U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


Mark One

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

                For the six month period ended December 31, 2009

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


                For the transition period from ______ to _______


                        COMMISSION FILE NUMBER: 000-33195


                                XINHUA CHINA LTD.
                 ______________________________________________
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


            NEVADA                                               88-0437644
_______________________________                              ___________________
(STATE OR OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NO.)


                    B-26F, ORIENTAL KENZO DONGCHENG DISTRICT
                                 BEIJING 100027
                           PEOPLE'S REPUBLIC OF CHINA
                    ________________________________________
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                       86-10-64168816 OR 86-10-64168916
                       ________________________________
                           (ISSUER'S TELEPHONE NUMBER)


             SUITE 304, BUILDING #1, YUANJIA INTERNATIONAL APARTMENT
                    NO. 40 DONGZHONG ST., DONGCHENG DISTRICT
                                 BEIJING 100027
                           PEOPLE'S REPUBLIC OF CHINA
             _______________________________________________________
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                         IF CHANGED SINCE LAST REPORT)


SECURITIES REGISTERED PURSUANT TO SECTION         NAME OF EACH EXCHANGE ON WHICH
            12(B) OF THE ACT:                              REGISTERED:
                   NONE


          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                        COMMON STOCK, $0.00001 PAR VALUE
                        ________________________________
                                (TITLE OF CLASS)


<PAGE>


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

                                 Yes [X ] No[ ]

Indicate by checkmark  whether the registrant is a large  accelerated  filer, an
accelerated filer, or a non-accelerated filer.

Large accelerated filer [ ]                                Accelerated filer [ ]
Non-accelerated filer   [X]

Indicate by checkmark  whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act). [ ] Yes [X] No

    APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                             PRECEDING FIVE YEARS.

                                       N/A

Indicate by  checkmark  whether the issuer has filed all  documents  and reports
required to be filed by Section 12, 13 and 15(d) of the Securities  Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.
Yes [ ]  No [ ]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares  outstanding   Outstanding as of February 15, 2010
of each of the issuer's classes of common
stock, as of the most practicable date:

Class
Common Stock $0.00001 par value                        499,911,400


<PAGE>

                                XINHUA CHINA LTD.

                                    FORM 10-Q

                   PART I - FINANCIAL INFORMATION

Item 1.            Financial Statements

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

Item 3.            Quantitative and Qualitative Discloses About Market
                   Risk

Item 4.            Controls and Procedures

Item 4T.           Controls and Procedures

..                  PART II - OTHER INFORMATION

Item 1.            Legal Proceedings

Item 1A.           Risk Factors

Item 2.            Unregistered Sales of Equity Securities and Use of
                   Proceeds

Item 3.            Defaults Upon Senior Securities

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

Item 5.            Other Information

Item 6.            Exhibits




<PAGE>


                           FORWARD LOOKING STATEMENTS

Statements  made in this Form 10-Q that are not  historical or current facts are
"forward-looking  statements"  made  pursuant to the safe harbor  provisions  of
Section  27A of the  Securities  Act of 1933 (the  "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use  of  terms  such  as  "may,"  "will,"  "expect,"  "believe,"   "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such  forward-looking  statements  be  subject  to the  safe  harbors  for  such
statements.  We wish to caution  readers not to place undue reliance on any such
forward-looking  statements,   which  speak  only  as  of  the  date  made.  Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties  and important  factors beyond our control that could cause actual
results and events to differ  materially from  historical  results of operations
and events  and those  presently  anticipated  or  projected.  We  disclaim  any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

AVAILABLE INFORMATION

Xinhua China Ltd. files annual,  quarterly,  current reports,  proxy statements,
and  other  information  with  the  Securities  and  Exchange   Commission  (the
"Commission").  You may read and copy  documents  referred to in this  Quarterly
Report on Form 10-Q that have been filed with the Commission at the Commission's
Public Reference Room, 450 Fifth Street, N.W.,  Washington,  D.C. You may obtain
information  on the  operation  of the  Public  Reference  Room by  calling  the
Commission  at  1-800-SEC-0330.  You can also  obtain  copies of our  Commission
filings by going to the Commission's website at http://www.sec.gov.

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS













                                XINHUA CHINA LTD.

                   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                       DECMEBER 31, 2009 AND JUNE 30, 2009

                             (STATED IN US DOLLARS)









<PAGE>



              XINHUA CHINA LTD.



CONTENTS                                                                   PAGES

Report of Registered Independent Public Accounting Firm                        1


Unaudited Consolidated Balance Sheet                                       2 - 3


Unaudited Consolidated Statement of Income                                     4

Unaudited Consolidated Statement of Stockholders' Equity                       5

Unaudited Consolidated Statement of Cash Flows                                 6

Notes to the Unaudited Consolidated Financial Statements                  7 - 20






<PAGE>


Board of Directors and Stockholders
Xinhua China Ltd.


             REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM


We have reviewed the accompanying  interim consolidated Balance Sheets of Xinhua
China Ltd.  ("the  Company") as of December 31, 2009 and June 30, 2009,  and the
related  statements  of  income,  stockholders'  equity,  and cash flows for the
three-months  and six months  ended  December 31, 2009 and 2008.  These  interim
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.

We conducted our review in accordance  with the 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 the
standards of the Public Company  Accounting  Oversight  Board,  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 review, we are not aware of any material  modifications that should
be made to the accompanying interim  consolidated  financial statements for them
to be in conformity with U.S. generally accepted accounting principles.







South San Francisco, California                        Samuel H. Wong & Co., LLP
February 3, 2010                                    Certified Public Accountants




<PAGE>

<TABLE>
<CAPTION>


                                XINHUA CHINA LTD.
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 2009 AND JUNE 30, 2009
                             (STATED IN US DOLLARS)


                                                                                                              (AUDITED)
                                                          NOTES                 DECEMBER 31, 2009           JUNE 30, 2009
                                                                                _________________           _____________
<S>                                                        <C>                      <C>                      <C>

ASSETS
        CURRENT ASSETS
          Cash and Cash Equivalents                        3D                       $    730,345             $    45,769
          Accounts Receivable, NET                         3E                             86,125                  74,228
          Other Receivables and Prepayments                 4                            224,657                 224,535
                                                                                _________________           _____________
             Total Current Assets                                                      1,041,127                 344,532

        LONG-TERM ASSETS
          Property, Plant & Equipment, NET                3F,5                            66,992                  55,156
                                                                                _________________           _____________
             Total Long-term Assets                                                       66,992                  55,156

                                                                                _________________           _____________
             Total Assets                                                           $  1,108,119             $   399,688
                                                                                =================           =============

LIABILITIES & STOCKHOLDERS' EQUITY

        LIABILITIES
          CURRENT LIABILITIES
          Accounts Payable and Accrued Liabilities          6                       $    487,353             $   754,025
          Current portion of Loans Payable                  7                          1,479,475               1,490,911
                                                                                _________________           _____________
             Total Current Liabilities                                                 1,966,828               2,244,936

          LONG-TERM LIABILITIES
          Loans Payable                                     7                          1,058,261               1,058,261
          Loans from Shareholders                           8                          7,243,452               5,945,061
                                                                                _________________           _____________
             Total Long-term Liabilities                                               8,301,713               7,003,322

                                                                                _________________           _____________
             Total Liabilities                                                      $ 10,268,541             $ 9,248,258
                                                                                =================           =============


   SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT


<PAGE>


                                XINHUA CHINA LTD.
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
                    AS OF DECEMBER 31, 2009 AND JUNE 30, 2009
                             (STATED IN US DOLLARS)


                                                                                                              (AUDITED)
                                                          NOTES                 DECEMBER 31, 2009           JUNE 30, 2009
                                                                                _________________           _____________


STOCKHOLDERS' EQUITY

  Common  Stock  $0.00001  Par  Value   500,000,000
     Shares     Authorized;     499,911,400     and
     490,311,400  shares issued and  outstanding at
     December   31,   2009  and   June  30,   2009,
     accordingly.                                          10                             4,999                  4,903
  Additional Paid-In Capital                                                         11,613,939             11,399,960
  Accumulated Other Comprehensive
     Income                                                                              38,431                 38,756
  Accumulated Deficit                                                              (20,817,791)           (20,292,189)
                                                                                _________________           _____________
      Total Stockholders' (Deficit)/Equity                                          (9,160,422)            (8,848,570)

                                                                                _________________           _____________
  Total Liabilities & Stockholders' Equity                                        $   1,108,119             $  399,688
                                                                                =================           =============









   SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT


</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
                   UNAUDITED CONSOLIDATED STATEMENT OF INCOME
          FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
                             (STATED IN US DOLLARS)


                                                    NOTE            THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                                       DECEMBER 31,                          DECEMBER 31,
                                                             ________________________________      ________________________________

                                                                 2009               2008               2009               2008
                                                             _____________      _____________      _____________      _____________
<S>                                                          <C>                <C>                <C>                <C>

REVENUE
      Revenue, NET                                   3H      $           -      $           -      $           -      $           -
      Cost of Sales, NET                             3I                  -                  -                  -                  -
                                                             _____________      _____________      _____________      _____________

         Gross Profit                                                    -                  -                  -                  -

OPERATING EXPENSES
      Selling, General, and Administrative
      Expenses                                                     167,374            110,942            296,393            337,808
                                                             _____________      _____________      _____________      _____________

         Total Operating Expense                                   167,374            110,942            296,393            337,808

                                                             _____________      _____________      _____________      _____________

      Operating Income/(Loss)                                     (167,374)          (110,942)          (296,393)          (337,808)
                                                             _____________      _____________      _____________      _____________

OTHER INCOME (EXPENSES)
      Other Income                                                       -                  -                  -            179,621
      Interest Income                                                   24                  5                 40                  -
      Gain on disposal of Beijing BoHeng                                 -                  -                  -             73,427
      Interest Expense                                            (124,328)          (100,137)          (229,249)          (250,466)
      Impairment Loss on Boheng investment                               -         (1,625,000)                 -         (1,625,000)
                                                             _____________      _____________      _____________      _____________

         Loss before minority interest and income tax              (291678)        (1,836,074)          (525,602)        (1,960,227)


Loss before Income Tax                                            (291,678)        (1,836,074)          (525,602)        (1,960,227)

Income Tax                                          3M,14                -                  -                  -                  -

                                                             _____________      _____________      _____________      _____________

Net Loss                                                     $    (291,678)     $  (1,836,074)     $    (525,602)     $  (1,960,227)
                                                             ==============    ===============    ===============    ===============


Basic & Diluted Earnings Per Share                  3N,17           (0.001)            (0.013)            (0.001)            (0.014)

Weighted Average Shares Outstanding                            499,911,399        142,941,399        498,095,183        142,941,399


   SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                XINHUA CHINA LTD.
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)

                                                        ADDITIONAL                       OTHER
                                  NUMBER OF    COMMON    PAID IN     COMPREHENSIVE   COMPREHENSIVE   ACCUMULATED
                                   SHARES      STOCK     CAPITAL     INCOME(LOSS)    INCOME(LOSS)      DEFICIT       TOTAL
                                 ___________   ______   __________   _____________   _____________   ___________   __________
<S>                               <C>             <C>   <C>            <C>                  <C>      <C>           <C>

Balance, July 1, 2008             98,655,733      987   10,903,997     (17,750,304)         38,149   (17,788,454)  (6,845,321)
Additional Paid-in Capital                 -        -      109,444               -               -             -      109,444
Imputed interest on interest
   free advances from related
   party                                   -        -      386,519               -               -             -      386,519
Issuance of shares to Highgate   266,655,667    2,666            -               -               -             -        2,666
Issuance of shares to Xianping
   Wang                          125,000,000    1,250            -               -               -             -        1,250
Foreign Currency translation               -        -            -             607             607             -          607
Net Loss for year                          -        -            -      (2,503,735)              -    (2,503,735)  (2,503,735)
                                 ___________   ______   __________   _____________   _____________   ___________   __________

Balance, June 30, 2009           490,311,400    4,903   11,399,960     (20,253,432)         38,756   (20,292,189)  (8,848,570)
                                 ============  ======   ==========   =============   =============   ===========   ==========


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                 -        -       11,339               -               -             -       11,339
Imputed interest on interest
   free advances from related
   party                                   -        -      202,640               -               -             -      202,640
Issuance of shares to Highgate     9,600,000       96            -               -               -             -           96
Foreign Currency translation               -        -            -            (325)           (325)            -         (325)
Net Loss for quarter                       -        -            -        (525,602)              -      (525,602)    (525,602)
                                 ___________   ______   __________   _____________   _____________   ___________   __________

Balance, December 31, 2009       499,911,400    4,999   11,613,939     (20,799,359)         38,431   (20,817,791)  (9,160,422)
                                 ============  ======   ==========   =============   =============   ===========   ==========




                                                        DECEMBER 31, 2009     JUNE 30, 2009
                                                        _________________     _____________

            COMPREHENSIVE INCOME(LOSS)

            Net Loss                                       $ (525,602)        $  (2,503,735)

            OTHER COMPREHENSIVE INCOME

            Foreign Currency Translation Adjustment              (325)                  607
                                                           __________         _____________

            Total Comprehensive Income                     $ (525,927)        $  (2,503,128)
                                                           __________         _____________


   SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT

</TABLE>


<PAGE>

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                      DECEMBER 31,                    DECEMBER 31,
                                                               ___________________________     ___________________________

                                                                  2009            2008            2009            2008
                                                               ___________     ___________     ___________     ___________
<S>                                                            <C>             <C>             <C>             <C>

CASH FLOW FROM OPERATING ACTIVITIES:
       Net (Loss)                                              $  (291,678)    $(1,836,074)    $  (525,602)    $(1,960,227)
       Adjustments to reconcile net earnings(loss) to net
       cash used in operating activities:
            Depreciation                                             5,593           5,394           9,462          10,629
            Imputed interest expense                               123,620         100,137         228,328         211,862
            Amortization of deferred imputed interest from               -               -               -          13,768
            note receivable

       CHANGES IN ASSETS AND LIABILITIES:
            Decrease/(Increase) Accounts receivable                (11,950)          4,464         (11,897)        342,116
            Decrease/(Increase) Other receivables and                    -               -               -            (812)
            prepayments
            Decrease/(Increase) Accounts Payable and              (250,837)         16,831        (292,360)       (489,853)
            accrued liabilities
            Decrease/(Increase) in Deferred Revenue                      -               -               -         (18,355)
                                                               ___________     ___________     ___________     ___________

       Cash Sourced/(Used) in Operating Activities                (425,252)     (1,709,248)       (592,069)     (1,890,872)
                                                               ___________     ___________     ___________     ___________

CASH FLOWS FROM INVESTING ACTIVITIES:
       Loss on impairment of asset                                       -       1,625,000               -       1,625,000
       Purchase of leasehold improvements                          (21,235)              -         (21,235)              -
       Investment in subsidiary - Boheng                                 -               -               -               -
                                                               ___________     ___________     ___________     ___________

       Cash Used/(Sourced) in Investing Activities                 (21,235)      1,625,000         (21,235)      1,625,000
                                                               ___________     ___________     ___________     ___________

CASH FLOWS FROM FINANCING ACTIVITIES:
       Stock Issue to Highgate on debt conversion                        -               -              96             502
       Repayment of Loan to Highgate                                     -               -         (11,436)        (44,174)
       Loans from shareholders                                   1,164,950          71,533       1,298,344         272,404
       Additional Paid-in Capital                                        -               -          11,340               -
                                                               ___________     ___________     ___________     ___________

       Cash Sourced/(Used) in Financing Activities               1,164,950          71,533       1,298,344         228,732

                                                               ___________     ___________     ___________     ___________
       NET INCREASE/(DECREASE) IN CASH & CASH
       EQUIVALENTS FOR THE PERIOD                                  718,463         (12,969)        685,040         (36,918)


EFFECT OF CURRENCY TRANSLATION                                        (204)            274            (464)            211

CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD                      12,086          14,783          45,769          38,733

                                                               ___________     ___________     ___________     ___________

CASH & CASH EQUIVALENTS AT END OF PERIOD                       $   730,345     $     1,814     $   730,345     $     1,814
                                                               ===========     ===========     ===========     ===========

Cash paid for interest expenses                                $         -     $         -     $         -     $         -


   SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS AND ACCOUNTANT'S REPORT

</TABLE>


<PAGE>



                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


1.       ORGANIZATION AND BUSINESS BACKGROUND

         Xinhua China Ltd. (the  "Company",  formerly  Camden Mines Limited) was
         incorporated  in the State of  Nevada,  United  States of  America,  on
         September  14,  1999.   Until   September   2004,  the  Company  was  a
         non-operating  shell  company and  considered  as a  development  stage
         enterprise  since its  inception.  Effective from October 12, 2004, the
         Company changed to its current name. The Company  established an office
         in Vancouver,  Canada; however, this office was closed down in December
         2006. The Company  established its principal executive office at B26-F,
         Oriental  Kenzo,  No.  48  Dongzhimenwai  Street,  Dongcheng  District,
         Beijing 100027 People's Republic of China.

         As of May 31, 2006, the Company  reduced its equity  interest in Xinhua
         C&D from 56.14% to 7.98%.  Subsequent to the  deconsolidation of Xinhua
         C&D, the Company  commenced  the internet  book  distribution  business
         through Beijing Joannes Information Technology Co., Ltd. ("Joannes").

         Details of the  Company's  subsidiaries  as of  December  31,  2009 are
         described below:

<TABLE>
<CAPTION>

         ________________________________________________________________________________________________________________
                                                PLACE OF
                                              INCORPORATION                                 PARTICULARS OF      EFFECTIVE
                                               AND KIND OF         PRINCIPAL ACTIVITIES    ISSUED/REGISTERED     INTEREST
                      NAME                    LEGAL ENTITY        AND PLACE OF OPERATION     SHARE CAPITAL         HELD
         ________________________________________________________________________________________________________________
<S>      <C>                               <C>                       <C>                   <C>                     <C>
                                                                        Sales and
         Beijing Joannes Information       PRC, a company with       distribution of       Registered capital
         Technology Co., Ltd.               limited liability           books, PRC            US$1,250,000         100%
         ________________________________________________________________________________________________________________

                                        British Virgin Islands,                           10,000,000 ordinary
         Pac-Poly Investment Ltd.       a company with limited     Investment holding,     shares of US$1 par
                                                liability                  PRC                   value             100%
         ________________________________________________________________________________________________________________

</TABLE>


2.       GOING CONCERN UNCERTAINTIES

         These  consolidated  financial  statements have been prepared  assuming
         that Company will continue as a going concern,  which  contemplates the
         realization  of assets and the discharge of  liabilities  in the normal
         course of business for the foreseeable future.

         As of December 31, 2009, the Company had no working capital but current
         liabilities  exceeding  current  assets by $925,701 and an  accumulated
         deficit of  $20,817,790  because the Company  continued to incur losses
         over the past several  years.  Management  has taken certain action and
         continues  to  implement  changes  designed  to improve  the  Company's
         financial results and operating cash flows. The actions involve certain
         cost-saving   initiatives   and  growing   strategies,   including  (a)
         reductions  in  headcount  and  corporate  overhead  expenses;  and (b)
         development  of  e-commerce  business.  Management  believes that these
         actions  will enable the Company to improve  future  profitability  and
         cash flow in its continuing  operations through December 31, 2009. As a
         result,  the  financial  statements do not include any  adjustments  to
         reflect  the  possible  future  effects  on  the   recoverability   and
         classification   of  assets  or  the  amounts  and   classification  of
         liabilities  that may result from the outcome of the Company's  ability
         to continue as a going concern.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


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

                  In  preparing   these   consolidated   financial   statements,
                  management  makes  estimates and  assumptions  that affect the
                  reported  amounts of assets  and  liabilities  in the  balance
                  sheets and  revenues and  expenses  during the year  reported.
                  Actual results may differ from these Estimates.

         (C.)     BASIS OF CONSOLIDATION

                  The interest of the Company in the  subsidiaries  was acquired
                  by means of exchange  of shares in the  Company  pursuant to a
                  share   exchange   agreement  on  September   14,  2004.   The
                  transaction  is considered a transfer  between  entities under
                  common  control,  within the meaning of US GAAP.  Accordingly,
                  the assets and liabilities transferred have been accounted for
                  at  historical  cost or at their  "fair  value" at the date of
                  their  original  acquisition  and have  been  included  in the
                  foregoing  financial  statements  as of the  beginning  of the
                  periods  presented.

                  The consolidated  financial  statements  include the financial
                  statements of the Company and its  subsidiaries.  Subsidiaries
                  are  those   entities  in  which  the  Company,   directly  or
                  indirectly,  controls  more than one half of the voting power;
                  has the power to govern the financial and operating  policies;
                  to appoint or remove the  majority of the members of the board
                  of  directors;  or to cast majority of votes at the meeting of
                  directors.   All   significant   inter-company   balances  and
                  transactions  within  the  Company  have  been  eliminated  on
                  consolidation.

         (D.)     CASH AND CASH EQUIVALENTS

                  Cash and cash  equivalents  are carried at cost and  represent
                  cash on  hand,  demand  deposits  placed  with  banks or other
                  financial  institutions and all highly liquid investments with
                  an  original  maturity  of  three  months  or  less  as of the
                  purchase date of such investments.

         (E.)     ACCOUNTS RECEIVABLE, NET

                  Accounts receivable are recorded at the invoiced amount and do
                  not bear interest. The Company extends unsecured credit to its
                  customers in the ordinary  course of business,  but  mitigates
                  the associated risks by performing  credit checks and actively
                  pursuing past due accounts. An allowance for doubtful accounts
                  is established and determined based on managements' assessment
                  of known requirements,  aging of receivables, payment history,
                  the  customer's  current credit  worthiness,  and the economic
                  environment.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


         (F.)     PROPERTY, PLANT, AND EQUIPMENT, NET

                  Property,  plant,  and  equipment  are  stated  at  cost  less
                  accumulated depreciation and accumulated impairment losses, if
                  any.  Depreciation  is calculated on the  straight-line  basis
                  over the  following  expected  useful  lives  from the date on
                  which they become fully operational.

                  ASSET CLASSIFICATION             DEPRECIABLE LIFE
                  _______________________          ________________

                  Land Use right                         50 years
                  Buildings                              50 years
                  Motor Vehicles                     8 - 10 years
                  Equipment and Machinery             5 - 8 years
                  Leasehold Improvement                   2 years

                  Expenditure   for  maintenance  and  repairs  is  expensed  as
                  incurred. The gain or loss on the disposal of property, plant,
                  and equipment is the difference between the net sales proceeds
                  and  the  carrying  amount  of  the  relevant  assets  and  is
                  recognized in the consolidated statement of operations.

         (G.)     IMPAIRMENT OF LONG-LIFE ASSETS

                  In  accordance   with  SFAS  No.  121,   "ACCOUNTING  FOR  THE
                  IMPAIRMENT OF LONG-LIVED  ASSETS AND FOR LONG-LIVED  ASSETS TO
                  BE DISPOSED OF', a long-lived assets and certain  identifiable
                  intangible  assets held and used by the  Company are  reviewed
                  for  impairment  whenever  events or changes in  circumstances
                  indicate  that the  carrying  amount  of an  asset  may not be
                  recoverable. For the purposes of evaluating the recoverability
                  of long-lived  assets,  the  recoverability  test is performed
                  using  undiscounted  net cash flows related to the  long-lived
                  assets.  The Company  reviews  long-lived  assets,  if any, to
                  determine whether the carrying values are not impaired.

         (H.)     REVENUE RECOGNITION

                  Sales revenue is  recognized  when  persuasive  evidence of an
                  arrangement exists, the price is fixed and final, delivery has
                  occurred and there is  reasonable  assurance of  collection of
                  the sales proceeds.  The Company  generally  obtains  purchase
                  authorizations  from its customers  for a specified  amount of
                  products at a specified  price and considers  delivery to have
                  occurred when the customer  takes  possession of the products.
                  Net sales incorporate offsets for discounts and sales returns.
                  Revenue is recognized upon delivery, risk and ownership of the
                  title is  transferred  and a  reserve  for  sales  returns  is
                  recorded  even  though  invoicing  may not be  completed.  The
                  Company has  demonstrated  the ability to make  reasonable and
                  reliable estimates of products returns in accordance with SFAS
                  No. 48, "REVENUE RECOGNITION WHEN RIGHT OF RETURN EXISTS".


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


                  Shipping and handling fees billed to customers are included in
                  sales.  Costs  related to shipping  and  handling  are part of
                  selling,   general,   and   administrative   expenses  in  the
                  consolidated   statements  of  operations.   EITF  No.  00-10,
                  "ACCOUNTING  FOR SHIPPING AND HANDLING  FEES AND COSTS" allows
                  for the presentation of shipping and handling expenses in line
                  items other than cost of sales.  For the period ended December
                  31, 2009,  there were no shipping and handling  costs included
                  in  selling,   general  and  administrative  expenses  in  the
                  accompanying consolidated statements of operations.

         (I.)     COST OF SALES

                  Cost of sales includes  depreciation of property,  plant,  and
                  equipment and purchase costs to publishers.

         (J.)     VALUE-ADDED TAX

                  The Company is subject to value  added tax ("VAT")  imposed by
                  the PRC on sales.  The output VAT is charged to customers  who
                  purchase books from the Company and the input VAT is paid when
                  the Company  purchases books from publishers.  The VAT rate is
                  13%. The input VAT can be offset against the output VAT.

         (K.)     ADVERTISING EXPENSES

                  The  Company  expenses   advertising   costs  as  incurred  in
                  accordance  with the American  Institute  of Certified  Public
                  Accountants  ("AICPA") Statement of Position 93-7,  "REPORTING
                  FOR  ADVERTISING  COSTS".  For the period  ended  December 31,
                  2009, advertising expenses amount to zero.

         (L.)     COMPREHENSIVE INCOME

                  SFAS No. 130, "REPORTING  COMPREHENSIVE  INCOME",  establishes
                  standards for reporting and display of  comprehensive  income,
                  its components, and accumulated balances. Comprehensive income
                  as defined includes all changes in equity during a period from
                  non-owner  sources.   Accumulated   comprehensive  income,  as
                  presented in the accompanying  statement of changes in owners'
                  equity  consists of changes in unrealized  gains and losses on
                  foreign currency translation. This comprehensive income is not
                  included in the computation of income tax expense or benefit.

         (M.)     INCOME TAXES

                  The Company uses the accrual method of accounting to determine
                  and report its taxable  reduction of income taxes for the year
                  in which  they are  available.  The  Company  has  implemented
                  Statement of Financial  Accounting  Standards  (SFAS) No. 109,
                  Accounting for Income Taxes.  Income tax liabilities  computed


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


                  according to the United States and People's  Republic of China
                  (PRC)  tax  laws  are   provided   for  the  tax   effects  of
                  transactions reported in the financial statements and consists
                  of taxes  currently due plus deferred taxes related  primarily
                  to   differences   between  the  basis  of  fixed  assets  and
                  intangible  assets  for  financial  and  tax  reporting.   The
                  deferred tax assets and  liabilities  represent the future tax
                  return consequences of those differences, which will be either
                  taxable or  deductible  when the assets  and  liabilities  are
                  recovered or settled.  Deferred  taxes also are recognized for
                  operating  losses that are  available to offset  future income
                  taxes. A valuation  allowance is created to evaluate  deferred
                  tax assets if it is more likely than not that these items will
                  either  expire  before the Company is able to realize that tax
                  benefit, or that future realization is uncertain.

                  In  respect  of  the  Company's   subsidiaries  domiciled  and
                  operated in China:

                  o  Beijing Joannes Information Technology Co., Ltd. is located
                     in the PRC and Pac-Poly  Investment  Ltd. is located in the
                     British Virgin  Islands;  all of these entities are subject
                     to the  relevant  tax laws and  regulations  of the PRC and
                     British   Virgin   Islands  in  which  the  related  entity
                     domiciled.  The  maximum  tax  rates  of  the  subsidiaries
                     pursuant to the countries in which they domicile are: -

                                                    COUNTRY OF
                              SUBSIDIARY             DOMICILE      TAX RATE
                     ______________________________________________________

                     Beijing Joannes Information
                        Technology Co., Ltd.        PRC             25.00%

                     Pac-Poly Investment Ltd.       British Virgin
                                                       Islands       0.00%

                  o  Effective January 1, 2008, PRC government implemented a new
                     25%  tax  rate   across  the  board  for  all   enterprises
                     regardless  of  whether  domestic  or  foreign   enterprise
                     without  any tax  holiday  which is  defined  as  "two-year
                     exemption  followed by three-year half exemption"  hitherto
                     enjoyed by tax payers.  As a result of the new tax law of a
                     standard  25%  tax  rate,  tax  holidays  terminated  as of
                     December 31, 2007. However,  PRC government has established
                     a set of  transition  rules  to allow  enterprises  already
                     started tax holidays  before  January 1, 2008,  to continue
                     enjoying the tax holidays until being fully utilized.

                  o  The Company is subject to United  States Tax  according  to
                     Internal  Revenue  Code  Sections  951 and  957.  Corporate
                     income tax is imposed on progressive rates in the range of:

                                            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                 -                    -


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


                  Based on the  consolidated  net income  for the  period  ended
                  December 31, 2009,  the Company shall not be subject to income
                  tax.

         (N.)     LOSS PER SHARE

                  The Company  calculates loss per share in accordance with SFAS
                  No.  128,  "EARNINGS  PER  SHARE".  Basic  loss  per  share is
                  computed  by  dividing  the net  loss by the  weighted-average
                  number of common shares outstanding. Diluted loss per share is
                  computed  similar  to basic loss per  share,  except  that the
                  denominator  is increased to include the number of  additional
                  common  shares  that  would  have  been   outstanding  if  the
                  potential common stock  equivalents had been issued and if the
                  additional   common  shares  were  dilutive.   The  effect  of
                  outstanding   stock  options,   stock  purchase  warrants  and
                  convertible  debenture,  which could result in the issuance of
                  499,911,400  and  490,311,400  of common stock at December 31,
                  2009 and June 30, 2009, respectively, are anti-dilutive.  As a
                  result,  diluted  loss per  share  data does not  include  the
                  assumed exercise of outstanding stock options,  stock purchase
                  warrants,  or conversion of convertible debenture and has been
                  presented jointly with basic loss per share.

         (O.)     FOREIGN CURRENCIES TRANSLATION

                  The  functional  and reporting  currency of the Company is the
                  United  States  dollars  ("U.S.  dollars").  The  accompanying
                  consolidated  financial statements have been expressed in U.S.
                  dollars.

                  The functional currency of the Company's foreign  subsidiaries
                  is the Renminbi Yuan ("RMB").  The balance sheet is translated
                  into  United  States  dollars  based on the rates of  exchange
                  ruling at the balance sheet date.  The statement of operations
                  is  translated  using a  weighted  average  rate for the year.
                  Translation    adjustments   are   reflected   as   cumulative
                  translation adjustments in stockholders' equity.

<TABLE>
<CAPTION>

                  EXCHANGE RATES                DECEMBER 31,     JUNE 30,     DECEMBER 31,
                                                    2009           2009          2008
                                                __________________________________________
<S>                                                <C>            <C>            <C>
                  Period/year end RMB : US$
                     exchange rate                 6.8282         6.8319         6.8542
                  Average period/year RMB:
                     US$ exchange rate             6.8293         6.8355         6.8531

</TABLE>


         (P.)     FAIR VALUE OF FINANCIAL INSTRUMENTS

                  The carrying  value of the  Company's  financial  instruments,
                  which include cash and cash equivalents, accounts receivables,
                  other payable and accrued liabilities,  approximate their fair
                  values due to the short-term maturity of these instruments.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


         (Q.)     RELATED PARTIES

                  For the purposes of these  financial  statements,  parties are
                  considered  to be  related  if  one  party  has  the  ability,
                  directly  or  indirectly,  to  control  the party or  exercise
                  significant  influence over the party in making  financial and
                  operating  decisions,  or vice versa, or where the Company and
                  the party are subject to common control or common  significant
                  influence.   Related  parties  may  be  individuals  or  other
                  entities.

         (R.)     CONVERTIBLE DEBENTURE ISSUED WITH STOCK PURCHASE WARRANTS

                  The Company accounts for the issuance of and  modifications to
                  the  convertible  debt issued with stock purchase  warrants in
                  accordance with APB No. 14,  ACCOUNTING FOR  CONVERTIBLE  DEBT
                  AND DEBT ISSUED WITH STOCK PURCHASE  WARRANTS , EITF No. 98-5,
                  ACCOUNTING  FOR   CONVERTIBLE   SECURITIES   WITH   BENEFICIAL
                  CONVERSION  FEATURES  OR  CONTINGENTLY  ADJUSTABLE  CONVERSION
                  RATIOS,  and EITF No. 00-27,  APPLICATION OF ISSUE NO. 98-5 TO
                  CERTAIN CONVERTIBLE INSTRUMENTS and SFAS No. 15, ACCOUNTING BY
                  DEBTORS AND CREDITORS FOR TROUBLED DEBT RESTRUCTURINGS. Due to
                  the  indeterminate  number of  shares,  which  might be issued
                  under the embedded convertible host debt conversion feature of
                  these  debentures,   the  Company  is  required  to  record  a
                  liability  relating  to  both  the  detachable   warrants  and
                  embedded convertible feature of the notes payable (included in
                  the liabilities as a "derivative liability").

                  The accompanying consolidated financial statements comply with
                  current   requirements   relating  to  warrants  and  embedded
                  derivatives as described in SFAS 133 as follows:

                  o  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.

                  o  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.

                  o  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
                     operations.

         (S.)     RECENTLY ISSUED ACCOUNTING STANDARD

                  In June 2009,  FASB issued FASB Statement No. 166,  ACCOUNTING
                  FOR TRANSFERS FOR FINANCIAL ASSETS and FASB Statement No. 167,
                  a revision to FASB  Interpretation  No. 46  (Revised  December
                  2003), CONSOLIDATION OF VARIABLE INTEREST ENTITIES.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


                  Statement  166  is a  revision  to  FASB  Statement  No.  140,
                  ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
                  EXTINGUISHMENTS   OF   LIABILITIES,   and  will  require  more
                  information  about  transfers of financial  assets,  including
                  securitization   transactions,   and   where   entities   have
                  continuing  exposure  to  the  risks  related  to  transferred
                  financial  assets.  It eliminates the concept of a "qualifying
                  special-purpose   entity,"   changes  the   requirements   for
                  derecognizing   financial  assets,  and  requires   additional
                  disclosures.

                  Statement  167 is a  revision  to FASB  Interpretation  No. 46
                  (Revised  December 2003),  CONSOLIDATION OF VARIABLE  INTEREST
                  ENTITIES,  and changes how a reporting entity  determines when
                  an  entity  that  is  insufficiently  capitalized  or  is  not
                  controlled  through  voting  (or  similar  rights)  should  be
                  consolidated.  The determination of whether a reporting entity
                  is required to  consolidate  another entity is based on, among
                  other things,  the other  entity's  purpose and design and the
                  reporting  entity's  ability to direct the  activities  of the
                  other entity that most significantly impact the other entity's
                  economic performance.

                  On July 1, 2009, FASB issued FASB Statement No. 168, The "FASB
                  ACCOUNTING  STANDARDS   CODIFICATION"  AND  THE  HIERARCHY  OF
                  GENERALLY ACCEPTED ACCOUNTING  PRINCIPLES.  The ASC has become
                  the source of  authoritative US GAAP recognized by the FASB to
                  be applied by  nongovernmental  entities and provides that all
                  such guidance carries an equal level of authority.  The ASC is
                  not  intended  to change or alter  existing  GAAP.  The ASC is
                  effective  for  interim  and  annual   periods   ending  after
                  September 15, 2009.

                  The Company is currently  evaluating the potential  impact, if
                  any,  of  the   adoption  of  the  above   recent   accounting
                  pronouncements  on its consolidated  results of operations and
                  financial condition.


4.       OTHER RECEIVABLES AND PREPAYMENT

                           DECEMBER 31, 2009       JUNE 30, 2009
                           _________________       _____________

         Prepayments       $         224,657       $     224,535
                           =================       =============

         The carrying amounts of prepayments approximate their fair value.

5.       PROPERTY, PLANT, AND EQUIPMENT, NET

         Property, plant, and equipment consist of the following:

                                            DECEMBER 31, 2009     JUNE 30, 2009
                                            _________________     _____________

         Equipment and machinery                $  53,447           $  53,418
         Motor vehicles                            47,033              47,007
         Leasehold Improvement                     37,550              16,306
                                                _________           _________

                                                  138,030             116,731
         LESS: Accumulated Depreciation           (71,038)            (61,576)
                                                _________           _________

                                                $  66,992           $  55,156
                                                =========           =========

         Depreciation  expense for  December 31, 2009 and June 30, 2009 were
         $9,462 and $26,585, respectively.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


6.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

         Accounts  payable and accrued  liabilities as of December 31, 2009 and
         June 30, 2009 consists of the following:

                                DECEMBER 31, 2009       JUNE 30, 2009
                                _________________       _____________

         Accounts Payable           $ 487,353             $ 754,025
                                    =========             =========


7.       LOANS PAYABLE/CONVERTIBLE DEBENTURE

         On  November  23,  2005,  the  Company  entered  into a debt  financing
         agreement (the  "Agreement")  with an  institutional  investor,  and on
         March 23, 2006,  the  Agreement  was modified to include an  additional
         institutional   investor,   who  is  an   affiliate   of  the  original
         institutional  investor  (both  institutional   investors  collectively
         referred to as "the Investors"). The Investors committed to purchase up
         to $4,000,000 of a secured convertible debenture ("the debenture") that
         shall be convertible into shares of the Company's common stock.

         After two closings on December 13, 2005 and March 23, 2006, the Company
         received gross proceeds of $3,250,000 (net proceeds $2,989,460) for the
         secured  convertible  debenture.   The  Company  and  debenture-holders
         entered into a  Forbearance  and  Settlement  Agreement on December 29,
         2006 because of default in debt service,  whereby the Company agreed to
         make cash  payment  and to grant  rights to the  creditors  to cashless
         purchase  the  Company's  common  stock by  exercising  the  warrant at
         200,000  shares in every three month  period  beginning on December 29,
         2006 according to the following payment plan:



                                                     CONVERSION OF
         PAYMENT DATE             CASH PAYMENT         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
                                  ============         =========


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


         The Company  paid  $250,000  for the payment due March 10, 2007 and the
         debenture  holders exercised 100,000 shares and 125,000 shares on March
         1, 2007 and April 18,  2007,  respectively.  During  the  period  ended
         December 31, 2009 and year ended June 30, 2009;  the debenture  holders
         converted  9,600,000 and 266,655,667 shares against outstanding loan at
         a total conversion price of $11,436 and $144,532, respectively.

         Loans Payable  outstanding as of December 31, 2009 amount to $2,537,736
         of which  $1,479,475 and $1,058,261  were attributed to current portion
         and long-term,  respectively.

         Loans Payable  outstanding  as of June 30, 2009 amount to $2,549,172 of
         which  $1,490,911 and $1,058,261 were attributed to current portion and
         long-term, respectively.

8.       LOANS FROM SHAREHOLDERS

         The total  outstanding  amount of $7,243,452  represents  cash advanced
         from shareholders of the Company.

         These  shareholders'  loans are unsecured and not repayable  within the
         next twelve months.  For the period ended December 31, 2009,  there was
         $202,640 imputed interest, at 6.00% annum, recorded. For the year ended
         June 30, 2009, there was $342,847 imputed interest, at 6.00% per annum,
         recorded.

9.       COMMON STOCK AND WARRANTS

         A.       COMMON STOCK

                  During  2005,  the  authorized  capital  stock of the  Company
                  increased  from $1,000  consisting  of  100,000,000  shares of
                  common stock of par value  $0.00001 each to $5,000  consisting
                  of  500,000,000  shares of common stock of par value  $0.00001
                  each.

         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.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


                        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 December 31, 2009,  374,911,400
                        shares  of  common  stock  have  been  converted  by the
                        convertible  debenture holders at an aggregate amount of
                        $533,168.

                  (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.      CHINA CONTRIBUTION PLAN

         Full-time  employees  of the  Company  are  entitled  to staff  welfare
         benefits  including  medical  care,  welfare  subsidies,   unemployment
         insurance  and  pension  benefits  through a China  government-mandated
         multi-employer  defined  contribution  plan. The Company is required to
         accrue  for  these  benefits  based  on  certain   percentages  of  the
         employees'  salaries.  The total  contributions  made for such employee
         benefits  were $41,607 and $53,457,  for the period ended  December 31,
         2009 and the year ended June 30, 2009, respectively.

11.      STATUTORY RESERVES

         The  Company is  required to make  appropriations  to  reserves  funds,
         comprising the statutory surplus reserve, statutory public welfare fund
         and  discretionary  surplus  reserve,  based on  after-tax  net  income
         determined in accordance with generally accepted accounting  principles
         of the People's  Republic of China (the "PRC GAAP").  Appropriation  to
         the statutory  surplus  reserve should be at least 10% of the after-tax
         net income determined in accordance with the PRC GAAP until the reserve
         is equal to 50% of the Company's  registered capital.  Appropriation to
         the  statutory  public  welfare fund is 10% of the after-tax net income
         determined  in  accordance  with the PRC  GAAP.  Appropriations  to the
         discretionary  surplus  reserve are made at the discretion of the Board
         of Directors.  The statutory  public  welfare fund is  established  for
         providing  employee  facilities  and other  collective  benefits to the
         employees  and is  non-distributable  other  than in  liquidation.  The
         Company made no appropriations to the statutory reserve,  as it did not
         have a pre-tax profit.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


12.      GAIN ON DEBT RESTRUCTURING

         On December 29, 2006, the Company completed a debt  restructuring  with
         its Investors,  namely Cornell Capital Partners,  L.P.  ("Cornell") and
         Highgate  House Funds,  Ltd.  ("Highgate")  under the  Forbearance  and
         Settlement  Agreement (the  "Forbearance  and  Settlement  Agreement").
         Pursuant  to the  Forbearance  and  Settlement  Agreement,  the Company
         agreed to make certain  payments to the Investors,  with respect to the
         Securities  Purchase  Agreement (the "Securities  Purchase  Agreement")
         entered  into  between the Company and the  Investors  on November  23,
         2005,  as amended on March 23, 2006, on the  convertible  debentures in
         the  amounts of  $1,250,000  (to  Highgate on  November  23,  2005) and
         $2,000,000   (to   Cornell  on  March  23,   2006)  (the   "Convertible
         Debentures")  in accordance  with the terms and conditions set forth in
         the Forbearance and Settlement Agreement.

         In  accordance  with the  Forbearance  and  Settlement  Agreement,  the
         Company agrees to use the proceeds from the disposal of Boheng to repay
         the principal and interest due to the Investors  under the  Convertible
         Debentures in exchange for the Investors agreeing to:

          (i)  Waive on a one-time  basis only any  accrued  liquidated  damages
               owing to the Investors;

          (ii) Not apply the redemption premium on the scheduled repayments;

          (iii) Converting the  Convertible  Debentures in an amount equal to at
               least the  amount of a  scheduled  repayment  subject  to certain
               conditions;

          (iv) No additional  liquidated damages accruing during the term of the
               Forbearance and Settlement Agreement;

          (v)  Permitting  the Company to withdraw  the  Registration  Statement
               filed on March  28,  2006  with  the SEC in  connection  with the
               Convertible Debentures;

          (vi) During  the term of the  Forbearance  and  Settlement  Agreement,
               waiving  the  requirement  for the  Company  to  receive  written
               consent of each Buyer for any  organizational  change (as defined
               in  the  Securities   Purchase   Agreement)  to  be  directly  or
               indirectly  consummated by the Company, and that the company will
               not  effectuate any stock splits for at least nine months without
               the consent of the Investors; and

          (vii) Terminate  the  provisions  for security  shares as set forth in
               Section 9 of the Securities  Purchase  Agreement and in Section 2
               of the Transfer Agent  Instructions upon receipt by the Investors
               of the first scheduled repayment amount.

         As a  result  of the  debt  restructuring  arrangement,  the  Company's
         liabilities  on  warrants,   conversions,   discounts  were  discharged
         resulting to a net gain of $1,500,132 attributable as follows:

         o  Liabilities on Conversion discharged                 $   2,334,198
         o  Liabilities on Warrants discharged                         891,537
         o  Loans discharged                                           225,000
         o  Unamortized discounts                                   (1,950,603)
                                                                 _____________
                                                                 $   1,500,132


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


13.      CONCENTRATION OF RISK

         (A).     MAJOR CUSTOMERS AND VENDORS

                  100% of the  Company's  revenues  were derived from  customers
                  located in the PRC, and there are no customers and vendors who
                  account  for  10% or  more  of  revenues  and  purchases.  The
                  Company's assets are all located in the PRC.

         (B).     CREDIT RISK

                  There  are  no  concentrations  of  credit  risk  because  the
                  Company, while in operation, entered into large number of cash
                  sale  transactions  without deploying  financial  instruments,
                  which may potentially drive to significant concentrations.

14.      COMMITMENT AND CONTINGENCIES

         The Company  currently  occupies  two office  premises  under two lease
         agreements  indicated  as Lease A and Lease B. Lease A leases an office
         premise located at Dongcheng District under a non-cancelable  operating
         lease for a term of three years from  January 1, 2009 to  December  31,
         2011. Lease B leases an office premise located at Xuanwu District under
         a non-cancelable  operating lease for a term of two years from November
         18, 2009 to November 17,  2011.The cost incurred under these  operating
         leases are recorded as rental  expense and totaled $ 41,294 and $65,944
         for the period  ended  December  31, 2009 and year ended June 30, 2009,
         respectively.  Future  minimum  rental  payments  due  according to the
         operating leases until date of termination are as followed:

                                                       LEASE A         LEASE B
                                                      _________       ________

              Within one year                         $  35,148       $ 18,453
              Within year two until termination         105,445         52,283
                                                      _________       ________
                                                      $ 140,593       $ 70,736
                                                      =========       ========

15.      NET LOSS PER SHARE

         Basic net loss per share is computed using the weighted  average number
         of the ordinary shares  outstanding  during the year.  Diluted net loss
         per share is computed  using the  weighted  average  number of ordinary
         shares and ordinary share equivalents outstanding during the year.


<PAGE>


                                XINHUA CHINA LTD.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009
                             (STATED IN US DOLLARS)


         The following table sets forth the computation of basic and diluted net
         loss per share for the period indicated:

         Basic and diluted net loss per share calculation:

<TABLE>
<CAPTION>

                                                  DECEMBER 31, 2009     DECEMBER 31, 2008
                                                  _________________     _________________
<S>                                                      <C>                 <C>


         (a). Numerator:
                Net loss used in computing               525,602             1,960,227
                basic net loss per share

         (b). Denominator:
                Weighted-average ordinary
                shares outstanding                   498,095,183           142,941,399

         Basic and diluted net loss per share            $ 0.001               $ 0.014

</TABLE>

         For the period  ended  December  31, 2009 and 2008 in which the Company
         had a net loss,  inclusion  of  warrants  outstanding  would  have been
         anti-dilutive  and therefore not included in the computation of diluted
         losses per share.


<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BUSINESS DEVELOPMENT

Xinhua  China Ltd.  was  incorporated  September  14, 1999 under the laws of the
State of Nevada as Camden Mines Limited ("Camden").  On October 12, 2004, Camden
changed its name from  "Camden  Mines  Limited" to its  current  corporate  name
"Xinhua  China Ltd." We have  certain  digital  media  distribution  and related
rights in "China" where we mostly  operate and seek to pursue our  business.  We
are in the development stage seeking to grow our company.

CURRENT SUBSIDIARIES

         PAC-POLY INVESTMENTS LIMITED
On  September  14,  2004,  we signed  two  separate  share  purchase  agreements
(collectively,  the "Share Purchase  Agreements"),  whereby we issued 35,000,000
shares  of our  restricted  common  stock in  exchange  for a 100%  interest  in
Pac-Poly  Investments  Limited,  a  company  incorporated  under the laws of the
International   Companies  Business  Act  Cap  291  of  British  Virgin  Islands
("Pac-Poly"),  and a 95%  interest  in Beijing  Boheng  Investments  Limited,  a
company  incorporated under the laws of China ("Beijing Boheng"),  respectively.
The  shareholders  of  Pac-Poly  and  Beijing  Boheng  received  16,387,000  and
18,613,000  shares of our restricted common stock,  respectively.  In accordance
with the  terms  and  provisions  of the Share  Purchase  Agreement,  one of our
shareholders  returned to us 35,000,000 shares of common stock held of record by
such  shareholder  and the shares  were  cancelled  and  returned  to  treasury.
Immediately  prior to consummation of the respective Share Purchase  Agreements,
Pac-Poly and Beijing  Boheng were under common  control.  Subsequently,  Beijing
Boheng spun off all of its business and net assets to its president and became a
non-operating  shell company.  Pac-Poly had no significant  operations since its
inception.

As of the date of this Quarterly  Report, we hold of record 10,000,000 shares of
common stock at $1.00 par value,  which constitutes 100% of the total issued and
outstanding  shares  of  Pac-Poly.   Therefore,  Pac-Poly  is  our  wholly-owned
subsidiary. Pac-Poly is an investment holding company.

         BEIJING JOANNES INFORMATION TECHNOLOGY CO. LT.

On May 9,  2006,  we formed  Beijing  Joannes  Information  Technology  Co.  Lt.
("Beijing Joannes"), as our Chinese wholly owned subsidiary, to launch a digital
media  content  initiative.  We hold of  record  100% of the  total  issued  and
outstanding  shares of  Beijing  Joannes.  Beijing  Joannes  was  formed for the
purpose  of  launching  a digital  media  content  initiative  with the web site
branded . The business focus is building online communities with connectivity to
an ecommerce engine,  which allows for the online purchase of e-books,  e-audio,
and  computer  games.  Hard  copies of books can also be  purchase  through  the
portal.  A unique customer  loyalty  program and digital  redemption or trade-in
strategy will be a market differentiator.


<PAGE>

As of the date of this Quarterly  Report,  we hold of record 1,250,000 shares of
common stock at $1.00 par value,  which constitutes 100% of the total issued and
outstanding  shares  of  Beijing  Joannes.  Therefore,  Beijing  Joannes  is our
wholly-owned subsidiary.

RECENT BUSINESS OPERATIONS

We are a  company  establishing  ourselves  as a  leader  in the  digital  media
industry.  We have refocused our strategic  business operation plans to maximize
our strategic  position in the publishing  industry.  We believe that we will be
able to  establish  ourselves  as a leader in the  digital  media  industry.  In
accordance  with our refocused  strategic  plan, we intend to enter into certain
contractual relationships.

We are subject to many risks and there is no assurance of success in our plans.

RESULTS OF OPERATION

The  summarized  consolidated  financial  data set forth in the tables below and
discussed in this section  should be read in conjunction  with our  consolidated
financial  statements  and related notes for the six month period ended December
31, 2009 and 2008,  which  financial  statements are included  elsewhere in this
Quarterly Report.

<TABLE>
<CAPTION>


__________________________________________________________________________________________________________________________________
                                                          FOR SIX MONTH PERIOD ENDED             FOR SIX MONTH PERIOD ENDED
                                                                DECEMBER 31, 2009                      DECEMBER 31, 2008
                                                                  (UNAUDITED)                             (UNAUDITED)
__________________________________________________________________________________________________________________________________
<S>                                                                <C>                                   <C>
REVENUE
__________________________________________________________________________________________________________________________________
   Net revenue                                                        -0-                                    -0-
__________________________________________________________________________________________________________________________________
   Cost of Sales                                                      -0-                                    -0-
__________________________________________________________________________________________________________________________________
GROSS PROFIT                                                          -0-                                    -0-
__________________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________
OPERATING EXPENSES
__________________________________________________________________________________________________________________________________
   Selling, general and administrative expenses                    $296,393                               $337,808
__________________________________________________________________________________________________________________________________
OPERATING INCOME (LOSS)                                            (296,393)                              (337,808)
__________________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________
OTHER INCOME (EXPENSES)
__________________________________________________________________________________________________________________________________
   Other income                                                       -0-                                    -0-
__________________________________________________________________________________________________________________________________
   Interest income                                                    40                                     -0-
__________________________________________________________________________________________________________________________________
   Gain on disposal of Beijing BoHeng                                 -0-                                  73,427
__________________________________________________________________________________________________________________________________
   Interest expense                                                (229,249)                              (250,466)
__________________________________________________________________________________________________________________________________
   Impairment loss on Boheng                                          -0-                                (1,625,000)
__________________________________________________________________________________________________________________________________
NET LOSS                                                           (525,602)                             (1,960,227)
__________________________________________________________________________________________________________________________________

</TABLE>

<PAGE>

RESULTS OF OPERATION

FOR SIX MONTH PERIOD ENDED  DECEMBER 31, 2009 COMPARED TO SIX MONTH PERIOD ENDED
DECEMBER 31, 2008.

         REVENUES AND GROSS MARGIN AND COST OF SALES

We had net sales of $-0- for both six month periods ended  December 31, 2009 and
December 31, 2008.

         OPERATING EXPENSES

Our total  operating  expenses  were  $296,393  for the six month  period  ended
December  31, 2009 as compared to total  operating  expenses of $337,808 for the
six month period ended  December  31, 2008.  The decrease in operating  expenses
during the six month period ended December 31, 2009 as compared to the six month
period  ended  December  31,  2008  was  due  to  a  decrease  in a  variety  of
expenditures relating to our restructuring efforts and decreased scope and scale
of business operations. During the six month period ended December 31, 2009, our
selling,  general  and  administrative  expenses  consisted  of:  (i)  legal and
professional  fees of $12,286 (2008:  $38,959);  (ii) office  expenses of $4,778
(2008: $4,868); (iii) salaries and benefits of $124,793 (2008:  $220,052);  (iv)
management  fees of $-0-  (2008:  $-0-);  (v) vehicle  expense of $9,051  (2008:
$333); and (vii) other expenses of $145,485 (2008: $73,596).

Selling,  general and  administrative  expenses  primarily  decreased based on a
reorganization of our subsidiaries and personnel  following the move to relocate
our office.

         INTEREST EXPENSE

We incurred  $229,249  in interest  expense  during the six month  period  ended
December 31, 2009 as compared to $250,466  incurred as interest  expense  during
the six month period  ended  December  31,  2008.  Interest  expense of $229,249
incurred  during the six month period ended  December 31, 2009 consisted of: (i)
$-0-  (2009:  $55,072)  in  interest  expense  from  the  amortization  of  note
receivable; and (ii) $229,249 (2008: $195,394) imputed interest charged on loans
from related parties.

         IMPAIRMENT LOSS ON BOHENG INVESTMENT/OTHER INCOME

As a result of the  termination  by the purchaser of the  acquisition of Beijing
Boheng  Investments and Management  Co., Ltd., we repossessed  Boheng as our 95%
interest subsidiary on August 25, 2008 at a value of $1,625,000, which was equal
to the unpaid  purchase price due by the purchaser.  After the  repossession  of
Boheng,  we conducted an evaluation of our carrying value and determined that an
impairment  loss in the amount of $1,625,000 was incurred  although Boheng still
owns a 7.98% equity interest in Xinhua C&D. This impairment loss was accordingly
reflected in the income statement for fiscal year ended December 31, 2008.

During the six month period ended  December 31, 2008, we also recorded  $179,621
in other income.


<PAGE>

Therefore,  our net loss during the six month period ended December 31, 2009 was
($525,602) compared to a net loss of ($1,960,227)  incurred during the six month
period ended  December  31, 2008.  The decrease in net loss during the six month
period ended December 31, 2009 was due primarily to the recording during the six
month  period  ended  December  31,  2008 of the  impairment  loss on  Boheng of
$1,625,000 (2009:  $-0-), which comprised a substantial  portion of the net loss
incurred during the six month period ended December 31, 2008.

FOR THREE MONTH  PERIOD ENDED  DECEMBER 31, 2009  COMPARED TO THREE MONTH PERIOD
ENDED DECEMBER 31, 2008.

         REVENUES AND GROSS MARGIN AND COST OF SALES

We had net sales of $-0- for both three month  periods  ended  December 31, 2009
and December 31, 2008.

         OPERATING EXPENSES

Our total  operating  expenses  were  $167,374  for the three month period ended
December  31, 2009 as compared to total  operating  expenses of $110,942 for the
six month period ended  December  31, 2008.  The increase in operating  expenses
during the three month period  ended  December 31, 2009 as compared to the three
month  period  ended  December  31,  2008 was due to an increase in a variety of
expenditures  relating  to our  restructuring  efforts.  During the three  month
period ended December 31, 2009, our selling, general and administrative expenses
consisted of: (i) legal and professional  fees of $3,500 (2008:  $26,959);  (ii)
office expenses of $3,115 (2008: $2,544); (iii) salaries and benefits of $62,700
(2008: $50,326);  (iv) management fees of $-0- (2008: $-0-); (v) vehicle expense
of $5,531 (2008: $253); and (vii) other expenses of $92,528 (2008: $30,860).

         INTEREST EXPENSE

We incurred  $124,328 in interest  expense  during the three month  period ended
December 31, 2009 as compared to $100,137  incurred as interest  expense  during
the six month period  ended  December  31,  2008.  Interest  expense of $124,328
incurred  during the three month  period ended  December  31, 2009  consisted of
$124,328  (2008:  $100,137)  imputed  interest  charged  on loans  from  related
parties.

         IMPAIRMENT LOSS ON BOHENG INVESTMENT/OTHER INCOME

As a result of the  termination  by the purchaser of the  acquisition of Beijing
Boheng  Investments and Management  Co., Ltd., we repossessed  Boheng as our 95%
interest subsidiary on August 25, 2008 at a value of $1,625,000, which was equal
to the unpaid  purchase price due by the purchaser.  After the  repossession  of
Boheng,  we conducted an evaluation of our carrying value and determined that an
impairment  loss in the amount of $1,625,000 was incurred  although Boheng still
owns a 7.98% equity interest in Xinhua C&D. This impairment loss was accordingly
reflected in the income statement for fiscal year ended December 31, 2008.

<PAGE>


Therefore,  our net loss during the three month period  ended  December 31, 2009
was ($291,678) compared to a net loss of ($1,836,074)  incurred during the three
month period ended  December 31, 2008. The decrease in net loss during the three
month period ended  December 31, 2009 was due primarily to the recording  during
the three month period ended December 31, 2008 of the impairment  loss on Boheng
of $1,625,000  (2009:  $-0-),  which comprised a substantial  portion of the net
loss incurred during the six month period ended December 31, 2008.

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTH PERIOD ENDED DECEMBER 31, 2009

Our financial  statements have been prepared assuming that we will continue as a
going  concern  and,  accordingly,  do not include  adjustments  relating to the
recoverability  and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation.

As at the six month period ended  December  31,  2009,  our current  assets were
$1,041,127 and our current  liabilities were $1,966,828,  resulting in a working
capital deficit of $858,709. As at the six month period ended December 31, 2009,
current  assets were  comprised  of: (i) $730,345 in cash and cash  equivalents;
(ii) $86,125 in net accounts receivable; and (iii) $224,657 in other receivables
and prepayments. As at the six month period ended December 31, 2009, our current
liabilities  were  comprised  of: (i)  $487,353 in accounts  payable and accrued
liabilities;  and (ii) $1,479,475 in current  portion of loans payable.  See " -
Material Commitments."

As at the six month  period  ended  December  31,  2009,  our total  assets were
$1,108,119  comprised of: (i) $1,041,127 in current assets;  and (ii) $66,992 in
net property,  plant and equipment.  The increase in total assets during the six
month period ended  December 31, 2009 from fiscal year ended  September 30, 2009
was primarily due to an increase in cash.

As at the six month period ended December 31, 2009, our total  liabilities  were
$10,268,541 comprised of: (i) $1,966,828 in current liabilities; (ii) $1,058,261
in loans payable;  and (iii) $7,243,713 in loans from  shareholders.  The slight
increase in total  liabilities  during the six month period  ended  December 30,
2009 from fiscal year ended June 30, 2009 was  primarily  due to the increase in
loans from shareholders.

Stockholders'   deficit  increased  from  ($8,848,570)  for  June  30,  2009  to
($9,160,422) for December 31, 2009.

         OPERATING ACTIVITIES

We have not generated positive cash flows from operating activities. For the six
month period ended December 31, 2009, net cash flow used in operating activities
was ($592,069)  compared to net cash used operating  activities of  ($1,890,872)
during  the six  month  period  ended  December  31,  2008.  Net cash  flow from
operating  activities  during  the six month  period  ended  December  31,  2009
consisted  primarily  of  a  net  loss  of  ($525,602)  adjusted  by  $9,462  in
depreciation and $228,328 in imputed interest expense. Further changes in assets
and liabilities  consisted of an increase of $11,897 in accounts  receivable and
$292,360 in accounts payable and accrued liabilities.

<PAGE>


Net cash flow from  operating  activities  during  the six  month  period  ended
December 31, 2008 consisted primarily of a net loss of ($1,960,227)  adjusted by
$10,629 in  depreciation,  $211,862 in imputed  interest  expense and $13,768 in
amortization of deferred imputed interest from note receivable.  Further changes
in assets and  liabilities  consisted  of a decrease  of  $342,116  in  accounts
receivable  and an  increase  of  $812 in  other  receivables  and  prepayments,
$489,853 in accounts  payable  and accrued  liabilities  and $18,355 in deferred
revenue.

         INVESTING ACTIVITIES

During the six month  period  ended  December  31,  2009,  net cash flow used in
investing  activities  was  ($21,235)  compared  to net cash flow  sourced  from
investing  activities  of  $1,625,000 in loss on impairment of asset for the six
month period ended December 31, 2008.

         FINANCING ACTIVITIES

During the six month period ended  December 31, 2009,  net cash flow provided by
financing  activities  was  $685,040  compared  to net  cash  flow  provided  by
financing  activities  of $228,732 for the six month  period ended  December 31,
2008.  Net cash flow provided  from  financing  activities  during the six month
period ended  December 31, 2009  pertained  primarily to $1,298,344  received as
loan from  shareholders  compared to $272,404 received as loan from shareholders
during the six month period ended December 31, 2008.

PLAN OF OPERATION

The local and  regional  distribution  business  for  books is  competitive  and
fragmented in the People's  Republic of China.  Estimates  range up to 500 as to
the number of  entrants  in this  field.  It is our plan that  economy of scale,
relationships  with  Chinese  publishers  and  also  with  sub-distributors  and
retailers and our nationwide scope which allows us the flexibility to distribute
books in any region will assist us in maintaining  and enhancing our competitive
position.

Our goal is to expand our  business to include  electronic  sales,  delivery and
distribution of media contents.  We also plan to partner with foreign publishers
to provide  foreign  media  contents in China.  We seek to achieve our goal on a
national  scale to  maximize  opportunities  in one of the  largest  and fastest
growing economies in the world.

To execute on our strategy to become a digital  media  company we formed our new
subsidiary, Beijing Joannes. Beijing Joannes is intended to be our digital media
company and it is expected to distribute all digital  content for Xinhua C&D and
others.  Beijing  Joannes has  anticipated in operating its business to consumer
(B2C)  e-commerce  portal as  www.geezip.com,  and expects to allow customers to
purchase electronic and hard copies of books on-line.


<PAGE>


We expect  to also  establish  a  co-publishing  company  which  anticipates  on
co-publishing  agreements with both domestic and foreign publishers,  publishing
both hard copy and digital works.

Existing  working  capital,  further  advances  and possible  debt  instruments,
warrant exercises, further private placements,  monetization of existing assets,
and  anticipated  cash flow are  expected to be adequate to fund our  operations
over the next two  months.  We have no lines of credit or other  bank  financing
arrangements.  Generally,  we  have  financed  operations  to date  through  the
proceeds of the private  placement of equity and debt  securities and loans from
our  shareholders.  In connection with our business plan,  management will delay
additional increases in operating expenses and capital  expenditures.  We intend
to utilize our best  efforts to settle  current  finance  accounts  payables and
liabilities  with  further  issuances  of  securities,  debt  and  or  advances,
monetization of existing assets,  and revenues from operations.  We will need to
raise  additional  capital  and  increase  revenues  to meet both short term and
long-term operating requirements.

We have undertaken certain actions and continue to implement changes designed to
improve our financial  results and  operating  cash flows.  The actions  involve
certain  cost-saving   initiatives  and  growing  strategies,   including:   (i)
reductions in headcounts and corporate overhead  expenses;  and (ii) continue to
develop  e-commerce  business  through  Beijing  Joannes.  We believe that these
actions  will  enable us to improve  future  profitability  and cash flow in our
continuing  operations  through June 30, 2009.  Furthermore,  the restructure of
debt  pertaining  to Cornell  and  Highgate  has been  advantageous  to our over
financial  outlook.  Ultimately,  we have  released  the burden on cash flow for
further  contribution  and  intend to put our  resources  in  co-publishing  and
e-commerce business opportunities.

The report of the independent registered public accounting firm that accompanies
our June 30, 2009 and June 30, 2008 consolidated  financial  statements contains
an  explanatory  paragraph  expressing  substantial  doubt  about our ability to
continue as a going concern.  The  consolidated  financial  statements have been
prepared "assuming that we will continue as a going concern," which contemplates
that we will realize our assets and satisfy our  liabilities  and commitments in
the ordinary course of business.

MATERIAL COMMITMENTS

LOANS PAYABLE/CONVERTIBLE DEBENTURE

During  2009/10,  a material  commitment for us relates to the  Forbearance  and
Settlement  Agreement  with  Cornell and  Highgate.  On December  29,  2006,  we
completed the debt restructuring with Cornell and Highgate under the Forbearance
and Settlement Agreement.  Pursuant to the Forbearance and Settlement Agreement,
we agreed to make certain  payments to Cornell and Highgate  with respect to the
Securities  Purchase  Agreement  previously  entered into by us with Cornell and
Highgate  dated  November  23, 2005 and amended on March 23,  2006,  and the two
convertible  debentures in the amounts of $1,250,000 to Highgate  dated November
23, 2005 and  $2,000,000  to Cornell  dated March 23,  2006  (collectively,  the
"Convertible  Debentures") in accordance with the terms and conditions set forth
in the Forbearance and Settlement Agreement.


<PAGE>

In further accordance with the Forbearance and Settlement  Agreement,  we agreed
to use the proceeds  from the disposal of Beijing  Boheng to repay the principal
and interest due to Cornell and Highgate  under the  Convertible  Debentures  in
exchange  for the  agreement of Cornell and Highgate to: (i) waive on a one-time
basis only any accrued liquidated damages owing to Cornell and Highgate; (ii) no
application  of the  redemption  premium  on  the  scheduled  repayments;  (iii)
conversion  of the  Convertible  Debentures  in an amount  equal to at least the
amount  of  a  scheduled  repayment  subject  to  certain  conditions;  (iv)  no
additional  liquidated  damages  accruing during the term of the Forbearance and
Settlement Agreement;  (v) permitting us to withdraw the registration  statement
filed on  March  28,  2006  with  the  Securities  and  Exchange  Commission  in
connection  with  the  Convertible  Debentures;  (vi)  during  the  term  of the
Forbearance and Settlement Agreement,  waiving the requirement for us to receive
written  consent of  Cornell  and  Highgate  for any  organizational  change (as
defined in the  Securities  Purchase  Agreement)  to be directly  or  indirectly
consummated by us, and that we will not effectuate any stock splits for at least
nine months without the consent of Cornell and Highgate;  and (vii)  terminating
the provisions  for security  shares as set forth in Section 9 of the Securities
Purchase  Agreement  and in Section 2 of the transfer  agent  instructions  upon
receipt by Cornell and Highgate of the first scheduled repayment amount.

The payment plan under the Forbearance and Settlement Agreement is as follows:

                                                               CONVERSION OF
           PAYMENT DATE                CASH PAYMENT              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
                                  =======================  =====================


As of June 30,  2007,  we paid  $250,000  for the payment due March 10, 2007 and
issued  100,000  shares and 125,000  shares of our common stock on March 1, 2007
and April 18, 2007,  respectively,  pursuant to exercise  rights.  During fiscal
year ended June 30,  2009 and the six month  period  ended  December  31,  2009,
Cornell and Highgate converted an aggregate of 9,600,000 and 266,655,667 shares,
respectively,  against the  outstanding  amount at a total  conversion  price of
$11,436 and $144,532,  respectively. Loan payable outstanding as of December 31,
2009 aggregated $2,537,736 of which $1,479,475 and $1,058,261 were attributed to
current portion and long-term portion, respectively.

LOANS FROM SHAREHOLDERS

During fiscal year 2009/10,  a material  commitment  for us relates to the loans
from shareholders. The outstanding amount of $7,243,452 represents cash advanced
to  us  from  our   shareholders.   These   shareholder   loans  are  unsecured,
interest-free  and not repayable within the next twelve months.  For fiscal year
ended June 30,  2009,  we  calculated  imputed  interest  expense of $342,847 in
relation to interest-free  shareholders loans at its effective interest rate and
accounted for it in the  consolidated  financial  statements.  For the six month
period ended  December 31,  2009,  we  calculated  imputed  interest  expense of

<PAGE>

$202,640  in  relation  to  interest-free  shareholders  loans at its  effective
interest  rate and accounted for it in the  consolidated  financial  statements.
During fiscal year ended June 30, 2009, the shareholders  converted an aggregate
of 125,000,000 shares against the shareholders' loan at a total conversion price
of $12,500.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial  position,
results of  operations or cash flows due to adverse  change in foreign  currency
and  interest  rates.

EXCHANGE  RATE

Our reporting  currency is United States Dollars  ("USD").  The Chinese Renminbi
("RMB")  has  been  informally  pegged  to the  USD.  However,  China  is  under
international pressure to adopt a more flexible exchange rate system. If the RMB
were no longer pegged to the USD, rate  fluctuations  may have a material impact
on the Company's  consolidated  financial  reporting and make realistic  revenue
projections difficult. Recently (July 2005) the Renminbi was allowed to rise 2%.
This has not had an  appreciable  effect on our operations and seems unlikely to
do so.

As Renminbi is the functional currency of Joannes and Boheng, the fluctuation of
exchange rates of Renminbi may have positive or negative  impacts on the results
of operations of the Company.  However,  since all sales revenue and expenses of
these two  subsidiary  companies  are  denominated  in Renminbi,  the net income
effect of  appreciation  and  devaluation of the currency  against the US Dollar
will be  limited  to the  net  operating  results  of the  subsidiary  companies
attributable to us.

INTEREST RATE

Interest rates in China are low and stable and inflation is well controlled, due
to the habit of the  population  to deposit  and save money in the banks  (among
with other reasons,  such as the People's  Republic of China's perennial balance
of trade  surplus).  Our loans  relate  mainly to trade  payables and are mainly
short-term. However our debt is likely to rise with physical plant in connection
with  expansion  and, were interest  rates to rise at the same time,  this could
become a significant impact on our operating and financing activities.

We have not entered into derivative  contracts either to hedge existing risks or
for speculative purposes.

ITEM 4.  CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be disclosed in our reports filed under the  SECURITIES
EXCHANGE  ACT OF 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange
Commission's  rules and forms,  and that such  information  is  accumulated  and
communicated  to our  management,  including our  president  (also our principal
executive  officer) and our  secretary,  treasurer and chief  financial  officer
(also our  principal  financial  and  accounting  officer)  to allow for  timely
decisions regarding required disclosure.

<PAGE>


As of December 31, 2009, the end of our second quarter covered by this Quarterly
Report,  we  carried  out an  evaluation,  under  the  supervision  and with the
participation  of our president  (also our principal  executive  officer and our
principal financial and accounting officer),  of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing,
our president (also our principal  executive officer and chief financial officer
also  our  principal  financial  and  accounting  officer)  concluded  that  our
disclosure  controls and  procedures  were  effective  in  providing  reasonable
assurance  in the  reliability  of our  financial  reports  as of the end of the
period covered by this Quarterly Report.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

Internal control over financial reporting has inherent limitations which include
but is not  limited  to the use of  independent  professionals  for  advice  and
guidance,  interpretation  of existing  and/or  changing  rules and  principles,
segregation of management duties, scale of organization,  and personnel factors.
Internal  control over  financial  reporting is a process which  involves  human
diligence  and  compliance  and is subject to lapses in judgment and  breakdowns
resulting from human failures.  Internal  control over financial  reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations,  internal control over financial reporting may not prevent
or detect  misstatements on a timely basis,  however these inherent  limitations
are known  features  of the  financial  reporting  process and it is possible to
design into the process safeguards to reduce,  though not eliminate,  this risk.
Therefore,  even those  systems  determined  to be  effective  can provide  only
reasonable  assurance  with  respect  to  financial  statement  preparation  and
presentation.  Projections of any evaluation of  effectiveness to future periods
are subject to the risk that controls may become  inadequate  because of changes
in conditions,  or that the degree of compliance with the policies or procedures
may deteriorate.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no significant  changes in our internal  controls over financial
reporting  that occurred  during the quarter  ended  December 31, 2009 that have
materially or are reasonably likely to materially  affect, our internal controls
over financial reporting.

AUDIT COMMITTEE

Our Board of Directors has not  established an audit  committee.  The respective
role of an audit committee has been conducted by our Board of Directors.  We are
contemplating  establishment of an audit committee during fiscal year 2010. When
established,  the audit  committee's  primary function will be to provide advice
with  respect  our  financial  matters and to assist our Board of  Directors  in
fulfilling its oversight  responsibilities  regarding finance,  accounting,  and
legal compliance. The audit committee's primary duties and responsibilities will
be to: (i) serve as an independent  and objective party to monitor our financial
reporting  process and  internal  control  system;  (ii) review and appraise the
audit  efforts of our  independent  accountants;  (iii)  evaluate our  quarterly
financial performance as well as its compliance with laws and regulations;  (iv)
oversee  management's  establishment  and enforcement of financial  policies and
business  practices;  and (v) provide an open avenue of communication  among the
independent accountants, management and our Board of Directors.

<PAGE>

ITEM 4T. CONTROLS AND PROCEDURES

Not applicable.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING

Management  is  not  aware  of  any  legal   proceedings   contemplated  by  any
governmental  authority or any other party involving us or our properties.  None
of our  directors,  officers or affiliates  are (i) a party adverse to us in any
legal  proceedings,  or  (ii)  has  an  adverse  interest  to  us in  any  legal
proceedings.  Management is not aware of any other legal proceedings  pending or
that have been threatened against us or our properties.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

CORNELL CAPITAL PARTNERS LP/HIGHGATE HOUSE FUNDS LTD.

We  previously  entered  into  a  forbearance  and  settlement   agreement  (the
"Forbearance  and  Settlement  Agreement")  with  Cornell  Capital  Partners  LP
("Cornell") and Highgate House Funds, Ltd.  ("Highgate").  On December 29, 2006,
we  completed  a  debt   restructuring  with  Cornell  and  Highgate  under  the
Forbearance and Settlement Agreement. Pursuant to the Forbearance and Settlement
Agreement,  we agreed to make  certain  payments  to Cornell and  Highgate  with
respect to the Securities Purchase Agreement  previously entered into by us with
Cornell and Highgate  dated November 23, 2005 and amended on March 23, 2006, and
the two  convertible  debentures in the amounts of $1,250,000 to Highgate  dated
November 23, 2005 and $2,000,000 to Cornell dated March 23, 2006  (collectively,
the  "Convertible  Debentures")  in accordance with the terms and conditions set
forth in the Forbearance and Settlement Agreement.

In further accordance with the Forbearance and Settlement  Agreement,  we agreed
to use the proceeds  from the disposal of Beijing  Boheng to repay the principal
and interest due to Cornell and Highgate  under the  Convertible  Debentures  in
exchange  for the  agreement of Cornell and Highgate to: (i) waive on a one-time
basis only any accrued liquidated damages owing to Cornell and Highgate; (ii) no
application  of the  redemption  premium  on  the  scheduled  repayments;  (iii)
conversion  of the  Convertible  Debentures  in an amount  equal to at least the
amount  of  a  scheduled  repayment  subject  to  certain  conditions;  (iv)  no
additional  liquidated  damages  accruing during the term of the Forbearance and
Settlement Agreement;  (v) permitting us to withdraw the registration  statement


<PAGE>

filed on  March  28,  2006  with  the  Securities  and  Exchange  Commission  in
connection  with  the  Convertible  Debentures;  (vi)  during  the  term  of the
Forbearance and Settlement Agreement,  waiving the requirement for us to receive
written  consent of  Cornell  and  Highgate  for any  organizational  change (as
defined in the  Securities  Purchase  Agreement)  to be directly  or  indirectly
consummated by us, and that we will not effectuate any stock splits for at least
nine months without the consent of Cornell and Highgate;  and (vii)  terminating
the provisions  for security  shares as set forth in Section 9 of the Securities
Purchase  Agreement  and in Section 2 of the transfer  agent  instructions  upon
receipt by Cornell and Highgate of the first scheduled repayment amount.

The payment plan under the Forbearance and Settlement Agreement is as follows:

                                                             CONVERSION OF
         PAYMENT DATE                CASH PAYMENT              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
                                 =======================   ====================

As of March 31,  2008,  we paid  $250,000 for the payment due March 10, 2007 and
issued 100,000 shares of our common stock on March 1, 2007 and 125,000 shares on
April 18,  2007,  respectively,  pursuant  to  exercise  rights.  The  scheduled
payments  of  $375,000  due  on  September   30,  2007  and  October  31,  2007,
respectively,  were not paid as of March 31,  2008.

During the six month period  ended  December 31, 2009 and fiscal year ended June
30, 2009, an aggregate of 9,600,000 and 266,655,667 shares, respectively, of our
common  stock  were  issued  pursuant  to  conversion  of the  debt  at a  total
conversion price of $11,436 and $144,532.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6, EXHIBITS

The following exhibits are filed as part of this Quarterly Report:


<PAGE>

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.

SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                        XINHUA CHINA LTD.


Dated: February 22, 2010                By: /s/ XIANPING WANG
                                        _______________________________________
                                        Xianping Wang, President/Chief
                                        Executive Officer



Dated: February 22, 2010                By: /s/ XIANPING WANG
                                        _______________________________________
                                        Xianping Wang, Acting as Interim Chief
                                        Financial Officer