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 March 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 INCORPORATION           (I.R.S. EMPLOYER
                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
of each of the issuer's classes of common
stock, as of the most practicable date:           Outstanding as of May 15, 2009

Class
Common Stock $0.000001 par value                        393,898,813


<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

                        MARCH 31, 2009 AND JUNE 30, 2008

                             (STATED IN US DOLLARS)

<PAGE>


XINHUA CHINA LTD.



CONTENTS                                                           PAGES

Report of Registered Independent Public Accounting Firm              F-1

Consolidated Balance Sheet                                     F-2 - F-3

Consolidated Statement of Income                                     F-4

Consolidated Statement of Stockholders' Equity                       F-5

Consolidated Statement of Cash Flows                                 F-6

Notes to the Financial Statements                             F-7 - F-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 March 31,  2009 and June 30,  2008,  and the
related  statements  of  income,  stockholders'  equity,  and cash flows for the
three-months  and  nine-months  ended  March 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
April 24, 2009                                    Certified Public Accountants


                                      F-1

<PAGE>
<TABLE>
<CAPTION>


                                XINHUA CHINA LTD.
                           CONSOLIDATED BALANCE SHEET
                     AS OF MARCH 31, 2009 AND JUNE 30, 2008
                             (STATED IN US DOLLARS)


                                                          NOTES                  MARCH 31, 2009             JUNE 30, 2008
                                                                             ________________________     __________________
<S>                                                                                    <C>                     <C>
ASSETS
        CURRENT ASSETS
          Cash and Cash Equivalents                        3D                                 25,466                 38,733
          Accounts Receivable, NET                         3E                                 74,016                411,782
          Note Receivable                                                                          -              1,625,000
          Other Receivables and Prepayments                 4                                224,404                223,231
                                                                             ________________________     __________________
             Total Current Assets                                                            323,886              2,298,746

        LONG-TERM ASSETS
          Property, Plant & Equipment, NET                3F,5                                57,630                 73,786
                                                                             ________________________     __________________
             Total Long-term Assets                                                           57,630                 73,786

                                                                             ________________________     __________________
             Total Assets                                                              $     381,516           $  2,372,532
                                                                             ========================     ==================

LIABILITIES & STOCKHOLDERS' EQUITY

        LIABILITIES
          CURRENT LIABILITIES
          Accounts Payable and Accrued Liabilities          6                                658,731              1,095,538
          Deferred Revenue                                                                         -                 18,355
          Current portion of Loans Payable                  7                              1,530,843              1,635,443
                                                                             ________________________     __________________
             Total Current Liabilities                                                     2,189,575              2,749,336

          LONG-TERM LIABILITIES
          Loans Payable                                     7                              1,058,261              1,058,261
          Loans from Shareholders                           8                              5,824,727              5,410,256
                                                                             ________________________     __________________
             Total Long-term Liabilities                                                   6,882,988              6,468,517

                                                                             ________________________     __________________
             Total Liabilities                                                             9,072,563              9,217,853













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

                                      F-2


<PAGE>
<CAPTION>




                                                               NOTE                 MARCH 31, 2009            JUNE 30, 2008
                                                                             ________________________     __________________

<S>                                                                                    <C>                     <C>
STOCKHOLDERS' EQUITY

          Common  Stock  $0.00001  Par  Value  500,000,000
             Shares  Authorized; 282,707,780  and 98,655,733
             shares issued and outstanding at March 31,
             2009 and June 30, 2008, accordingly.               9                              2,827                    987
          Additional Paid-In Capital                                                      11,260,680             10,903,997
          Accumulated Other Comprehensive
             Income                                                                           38,772                 38,149
          Accumulated Deficit                                                            (19,993,326)           (17,788,454)
                                                                             ________________________     __________________
              Total Stockholders' (Deficit)/Equity                                        (8,691,048)            (6,845,321)

                                                                             ________________________     __________________
          Total Liabilities & Stockholders' Equity                                     $     381,516           $  2,372,532
                                                                             =========================    ===================

</TABLE>










   See Accompanying Notes to the Financial Statements and Accountant's Report

                                      F-3


<PAGE>
<TABLE>
<CAPTION>


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


                                                 NOTE         FOR THE THREE MONTHS ENDED             FOR THE NINE MONTHS ENDED
REVENUE                                                    MARCH 31, 2009    MARCH 31, 2008       MARCH 31, 2009   MARCH 31, 2008
                                                          _________________ _________________    _________________ ________________
<S>                                                           <C>               <C>                 <C>                <C>
      Revenue, NET                                3H          $          -      $          -        $           -      $         -
      Cost of Sales, NET                          3I                     -                 -                    -                -
         Gross Profit                                                    -                 -                    -                -

OPERATING EXPENSES

      Selling, General, and Administrative
      Expenses                                                     145,682            16,704              483,491          187,458
                                                          _________________ _________________    _________________ ________________
         Total Operating Expense                                   145,682            16,704              483,491          187,458

                                                          _________________ _________________    _________________ ________________
      Operating Income/(Loss)                                     (145,682)          (16,704)            (483,491)        (187,458)
                                                          _________________ _________________    _________________ ________________

OTHER INCOME (EXPENSES)
      Other Income                                                       -                 -                    -                -
      Interest Income                                                    7            13,781                   50           27,581
      Gain on debt restructuring                                         -            12,644               73,427           12.644
      Gain from writing off accounts
      payable                                                            -                 -              179,621                -
      Impairment loss on Boheng investment        13                                       -           (1,625,000)               -
      Other Expense                                                      -                 -                    -                -
      Interest Expense                                             (98,971)         (180,106)            (349,380)        (408,856)
                                                          _________________ _________________    _________________ ________________
         Loss before minority interest and income tax             (244,646)         (170,385)          (2,204,872)        (557,089)

      Minority interest in net loss of
      consolidated subsidiaries                                          -                 -                    -                -
                                                          _________________ _________________    _________________ ________________

Loss before Income Tax                                            (244,646)         (170,385)          (2,204,872)        (557,089)

Income Tax                                        3M                     -                 -                    -                -

                                                          _________________ _________________    _________________ ________________
Net Loss                                                      $   (244,646)     $   (170,385)       $  (2,204,872)     $  (557,089)
                                                           ================ =================    ================= ================

                                                          _________________ _________________    _________________ ________________
Basic & Diluted Earnings Per Share               3N,14        $     (.0012)     $     (.0027)       $      (.0110)     $    (.0088)
                                                           ================ =================    ================= ================

Weighted Average Shares Outstanding                            199,873,539        63,463,287          199,873,539       63,463,287
                                                          _________________ _________________    _________________ ________________

</TABLE>





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

                                      F-4


<PAGE>
<TABLE>
<CAPTION>


                                XINHUA CHINA LTD.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR THE NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


                                                                    ADDITIONAL          OTHER
                                         NUMBER OF       COMMON       PAID IN       COMPREHENSIVE     ACCUMULATED
                                           SHARES        STOCK        CAPITAL       INCOME(LOSS)        DEFICIT          TOTAL
                                       _______________ ___________ ______________ __________________ _______________ ______________

<S>                                       <C>               <C>       <C>                    <C>       <C>              <C>
    Balance, July 1, 2007                  54,638,890         546     10,423,526              8,749    (17,097,530)     (6,664,709)
    Additional Paid-in Capital                      -           -        151,760                  -              -         151,760
    Imputed interest on interest
    free advances from related party                -           -        328,711                  -              -         328,711
    Issuance of shares to Highgate         44,016,843         441              -                  -              -             441
    Foreign Currency translation                    -           -              -             29,400              -          29,400
    Net Loss for year                               -           -              -                  -       (690,924)       (690,924)
                                       _______________ ___________ ______________ __________________ _______________ ______________
    Balance, June 30, 2008                 98,655,733         987     10,903,997             38,149    (17,788,454)     (6,845,321)
                                       =============== =========== ============== ================== =============== ==============

    Balance, July 1, 2008                  98,655,733         987     10,903,997             38,149    (17,788,454)     (6,845,321)
    Additional Paid-in Capital                      -           -        102,760                  -              -         102,760
    Imputed interest on interest
    free advances from related party                -           -        253,923                  -              -         253,923
    Issuance of shares to Highgate        184,052,047       1,840              -                  -              -           1,840
    Foreign Currency translation                    -           -              -                623              -             623
    Net Loss for quarter                            -           -              -                  -     (2,204,872)     (2,204,872)
                                       _______________ ___________ ______________ __________________ _______________ ______________
    Balance, March 31, 2009               282,707,780       2,827     11,260,680             38,772    (19,993,326)     (8,691,048)
                                       =============== =========== ============== ================== =============== ==============

</TABLE>

<TABLE>
<CAPTION>

                                           ACCUMULATED COMPREHENSIVE INCOME/(LOSS)

                                                                      MARCH 31, 2009          JUNE 30, 2008
                                                                  _______________________   __________________

<S>                                                                      <C>                   <C>
                COMPREHENSIVE INCOME(LOSS)
                 Net Loss                                                $   (2,204,872)       $    (690,924)

                OTHER COMPREHENSIVE INCOME

                 Foreign Currency Translation Adjustment                             623               29,400
                                                                  _______________________   __________________
                Total Comprehensive Income                                $  (2,204,249)       $    (661,524)
                                                                  =======================   ==================

</TABLE>



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


                                      F-5

<PAGE>
<TABLE>
<CAPTION>


                                XINHUA CHINA LTD.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
       FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2009 AND 2008
                             (STATED IN US DOLLARS)




                                                            FOR THE THREE MONTHS ENDED              FOR THE NINE MONTHS ENDED
                                                         MARCH 31, 2009     MARCH 31, 2008       MARCH 31, 2009    MARCH 31, 2008
                                                        __________________ _________________    _________________ _________________
<S>                                                          <C>                <C>                  <C>                <C>
CASH FLOW FROM OPERATING ACTIVITIES:
       Net (Loss)                                            $   (244,646)      $  (246,639)         $(2,204,873)       $ (557,089)
       Adjustments to reconcile net earnings(loss) to
       net cash used in operating activities:
            Depreciation                                            5,527             3,186               16,156             5,740
            Imputed interest expense                               98,971           244,111               310833           443,770
            Amortization of deferred imputed interest
            from note receivable                                        -                 -                    -            13,768

       CHANGES IN ASSETS AND LIABILITIES:
            Decrease/(Increase) Accounts receivable                (4,351)          (12,607)             337,765           (80,341)
            Decrease/(Increase) Other receivables and
            prepayments                                                 -            (8,718)                (812)          (17,264)
            Decrease/(Increase) Accounts Payable and
            accrued liabilities                                    26,041           115,964             (463,812)          267,467
            Decrease/(Increase) in Deferred Revenue                     -           (13,768)             (18,355)          (41,303)
                                                        __________________ _________________    _________________ _________________
       Cash Sourced/(Used) in Operating Activities               (118,456)           81,529           (2,009,328)           34,748
                                                                   123984
                                                        __________________ _________________    _________________ _________________

CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds of note receivable - Boheng                             -                 -                    -                 -
       Purchase of plant and equipment                                  -           (16,160)           1,625,000           (73,191)
       Loss on impairment of asset                                      -                 -                    -                 -
                                                        __________________ _________________    _________________ _________________
       Cash Used/(Sourced) in Investing Activities                      -           (16,160)           1,625,000           (73,191)
                                                        __________________ _________________    _________________ _________________

CASH FLOWS FROM FINANCING ACTIVITIES:
       Stock Issue to Highgate on debt conversion                   1,337                 -                1,839                 -
       Repayment of Loan to Highgate                              (43,100)          (89,565)             (87,274)          (89,565)
       Loans from shareholders                                    142,068            14,143              414,472           100,931
       Additional Paid-in Capital                                  41,763                 -               41,763                 -
                                                        __________________ _________________    _________________ _________________
       Cash Sourced/(Used) in Financing Activities                142,068           (75,422)             370,800            11,366
                                                        __________________ _________________    _________________ _________________

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS
FOR THE YEAR                                                       23,652           (10,053)             (13,266)          (27,077)

EFFECT OF CURRENCY TRANSLATION                                         41             4,770                  252            39,070

CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD                      1,814            20,009               38,733             2,733

                                                        __________________ _________________    _________________ _________________
CASH & CASH EQUIVALENTS AT END OF PERIOD                     $     25,466       $    14,726           $   25,466        $   14,726
                                                        ================== =================    ================= =================

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


</TABLE>


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

                                      F-6

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 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 B-26F,
         Oriental Kenzo, Dongcheng District,  Beijing, 100027, People's Republic
         of China.

         Details  of  the  Company's  subsidiaries  as of  March  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>

                                                                          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, a                         10,000,000 ordinary
           Pac-Poly Investment Ltd.         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 March 31,  2009,  the Company had no working  capital but current
         liabilities  exceeding  current assets by $1,865,689 and an accumulated
         deficit of  $19,993,326  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 June 30,  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.


                                      F-7

<PAGE>


                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 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 period 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.


                                      F-8
<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 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
           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".

                                      F-9

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 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
         March 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 March 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  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


                                      F-10

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


         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: -

                    SUBSIDIARY              COUNTRY OF DOMICILE    INCOME TAX
                                                                       RATE
             ______________________________ ______________________ __________
             Beijing Joannes Information         PRC                  25.00%
             Technology Co., Ltd. Pac-Poly  British Virgin Islands     0.00%
             Investment Ltd.

         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                  -                    -


                                      F-11

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


         Based on the  consolidated  net income for the period  ended  March 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 282,707,780 and 98,655,733 of common stock at
         March 31, 2009 and June 30, 2008, 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                                 MARCH 31, 2009    JUNE 30, 2008    MARCH 31, 2008
         ______________                                 ______________   _____ ________    ______________
<S>                              <C>                        <C>                <C>            <C>
         Period/year end RMB : US$ exchange rate            6.8359             6.8718         7.0222
         Average period/year RMB : US$ exchange rate        6.8357             7.0726         7.3968

</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.

(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


                                      F-12

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


         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:

         |X| 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.

         |X| 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.

         |X| 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  March  2008,  the FASB  issued  SFAS No.  161,  "Disclosures  about
         Derivative  Instruments  and Hedging  Activities,  an amendment of FASB
         Statement  No. 133" ("SFAS  161").  SFAS 161 applies to all  derivative
         instruments  and related hedged items accounted for under SFAS No. 133,
         "Accounting for Derivative  Instruments and Hedging  Activities" ("SFAS
         133"). SFAS 161 requires entities to provide greater transparency about
         (a)  how  and  why an  entity  uses  derivative  instruments,  (b)  how
         derivative instruments and related hedged items are accounted for under
         SFAS  133  and its  related  interpretations,  and  (c) how  derivative
         instruments  and related  hedged  items  affect an  entity's  financial


                                      F-13

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


         position,  results of operations and cash flows.  SFAS 161 is effective
         for financial  statements  issued for fiscal years and interim  periods
         beginning after November 15, 2008.

         In May 2008,  the FASB issued SFAS No. 162, "The Hierarchy of Generally
         Accepted  Accounting  Principles" ("SFAS 162"). SFAS 162 identifies the
         sources of  accounting  principles  and the framework for selecting the
         principles  used  in  the   preparation  of  financial   statements  of
         nongovernmental   entities  that  are  presented  in  conformity   with
         generally   accepted   accounting   principles  (the  GAAP  hierarchy).
         Statement  162  will  become  effective  60 days  following  the  SEC's
         approval of the Public Company Accounting Oversight Board amendments to
         AU Section  411,  "The  Meaning of Present  Fairly in  Conformity  With
         Generally Accepted Accounting Principles."

         In May 2008,  the FASB issued FSP Accounting  Principles  Board ("APB")
         14-1  "Accounting for Convertible  Debt Instruments That May Be Settled
         in Cash upon Conversion  (Including Partial Cash Settlement)" ("FSP APB
         14-1").  FSP APB 14-1 requires the issuer of certain  convertible  debt
         instruments that may be settled in cash (or other assets) on conversion
         to separately  account for the liability (debt) and equity  (conversion
         option)  components  of the  instrument  in a manner that  reflects the
         issuer's non-convertible debt borrowing rate. FSP APB 14-1 is effective
         for fiscal years  beginning  after  December 15, 2008 on a  retroactive
         basis.

         In September 2008, FASB issued FSP No. 133-1 and FIN 45-4, "Disclosures
         about Credit Derivatives and Certain Guarantees",  an amendment of FASB
         Statement No. 133 and FASB  Interpretation No. 45; and Clarification of
         the Effective  Date of FASB  Statement No. 161. This FSP is intended to
         improve   disclosures  about  credit   derivatives  by  requiring  more
         information  about the potential  adverse  effects of changes in credit
         risk on the financial position,  financial performance,  and cash flows
         of the sellers of credit  derivatives.  The  provisions of the FSP that
         amend  Statement 133 and FIN 45 are  effective  for  reporting  periods
         (annual or interim) ending after November 15, 2008.

         This FSP amends FASB  Statement  No.  133,  ACCOUNTING  FOR  DERIVATIVE
         INSTRUMENTS AND HEDGING  ACTIVITIES,  to require disclosures by sellers
         of credit derivatives,  including credit derivatives embedded in hybrid
         instruments.  This FSP also  amends FASB  Interpretation  (FIN) No. 45,
         GUARANTOR'S  ACCOUNTING AND  DISCLOSURE  REQUIREMENTS  FOR  GUARANTEES,
         INCLUDING INDIRECT  GUARANTEES OF INDEBTEDNESS TO OTHERS, to require an
         additional    disclosure    about   the    current    status   of   the
         payment/performance risk of a guarantee. The provisions of the FSP that
         amend  Statement 133 and FIN 45 are  effective  for  reporting  periods
         (annual or interim) ending after November 15, 2008.

         Finally,  this FSP clarifies the effective  date in FASB  Statement No.
         161,  DISCLOSURES ABOUT DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES.
         The  disclosures  required by Statement  161 should be provided for any
         reporting period (annual or quarterly interim) beginning after November
         15, 2008. For example, an entity with a March 31 fiscal year-end should
         provide the  disclosures  for its fourth quarter  interim period ending
         March  31,  2009,  in  its  2009  annual  financial  statements.   This
         clarification  of the effective date of Statement 161 is effective upon
         issuance of the FSP. 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.


                                      F-14

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)



4.       OTHER RECEIVABLES AND PREPAYMENT

                                         MARCH 31, 2009          JUNE 30, 2008
                                         ______________          _____________

         Prepayments                     $      224,404          $     223,231
                                         ==============          =============

         The carrying amounts of prepayments approximate their fair value.


5.       PROPERTY, PLANT, AND EQUIPMENT, NET

         Property, plant, and equipment consist of the following:

                                              MARCH 31, 2009   JUNE 30, 2008
                                              ______________   _____________
         Equipment and machinery              $       53,387   $      53,108
         Motor vehicles                               39,666          39,458
         Leasehold Improvement                        16,296          16,211
                                              ______________   _____________
                                                     109,349         108,777
         LESS: Accumulated Depreciation             (51,719)        (34,991)
                                              ______________   _____________
                                              $       57,630   $      73,786
                                              ==============   =============

         Depreciation  expense for the nine months  ended March 31, 2009 and the
         year ended June 30, 2008 were $16,156 and $10,157, respectively.

6.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

         Accounts payable and accrued  liabilities as of March 31, 2009 and June
         30, 2008 consists of the following:

                                               MARCH 31, 2009  JUNE 30, 2008
                                              ______________   _____________

      Accounts Payable                        $      397,571   $   1,095,538

      Other Payables                                 261,160               -
                                              ______________   _____________
                                              $      658,731   $   1,095,538
                                              ===============  =============


                                      F-15

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)



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
                                        ===================   ==================

         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 March
         31, 2009, the debenture  holders converted  133,708,772  shares against
         outstanding loan at a total conversion price of $43,100.
         Loans Payable  outstanding as of March 31, 2009 amount to $2,589,104 of
         which  $1,530,843 and $1,058,261 were attributed to current portion and
         long-term, respectively.

8.       LOANS FROM SHAREHOLDERS

         The total  outstanding  amount of $5,824,727  represents  cash advanced
         from shareholders of the Company.

         These  shareholders'  loans are unsecured and not repayable  within the
         next twelve  months.  For the quarter  ended March 31, 2009,  there was
         $86,169 imputed interest, at 6.00% annum,  recorded. For the year ended
         June 30, 2008, there was $314,865 imputed interest, at 6.00% per annum,
         recorded.

                                      F-16

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)



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.

              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
              warrants  is  exercisable  for one common  share at  $0.00001  per
              share,  until  expiration  on November 22,  2010.  As of March 31,
              2009,  230,728,061  shares of common stock have been  converted by
              the  convertible  debenture  holders  at an  aggregate  amount  of
              $481,800.

         (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.


                                      F-17

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


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 $ 25,273 and  $23,854,  for the quarter  ended March 31,
         2009 and the year ended June 30, 2008, 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.

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;

                                      F-18

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)



              (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

13.      IMPAIRMENT LOSS ON BOHENG INVESTMENT

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

14.      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.


                                      F-19

<PAGE>

                                XINHUA CHINA LTD.
                          NOTES TO FINANCIAL STATEMENTS
               FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2009
                             (STATED IN US DOLLARS)


         (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.

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 period.

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

<TABLE>
<CAPTION>

                                                           FOR THE THREE MONTHS ENDED               FOR THE NINE MONTHS ENDED

         Basic and diluted net loss per share          MARCH 31, 2009      MARCH 31, 2008        MARCH 31, 2009     MARCH 31, 2008
         calculation:                                  ______________      ______________        ______________     ______________

<S>                                                      <C>                 <C>                  <C>                <C>
         a).  Numerator:
                Net loss used in computing basic
                net loss per share                          (244,646)          (170,385)           (2,204,872)          (557,089)

         (b). Denominator:
                Weighted-average ordinary shares
                outstanding                              199,873,539         63,463,287           199,873,539         63,463,287

         Basic and diluted net loss per share                 (.0012)            (.0027)               (.0151)            (.0088)

</TABLE>


         For the period  ended  March 31,  2009 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.


                                      F-20

<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.

SUBSIDIARIES

         PAC-POLY INVESTMENTS LIMITED/BEIJING BOHENG INVESTMENTS LIMITED

As of the date of this  Quarterly  Report,  we hold of record  100% of the total
issued and  outstanding  shares of Pac-Poly  Investments  Limited  ("Pac-Poly"),
which is our wholly-owned subsidiary. Pac-Poly is an investment holding company.
We maintain a 7.98% effective  interest in Xinhua C&D through  Pac-PolyAs of the
date of this  Quarterly  Report,  we hold of record 95% of the total  issued and
outstanding shares of Beijing Boheng Investments Limited ("Beijing Boheng").  We
re-acquired  our  interest  in Beijing  Boheng on August 25,  2008 at a value of
$1,625,000,  which  amount  was equal to the  unpaid  purchase  price due by the
original purchaser.

         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 held 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  WWW.GEEPIP.COM.  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.   Subsequent  to  the
deconsolidation of Xinhua C&D as discussed below, we have commenced the internet
book distribution business through Beijing Joannes.

RECENT BUSINESS OPERATIONS

We are  focused  to  develop  a plan for  funding,  sales,  marketing  and other
benefits relating to China and this plan may include other related pursuits such
as  assisting  one or  more  USA or  international  companies  to  navigate  the
regulatory  demands of doing related business in China and to possibly join with
us by joint  venture or similar  arrangement  to pursue  business  in one of the
world's  if  not  the  world's  most  rapidly  growing  financial  and  consumer
population environments. As part of this we still seek to establish ourselves as
a  leader  in the  digital  media  industry  first in  China  and then  possibly
elsewhere.  We intend to  maximize  our  strategic  position  in the  publishing
industry.

<PAGE>

We are  developing  a new  business  plan focused on fiscal year 2009 to achieve
several key areas or goals:  restructure certain aspects of our organization and
relationships  after  careful  consideration  as  part of our  plan to grow  our
Company and revenues; focus on market awareness primarily making those investors
in the USA stock markets aware of us, given our  arrangements,  discussed below,
with the People's  Republic of China (China) seek how we can expand our business
in both our core license rights and to possibly  obtain other benefits or rights
similar in nature,  and seek  acquisitions  of mainly China  companies or assets
that may be the subject of registrations  or "spin-off"  transactions in the USA
markets,  both stock and business trade,  given the extensive  energy,  time and
expense we have been through in learning about the markets.  These plans need to
be  developed  and  approved  by the Board of  Directors,  which we also plan to
restructure by adding Directors to expand.

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 nine-month period ended March 31,
2009 and  2008,  which  financial  statements  are  included  elsewhere  in this
Quarterly Report.

<TABLE>
<CAPTION>

                                                                        FOR NINE MONTH PERIOD   FOR NINE MONTH PERIOD
                                                                         ENDED MARCH 31, 2009    ENDED MARCH 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                                $483,491                 $187,458
OPERATING INCOME (LOSS)                                                        (483,491)                (187,458)

OTHER INCOME (EXPENSES)
   Interest income                                                                50                     27,581
   Gain on debt restructuring                                                   73,427                   12,644
    Gain from writing off accounts payable                                      179,621                    -0-
   Interest expense                                                           (349,380-)                (408,856)
   Impairment loss on Boheng investment                                       (1,625,000)                  -0-
NET LOSS                                                                      (2,204,872)               (557,089)

</TABLE>



<PAGE>


RESULTS OF OPERATION

FOR NINE MONTH PERIOD  ENDED MARCH 31, 2009  COMPARED TO NINE MONTH PERIOD ENDED
MARCH 31, 2008.

         REVENUES AND GROSS MARGIN AND COST OF SALES

We had net sales of $-0- for both nine month  periods  ended  March 31, 2009 and
March 31, 2008.  Our cost of sales for both nine month  periods  ended March 31,
2009 and March 31, 2008 was $-0-.  The lack of sales  during both the nine month
periods  ended  March 31, 2009 and March 31,  2008 was due to the  divesture  of
certain interests in our assets.

         OPERATING EXPENSES

Our total operating expenses were $483,491 for the nine month period ended March
31, 2009 as compared to total operating  expenses of $187,458 for the nine month
period ended March 31, 2008. The increase in operating  expenses during the nine
month  period  ended March 31, 2009 as compared to the nine month  period  ended
March  31,  2008  was  due  to  a  variety  of  expenditures   relating  to  our
restructuring efforts.

Selling,  general and administrative expenses increased to $483,491 for the nine
month   period   ended  March  31,  2009   compared  to  selling,   general  and
administrative  expenses of $187,458  for the nine month  period ended March 31,
2008. The increase in selling,  general and administrative expenses was a result
of an increase of fees to our consultants and professional,  including legal and
accounting, in relation to our fund raising and restructuring.

         INTEREST EXPENSE

We incurred  $349,380 in interest  expense  during the nine month  period  ended
March 31, 2009 as compared to $408,856  incurred as interest  expense during the
nine month period  ended March 31, 2008.  Interest  expense  incurred  consisted
primarily of interest charged on loans from related parties and increased due to
the increase in loan activity relating to our restructuring.

         INTEREST INCOME/IMPAIRMENT LOSS ON INVESTMENT

We earned  interest  income of $50 during the nine month  period ended March 31,
2009 as  compared  to interest  income of $27,581  during the nine month  period
ended March 31, 2008. We,  however,  recognized an impairment loss on the Boheng
investment  of  ($1,625,000)  during the nine month  period ended March 31, 2009
compared to $-0- during the nine month period ended March 31, 2008.

Thus,  we incurred a net loss of  ($2,204,872)  for the nine month  period ended
March 31, 2009  compared to a net loss of  ($557,089)  incurred  during the nine
month period ended March 31,  2008.  This  difference  resulted  primarily  from
recognition  of the  impairment  on the Boheng  investment  and the  increase in
selling,  general and  administrative  expenses resulting from the restructuring
efforts.


<PAGE>


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

         REVENUES AND GROSS MARGIN AND COST OF SALES

We had net sales of $-0- for both three month  periods  ended March 31, 2009 and
March 31,  2008.  Our cost of sales for both three month  period ended March 31,
2009 and March 31, 2008 was $-0-.  The lack of sales during both the three month
periods  ended  March 31, 2009 and March 31,  2008 was due to the  divesture  of
certain interests in our assets.

         OPERATING EXPENSES

Our total  operating  expenses  were  $145,682  for the three month period ended
March 31, 2009 as compared to total operating  expenses of $16,704 for the three
month period ended MJarch 31, 2008.  The increase in operating  expenses  during
the three  month  period  ended  March 31,  2009 as  compared to the three month
period ended March 31, 2008 was due to a variety of expenditures relating to our
restructuring efforts.

Selling, general and administrative expenses increased to $145,682 for the three
month   period   ended  March  31,  2009   compared  to  selling,   general  and
administrative  expenses of $16,704 for the three month  period  ended March 31,
2008. The increase in selling,  general and administrative expenses was a result
of an increase of fees to our consultants and professional,  including legal and
accounting, in relation to our fund raising and restructuring.

         INTEREST EXPENSE

We incurred  $98,971 in interest  expense  during the three month  period  ended
March 31, 2009 as compared to $180,106  incurred as interest  expense during the
three month period ended March 31, 2008.  Interest  expense  incurred  consisted
primarily of interest charged on loans from related parties and increased due to
the increase in loan activity relating to our restructuring.

         INTEREST INCOME

We earned  interest  income of $7 during the three month  period ended March 31,
2009 as  compared to interest  income of $13,781  during the three month  period
ended March 31, 2008.

Thus,  we incurred a net loss of  ($244,646)  for the three month  period  ended
March 31, 2009  compared to a net loss of ($170,385)  incurred  during the three
month period ended March 31, 2008. This difference  resulted  primarily from the
increase in selling,  general and  administrative  expenses  resulting  from the
restructuring efforts.

LIQUIDITY AND CAPITAL RESOURCES

NINE MONTH PERIOD ENDED MARCH 31, 2009


<PAGE>

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 nine month  period  ended  March 31,  2009,  our  current  assets were
$323,886 and our current  liabilities  were  $2,189,575,  resulting in a working
capital deficit of $1,865,689. As at the nine month period ended March 31, 2009,
current assets were comprised of: (i) $25,466 in cash and cash equivalents; (ii)
$74,016 in net accounts receivable;  and (iii) $224,404 in other receivables and
prepayments.  As at the nine month  period  ended  March 31,  2009,  our current
liabilities  were  comprised  of: (i)  $658,731 in accounts  payable and accrued
liabilities;  and (ii) $1,530,843 in current  portion of loans payable.  See " -
Material Commitments."

As at the nine month period ended March 31, 2009, our total assets were $381,516
comprised of: (i) $323,886 in current assets;  and (ii) $57,630 in net property,
plant and  equipment.  The decrease in total assets during the nine month period
ended March 31, 2009 from fiscal year ended June 30, 2008 was  primarily  due to
the note  receivable  in the amount of  $1,625,000  and the decrease in accounts
receivable.  The note  receivable  represented  the sales proceeds of $1,875,000
from the disposal of Beijing Boheng in accordance  with the terms and provisions
of the disposal agreement.

As at the nine month  period ended March 31, 2009,  our total  liabilities  were
$9,072,563 comprised of: (i) $2,189,575 in current liabilities;  (ii) $1,058,261
in loans payable;  and (iii) $5,824,727 in loans from  shareholders.  The slight
decrease in total liabilities  during the nine month period ended March 31, 2009
from  fiscal  year ended June 30,  2008 was  primarily  due to the  decrease  in
accounts payable and accrued liabilities.

Stockholders'   deficit  increased  from  ($6,845,321)  for  June  30,  2008  to
($8,691,048) for March 31, 2009.

         OPERATING ACTIVITIES

We have not generated  positive cash flows from  operating  activities.  For the
nine  month  period  ended  March 31,  2009,  net cash  flow  used in  operating
activities  was  ($2,009,328)  compared  to  net  cash  sourced  from  operating
activities  of $34,748  during the nine month period  ended March 31, 2008.  Net
cash flow from operating activities during the nine month period ended March 31,
2009 consisted  primarily of a net loss of  ($2,204,873)  adjusted by $16,156 in
depreciation  and $310,833 in imputed  interest  expense.  Changes in assets and
liabilities  consisted  of a decrease of $337,765  in  accounts  receivable,  an
increase of $463,812  in  accounts  payable,  an increase of $18,355 in deferred
revenue and a further increase of $18,355 in deferred revenue.

         INVESTING ACTIVITIES

During  the nine  month  period  ended  March  31,  2009,  net cash flow used in
investing  activities  was  $1,625,000  compared to net cash flow  sourced  from
investing  activities  of  ($73,191)  for the nine month  period ended March 31,
2008.  Net cash flow used in investing  activities  during the nine month period
ended March 31, 2009 was primarily  the result of  $1,625,000 as the  impairment
loss of the Boheng Investment.


<PAGE>


         FINANCING ACTIVITIES

During the nine month  period ended March 31,  2009,  net cash flow  provided by
financing  activities  was  $370,800  compared  to net  cash  flow  provided  by
financing  activities of $11,366 for the nine month period ended March 31, 2008.
Net cash flow provided from  financing  activities  during the nine month period
ended  March 31, 2009  pertained  primarily  to  $414,472  received as loan from
shareholders,  $1,839 in stock issued to Highgate on debt conversion and $41,763
as additional paid-in capital,  which was offset by $87,274 in repayment of loan
to Highgate.

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.

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.


<PAGE>

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.

The report of the independent registered public accounting firm that accompanies
our June 30, 2008 and June 30, 2007 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  2007/8,  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.

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.



<PAGE>

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 nine month period
ended March 31, 2009,  an aggregate  of  133,708,772  shares of our common stock
were issued  pursuant to conversion of the debt at a total  conversion  price of
$43,100. As of March 31, 2009, an aggregate of $2,589,104 remains due and owing.

LOANS FROM SHAREHOLDERS

During  fiscal year 2007/8,  a material  commitment  for us relates to the loans
from shareholders. The outstanding amount of $5,824,727 represents cash advanced
to us from our  shareholders.  These  shareholder  loans are  unsecured  and not
repayable within the next twelve months.  For the three month period ended March
31, 2009, we calculated  imputed  interest expense of $86,169 in relation to the
shareholders  loans at its effective interest rate of 6% per annum and accounted
for it in the consolidated financial statements.

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.


<PAGE>


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.

As of March 31, 2009,  the end of our third quarter  covered by this 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


<PAGE>

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  March 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 2009. 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.

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.


<PAGE>

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
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


<PAGE>

payments  of  $375,000  due  on  September   30,  2007  and  October  31,  2007,
respectively, were not paid as of March 31, 2008.

During the nine month period ended March 31, 2009,  an aggregate of  133,708,772
shares of our common stock were issued  pursuant to  conversion of the debt at a
total  conversion  price of  $43,100.  As of March 31,  2009,  an  aggregate  of
$2,589,104 remains due and owing.

SETTLEMENT OF DEBT

We had incurred an aggregate of  $3,426,444  (the "Debt") as of March 1, 2008 to
our  President/Chief  Executive  Officer,  Xianping Wang,  consisting of sums of
money loaned by Mr. Wang to us for funding and working capital purposes. We have
been unable to repay the Debt. At the time the Debt was incurred,  we had agreed
that in the event we were unable to repay the Debt,  the Debt would be satisfied
by  conversion of the Debt into shares of our common stock at $0.0001 per share.
On approximately  March 1, 2009, Mr. Wang assigned his right, title and interest
in the Debt to Lily Wang. On approximately  March 30, 2009, Lily Wang elected to
convert a portion of the Debt into 57,000,000 shares of our common stock.

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:

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.



<PAGE>

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: May 18, 2009                 By: /s/XIANPING WANG
                                        _______________________________________
                                        Xianping Wang, President/Chief
                                        Executive Officer



Dated: May 18, 2009                 By: /s/ XIANPING WANG
                                        _______________________________________
                                         Xianping Wang, Acting as Interim Chief
                                         Financial Officer