily located in China and may be adversely affected by
changes in the policies of the Chinese government.The political environment in the PRC may
adversely affect the Companys business operations.  The PRC has operated as a socialist state since 1949 and is
controlled by the Communist Party of China. 
In recent years, however, the government has introduced reforms aimed at
creating a socialist market economy and policies have been implemented to
allow business enterprises greater autonomy in their operations.  Changes in the political leadership of the
PRC may have a significant effect on laws and policies related to the current
economic reforms program, other policies affecting business and the general
political, economic and social environment in the PRC, including the
introduction of measures to control inflation, changes in the rate or method of
taxation, the imposition of

10

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additional
restrictions on currency conversion and remittances abroad, and foreign
investment.  These effects could
substantially impair the Companys business, profits or prospects in China.  Moreover, economic reforms and growth in the
PRC have been more successful in certain provinces than in others, and the
continuation or increases of such disparities could affect the political or
social stability of the PRC.

The
Chinese government exerts substantial influence over the manner in which the
company must conduct its business activities.The PRC only recently has permitted greater
provincial and local economic autonomy and private economic activities.  The government of the PRC has exercised and
continues to exercise substantial control over virtually every sector of the
Chinese economy through regulation and state ownership.  Accordingly, government actions in the
future, including any decision not to continue to support recent economic
reforms and to return to a more centrally planned economy or regional or local
variations in the implementation of economic policies, could have a significant
effect on economic conditions in the PRC or particular regions thereof, and
could require the Company to divest the interests it then holds in Chinese
properties or joint ventures.  Any such
developments could have a material adverse effect on the business, operations,
financial condition and prospects of the Company.

Future
inflation in China may inhibit economic activity in china and adversely affect
the Companys operations.In
recent years, the Chinese economy has experienced periods of rapid expansion
and within which some years with high rates of inflation and deflation, which
have led to the adoption by the PRC government, from time to time, of various
corrective measures designed to restrict the availability of credit or regulate
growth and contain inflation.  While
inflation has moderated since 1995, high inflation may in the future cause the
PRC government to impose controls on credit and/or prices, or to take other
action, which could inhibit economic activity in China, and thereby adversely
affect the Companys business operations and prospects in the PRC.

We
may be restricted from freely converting the Renminbi to other currencies in a
timely manner.The
Renminbi is not a freely convertible currency at present.  The Company receives nearly all of its
revenue in Renminbi, which may need to be converted to other currencies,
primarily U.S. dollars, and remitted outside of the PRC.  Effective July 1, 1996, foreign currency
current account transactions by foreign investment enterprises, including
Sino-foreign joint ventures, are no longer subject to the approval of State
Administration of Foreign Exchange (SAFE, formerly, State Administration of
Exchange Control), but need only a ministerial review, according to the Administration of the Settlement, Sale and Payment of
Foreign Exchange Provisions promulgated in 1996 (the FX
regulations).  Current account items
include international commercial transactions, which occur on a regular basis,
such as those relating to trade and provision of services.  Distributions to joint venture parties also
are considered a current account transaction.  Other non-current account items, known as capital account
items, remain subject to SAFE approval. 
Under current regulations, the Company can obtain foreign currency in exchange
for Renminbi from swap centers authorized by the government.  The Company does not anticipate problems in
obtaining foreign currency to satisfy its requirements; however, there is no
assurance that foreign currency shortages or changes in currency exchange laws
and regulations by the Chinese government will not restrict the Company from
freely converting Renminbi in a timely manner. 
If such shortages or change in laws and regulations occur, the Company
may accept Renminbi, which can be held or re-invested in other projects.

Future
fluctuation in the value of the Renminbi may negatively affect the Companys
ability to convert its return on operations to u.s. dollars in a profitable
manner and its sales globally.  Until 1994, the Renminbi experienced a
gradual but significant devaluation against most major currencies, including
U.S. dollars, and there was a significant devaluation of the Renminbi on
January 1, 1994 in connection with the replacement of the dual exchange rate
system with a unified managed floating rate foreign exchange system.  Since 1994, the value of the Renminbi
relative to the U.S. Dollar has remained stable

11

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and has
appreciated slightly against the U.S. dollar. 
Countries, including the U.S., have argued that the Renminbi is
artificially undervalued due to Chinas current monetary policies and have
pressured China to allow the Renminbi to float freely in world markets.

If
any devaluation of the Renminbi were to occur in the future, the Companys
returns on its operations in China, which are expected to be in the form of
Renminbi, would be negatively affected upon conversion to U.S. dollars.  The Company intends to have most future
payments, if outside of China, to be denominated in U.S. dollars.  If any fluctuation in the value of the
Renminbi were to occur in the future, the value of the Companys services in
China may be negatively affected.

We may be unable to enforce its rights due to policies
regarding the
regulation of foreign investments in China.The PRCs legal system is a civil law system
based on written statutes in which decided legal cases have little value as
precedents, unlike the common law system prevalent in the United States.  The PRC does not have a well-developed,
consolidated body of laws governing foreign investment enterprises.  As a result, the administration of laws and
regulations by government agencies may be subject to considerable discretion
and variation, and may be subject to influence by external forces unrelated to
the legal merits of a particular matter. 
Chinas regulations and policies with respect to foreign investments are
evolving.  Definitive regulations and
policies with respect to such matters as the permissible percentage of foreign
investment and permissible rates of equity returns have not yet been
published.  Statements regarding these
evolving policies have been conflicting and any such policies, as administered,
are likely to be subject to broad interpretation and discretion and to be
modified, perhaps on a case-by-case basis. 
The uncertainties regarding such regulations and policies present risks
that the Company will not be able to achieve its business objectives.  There can be no assurance that the Company
will be able to enforce any legal rights it may have under its contracts or
otherwise.

Risks
from the recent outbreak of severe acute respiratory syndrome in various parts
of mainland China, Hong Kong and elsewhere.Since early 2003, Mainland China, Hong Kong and
certain other countries, largely in Asia, have been experiencing an outbreak of
a new and highly contagious form of atypical pneumonia, now known as severe
acute respiratory syndrome, or SARS.  This outbreak has resulted in
significant disruption to the lifestyles of the affected population and
business and economic activity generally in the affected areas.  Areas in
Mainland China that have been affected include areas where the Company has
business and management operations.  Although the outbreak is now
generally under control in China, the Company cannot predict at this time
whether the situation may again deteriorate or the extent of its effect on the
Companys business and operations.  The Company cannot assure that this
outbreak, particularly if the situation worsens, will not significantly reduce
the Companys hotel and travel related revenues, disrupt the Companys staffing
or otherwise generally disrupt the Companys operations, result in higher
operating expenses, severely restrict the level of economic activity generally,
or otherwise adversely affect products, services and usage levels of the Companys
services in affected areas, all of which may result in a material adverse
effect on the Companys business and prospects.

Internet Address and Company SEC Filings

Our
internet address is www.tedatravelgroup.com. On this website,  we provide a link to our electronic SEC
filings, including our annual report on Form 10-K, our quarterly reports on
Form 10-Q, our current reports on Form 8-K and any amendments to these reports.
All such filings are available free of charge and are available as soon as
reasonably practicable after filing.

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ITEM
3.     LEGAL PROCEEDINGS

In August
2000, the Company received a letter from an attorney advising that there is an
Order for Entry of Default Judgment in the District Court of Boulder, Colorado
against a predecessor of the Company in favor of two alleged former employees
of Northern Lights Software, Ltd. (a subsidiary of the Company) dated March 10,
1998 in the total amount of $74,887. The judgment was apparently for alleged
unpaid wages. Pursuant to an Agreement and Plan of Reorganization dated
February 15, 1999, a former director of the Company had personally warranted
that there were no undisclosed liabilities in the Company and had indemnified
the Company against such claims. He stated that he believed that claimants were
actually employees of Northern Lights Software (New York) Ltd., a subsidiary of
Northern Lights Software, Ltd. (Delaware), a predecessor of the Company.  The Companys predecessor accepted $10,300
from the former director in exchange for releasing his indemnification of the
Company.  The Company believes that the
Colorado lawsuit was brought against the wrong corporation and that the default
judgment was erroneously issued in violation of Colorado statutes, as
interpreted by the Colorado Supreme Court. 
Based upon a review of the record in the case, management believes that
it would be an error for any court to enforce the default judgment, and the
Company plans to mount a vigorous defense against any effort to enforce the
judgment against the Company.

Other than
that stated above, to the best knowledge of the Officers and Directors of the
Company, neither the Company nor any of its Officers or Directors is a party to
any material legal proceeding or litigation and such persons know of no other
material legal proceeding or litigation contemplated or threatened. Other than
that stated above, there are no judgments against the Company or its Officers
or Directors.

ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

None.

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PART II

ITEM 5.     MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER  MATTERS

Market Information
and Dividends

Our common
stock is listed on the Over-the-Counter Bulletin Board (OTCBB) under the
symbol TTVL. The high and low bid intra-day prices of the common stock were
not  reported on the OTCBB for the
time  periods  indicated on the table below. 
Accordingly, the Company has set forth the high and low bid closing
prices of our common stock as reported on the OTCBB.  Further, the sales prices listed below represent  prices between
dealers without adjustments
for retail markups, breakdown or commissions and they may not represent actual
transactions. The range of prices of our common stock for each quarterly period
within the last two years are as follows:

|     |                |          | Stock
  Price |         
|---- | -------------- | -------- | ------------- | --------
|2003 |                | Low      |               | High    
|     | First quarter  | $
  0.40 |               | $
  1.00
|     | Second quarter | $
  0.40 |               | $
  1.60
|     | Third quarter  | $
  0.80 |               | $
  1.20
|     | Fourth quarter | $
  0.80 |               | $
  2.00
|2004 |                |          |               |         
|     | First quarter  | $
  1.20 |               | $
  4.80
|     | Second quarter | $
  1.75 |               | $
  6.00
|     | Third quarter  | $
  0.60 |               | $
  6.00
|     | Fourth quarter | $
  1.80 |               | $
  4.00
|     |                |          |               |         

The
stock price in 2003 has been adjusted to reflect a 40:1 forward split effected
on March 11, 2004.

At
March 30, 2005, there were 21,667,887 shares of Common Stock outstanding held
by 149 shareholders of record. Our Common Stock is traded on the
Over-the-Counter Bulletin Board.  The
year-end closing price for our stock was $2.75 on December 31, 2004, and $1.75
on March 30, 2005.

The
Company has not paid any cash dividends on its common stock since its
inception. The Company presently intends to retain future earnings, if any, to
finance the expansion of its business and does not anticipate that any cash
dividends will be paid in the foreseeable future. Future dividend policy will
depend on the Companys earnings, capital requirements, expansion plans,
financial condition and other relevant factors.

The
Company does not have any equity compensation plans as of December 31, 2004.

Until
the  Companys  shares 
qualify for  inclusion in the
NASDAQ  system,  the public 
trading,  if  any, 
of the  Companys  common 
stock  will be on the OTC
Bulletin Board.  As a result, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of the common 
stock offered.  The  Companys 
common stock is subject to provisions of Section 15(g) and Rule 15g-9 of
the Securities Exchange Act of 1934, as amended (the Exchange Act),  commonly referred to as the penny stock
rule. Section 15(g) sets forth certain 
requirements  for  transactions  in penny  stocks,  and 
Rule  15g-9(d) incorporates the
definition of penny stock that is found in Rule 3a51-1 of the Exchange  Act. 
The SEC  generally  defines 
a penny  stock  to be any 
equity security  that has a
market price less than $5.00 per share, 
subject to certain exceptions. If the Companys common stock is deemed
to be a

14

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penny stock,
trading in the shares  will be subject
to  additional  sales  practice  requirements  on broker-dealers who sell penny stock to persons other than
established  customers and  accredited 
investors.  Accredited  investors 
are persons with assets in excess of $1,000,000 or annual income  exceeding 
$200,000 or $300,000  together
with their spouse. For transactions covered by these rules,  broker-dealers must  make a special  suitability 
determination
for the purchase of such security and must 
have the  purchasers  written 
consent  to the  transaction 
prior to the purchase.  Additionally,  for any 
transaction  involving a penny
stock,  unless exempt,  the rules require the delivery,  prior to the first  transaction,  of a risk 
disclosure 
document,  prepared  by the SEC, 
relating  to the penny stock
market. A broker-dealer  also must
disclose the commissions  payable to
both the broker-dealer and the registered representative,  and current quotations for the
securities.  Finally,  monthly 
statements must be sent disclosing 
recent price information  for the
penny  stocks  held in an account 
and  information  on the limited  market in penny 
stocks.  Consequently,  these rules may  restrict  the ability of  broker-dealers  to trade
and/or  maintain
a market in the  Companys common stock
and may affect the ability of the 
Companys  shareholders  to sell their shares.

ITEM 6.     MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND  RESULTS OF OPERATION

CAUTIONARY
STATEMENTS

The
following discussion and analysis should be read in conjunction with the
Companys Consolidated Financial Statements and the Notes thereto included in
Part II, Item 7 of this Report. All amounts are expressed in U.S. dollars.

The
following discussion regarding the Company and its business and operations
contains forward-looking statements within the meaning of Private Securities
Litigation Reform Act 1995. These statements consist of any statement other
than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as may, expect, anticipate, estimate
or continue or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements, including the risk factors discussed in this
Report.  The Company does not have a
policy of updating or revising forward-looking statements and thus it should
not be assumed that silence by management of the Company over time means that
actual events are bearing out as estimated in such forward looking statements.

OVERVIEW

The
Company is a Delaware corporation incorporated on September 10, 1993. It has
since engaged in various ventures and was led by numerous different management
teams. The most recent prior operation was known as Acola Corp. (Acola),
which came into being on October 12, 2001. Acola was formed to attempt to
distribute an anti-cancer drug in Mexico, where it was unable to secure enough
capital to obtain the exclusive distribution rights to the drug and has no
business since 2002.

On
March 10, 2004, Teda Travel Incorporated, a Florida Corporation (Teda
Florida), entered into a Share Exchange Agreement (Exchange Agreement) with
its wholly owned subsidiary, Teda Hotels Management Company Limited, a British
Virgin Islands Corporation (Teda BVI) and Acola. The Exchange Agreement set
forth certain terms and conditions of the exchange by which the entire issued
share capital of Teda BVI are transferred to that of Acola in exchange for
approximately 86% of

15

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the issued
share capital of Acola. The closing of the Transaction occurred on March 12,
2004. On the closing date, pursuant to the Exchange Agreement, all of Acolas
existing officers and directors, except Mr. James N. Baxter, resigned and all
the directors of Teda Florida were elected on the Board of Acola. Mr. James N.
Baxter resigned on March 30, 2004. In order to better reflect the new
operations of the Company, the Company amended its certificate of incorporation
to change its name to that of Teda Travel Group, Inc. on April 20, 2004.

Prior
to the share exchange, the Company had no material operations.  The merger
was accounted for as a recapitalization of Teda BVI, as the shareholders of
Teda BVI acquired capital stock of the Company in a reverse acquisition.
 Accordingly, the assets and liabilities of Teda BVI were recorded at
historical cost, and the shares of common stock issued by the Company were
reflected in the consolidated financial statements with retroactive effect, as
if the Company had been the parent company from inception. The Companys former
year-end date was June 30 and currently assumes the year-end date of the
acquirer of December 31.

The
Company primarily earns its revenues through the provision of management
services, including training and consulting services, to hotels and resorts in
the Peoples Republic of China through its wholly-owned operating subsidiaries,
Teda BVI, and Teda Hotels Management Limited, a Hong Kong corporation, as well
as a 60%-owned subsidiary purchased through an acquisition closed in November
8, 2004, Landmark International Hotel Group Limited.

The
Company is also an investor in real estate development projects in Asia.
 In January 2002, the Company acquired a 35% interest in a real estate
joint venture by the name of Tianjin Yide Real Estate Company Limited.
 The Companys co-venturer is a real estate developer by the name of
Tianjin Teda International Hotels Development Company Limited, a corporation
owned by the Tianjin provincial government and formed under the laws of the
Peoples Republic of China.  Through the real estate joint venture, the
Company owns a multi-use complex featuring apartment units for sale, as well as
a hotel and clubhouse.  For more
information about the Companys real estate joint venture,  please see
Item 2, Properties, in the Teda Travel Inc.s Annual Report on Form 10-KSB,
as filed with the United States Securities and Exchange Commission on April 14,
2004.

Revenues
are derived from the Companys provision of management services to hotels and
resorts which include management fees and incentive fees from the properties
that it manages, pursuant to the terms and conditions of its management
contracts.  Each of the hotels and resorts is managed under a management
contract with terms varying from 2-10 years.  As of December 31, 2004, the
Company manages 13 hotels rooms located in various parts of China, encompassing
an aggregate of 2,695 rooms.

Under
its management contracts with each of the hotel and resort properties, the
Company is responsible for the supervision and day-to-day operations of the
property in exchange for a basic management fee based on gross revenues. In
addition, the Company may also earn an incentive fee based upon gross operating
profits of the property managed.

Management
of the Company plans to grow by acquiring peer hotel management companies and
may diversify the Companys business through acquiring new properties and
entering new travel business sectors such as online reservation services and
travel agencies.

16

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For
more information relating to the Companys business, please see the section
entitled Business in the Teda Travel, Inc.s Annual Report on Form 10-KSB as
filed with the United States Securities and Exchange Commission on April 14,
2004.

CRITICAL
ACCOUNTING POLICIES

The
preparation of our financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including but not limited to those
related to income taxes and impairment of long-lived assets. We base our
estimates on historical experience and on various other assumptions and factors
that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Based on our
ongoing review, we plan to make adjustments to our judgments and estimates
where facts and circumstances dictate. Actual results could differ from our
estimates.

We
believe the following critical accounting policies are important to the
portrayal of our financial condition and results and require our managements
most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain.

(i) Property and Equipment

Property and
equipment are stated at cost, less accumulated depreciation.  Depreciation is provided using the
straight-line method over the estimated useful life of the assets from three to
thirty nine years.  Repairs and
maintenance on property and equipment are expensed as incurred.

(ii) Revenue Recognition

The Company
recognizes hotel and resort management service fees in the period when the
services are rendered.

(iii) Foreign Currency Translation

The Companys
assets and liabilities that are denominated in foreign currencies are
translated into the currency of United States dollars using the exchange rates
at the balance sheet date.  For revenues
and expenses, the average exchange rate during the year was used to translate
Hong Kong dollars and Chinese Renminbi into United States dollars.  The translation gains and losses resulting
from changes in the exchange rate are charged or credited directly to the
stockholders equity section of the balance sheet when material.  All realized and unrealized transaction
gains and losses are included in the determination of income in the period in
which they occur.  Translation and
transaction gains and losses are included in the statement of operations
because they are not material as of December 31, 2004.

(iv) Stock-Based Compensation

The Company
accounts for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees and related interpretations and elects the disclosure
option of Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS No. 123). 
Accordingly, compensation cost for stock options is measured as the
excess, if any, of the fair value of the Companys stock at the date of

17

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grant over the
amount an employee must pay to acquire the stock.  The Company also records stock compensation expense for any
options issued to non-employees using the fair value method prescribed in SFAS
No. 123.

(v) Income Taxes

The Company
accounts for income taxes under the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 109 Accounting for Income
Taxes (SFAS No. 109).  Under SFAS No.
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.  Under SFAS No.
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

(vi) Long-Lived Assets

The Company
accounts for long-lived assets under the Statements of Financial Accounting
Standards Nos. 142 and 144 Accounting for Goodwill and Other Intangible
Assets and Accounting for Impairment or Disposal of Long-Lived Assets (SFAS
No. 142 and 144).  In accordance with
SFAS No. 142 and 144, long-lived assets, goodwill and certain identifiable
intangible assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.  For
purposes of evaluating the recoverability of long-lived assets, goodwill and
intangible assets, the recoverability test is performed using undiscounted net
cash flows related to the long-lived assets.

CONSOLIDATED RESULTS OF OPERATIONS

Comparing
Fiscal Years Ended December 31, 2004 and 2003:

Revenue.  Revenues for the fiscal year ended December
31, 2004 were $568,391 as compared to revenues of $396,794 for the fiscal year
ended December 31, 2003, an increase of $171,597, or 43%. The increase was
mainly due to combination of results of the revenue of a newly-acquired
subsidiary since November 8, 2004, in addition to the fact that our managed
hotels recorded improved results in the year. Tianjin International Club and
Tianjin Teda Hotel & Club recorded a 44.3% increase and 8.2% increase in
gross revenue when compared to 2003 revenue, thus increasing the management fee
for the year.

During
the fiscal years ended December 31, 2004 and 2003, the Company received
$461,324 and $204,420, which amounts accounted for 81% and 52% of revenues,
respectively, from two properties managed by the Company that are owned by the
Companys Joint Venture Partner.

Other
Selling, G&A expenses.  Other selling, G&A expenses
for fiscal years ended December 31, 2004 and 2003 were $263,314 as compared to
$344,446 respectively, showing a decrease of $81,132 or 24%.  The decrease
is due to continuous cost containment measures implemented by the Company. In
addition, an office set up in Shenzhen, PRC in March 2003 for business
development and property management in China was closed in late 2003, therefore
reducing overall expense outlays when comparing to 2004.

Loss from
Operations.  The Company recorded a loss of $3,684,962 from
operations for the fiscal year ended December 31, 2004 as compared to a loss of
$65,436 in the fiscal year ended December 31,

18

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2003.
 The increase in loss from operations is due largely to the non-recurring cost of stock issued for
services that amounted to $2,785,721 principally related to the share
exchange transaction which closed on March 12, 2004, in addition to about
$737,752 recorded for issuance to other consultants of the Company during the
year, which is partially offset by growth in revenues from the property management business.

Other
income. The Company recorded equity loss of the Real Estate Joint Venture of
$792,815 for the fiscal year ended December 31, 2004 as compared to an equity
earnings of $51,408 for the fiscal year ended December 31, 2003.  The results are mainly contributed to the
fact that most apartments were already sold in 2003 and additional interest
costs borne by the affiliate to engage in new projects as explained in
aforementioned sections.

Net
Loss. The Company had a net loss for the fiscal year ended December 31, 2004 of
$4,516,397 as compared to net loss of $40,654 for the fiscal year ended
December 31, 2003, an increase of $4,475,743. The increase in net loss from
Operations reflected the non-recurring cost of stock issued for services that amounted to
$2,785,721 principally related to the share exchange transaction which
closed on March 12, 2004, which is partially offset by growth in revenues from the property management
operations, and expenses incurred in relation to business development in the
Peoples Republic of China. The Companys management anticipates that these
business development activities in the Peoples Republic of China will be
significantly reduced in the near future.

Income
tax. The Company derives its hotel management income in the Peoples Republic
of China and is subject to withholding tax in the Peoples Republic of China
depending upon the province in which a particular hotel is located.  Income tax expenses the Company charged to
the consolidated income statement for the fiscal year ended December 31, 2004
were $37,024 as compared to $23,795 for the year ended December 31, 2003, a
increase of $13,229, or 56%. The increase in income tax provision coincides
with increase in property management revenue recorded.

CONSOLIDATED FINANCIAL CONDITION

Liquidity
and Capital Resources.

The
principal sources of cash of the Company have been:


-     Receipts
of management fee income from the hotels it manages


-     Loans
from shareholders


-     Proceeds
from issuance of stock


We
do not have any credit facilities with financial institutions and do not
foresee arranging one in the immediate future. The status of the capital
markets can be volatile and any changes in capital market conditions may have
adverse impact on our ability to execute our announced growth plans. Therefore,
we expect that a majority of our financing and liquidity needs will continue to
be met through access to loans from our major shareholders and receipts of
property management fees in the near term.

Operations.
For the fiscal year ended December 31, 2004, the Groups operations generated/
(utilized) resources of $80,111, as compared to utilizing $84,638 for the
fiscal year ended December 31, 2003. The increase in cash generated is mainly
attributable to increase in gross property management income received and
continuous cost containment measures imposed by the Company.

19

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Investing.
We continually seek opportunities to enter new markets, increase market share
or broaden service offerings through acquisitions. During the fiscal years
ended December 31, 2004 and 2003, additions to property, plant and equipment
aggregated $44,034 and $18,650, respectively. The Company has no significant
capital expenditure commitments outstanding at December 31, 2004.

Financing.
During the fiscal year ended December 31, 2004, we received loans of $427,597
from our principal shareholder, Magnolia Group Holdings Limited, to finance our
working capital needs. Other than that, the changes in financing activities are
not material when comparing to that of 2003.

The
Company does not foresee a major outlay for capital expenditures and other
reasonably likely cash requirements apart from those arising from its
day-to-day operations. Fluctuations in the values of hotel real estate
generally have little impact on the overall results of our business because (1)
we do not own the hotels that we manage; (2) management fees are generally
based upon hotel revenues and profits versus current hotel property values; and
(3) our management agreements generally do not terminate upon hotel sale. We
are essentially a debt-free company and therefore have no financial
obligations, except from loans from our major shareholder which is renewable on
an annual basis.

FINANCIAL
OUTLOOK & GOING CONCERN

As of
December  31,  2004,  the Company is
reliant  upon the cash flows from its
operations and advances from its major shareholder.  The Company does not have any other material external sources of
liquidity.

The Company
has attempted to implement various measures designed to improve its operating
results, cash flows and financial position, 
including the following:

- The
Company has reviewed  its operations,
and has revised its acquisition plan to reduce cash outlay on acquisitions;

- The
Company focuses its acquisitions efforts on cash-flow positive companies to
reduce immediate cash injection to the acquired entities;

- The
Company has focused its efforts on containing expense outlays for general and
administrative purposes;

- The
Company is attempting to increase its operating liquidity by exploring the
availability of outside debt and equity financing, to the extent such funding
is available under reasonable terms and conditions.

There can be
no assurances  that these measures will
result in an improvement in the 
Companys  operations  or 
liquidity.  To the  extent 
that  the  Companys operation and liquidity  does not improve,  the Company may be forced to reduce operations
to a level
consistent with its available  working
capital  resources.

As
a  result  of these  factors,  the 
Companys  independent  accountants 
have expressed  substantial  doubt about the Companys ability to
continue as a going concern. The accompanying 
consolidated  financial
statements have been prepared assuming that the Company will continue as a
going concern,  which  contemplates the  realization  of assets and
the  satisfaction  of 
liabilities in the normal course of business.  The carrying amounts of assets and liabilities presented in the
consolidated financial statements do not purport to represent the realizable or
settlement  values, and do not include
any adjustments that might result from the outcome of this uncertainty.

MATERIAL
SUBSEQUENT EVENT

20

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None.

OFF BALANCE
SHEET ARRANGEMENTS

We
do not have any off balance sheet arrangements.

IMPACT OF FUTURE ADOPTION OF ACCOUNTING STANDARDS

FAS No. 123 (revised 2004), Share-Based
Payment

In
December 2004, the FASB issued FAS No. 123 (revised 2004), Share-Based
Payment (FAS No. 123R), which is a revision of FAS No. 123, Accounting for
Stock-Based Compensation. FAS No. 123R supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends FAS No. 95, Statement
of Cash Flows. We will adopt FAS No. 123R at the beginning of our 2005 first
quarter.

FAS
No. 123R requires all share-based payments to employees, including grants of
employee stock options, to be recorded as an expense based on their fair
values. The grant-date fair value of employee share options and similar
instruments will be estimated using an option-pricing model adjusted for any
unique characteristics of a particular instrument. If an equity award is
modified after the grant date, incremental compensation cost will be recognized
in an amount equal to the excess of the fair value of the modified award over
the fair value of the original award immediately before the modification.

We
cannot currently estimate that adoption of FAS No. 123R on the expense since we
have no share-based payment compensation plans at this moment.

ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The
financial statements are attached at the end of this document.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND  FINANCIAL DISCLOSURE.

None

ITEM 8A.   CONTROLS AND PROCEDURES

We
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this report.  The evaluation was undertaken in
consultation with our accounting personnel. 
Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms.

21

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There were no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their
evaluation.

PART III

ITEM 9.     DIRECTORS AND EXECUTIVE OFFICERS OF
REGISTRANT.

The
following table sets forth the names, ages and positions held with respect to
each Director and Executive Officer of the Company.

|                        |  |     |  |                                      | 
|----------------------- |  | --- |  | ------------------------------------ | 
|Name                    |  | Age |  | Position                             | 
|                        |  |     |  |                                      | 
|Zhi Ying
  Chang        |  | 50  |  | Chairwoman of the Board             
|                        |  |     |  |                                     
|Godfrey Chin
  Tong Hui |  | 44  |  | Director and Chief Executive Officer
|                        |  |     |  |                                     
|Hon Ming
  Wong         |  | 34  |  | Director and Chief Financial Officer

DIRECTORS
AND OFFICERS

Zhi Ying Chang has been the Chairwoman of
the Board of the Company since April 2002. Ms. Chang, along with the Chief
Executive Officer of the Company, Godfrey Hui Chin Tong, also serves as the
Group General Manager of Tianjin Teda International Hotel Development Limited,
a corporation owned by the Tianjin provincial government and formed under the
laws of the Peoples Republic of China and a joint venture partner of the
Company (the Companys Joint Venture Partner), where she has been responsible
for day-to-day management and business development since 1998. The Companys
Joint Venture Partner owns 65% of a real estate joint venture with the Company by
the name of Tianjin Yide Industrial Company Limited (formerly Tianjin Yide Real
Estate Company Limited), a Peoples Republic of China corporation (the Real
Estate Joint Venture). See, Item 2, Properties, and Item 12, Certain
Relationships and Related Transactions. In addition, the Companys Joint
Venture Partner is the beneficial owner of 8.2% of the Companys outstanding
common stock. See, Item 11, Security Ownership of Certain Beneficial
Owners and Management. Ms. Chang also serves as a member of the Board of
Directors of the Real Estate Joint Venture. In addition, Ms. Chang currently
serves as counselor for both the Tourism Association of China and the Tourism
Association of Tianjin, China. Ms. Chang has a background in engineering and
utilized that background on behalf of the Tianjin Economic and Technological
Development Area (TEDA). See, Item 1, Business. Beginning in 1986,
Ms. Chang was responsible for all utility plants and supplies in TEDA until
1993, when she transferred to head the hotel division of TEDA. Ms. Chang holds
a Masters Degree in Business Administration from the State University of
Singapore.

Godfrey Chin Tong Hui has been a Director
and the Chief Executive Officer of the Company since April 2002. Prior to this
time, beginning in March 2000, Mr. Hui worked to establish Teda Hotels
Management Limited, a Hong Kong corporation which is now one of the two
wholly-owned operating subsidiaries of the Company. See, Item 1,
Business. Mr. Hui, along with the Chairwoman of the Company, Zhi Ying Chang,
also serves as a member of the Board of Directors of the Real Estate Joint
Venture. See, Item 2, Properties. Mr. Hui began his career in the
hotel industry in 1985 and has worked for several international and regional
hotel groups, becoming one of the top hotel professionals in the Greater China
Area. From November 1998 through March 2000, Mr. Hui was responsible for
management and financial issues at Hopewell Holdings Limited, where he worked
in various capacities,

22

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including Director of
Operations, Finance and Development of the Hotel Division, Executive Assistant
to the Chairman, Chairman of the Executive Committee, Group Financial
Controller and Executive Director of the Hopewell Hospitality Company Limited.
From June 1993 through November 1998, Mr. Hui was involved in hotel management
for Mega Hotels Management Limited, where he served as Director of Finance,
Development and Operations. Mr. Hui holds a Bachelors Degree in Business
Management and a Masters Degree in Finance and Investment.

Hon Ming Wong has been a Director and Chief
Financial Officer of the Company since November 2003. Mr. Wong obtained a
bachelor degree in Accountancy in 1992 and a MBA in 1999, he is also a
Certified Public Accountant in Hong Kong and is a member with the Association
of Chartered Certified Accountants and the Hong Kong Institute of Certified
Public Accountants. He worked in Ernst & Young and Price Waterhouse from
1992 to 1997. Prior to joining the Group, he was Controller of companies  in the telecom industry, one of which has
been listed on the OTC Bulletin Board since 2002, and the other operates in
China with an asset base of over $50M and 7 regional offices, thus has
accumulated a wealth of knowledge in auditing, financial reporting and
analysis.

The
directors named above will serve until the next annual meeting of our
stockholders or until their successors are duly elected and have qualified.
Directors will be elected for one-year terms at the annual stockholders
meeting. Officers will hold their positions at the pleasure of the board of
directors, absent any employment agreement, of which none currently exists.
There is no arrangement or understanding between any of our directors or
officers and any other person pursuant to which any director or officer was or
is to be selected as a director or officer, and there is no arrangement, plan
or understanding as to whether non-management stockholders will exercise their
voting rights to continue to elect the current board of directors. There are
also no arrangements, agreements or understandings between non-management
stockholders that may directly or indirectly participate in or influence the
management of our affairs.

There
is no family relationship among any of our directors and executive officers.

COMPLIANCE
WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

The
Securities and Exchange Commission has implemented a rule that requires
companies to disclose information with respect to reports that are required to
be filed pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), by directors, officers and 10% shareholders of
each company, if any of those reports are not filed timely. To the Companys
knowledge, based solely on a review of the copies of the reports furnished to
the Company, (a) each of the Companys directors, officers or 10% shareholders
have failed to file a Form 3, Initial Statement of Beneficial Ownership of
Securities, on a timely basis and (b) Magnolia Group Holdings Limited, a
corporation registered in the British Virgin Islands and the owner of 6,245,070
shares of the Companys common stock or 28.8% of the Company (Magnolia), has
failed to file a Form 4, Statement of Changes of Beneficial Ownership of
Securities, on a timely basis. The Company is currently assisting its
directors, officers and 10% shareholders to become current in their respective
required Section 16 filings.

CODE OF ETHICS

We
have adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions.  
Such code of ethics will be provided to any person without charge, upon
request, a copy of such code of ethics by sending such request to us at our
principal office.

23

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AUDIT
COMMITTEE FUNCTIONS

Our
board of directors does not have a standing 
audit  committee  and our board as a whole performs all audit
committee functions,  including
oversight of our independent registered public accountants and oversight of our
management on matters  relating to
accounting,  financial  reporting and disclosure,  internal controls and compliance with
laws,  regulations and corporate
policies.  None of the members of the
board of  directors  is 
independent  as defined  under the rules of the NASDAQ Stock Market.
The board of directors has determined that Mr. Wong qualifies as an audit  committee 
financial  expert as defined by
the SEC.

ITEM 10.     EXECUTIVE COMPENSATION.

The
following table summarizes all compensation paid by the Company in each of the
last three fiscal years to the Companys Chief Executive Officer.  None of the Companys other executive
officers currently serving as such had annual compensation exceeded $100,000
(U.S.) in any of the last three fiscal years.

| | Name
  and                |  | Annual Compensation (all in $U.S.) |      | Long Term
  Compensation | 
| | ------------------------- |  | ---------------------------------- | ---- | ------------------------ | 
| |                           |  |                                    |      |                         
| | Principal
  Position      |  | Year                               |      | Salary                   | 
| |                           |  |                                    |      |                          | 
| | Godfrey Chin
  Tong Hui,  |  |                                    | 2004 |                          | 
| | Chief
  Executive Officer |  |                                    | 2003 |                          | 
| |                           |  |                                    | 2002 |                          | 



---

(1)     This
amount was paid by the Company as a tax allowance for personal income taxes
paid by Mr. Chin Tong Hui for the tax year 2004.


(2)     This
amount was contributed by the Company into a mandatory pension fund to the
benefit of the individual

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

The
following table sets forth, as of the close of business on April 8, 2004 , (a)
the name of, and the number of shares beneficially owned by, each person known
by the Company to be the beneficial owner of more than 5% of the Companys
Common Stock, and (b) the number of shares of Common Stock owned by each
executive officer and director and all executive officers and directors as a
group, together with their respective percentage holdings of such shares:

24

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|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 
|---------------------------------------------------------- |  | -------------------------------- |  | ----------------------------------------- | ------ |  |  |  | ---- | ------- | 
|NAME AND
  ADDRESS OF
  BENEFICIAL OWNER(1)                |  | AMOUNT OF BENEFICIAL
  OWNERSHIP |  | PERCENT OF
  CLASS OF STOCK
  OUTSTANDING |       
|                                                           |  |                                  |  |                                           |       
|Zhi Ying
  Chang                                           |  |                                  |  | 0                                         | (2)    |  |  |  | 0.00 | %(2)    | 
|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 
|Godfrey Hui
  Chin Tong                                    |  |                                  |  | 12,650,031                                | (3)    |  |  |  | 58.4 | %(3)    | 
|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 
|Hon Ming
  Wong                                            |  |                                  |  | 143,400                                   |        |  |  |  | 0.7  | %       | 
|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 
|All Officers
  and Directors 
  as a Group (three persons) |  |                                  |  | 12,793,431                                | (2)(3) |  |  |  | 59.0 | %(2)(3) | 
|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 
|Magnolia
  Group Holdings Limited(4)                       |  |                                  |  | 6,245,070                                 | (3)    |  |  |  | 28.8 | %(3)    | 
|                                                           |  |                                  |  |                                           |        |  |  |  |      |         | 



---

(1)     The
address of the directors and officers of the Company listed above is Suite
2102, Chinachem Century Tower, 178 Gloucester Road, Wanchai, Hong Kong.


(2)     Zhi
Ying Chang, the Chairwoman of the Board of the Company, also serves as the
Group General Manager of Tianjin Teda International Hotel Development Limited,
a corporation owned by the Tianjin provincial government and formed under the
laws of the Peoples Republic of China and a joint venture partner of the
Company (the Companys Joint Venture Partner). See Item 2, Properties, Item
9 Directors and Executive Officers and Item 12, Certain Relationships and
Related Transactions.

(3)     Godfrey
Chin Tong Hui, a Director and the Chief Executive Officer of the Company owns
100% of the issued and outstanding common stock of his personal holding company,
New Nature Development Limited (New Nature), which in turn is the record
owner of 367,821 shares of the Companys common stock, or 1.7% of the Company.

Mr.
Hui also owns 1% of the issued and outstanding shares of, and is a director of,
Magnolia Group Holdings Limited (Magnolia). 
Magnolia owns 6,245,070 shares of the Companys common stock, or 28.8%
of the Company. See Item 1, Business. Because Mr. Hui Chin Tong is a director
of Magnolia, he might be deemed to have or share investment control over
Magnolias portfolio.

(4)     The
address of Magnolia Group Holdings Limited is Unit 1602, Malaysia Building, 50
Gloucester Road, Wanchai, Hong Kong.

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.

In
January 2002, the Company acquired a 35% interest in a real estate joint
venture by the name of Tianjin Yide Industrial Company Limited (formerly
Tianjin Yide Real Estate Company Limited), a Peoples Republic of China
corporation (the Real Estate Joint Venture). The Companys joint venture
partner is Tianjin Teda International Hotels Development Company Limited, a
corporation owned by the Tianjin provincial government and formed under the
laws of the Peoples Republic of China (the Companys Joint Venture Partner),
which joint venture partner is the beneficial owner of 4.0% of the Company
through Teda Hotel Management Pte Limited, a limited corporation formed in
Singapore.  The Companys share of
equity loss for 2004 from the Real Estate Joint Venture was $792,815.

During
each of the fiscal years ended December 31, 2004 the Company paid $30,769 to
New Nature Development Limited (New Nature) for hotel management consulting
services. Godfrey Chin Tong Hui, a Director and the Chief Executive Officer of
the Company, is the controlling shareholder of New Nature.

Godfrey
Chin Tong Hui, a Director and the Chief Executive Officer of the Company owns
100% of the issued and outstanding common stock of New Nature Development
Limited (New Nature). New Nature owns 367,821 shares of the Companys common
stock, or 1.7% of the Company.  Mr. Hui
also owns 1% of the issued and outstanding shares of, and is a director of,
Magnolia Group Holdings Limited (Magnolia). Magnolia owns 6,245,070 shares of
the Companys common stock, or 28.8% of the Company, as a result of the reverse
merger of the Company with Teda Hotels Management Company

25

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Limited in
July 2002, conversion of a Convertible Promissory Note on March 18, 2004 and
distribution of stock effected in January 2005.

During
the years ended December 31, 2004 and 2003, the Company received management
revenue of $461,324 and $327,381, respectively from two properties it manages
that are owned by shareholders.

During
the years ended December 31, 2004 and 2003, the Company paid rent of $35,345
and $19,582, respectively for office space leased from a director and
stockholder.

SUBSEQUENT
EVENTS

On
January 4, 2005, the Company entered into an
agreement to acquire 55% equity
interest in Shanghai Bowking Hotel Management
Company Limited for $242,000 of which $121,000 was payable in cash and $121,100
was payable in the form of 48,440 restricted common shares of the Company
valued at a fair value of $121,100.  The
Company expects to complete the acquisition in the second quarter of 2005.

26

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PART IV

ITEM 13.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.

| |     |                                                   |                                                    
| | --- | ------------------------------------------------- | ---------------------------------------------------
| | (a) | Exhibits and
  Financial Statements and Schedules
| |     |                                                  
| |     | (1)                                               | Financial
  Statements and Schedules: See Attached.
| |     |                                                   |                                                    
| |     | (2)                                               | Exhibits: See
  Exhibit Index.                     
| |     |                                                   |                                                    
| | (b) | Reports on
  Form 8-K                            

ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

The aggregate fees billed for each of Fiscal Year 2003 and Fiscal Year
2004 for professional services rendered by our principal accountants for the
audit of our annual financial statements, review of financial statements
included in our Form 10-QSBs and other services provided by the accountant in
connection with statutory and regulatory filings are as follows: Fiscal Year
2003: $12,800; Fiscal Year 2004: $44,137.

AUDIT RELATED FEES

The aggregate fees billed for each of Fiscal Year 2003 and Fiscal Year
2004 for assurance and related services by our principal accountant that are
reasonably related to the performance of the audit or review of our financials
statements are as follows:  Fiscal Year
2003: $NIL;
Fiscal Year 2004: $NIL.

TAX FEES

The aggregate fees billed for each of Fiscal Year 2003 and Fiscal Year
2004 for professional services rendered by our principal accountants for tax
compliance, tax advice and tax planning are as follows:  Fiscal Year 20032: $NIL; Fiscal Year 2004:
$NIL.

ALL OTHER ACCOUNTANT FEES

The aggregate fees billed for each of Fiscal
Year 2003 and Fiscal Year 2004 for other professional services rendered by our
principal accountants are as follows: 
Fiscal Year 2003: $NIL Fiscal Year 2004: $NIL.

27

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report on Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                       |                          |                              | 
|---------------------- | ------------------------ | ---------------------------- | 
|                       | TEDA TRAVEL INCORPORATED |                             
|                       |                          |                             
|Date: April
  12, 2005 | By:                      | /s/ Godfrey
  Chin Tong Hui  | 
|                       |                          |                              | 
|                       |                          | Godfrey Chin
  Tong Hui, CEO | 

In
accordance with 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:

|                            |  |                                        |  |                 
|--------------------------- |  | -------------------------------------- |  | ----------------
|SIGNATURE                   |  | TITLE                                  |  | DATE            
|                            |  |                                        |  |                 
|                           
|/s/ Zhi Ying
  Chang        |  | Chairwoman
  of the Board              |  | April 12,
  2005
|                            |  |                                        |  |                 
|Zhi Ying
  Chang            |  |                                        |  |                 
|                            |  |                                        |  |                 
|/s/ Godfrey
  Chin Tong Hui |  | Director and
  Chief Executive Officer |  | April 12,
  2005
|                            |  |                                        | 
|Godfrey Chin
  Tong Hui     |  |                                        |  |                 
|                            |  |                                        |  |                 
|/s/ Hon Ming
  Wong         |  | Director and
  Chief Financial Officer |  | April 12,
  2005
|                            |  |                                        | 
|Hon Ming
  Wong             |  |                                        |  |                 

28

---



TEDA TRAVEL
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTSAS OF DECEMBER 31, 2004

---



TEDA TRAVEL
GROUP, INC. AND SUBSIDIARIES

CONTENTS

|PAGE  |  | F-1          |  | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                   
|----- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------
|      |  |              |  |                                                                                                           
|PAGE  |  | F-2          |  | CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2004                                                        
|      |  |              |  |                                                                                                           
|PAGE  |  | F-3          |  | CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND
  2003                    
|      |  |              |  |                                                                                                           
|PAGE  |  | F-4          |  | CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY FOR THE YEARS ENDED DECEMBER  31, 2004 AND 2003
|      |  |              |  |                                                                                                           
|PAGE  |  | F-5          |  | CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004 AND
  2003                    
|      |  |              |  |                                                                                                           
|PAGES |  | F-6
   F-16 |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2004                                        



---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
of:
 Teda Travel Group, Inc. and Subsidiaries

We have audited the accompanying
consolidated balance sheet of Teda Travel Group, Inc. and subsidiaries as of
December 31, 2004, and the related statements of operations, changes in
stockholders equity and cash flows for the two years then ended.  These financial statements are the
responsibility of the Companys management. 
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 audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.  We believe that our 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 Teda Travel Group, Inc. and subsidiaries as of
December 31, 2004 and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally
accepted in the United States of America.

The accompanying
consolidated financial statements have been prepared assuming that the Company
will continue as a going concern.  As
discussed in Note 13 to the consolidated financial statements, the Company had
a net loss of $4,516,397, an accumulated deficit of $4,002,319, a working
capital deficiency of $3,509,359 and used cash in operations of $253,222.  These factors raise substantial doubt about
its ability to continue as a going concern. 
Managements plans concerning this matter are also described in Note
13.  The accompanying consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

WEBB & COMPANY, P.A.

Boynton Beach, Florida
March 28, 2005

F-1

---



TEDA TRAVEL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETAS OF DECEMBER 31, 2004

|                                                                                                          |  |   |            |  
|--------------------------------------------------------------------------------------------------------- |  | - | ---------- | -
|ASSETS                                                                                                   
|CURRENT ASSETS                                                                                            |  |   |            |  
|Cash                                                                                                      |  | $ | 66,742     |  
|Accounts receivable, net                                                                                  |  |   | 159,502    |  
|Prepaid expenses and other current
assets                                                                 |  |   | 86,858     |  
|Due from director                                                                                         |  |   | 30,396     |  
|                                                                                                          |  |   |            |  
|Total Current Assets                                                                                      |  |   | 343,498    |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|PROPERTY AND EQUIPMENT, NET                                                                               |  |   | 46,409     |  
|                                                                                                          |  |   |            |  
|OTHER
  ASSETS                                                                                            |  |   |            |  
|Intangible license rights, net                                                                            |  |   | 663,630    |  
|Investment in affiliate                                                                                   |  |   | 2,869,053  |  
|                                                                                                          |  |   |            |  
|Total Other Assets                                                                                        |  |   | 3,532,683  |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|TOTAL
  ASSETS                                                                                            |  | $ | 3,922,590  |  
|                                                                                                          |  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                     
|                                                                                                          |  |   |            |  
|CURRENT LIABILITIES                                                                                       |  |   |            |  
|Accounts payable and accrued expenses                                                                     |  | $ | 138,630    |  
|Capital lease payable                                                                                     |  |   | 9,359      |  
|Due to affiliate                                                                                          |  |   | 3,685,958  |  
|Due to related party                                                                                      |  |   | 18,910     |  
|                                                                                                          |  |   |            |  
|Total Current Liabilities                                                                                 |  |   | 3,852,857  |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|LONG-TERM LIABILITIES                                                                                     |  |   |            |  
|Capital lease payable                                                                                     |  |   | 12,479     |  
|                                                                                                          |  |   |            |  
|Total Long-Term Liabilities                                                                               |  |   | 12,479     |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|TOTAL LIABILITIES                                                                                         |  |   | 3,865,336  |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|MINORITY
  INTEREST                                                                                       |  |   | -          |  
|                                                                                                          |  |   |            |  
|STOCKHOLDERS
  EQUITY                                                                                    |  |   |            |  
|Preferred stock, $0.001 par value, 5,000,000
shares authorized,
  none issued and outstanding             |  |   | -          |  
|Common stock, $0.001 par value, 100,000,000
shares authorized,
  21,667,887 shares issued and outstanding |  |   | 21,668     |  
|Additional paid-in capital                                                                                |  |   | 4,612,757  |  
|Deferred stock compensation                                                                               |  |   | (574,852   | )
|Accumulated deficit                                                                                       |  |   | (4,002,319 | )
|                                                                                                          |  |   |            |  
|Total Stockholders Equity                                                                                |  |   | 57,254     |  
|                                                                                                          |  |   |            |  
|                                                                                                          |  |   |            |  
|TOTAL
  LIABILITIES AND STOCKHOLDERS EQUITY                                                              |  | $ | 3,922,590  |  
|                                                                                                          |  |   |            |  



See accompanying notes to
consolidated financial statements.

F-2

---



TEDA TRAVEL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

|                                                        |  |      |            |      |   |            |  
|------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | -
|                                                        |  | 2004 |            | 2004 |  
|                                                        |  |      |            |      |  
|                                                        |  |      |            |      |   |            |  
|REVENUE, NET                                            |  | $    | 568,391    |      | $ | 396,794    |  
|                                                        |  |      |            |      |   |            |  
|EXPENSES                                                |  |      |            |      |   |            |  
|Stock issued for services                               |  |      | 3,523,473  |      |   | -          |  
|Professional fees                                       |  |      | 221,716    |      |   | -          |  
|Payroll                                                 |  |      | 244,850    |      |   | 117,784    |  
|Other selling, general and
administrative               |  |      | 263,314    |      |   | 344,446    |  
|                                                        |  |      |            |      |   |            |  
|Total Expenses                                          |  |      | 4,253,353  |      |   | 462,230    |  
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|LOSS FROM
  OPERATIONS                                  |  |      | (3,684,962 | )    |   | (65,436    | )
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|OTHER INCOME (EXPENSE)                                  |  |      |            |      |   |            |  
|Equity in earnings of affiliate                         |  |      | (792,815   | )    |   | 51,409     |  
|Loss on disposal of property and
equipment              |  |      | -          |      |   | (3,202     | )
|Interest expense                                        |  |      | (2,358     | )    |   | -          |  
|Other expense                                           |  |      | (833       | )    |   | -          |  
|Other income                                            |  |      | 1,595      |      |   | 370        |  
|                                                        |  |      |            |      |   |            |  
|Total Other Income (Expense)                            |  |      | (794,411   | )    |   | 48,577     |  
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|LOSS BEFORE INCOME TAXES AND MINORITY
INTEREST          |  |      | (4,479,373 | )    |   | (16,859    | )
|Minority interest                                       |  |      | -          |      |   | -          |  
|Income taxes                                            |  |      | 37,024     |      |   | 23,795     |  
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|NET LOSS                                                |  | $    | (4,516,397 | )    | $ | (40,654    | )
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|NET LOSS PER COMMON SHARE  BASIC AND
DILUTED           |  | $    | (0.22      | )    | $ | (0.00      | )
|                                                        |  |      |            |      |   |            |  
|                                                        |  |      |            |      |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING 
BASIC AND DILUTED |  |      | 20,574,100 |      |   | 17,853,578 |  
|                                                        |  |      |            |      |   |            |  

See accompanying notes to
consolidated financial statements.

F-3

---



TEDA TRAVEL GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|--------------------------------------- |  | --------------- | - | ------------ |  | ------------------ | - | -------------- |  | ----------- |  | ------------ |  | ------- | ------ | ----- | - | --------- | - |  | - | -------- | - |  | 
|                                        |  | Preferred Stock |   | Common Stock |  | Additional Paid-In |   | Deferred Stock |  | Accumulated |  |              |  |        
|                                        |  | Shares          |   | Amount       |  | Shares             |   | Amount         |  | Capital     |  | Compensation |  | Deficit |        | Total |  
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |  
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Balance, December 31, 2002              |  |                 | - |              |  |                    | $ | -              |  |             |  | 17,853,578   |  | $       | 17,854 |       | $ | (17,754   | ) |  | $ | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Net loss, 2003                          |  |                 | - |              |  |                    |   | -              |  |             |  | -            |  |         | -      |       |   | -         |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Balance, December 31, 2003              |  |                 | - |              |  |                    |   | -              |  |             |  | 17,853,578   |  |         | 17,854 |       |   | (17,754   | ) |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued in reverse merger          |  |                 | - |              |  |                    |   | -              |  |             |  | 1,037,972    |  |         | 1,038  |       |   | (1,038    | ) |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 1,861,337    |  |         | 1,861  |       |   | 1,878,089 |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 20,000       |  |         | 20     |       |   | 59,980    |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 115,000      |  |         | 115    |       |   | 344,885   |   |  |   | (129,375 | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 30,000       |  |         | 30     |       |   | 89,970    |   |  |   | (33,750  | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 40,000       |  |         | 40     |       |   | 119,960   |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 180,000      |  |         | 180    |       |   | 539,820   |   |  |   | (202,500 | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 50,000       |  |         | 50     |       |   | 149,950   |   |  |   | (65,227  | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued to officer for services    |  |                 | - |              |  |                    |   | -              |  |             |  | 200,000      |  |         | 200    |       |   | 599,800   |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for purchase of
subsidiary |  |                 | - |              |  |                    |   | -              |  |             |  | 200,000      |  |         | 200    |       |   | 535,800   |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Stock issued for services               |  |                 | - |              |  |                    |   | -              |  |             |  | 80,000       |  |         | 80     |       |   | 215,920   |   |  |   | (144,000 | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Warrants issued for services            |  |                 | - |              |  |                    |   | -              |  |             |  | -            |  |         | -      |       |   | 97,375    |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|Net loss, 2004                          |  |                 | - |              |  |                    |   | -              |  |             |  | -            |  |         | -      |       |   | -         |   |  |   | -        |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 
|BALANCE,
  DECEMBER 31, 2004            |  |                 | - |              |  |                    | $ | -              |  |             |  | 21,667,887   |  | $       | 21,668 |       | $ | 4,612,757 |   |  | $ | (574,852 | ) |  | 
|                                        |  |                 |   |              |  |                    |   |                |  |             |  |              |  |         |        |       |   |           |   |  |   |          |   |  | 

See accompanying notes to
consolidated financial statements.

F-4

---



TEDA TRAVEL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

|                                                                              |  |      |            |      |   |          |  
|----------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | -------- | -
|                                                                              |  | 2004 |            | 2003 |  
|                                                                              |  |      |            |      |  
|CASH
  FLOWS FROM OPERATING ACTIVITIES:                                       |  |      |            |      |   |          |  
|Net loss                                                                      |  | $    | (4,516,397 | )    | $ | (40,654  | )
|Adjustments to reconcile net loss to net cash
used in operating
  activities: |  |      |            |      |   |          |  
|Depreciation and amortization                                                 |  |      | 49,726     |      |   | 5,890    |  
|Stock issued for services                                                     |  |      | 3,523,473  |      |   | -        |  
|Loss on disposal of property and
equipment                                    |  |      | -          |      |   | 3,202    |  
|Provision for bad debts                                                       |  |      | 21,805     |      |   | 21,556   |  
|Earnings in affiliate                                                         |  |      | 792,815    |      |   | (48,534  | )
|(Increase) decrease in:                                                       |  |      |            |      |   |          |  
|Prepaid expenses                                                              |  |      | (31,503    | )    |   | (52,466  | )
|Accounts receivable                                                           |  |      | (92,798    | )    |   | 66,390   |  
|Increase (decrease) in:                                                       |  |      |            |      |   |          |  
|Accounts payable and accrued expenses                                         |  |      | (343       | )    |   | (40,022  | )
|                                                                              |  |      |            |      |   |          |  
|Net
  Cash Used In Operating Activities                                       |  |      | (253,222   | )    |   | (84,638  | )
|                                                                              |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|CASH
  FLOWS FROM INVESTING ACTIVITIES:                                       |  |      |            |      |   |          |  
|Investment in subsidiary                                                      |  |      | (166,667   | )    |   | -        |  
|Purchase of property and equipment                                            |  |      | (12,165    | )    |   | (18,650  | )
|                                                                              |  |      |            |      |   |          |  
|Net
  Cash Used In Investing Activities                                       |  |      | (178,832   | )    |   | (18,650  | )
|                                                                              |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|CASH
  FLOWS FROM FINANCING ACTIVITIES:                                       |  |      |            |      |   |          |  
|Due from related parties                                                      |  |      | 13,547     |      |   | 2,489    |  
|Due from directors                                                            |  |      | (30,396    | )    |   | 6,659    |  
|Proceeds from notes payable                                                   |  |      | 179,058    |      |   | -        |  
|Loan from affiliate                                                           |  |      | 427,597    |      |   | -        |  
|Payments on capital leases                                                    |  |      | (10,031    | )    |   |          |  
|Payments on notes payable                                                     |  |      | (179,058   | )    |   | (131,064 | )
|                                                                              |  |      |            |      |   |          |  
|Net Cash Provided By (Used In) Financing
  Activities                         |  |      | 400,717    |      |   | (121,916 | )
|                                                                              |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|DECREASE
  IN CASH AND CASH EQUIVALENTS                                       |  |      | (31,337    | )    |   | (225,204 | )
|                                                                              |  |      |            |      |   |          |  
|CASH AND CASH EQUIVALENTS - BEGINNING OF
YEAR                                 |  |      | 98,079     |      |   | 323,283  |  
|                                                                              |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|CASH AND
  CASH EQUIVALENTS - END OF YEAR                                     |  | $    | 66,742     |      | $ | 98,079   |  
|                                                                              |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:                             |  |      |            |      |   |          |  
|                                                                              |  |      |            |      |   |          |  
|Cash paid for interest                                                        |  | $    | 2,358      |      | $ | -        |  
|                                                                              |  |      |            |      |   |          |  
|Cash paid for income taxes                                                    |  | $    | 27,665     |      | $ | 26,037   |  
|                                                                              |  |      |            |      |   |          |  

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:

During 2004, the Company
exchanged 200,000 shares of common stock with a fair value of $536,000 for 60%
of the common stock of Landmark.

During 2004,
the Company acquired property and equipment under a capital lease for $31,869.

See accompanying notes to
consolidated financial statements.

F-5

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 1 | SUMMARY
  OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | (A) Nature of Operations and Organization and Basis of
  Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | On March 10, 2004, Acola
  Corp. consummated an agreement with Teda Travel, Inc. a Florida corporation,
  pursuant to which Teda Travel, Inc. exchanged 100% of the then issued and
  outstanding shares of common stock of Teda Hotels Management Company, Limited
  for 17,853,578 shares or approximately 86% of the common stock of Acola
  Corp.  As a result of the agreement,
  the transaction was treated for accounting purposes as a capital transaction
  and recapitalization by the accounting acquirer (Teda Hotels Management
  Company, Limited) and as a reorganization by the accounting acquiree (Acola
  Corp.).  Subsequent to the merger,
  Acola Corp. changed its name to Teda Travel Group, Inc.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       | Accordingly, the financial
  statements include the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |     |                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The balance sheet consists
  of the net assets of the acquirer at historical cost and the net assets of
  the acquiree at historical cost.                       
| |     |                                                                                                                                                                  
| | (2) | The statement of
  operations includes the operations of the acquirer for the periods presented
  and the operations of the acquiree from the date of the merger.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Teda Hotels Management
  Company, Limited was incorporated in the British Virgin Islands on June 23,
  2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | Teda Hotels Management,
  Limited was incorporated in Hong Kong on July 28, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | The Company provides
  management services for hotels and resorts located in China and invests in
  real estate through its joint venture in China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (B) Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The accompanying
  consolidated financial statements for 2004 include the accounts of Teda
  Travel Group, Inc. from the date of merger and Teda Hotels Management
  Company, Limited and its wholly owned subsidiaries Teda Hotels Management
  Limited, Teda BVI, Teda Beijing, Ltd. and its 60% owned subsidiary Landmark
  International Hotel Group, Ltd. (Landmark) from November 8, 2004.  During 2003, the consolidated financial
  statements include the accounts of Teda Hotels Management Company, Ltd. and
  its wholly owned subsidiaries Teda Hotels Management, Ltd. and Teda BVI,
  which are hereafter referred to as (the Company).  The Company accounts for its 35%
  investment in a joint venture on the equity method (See Note 4).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | All significant
  intercompany transactions and balances have been eliminated in the
  consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (C) Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In preparing financial
  statements in conformity with generally accepted accounting principles,
  management is required to make estimates and assumptions that affect the
  reported amounts of assets and liabilities and the disclosure of contingent
  assets and liabilities at the date of the financial                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-6

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | statements and
  revenues and expenses during the reported period. Actual results could differ
  from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (D) Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Property and equipment are
  stated at cost, less accumulated depreciation.  Depreciation is provided using the straight-line method over
  the estimated useful life of the assets from three to thirty nine years.  Repairs and maintenance on property and
  equipment are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (E) Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The Company recognizes
  hotel and resort management service fees in the period when the services are
  rendered and earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (F) Earnings (Loss) Per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Basic earnings (loss) per
  common share is computed by dividing the net income (loss) applicable to
  common stock stockholders by the weighted average number of shares of common
  stock outstanding during the period. 
  Diluted earnings per share is computed by dividing net income by the
  weighted average number of common shares including the dilutive effect of
  common share equivalents then outstanding. 
  There are no dilutive securities outstanding as of December 31, 2003
  and the effect of dilutive securities as of December 31, 2004 are
  anti-dilutive and not included in the calculation of diluted earnings per
  share.                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (G) Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The Companys assets and
  liabilities that are denominated in foreign currencies are translated into
  the currency of U.S. dollars using the exchange rates at the balance sheet
  date.  For revenues and expenses, the
  average exchange rate during the year was used to translate Hong Kong dollars
  and Chinese Renminbi into United States dollars.  The translation gains and losses resulting form changes in the
  exchange rate are charged or credited directly to the shareholders equity
  section of the balance sheet when material. 
  All realized and unrealized transaction gains and losses are included
  in the determination of income in the period in which they occur.  Translation and transaction gains and
  losses are not included in the statement of operations because they are not
  material as of December 31, 2004 and 2003.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (H) Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The carrying amounts of
  the Companys financial instruments, including accounts payable and accrued
  interest approximate fair value due to the relatively short period to
  maturity for these instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (I) Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The Company accounts for
  income taxes under the Financial Accounting Standards Board Statement of
  Financial Accounting Standards No. 109 Accounting for Income Taxes
  (Statement 109).  Under Statement
  109, deferred tax assets and liabilities are recognized for the future tax
  consequences attributable to differences between the financial statement
  carrying amounts of                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-7

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | existing assets and
  liabilities and their respective tax bases. 
  Deferred tax assets and liabilities are measured using enacted tax
  rates expected to apply to taxable income in the years in which those
  temporary differences are expected to be recovered or settled.  Under Statement 109, the effect on
  deferred tax assets and liabilities of a change in tax rates is recognized in
  income in the period that includes the enactment date.                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (J) Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The Company accounts for
  long-lived assets under the Statements of Financial Accounting Standards Nos.
  142 and 144 Accounting for Goodwill and Other Intangible Assets and
  Accounting for Impairment or Disposal of Long-Lived Assets (SFAS No. 142
  and 144).  In accordance with SFAS
  No. 142 and 144, long-lived assets, goodwill and certain identifiable
  intangible assets held and used by the Company are reviewed for impairment
  whenever events or changes in circumstances indicate that the carrying amount
  of an asset may not be recoverable. 
  For purposes of evaluating the recoverability of long-lived assets,
  goodwill and intangible assets, the recoverability test is performed using
  undiscounted net cash flows related to the long-lived assets.                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (K) Concentration of Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The Company maintains its
  cash in foreign bank deposit accounts, which at times may exceed insured
  limits.  The Company has not
  experienced any losses in such accounts and believes it is not exposed to any
  significant credit risk for cash.  All
  of the Companys assets and revenue are located in China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (L) Business Segments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The Companys operating segments are organized
  internally primarily by the type of services performed.  The Companys two operating segments
  include property management and real estate investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (M)
  Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In October 1995, the FASB
  issued SFAS No. 123, Accounting for Stock-Based Compensation.  SFAS No. 123 prescribes accounting and
  reporting standards for all stock-based compensation plans, including
  employee stock options, restricted stock, employee stock purchase plans and
  stock appreciation rights.  SFAS No.
  123 requires compensation expense to be recorded (i) using the new fair value
  method or (ii) using the existing accounting rules prescribed by Accounting
  Principles Board Opinion No. 25, Accounting for stock issued to employees
  (APB 25) and related interpretations with pro forma disclosure of what net
  income and earnings per share would have been had the Company adopted the new
  fair value method.  The company uses
  the intrinsic value method prescribed by APB25 and has opted for the
  disclosure provisions of SFAS No.123.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | In December 2002, the FASB
  issued SFAS No. 148 Accounting for Stock Based Compensation-Transition and
  Disclosure.  SFAS No. 148 amends SFAS
  No. 123, Accounting for Stock Based Compensation, to provide alternative
  methods of transition for a voluntary change to the fair value based method
  of accounting for stock-based employee compensation.  In addition, this Statement amends the
  disclosure requirements of Statement 123 to require prominent disclosures in
  both annual and interim financial statements about the method of accounting
  for stock-based employee                                                                                                                                                                                                                                                                                            

F-8

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | compensation and the
  effect of the method used, on reported results.  The adoption of SFAS No. 148 did not have a material affect on
  the net loss of the Company.                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       | (N) Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       | Statement of Financial
  Accounting Standards (SFAS) No. 151, Inventory Costs  an amendment of ARB
  No. 43, Chapter 4 SFAS No. 152, Accounting for Real Estate Time-Sharing
  Transactions - an amendment of FASB Statements No. 66 and 67, SFAS No. 153,
  Exchanges of Non-monetary Assets  an amendment of APB Opinion No. 29, and
  SFAS No. 123 (revised 2004), Share-Based Payment, were recently
  issued.  SFAS No. 151, 152, 153 and
  123 (revised 2004) have no current applicability to the Company and have no
  effect on the financial statements.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|NOTE 2 | ACCOUNTS
  RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       | Accounts receivable were
  as follows at December 31, 2004:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                                        |  |   |         | 
| | -------------------------------------- |  | - | ------- | 
| | Accounts receivable                    |  | $ | 181,307 | 
| | Less allowance for
  doubtful accounts |  |   | 21,805  | 
| |                                        |  |   |         | 
| |                                        |  |   |         | 
| |                                        |  | $ | 159,502 | 
| |                                        |  |   |         | 

|       |                                                                                                                                                   
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------
|       | For the years ended
  December 31, 2004 and 2003, the Company recorded a provision for doubtful
  accounts of $21,805 and $21,556,
  respectively.
|       |                                                                                                                                                   
|NOTE 3 | PROPERTY
  AND EQUIPMENT                                                                                                                          
|       |                                                                                                                                                   
|       | Property and equipment as
  of December 31, 2004 consisted of the following:                                                                      

| |                                 |  |   |         |  
| | ------------------------------- |  | - | ------- | -
| | Computer equipment              |  | $ | 23,772  |  
| | Office furniture                |  |   | 8,055   |  
| | Vehicle                         |  |   | 40,655  |  
| | Less accumulated
  depreciation |  |   | (26,073 | )
| |                                 |  |   |         |  
| |                                 |  |   |         |  
| |                                 |  | $ | 46,409  |  
| |                                 |  |   |         |  

|       |                                                                                                                                                                                                                                                                                                                     
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | Depreciation expense for
  the years ended December 31, 2004 and 2003 was $10,689 and $5,890,
  respectively.  During 2003, the
  Company closed its Beijing office and recognized a loss on leasehold
  improvements of $3,202.                                                                                    
|       |                                                                                                                                                                                                                                                                                                                     
|NOTE 4 | INVESTMENT
  IN AFFILIATE                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                     
|       | On January 6, 2002, the Company
  acquired a 35% interest in a real estate joint venture located in China.  The joint venture was formed to develop
  and manage a mixed-use complex of apartments, restaurants, a hotel and a
  private clubhouse.  The joint venture
  was formed with a maximum life of 50 years.

F-9

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002



| |                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys 35% interest
  in the joint venture is accounted for using the equity method of accounting
  and is stated at cost plus equity in undistributed earnings since
  acquisition.  The Companys share of
  the earnings (loss) for 2004 and 2003 was $(792,815) and $51,408.
| |                                                                                                                                                                                                                                                                                        
| | A summary of the audited
  financial statements of the affiliate as of December 31, 2004 is as follows:                                                                                                                                                                                

| |                                              |  |   |            |  
| | -------------------------------------------- |  | - | ---------- | -
| | Current assets                               |  | $ | 8,697,212  |  
| | Non-current assets                           |  |   | 35,673,062 |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Total Assets                                 |  | $ | 44,370,274 |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Current liabilities                          |  | $ | 29,164,649 |  
| | Non-current liabilities                      |  |   | 4,837,929  |  
| | Stockholders equity                         |  |   | 10,367,696 |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Total Liabilities and
  Stockholders Equity |  | $ | 44,370,274 |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Revenues                                     |  |   | 8,627,470  |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Operating Income                             |  |   | 2,486,632  |  
| |                                              |  |   |            |  
| |                                              |  |   |            |  
| | Net (Loss)                                   |  | $ | (1,299,769 | )
| |                                              |  |   |            |  

| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | The Companys share of the
  earnings for 2004 after accounting for differences between Hong Kong GAAP and
  U.S. GAAP:

| |                                              |  |   |          |  
| | -------------------------------------------- |  | - | -------- | -
| | Company share at 35%                         |  | $ | (454,919 | )
| | Less U.S. GAAP adjustment
  for depreciation |  |   | (337,896 | )
| |                                              |  |   |          |  
| |                                              |  |   |          |  
| | Equity in losses of affiliate                |  | $ | (792,815 | )
| |                                              |  |   |          |  

|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 5 | ACQUISITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | During November 2004, the
  Company, through its 100% owned subsidiary Teda Hotels Management Company
  Limited, completed the acquisition of 60% of the common stock of Landmark
  International Hotel Group Limited. 
  The Company issued 200,000 shares of common stock with a fair value of
  $536,000 and cash of $166,667 for the acquisition.  The assets of Landmark consisted of eight hotel management
  agreements.  As of December 31, 2004,
  three hotels were in operation and five were under construction.  The Company allocated the purchase price
  for Landmark based on the fair value of its assets and liabilities.  As of the date of acquisition, there were
  no assets or liabilities besides the management contracts that were assigned
  by Landmarks sole stockholder at his historical cost of $0.  The Company allocated the purchase price
  differential of $702,667 to the intangible license rights.  The Company will amortize the intangible
  license rights over a period of 36 months.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The contract also calls
  for additional cash payments over the next three years based on the earnings
  of the Company.  The agreement
  requires Landmark to have net income of approximately $384,600,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-10

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | $448,700 and $448,700 for
  the years ended December 31, 2005, 2006 and 2007, respectively.  The total cash payment due for each year
  is approximately $128,200, $128,200 and $76,900 for the years ended December
  31, 2005, 2006 and 2007, respectively. 
  If during any of these years, the net income is less than 25% below
  the required minimum net income, the cash consideration for that year will be
  reduced by the same percentage.  If
  the net income is more than 25% below the required minimum net income, the
  cash consideration for that year will be reduced to zero.  In addition, the Company has a three year
  option to purchase the remaining 40% of the common stock of Landmark at a purchase
  price of $666,667.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Intangible license rights
  as of December 31, 2004 consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                           |  |   |         | 
| | ------------------------- |  | - | ------- | 
| | Intangible license rights |  | $ | 702,667 | 
| | Accumulated amortization  |  |   | 39,037  | 
| |                           |  |   |         | 
| |                           |  |   |         | 
| |                           |  | $ | 663,630 | 
| |                           |  |   |         | 

|       |                                                                                                        
|------ | -------------------------------------------------------------------------------------------------------
|       | Amortization expense for
  the years ended December 31, 2004 and 2003 was $39,037 and $0, respectively.
|       |                                                                                                        
|NOTE 6 | DUE TO RELATED PARTIES                                                                                 
|       |                                                                                                        
|       | Due to related parties at
  December 31, 2004 consists of the following:                               

| |                                                      |  |   |        | 
| | ---------------------------------------------------- |  | - | ------ | 
| | Due to affiliate                                     |  | $ | 15,233 | 
| | Due to company owned by a
  stockholder and director |  |   | 3,677  | 
| |                                                      |  |   |        | 
| |                                                      |  |   |        | 
| |                                                      |  | $ | 18,910 | 
| |                                                      |  |   |        | 

|       |                                                                                                                                                                                                                                        
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 7 | COMMITMENTS
  AND CONTINGENCIES                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                        
|       | (A) Operating Lease Agreements                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                        
|       | The Company leases
  corporate office space and office equipment under various operating leases.  The leases expire at various dates through
  November 2005.  Future minimum lease
  payments for the operating leases are as follows:

|     |  |   |        | 
|---- |  | - | ------ | 
|Year |  |   | Amount | 
|     |  |   |        | 
|     |  |   |        | 
|2005 |  |   | 25,100 | 
|     |  |   |        | 
|     |  |   |        | 
|     |  | $ | 25,100 | 
|     |  |   |        | 

| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Rent expense under operating
  leases for the years ended December 31, 2004 and 2003 aggregated $35,344 and
  $31,401, respectively.

F-11

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) Capital Leases                                                                                                                                                        
| |                                                                                                                                                                           
| | The Company leases a
  vehicle under a non-cancelable capital lease agreement.  Future minimum lease payments under the
  capital leases are as follows as of December 31:

| |                                           |      |   |        |        | 
| | ----------------------------------------- | ---- | - | ------ | ------ | 
| |                                           | Year |   |        | Amount | 
| |                                           |      |   |        |        | 
| |                                           |      |   |       
| | 2005                                      |      | $ | 11,387 |       
| | 2006                                      |      |   | 11,387 |       
| |                                           | 2007 |   |        | 3,796  | 
| |                                           |      |   |        |       
| |                                           |      |   | 26,570 |       
| | Less: interest                            |      |   | 4,732  |       
| |                                           |      |   |        |       
| |                                           |      |   | 21,838 |       
| | Less: current portion                     |      |   | 9,359  |       
| |                                           |      |   |        |       
| | Capital lease obligations
   non-current |      | $ | 12,479 |       
| |                                           |      |   |        |       

|       |                                                                                                                                                                                                                                                                                                                                                            
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | The lease is guaranteed by
  property and equipment with a cost of $31,869.                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                            
|NOTE 8 | EQUITY                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | (A) Stock Issued for Services                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 1,861,337 shares of common stock to consultants for services having a
  fair value of $1,879,950.                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 20,000 shares of common stock for legal services having a fair value
  of $60,000.                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 115,000 shares of common stock to consultants for services having a
  fair value of $345,000.  The fair
  value will be amortized over twelve months, the life of the agreement.  The Company recognized consulting expense
  of $215,625 and recorded deferred stock compensation of $129,375 as of
  December 31, 2004.
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 30,000 shares of common stock to consultants for services having a
  fair value of $90,000.  The fair value
  will be amortized over twelve months, the life of the agreement.  The Company recognized consulting expense
  of $56,250 and recorded deferred stock compensation of $33,750 as of December
  31, 2004.    
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 40,000 shares of common stock to consultants for services having a
  fair value of $120,000.  The fair
  value will be amortized over three months, the life of the agreement.  The Company recognized consulting expense
  of $120,000 as of December 31, 2004.                                                         
|       |                                                                                                                                                                                                                                                                                                                                                            
|       | During 2004, the Company
  issued 180,000 shares of common stock to consultants for services having a
  fair value of $540,000.  The fair
  value will be amortized over twelve months, the life of the agreement.  The Company recognized consulting expense
  of $337,500 and recorded deferred stock compensation of $202,500 as of
  December 31, 2004.

F-12

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

|       |                                                                                                                                                                                                                                                                                                                                                                                    
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | During 2004, the Company
  issued 50,000 shares of common stock to consultants for services having a
  fair value of $150,000.  The fair
  value will be amortized over twenty-three months, the life of the agreement.  The Company recognized consulting expense
  of $84,773 and recorded deferred stock compensation of $65,227 as of December
  31, 2004.                     
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During 2004, the Company
  issued 200,000 shares of common stock having a fair value of $600,000 to a
  director as a bonus for becoming CEO of the Companys subsidiary.                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During 2004, the Company
  issued 80,000 shares of common stock to consultants for services having a
  fair value of $216,000.  The fair
  value will be amortized over six months, the life of the agreement.  The Company recognized consulting expense
  of $72,000 and recorded deferred stock compensation of $144,000 as of
  December 31, 2004.                             
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | (B) Common Stock Warrants                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During 2004, the Company
  issued 200,000 common stock warrants at an exercise price of $2.00 to a
  consultant for services.  The warrants
  expire in 2009.  Using the
  Black-Scholes model, the warrants were valued at $97,375 under the following
  assumptions; no annual dividend, volatility of 252%, risk-free interest rate
  of return of .979% and a term of one year.
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | (C) Stock Issued in Reverse Merger                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | On March 10, 2004, the
  Company issued 1,037,972 shares of common stock to the former stockholders of
  Acola Corp (See Note 2).                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | (D) Stock Issued for Acquisition                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During 2004, the Company
  issued 200,000 shares of common stock for the acquisition of 60% of Landmark
  common stock with a fair value of $536,000.                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | (E) Stock Split                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | On March 11, 2004, the
  Company effected a 40:1 reverse stock split. 
  All share and per share amounts have been retroactively restated to
  reflect the stock split.                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|NOTE 9 | RELATED
  PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During 2004, the Company
  issued 200,000 shares of common stock to a director as a bonus with a fair
  value of $600,000.                                                                                                                                                                                                                                                         
|      
|       | During the years ended
  December 31, 2004 and 2003, the Company received management revenue of $461,324
  and $327,381, respectively from two properties it manages that are owned by
  shareholders.                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                    
|       | During the years ended
  December 31, 2004 and 2003, the Company paid $30,769 and $30,769,
  respectively to two directors for consulting and professional services.                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                    

F-13

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | During the
  years ended December 31, 2004 and 2003, the Company paid rent of $35,345 and
  $19,582, respectively for office space leased from a director and
  stockholder.                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE 10 | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | The Company
  received 81% of its revenues from two hotels in 2004 and 98% of its revenue
  from three hotels in 2003 that it provides management services for located in
  China, the two hotels constituted 48%, and 33% of the revenue recorded for
  the year ended December 31, 2004 and the three hotels constituted 52%, 31%
  and 15% for December 31, 2003.                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|NOTE 11 | BUSINESS SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | The Company has two operating segments.  They are organized internally primarily by
  the type of services performed.  The
  Companys two operating segments include property management and real estate
  investments.  The real estate
  investment segment invests in real estate development projects.  The accounting policies of the segments
  are the same as described in the summary of significant accounting
  policies.  There are no inter-segment
  sales.

| |                                 |  |                       |            |                           |   |           |   |   |            |  
| | ------------------------------- |  | --------------------- | ---------- | ------------------------- | - | --------- | - | - | ---------- | -
| |                                 |  | Property
  Management |            | Real Estate
  Investments |   | Total     |  
| |                                 |  |                       |            |                           |   |           |  
| | 2004                            |  |                       |            |                           |   |           |   |   |            |  
| | Revenue                         |  | $                     | 568,391    |                           | $ | -         |   | $ | 568,391    |  
| | Net income
  (loss)             |  |                       | (3,723,582 | )                         |   | (792,815  | ) |   | (4,516,397 | )
| | Depreciation
  and amortization |  |                       | 49,726     |                           |   | -         |   |   | 49,726     |  
| | Assets                          |  |                       | 1,053,537  |                           |   | 2,869,053 |   |   | 3,922,590  |  
| | Capital
  expenditures          |  |                       | 44,034     |                           |   | -         |   |   | 44,034     |  
| |                                 |  |                       |            |                           |   |           |   |   |            |  
| | 2003                            |  |                       |            |                           |   |           |   |   |            |  
| | Revenue                         |  | $                     | 396,794    |                           | $ | -         |   | $ | 396,794    |  
| | Net income                      |  |                       | (92,063    | )                         |   | 51,409    |   |   | (40,654    | )
| | Depreciation                    |  |                       | 5,890      |                           |   | -         |   |   | 5,890      |  
| | Assets                          |  |                       | 255,007    |                           |   | 3,661,868 |   |   | 3,916,875  |  
| | Capital
  expenditures          |  |                       | 18,650     |                           |   | -         |   |   | 18,650     |  

|        |                                                                                                
|------- | -----------------------------------------------------------------------------------------------
|NOTE 12 | INCOME TAXES                                                                                   
|        |                                                                                                
|        | Income tax
  expense for the years ended December 31, 2004 and 2003 is summarized as
  follows:

| |                 |  |         |        |          |   |       |  |   |        | 
| | --------------- |  | ------- | ------ | -------- | - | ----- |  | - | ------ | 
| |                 |  | Current |        | Deferred |   | Total | 
| |                 |  |         |        |          |   |       | 
| | 2004            |  |         |        |          |   |       |  |   |        | 
| | United
  States |  | $       | -      |          | $ | -     |  | $ | -      | 
| | Foreign         |  |         | 37,024 |          |   | -     |  |   | 37,024 | 
| |                 |  |         |        |          |   |       |  |   |        | 
| |                 |  |         |        |          |   |       |  |   |        | 
| |                 |  | $       | 37,024 |          | $ | -     |  | $ | 37,024 | 
| |                 |  |         |        |          |   |       |  |   |        | 
| |                 |  |         |        |          |   |       |  |   |        | 
| | 2003            |  |         |        |          |   |       |  |   |        | 
| | United
  States |  | $       | -      |          | $ | -     |  | $ | -      | 
| | Foreign         |  |         | 23,795 |          |   | -     |  |   | 23,795 | 
| |                 |  |         |        |          |   |       |  |   |        | 
|
| |                 |  | $       | 23,795 |          | $ | -     |  | $ | 23,795 | 
| |                 |  |         |        |          |   |       |  |   |        | 

F-14

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

| | Income tax
  expense for the years ended December 31, 2004 and 2003 differed from amounts
  computed by applying the statutory U.S. federal corporate income tax rate of
  34% to income before income tax benefit as a result of the following:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                                                |  |      |            |      |   |         |  
| | ---------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ------- | -
| |                                                                                                |  | 2004 |            | 2003 |  
| |                                                                                                |  |      |            |      |  
| |                                                                                                |  |      |            |      |   |         |  
| | Expected
  income tax expense (benefit)                                                        |  | $    | (1,535,575 | )    | $ | (13,822 | )
| | Operating
  loss carryforwards                                                                 |  |      | 1,180,095  |      |   | -       |  
| | Tax effect on foreign income (loss) which
  is not subject to the United States statutory rate |  |      | 392,504    |      |   | 37,617  |  
|
| |                                                                                                |  |      |            |      |   |         |  
|
| |                                                                                                |  | $    | 37,024     |      | $ | 23,795  |  
| |                                                                                                |  |      |            |      |   |         |  

| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax
  effects of temporary differences that give rise to significant portions of
  deferred tax assets and liabilities at December 31, 2004 and 2003 are as
  follows:

| |                                   |  | 2004 |            | 2003 |  
| | --------------------------------- |  | ---- | ---------- | ---- | -
| |                                   |  |      |            |      |  
| | Deferred tax
  assets:            |  |      |            |      |  
| | Net
  operating loss carryforward |  | $    | 1,535,575  |      | $
| |                                   |  |      |            |      |  
| | Total
  deferred tax assets       |  |      | 1,535,575  |      |  
| | Less
  valuation allowance        |  |      | (1,535,575 | )    |  
| |                                   |  |      |            |      |  
|
| | Net deferred
  tax assets         |  | $    | -          |      | $
| |                                   |  |      |            |      |  

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | At December
  31, 2004, the Company had approximately $447,920 of undistributed losses of
  the Companys foreign subsidiaries. 
  These losses are considered to be indefinitely invested, and
  accordingly, no United States income tax has been provided for these losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | The Company
  has loss carryforwards of approximately $4,516,300 for income tax purposes
  available to offset future taxable U.S. income expiring in 2024.  The valuation allowance at December 31,
  2003 was $0.  The net change in the
  valuation allowance was an increase of $1,535,575.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|NOTE 13 | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | As reflected in the accompanying consolidated financial statements,
  the Company has an accumulated deficit of $4,002,319 at December 31, 2004
  which includes a net loss of $4,516,397 for the year ended December 31,
  2004.  The Companys total current
  liabilities exceed its total current assets by $3,509,359 and the Company
  used cash in operations of $253,222. 
  These factors raise substantial doubt about its ability to continue as
  a going concern.  In view of the
  matters described above, recoverability of a major portion of the recorded
  asset amounts shown in the accompanying consolidated balance sheet is
  dependent upon continued operations of the company, which in turn is
  dependent upon the Companys ability to raise additional capital, obtain
financing

F-15

---



TEDA
TRAVEL INCORPORATED AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | and succeed in its future operations. 
  The financial statements do not include any adjustments relating to
  the recoverability and classification of recorded asset amounts or amounts
  and classification of liabilities that might be necessary should the Company
  be unable to continue as a going concern.                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | Management has taken the following steps to revise its operating and financial
  requirements, which it believes are sufficient to provide the Company with
  the ability to continue as a going concern.  The Company is actively pursuing additional funding and potential
  merger or acquisition candidates and strategic partners, which would enhance
  stockholders investment. Management believes that the above actions will allow the Company to continue operations
  through the next fiscal year.                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|NOTE 14 | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | On August 18, 2004, the Company announced that it had agreed to
  acquire Teda Resort Alliance Development Company Limited (TRAC) for
  approximately $386,200, of which $280,872 is payable in cash and $105,328 is
  payable in restricted common stock. 
  TRAC provides timeshare services for customers in China and is the
  largest partner of RCI, the biggest timeshare operator in the world.  The completion of the transaction is
  subject to certain conditions, including approval by shareholders and
  governmental approval.  The Company
  expects to complete the acquisition in the second quarter of 2005.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | On January 4, 2005, the Company entered into an
  agreement to acquire 55%
  equity interest in Shanghai Bowking
  Hotel Management Company Limited for $242,000 of which $121,000 was payable
  in cash and $121,100 was payable in the form of 48,440 restricted common
  shares of the Company valued at a fair value of $121,100.  The Company expects to complete the
  acquisition in the second quarter of 2005.                                                                                                                                                                                                           

F-16

---



EXHIBIT
INDEX

|              |  |                                                                                                                                                                                     | 
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Exhibit
  No. |  | Description                                                                                                                                                                        
|              |  |                                                                                                                                                                                     | 
|              |  |                                                                                                                                                                                     | 
|2.1           |  | Stock
  Purchase Agreement and Share Exchange dated as of May 1, 2002, by and among
  Gaige Financial Group, Inc. and Teda Hotels Management Company Limited. (1)                  
|              |  |                                                                                                                                                                                    
|2.2           |  | Amendment to
  Stock Purchase Agreement and Share Exchange dated as of August 15, 2002 by
  and among Gaige Financial Group, Inc. and Teda Hotels Management Company
  Limited. (2)
|              |  |                                                                                                                                                                                    
|3.1           |  | Articles of
  Incorporation (3)                                                                                                                                                    
|              |  |                                                                                                                                                                                    
|3.2           |  | Amendment to
  Articles of Incorporation (4)                                                                                                                                       
|              |  |                                                                                                                                                                                    
|3.3           |  | Bylaws (3)                                                                                                                                                                         
|              |  |                                                                                                                                                                                    
|14            |  | Code of
  Ethics                                                                                                                                                                   
|              |  |                                                                                                                                                                                    
|16            |  | Letter on
  Change in Certifying Accountant (5)                                                                                                                                    
|              |  |                                                                                                                                                                                    
|21.1          |  | Subsidiaries
  of the Registrant*                                                                                                                                                  
|              |  |                                                                                                                                                                                    
|31.1          |  | Certification
  Pursuant to Rule 13a-14(a) and 15d-14(a) (4) of Chief Executive Officer                                                                                            
|              |  |                                                                                                                                                                                    
|31.2          |  | Certification
  Pursuant to Rule 13a-14(a) and 15d-14(a) (4) of Chief Financial Officer                                                                                            
|              |  |                                                                                                                                                                                    
|32.1          |  | Certification
  Pursuant to Section 1350 of Title 18 of the United States Code of Chief Executive
  Officer                                                                        
|              |  |                                                                                                                                                                                    
|32.2          |  | Certification
  Pursuant to Section 1350 of Title 18 of the United States Code of Chief
  Financial Officer                                                                        



---

*          Filed
herewith.




|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated
  by reference to the Registrants Current Report on Form 8-K dated
  May 1, 2002.                      
|    |                                                                                                                      
|(2) | Incorporated
  by reference to the Registrants Current Report on Form
8-K dated
  August 15, 2002.                  
|    |                                                                                                                      
|(3) | Incorporated
  by reference to the Registrants Registration Statement on
Form 10-SB filed January 24, 2000.         
|    |                                                                                                                      
|(4) | Incorporated
  by reference to the Registrants Definitive Information Statement on Schedule
  14C on March 26, 2004.

---