----

----

| Xinhua China Ltd.                              |
|------------------------------------------------|
| (Name of small business issuer in its charter) |

| Nevada                                                        |   | 88-0437644                           |
|---------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporationor organization) |   | (I.R.S. Employer Identification No.) |

| Securities registered pursuant to Section12(b) of the Act: | Name of each exchange on whichregistered:       |
|------------------------------------------------------------|-------------------------------------------------------------------------------|
| None                                                       |                                                                          |

| Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:Class | Outstanding as of November 22, 2010   |
|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| Common Stock $0.00001 par value                                                                                                        | 499,911,400                                     |

----

----

----

|     |   | PART I – FINANCIAL INFORMATION                                                        |   |   |   |
|----------|--------|---------------------------------------------------------------------------------------------|--------|--------|--------|
|     |   |                                                                                        |   |   |   |
| Item 1.  |   | Financial Statements                                                                        |   |   | 4      |   |
|     |   |                                                                                        |   |   |   |   |
| Item 2   |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   | 22     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 3.  |   | Quantitative and Qualitative Discloses About Market Risk                                    |   |   | 28     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 4.  |   | Controls and Procedures                                                                     |   |   | 29     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 4T. |   | Controls and Procedures                                                                     |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
|     |   | PART II – OTHER INFORMATION                                                           |   |   |   |   |
|     |   |                                                                                        |   |   |   |   |
| Item 1.  |   | Legal Proceedings                                                                           |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 1A. |   | Risk Factors                                                                                |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 2.  |   | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 3.  |   | Defaults Upon Senior Securities                                                             |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 4.  |   | Removed and Reserved                                                                        |   |   | 31     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 5.  |   | Other Information                                                                           |   |   | 32     |   |
|     |   |                                                                                        |   |   |   |   |
| Item 6.  |   | Exhibits                                                                                    |   |   | 32     |   |

----

----

----

| Contents                                                | Pages        |
|---------------------------------------------------------|--------------|
|                                                    |         |
| Report of Registered Independent Public Accounting Firm | 6            |
|                                                    |         |
| Unaudited Balance Sheet                                 | 7 - 8   |
|                                                    |         |
| Unaudited Statement of Income                           | 9            |
|                                                    |         |
| Unaudited Statement of Stockholders’ Equity       | 10           |
|                                                    |         |
| Unaudited Statement of Cash Flows                       | 11           |
|                                                    |         |
| Notes to the Unaudited Financial Statements             | 12 - 21 |

----

| San Mateo, California | Samuel H. Wong & Co., LLP  |
|-----------------------|-------------------------------------|
| October 23, 2010      | Certified Public Accountants        |

----

|                                     |   |   |   |   |               |       |   | (Audited)     |   |
|------------------------------------------|--------|--------|--------|--------|--------------------|------------|--------|---------------|--------|
|                                     |   | Notes  |   |   | September 30, 2010 |       |   | June 30, 2010 |   |
| ASSETS                                   |   |   |   |   |               |       |   |          |   |
| Current Assets                           |   |   |   |   |               |       |   |          |   |
| Cash and Cash Equivalents                |   | 3D     |   |   | $                  | -          |   |          | $      | 255,810 |   |
| Accounts Receivable, net                 |   | 3E     |   |   |               | -          |   |          |   | 75,125 |   |
| Other Receivables and Prepayments        |   | 4      |   |   |               | 23,000     |   |          |   | 241,353 |   |
| Total Current Assets                     |   |   |   |   |               | 23,000     |   |          |   | 572,288 |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| Long-term Assets                         |   |   |   |   |               |       |   |          |   |   |   |
| Property, Plant & Equipment, net     |   | 3F,5   |   |   |               | -          |   |          |   | 204,062 |   |
| Intangible Assets, net                   |   | 5      |   |   |               | -          |   |          |   | 78,242 |   |
| Total Long-term Assets                   |   |   |   |   |               | -          |   |          |   | 282,304 |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| Total Assets                             |   |   |   |   | $                  | 23,000     |   |          | $      | 854,592 |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY   |   |   |   |   |               |       |   |          |   |   |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| Liabilities                              |   |   |   |   |               |       |   |          |   |   |   |
| Current Liabilities                      |   |   |   |   |               |       |   |          |   |   |   |
| Accounts Payable and Accrued Liabilities |   | 6      |   |   | $                  | 141,503    |   |          | $      | 570,834 |   |
| Current portion of Loans Payable         |   | 7      |   |   |               | 1,498,075  |   |          |   | 1,472,311 |   |
| Total Current Liabilities                |   |   |   |   |               | 1,639,578  |   |          |   | 2,043,145 |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| Long-term Liabilities                    |   |   |   |   |               |       |   |          |   |   |   |
| Loans Payable                            |   | 7      |   |   |               | 1,058,261  |   |          |   | 1,058,261 |   |
| Loans from Shareholders                  |   | 8      |   |   |               | 10,401,280 |   |          |   | 10,176,526 |   |
| Total Long-term Liabilities              |   |   |   |   |               | 11,459,541 |   |          |   | 11,234,787 |   |
|                                     |   |   |   |   |               |       |   |          |   |   |   |
| Total Liabilities                        |   |   |   |   | $                  | 13,099,119 |   |          | $      | 13,277,932 |   |

----

|                                                                                                                                                                           |   |   |   |   |               |        |   | (Audited)     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------------------|-------------|--------|---------------|--------|
|                                                                                                                                                                           |   | Note   |   |   | September 30, 2010 |        |   | June 30, 2010 |   |
|                                                                                                                                                                           |   |   |   |   |               |        |   |          |   |
| Stockholders' Equity                                                                                                                                                           |   |   |   |   |               |        |   |          |   |
|                                                                                                                                                                           |   |   |   |   |               |        |   |          |   |
| Common Stock $0.00001 Par Value 500,000,000 Shares Authorized; 499,911,400 and 499,911,400 shares issued and outstanding at September 30, 2010 and June 30, 2010, accordingly. |   | 9      |   |   | $                  | 4,999       |   |          | $      | 4,999 |   |
| Additional Paid-In Capital                                                                                                                                                     |   |   |   |   |               | 11,940,301  |   |          |   | 11,831,075 |   |
| Accumulated Other ComprehensiveIncome                                                                                                                                          |   |   |   |   |               | (30,390     | )      |          |   | 40,149 |   |
| Accumulated Deficit                                                                                                                                                            |   |   |   |   |               | (24,991,028 | )      |          |   | (24,299,563 | ) |
| Total Stockholders' (Deficit)/Equity                                                                                                                                           |   |   |   |   |               | (13,076,119 | )      |          |   | (12,423,340 | ) |
|                                                                                                                                                                           |   |   |   |   |               |        |   |          |   |   |   |
| Total Liabilities & Stockholders' Equity                                                                                                                                   |   |   | $      | 23,000 |               |        | $      | 854,592       |   |

----

|                                           |   |   |   |       | Three months ended |        |
|------------------------------------------------|--------|--------|--------|------------|--------------------|-------------|
|                                           |   | Note   |   |       | September 30,      |        |
| Revenue                                        |   |   |   |       | 2010               |        |   | 2009 |   |
|                                           |   |   |   |       |               |        |   |   |   |
| Revenue, net                                   |   | 3H     |   |       | $                  | -           |   |   | $ | - |   |
| Cost of Sales, net                             |   | 3I     |   |       |               | -           |   |   |   | - |   |
| Gross Profit                                   |   |   |   |       |               | -           |   |   |   | - |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Operating Expenses                             |   |   |   |       |               |        |   |   |   |   |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Selling, General, and Administrative Expenses  |   |   |   |       |               | 30,000      |   |   |   | 129,019 |   |
| Total Operating Expense                        |   |   |   |       |               | 30,000      |   |   |   | 129,019 |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Operating Income/(Loss)                        |   |   |   |       |               | (30,000     | ) |   |   | (129,019 | ) |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Other Income (Expenses)                        |   |   |   |       |               |        |   |   |   |   |   |
| Other Income                                   |   |   |   |       |               | -           |   |   |   | - |   |
| Interest Income                                |   |   |   |       |               | -           |   |   |   | 8 |   |
| Interest Expense                               |   |   |   |       |               | 122,414     |   |   |   | 104,913 |   |
| Loss on disposal of subsidiaries               |   | 12     |   |       |               | 4,118,173   |   |   |   | - |   |
| (Loss) before minority interest and income tax |   |   |   | (4,270,587 | )                  |        |   | (233,924 | ) |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Loss before Income Tax                         |   |   |   |       |               | (4,270,587  | ) |   |   | (233,924 | ) |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Income Tax                                     |   | 3M     |   |       |               | -           |   |   |   | - |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Discontinued Operations, net of tax            |   | 14     |   |       |               | (71,086     | ) |   |   | - |   |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Net Loss                                       |   |   |   |       | $                  | (4,341,673  | ) |   | $ | (233,924 | ) |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Basic & Diluted Earnings Per Share         |   | 3N,17  |   |       |               | (0.0087     | ) |   |   | (0.0004 | ) |
|                                           |   |   |   |       |               |        |   |   |   |   |   |
| Weighted Average Shares Outstanding            |   |   |   |       |               | 499,911,400 |   |   |   | 496,259,226 |   |

----

|                                                          |   |      |        |   |   |   |   | Additional |   |   |          |   |   | Other         |        |   |        |   |    |   |   |
|---------------------------------------------------------------|--------|-----------|-------------|--------|--------|--------|--------|------------|--------|--------|---------------|--------|--------|---------------|-------------|--------|-------------|--------|---------|--------|--------|
|                                                          |   | Number of |        |   | Common |   |   | Paid in    |   |   | Comprehensive |   |   | Comprehensive |        |   | Accumulated |   |    |   |   |
|                                                          |   | Shares    |        |   | Stock  |   |   | Capital    |   |   | Income(Loss)  |   |   | Income(Loss)  |        |   | Deficit     |   |    | Total  |   |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |
| Balance, July 1, 2009                                         |   |      | 490,311,400 |   |   |   | 4,903  |       |   |   | 11,399,960    |   |   |          | (20,253,432 | )      |        |   | 38,756  |   |   |   | (20,292,189 | ) |   |   | (8,848,570 | ) |
| Additional Paid-in Capital                                    |   |      | -           |   |   |   | -      |       |   |   | 419,775       |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 419,775 |   |
| Imputed interest on interest free advances from related party |   |      | -           |   |   |   | -      |       |   |   | 11,340        |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 11,340 |   |
| Issuance of shares to Highgate                                |   |      | 9,600,000   |   |   |   | 96     |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 96 |   |
| Issuance of shares to Xianping Wang                           |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Foreign Currency translation                                  |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | 1,393       |   |        |   | 1,393   |   |   |   | - |   |   |   | 1,393 |   |
| Net Loss for year                                             |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (4,007,374  | )      |        |   | -       |   |   |   | (4,007,374 | ) |   |   | (4,007,374 | ) |
| Balance, June 30, 2010                                        |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 11,831,075    |   |   |          | (24,259,413 | )      |        |   | 40,149  |   |   |   | (24,299,563 | ) |   |   | (12,423,340 | ) |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |   |   |   |   |   |   |   |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |   |   |   |   |   |   |   |
| Balance, July 1, 2010                                         |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 11,831,075    |   |   |          | (24,259,413 | )      |        |   | 40,149  |   |   |   | (24,299,563 | ) |   |   | (12,423,340 | ) |
| Additional Paid-in Capital on conversion                      |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Imputed interest on interest free advances from related party |   |      | -           |   |   |   | -      |       |   |   | 109,226       |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 109,226 |   |
| Issuance of shares to Highgate                                |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Foreign Currency translation                                  |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (70,539     | )      |        |   | (70,539 | )      |   |   | - |   |   |   | (70,539 | ) |
| Deconsolidation of disposed subsidiaries                      |   |      |        |   |   |   |   |       |   |   |          |   |   |          | 3,650,208   |   |        |   | -       |   |   |   | 3,650,208 |   |   |   | 3,650,208 |   |
| Net Loss for period                                           |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (4,341,673  | )      |        |   | -       |   |   |   | (4,341,673 | ) |   |   | (4,341,673 | ) |
| Balance, September 30, 2010                                   |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 11,940,301    |   |   |          | (25,021,417 | )      |        |   | (30,390 | )      |   |   | (24,991,028 | ) |   |   | (13,076,119 | ) |

|                                    |   | September 30, 2010 |       |   | June 30, 2010 |   |       | Total  |   |
|-----------------------------------------|--------|--------------------|------------|--------|---------------|--------|------------|--------|--------|
|                                    |   |               |       |   |          |   |       |   |   |
| Comprehensive Income(Loss)              |   |               |       |   |          |   |       |   |   |
| Net Loss                                |   | $                  | (4,341,673 | )      |          | $      | (4,007,374 | )      |   | $ | (8,349,047 | ) |
|                                    |   |               |       |   |          |   |       |   |   |   |   |   |
| Other Comprehensive Income              |   |               |       |   |          |   |       |   |   |   |   |   |
| Foreign Currency Translation Adjustment |   |               | (70,539    | )      |          |   | 1,393      |   |   |   | (69,146 | ) |
| Total Comprehensive Income              |   | $                  | (4,412,212 | )      |          | $      | (4,005,981 | )      |   | $ | (8,418,193 | ) |

----

|                                                                                  |   | Three months ended |       |
|---------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                  |   | September 30,      |       |
|                                                                                  |   | 2010               |       |   | 2009 |   |
| Cash Flow from Operating Activities:                                                  |   |               |       |   |   |   |
| Net (Loss)                                                                            |   | $                  | (4,341,673 | ) |   | $ | (233,924 | ) |
| Adjustments to reconcile net earnings(loss) to net cash used in operating activities: |   |               |       |   |   |   |   |   |
| Depreciation                                                                          |   |               | -          |   |   |   | 3,856 |   |
| Imputed interest expense                                                              |   |               | -          |   |   |   | 104,708 |   |
|                                                                                  |   |               |       |   |   |   |   |   |
| Changes in assets and liabilities:                                                    |   |               |       |   |   |   |   |   |
| Decrease/(Increase) Accounts receivable                                               |   |               | 7,000      |   |   |   | - |   |
| Decrease/(Increase) Accounts Payable and accrued liabilities                          |   |               | (452,079   | ) |   |   | (41,523 | ) |
| Cash Sourced/(Used) in Operating Activities                                           |   |               | (4,786,751 | ) |   |   | (166,883 | ) |
|                                                                                  |   |               |       |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                 |   |               |       |   |   |   |   |   |
| Disposal of subsidiaries                                                              |   |               | 1,998,464  |   |   |   | - |   |
| Cash Used/(Sourced) in Investing Activities                                           |   |               | 1,998,464  |   |   |   | - |   |
|                                                                                  |   |               |       |   |   |   |   |   |
| Cash Flows from Financing Activities:                                                 |   |               |       |   |   |   |   |   |
| Stock Issue to Highgate on debt conversion                                            |   |               | -          |   |   |   | 96 |   |
| Adjustment/(Repayment) of Loan to Highgate                                            |   |               | 18,600     |   |   |   | (11,436 | ) |
| Loans from shareholders                                                               |   |               | 2,660,462  |   |   |   | 133,236 |   |
| Additional Paid-in Capital                                                            |   |               | 109,226    |   |   |   | 11,340 |   |
| Cash Sourced/(Used) in Financing Activities                                           |   |               | 2,788,288  |   |   |   | 133,236 |   |
|                                                                                  |   |               |       |   |   |   |   |   |
| Net Increase/(Decrease) in Cash & Cash Equivalents for the Period                 |   |               | (255,810   | ) |   |   | (33,647 | ) |
|                                                                                  |   |               |       |   |   |   |   |   |
| Effect of Currency Translation                                                        |   |               | -          |   |   |   | (36 | ) |
|                                                                                  |   |               |       |   |   |   |   |   |
| Cash & Cash Equivalents at Beginning of Period                                    |   |               | 255,810    |   |   |   | 45,769 |   |
|                                                                                  |   |               |       |   |   |   |   |   |
| Cash & Cash Equivalents at End of Period                                          |   | $                  | -          |   |   | $ | 12,086 |   |
|                                                                                  |   |               |       |   |   |   |   |   |
| Cash paid for interest expenses                                                       |   | $                  | -          |   |   | $ | - |   |

----

| 1.   | ORGANIZATION AND BUSINESS BACKGROUND |
|----------------|--------------------------------------|

| 2.   | GOING CONCERN UNCERTAINTIES |
|----------------|-----------------------------|

| 3.   | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----------------|--------------------------------------------|

|       (A.)      | Basis of Presentation These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). |
|-------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|      (B.)     | Use of Estimates |
|-------------------------------------------------------|------------------|

|      (C.)     | Basis of Consolidation |
|-------------------------------------------------------|------------------------|

|      (D.)     | Cash and Cash Equivalents |
|-------------------------------------------------------|---------------------------|

|      (E.)     | Accounts Receivable, Net |
|-------------------------------------------------------|--------------------------|

|      (F.)     | Property, Plant, and Equipment, Net |
|-------------------------------------------------------|-------------------------------------|

| Asset Classification    |   | Depreciable Life   |
|-------------------------|--------|--------------------|
| Land Use right          |   | 50 years           |
| Buildings               |   | 50 years           |
| Motor Vehicles          |   | 8 – 10 years |
| Equipment and Machinery |   | 5 – 8 years  |
| Intangible Assets       |   | 3 years            |
| Leasehold Improvement   |   | 2 years            |

----

| (G.)     | Impairment of Long-life Assets |
|------------------------------|--------------------------------|

| (H.)     | Revenue Recognition |
|------------------------------|---------------------|

|     (I.)     | Cost of Sales |
|-------------------------------------------------|---------------|

|      (J.)     | Value-Added Tax |
|-------------------------------------------------------|-----------------|

----

|      (K.)     | Advertising Expenses |
|-------------------------------------------------------|----------------------|

|      (L.)     | Comprehensive Income |
|-------------------------------------------------------|----------------------|

|        (M.)     | Income Taxes |
|-------------------------------------------------------------------|--------------|

| Taxable Income |   |
|----------------|--------|
| Rate           |   |   | Over |   |   | But Not Over |   |   | Of Amount Over |   |
|           | 15     | % |   |   | 0 |   |   |   | 50,000 |   |   |   | 0 |   |
|           | 25     | % |   |   | 50,000 |   |   |   | 75,000 |   |   |   | 50,000 |   |
|           | 34     | % |   |   | 75,000 |   |   |   | 100,000 |   |   |   | 75,000 |   |
|           | 39     | % |   |   | 100,000 |   |   |   | 335,000 |   |   |   | 100,000 |   |
|           | 34     | % |   |   | 335,000 |   |   |   | 10,000,000 |   |   |   | 335,000 |   |
|           | 35     | % |   |   | 10,000,000 |   |   |   | 15,000,000 |   |   |   | 10,000,000 |   |
|           | 38     | % |   |   | 15,000,000 |   |   |   | 18,333,333 |   |   |   | 15,000,000 |   |
|           | 35     | % |   |   | 18,333,333 |   |   |   | - |   |   |   | - |   |

----

|       (N.)     | Loss Per Share |
|-------------------------------------------------------------|----------------|

|        (O.)     | Foreign Currencies Translation |
|-------------------------------------------------------------------|--------------------------------|

| Exchange Rates                              |   | September 30, 2010 |   |   | June 30, 2010 |   |   | September 30, 2009 |   |
|---------------------------------------------|--------|--------------------|--------|--------|---------------|--------|--------|--------------------|--------|
| Period/year end RMB : US$ exchange rate     |   |               | 6.7011 |   |          |   | 6.8086 |               |   |   | 6.8376 |   |
| Average period/year RMB : US$ exchange rate |   |               | 6.7726 |   |          |   | 6.8347 |               |   |   | 6.8425 |   |

----

|      (P.)     | Fair Value of Financial Instruments |
|-------------------------------------------------------|-------------------------------------|

|      (Q.)     | Related Parties |
|-------------------------------------------------------|-----------------|

|       (R.)     | Convertible Debenture Issued with Stock Purchase Warrants |
|-------------------------------------------------------------|-----------------------------------------------------------|

| §  | The Company treats the full fair market value of the derivative and warrant liability on the convertible secured debentures as a discount on the debentures (limited to their face value).  The excess, if any, is recorded as an increase in the derivative liability and warrant liability with a corresponding increase in loss on adjustment of the derivative and warrant liability to fair value. |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §  | Subsequent to the initial recording, the change in the fair value of the detachable warrants, determined under the Black-Scholes option pricing formula and the change in the fair value of the embedded derivative (utilizing the Black-Scholes option pricing formula) in the conversion feature of the convertible debentures are recorded as adjustments to the liabilities as of September 30, 2006. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §  | The expense relating to the change in the fair value of the Company's stock reflected in the change in the fair value of the warrants and derivatives is included in interest expense in the accompanying consolidated statements of income. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|      (S.)     | Recently Issued Accounting Standard |
|-------------------------------------------------------|-------------------------------------|

| 4.   | OTHER RECEIVABLES AND PREPAYMENT |
|----------------|----------------------------------|

|        |   | September 30, 2010 |   |   | June 30, 2010 |   |
|-------------|--------|--------------------|--------|--------|---------------|--------|
|        |   |               |   |   |          |   |
| Prepayments |   | $                  | 23,000 |   |          | $      | 241,353 |   |

----

| 5.   | PROPERTY, PLANT, AND EQUIPMENT, NET |
|----------------|-------------------------------------|

|                           |   | September 30, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|--------------------|--------|--------|---------------|--------|
| Equipment and machinery        |   | $                  | -      |   |          | $      | 174,428 |   |
| Motor vehicles                 |   |               | -      |   |          |   | 81,959 |   |
| Leasehold Improvement          |   |               | -      |   |          |   | 37,756 |   |
|                           |   |               | -      |   |          |   | 294,143 |   |
| Less: Accumulated Depreciation |   |               | -      |   |          |   | (90,081 | ) |
|                           |   | $                  | -      |   |          | $      | 204,062 |   |

| 6.   | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
|----------------|------------------------------------------|

|   | Accounts payable and accrued liabilities as of September 30, 2010 and June 30, 2010 consists of the following: |
|--------|----------------------------------------------------------------------------------------------------------------|

|             |   | September 30, 2010 |    |   | June 30, 2010 |   |
|------------------|--------|--------------------|---------|--------|---------------|--------|
| Accounts Payable |   | $                  | 141,503 |   |          | $      | 570,834 |   |

| 7.   | LOANS PAYABLE/CONVERTIBLE DEBENTURE |
|----------------|-------------------------------------|

| Payment Date       |   | Cash Payment |      |   | Conversion of Debenture |   |
|--------------------|--------|--------------|-----------|--------|-------------------------|--------|
| March 10, 2007     |   | $            | 250,000   |   |                    |   | 250,000 |   |
| September 30, 2007 |   |         | 375,000   |   |                    |   | 375,000 |   |
| October 31, 2007   |   |         | 375,000   |   |                    |   | 375,000 |   |
| January 31, 2008   |   |         | 250,000   |   |                    |   | 250,000 |   |
| July 31, 2008      |   |         | 625,000   |   |                    |   | 625,000 |   |
|               |   | $            | 1,875,000 |   |                    |   | 1,875,000 |   |

----

| 8.   | LOANS FROM SHAREHOLDERS |
|----------------|-------------------------|

| 9.   | COMMON STOCK AND WARRANTS |
|----------------|---------------------------|

| A.   | Common Stock |
|----------------|--------------|

| B.   | Warrants |
|----------------|----------|

| (1)   | The Company completed a private placement in 2005 with certain individuals for 622,690 units at $3.25 per unit for total cash proceeds of $2,023,800.  Each unit consists of one share of common stock and one-half of one non-transferable share purchase warrant.  The warrant will expire on the earlier of: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)       | two years from the date of issuance; and                                                                                                                                                                            |
|-----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)           | fifteen business days from date that the Company provides notice in writing to the subscriber that the Company’s common shares have been trading or traded at a price of $7 or more for a period of ten days. |

|   | The warrant shares shall have an exercise price of $4.50 per warrant share for the first twelve months, and if still available after twelve months, the warrant shares shall have an exercise price of $4.60 per warrant share starting on the first day of the second twelve month period and increasing by $0.10 on the first day of each subsequent month thereafter until expiration of the warrants. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | Share purchase warrant issued from convertible debenture On December 13, 2005, the Company issued to the holder of the convertible debenture 1,035,000 warrants.  One share purchase warrant is exercisable for one common share at $0.00001 per share, until expiration on November 22, 2010.  As of September 30, 2010, zero shares of common stock were converted by the convertible debenture holders. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)  | Share warrant issued for service On May 1, 2006, the Company issued 100,000 warrants at $1.47 per share to Mr. Peter Shandro, the VP Business Strategy of the Company, in association with the planning and execution of the on-line ecommerce initiative of the Company.  Compensation expense of $94,775 was recorded with the issuance of these warrants. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.   | STATUTORY RESERVES |
|-----------------|--------------------|

----

| 11.   | CONCENTRATION OF RISK |
|-----------------|-----------------------|

| 12.   | LOSS ON DISPOSAL OF SUBSIDIARIES |
|-----------------|----------------------------------|

| 13.   | NET LOSS PER SHARE |
|-----------------|--------------------|

|                                                |   | For the three months ended |        |
|-----------------------------------------------------|--------|----------------------------|-------------|
| Basic and diluted net loss per share calculation:   |   | September 30, 2010         |        |   | September 30, 2009 |   |
|                                                |   |                       |        |   |   |   |
| (a). Numerator:                                |   |                       |        |   |   |   |
| Net loss used in computing basic net loss per share |   |                       | 4,341,673   |   |   |   | 233,924 |   |
|                                                |   |                       |        |   |   |   |   |   |
| (b). Denominator:                              |   |                       |        |   |   |   |   |   |
| Weighted-average ordinary shares outstanding        |   |                       | 499,911,400 |   |   |   | 496,259,226 |   |
|                                                |   |                       |        |   |   |   |   |   |
| Basic and diluted net loss per share                |   | $                          | 0.0087      |   |   | $ | 0.0004 |   |

| 14.   | DISCONTINUED OPERATION |
|-----------------|------------------------|

| Results of Operations               |   |            |   |   |                     |   |   |   |   |
|-------------------------------------|--------|-----------------|--------|--------|--------------------------|--------|--------|--------|--------|
| for the three months ended          |   |            |   |   |                     |   |   |   |   |
| September 30, 2010                  |   |            |   |   |                     |   |   |   |   |
|                                |   | Beijing Joannes |   |   | Pac Poly Investment Ltd. |   |   | Total  |   |
|  Revenue                       |   |            | -      |   |                     |   | -      |   |   |   | - |   |
|  Cost of revenue               |   |            | -      |   |                     |   | -      |   |   |   | - |   |
|  Gross profit                  |   |            | -      |   |                     |   | -      |   |   |   | - |   |
|                                |   |            |   |   |                     |   |   |   |   |   |   |   |
| Selling expenses                    |   |            | -      |   |                     |   | -      |   |   |   | - |   |
| General and administrative expenses |   |            | 64,086 |   |                     |   | 7,000  |   |   |   | 71,086 |   |
| Total operating expenses            |   |            | 64,086 |   |                     |   | 7,000  |   |   |   | 71,086 |   |
|                                |   |            |   |   |                     |   |   |   |   |   |   |   |
| Other income                        |   |            | -      |   |                     |   | -      |   |   |   | - |   |
| Interest income                     |   |            | -      |   |                     |   | -      |   |   |   | - |   |
| Other expense                       |   |            | -      |   |                     |   | -      |   |   |   | - |   |
| Interest expense                    |   |            | -      |   |                     |   | -      |   |   |   | - |   |
|                                |   |            |   |   |                     |   |   |   |   |   |   |   |
| Earnings/(Losses) before tax        |   |            | 64,086 |   |                     |   | 7,000  |   |   |   | 71,086 |   |
| Income tax                          |   |            | -      |   |                     |   | -      |   |   |   | - |   |
| Minority interest income            |   |            | -      |   |                     |   | -      |   |   |   | - |   |
|                                |   |            | 64,086 |   |                     |   | 7,000  |   |   |   | 71,086 |   |

----

----

|                                                           | For Three Month Period Ended September 30, 2010(unaudited) | For Three Month Period Ended September 30, 2009(unaudited) |
|----------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|
| Revenue                                                        |                                                       |                                                       |
|    Net revenue                                  | -0-                                                        | -0-                                                        |
|    Cost of Sales                                | -0-                                                        | -0-                                                        |
| Gross Profit                                                   | -0-                                                        | -0-                                                        |
|                                                           |                                                       |                                                       |
| Operating Expenses                                             |                                                       |                                                       |
|    Selling, general and administrative expenses | $30,000                                                    | $129,019                                                   |
| Operating Income (loss)                                        | (30,000)                                                   |  (129,019)                                            |
|                                                           |                                                       |                                                       |
| Other Income (Expenses)                                        |                                                       |                                                       |
|    Other income                                 | -0-                                                        | -0-                                                        |
|    Interest income                              | -0-                                                        | 8                                                          |
|    Interest expense                             | 122,414                                                    | 104,913                                                    |
|    Loss on disposal of subsidiaries             | 4,118,173                                                  | -0-                                                        |
| Loss Before Income Tax                                         | (4,270,587)                                                | (233,924)                                                  |
|    Discontinued Operations net of tax           | (71,086)                                                   | -0-                                                        |
| Net Loss                                                       | (4,341,673)                                                | (233,924)                                                  |
|                                                           |                                                       |                                                       |

----

----

----

----

|  Payment Date |   |  Cash Payment |      |   | Conversion of Debenture |   |
|--------------------|--------|--------------------|-----------|--------|-------------------------|--------|
| March 10, 2007     |   | $                  | 250,000   |   |                    |   | 250,000 |   |
| June 30, 2007      |   |               | 375,000   |   |                    |   | 375,000 |   |
| October 31, 2007   |   |               | 375,000   |   |                    |   | 375,000 |   |
| January 31, 2008   |   |               | 250,000   |   |                    |   | 250,000 |   |
| July 31, 2008      |   |               | 625,000   |   |                    |   | 625,000 |   |
|               |   | $                  | 1,875,000 |   |                    |   | 1,875,000 |   |

----

----

----

| 1.   | Pertain to the  maintenance of records that in reasonable  detail accurately and fairly reflect the  transactions  and dispositions of the assets of the issuer; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Provide  reasonable  assurance that  transactions are recorded as necessary  to  permit  preparation  of  financial  statements  in accordance with generally  accepted  accounting  principles,  and that receipts and  expenditures of the issuer are being made only in accordance with  authorizations of management and directors of the issuer; and |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Provide  reasonable  assurance  regarding  prevention  or  timely detection of unauthorized acquisition,  use or disposition of the issuer's  assets  that  could  have  a  material  effect  on  the financial statements. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Exhibit |     |                           |
|---------|--------------------|-------------------------------------|
|    |          |                                |
| 31.1    |     | Certification under Rule 13a-14(a). |
| 31.2    |          | Certification under Rule 13a-14(a). |
| 32.1    |          | Certification under Section 1350.   |
| 32.2    |          | Certification under Section 1350.   |

----

|                           | XINHUA CHINA LTD. |                                   |
|--------------------------------|-------------------|----------------------------------------|
|                           |              |                                   |   |
| Dated: November 22, 2010  | By:               | /s/XIANPING WANG                       |   |
|                           |              | Xianping Wang, President/Chief         |   |
|                           |              | Executive Officer                      |   |
|                           |              |                                   |   |
|                           |              |                                   |   |
| Dated: November 22, 2010       | By:               | /s/ XIANPING WANG                      |   |
|                           |              | Xianping Wang, Acting as Interim Chief |   |
|                           |              | Financial Officer                      |   |

----