UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)
 
 S
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
quarterly period ended March 31, 2009
 
 £
              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 ororganization)
                
                (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
      lastreport)





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.  YesSNo£





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  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              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£NoS





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 £    No
£





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 May
6, 2009, there are 13,873,969 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
              
              F-3Consolidated
      Balance Sheets as of  March 31, 2009 (Unaudited) and December
      31, 2008
              
              F-4Consolidated
      Statements of Income for the Three Months Ended March 31, 2009 and 2008
      (Unaudited)
              
              F-5Consolidated
      Statements of Cash Flows for the Three Months Ended March 31, 2009 and
      2008 (Unaudited)
              
              F-6Consolidated
      Statements of Stockholders' Equity
              
              F-7Notes
      to Consolidated Financial Statements as of  March 31, 2009
      (Unaudited)
              
              F-8Item
      2.  Management’s Discussion and Analysis of Financial Condition or
      Plan of Operation
              
              4Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk.
              
              9Item
      4.  Controls and Procedures
              
              9PART
      II.
              
              Other
      Information
              
              10Item
      1.  Legal Proceedings
              
              10Item
      1A. Risk Factors
              
              10Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
              
              10Item
      3.  Defaults Upon Senior Securities
              
              10Item
      4.  Submission of Matters to a Vote of Security
    Holders.
              
              10Item
      5.  Other Information
              
              10Item
      6.  Exhibits
              
              10Signatures
              
              10





(Inapplicable
items have been omitted)




2




PART
I - FINANCIAL INFORMATION





Item
1. Financial Statements (Unaudited)





3





UNIVERSAL
TRAVEL GROUP





CONSOLIDATED
FINANCIAL STATEMENTS





MARCH
31, 2009




F-1




TABLE
OF CONTENTS





Report of Independent Registered Public Accounting
      Firm
                            F-3Consolidated Balance Sheets
                            F-4Consolidated Statements of
      Income
                            F-5Consolidated Statements of Cash
      Flows
                            F-6-7Consolidated Statements of Stockholders’
      Equity
                            F-8Notes to Consolidated Financial
      Statements
                            F-9-23




F-2




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 March 31, 2009 and the consolidated statements of operations for the
three months ended March 31, 2009 and 2008 and consolidated statements of cash
flows and shareholders equity for the three 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, 2008 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 3, 2009 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, 2008, 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.


May 2,
2009





F-3




UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
BALANCE SHEETS


MARCH
31, 2009 AND DECEMBER 31, 2008





3/31/2009
                                
                                
                                12/31/2008(Unaudited)
                                
                                
                                (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
                                
                                $
                                19,171,277
                                
                                
                                $
                                16,204,531Accounts
      receivable, net
                                
                                
                                12,913,177
                                
                                
                                
                                10,715,206Other
      ` and deposits, net
                                
                                
                                431,979
                                
                                
                                
                                141,413Trade
      deposit
                                
                                
                                4,567,822
                                
                                
                                
                                6,737,521Advances
                                
                                
                                438,981
                                
                                
                                
                                438,468Escrow
      deposits
                                
                                
                                162,301
                                
                                
                                
                                762,800Prepaid
      expenses
                                
                                
                                196,154
                                
                                
                                
                                319,257Total
      Current Assets
                                
                                
                                37,881,691
                                
                                
                                
                                35,319,196Property
      & equipment, net
                                
                                
                                1,473,656
                                
                                
                                
                                273,340Intangible
      assets
                                
                                
                                280,134
                                
                                
                                
                                307,335Goodwill
                                
                                
                                13,526,809
                                
                                
                                
                                13,526,80915,280,599
                                
                                
                                
                                14,107,484Total
      Assets
                                
                                $
                                53,162,290
                                
                                
                                $
                                49,426,680LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable and accrued expenses
                                
                                $
                                2,912,428
                                
                                
                                $
                                2,219,156Customer
      deposits
                                
                                
                                1,405,967
                                
                                
                                
                                1,047,250Income
      tax payable
                                
                                
                                975,038
                                
                                
                                
                                1,759,402Total
      Current Liabilities
                                
                                
                                5,293,433
                                
                                
                                
                                5,025,808Stockholders'
      EquityCommon
      stock, $.001 par value, 70,000,000shares
      authorized, 13,873,969 and 13,873,969 issued and
    outstanding
                                
                                
                                13,873
                                
                                
                                
                                13,873Additional
      paid in capital
                                
                                
                                16,026,116
                                
                                
                                
                                15,861,116Other
      comprehensive income
                                
                                
                                1,554,873
                                
                                
                                
                                1,520,166Statutory
      reserve
                                
                                
                                372,144
                                
                                
                                
                                372,144Retained
      earnings
                                
                                
                                29,901,851
                                
                                
                                
                                26,633,573Total
      Stockholders' Equity
                                
                                
                                47,868,857
                                
                                
                                
                                44,400,872Total
      Liabilities and Stockholders' Equity
                                
                                $
                                53,162,290
                                
                                
                                $
                                49,426,680





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





F-4





UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
STATEMENTS OF INCOME


FOR
THE THREE MONTHS ENDED MARCH
31,


(UNAUDITED)




2009
                                          
                                          
                                          2008Gross
      revenues,
                                          
                                          $
                                          17,369,678
                                          
                                          
                                          $
                                          10,076,304Cost
      of services
                                          
                                          
                                          11,020,899
                                          
                                          
                                          
                                          7,232,758Gross
      Profit
                                          
                                          
                                          6,348,779
                                          
                                          
                                          
                                          2,843,546Selling,
      general and administrative expenses
                                          
                                          
                                          1,799,879
                                          
                                          
                                          
                                          855,522Stock
      based compensation
                                          
                                          
                                          165,000
                                          
                                          
                                          
                                          110,012Total
      expenses
                                          
                                          
                                          1,964,879
                                          
                                          
                                          
                                          1,103,835Income
      from operations
                                          
                                          
                                          4,383,900
                                          
                                          
                                          
                                          1,878,012Other
      Income (Expense)Loss
      on disposal of assets
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (1,104
                                          )Other
      income
                                          
                                          
                                          3,828
                                          
                                          
                                          
                                          2,874Interest
      income
                                          
                                          
                                          25,816
                                          
                                          
                                          
                                          1,415Interest
      expense
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (36,707
                                          )Total
      Other Income (Expense)
                                          
                                          
                                          29,644
                                          
                                          
                                          
                                          (33,522
                                          )Income
      before income taxes
                                          
                                          
                                          4,413,544
                                          
                                          
                                          
                                          1,844,490Provision
      for income taxes
                                          
                                          
                                          1,145,266
                                          
                                          
                                          
                                          380,625Net
      income
                                          
                                          $
                                          3,268,278
                                          
                                          
                                          $
                                          1,463,865Net
      income per common shareBasic
                                          
                                          $
                                          .24
                                          
                                          
                                          $
                                          .12Diluted
                                          
                                          $
                                          .21
                                          
                                          
                                          $
                                          .12Weighted
      average common shares outstandingBasic
                                          
                                          
                                          13,873,969
                                          
                                          
                                          
                                          12,306,715Diluted
                                          
                                          
                                          15,640,635
                                          
                                          
                                          
                                          12,406,715





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





F-5





UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE THREE MONTHS ENDED MARCH
31,


(UNAUDITED)




2009
                                                                    
                                                                    
                                                                    2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                                                                    
                                                                    $
                                                                    3,268,278
                                                                    
                                                                    
                                                                    $
                                                                    1,463,865Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                                                    
                                                                    
                                                                    87,283
                                                                    
                                                                    
                                                                    
                                                                    19,489Provision
      for doubtful accounts
                                                                    
                                                                    
                                                                    9,205
                                                                    
                                                                    
                                                                    
                                                                    2,961Stock
      based compensation
                                                                    
                                                                    
                                                                    165,000
                                                                    
                                                                    
                                                                    
                                                                    110,102Loss
      on asset disposal
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,105(Increase)
      / decrease in assets:Accounts
      receivable
                                                                    
                                                                    
                                                                    (2,207,176
                                                                    )
                                                                    
                                                                    
                                                                    455,846Other
      receivable
                                                                    
                                                                    
                                                                    (290,566
                                                                    )
                                                                    
                                                                    
                                                                    751,167Advances
                                                                    
                                                                    
                                                                    (513
                                                                    )
                                                                    
                                                                    
                                                                    (24,896
                                                                    )Due
      from shareholder
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,309,981Prepaid
      expenses
                                                                    
                                                                    
                                                                    123,103
                                                                    
                                                                    
                                                                    
                                                                    (2,492
                                                                    )Trade
      deposits
                                                                    
                                                                    
                                                                    2,169,699
                                                                    
                                                                    
                                                                    
                                                                    (938,405
                                                                    )Escrow
      deposits
                                                                    
                                                                    
                                                                    600,499
                                                                    
                                                                    
                                                                    
                                                                    -Increase
      / (decrease) in current liabilities:Accounts
      payable and accrued expenses
                                                                    
                                                                    
                                                                    693,272
                                                                    
                                                                    
                                                                    
                                                                    (343,884
                                                                    )Customer
      deposits
                                                                    
                                                                    
                                                                    358,717
                                                                    
                                                                    
                                                                    
                                                                    (120,045
                                                                    )Income
      tax payable
                                                                    
                                                                    
                                                                    (784,364
                                                                    )
                                                                    
                                                                    
                                                                    (311,101
                                                                    )Total
      Adjustments
                                                                    
                                                                    
                                                                    924,159
                                                                    
                                                                    
                                                                    
                                                                    909,828Net
      cash provided by(used in) operating activities
                                                                    
                                                                    
                                                                    4,192,437
                                                                    
                                                                    
                                                                    
                                                                    2,373,693CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property & equipment
                                                                    
                                                                    
                                                                    (1,260,398
                                                                    )
                                                                    
                                                                    
                                                                    (5,647
                                                                    )Proceeds
      from asset disposals
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    663Acquisition
      deposits
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,453,050Net
      cash used by Investing activities
                                                                    
                                                                    
                                                                    (1,260,398
                                                                    )
                                                                    
                                                                    
                                                                    1,448,066CASH
      FLOWS FROM FINANCING ACTIVITIES(Repayments)Proceeds
      from bank loan – net
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (78,347
                                                                    )Proceeds
      of equity financing
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    599,994Note
      payable – others
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (977,019
                                                                    )Net
      cash provided by financing activities
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (453,372
                                                                    )Effect
      of exchange rate changes on cash and cash equivalents
                                                                    
                                                                    
                                                                    34,707
                                                                    
                                                                    
                                                                    
                                                                    351,171Net
      change in cash and cash equivalents
                                                                    
                                                                    
                                                                    2,966,746
                                                                    
                                                                    
                                                                    
                                                                    3,719,558Cash
      and cash equivalents, beginning balance
                                                                    
                                                                    
                                                                    16,204,531
                                                                    
                                                                    
                                                                    
                                                                    2,671,684Cash
      and cash equivalents, ending balance
                                                                    
                                                                    $
                                                                    19,171,277
                                                                    
                                                                    
                                                                    $
                                                                    6,391,242SUPPLEMENTAL
      DISCLOSURES:Cash
      paid during the year for:Interest
      payments
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    36,707Income
      Taxes
                                                                    
                                                                    $
                                                                    1,929,630
                                                                    
                                                                    
                                                                    $
                                                                    691,726





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




F-6




UNIVERSAL
TRAVEL GROUP


CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY


FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND THE YEAR ENDED DECEMBER 31,
2008




Common Stock
                                                  
                                                  
                                                  AdditionalPaid InCapital
                                                  
                                                  
                                                  OtherComprehensiveIncome
                                                  
                                                  
                                                  RetainedEarnings
                                                  
                                                  
                                                  StatutoryReserve
                                                  
                                                  
                                                  TotalStockholders’EquityShares
                                                  
                                                  
                                                  AmountBalanceDecember
      31, 2008
                                                  
                                                  
                                                  13,873,969
                                                  
                                                  
                                                  $
                                                  13,873
                                                  
                                                  
                                                  $
                                                  15,861,116
                                                  
                                                  
                                                  $
                                                  1,520,166
                                                  
                                                  
                                                  $
                                                  26,633,573
                                                  
                                                  
                                                  $
                                                  372,144
                                                  
                                                  
                                                  $
                                                  44,400,872Foreign
      currency translation adjustments
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  34,707
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  34,707Stock
      Based Compensation
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  165,000
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  165,000Income
      for the three months ended 3/31/2009
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  3,268,278
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  3,268,278Balance
      March 31, 2009
                                                  
                                                  
                                                  13,873,969
                                                  
                                                  
                                                  $
                                                  13,873
                                                  
                                                  
                                                  $
                                                  16,026,116
                                                  
                                                  
                                                  $
                                                  1,554,873
                                                  
                                                  
                                                  $
                                                  29,901,851
                                                  
                                                  
                                                  $
                                                  372,144
                                                  
                                                  
                                                  $
                                                  47,868,857BalanceDecember
      31, 2007
                                                  
                                                  
                                                  12,270,326
                                                  
                                                  
                                                  $
                                                  12,269
                                                  
                                                  
                                                  $
                                                  8,626,075
                                                  
                                                  
                                                  $
                                                  545,164
                                                  
                                                  
                                                  $
                                                  12,101,396
                                                  
                                                  
                                                  $
                                                  372,144
                                                  
                                                  
                                                  $
                                                  21,657,048Foreign
      currency translation adjustments
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  975,002
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  975,002Forfeited
      options
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (683,437
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (683,437
                                                  )Stock
      Based Compensation
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  207,588
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  207,588EquityFinancings
                                                  
                                                  
                                                  74,074
                                                  
                                                  
                                                  
                                                  74
                                                  
                                                  
                                                  
                                                  599,920
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  599,9941,529,569
                                                  
                                                  
                                                  
                                                  1,530
                                                  
                                                  
                                                  
                                                  7,110,970
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  7,112,500Warrants
      issuedIncome
      for the twelve months ended 12/31/2008
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  14,532,177
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  14,532,177Balance
      December 31, 2008
                                                  
                                                  
                                                  13,873,969
                                                  
                                                  
                                                  $
                                                  13,873
                                                  
                                                  
                                                  $
                                                  15,861,116
                                                  
                                                  
                                                  $
                                                  1,520,166
                                                  
                                                  
                                                  $
                                                  26,633,573
                                                  
                                                  
                                                  $
                                                  372,144
                                                  
                                                  
                                                  $
                                                  44,400,872
  The
accompanying notes are an integral part of these consolidated financial
statements.




F-7




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





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
March 31, 2009 and December 31, 2008 the accounts of Universal Travel Group were
maintained, and its financial statements were expressed, in Chinese Yuan
Renminbi (CNY). Such financial statements were translated into U.S. Dollars
(USD) in accordance with Statement of Financial Accounts Standards (SFAS) No.
52, Foreign Currency Translation with the CNY as the functional currency.
According to the Statement, all assets and liabilities were translated at the
current exchange rate, stockholders equity are translated at the historical
rates and income statement items are translated at the average exchange rate for
the period. The resulting translation adjustments are reported under other
comprehensive income in accordance with SFAS No. 130, Reporting Comprehensive
Income as a component of shareholders equity. Transaction gains and losses are
reflected in the income statement.





Use of
Estimates





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





Principles of
Consolidation





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




F-8




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





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 $ 219,344 and $210,139 as of March 31, 2009 and December 31, 2008,
respectively.




Description
                    
                    Balanceat
                      beginningof
                      year
                    
                    
                    Chargedto
                      expenses
                    
                    
                    Deductions
                    
                    
                    Balance at end
                      of periodAllowance
      for doubtful receivables 2008
                    
                    $
                    210,139
                    
                    
                    $
                    9,205
                    
                    
                    $
                    -
                    
                    
                    $
                    219,344




Reverse
Split


On March
31, 2009 the Company effected a three-for-one (3:1) reverse split of the
Company’s issued and outstanding shares of common stock, decreasing the number
of outstanding shares from 41,619,966 to 13,873,969. These statements have been
adjusted to reflect this reverse split on a historical pro-forma
basis.




F-9




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)





Property, Plant &
Equipment




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





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





As of
March 31, 2009 and December 31, 2008 Property, Plant & Equipment consist of
the following:





2009
                        
                        
                        2008Furniture
      and fixture
                        
                        $
                        18,247
                        
                        
                        $
                        18,247Transportation
      equipment
                        
                        
                        183,024
                        
                        
                        
                        183,024Office
      equipment
                        
                        
                        1,619,159
                        
                        
                        
                        358,761Leasehold
      improve
                        
                        
                        31,374
                        
                        
                        
                        31,3741,862,483
                        
                        
                        
                        602,085Accumulated
      depreciation
                        
                        
                        (388,827
                        )
                        
                        
                        (328,745
                        )$
                        1,473,656
                        
                        
                        $
                        273,340





Depreciation
expense for the three months ended March, 31, 2009 and 2008 was $60,082 and
$11,103, respectively.





Goodwill





Goodwill
represents the excess cost of a business acquisition over the fair value of the
net assets acquired.  In accordance with Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (Statement
142), indefinite-life identifiable intangible assets and goodwill are not
amortized. Under the provisions of Statement 142, we are required to perform an
annual impairment test of our goodwill. Goodwill impairment is determined using
a two-step process.  The first step of the goodwill impairment test is
used to identify potential impairment by comparing the fair value of a reporting
unit, which we define as our business segments, with its net book value or
carrying amount including goodwill. If the fair value of a reporting unit
exceeds its carrying amount, goodwill of the reporting unit is considered not
impaired and the second step of the impairment test is
unnecessary.  If the carrying amount of a reporting unit exceeds its
fair value, the second step of the goodwill impairment test compares the implied
fair value of the reporting unit's goodwill with the carrying amount of that
goodwill. If the carrying amount of the reporting unit's goodwill exceeds the
implied fair value of that goodwill, an impairment loss is recognized in an
amount equal to that excess.  The implied fair value of goodwill is
determined in the same manner as the amount of goodwill recognized in a business
combination.  The fair value of the reporting unit is allocated to all
of the assets and liabilities of that unit including any unrecognized intangible
assets as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit was the purchase price paid to acquire the
reporting unit.  See Note 8, Purchase of Subsidiary, for additional
information regarding goodwill.




F-10




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)





Long-Lived
Assets




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





Fair Value of Financial
Instruments





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





Revenue
Recognition





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





Advertising


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




Income
Taxes


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





Statement of Cash
Flows


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




F-11






UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




Intangibles


Intangible
assets are amortized using the straight-line method over their estimated period
of benefit. Evaluation of the recoverability of intangible assets is made
annually to take into account events or circumstances that warrant revised
estimates of useful lives or that indicate that impairment exists. All of our
intangible assets are subject to amortization. No impairments of intangible
assets have been identified during any of the periods presented. The Company’s
intangible assets consist primarily of map of hotels and scenic spots used for
marketing purposes. These definitive lived intangible assets are being amortized
over their useful lives.  Expenditures of $316,107 were capitalized in
2008 and will be amortized over a 3 year life.  The Company recorded
amortization expense for definitive lived intangible assets of $27,021 and $-0-
for the three months ended March 31, 2009 and 2008, respectively. The Company
will record approximately $108,804, $108,804, and $62,526 over the next three
years, respectively.





Concentration of Credit
Risk


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





Recent accounting
pronouncements





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





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





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


F-12





UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





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





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





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





Merger and Corporate
Restructure





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





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





Note
3 – TRADE DEPOSITS AND
ADVANCES




Trade
deposits represents amount held by Airlines and deposits. As of March 31, 2009
and December 31, 2008 the Company had paid $4,567,822 and $6,737,520 as trade
deposits respectively.





The
Company has entered into a co-operation agreement with an unrelated company, to
assist that company in their business development by participating in that
business operations and providing working capital funding. As of March 31, 2009
and December 31, 2008 the Company has advanced this company $438,979 and
$438,468 respectively.


F-13


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009





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
statutory rate of 25%.





The
following is a reconciliation of income tax expense for the three months ended
March 31, 2009 and 2008.





2009
                        
                        
                        2008Current
                        
                        $
                        1,145,266
                        
                        
                        $
                        380,625Deferred
                        
                        
                        -
                        
                        
                        
                        -Total
                        
                        $
                        1,145,266
                        
                        
                        $
                        380,625





Note 6 -COMMITTMENTS




The
Company leases various office facilities under month-to-month arrangements.
Rental expense for leases consisted of $ 94,937 and $83,589 for three months
ended March 31, 2009 and 2008 respectively. The Company has future minimum lease
obligations as of March 31, 2009 as follows:





2010
                  
                  $
                  159,4102011
                  
                  $
                  61,9882012
                  
                  $
                  10,9392013
                  
                  $
                  11,1852014
                  
                  $
                  11,185Thereafter
                  
                  $
                  24,698Total
                  
                  $
                  279,405





Pursuant to the Securities Purchase
Agreement entered into on August 28, 2008, the Company and the Buyers in this
Agreement entered into a Lock up Agreement. Under the Lock-Up Agreement, the
Principal Shareholder agreed that she would not sell any of the Lock-Up Shares,
5,000,000 shares of Common Stock and options to purchase 2,000,000 shares of
Common Stock, and shall not transfer such shares for twelve (12)
months.


F-14


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
7 – 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 1,256,667 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.





Pursuant
to a share exchange agreement, the Company issued 238,095 shares of newly issued
shares of Common Stock to the former shareholders of Shenzhen Speedy Dragon
Enterprises Limited. The shares were valued at $1,000,000, which was the fair
value of the shares at the date of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.





On April
10, 2007 the Company consummated the acquisition of a 100% interest in Shenzhen
Speedy Dragon Enterprises Limited ("SSD") for a cash and stock transaction
valued at approximately US$4 million. This amount is included in the cost of net
assets and goodwill purchased.





The stock
consideration consisted of 238,095 newly issued shares of the Registrant’s
common stock, which were given to SSD’s sole Shareholder immediately before the
completion of the Share Exchange Transaction. The cash consideration consisted
of $3,000,000 in cash and payable no later than the first anniversary of the
Merger Transaction. The obligation to pay the cash consideration is evidenced by
interest-free promissory notes between the Registrant and the SSD
Shareholder.




SSD is
engaged in the business of air freight forwarding. The purchase price was
determined based on arms' length negotiations between Universal Travel Group and
the shareholder of SSD.





The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:





Cash
      acquired
                      
                      $
                      17,800Loans
      receivable
                      
                      
                      90,096Loans
      shareholder
                      
                      
                      251,184Property
      Plant & Equipment
                      
                      
                      22,995Goodwill
                      
                      
                      3,630,539Total
      assets acquired
                      
                      
                      4,012,614Liabilities
      assumedAccounts
      & Income Taxes payable
                      
                      
                      3,587Other
      payable
                      
                      
                      9,026Total
                      
                      $
                      4,000,000





The
excess of purchase price over tangible assets acquired and liabilities assumed
of $3,630,359 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.





Prior to
the acquisition, Shenzhen Speedy Dragon Enterprises Limited prepared its
financial statements under accounting principles generally accepted in the
United States of America.




Pursuant
to a share exchange agreement, the Company issued 50,588 shares of newly issued
shares of Common Stock to the former shareholders of Xian Golden Net Travel
Serve Services, Inc. The shares were valued at $258,000, which was the fair
value of the shares at the date the of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.


F-15


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
7 – COMMON STOCK
(CONTINUED)





On August
6, 2007 the Company consummated the acquisition of a 100% interest in Xian
Golden Net Travel Serve Services, Inc. ("XGN") for a cash and stock transaction
valued at approximately US$1.8 million. This amount is included in the cost of
net assets and goodwill purchased.





The stock
consideration consisted of 50,588 newly issued shares of the Registrant’s common
stock, which were given to XGN’s Shareholders immediately before the completion
of the Share Exchange Transaction. The cash consideration consisted of
$1,542,000 in cash and payable no later than the first anniversary of the Merger
Transaction. The obligation to pay the cash consideration is evidenced by an
interest-free promissory note between the Registrant and the XGN’s
Shareholders.





XGN is
engaged in the business of Chinese domestic tourism. The purchase price was
determined based on arms' length negotiations between Universal Travel Group and
the shareholders of XGN.





The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:





Cash
      acquired
                        
                        $
                        45,356Accounts
      Receivable
                        
                        
                        142,462Loans
      Shareholder
                        
                        
                        1,075,504Property
      Plant & Equipment
                        
                        
                        773Goodwill
                        
                        
                        764,895Total
      assets acquired
                        
                        
                        2,028,990Liabilities
      assumedAccounts
      & Income Taxes payable
                        
                        
                        131,875Other
      payable
                        
                        
                        97,115Total
                        
                        $
                        1,800,000





The
excess of purchase price over tangible assets acquired and liabilities assumed
of $764,895 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.





Prior to
the acquisition, Xian Golden Net Travel Serve Services, Inc. prepared its
financial statements under accounting principles generally accepted in the
United States of America.




Pursuant
to a share exchange agreement, the Company issued 200,000 shares of newly issued
shares of Common Stock to the former shareholders of Shanghai Lanbao Travel
Services Co., Ltd. The shares were valued at $1,092,000, which was the fair
value of the shares at the date of the exchange agreement. This amount is
included in the cost of net assets and goodwill purchased.





On August
8, 2007, the Company consummated the acquisition of a 100% interest in Shanghai
Lanbao Travel Services Co., Ltd. ("SLB") for a cash and stock transaction valued
at approximately US$3.92 million. This amount is included in the cost of net
assets and goodwill purchased.




The stock
consideration consisted of 200,000 newly issued shares of the Registrant’s
common stock immediately before the completion of the Share Exchange
Transaction. The cash consideration consisted of $2,828,000 in cash and payable
no later than the first anniversary of the Merger Transaction. The obligation to
pay the cash consideration is evidenced by interest-free promissory notes
between the Registrant and each of the SLB Shareholders.


F-16


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
7 – COMMON STOCK
(CONTINUED)




SLB is
engaged in the business of real time booking of travel related products via the
internet. The purchase price was determined based on arms' length negotiations
between Universal Travel Group and the shareholders of SLB.





The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:




Cash
      acquired
                        
                        $
                        28,510Accounts
      Receivable
                        
                        
                        1,265,352Loans
      shareholders
                        
                        
                        178,665Property
      Plant & Equipment
                        
                        
                        9,376Goodwill
                        
                        
                        3,081,799Total
      assets acquired
                        
                        
                        4,563,702Liabilities
      assumedAccounts
      & Income Taxes payable
                        
                        
                        566,809Other
      payable
                        
                        
                        76,893Total
                        
                        $
                        3,920,000





The
excess of purchase price over tangible assets acquired and liabilities assumed
of $3,081,799 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.





Prior to
the acquisition, Shanghai Lanbao Travel Services Co., Ltd. prepared its
financial statements under accounting principles generally accepted in the
United States of America.




Pursuant
to a share exchange agreement, the Company issued 374,329 shares of newly issued
shares of Common Stock and a promissory note to the former shareholders of
Foshan Overseas International Travel Service Co., Ltd. The shares were valued at
$ 3,346,500, which was the fair value of the shares at the date of exchange
agreement. This amount is included in the cost of net assets and goodwill
purchased.





On
September 20, 2007, the Company consummated the acquisition of a 100% interest
in Foshan Overseas International Travel Service Co., Ltd. ("FOI") for a cash and
stock transaction valued at approximately US$6.5 million. This amount is
included in the cost of net assets and goodwill purchased.




The stock
consideration consisted of 374,329 newly issued shares of the Registrant’s
common stock, immediately before the completion of the Share Exchange
Transaction. The cash consideration consisted of $3,153,000 due immediately
before the completion of the Share Exchange Transaction and payable no later
than the first anniversary of the Merger Transaction. The obligation to pay the
cash consideration is evidenced by two interest-free promissory notes between
the Registrant and each of the FOI Shareholders.




FOI is
engaged in the business of domestic and international travel inquiries as well
as corporate travel, offering specialized packages that include national and
international air ticket booking, hotel reservations, conference center
reservations and rental cars. The purchase price was determined based on arms'
length negotiations between Universal Travel Group and the shareholders of
FOI.


F-17


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
7 – COMMON STOCK
(CONTINUED)





The
acquisition had been accounted for as a purchase business combination and the
results of operations from the acquisition date have been included in the
Company's consolidated financial statements in accordance with SFAS 94. The
allocation of the purchase price is as follows:





Cash
      acquired
                    
                    $
                    423,292Accounts
      Receivable
                    
                    
                    2,204,094Loans
      Shareholders
                    
                    
                    686,936Trade
      Deposits
                    
                    
                    513,317Prepaid
      Expenses
                    
                    
                    3,285Property
      Plant & Equipment
                    
                    
                    42,244Goodwill
                    
                    
                    6,049,576Total
      assets acquired
                    
                    
                    9,922,744Liabilities
      assumedAccounts
      & Income Taxes payable
                    
                    
                    3,126,718Other
      payable
                    
                    
                    296,026Total
                    
                    $
                    6,500,000





The
excess of purchase price over tangible assets acquired and liabilities assumed
of $6,049,576 was recorded as goodwill. At the time of the acquisition no
identifiable intangibles assets existed under the contractual-legal or the
separability criterion as required under SFAS 141.





Prior to
the acquisition, Foshan Overseas International Travel Service Co., Ltd. prepared
its financial statements under accounting principles generally accepted in the
United States of America.




On August
28, 2008, Universal Travel Group (the “Company”) entered into a Securities
Purchase Agreement with Access America Fund, LP, Chinamerica Fund LP, Pope
Investments II LLC, Heller Capital Investments, LLC, CGM as C/F Ronald I. Heller
IRA, Investment Hunter, LLC, MARed Investments, High Capital Funding, LLC, and
Merrill Lynch, Pierce, Fenner & Smith, FBO Beau L. Johnson (collectively,
the “Buyers”) to sell to the Buyers 1,529,569 shares of common stock, par value
$0.001 of the Company (“Common Stock”) and warrants to purchase 764,785 shares
of Common Stock for an aggregate purchase price of $7,112,500 (the
“Financing”).





Note
8 – STOCK WARRANTS,
OPTIONS, AND COMPENSATION





On
February 4, 2008, under the terms of an equity financing commitment, the company
issued 74,074 shares of common stock at the closing price
of  $8.10.  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 33,333 shares of common stock at the closing price at $ 5.85. 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 33,333 shares of common stock at the closing price at $
8.55. The options are exercisable until June 1, 2017. On June 23, 2008, upon
resignation, Board member has forfeited 22,222 options.


F-18


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





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




On
December 7, 2007, the Company issued, to another newly appointed Board member,
an option grant to purchase 33,333 shares of common stock at the closing price
of $ 11.25. 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 22,222 options.





On June
24, 2008, the Company issued, to another newly appointed Board member, an option
grant to purchase 33,333 shares of common stock at the closing price of $ 4.56.
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.





On
January 20, 2009, pursuant to the Securities Purchase agreement entered into on
August 28, the Company enacted the Universal Travel Group 2009 Incentive Stock
Option Plan entitles the grant of up to 2,200,000 shares of common stock of
Universal Travel Group, par value $0.001 to certain employees of the Company
either as stock or stock options, and the subsequent exercise of any stock
options.  The options are exercisable until 1/19/2019, with a vesting
period of six years. Average purchase price for the options is $3.73 per
share.





Three
      months
                          endedMarch
      31, 2009Expected
      Volatility
                        
                        
                        
                        
                        87.09
                        %Expected
      term (in years)Richard
      P. Randall
                        
                        
                        
                        
                        8.25James
      Treacy
                        
                        
                        
                        
                        8.25Yizhao
      Zhang
                        
                        
                        
                        
                        9.25Jiangping
      Jiang
                        
                        
                        
                        
                        10.00Others
                        
                        
                        
                        
                        10.00Expected
      dividends
                        
                        
                        
                        
                        -Risk-free
      rate of return (weighted average)
                        
                        
                        
                        
                        2.71
                        %Weighted
      average grant-date fair value
                        $                 2.77
                        Range
                        
                        $
                        2.67-11.25





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 $165,000 for the three months ending March 31,
2009.


F-19




UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





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





AggregateExercise
                        
                        
                        Remaining
                        
                        
                        IntrinsicTotal
                        
                        
                        Price
                        
                        
                        Life
                        
                        
                        ValueOutstanding,
      December 31, 2008
                        
                        
                        55,555
                        
                        
                        $
                        4-56-11.25
                        
                        
                        8.25-9.75yrs
                        
                        
                        
                        -Granted
      in 2009
                        
                        
                        2,200,000
                        
                        
                        $
                        2.70-3.84
                        
                        
                        10yrs
                        
                        
                        
                        -Exercised
      in 2008
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Outstanding,
      March 31, 2009
                        
                        
                        2,255,555
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -





Pursuant
to the Securities Purchase Agreement entered into On August 28, 2008, the
Company issued warrants to purchase 764,785 shares of Common Stock. The unit
purchase price was $4.65per 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 $4.05. 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 $8.13 and a term of 5
years from the date of issuance.





Note
9 - OTHER
COMPREHENSIVE INCOME





Balances
of related after-tax components comprising accumulated other comprehensive
income, included in stockholders equity, at March 31, 2009  and
December 31, 2008 are as follows:





Foreign Currency
                          Translation
                          Adjustment
                        
                        
                        Accumulated
                          Other
                          Comprehensive
                          IncomeBalance December 31, 2007
                        
                        
                        545,164
                        
                        
                        
                        545,164Changes
      for year ended December 31, 2008
                        
                        
                        975,002
                        
                        
                        
                        975,002Balance
      December 31, 2008
                        
                        $
                        1,520,166
                        
                        
                        $
                        1,520,166Changes
      for three months  ended March 31, 200
                        
                        
                        34,707
                        
                        
                        
                        34,707Balance
      at March 31, 2009
                        
                        $
                        1,554,873
                        
                        
                        $
                        1,554,873





Note
10 - 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
11 – MAJOR CUSTOMERS
AND CREDIT RISK





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




F-20


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note 12 –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. 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.




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. During the
three months ended March 31. 2009, $600,000 was released from escrow to the
Company.




Note
13 -   SEGMENT
INFORMATION





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





The
following tables’ present summarized information by segment:





Three Months Ended March 31, 2009Shenzhen
                              Yuzhilu
                              Aviation
                              Service
                              Co., Ltd.
                            
                            
                            Shenzhen
                              Speedy
                              Dragon
                              Enterprises
                              Limited
                            
                            
                            Shanghai
                              Lanboa
                              Travel
                              Service
                              Co., Ltd.
                            
                            
                            Foshan
                              International
                              Travel Service
                              Co., Ltd.
                            
                            
                            Xian
                              Golden
                              Net
                              Travel
                              Serve
                              Services
                            
                            
                            Other
                            
                            
                            TotalSales, net
                            
                            $
                            2,751,128
                            
                            
                            $
                            1,858,999
                            
                            
                            $
                            2,516,831
                            
                            
                            $
                            6,586,427
                            
                            
                            $
                            3,656,293
                            
                            
                            $
                            -
                            
                            
                            $
                            17,369,678Cost
      of sales
                            
                            $
                            144,579
                            
                            
                            $
                            1,604,303
                            
                            
                            $
                            609,416
                            
                            
                            $
                            5,555,409
                            
                            
                            $
                            3,107,192
                            
                            
                            $
                            -
                            
                            
                            $
                            11,020,899Gross
      profit
                            
                            $
                            2,606,549
                            
                            
                            $
                            254,696
                            
                            
                            $
                            1,907,415
                            
                            
                            $
                            1,031,018
                            
                            
                            $
                            549,101
                            
                            
                            $
                            -
                            
                            
                            $
                            6,348,779Income
      from operations
                            
                            $
                            1,574,790
                            
                            
                            $
                            144,887
                            
                            
                            $
                            1,699,296
                            
                            
                            $
                            890,717
                            
                            
                            $
                            495,144
                            
                            
                            $
                            (420,934
                            )
                            
                            $
                            4,383,900Total
      assets
                            
                            $
                            28,210,039
                            
                            
                            $
                            3,177,337
                            
                            
                            $
                            8,294,048
                            
                            
                            $
                            6,140,964
                            
                            
                            $
                            4,406,897
                            
                            
                            $
                            2,933,005
                            
                            
                            $
                            53,162,290





Three Months Ended March 31, 2008Sales,
      net
                          
                          $
                          1,428,880
                          
                          
                          $
                          3,123,926
                          
                          
                          $
                          612,477
                          
                          
                          $
                          3,090,563
                          
                          
                          $
                          1,820,458
                          
                          
                          $
                          -
                          
                          
                          $
                          10,076,304Cost
      of sales
                          
                          $
                          73,501
                          
                          
                          $
                          2,608,620
                          
                          
                          $
                          194,672
                          
                          
                          $
                          2,724,983
                          
                          
                          $
                          1,630,982
                          
                          
                          $
                          -
                          
                          
                          $
                          7,232,758Gross
      profit
                          
                          $
                          1,355,379
                          
                          
                          $
                          515,305
                          
                          
                          $
                          417,806
                          
                          
                          $
                          365,580
                          
                          
                          $
                          189,476
                          
                          
                          $
                          -
                          
                          
                          $
                          2,843,546Income
      from operations
                          
                          $
                          910,360
                          
                          
                          $
                          353,693
                          
                          
                          $
                          343,607
                          
                          
                          $
                          231,276
                          
                          
                          $
                          149,087
                          
                          
                          $
                          (110,011
                          )
                          
                          $
                          1,878,012Total
      assets
                          
                          $
                          18,019,415
                          
                          
                          $
                          2,743,779
                          
                          
                          $
                          2,789,517
                          
                          
                          $
                          4,173,970
                          
                          
                          $
                          2,211,433
                          
                          
                          $
                          573,425
                          
                          
                          $
                          30,511,539





Year Ended December 31, 2008Sales,
      net
                          
                          $
                          12,333,527
                          
                          
                          $
                          10,937,573
                          
                          
                          $
                          8,340,519
                          
                          
                          $
                          27,549,267
                          
                          
                          $
                          17,598,524
                          
                          
                          $
                          -
                          
                          
                          $
                          76,759,411Cost
      of sales
                          
                          $
                          622,069
                          
                          
                          $
                          9,347,312
                          
                          
                          $
                          2,649,716
                          
                          
                          $
                          23,942,757
                          
                          
                          $
                          14,994,137
                          
                          
                          $
                          -
                          
                          
                          $
                          51,555,991Gross
      profit
                          
                          $
                          11,711,458
                          
                          
                          $
                          1,590,261
                          
                          
                          $
                          5,690,803
                          
                          
                          $
                          3,606,510
                          
                          
                          $
                          2,604,387
                          
                          
                          $
                          -
                          
                          
                          $
                          25,203,420Income
      from operations
                          
                          $
                          7,839,219
                          
                          
                          $
                          950.170
                          
                          
                          $
                          5,032,193
                          
                          
                          $
                          3,176,248
                          
                          
                          $
                          2,334,366
                          
                          
                          $
                          (464,917
                          )
                          
                          $
                          18,867,729Total
      assets
                          
                          $
                          24,303,306
                          
                          
                          $
                          3,075,033
                          
                          
                          $
                          7,402,560
                          
                          
                          $
                          5,917,701
                          
                          
                          $
                          4,225,493
                          
                          
                          $
                          4,502,586
                          
                          
                          $
                          49,426,680




F-21


UNIVERSAL
TRAVEL GROUP


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
14 -   SUBSEQUENT
EVENTS





On April
14, 2009 the Company filed form 8-A to register its common stock, $0.001 par
value, under Section 12(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and the listing of Common Stock on the NYSE Alternext US
(formerly known as the American Stock Exchange LLC). The Common Stock had been
registered under Section 12(g) of the Exchange Act.




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





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.




4


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
April 2009, the People’s Republic of China’s first quarter gross domestic
product (or “GDP”) grew to US$960 billion(RMB6.574 trillion), representing a
6.1% growth year over year. (Source:
http://gb.cri.cn/27824/2009/04/16/3785s2486459.htm)




According
to the statistics from the website of National Tourism Administration of
People's Republic of China in April 2009, domestic tourism spending grew to
US$41.4billion (approximately RMB283.4 billion), representing a 12.9% growth
year over year.
(Source:  http://news.sohu.com/20090427/n263647914.shtml)





According
to the statistics from the website of Civil Aviation Administration of
China:




·
              domestic
      air passenger transportation volume grew 19.1% in the first 2 months 2009
      compared to 2008;
 
 ·
              domestic
      cargo transportation volume dropped 12.2% in the first 2 months 2009
      compared to 2008;




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 last year were:




·
                the snow storms which
      affected the People’s Republic of China during the Spring Festival last
      year;
  5
 ·
                the Olympics in August 2008 which
      led to an increase in prices for hotels, airline and other travel-related
      costs and accordingly, a similar increase in travel
      products;
 ·
                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 Olympics,
      which affected our cargo agency business;
  and
 ·
              a downturn in international
      economies such as in the United
States.




Global events such as the widespread
infection of the swine flu this year could similarly disrupt travel and affect
the travel industry adversely.




RESULTS
OF OPERATIONS




THREE
MONTHS ENDED MARCH 31 2009 AND 2008




The
following table presents certain consolidated statement of operations
information derived from the consolidated statements of income for three months
ended March 31, 2009 and same period 2008.




Revenue Segment
Analysis




Three months ended
                  March 31, 2009
                
                
                Three months ended
                  March 31, 2008
                
                
                Increase / (Decrease)
                
                
                PercentageRevenue
                
                
                17,369,678
                
                
                $
                10,076,304
                
                
                
                7,293,373
                
                
                
                72.4
                %Cost
      of services
                
                
                (11,020,899
                )
                
                
                (7,232,758
                )
                
                
                3,788,140
                
                
                
                52.4
                %Gross
      Profit
                
                
                6,348,779
                
                
                
                2,843,546
                
                
                
                3,505,233
                
                
                
                123.3
                %Selling,
      General and Administrative Expenses
                
                
                (1,799,879
                )
                
                
                (855,522
                )
                
                
                944,357
                
                
                
                110.4
                %Stock
      based compensation
                
                
                (165,000
                )
                
                
                (110,012
                )
                
                
                54,988
                
                
                
                50
                %Income
      from operations
                
                
                4,383,900
                
                
                
                1,878,012
                
                
                
                2,505,888
                
                
                
                133.4
                %Loss
      on asset disposal
                
                
                -
                
                
                
                (1,104
                )
                
                
                (1,104
                )
                
                
                -100
                %Other
      income
                
                
                3,828
                
                
                
                2,874
                
                
                
                954
                
                
                
                33.2
                %Interest
      income
                
                
                25,816
                
                
                
                1,415
                
                
                
                24,401
                
                
                
                1724.5
                %Interest
      expenses
                
                
                -
                
                
                
                (36,707
                )
                
                
                (36,707
                )
                
                
                -100
                %Provision
      for income taxes
                
                
                (1,145,266
                )
                
                
                (380,625
                )
                
                
                764,642
                
                
                
                200.9
                %Net
      income
                
                $
                3,268,678
                
                
                $
                1,463,865
                
                
                
                1,804,412
                
                
                
                123.3
                %







For the
three months ended March 31, 2009:




Air-ticketing
                
                
                Percentage of
                  Revenue (%)
                
                
                Cargo Agency
                
                
                Percentage of
                  Revenue (%)
                
                
                Hotel
                
                
                Percentage of
                  Revenue (%)
                
                
                Travel
                
                
                Percentage of
                  Revenue (%)
                
                
                TotalRevenue
                
                
                2,751,128
                
                
                
                15.8
                %
                
                
                1,858,998
                
                
                
                10.7
                %
                
                
                2,516,831
                
                
                
                14.5
                %
                
                
                10,242,721
                
                
                
                59.0
                %
                
                
                17,369,678Cost
      of Services
                
                
                (144,579
                )
                
                
                1.3
                %
                
                
                (1,604,302
                )
                
                
                14,6
                %
                
                
                (609,416
                )
                
                
                5.5
                %
                
                
                (8,662,602
                )
                
                
                78.6
                %
                
                
                (11,020,899
                )Gross
      Profit
                
                
                2,606,549
                
                
                
                41.1
                %
                
                
                254,696
                
                
                
                4
                %
                
                
                1,907,415
                
                
                
                30.0
                %
                
                
                1,580,119
                
                
                
                24.9
                %
                
                
                6,348,779







For the
three months ended March 31, 2008:




Air-ticketing
                
                
                Percentage of
                  Revenue (%)
                
                
                Cargo Agency
                
                
                Percentage of
                  Revenue (%)
                
                
                Hotel
                
                
                Percentage of
                  Revenue (%)
                
                
                Travel
                
                
                Percentage of
                  Revenue (%)
                
                
                TotalRevenue
                
                
                1,428,880
                
                
                
                14.0
                %
                
                
                3,123,926
                
                
                
                31.0
                %
                
                
                612,478
                
                
                
                6.1
                %
                
                
                4,911,020
                
                
                
                48.7
                %
                
                
                10,076,304Cost
      of Services
                
                
                73,501
                
                
                
                1.0
                %
                
                
                (2,608,620
                )
                
                
                36.1
                %
                
                
                (194,672
                )
                
                
                2.7
                %
                
                
                (4,355,965
                )
                
                
                60.2
                %
                
                
                (7,232,758
                )Gross
      Profit
                
                
                1,355,379
                
                
                
                48.0
                %
                
                
                515,306
                
                
                
                18.1
                %
                
                
                417,806
                
                
                
                14.7
                %
                
                
                555,055
                
                
                
                19.5
                %
                
                
                2,843,546




6




Revenue






Revenue
for the three months ended March 31, 2009 were $17,369,678 compared
to $10,076,304
for the same period 2008, an increase of approximately 72.4%. The increase in
revenue was due to the improved weather condition in the first quarter 2009 as
compared to the heavy snow storm that struck most area of China last
year. The growth in revenue was further supported by the Chinese
government's economic stimulus plans, the creation of new holiday policy to
include a 3-day public holiday – the "April
Tomb-sweeping Day", the successful introduction of our TRIPEASY Kiosks, and
increased brand awareness.




Revenue
from air-ticketing was $ 2,751,128 for the
three months ended March 31, 2009 compared to $ 1,428,880 for the same
period last year, an increase of approximately 92.5%. This increase is due to:
1) the result of our continuous search for new distribution channels and
end-consumers, leading to not only an increase in club members but also an
increase in our agents; 2) we formed partnerships with premium agents and
obtained higher commissions from many airlines; 3) 15.3% growth of the air
passenger transport industry in the previous two months, and the
19.1% increase in domestic flights.




Revenue
generated by cargo agency for the three months ended March 31, 2009 was $1,858,999 compared to
$3,123,926 for the same period 2008, a decrease of approximately 40.5%. This decrease
is due to reduced cargo volume as a result of the global finance crisis, where
the overall industry fell by 16.6%. We foresee that there will be further
contraction in the domestic and international air cargo business in light of the
current global economic crisis.  However we anticipate continued
profitability in such a challenging environment in the short to medium term but
will continually adapt and strategize to counteract the effects of such a
negative environment.




Revenue
generated by hotel reservation for the three months ended March 31, 2009 was
$2,516,831compared to $609,416for the same period 2008,
an increase of approximately 310.9%. This increase
is due to the successful cross marketing and selling strategy within the
Company's service chain, and increased brand awareness.




Revenue
generated by packaged tours for the three months ended March 31, 2009 was $
10,242,721
compared to $4,911,020 for the same period 2008,
an increase of approximately 108.6%. This increase
is primarily due to the tremendous growth of the domestic travel
industry. First quarter travelers reached 560 million, and tourism income
receipt grew by 12.9%. This was further enhanced by the successful
integration within our travel service chain, expansion of businesses lines, and
increased brand awareness.




Gross
Profit




Gross
Profit for three months ended March 31, 2009 was $6,348,779 compared to $2,843,546 for the
three months ended March 31, 2008, an increase of approximately 123.3%. The
increase in gross profit reflects our steady growth and profitability, and is a
result of an efficient management and control of our operations by an
experienced management team.




Gross
profit margin for three months ended March 31, 2009 was 36.6% compared to
28.2% for three
months ended March 31, 2008. This increase is primarily due to the restructuring
of our major businesses segments, decreased dependence on our less
profitable cargo business segment, cost reductions, and our ability to
seize business opportunities in a fast developing industry.




Selling, General and
Administrative Expenses




Selling, general and administrative expenses for three months
ended March 31, 2009 totaled$1,799,879compared to$855,522for three months ended March 31, 2008,
an increase of approximately110.4%.




7




Selling,
general and administrative expenses were approximately10.4% of revenue for
three months ended March 31, 2009 as compared to 8.5% for three months ended
March 31, 2008.




The
increase in selling, general and administrative expenses reflects the expansion
in our businesses and the increase in selling, general and administrative
expenses as a percentage of revenue reflects the increased effort to increase
company awareness in both our operations and capital
market segments.




Stock-based
compensationreflects
options issued as a result of our 2009 stock option incentive plan executed on
January 20, 2009.




Interest
expense for three months ended March 31, 2009 totaled $0 compared to $36,707 for three
months ended March 31, 2008. The decrease in interest expense reflects the fact
that we paid off all our bank loans in July 2008 and our ability to manage our
cash flow.




Net
Income




Net
income was
$3,268,278 or18.8% of revenue for three months ended March 31, 2009,
compared to $1,463,865 or 14.5% of
revenue for three months ended March 31, 2008.




The
increase in net income reflects the continued growth in our business, and the
improved weather condition for travel in first quarter of 2009, compared to the
heavy snow storm that struck most of China last year .




The
increase in net income as a percentage of revenue is due to the change of
revenue mix, where we took advantage of the booming domestic tourism industry,
drove synergies with our air ticketing and hotel reservation businesses; shifted
our focus away from the low margin cargo segment, and further improved cash flow
management and resource allocation.




LIQUIDITY
AND CAPITAL RESOURCES




Cash for
operations and liquidity needs are funded primarily through cash flow from
operations and short-term borrowings. Cash and cash equivalents were $19,171,277
at March 31, 2009. Current assets and current liabilities as of March 31, 2009,
were $37,881,691
and $5,293,433,
yielding working capital of $32,588,258.
We believe that the funds available to us from operations are adequate to meet
our operating needs in recent future. For the three months ended March 31, 2009,
net cash provided by operating activities was approximately $4,192,437,
which resulted primarily from our organic operations and effective management of
cash flow.




Capital
expenditure




Total
capital expenditure for three months ended March 31, 2009 was $1,473,656 to
purchase fixed assets, primarily machinery and equipment. Management is
considering a substantial increase in equipment or other supporting
machinery expenditure to support the fast development and expansion of our
business.  We anticipate spending about $1.4 million in the second
quarter.




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 the
immediate future. 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.




8




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.





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 March 31, 2009, 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 March 31, 2009, that materially
affected or are reasonably likely to materially affect our internal control over
financial reporting.




9





PART
II - OTHER INFORMATION


Item
      1.
              Legal
      Proceedings.
 
 There is
no material legal proceeding pending against us.
 
 Item
      1A.
              Risk
      Factors.
 
 Not
applicable.
 
 Item
      2.
              Unregistered
      Sales of Equity Securities and Use of
Proceeds
 
 None.
 
 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 Document1
              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.




10


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: May 6,
2009





UNIVERSAL
      TRAVEL GROUPBy:
                  /s/
      Jiangping JiangJiangping
      Jiang
                    Chairman
      and Chief Executive Officer
                    (Principal
      Executive
Officer)





By:
                /s/ Jing
      XieJing
      Xie
                  Chief
      Financial Officer
                  (Principal
      Financial Officer)




11