**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**




(Mark
      One)





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





For
      the
      quarterly period ended September 30, 2008





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ______________ to _____________




Commission
      file number: **000-51516**




**UNIVERSAL
      TRAVEL GROUP**


(Exact
      name of registrant as specified in its charter)




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




**Shennan
                Road, Hualian Center**
              **Room
                301 - 309**
              **Shenzhen,
                People’s Republic of China**(Address
                of principal executive offices)
            
            (Zip
                Code)





**86 755 836 68489**


(Registrant’s
      telephone number, including area code)





(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant (1) has filed reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No
o





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





Large
                accelerated filer
            o
            Accelerated
                filer
            oNon-accelerated
                filer
            o
            Smaller
                reporting company
            x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**


**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**





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





**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      equity, as of the latest practicable date:





As
      of
      November 5, 2008, there are 41,619,966 shares of $0.001 par value common stock
      issued and outstanding.










FORM
      10-Q


.UNIVERSAL
      TRAVEL GROUP


INDEX





PagePART
                I.
            
            Financial
                Information
            
            3Item
                1.  Financial Statements ( Unaudited)
            
            3Report
                of Independent Registered Public Accounting Firm
            
            6Consolidated
                Balance Sheets as of September 30, 2008 (Unaudited) and December
                31,
                2007
            
            7Consolidated
                Statements of Income for the Nine Months Ended September 30, 2008
                and 2007
                (Unaudited)
            
            8Consolidated
                Statements of Cash Flows for the Nine Months Ended September 30,
                2008 and
                2007 (Unaudited)
            
            9Consolidated
                Statements of Stockholders' Equity
            
            10Notes
                to Consolidated Financial Statements as of September 30, 2008
                (Unaudited)
            
            11Item
                2.  Management’s Discussion and Analysis of Financial Condition or
                Plan of Operation
            
            22Item
                3.  Quantitative and Qualitative Disclosures About Market
                Risk.
            
            30Item
                4.  Controls and Procedures
            
            31PART
                II.
            
            Other
                Information
            
            32Item
                1.  Legal Proceedings
            
            32Item
                2.  Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            32Item
                3.  Defaults Upon Senior Securities
            
            32Item
                4.  Submission of Matters to a Vote of Security
                Holders.
            
            32Item
                5.  Other Information
            
            32Item
                6.  Exhibits
            
            32Signatures
            
            33





2





(Inapplicable
      items have been omitted)





**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements (Unaudited)**


3





**UNIVERSAL
      TRAVEL GROUP**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**SEPTEMBER
      30, 2008**


4





**TABLE
      OF CONTENTS**





Report
                of Independent Registered Public Accounting Firm
            
            6Consolidated
                Balance Sheets
            
            7Consolidated
                Statements of Income
            
            8Consolidated
                Statements of Cash Flows
            
            9Consolidated
                Statements of Stockholders’ Equity
            
            10Notes
                to Consolidated Financial Statements
            
            11




5




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




*CERTIFIED
      PUBLIC ACCOUNTANTS*


40
      Exchange Place, Suite 1820


New
      York,
      N.Y.10005


TEL:
      (212) 925-9490


FAX:
      (212) 226-9134


E-MAIL:
      MSBCPAS@gmail.com




Report
      of Independent Registered Public Accounting Firm




Board
      of
      Directors and Stockholders of


Universal
      Travel Group





We
      have
      reviewed the accompanying consolidated balance sheets of Universal Travel Group,
      Inc. as of September 30, 2008 and the consolidated statements of operations
      for
      the nine months ended September 30, 2008 & 2007 and consolidated statements
      of cash flows and shareholders equity for the nine months then ended. These
      financial statements are the responsibility of the Company's
      management.





We
      conducted our review in accordance with standards of the Public Company
      Accounting Oversight Board (United States). A review of interim financial
      information consists principally of applying analytical procedures and making
      inquiries of persons responsible for financial and accounting matters. It is
      substantially less in scope than an audit conducted in accordance with standards
      of the Public Company Accounting Oversight Board (United States), the objective
      of which is the expression of an opinion regarding the financial statements
      taken as a whole. Accordingly, we do not express such an opinion.





Based
      on
      our reviews, we are not aware of any material modifications that should be
      made
      to the accompanying interim financial statements referred to above for them
      to
      be in conformity with accounting principles generally accepted in the United
      States of America.





We
      have
      previously audited, in accordance with auditing standards of the Public Company
      Accounting Oversight Board (United States), the consolidated balance sheet
      of
      Universal Travel Group, Inc. as of December 31, 2007 and the related
      consolidated statements of income retained earnings and comprehensive income,
      and consolidated statements of cash flows for the year then ended; and in our
      report dated March 18, 2008 we expressed an unqualified opinion on those
      financial statements. In our opinion, the information set forth in the
      accompanying consolidated balance sheet as of December 31, 2007, is fairly
      stated, in all material respects, in relation to the consolidated balance sheet
      from which it has been derived.




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


Certified
      Public Accountants





New
      York,
      N.Y.


October
      26, 2008





6




**UNIVERSAL
        TRAVEL GROUP**
 **CONSOLIDATED
        BALANCE SHEET****S**
 **SEPTEMBER
        30, 2008 and DECEMBER 31, 2007**


2008
              
              2007ASSETSCurrent
                  AssetsCash
                  and cash equivalents
              
              $
              12,564,894
              
              $
              2,671,684Accounts
                  receivable, net
              
              
              9,218,433
              
              
              5,403,820Other
                  receivables and deposits, net
              
              
              295,896
              
              
              1,297,426Refundable
                  acquisition deposit
              
              
              -
              
              
              1,453,050Due
                  from shareholder
              
              
              137,885
              
              
              1,444,818Trade
                  deposit
              
              
              4,614,844
              
              
              2,650,744Advances
              
              
              437,509
              
              
              616,861Escrow
                  deposits
              
              
              762,800
              
              
              -Prepaid
                  expenses
              
              
              437,761
              
              
              713,668Total
                  Current Assets
              
              
              28,470,022
              
              
              16,252,071Property
                  & equipment, net
              
              
              122,143
              
              
              127,393Intangible
                  assets
              
              
              -
              
              
              18,626Goodwill
              
              
              13,526,809
              
              
              13,526,80913,648,952
              
              
              13,672,828Total
                  Assets
              
              $
              42,118,974
              
              $
              29,924,899**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  LiabilitiesNotes
                  payable – bank
              
              $
              -
              
              $
              1,288,554Note
                  payable – others
              
              
              -
              
              
              1,576,750Accounts
                  payable and accrued expenses
              
              
              1,941,231
              
              
              3,604,666Customer
                  deposits
              
              
              1,197,362
              
              
              1,132,886Income
                  tax payable
              
              
              1,203,889
              
              
              664,995Total
                  Current Liabilities
              
              
              4,342,482
              
              
              8,267,851Stockholders'
                  EquityCommon
                  stock, $.001 par value, 70,000,000shares
                  authorized, 41,619,966 and 36,809,036 issued and
                  outstanding
              
              
              41,621
              
              
              36,810Additional
                  paid in capital
              
              
              15,781,582
              
              
              8,601,534Other
                  comprehensive income
              
              
              1,273,865
              
              
              545,164Statutory
                  reserve
              
              
              372,144
              
              
              372,144Retained
                  earnings
              
              
              20,307,280
              
              
              12,101,396Total
                  Stockholders' Equity
              
              
              37,776,492
              
              
              21,657,048Total
                  Liabilities and Stockholders' Equity
              
              $
              42,118,974
              
              $
              29,924,899


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




7




**UNIVERSAL
      TRAVEL GROUP**


**CONSOLIDATED
      STATEMENTS OF INCOME**


**FOR
      THE THREE MONTHS ENDED SEPTEMBER 30,**




****
            
            **2008**
            
            **2007**Gross
                revenues,
            
            $
            22,903,643
            
            $
            12,813,942Cost
                of services
            
            
            15,047,932
            
            
            8,308,363Gross
                Profit
            
            
            7,855,711
            
            
            4,505,579Selling,
                general and administrative expenses
            
            
            1,917,323
            
            
            812,464Income
                from operations
            
            
            5,938,388
            
            
            3,693,115Other
                Income (Expense)Other
                income
            
            
            (1,485
            )
            
            -Interest
                income
            
            
            (9,941
            )
            
            (2,955
            )Interest
                expense
            
            
            13,521
            
            
            21,442Total
                Other Income (Expense)
            
            
            2,095
            
            
            18,487Income
                before income taxes
            
            
            5,926,293
            
            
            3,674,628Provision
                for income taxes
            
            
            1,307,966
            
            
            608,153Net
                income
            
            $
            4,628,327
            
            $
            3,066,475Net
                income per common shareBasic
            
            $
            .12
            
            $
            .09Diluted
            
            $
            .12
            
            $
            .09Weighted
                average common shares outstandingBasic
            
            
            38,695,295
            
            
            35,314,298Diluted
            
            
            39,693,980
            
            
            35,464,848




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


8





**UNIVERSAL
      TRAVEL GROUP**


**CONSOLIDATED
      STATEMENTS OF INCOME**


**FOR
      THE NINE MONTHS ENDED SEPTEMBER 30,**




**2008**
            
            **2007**Gross
                revenues,
            
            $
            47,324,686
            
            $
            26,799,445Cost
                of services
            
            
            32,465,680
            
            
            17,419,435Gross
                     Profit
            
            
            14,859,006
            
            
            9,380,010Selling,
                general and administrative expenses
            
            
            4,024,721
            
            
            2,222,407Stock
                based compensation
            
            
            155,802
            
            
            633,3604,180,523
            
            
            2,855,767**Income
                from operations**
            
            
            10,678,483
            
            
            6,524,243Other
                Income (Expense)Loss
                on asset disposal
            
            
            1,105
            
            
            -Other
                income
            
            
            (9,863
            )
            
            -Interest
                income
            
            
            (21,881
            )
            
            (17,783
            )Interest
                expense
            
            
            78,525
            
            
            42,724Total
                Other Income (Expense)
            
            
            47,886
            
            
            24,941**Income
                before income taxes**
            
            
            10,630,597
            
            
            6,499,302Provision
                for income taxes
            
            
            2,424,713
            
            
            1,127,306**Net
                income**
            
            $
            8,205,884
            
            $
            5,371,996Net
                income per common shareBasic
            
            $
            .22
            
            $
            .16Diluted
            
            $
            .22
            
            $
            .16Weighted
                average common shares outstandingBasic
            
            
            37,546,605
            
            
            34,304,914Diluted
            
            
            38,050,305
            
            
            34,421,337





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




9




**UNIVERSAL
                TRAVEL GROUP****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****FOR
                THE NINE MONTHS ENDED SEPTEMBER
                30,**


**2008**
                
                **2007****CASH
                    FLOWS FROM OPERATING ACTIVITIES**Net
                    Income
                
                $
                8,205,88
                
                $
                5,371,996Adjustments
                    to reconcile net income to net cashprovided
                    by operating activities:Depreciation
                    and amortization
                
                
                49,850
                
                
                60,269Provision
                    for doubtful accounts
                
                
                7,185
                
                
                -Stock
                    based compensation
                
                
                155,802
                
                
                633,360Loss
                    on asset disposal
                
                
                1,105(Increase)
                    / decrease in assets:Accounts
                    receivable
                
                
                (3,821,798
                )
                
                (1,982,708
                )Other
                    receivable
                
                
                1,001,530
                
                
                19,760Advances
                
                
                179,352
                
                
                (414,885
                )Due
                    from shareholder
                
                
                1,306,933
                
                
                729,173Prepaid
                    expenses
                
                
                (407,530
                )
                
                18,752Trade
                    deposits
                
                
                (1,964,100
                )
                
                53,652Customer
                    deposits
                
                
                64,476
                
                
                (514
                )Escrow
                    deposits
                
                
                (726,800
                )
                
                -Increase
                    / (decrease) in current liabilities:Accounts
                    payable and accrued expenses
                
                
                (1,663,435
                )
                
                613,482Income
                    tax payable
                
                
                538,894
                
                
                209,551Total
                    Adjustments
                
                
                (5,314,368
                )
                
                (60,108
                )**Net
                    cash provided by(used in) operating activities**
                
                
                2,891,348
                
                
                5,311,888**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Purchase
                    of property & equipment
                
                
                (27,742
                )
                
                (50,024
                )Proceeds
                    from asset disposals
                
                
                663Acquisition
                    deposits
                
                
                1,453,050
                
                
                2,288,481Paid
                    for acquisition – net of cash acquired
                
                
                -
                
                
                (7,278,434
                )**Net
                    cash used by Investing activities**
                
                
                1,425,971
                
                
                (5,039,977
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES**(Repayments)Proceeds
                    from bank loan – net
                
                
                (1,288,554
                )
                
                1,289,873Proceeds
                    of equity financing
                
                
                7,712,494
                
                
                -Note
                    payable – others
                
                
                (1,576,750
                )
                
                -**Net
                    cash provided by financing activities**
                
                
                4,847,190
                
                
                1,289,873Effect
                    of exchange rate changes on cash and cash equivalents
                
                
                728,701
                
                
                123,521Net
                    change in cash and cash equivalents
                
                
                9,893,210
                
                
                1,685,305**Cash
                    and cash equivalents, beginning balance**
                
                
                2,671,684
                
                $
                1,043,555**Cash
                    and cash equivalents, ending balance**
                
                $
                12,564.894
                
                $
                2,728,860**SUPPLEMENTAL
                    DISCLOSURES:**Cash
                    paid during the year for:Interest
                    payments
                
                $
                78,525
                
                $
                40,603Income
                    Taxes
                
                $
                1,885,819
                
                $
                799,691Other
                    non-cash transactionsPurchased
                    Goodwill
                
                
                -
                
                $
                (7,477,233
                )Fair
                    value of assets purchased less cash acquired
                
                
                -
                
                
                (2,151,201
                )Acquisition
                    financed with stock issuance
                
                
                -
                
                
                2,350,000Acquisition
                    paid for with cash – net of acquired
                
                
                -
                
                $
                (7,278,434
                )







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





10




**UNIVERSAL
                TRAVEL GROUP****CONSOLIDATED
                STATEMENT OF STOCKHOLDERS' EQUITY****FOR
                THE NINE MONTHS ENDED SEPTEMBER 30,
                2008**




Additional
            
            Other
            
            
            
            
            
            TotalCommon Stock
            
            Paid-In
            
            Comprehensive
            
            Retained
            
            Statutory
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Income
            
            Earnings
            
            Reserve
            
            EquityBalance
                December 31, 2007
            
            
            36,809,036
            
            $
            36,810
            
            $
            8,601,534
            
            $
            545,
                164
            
            $
            12,101,396
            
            $
            372,144
            
            $
            21,657,048Stock
                based compensation
            
            
            
            
            
            
            
            
            45,790
            
            
            
            
            
            
            
            
            
            
            
            45,790Forfeited
                options
            
            
            
            
            
            
            
            
            (573,425
            )
            
            
            
            
            
            
            
            
            
            
            (573,425
            )Foreign
                currency translation adjustments
            
            
            
            
            
            
            
            
            
            
            
            728,701
            
            
            
            
            
            
            
            
            728,701Equity
                Financing
            
            
            222,222
            
            
            222
            
            
            599,772
            
            
            
            
            
            
            
            
            
            
            
            599,9944,588,708
            
            
            4,589
            
            
            7,107,911
            
            
            
            
            
            
            
            
            
            
            
            7,112,500Income
                for the nine months ended 9/30/2008
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            8,205,884
            
            
            
            
            
            8,205,884Balance
                September 30, 2008
            
            
            41,619,966
            
            $
            41,621
            
            $
            15,781,582
            
            $
            1,273,865
            
            $
            $
                20,307,280
            
            $
            372,144
            
            $
            37,776,492




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


11


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**




**Note
      1 -** **ORGANIZATION**





Universal
      Travel Group was incorporated on January 28, 2004 under the laws of the State
      of
      Nevada. Full Power Enterprise Global Limited – BVI was incorporated under the
      laws of the British Virginia Islands. Shenzhen Yuzhilu Aviation Service Co.,
      Ltd
      was incorporated on March 9, 1998 under the laws of the Peoples Republic of
      China (PRC). Shenzhen Speedy Dragon Enterprises Limited was incorporated in
      August of 2002 under the laws of the Peoples Republic of China (PRC), Xian
      Golden Net Travel Serve Services was incorporated on July 25, 2001 under the
      laws of the Peoples Republic of China, Xian City, Shanghai Lanbao Travel Service
      Co., Ltd, was established in 2002 under the laws of Shanghai China. Foshan
      Overseas International Travel Service Co., Ltd. was incorporated in 1990 under
      the laws of the Peoples Republic of China. Full Power Enterprise Global Limited
      owns 100% of the Shenzhen Yuzhilu Aviation Service Co., Ltd. Collectively the
      seven corporations are referred to herein as the Company.





The
      Company is now engaged in the travel business, including airline ticketing,
      hotel reservation services and air cargo transportation services, technological
      solutions to travel reservations, and tour planning and tour guide services.





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





Basis
      of Presentation





The
      accompanying consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of America.
      The Company's functional currency is the Chinese Renminbi; however the
      accompanying consolidated financial statements have been translated and
      presented in United States Dollars.





Translation
      Adjustment





As
      of
      September 30, 2008 and December 31, 2007 the accounts of Universal Travel Group
      were maintained, and its financial statements were expressed, in Chinese Yuan
      Renminbi (CNY). Such financial statements were translated into U.S. Dollars
      (USD) in accordance with Statement of Financial Accounts Standards (SFAS) No.
      52, Foreign Currency Translation with the CNY as the functional currency.
      According to the Statement, all assets and liabilities were translated at the
      current exchange rate, stockholders equity are translated at the historical
      rates and income statement items are translated at the average exchange rate
      for
      the period. The resulting translation adjustments are reported under other
      comprehensive income in accordance with SFAS No. 130, Reporting Comprehensive
      Income as a component of shareholders equity. Transaction gains and losses
      are
      reflected in the income statement.





Use
      of
      Estimates


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





Principles
      of Consolidation





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


12


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





Risks
      and Uncertainties





The
      Company is subject to substantial risks from, among other things, intense
      competition associated with the industry in general, other risks associated
      with
      financing, liquidity requirements, rapidly changing customer requirements,
      limited operating history, foreign currency exchange rates and the volatility
      of
      public markets.





Contingencies





Certain
      conditions may exist as of the date the financial statements are issued. These
      conditions may result in a future loss to the Company but which will only be
      resolved when one or more future events occur or fail to occur. The Company’s
      management and legal counsel assess such contingent liabilities, and such
      assessment inherently involves an exercise of judgment. In assessing loss
      contingencies related to legal proceedings that are pending against the Company
      or unasserted claims that may result in such proceedings, the Company’s legal
      counsel evaluates the perceived merits of any legal proceedings or unasserted
      claims as well as the perceived merits of the amount of relief sought or
      expected to be sought.





If
      the
      assessment of a contingency indicates that it is probable that a material loss
      has been incurred and the amount of the liability can be estimated, then the
      estimated liability would be accrued in the Company’s financial statements. If
      the assessment indicates that a potential material loss contingency is not
      probable but is reasonably possible, or is probable but cannot be estimated,
      then the nature of the contingent liability, together with an estimate of the
      range of possible loss if determinable and material would be disclosed.





Loss
      contingencies considered to be remote by management are generally not disclosed
      unless they involve guarantees, in which case the guarantee would be
      disclosed.





Cash
      and Cash Equivalents





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




Accounts
      Receivable





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves. Terms of the sales vary. Reserves are recorded
      primarily on a specific identification basis. Allowance for doubtful accounts
      amounted to $ 80,300 and $73,115 as of September 30, 2008 and December 31,
      2007,
      respectively.





Property,
      Plant & Equipment




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


13


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





Furniture and Fixtures
            5 yearsTransportation equipment
            5 yearsOffice equipment
            5 yearsLeasehold Improvements
            5 – 10 years





As of September 30, 2008 and December 31, 2007 Property,
      Plant & Equipment consist of the following:





2008
            
            2007Furniture
                & fixture
            
            $
            18,247
                $
            
            
            18,247Transportation
                equip
            
            
            183,024
            
            
            301,308Office
                equipment
            
            
            194,067
            
            
            177,004Leasehold
                improve
            
            
            31,374
            
            
            31,374437,391
            
            
            527,933Accumulated
                depreciation
            
            
            (315,248
            )
            
            (400,540
            )122,143
            
            
            127,393





Long-Lived
      Assets




The
      Company adopted Statement of Financial Accounting Standards No. 144, Accounting
      for the Impairment or Disposal of Long-Lived Assets (SFAS 144), which addresses
      financial accounting and reporting for the impairment or disposal of long-lived
      assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
      Assets and for Long-Lived Assets to be Disposed Of, and the accounting and
      reporting provisions of APB Opinion No. 30, Reporting the Results of Operations
      for a Disposal of a Segment of a Business. The Company periodically evaluates
      the carrying value of long-lived assets to be held and used in accordance with
      SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived
      assets used in operations when indicators of impairment are present and the
      undiscounted cash flows estimated to be generated by those assets are less
      than
      the assets carrying amounts. In that event, a loss is recognized based on the
      amount by which the carrying amount exceeds the fair market value of the
      long-lived assets. Loss on long-lived assets to be disposed of is determined
      in
      a similar manner, except that fair market values are reduced for the cost of
      disposal. Based on its review, the Company believes that, as of June 30, 2008
      and December 31, 2007 there were no significant impairments of its long-lived
      assets.





Fair
      Value of Financial Instruments





Statement
      of financial accounting standard No. 107, Disclosures about Fair Value of
      Financial Instruments, requires that the Company disclose estimated fair values
      of financial instruments. The carrying amounts reported in the statements of
      financial position for current assets and current liabilities qualifying as
      financial instruments are a reasonable estimate of fair value.





Revenue
      Recognition




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




14


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**




Advertising


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




Income
      Taxes


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




Statement
      of Cash Flows


In
      accordance with SFAS No. 95, Statement of Cash Flows, cash flows from the
      Company’s operations is based upon the local currencies. As a result, amounts
      related to assets and liabilities reported on the statement of cash flows will
      not necessarily agree with changes in the corresponding balances on the balance
      sheet.




Intangibles


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





Concentration
      of Credit Risk


Financial
      instruments that potentially subject the Company to concentrations of credit
      risk are cash, accounts receivable and other receivables arising from its normal
      business activities. The Company places its cash in what it believes to be
      credit-worthy financial institutions. The Company has a diversified customer
      base, most of which are in China. The Company controls credit risk related
      to
      accounts receivable through credit approvals, credit limits and monitoring
      procedures. The Company routinely assesses the financial strength of its
      customers and, based upon factors surrounding the credit risk, establishes
      an
      allowance, if required, for uncollectible accounts and, as a consequence,
      believes that its accounts receivable credit risk exposure beyond such allowance
      is limited.





Recent
      accounting pronouncements





In
      July
      2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting for
      uncertainty in Income Taxes - an interpretation of FASB Statement 109” (“FIN No.
      48”). FIN 48 clarifies the accounting for Income Taxes by prescribing the
      minimum recognition threshold a tax position is required to meet before being
      recognized in the financial statements. It also provides guidance on
      derecognition, measurement, classification, interest and penalties, accounting
      in interim periods, disclosure and transition and clearly scopes income taxes
      out of SFAS No. 5, “ Accounting for Contingencies”. FIN 48 is effective for
      fiscal years beginning after December 15, 2006. Based on the Company’s
      evaluation of this issue, the adoption of this accounting requirement has no
      effect on the Company’s financial statements.


15


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





In
      September, 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. This Statements applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. Based on the Company’s evaluation
      of this issue, the adoption of this accounting requirement has no effect on
      the
      Company’s financial statements.





In
      February, 2007, FASB issued SFAS 159 ‘The Fair Value Option for Financial Assets
      and Financial Liabilities’ – Including an Amendment of FABS Statement No. 115.
      This statement permits entities to choose to measure many financial instruments
      and certain other items at fair value. This statement is expected to expand
      the
      use of fair value measurement, which is consistent with the Board’s long-term
      measurement objectives for accounting for financial instruments. This statement
      is effective as of the beginning of an entity’s first fiscal year that begins
      after November 15, 2007. Based on the Company’s evaluation of this issue, the
      adoption of this accounting requirement has no effect on the Company’s financial
      statements.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements”. This Statement amends ARB 51 to establish
      accounting and reporting standards for the noncontrolling (minority) interest
      in
      a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
      a
      noncontrolling interest in a subsidiary is an ownership interest in the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. SFAS No. 160 is effective for the Company’s fiscal year
      beginning October 1, 2009. Management is currently evaluating the effect of
      this
      pronouncement on financial statements.





In
      March
      2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative
      Instruments and Hedging Activities. The new standard is intended to improve
      financial reporting about derivative instruments and hedging activities by
      requiring enhanced disclosures to enable investors to better understand their
      effects on an entity’s financial position, financial performance, and cash
      flows. It is effective for financial statements issued for fiscal years and
      interim periods beginning after November 15, 2008, with early application
      encouraged. The new standard also improves transparency about the location
      and
      amounts of derivative instruments in an entity’s financial statements; how
      derivative instruments and related hedged items are accounted for under
      Statement 133; and how derivative instruments and related hedged items affect
      its financial position, financial performance, and cash flows. Management is
      currently evaluating the effect of this pronouncement on financial
      statements.





On
      May 8,
      2008, the Financial Accounting Standards Board (FASB) issued Statement of
      Financial Accounting Standards (SFAS) No. 162, The Hierarchy of Generally
      Accepted Accounting Principles, which will provide framework for selecting
      accounting principles to be used in preparing financial statements that are
      presented in conformity with U.S. generally accepted accounting principles
      (GAAP) for nongovernmental entities. With the issuance of SFAS No. 162, the
      GAAP
      hierarchy for nongovernmental entities will move from auditing literature to
      accounting literature. The Company is currently assessing the impact of SFAS
      No.
      162 on its financial position and results of operations.


16


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      2 -** **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





Merger
      and Corporate Restructure





On
      June
      26, 2006 the company entered into an agreement and plan of merger with Full
      Power Enterprises Global Limited, a holding company that owns all of the issued
      and outstanding shares of Shenzhen YuzhiLu Aviation Service Company Limited,
      the
      operating Company. In substance the agreement is a recapitalization of Shenzhen
      YuzhiLu Aviation Service Company’s capital structure.





For
      accounting purposes, the company accounted for the transaction as a reverse
      acquisition and with Full Power Enterprises Global Limited being the surviving
      entity. The Company did not recognize goodwill or any intangible assets in
      connection with the transaction. Prior to the Agreement, the company was an
      inactive corporation with no significant assets and liabilities.





The
      accompanying financial statements present the historical financial condition,
      results of operations and cash flows of the operating company prior to the
      merger.





**Note
      3 –** **TRADE
      DEPOSITS AND ADVANCES**




Trade
      deposits represents amount held by Airlines and deposits. As of September 30,
      2008 and December 31, 2007 the Company had paid $4,614,844 and $2,650,744 as
      trade deposits respectively.





During
      the year, the Company entered into a co-operation agreement with an unrelated
      company, to assist that company in their business development by participating
      in that business operations and providing working capital funding. As of
      September 30, 2008 and December 31, 2007 the Company has advanced this company
      $437,509 and $616,861 respectively.





**Note
      4 -** **COMPENSATED
      ABSENCES**




Regulation
      45 of local PRC labor law entitles employees to annual vacation leave after
      1
      year of service. In general all leave must be utilized annually, with proper
      notification. Any unutilized leave is cancelled.





**Note
      5 -** **INCOME
      TAXES**





The
      Company through its subsidiary Shenzhen Yuzhilu Aviation Service Co. is governed
      by the Income Tax Laws of the PRC. Operations in the United States of America
      have incurred net accumulated operating losses for income tax
      purposes.




Pursuant
      to the PRC Income Tax Laws, the Enterprise Income Tax (EIT) the Company has
      a
      varying statutory rate of 25%.





The
      following is a reconciliation of income tax expense as of September 30, 2008
      and
      2007.





**2008**
            
            **2007**Current
            
            $
            2,424,713
            
            $
            1,127,306Deferred
            
            
            -
            
            
            -Total
            
            $
            1,116,747
            
            $
            519,153


17


**UNIVERSAL
      TRAVEL GROUP**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008**





**Note
      6 -** **COMMITTMENTS**




The
      Company leases various office facilities under month-to-month arrangements.
      Rental expense for leases consisted of $ 132,446 and $48,559 for the nine months
      ended September 30, 2008 and 2007 respectively. The Company has future minimum
      lease obligations as of September 30, 2008 as follows:




2009
            
            $
            120,448Total
            
            $
            120,448




Pursuant
      to the Securities Purchase Agreement entered into On August 28, 2008, the
      Company agreed to enact an employee stock option plan, subject to the approval
      of the Buyers, for certain key members of management covering options to
      purchase a total of 6,600,000 shares of Common Stock of the Company (“Plan”)
      within 60 days of the closing of the Financing. The options to collectively
      purchase 1,100,000 shares of Common Stock under the said Plan shall vest on
      each
      anniversary of the grant until the end of six years, whereby all the options
      to
      purchase the 6,600,000 shares of Common Stock shall vest and be immediately
      exerciseable. The Company is also obligated, uder this Agreement to use its
      commercially reasonable efforts to effect a two-for-one (2:1) reverse split
      of
      its Common Stock within 180 days of the closing of the Financing. The Company
      and the Buyers in this Agreement entered into a Lock Up Agreement. Under the
      Lock-Up Agreement, the Principal Shareholder agreed that she would not sell
      any
      of the Lock-Up Shares, 5,000,000 shares of Common Stock and options to purchase
      2,000,000 shares of Common Stock, and shall not transfer such shares for twelve
      (12) months.




**Note
      7 – NOTES PAYABLE**





The
      following table summaries notes payable as of September 30, 2008:





Lender
            
            Due
                Date
            
            Interest
                Rate
            
            OutstandingChina
                Construction Bank
            
            
            July
                29, 2008
            
            
            8.55%
                per Annum
            
            $
            -0-





On
      September 20, 2007, the Company entered into a share exchange agreement with
      Foshan Overseas International Travel Service Co.(“FOI”), Ltd,, and the
      shareholders of FOI. The shareholders of FOI received a promissory note from
      the
      Company totaling $3,153,500. The promissory note bears no interest, with a
      maturity date of one year. Balance at September 30, 2008 and December 31, 2007
      was $-0- and $ 1,576,750 respectively.





**Note
      8 –** **COMMON
      STOCK**





In
      January 2007 the company adopted the Universal Travel Group 2007 Equity
      Incentive Plan. Under the terms of this Plan the Company issued 3,770,000 shares
      of the Company’s stock, valued at $1,583,400, for services rendered during the
      period from October 2, 2006 through February 28, 2007. As of June 30, 2007
      the
      financial Statements include a charge $633,360 with the remaining $950,040
      being
      expensed as of December 31, 2006.





Pursuant
      to a share exchange agreement, the Company issued 714,285 shares of newly issued
      shares of Common Stock to the former shareholders of Shenzhen Speedy Dragon
      Enterprises Limited. The shares were valued at $1,000,000, which was the fair
      value of the shares at the date of the exchange agreement. This amount is
      included in the cost of net assets and goodwill purchased.





Pursuant
      to a share exchange agreement, the Company issued 151,765 shares of newly issued
      shares of Common Stock to the former shareholders of Xian Golden Net Travel
      Serve Services, Inc. The shares were valued at $258,000, which was the fair
      value of the shares at the date the of the exchange agreement. This amount
      is
      included in the cost of net assets and goodwill purchased.


18




**UNIVERSAL
        TRAVEL GROUP**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2008**
 
 **Note
        8 –** **COMMON
        STOCK (CONTINUED)** ****
 
 Pursuant
        to a share exchange agreement, the Company issued 600,000 shares of newly
        issued
        shares of Common Stock to the former shareholders of Shanghai Lanbao Travel
        Services Co., Ltd. The shares were valued at $1,092,000, which was the fair
        value of the shares at the date of the exchange agreement. This amount is
        included in the cost of net assets and goodwill purchased.
 
 Pursuant
        to a share exchange agreement, the Company issued 1,122,986 shares of newly
        issued shares of Common Stock and a promissory note to the former shareholders
        of Foshan Overseas International Travel Service Co., Ltd.. The shares were
        valued at $ 3,346,500, which was the fair value of the shares at the date
        of
        exchange agreement. This amount is included in the cost of net assets and
        goodwill purchased.
 
 On
        August
        28, 2008, Universal Travel Group (the “Company”) entered into a Securities
        Purchase Agreement with Access America Fund, LP, Chinamerica Fund LP, Pope
        Investments II LLC, Heller Capital Investments, LLC, CGM as C/F Ronald I.
        Heller
        IRA, Investment Hunter, LLC, MARed Investments, High Capital Funding, LLC,
        and
        Merrill Lynch, Pierce, Fenner & Smith, FBO Beau L. Johnson (collectively,
        the “Buyers”) to sell to the Buyers 4,588,708 shares of common stock, par value
        $0.001 of the Company (“Common Stock”) and warrants to purchase 2,294,356 shares
        of Common Stock for an aggregate purchase price of $7,112,500 (the “Financing”).
 
 **Note
        9 –** **STOCK
        WARRANTS, OPTIONS, AND COMPENSATION**
 
 On
        February 4, 2008, under the terms of an equity financing commitment, the
        company
        issued 222,222 shares of common stock at the closing price of $2.70. The
        proceeds of $599,994 were paid directly to the shareholders of Foshan Overseas
        International Travel Service Co, for amount due them under Note obligation
        of
        the company.
 
 On
        May 7,
        2007, the Company issued, to a newly appointed Board member, an option grant
        to
        purchase 100,000 shares of common stock at the closing price at $ 1.95. The
        exercisable period is two years from issuance. On June 23, 2008, upon
        resignation, Board member has forfeited all options.
 
 On
        September 6, 2007, the Company issued, to a newly appointed Board member,
        an
        option grant to purchase 100,000 shares of common stock at the closing price
        at
        $ 2.85. The options are exercisable until June 1, 2017. On June 23, 2008,
        upon
        resignation, Board member has forfeited 66,667 options.
 
 On
        December 7, 2007, the Company issued, to another newly appointed Board member,
        an option grant to purchase 100,000 shares of common stock at the closing
        price
        of $ 3.75. The options are exercisable until November 1, 2017.
 Stock
        options— The option holder has no voting or dividend rights. The company records
        the expense of the stock options over the related vesting period. The options
        were valued using the Black-Scholes option-pricing model at the model at
        the
        date of grant stock option pricing. On May 28, 2008, upon resignation, Board
        member has forfeited 66,667 options.
 
 19
  **UNIVERSAL
        TRAVEL GROUP**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2008**
 
 On
        June
        24, 2008, the Company issued, to another newly appointed Board member, an
        option
        grant to purchase 100,000 shares of common stock at the closing price of
        $ 1.52.
        The options are exercisable until July 1, 2018. Stock options— The option holder
        has no voting or dividend rights. The company records the expense of the
        stock
        options over the related vesting period. The options were valued using the
        Black-Scholes option-pricing model at the model at the date of grant stock
        option pricing.
  Nine months endedSeptember 30, 2008Expected
                  Volatility
              
              
              146
              %Expected
                  term (in years)Richard
                  P. Randall
              
              
              9James
                  Treacy
              
              
              9Yizhao
                  Zhang
              
              
              10Expected
                  dividends
              
              
              -Risk-free
                  rate of return (weighted average)
              
              
              3
              %Weighted
                  average grant-date fair value
              
              $
              1.52-3.75
 
 Expected
        volatility is based on the historical volatility of the Company’s stock price.
        The expected term represents the estimated average period of time that the
        options remain outstanding. No dividend payouts were assumed, as the Company
        has
        no plans to declare dividends during the expected term of the stock options.
        The
        risk-free rate of return reflects the weighted average interest rate offered
        for
        zero coupon treasury bonds over the expected term of the options. Based upon
        this calculation and pursuant to, as EITF 96-18, the Company recorded a service
        period expense of $155,082 for the nine months ending September 30,
        2008.
 AggregateExercise
                
                Remaining
                
                IntrinsicTotal
                
                Price
                
                Life
                
                ValueOutstanding,
                    December 31, 2007
                
                
                300,000
                
                
                -
                
                
                -
                
                
                -Granted
                    in 2008
                
                
                100,000
                
                
                -
                
                
                -
                
                
                -Forfeited
                    in 2008
                
                
                (233,334
                )Exercised
                    in 2008
                
                
                -
                
                
                -
                
                
                -
                
                
                -Outstanding,
                    September 30, 2008
                
                
                166,666
  Pursuant
        to the Securities Purchase Agreement entered into On August 28, 2008, the
        Company issued warrants to purchase 2,294,356 shares of Common Stock. The
        unit
        purchase price was $1.55 per Common Share and a related Warrant for the purchase
        of one-half a Common Share, times the number of Common Shares purchased.
        Market
        Value of the Company’s stock on August 28, 2008 was $1.35. Accordingly
        approximately $45,887 of the amount recorded as additional paid in capital
        for
        the transaction is attributable to the sale these warrants. Each warrant
        has an
        Exercise Price of $2.71 and a term of 5 years from the date of
        issuance.
 
 20
 
 **UNIVERSAL
        TRAVEL GROUP**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2008**
 
 **Note
        10 -** **OTHER
        COMPREHENSIVE INCOME** ****
 
 Balances
        of related after-tax components comprising accumulated other comprehensive
        income, included in stockholders equity, at September 30, 2008 are as
        follows:
 
 Foreign Currency
                Translation
                Adjustment
              
              Accumulated
                Other
                Comprehensive
                IncomeBalance
                  December 31, 2007
              
              $
              545,164
              
              $
              545,164Changes
                  for 9 months ended September 30, 2008
              
              
              728,701
              
              
              728,701Balance
                  at September 30, 2008
              
              $
              1,273,865
              
              $
              1,273,865
 
 **Note
        11 -** **CURRENT
        VULNERABILITY DUE TO CERTAIN RISK FACTORS**
 
 The
        Company’s operations are carried out in the PRC. Accordingly, the Company’s
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, and by the general
        state
        of the PRC's economy. The Company’s business may be influenced by changes in
        governmental policies with respect to laws and regulations, anti-inflationary
        measures, currency conversion and remittance abroad, and rates and methods
        of
        taxation, among other things.
 
 **Note
        12 –** **MAJOR
        CUSTOMERS AND CREDIT RISK**
 
 The
        Company derives a portion of its income from various Airlines. Most revenue
        is
        cleared through IATA, a centralized reporting platform.
 
 **Note
        13 –** **ESCROW
        DEPOSITS**
 
 Pursuant
        to the Securities Purchase Agreement entered into On August 28, 2008, the
        Company agreed that it will deposit $500,000 of the proceeds in escrow to
        pay
        the fees and expenses in connection with a public relations and investor
        relations campaign. The Company also agreed that it engage a Chief Financial
        Officer who shall be fluent in English and Mandarin, who understands and
        has a
        working knowledge of United States generally accepted accounting principles,
        who
        has had significant responsibility for the preparation and filing of quarterly,
        annual and current reports with the SEC and who has experience working with
        or
        in United States capital market participants. The Company agreed that it
        would
        deposit $600,000 of the proceeds in escrow under the Escrow Agreement, to
        be
        released only upon the dual signatures of the CEO of the Company and the
        representative of the Buyers designated in the Escrow Agreement following
        the
        engagement of a Chief Financial Officer. As of September 30, 2008 $337,200
        has
        been prepaid out of this escrow account in connection with the public and
        investor relations campaign for services covering a one year period. This
        prepayment is being amortized accordingly.
 
 21
  **Item
        2.  Management’s Discussion and Analysis or Plan of
        Operation.**
 
 **Forward-Looking
        Statements: No Assurances Intended**
  *In
        addition to historical information, this Quarterly Report contains
        forward-looking statements, which are generally identifiable by use of the
        words
“believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,”
“projects,” or similar expressions. These forward-looking statements represent
        Management’s belief as to the future of Universal Travel Group.  Whether
        those beliefs become reality will depend on many factors that are not under
        management’s control.  Many risks and uncertainties exist that could cause
        actual results to differ materially from those reflected in these
        forward-looking statements. Readers are cautioned not to place undue reliance
        on
        these forward-looking statements. We undertake no obligation to revise or
        publicly release the results of any revision to these forward-looking
        statements.*
 
 **Business
        Overview**
 
 We
        are a
        travel services provider in the People’s Republic of China and are engaged in
        providing reservation, booking, and domestic and international travel and
        tourism services throughout the People’s Republic of China via the internet and
        through customer representatives.
 
 Under
        the
        theme " *Wings
        towards a more colorful life* ",
        our
        core services include tour packaging, booking services for air tickets and
        hotels as well as air cargo agency.
 
 In
        2007,
        we completed the acquisitions of Speedy Dragon, specializing in air cargo
        agency; Xi'an Golden Net, specializing in travel packaged tours; Shanghai
        LanBao, specializing in hotel reservations and Foshan Overseas International,
        a
        PRC-based company that handles both domestic and international travel inquiries.
 
 Our
        goal
        is to become the foremost leading online travel services provider in all
        fields
        of the tourism industry including the aviation service, cargo agency, hotel
        booking and tour packaging segments in the People’s Republic of
        China.
 
 **Major
        Factors Affecting the Travel Industry**
 
 A
        variety
        of factors affect the travel industry in the People’s Republic of China, and we
        shall be discussing these together with analysis of our results of operations
        and financial condition.
 
 Some
        of
        these factors include:
 ***(i)***
                ***Growth
                    in the Overall Economy and Demand for Travel Services in the
                    People’s
                    Republic of China***.
 We
        expect
        that our financial results will continue to be affected by the overall growth
        of
        the economy and demand for travel services in the People’s Republic of China and
        the rest of the world.
 
 According
        to the statistics from the website of National Bureau of Statistics of China,
        in
        February 2008, the People’s Republic of China’s gross domestic product (or
“GDP”) grew from US$1.7 trillion in 2003 to US$3.4 trillion in 2007,
        representing a compound annual growth rate of 16%. GDP per capita in the
        same
        period rose from US$1,273 to US$2,559, representing a 15% compound annual
        growth
        rate.
  22
 According
        to the statistics from the website of National Bureau of Statistics of China
        in
        February 2008, domestic tourism spending grew from US$41.6 billion in 2003
        to
        US$106.5 billion in 2007, representing a compound annual growth of 23%.
 
 According
        to the statistics from the website of Civil Aviation Administration of
        China:
 ·
                domestic
                    passenger transportation volume grew 15.7% in 2007 compared to
                    2006;
 ·
                domestic
                    cargo transportation volume grew 9.4% in 2007 compared to
                    2006;
 ·
                domestic
                    passenger transportation volume grew 5.8% for the first half
                    of 2008
                    compared to the same period of
                    2007;
 ·
                domestic
                    cargo transportation volume grew 6.6% for the first half of 2008
                    compare
                    to the same period of 2007.
 The
        slower growth of the aviation industry for the first half of 2008 reflects
        the
        seasonality that the first half of the year, which is slower. This seasonality
        factor is further compounded by the increase in oil prices and the snowstorms
        during February of this year.
 
 Subject
        to slight fluctuations, we believe that demand for travel services in the
        People’s Republic of China will continue to increase in the foreseeable future
        as the economy in the People’s Republic of China continues to grow. However, any
        adverse changes in economic conditions of the People’s Republic of China and the
        rest of the world, such as a slow-down of the Chinese economy, could have
        a
        material and adverse effect on the travel industry in the People’s Republic of
        China, which in turn would adversely affect our business.
 
 ***(ii)***
              ***Seasonality
                  in the Travel Service Industry***.
 
 The
        travel service industry is characterized by seasonal fluctuations and
        accordingly our revenue may vary from quarter to quarter. To date, revenue
        generated during the summer season of each year generally is higher than
        those
        generated during the winter season, mainly because the summer season coincides
        with the domestic peak business and leisure travel season. By contrast, the
        winter season includes the Chinese New Year holiday, during which our customers
        reduce their business activities.
  These
        seasonal trends are difficult to discern in our historical results because
        our
        revenue structure has changed due to our expansion over the years into more
        diversified fields and our revenue have grown substantially since inception.
 
 However,
        the impact of seasonal fluctuations in the travel industry is likely to have
        a
        more apparent impact on our future results.
 
 ***(iii)***
              ***Disruptions
                  in the Travel Industry***.
 
 Because
        the travel industry is sensitive to the weather, events and seasons, travelers
        tend to modify their travel plans according to such factors.
 
 Examples
        of some events which affected our travel industry this year are:
 
 ·
              the snow
                  storms which affected the People’s Republic of China during the Spring
                  Festival this year;
 ·
              the
                  Olympics in August which led to an increase in prices for hotels,
                  airline
                  and other travel-related costs and accordingly, a similar increase
                  in
                  travel products;
   23
  ·
              the
                  earthquakes in May 2008 which affected travel in the Sichuan
                  area;
 ·
              the
                  threat of terrorist attacks and increased security over international
                  events, such as the the Olympics, which affect our cargo agency
                  business;
                  and
 ·
              a
                  downturn in international economies such as in the United
                  States.
  **RESULTS
        OF OPERATIONS**
 
 *THREE
        MONTHS ENDED SEPTEMBER 30, 2008 AND 2007*
 
 The
        following table presents certain consolidated statement of operations
        information derived from the consolidated statements of income for three
        months
        ended September 30, 2008 and same period 2007.
 
 Revenue
        Segment Analysis
  Three months ended
                September 30, 2008
              
              Three months ended
                September 30, 2007
              
              Increase /
                (Decrease)
              
              PercentageRevenues
              
              $
              22,903,643
              
              $
              12,813,942
              
              $
              10,089,701
              
              
              78.7
              %Cost
                  of services
              
              
              (15,047,932
              )
              
              (8,308,363
              )
              
              (6,739,569
              )
              
              81.1
              %Gross
                  Profit
              
              
              7,855,711
              
              
              4,505,579
              
              
              3,350,132
              
              
              74.4
              %SG&A
              
              
              (1,917,323
              )
              
              (812,464
              )
              
              (1,104,859
              )
              
              136.0
              %Stock
                  based compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              N/AIncome
                  from operations
              
              
              5,938,388
              
              
              3,693,115
              
              
              2,245,273
              
              
              60.8
              %Other
                  income
              
              
              1,485
              
              
              -
              
              
              1,485
              
              
              N/AInterest
                  income
              
              
              9,941
              
              
              2,955
              
              
              6,986
              
              
              236.4
              %Interest
                  expenses
              
              
              (13,521
              )
              
              (21,442
              )
              
              7,921
              
              
              -36.9
              %Provision
                  for income taxes
              
              
              (1,307,966
              )
              
              (608,153
              )
              
              (699,813
              )
              
              115.1
              %Net
                  income
              
              $
              4,628,327
              
              $
              3,066,475
              
              $
              1,561,852
              
              
              50.9
              %
  For
        the
        three months ended September 30, 2008:
 
 Air-
                ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              $
              3,885,722
              
              
              17.0
              %
              $
              2,854,332
              
              
              12.5
              %
              $
              2,540,469
              
              
              11.1
              %
              $
              13,623,120
              
              
              59.5
              %
              $
              22,903,643Cost
                  of Services
              
              
              (196,454
              )
              
              1.3
              %
              
              (2,363,228
              )
              
              15.7
              %
              
              (944,149
              )
              
              6.3
              %
              
              (11,544,101
              )
              
              76.7
              %
              
              (15,047,932
              )Gross
                  Profit
              
              $
              3,689,268
              
              
              47.0
              %
              $
              491,104
              
              
              6.3
              %
              $
              1,596,320
              
              
              20.3
              %
              $
              2,079,019
              
              
              26.5
              %
              $
              7,855,711
 
 For
        the
        three months ended September 30, 2007:
 
 Air-
                ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              $
              2,250,090
              
              
              17.6
              %
              $
              5,126,348
              
              
              40.0
              %
              $
              915,465
              
              
              7.1
              %
              $
              4,522,039
              
              
              35.3
              %
              $
              12,813,942Cost
                  of Services
              
              
              (115,204
              )
              
              1.4
              %
              
              (3,957,959
              )
              
              47.6
              %
              
              (297,940
              )
              
              3.6
              %
              
              (3,937,260
              )
              
              47.4
              %
              
              (8,308,363
              )Gross
                  Profit
              
              $
              2,134,886
              
              
              47.4
              %
              $
              1,168,389
              
              
              25.9
              %
              $
              617,525
              
              
              13.7
              %
              $
              584,779
              
              
              13.0
              %
              $
              4,505,579
  24
  Revenue
  Revenue
        for the three months ended September 30, 2008 were $22,903,643 compared to
        $12,813,942 for the same period 2007, an increase of approximately 78.7%.
        This
        increase is due to the company ’ s
        strategic expansion into hotel reservation and packaged tours business via
        acquisitions of Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  Revenue
        from air-ticketing was $3,885,722 for the three months ended September 30,
        2008
        compared to $2,250,090 for the same period last year, an increase of
        approximately 72.7%. This increase is due to our efforts in constantly expanding
        our customer base and number of sales representatives and improving our
        commission rates through cooperation with first tier ticket
        vendors.
  Revenue
        generated from our cargo agency business for the three months ended September
        30, 2008 was $2,854,332 compared to $5,126,348 for the same period 2007,
        a
        decrease of approximately 44.3%. This decrease is due to the increase in
        global
        oil prices as well as the increase security for imports and exports due to
        the
        Beijing Olympics.
  Revenue
        generated from hotel reservations for the three months ended September 30,
        2008
        was $2,540,469 compared to $915,465 for the same period 2007, an increase
        of
        approximately 177.5%. This increase is attributable to the increase in
        reservations while the 2008 Beijing Olympics was being held in China and
        the
        traditional peak summer travel season.
  Revenue
        generated from travel-related services and packages for the three months
        ended
        September 30, 2008 was $13,623,120 compared to $4,522,039 for the same period
        2007, an increase of approximately 201.3%. This increase is due to the
        acquisition of Foshan Overseas International Travel Service Co., Ltd. the
        end of
        2007 and the increase in travel as a result of the 2008 Beijing Olympics
        and the
        traditional peak travel season in the summer.
  Gross
        Profit
  Gross
        profit for three months ended September 30, 2008 was $7,855,711 compared
        to
        $4,505,579 for three months ended September 30, 2007, an increase of
        approximately 74.4%. The increase in gross profit reflects the
        company ’ s
        strategic expansion into profitable hotel reservation and packaged tours
        business via acquisitions. The increase also reflects the results of an
        efficient management and control of our operations by an experienced management
        team.
  Gross
        profit margin for three months ended September 30, 2008 was 34.3% compared
        to
        35.2% for three months ended September 30, 2007. This decrease is primarily
        due
        to the acquisition of a lower gross margin businesses in 2007. Despite the
        short
        term decrease in gross profit margin, we believe that this strategic move
        will
        bring a higher long term value to guarantee stable and long term growth of
        our
        various business segments as a whole. We believe that our gross profit margins
        will improve as our four business segments begin to integrate.
  Selling,
        General and Administrative Expenses
  Selling,
        general and administrative expenses for three months ended September 30,
        2008
        totaled $1,917,323 compared to $812,464 for three months ended September
        30,
        2007, an increase of approximately 136.0%.
  Selling,
        general and administrative expenses were approximately 8.4% of revenue for
        three
        months ended September 30, 2008 as compared to 6.3% for three months ended
        September 30, 2007.
  The
        increase in selling, general and administrative expenses reflects the increase
        in our expenses as a result of acquiring of Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  Stock
        based compensation ** reflects
        standard amount of options issued to U.S independent directors.
  Interest
        expense for three months ended September 30, 2008 totaled $13,521 compared
        to
        $21,442 for three months ended September 30, 2007. The decrease in interest
        expense was the result of the repayment of all our outstanding bank loans
        in
        July 29, 2008.
  25
  Net
        Income
  Net
        income was $4,628,327 or 20.2% of revenue for three months ended September
        30,
        2008, compared to $3,066,475 or 23.9% of revenue for three months ended
        September 30, 2007.
  The
        increase in net income reflects the continued growth in our business and
        the
        income derived from the acquisitions of Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  The
        decrease in net income as a percentage of revenue in the result of the
        acquisitions of lower net income margin businesses. We believe that despite
        the
        short term decrease in net income margin, the acquisitions will bring a more
        stable and long term growth to our business as a whole. By integrating the
        different business segments and leveraging off the synergies between such
        segments, we believe that we will be able to improve our net income
        margin.
  *NINE
        MONTHS ENDED SEPTEMBER 30, 2008 AND 2007*
  The
        following table presents certain consolidated statement of operations
        information derived from the consolidated statements of income for nine months
        ended September 30, 2008 and same period 2007.
  Revenue
        Segment Analysis
 
 Nine months ended
                September 30, 2008
              
              Nine months ended
                September 30, 2007
              
              Increase /
                (Decrease)
              
              PercentageRevenues
              
              $
              47,324,686
              
              $
              26,799,445
              
              $
              20,525,241
              
              
              76.6
              %Cost
                  of services
              
              
              (32,465,680
              )
              
              (17,419,435
              )
              
              (15,046,245
              )
              
              86.4
              %Gross
                  Profit
              
              
              14,859,006
              
              
              9,380,010
              
              
              5,478,996
              
              
              58.4
              %SG&A
              
              
              (4,024,721
              )
              
              (2,222,407
              )
              
              (1,802,314
              )
              
              81.1
              %Stock
                  based compensation
              
              
              (155,802
              )
              
              (633,360
              )
              
              477,558
              
              
              -75.4
              %Income
                  from operations
              
              
              10,678,483
              
              
              6,524,243
              
              
              4,154,240
              
              
              63.7
              %Other
                  income
              
              
              8,758
              
              
              -
              
              
              8,758
              
              
              N/AInterest
                  income
              
              
              21,881
              
              
              17,783
              
              
              4,098
              
              
              23.0
              %Interest
                  expenses
              
              
              (78,525
              )
              
              (42,724
              )
              
              (35,801
              )
              
              83.8
              %Provision
                  for income taxes
              
              
              (2,424,713
              )
              
              (1,127,306
              )
              
              (1,297,407
              )
              
              115.1
              %Net
                  income
              
              $
              8,205,884
              
              $
              5,371,996
              
              $
              2,833,888
              
              
              52.8
              %
 
 For
        the
        nine months ended September 30, 2008:
 
 Air-
                ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              $
              7,251,122
              
              
              15.3
              %
              $
              8,520,022
              
              
              18.0
              %
              $
              4,564,765
              
              
              9.6
              %
              $
              26,988,777
              
              
              57.0
              %
              $
              47,324,686Cost
                  of Services
              
              
              (369,567
              )
              
              1.1
              %
              
              (7,259,803
              )
              
              22.4
              %
              
              (1,643,809
              )
              
              5.1
              %
              
              (23,192,501
              )
              
              71.4
              %
              
              (32,465,680
              )Gross
                  Profit
              
              $
              6,881,555
              
              
              46.3
              %
              $
              1,260,219
              
              
              8.5
              %
              $
              2,920,956
              
              
              19.7
              %
              $
              3,796,276
              
              
              25.5
              %
              $
              14,859,006
 
 For
        the
        nine months ended September 30, 2007:
 
 Air-
                ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              $
              5,755,908
              
              
              21.5
              %
              $
              15,606,033
              
              
              58.2
              %
              $
              915,465
              
              
              3.4
              %
              $
              4,522,039
              
              
              16.9
              %
              $
              26,799,445Cost
                  of Services
              
              
              (297,010
              )
              
              1.7
              %
              
              (12,887,225
              )
              
              74.0
              %
              
              (297,940
              )
              
              1.7
              %
              
              (3,937,260
              )
              
              22.6
              %
              
              (17,419,435
              )Gross
                  Profit
              
              $
              5,458,898
              
              
              58.2
              %
              $
              2,718,808
              
              
              29.0
              %
              $
              617,525
              
              
              6.6
              %
              $
              584,779
              
              
              6.2
              %
              $
              9,380,010
  26
  Revenue
  Revenue
        for the nine months ended September 30, 2008 was $47,324,686 compared to
        $26,799,445 for nine months ended September 30, 2007, an increase of
        approximately 76.6%. This increase is attributable to our organic growth
        as well
        as our expansion into the air cargo agency, packaged tours services and hotel
        booking services business through the acquisitions of Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  Gross
        Profit
  Gross
        profit for the nine months ended September 30, 2008 was $14,859,006 compared
        to
        $9,380,010 for nine months ended September 30, 2007, an increase of
        approximately 58.4%. The increase in gross profit reflects our aggressive
        growth
        strategy as exemplified by continued growth in our traditional customer base
        and
        the acquisitions of Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  Gross
        profit margin for nine months ended September 30, 2008 was 31.4% compared
        to
        35.0% for nine months ended September 30, 2007. This decrease is primarily
        due
        to the acquisition of a lower gross margin businesses in 2007. Despite the
        short
        term decrease in gross profit margin, we believe that this strategic move
        will
        bring a higher long term value to guarantee stable and long term growth of
        our
        various business segments as a whole. We believe that our gross profit margins
        will improve as our four business segments begin to integrate and leverage
        off
        the synergism of these various segments.
  Selling,
        general and administrative expenses
  Selling,
        general and administrative expenses for nine months ended September 30, 2008
        totaled $4,024,721 compared to $2,222,407 for nine months ended September
        30,
        2007. Selling, general and administrative expenses was approximately 8.5%
        of
        revenue for nine months ended September 30, 2008 as compared to 8.3% for
        nine
        months ended September 30, 2007. The increase in selling, general and
        administrative expenses is a result acquiring Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  Stock-based
        compensation ** reflects
        standard amount of options issued to U.S independent directors.
  Interest
        expense for nine months ended September 30, 2008 totaled $78,525 compared
        to
        $42,724 for nine months ended September 30, 2007, an increase of approximately
        83.8%. The increase in interest expense is a result of the expenses incurred
        from short term bank loans to support our expansion while our market valuation
        was still low.
  Net
        Income
  Net
        income was $8,205,884 or 17.3% of revenue for the nine months ended September
        30, 2008, compared to $5,371,996 or 20.0% of revenue for the nine months
        ended
        September 30, 2007. The increase in net income reflects the continued growth
        in
        our business and the additional income derived through Xi ’ an
        Golden
        Net Travel Service Company Limited, Shanghai Lanbao Travel Service Company
        Limited and Foshan Overseas International Travel Service Co., Ltd.
  The
        decrease in net income as a percentage of revenues reflects the acquisitions
        of
        lower net income margin businesses. However, we believe that despite the
        short
        term decrease in net income margin, these acquisitions will bring a more
        stable
        and long term growth to our business as a whole. We anticipate improving
        our net
        income margins by integrating our four business segments and leveraging off
        the
        synergies created.
  We
        believe a more meaningful comparison should be made for the third quarter
        ended
        September 30, 2008 to the second quarter ended June 30, 2008 because it will
        reveal the progress from quarter to quarter of all our business segments
        including our two new business segments, namely the hotel reservations and
        travel packaged services businesses.
  27


THIRD
        QUARTER ENDED SEPTEMBER 30, 2008 AND THE SECOND QUARTER ENDED JUNE 30,
        2008
  The
        following table presents certain consolidated statement of operations
        information derived from the consolidated statements of income for the three
        months ended September 30, 2008 and June 30, 2008.
  Revenue
        Segment Analysis
  Three months ended
                September 30, 2008
              
              Three months ended
                June 30, 2008
              
              Increase /
                (Decrease)
              
              PercentageRevenues
              
              $
              22,903,643
              
              $
              14,344,739
              
              
              8,558,904
              
              
              59.7
              %Cost
                  of services
              
              
              (15,047,932
              )
              
              (10,184,990
              )
              
              (4,862,942
              )
              
              47.7
              %Gross
                  Profit
              
              
              7,855,711
              
              
              4,159,749
              
              
              3,695,962
              
              
              88.9
              %Selling,
                  General and Administrative Expenses
              
              
              (1,917,323
              )
              
              (1,251,876
              )
              
              (665,447
              )
              
              53.2
              %Stock
                  based compensation
              
              
              -
              
              
              (45,790
              )
              
              45,790
              
              
              -100.0
              %Income
                  from operations
              
              
              5,938,388
              
              
              2,862,083
              
              
              3,076,305
              
              
              107.5
              %Other
                  income
              
              
              1,485
              
              
              5,504
              
              
              (4,019
              )
              
              -73.0
              %Interest
                  income
              
              
              9,941
              
              
              10,525
              
              
              (584
              )
              
              -5.5
              %Interest
                  expenses
              
              
              (13,521
              )
              
              (28,297
              )
              
              14,776
              
              
              -52.2
              %Provision
                  for income taxes
              
              
              (1,307,966
              )
              
              (736,122
              )
              
              (571,844
              )
              
              77.7
              %Net
                  income
              
              $
              4,628,327
              
              $
              2,113,693
              
              
              2,514,634
              
              
              119.0
              %
  For
        the
        third quarter ended September 30, 2008
  Air-ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              
              3,885,722
              
              
              17.0
              %
              
              2,854,332
              
              
              12.5
              %
              
              2,540,469
              
              
              11.1
              %
              
              13,623,120
              
              
              59.5
              %
              
              22,903,643Cost
                  of Services
              
              
              (196,454
              )
              
              1.3
              %
              
              (2,363,228
              )
              
              15.7
              %
              
              (944,149
              )
              
              6.3
              %
              
              (11,544,101
              )
              
              76.7
              %
              
              (15,047,932
              )Gross
                  Profit
              
              
              3,689,268
              
              
              47.0
              %
              
              491,104
              
              
              6.3
              %
              
              1,596,320
              
              
              20.3
              %
              
              2,079,019
              
              
              26.5
              %
              
              7,855,711
  For
        the
        second quarter ended June 30, 2008
  Air-ticketing
              
              Percentage
                of Revenue
                (%)
              
              Cargo
                Agency
              
              Percentage
                of Revenue
                (%)
              
              Hotel
              
              Percentage
                of Revenue
                (%)
              
              Travel
              
              Percentage
                of Revenue
                (%)
              
              TotalRevenue
              
              
              1,936,520
              
              
              13.5
              %
              
              2,541,764
              
              
              17.7
              %
              
              1,411,818
              
              
              9.8
              %
              
              8,454,637
              
              
              58.9
              %
              
              14,344,739Cost
                  of Services
              
              
              (99,612
              )
              
              1.0
              %
              
              (2,287,955
              )
              
              22.5
              %
              
              (504,988
              )
              
              5.0
              %
              
              (7,292,435
              )
              
              71.6
              %
              
              (10,184,990
              )Gross
                  Profit
              
              
              1,836,908
              
              
              44.2
              %
              
              253,809
              
              
              6.1
              %
              
              906,830
              
              
              21.8
              %
              
              1,162,202
              
              
              27.9
              %
              
              4,159,749
  28
  Revenue
  Revenue
        for the three months ended September 30, 2008 was $22,903,643 compared to
        $14,344,739 for the three months ended June 30, 2008, an increase of
        approximately 59.7%. This increase is attributable primarily to the growth
        in
        tourism and travel and the seasonality of sales.
  We
        believe that the package tour business would bring more stable growth to
        our
        business and has a better business development potential alongside our
        air-ticketing and hotel reservation business segments . By contrast, because
        of
        the increase in global oil prices and the increased security over imports
        and
        exports as a result of the Beijing Olympics, our cargo agency
        business ’ s growth
        has been somewhat stifled.
  Gross
        Profit
  Gross
        profit for the three months ended September 30, 2008 was $7,855,711 compared
        to
        $4,159,749 for the three months ended June 30, 2008, an increase of
        approximately 88.9%. The increase in gross profit is a result of our aggressive
        growth strategy as to expand our various business segments
        organically.
  Gross
        profit margin for the three months ended September 30, 2008 was 34.3% compared
        to 29.0% for the three months ended June 30, 2008. We managed to successfully
        maintain our gross profit margin despite the earthquakes in the Sichuan province
        which adversely affected the travel industry there. We attribute this success
        from the synergies and diversity of our various business segments.
  Selling,
        General and Administrative Expenses
  Selling,
        general and administrative expenses for the three months ended September
        30,
        2008, totaled $1,917,323 compared to $1,251,876 for the three months ended
        June
        30, 2008, an increase of approximately 53.2%.
  Selling,
        general and administrative expenses were approximately 8.4% of revenue in
        the
        three months ended September 30, 2008 as compared to 8.7% for the three months
        ended June 30, 2008. The decrease in selling, general and administrative
        expenses is *in
        tandem*  with
        the
        growth of our business and the slight increase in selling, general and
        administrative expenses as a percentage of revenue reflects effective control
        over expenses in spite of a fast growing business.
  Stock
        based compensation ** reflects
        standard amount of options issued to U.S independent directors.
  Interest
        expense for the three months ended September 30, 2008 totaled $13,521 compared
        to $28,297 for the three months ended June 30, 2008. The decrease in interest
        expense is a result of us paying down the principal of our bank loans
        gradually.
  Net
        Income
  Net
        income was $4,628,327 or 20.2% of revenue for the three months ended September
        30, 2008, compared to $2,113,693 or 14.7% of revenues for the three months
        ended
        June 30, 2008. The increase in net income reflects the continued growth in
        our
        business and the increase in net income as a percentage of revenue is a result
        of effective management of cost of services as well as our successful strategic
        focus on online integration, which provides synergies among our diversified
        business segments.
  LIQUIDITY
        AND CAPITAL RESOURCES
  Cash
        for
        operations and liquidity needs are funded primarily through cash flows from
        operations and short-term borrowings. Cash and cash equivalents were $12,564,894
        at September 30, 2008. Current assets and current liabilities as of September
        30, 2008, were $28,470,022 and $4,342,482, yielding working capital of
        $24,127,540. We believe that the funds available to us from operations are
        adequate to meet our operating needs in 2008. For the nine months ended
        September 30, 2008, net cash provided by operating activities was approximately
        $2,891,348, which resulted primarily from our organic operations and effective
        management of cash flow.
  29
  On
        August
        28, 2008, the Company entered into a Securities Purchase Agreement with Access
        America Fund, LP, Chinamerica Fund LP, Pope Investments II LLC, Heller Capital
        Investments, LLC, CGM as C/F Ronald I. Heller IRA, Investment Hunter, LLC,
        MARed
        Investments, High Capital Funding, LLC, and Merrill Lynch, Pierce, Fenner
&
Smith, FBO Beau L. Johnson (collectively, the “Buyers”) to sell to the Buyers
        4,588,708 shares of common stock, par value $0.001 of the Company (“Common
        Stock”) and warrants to purchase 2,294,356 shares of Common Stock for an
        aggregate purchase price of $7,112,500 (the “Financing”). Meanwhile, Pursuant to
        the Securities Purchase Agreement, the Company agreed that it will deposit
        $500,000 of the proceeds in escrow to pay the fees and expenses in connection
        with a public relations and investor relations campaign. The Company also
        agreed
        that it engage a Chief Financial Officer who shall be fluent in English and
        Mandarin, who understands and has a working knowledge of United States generally
        accepted accounting principles, who has had significant responsibility for
        the
        preparation and filing of quarterly, annual and current reports with the
        SEC and
        who has experience working with or in United States capital market participants.
        The Company agreed that it would deposit $600,000 of the proceeds in escrow
        under the Escrow Agreement, to be released only upon the dual signatures
        of the
        CEO of the Company and the representative of the Buyers designated in the
        Escrow
        Agreement following the engagement of a Chief Financial Officer. The balance
        of
        the escrow as of September 30, 2008 is $762,800.65.
  Capital
        expenditure
  Total
        capital expenditure for nine months ended September 30, 2008 was $27,742
        to
        purchase fixed assets, primarily machinery and equipment. Management is
        considering a strategic investment of 600 full service kiosk terminals to
        offer
        customers easier access to the company's core services in the rest of the
        time
        of the year, which will substantially increase in capital expenditures.
  Working
        Capital Requirements
  Historically,
        operations and short term financing have been sufficient to meet our cash
        needs.
        We believe that we will be able to generate revenue from operations to provide
        the necessary cash flow to meet anticipated working capital requirements
        for at
        least the following 12 months. However, our actual working capital needs
        for the
        long and short term will depend upon numerous factors, including operating
        results, competition, the opportunity to acquire or start-up new businesses,
        and
        the availability of credit facilities, none of which can be predicted with
        certainty. Due to our rapid growth and expansion, our need for additional
        capital may arise, and management will seek to raise capital for the maintenance
        and expansion of our operations through the issuance of debt or equity if
        necessary. There can be no assurance that such financing will be available
        or,
        if available, will be on terms acceptable to us. Future expansion will be
        limited by the availability of financing.
  Off
        Balance Sheet Arrangements
  We
        have
        never entered into any off-balance sheet financing arrangements and have
        never
        established any special purpose entities. We have not guaranteed any debt
        or
        commitments of other entities or entered into any options on non-financial
        assets.
 
 **Item
        3.**  **Quantitative
        and Qualitative Disclosures About Market Risk.**
 
 We
        currently do not hold or use any derivative or other financial instruments
        that
        expose us to substantial market risk and we have no foreign exchange
        contracts.
 
 We
        are
        exposed to foreign exchange risk arising from fluctuations in the exchange
        rate
        between U.S. Dollars and Renminbi. Our operations are located in the People’s
        Republic of China and substantially all of our revenues and assets are
        denominated in Renminbi; however our reporting currency is the U.S. Dollar
        and
        some of our expenses are denominated in U.S. Dollars. As a result, our financial
        results are potentially subject to the impact of changes in value between
        U.S.
        Dollars and Renminbi. If the Renminbi depreciates relative to the U.S. Dollar,
        the value of our revenues, earnings and assets as reported in our financial
        statements will decline.
  30
  **Item
        4.**  **Controls
        and Procedures.**
 
 We
        maintain disclosure controls and procedures that are designed to ensure that
        information required to be disclosed in our reports filed pursuant to the
        Exchange Act is recorded, processed, summarized and reported within the time
        periods specified in the SEC's rules, regulations and related forms, and
        that
        such information is accumulated and communicated to our principal executive
        officer and principal financial officer, as appropriate, to allow timely
        decisions regarding required disclosure.
 
 Based
        on
        an evaluation of our disclosure controls and procedures as of September 30,
        2008, and the financial statements contained in this report, our principal
        executive officer and our principal financial officer have determined that
        our
        disclosure controls and procedures were effective as of the end of the period
        covered by this report.
 
 There
        were no changes in our internal control over financial reporting (as such
        term
        is defined in Rule 13A-15(F) under the Exchange Act during our quarter ended
        September 30, 2008, that materially affected or are reasonably likely to
        materially affect our internal control over financial reporting.
  31
 **PART
          II - OTHER INFORMATION**
 
 **Item
          1.**  **Legal
          Proceedings.**
 
 There
          is
          no material legal proceeding pending against us.
 
 **Item
          2.**  **Unregistered
          Sales of Equity Securities and Use of Proceeds**
 
 Please
          refer to the Company’s Current Report on Form 8-K filed on September 3,
          2008.
  **Item
          3.**   **Defaults
          Upon Senior Securities**
 
 None.
  **Item
          4.**  **Submission
          of Matters to a Vote of Security Holders.**
 
 None.
 
 **Item
          5.**  **Other
          Information**
 
 Not
          applicable.
 
 **Item
          6.**  **Exhibits**
  Copies
          of
          the following documents are included as exhibits to this report pursuant
          to Item
          601 of Regulation S-K.
 
 **Exhibit
                  No.**
              
              **SEC
                  Ref. No.**
              
              **Title
                  of Document**1
              
              31.1
              
              Certification
                  of the Principal Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 20022.
              
              31.2
              
              Certification
                  of the Principal Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 20023
              
              32.1
              
              Certification
                  of the Principal Executive Officer pursuant to U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002*4
              
              32.2
              
              Certification
                  of the Principal Financial Officer pursuant to U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002*
 
 ***** The
        Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes
        of
        Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
        otherwise subject to liability under that section, nor shall it be deemed
        incorporated by reference in any filing under the Securities Act of 1933,
        as
        amended, or the Exchange Act, except as expressly set forth by specific
        reference in such filing.
  32
 
 **SIGNATURES**
 
 In
        accordance with the Exchange Act, the registrant caused this report to be
        signed
        on its behalf by the undersigned thereunto duly authorized.
  Date:
        November 5, 2008
  UNIVERSAL
                  TRAVEL GROUPBy:
              /s/
                  Jiangping JiangJiangping
                  Jiang
                Chairman
                  and Chief Executive Officer
                (Principal
                  Executive Officer)By:
              /s/ Huijie
                  GaoHuijie
                  Gao
                Vice
                  President of Corporate Finance
                (Principal
                  Financial Officer)




33