----

----

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

| Securities registered pursuant to Section 12(b) of the Act: |   | Name of each exchange on which registered: |
|-------------------------------------------------------------|--------|--------------------------------------------|
| None                                                        |   |                                       |
|                               |   |              |
| Securities registered pursuant to Section 12(g) of the Act: |
| Common Stock, $0.00001 par value                            |   |                                       |
| (Title of Class)                                            |   |                                       |

| Large accelerated filer | o | Accelerated filer | o | Non-accelerated filer | x |
|-------------------------|---|-------------------|---|-----------------------|---|

| Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:Class | Outstanding as of February 22, 2011  499,911,400 |
|----------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|
| Common Stock $0.00001                                                                                                                  |

----

----

----

| PART I – FINANCIAL INFORMATION |                                                                                        |   |   |
|--------------------------------------|---------------------------------------------------------------------------------------------|--------|--------|
|                                 |                                                                                        |   |   |   |
| Item 1.               | Financial Statements                                                                        |   |   | 3 |   |
|        |                                                                                        |   |   |   |   |
| Item 2                | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   | 23 |   |
|        |                                                                                        |   |   |   |   |
| Item 3.               | Quantitative and Qualitative Discloses About Market Risk                                    |   |   | 30 |   |
|        |                                                                                        |   |   |   |   |
| Item 4.               | Controls and Procedures                                                                     |   |   | 31 |   |
|        |                                                                                        |   |   |   |   |
| Item 4T.              | Controls and Procedures                                                                     |   |   | 33 |   |
|        |                                                                                        |   |   |   |   |
| PART II – OTHER INFORMATION    |                                                                                        |   |   |   |
|                                 |                                                                                        |   |   |   |   |
| Item 1.               | Legal Proceedings                                                                           |   |   | 33 |   |
|        |                                                                                        |   |   |   |   |
| Item 1A.              | Risk Factors                                                                                |   |   | 33 |   |
|        |                                                                                        |   |   |   |   |
| Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   | 33 |   |
|        |                                                                                        |   |   |   |   |
| Item 3.                              | Defaults Upon Senior Securities                                                             |   |   | 33 |   |
|                                 |                                                                                        |   |   |   |   |
| Item 4.               | Removed and Reserved                                                                        |   |   | 34 |   |
|                                 |                                                                                        |   |   |   |   |
| Item 5.                    | Other Information                                                                           |   |   | 34 |   |
|        |                                                                                        |   |   |   |   |
| Item 6.                    | Exhibits                                                                                    |   |   | 34 |   |

----

----

| Contents                                                                   | Pages  |
|----------------------------------------------------------------------------|--------|
|                                                                       |   |
| Report of Registered Independent Public Accounting Firm               | 5      |
|                                                                       |   |
| Unaudited Balance Sheets                                                   | 6-7    |
|                                                                       |   |
| Unaudited Statements of Income                                             | 8      |
|                                                                       |   |
| Unaudited Statements of Stockholders’ Equity     | 9      |
|                                                                       |   |
| Unaudited Statements of Cash Flows                                         | 10     |
|                                                                       |   |
| Notes to the Unaudited Financial Statements                                | 11-22  |

----

|                              |   |                               |
|-----------------------------------|--------|-------------------------------|
| San Mateo, California   |   | Samuel H. Wong & Co., LLP |
| February 7, 2011        |   | Certified Public Accountants  |

----

|                                     |   | Notes  |   |   | December 31, 2010 |   |       | (Audited)June 30, 2010 |   |
|------------------------------------------|--------|--------|--------|--------|-------------------|--------|------------|------------------------|--------|
| ASSETS                                   |   |   |   |   |              |   |       |                   |   |
| Current Assets                           |   |   |   |   |              |   |       |                   |   |
| Cash and Cash Equivalents                |   |   | 3D     |   |              | $      | -          |                   |   | $ | 255,810 |   |
| Accounts Receivable, net                 |   |   | 3E     |   |              |   | -          |                   |   |   | 75,125 |   |
| Other Receivables and Prepayments        |   |   | 4      |   |              |   | 11,189     |                   |   |   | 241,353 |   |
| Total Current Assets                     |   |   |   |   |              |   | 11,189     |                   |   |   | 572,288 |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| Long-term Assets                         |   |   |   |   |              |   |       |                   |   |   |   |   |
| Property, Plant & Equipment, net     |   |   | 3F,5   |   |              |   | -          |                   |   |   | 204,062 |   |
| Intangible Assets, net                   |   |   | 5      |   |              |   | -          |                   |   |   | 78,242 |   |
| Total Long-term Assets                   |   |   |   |   |              |   | -          |                   |   |   | 282,304 |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| Total Assets                             |   |   |   |   |              | $      | 11,189     |                   |   | $ | 854,592 |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY   |   |   |   |   |              |   |       |                   |   |   |   |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| Liabilities                              |   |   |   |   |              |   |       |                   |   |   |   |   |
| Current Liabilities                      |   |   |   |   |              |   |       |                   |   |   |   |   |
| Accounts Payable and Accrued Liabilities |   |   | 6      |   |              | $      | 159,354    |                   |   | $ | 570,834 |   |
| Current portion of Loans Payable         |   |   | 7      |   |              |   | 1,498,075  |                   |   |   | 1,472,311 |   |
| Total Current Liabilities                |   |   |   |   |              |   | 1,657,429  |                   |   |   | 2,043,145 |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| Long-term Liabilities                    |   |   |   |   |              |   |       |                   |   |   |   |   |
| Loans Payable                            |   |   | 7      |   |              |   | 1,058,261  |                   |   |   | 1,058,261 |   |
| Loans from Shareholders                  |   |   | 8      |   |              |   | 10,548,854 |                   |   |   | 10,176,526 |   |
| Total Long-term Liabilities              |   |   |   |   |              |   | 11,607,115 |                   |   |   | 11,234,787 |   |
|                                     |   |   |   |   |              |   |       |                   |   |   |   |   |
| Total Liabilities                        |   |   |   |   |              | $      | 13,264,544 |                   |   | $ | 13,277,932 |   |

----

|                                                                                                                                                                          |   | Note   |   |   | December 31, 2010 |   |        | (Audited)June 30, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|-------------------|--------|-------------|------------------------|--------|
|                                                                                                                                                                          |   |   |   |   |              |   |        |                   |   |
| Stockholders' Equity                                                                                                                                                          |   |   |   |   |              |   |        |                   |   |
|                                                                                                                                                                          |   |   |   |   |              |   |        |                   |   |
| Common Stock $0.00001 Par Value 500,000,000 Shares Authorized; 499,911,400 and 499,911,400 shares issued and outstanding at December 31, 2010 and June 30, 2010, accordingly. |   |   | 9      |   |              | $      | 4,999       |                   |   | $ | 4,999 |   |
| Additional Paid-In Capital                                                                                                                                                    |   |   |   |   |              |   | 12,050,631  |                   |   |   | 11,831,075 |   |
| Accumulated Other ComprehensiveIncome                                                                                                                                         |   |   |   |   |              |   | (30,392     | )                      |   |   | 40,149 |   |
| Accumulated Deficit                                                                                                                                                           |   |   |   |   |              |   | (25,278,593 | )                      |   |   | (24,299,563 | ) |
| Total Stockholders' (Deficit)/Equity                                                                                                                                          |   |   |   |   |              |   | (13,253,355 | )                      |   |   | (12,423,340 | ) |
|                                                                                                                                                                          |   |   |   |   |              |   |        |                   |   |   |   |   |
| Total Liabilities & Stockholders' Equity                                                                                                                                  |   |   | $      | 11,189 |              |   | $           | 854,592                |   |

----

|                                           |   |   |   |   | Three-month period ended |   |        | Six-month period ended |   |
|------------------------------------------------|--------|--------|--------|--------|--------------------------|--------|-------------|------------------------|--------|
|                                           |   | Note   |   |   | December 31,             |   |        | December 31,           |   |
| Revenue                                        |   |   |   |   | 2010                     |   |        | 2009                   |   |   | 2010 |   |   | 2009 |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |
| Revenue, net                                   |   |   | 3H     |   |                     | $      | -           |                   |   | $ | - |   |   |   | - |   |   |   | - |   |
| Cost of Sales, net                             |   |   | 3I     |   |                     |   | -           |                   |   |   | - |   |   |   | - |   |   |   | - |   |
| Gross Profit                                   |   |   |   |   |                     |   | -           |                   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                             |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General, and Administrative Expenses  |   |   |   |   |                     |   | 164,385     |                   |   |   | 167,374 |   |   |   | 194,385 |   |   |   | 296,393 |   |
| Total Operating Expense                        |   |   |   |   |                     |   | 164,385     |                   |   |   | 167,374 |   |   |   | 194,385 |   |   |   | 296,393 |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income/(Loss)                        |   |   |   |   |                     |   | (164,385    | )                      |   |   | (167,374 | ) |   |   | (194,385 | ) |   |   | (296,393 | ) |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expenses)                        |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income                                   |   |   |   |   |                     |   | -           |                   |   |   | - |   |   |   | - |   |   |   | - |   |
| Interest Income                                |   |   |   |   |                     |   | -           |                   |   |   | 24 |   |   |   | - |   |   |   | 40 |   |
| Interest Expense                               |   |   |   |   |                     |   | (123,181    | )                      |   |   | (124,328 | ) |   |   | (245,594 | ) |   |   | (229,249 | ) |
| Loss on disposal of subsidiaries               |   |   | 12     |   |                     |   | -           |                   |   |   | - |   |   |   | (4,118,173 | ) |   |   | - |   |
| (Loss) before minority interest and income tax |   |   |   |   |                     |   | (287,565    | )                      |   |   | (291,678 | ) |   |   | (4,363,767 | ) |   |   | (525,602 | ) |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before Income Tax                         |   |   |   |   |                     |   | (287,565    | )                      |   |   | (291,678 | ) |   |   | (4,558,152 | ) |   |   | (525,602 | ) |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax                                     |   |   | 3M     |   |                     |   | -           |                   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations, net of tax            |   |   | 14     |   |                     |   | -           |                   |   |   | - |   |   |   | (71,086 | ) |   |   | - |   |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (Loss)                                     |   |   |   |   |                     | $      | (287,565    | )                      |   | $ | (233,924 | ) |   | $ | (4,629,238 | ) |   | $ | (525,602 | ) |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic & Diluted (Loss) Per Share           |   |   | 3N,13  |   |                     |   | (0.001      | )                      |   |   | (0.001 | ) |   |   | (0.009 | ) |   |   | (0.001 | ) |
|                                           |   |   |   |   |                     |   |        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding            |   |   |   |   |                     |   | 499,911,400 |                   |   |   | 499,911,399 |   |   |   | 499,911,400 |   |   |   | 498,095,183 |   |

----

|                                                          |   |      |        |   |   |   |   | Additional |   |   |          |   |   | Other         |        |   |        |   |    |   |   |
|---------------------------------------------------------------|--------|-----------|-------------|--------|--------|--------|--------|------------|--------|--------|---------------|--------|--------|---------------|-------------|--------|-------------|--------|---------|--------|--------|
|                                                          |   | Number of |        |   | Common |   |   | Paid in    |   |   | Comprehensive |   |   | Comprehensive |        |   | Accumulated |   |    |   |   |
|                                                          |   | Shares    |        |   | Stock  |   |   | Capital    |   |   | Income(Loss)  |   |   | Income(Loss)  |        |   | Deficit     |   |    | Total  |   |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |
| Balance, July 1, 2009                                         |   |      | 490,311,400 |   |   |   | 4,903  |       |   |   | 11,399,960    |   |   |          | (20,253,432 | )      |        |   | 38,756  |   |   |   | (20,292,189 | ) |   |   | (8,848,570 | ) |
| Additional Paid-in Capital                                    |   |      | -           |   |   |   | -      |       |   |   | 419,775       |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 419,775 |   |
| Imputed interest on interest free advances from related party |   |      | -           |   |   |   | -      |       |   |   | 11,340        |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 11,340 |   |
| Issuance of shares to Highgate                                |   |      | 9,600,000   |   |   |   | 96     |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 96 |   |
| Issuance of shares to Xianping Wang                           |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Foreign Currency translation                                  |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | 1,393       |   |        |   | 1,393   |   |   |   | - |   |   |   | 1,393 |   |
| Net Loss for year                                             |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (4,007,374  | )      |        |   | -       |   |   |   | (4,007,374 | ) |   |   | (4,007,374 | ) |
| Balance, June 30, 2010                                        |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 11,831,075    |   |   |          | (24,259,413 | )      |        |   | 40,149  |   |   |   | (24,299,563 | ) |   |   | (12,423,340 | ) |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |   |   |   |   |   |   |   |
|                                                          |   |      |        |   |   |   |   |       |   |   |          |   |   |          |        |   |        |   |    |   |   |   |   |   |   |   |   |   |
| Balance, July 1, 2010                                         |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 11,831,075    |   |   |          | (24,259,413 | )      |        |   | 40,149  |   |   |   | (24,299,563 | ) |   |   | (12,423,340 | ) |
| Additional Paid-in Capital on conversion                      |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Imputed interest on interest free advances from related party |   |      | -           |   |   |   | -      |       |   |   | 219,556       |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | 219,556 |   |
| Issuance of shares to Highgate                                |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | -           |   |        |   | -       |   |   |   | - |   |   |   | - |   |
| Foreign Currency translation                                  |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (70,541     | )      |        |   | (70,541 | )      |   |   | - |   |   |   | (70,541 | ) |
| Deconsolidation of disposed subsidiaries                      |   |      |        |   |   |   |   |       |   |   |          |   |   |          | 3,650,208   |   |        |   | -       |   |   |   | 3,650,208 |   |   |   | 3,650,208 |   |
| Net Loss for period                                           |   |      | -           |   |   |   | -      |       |   |   | -             |   |   |          | (4,629,238  | )      |        |   | -       |   |   |   | (4,629,238 | ) |   |   | (4,629,238 | ) |
| Balance, December 31, 2010                                    |   |      | 499,911,400 |   |   |   | 4,999  |       |   |   | 12,050,631    |   |   |          | (25,308,984 | )      |        |   | (30,392 | )      |   |   | (25,278,593 | ) |   |   | (13,253,355 | ) |

|                                    |   | December 31, 2010 |       |   | June 30, 2010 |   |       | Total  |   |
|-----------------------------------------|--------|-------------------|------------|--------|---------------|--------|------------|--------|--------|
| Comprehensive Income(Loss)              |   |              |       |   |          |   |       |   |   |
| Net Loss                                |   | $                 | (4,629,238 | )      |          | $      | (4,007,374 | )      |   | $ | (8,349,047 | ) |
| Other Comprehensive Income              |   |              |       |   |          |   |       |   |   |   |   |   |
| Foreign Currency Translation Adjustment |   |              | (70,541    | )      |          |   | 1,393      |   |   |   | (69,146 | ) |
| Total Comprehensive Income              |   | $                 | (4,699,779 | )      |          | $      | (4,005,981 | )      |   | $ | (8,418,193 | ) |

----

|                                                                                  |   | Three-month period ended |     |   | Six-month period ended |   |
|---------------------------------------------------------------------------------------|--------|--------------------------|----------|--------|------------------------|--------|
|                                                                                  |   | December 31,             |     |   | December 31,           |   |
|                                                                                  |   | 2010                     |     |   | 2009                   |   |   | 2010 |   |   | 2009 |   |
| Cash Flow from Operating Activities:                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |
| Net (Loss)                                                                            |   | $                        | (287,565 | )      |                   | $      | (291,678 | ) |   | $ | (4,629,238 | ) |   | $ | (525,602 | ) |
| Adjustments to reconcile net earnings(loss) to net cash used in operating activities: |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                          |   |                     | -        |   |                   |   | 5,593 |   |   |   | - |   |   |   | 9,462 |   |
| Imputed interest expense                                                              |   |                     | -        |   |                   |   | 123,620 |   |   |   | - |   |   |   | 228,328 |   |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in assets and liabilities:                                                    |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Decrease/(Increase) Accounts receivable                                               |   |                     | 11,811   |   |                   |   | (11,950 | ) |   |   | 18,811 |   |   |   | (11,897 | ) |
| Decrease/(Increase) Accounts Payable and accrued liabilities                          |   |                     | 17,851   |   |                   |   | (250,837 | ) |   |   | (434,228 | ) |   |   | (292,360 | ) |
| Cash Sourced/(Used) in Operating Activities                                           |   |                     | (257,904 | )      |                   |   | (425,252 | ) |   |   | (5,044,655 | ) |   |   | (592,069 | ) |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                 |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase of leasehold improvements                                                    |   |                     | -        |   |                   |   | (21,235 | ) |   |   | - |   |   |   | (21,235 | ) |
| Disposal of subsidiaries                                                              |   |                     | -        |   |                   |   | - |   |   |   | 1,998,464 |   |   |   |   |   |
| Cash Used/(Sourced) in Investing Activities                                           |   |                     | -        |   |                   |   | (21,235 | ) |   |   | 1,998,464 |   |   |   | (21,235 | ) |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities:                                                 |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Stock Issue to Highgate on debt conversion                                            |   |                     | -        |   |                   |   | - |   |   |   | - |   |   |   | 96 |   |
| Adjustment/(Repayment) of Loan to Highgate                                            |   |                     | -        |   |                   |   | - |   |   |   | 18,600 |   |   |   | (11,436 | ) |
| Loans from shareholders                                                               |   |                     | 147,574  |   |                   |   | 1,164,950 |   |   |   | 2,808,036 |   |   |   | 1,298,344 |   |
| Additional Paid-in Capital                                                            |   |                     | 110,330  |   |                   |   | - |   |   |   | 219,556 |   |   |   | 11,340 |   |
| Cash Sourced/(Used) in Financing Activities                                           |   |                     | 257,904  |   |                   |   | 1,164,950 |   |   |   | 3,046,192 |   |   |   | 1,298,344 |   |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net Increase/(Decrease) in Cash & Cash Equivalents for the Period                 |   |                     | -        |   |                   |   | 718,463 |   |   |   | - |   |   |   | 685,040 |   |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of Currency Translation                                                        |   |                     | -        |   |                   |   | (204 | ) |   |   | - |   |   |   | (464 | ) |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cash & Cash Equivalents at Beginning of Period                                    |   |                     | -        |   |                   |   | 12,086 |   |   |   | - |   |   |   | 45,769 |   |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cash & Cash Equivalents at End of Period                                          |   | $                        | -        |   |                   | $      | 730,345 |   |   | $ | - |   |   | $ | 730,345 |   |
|                                                                                  |   |                     |     |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest expenses                                                       |   | $                        | -        |   |                   | $      | - |   |   | $ | - |   |   | $ | - |   |

----

| 1.   | ORGANIZATION AND BUSINESS BACKGROUND Xinhua China Ltd. (the “Company”, formerly Camden Mines Limited) was incorporated in the State of Nevada, United States of America, on September 14, 1999.  Until September 2004, the Company was a non-operating shell company and considered as a development stage enterprise since its inception.  Effective from October 12, 2004, the Company changed to its current name.  The Company established an office in Vancouver, Canada; however, this office was closed down in December 2006.  The Company established its principal executive office at B26-F, Oriental Kenzo, No. 48 Dongzhimenwai Street, Dongcheng District, Beijing 100027 People’s Republic of China. As of May 31, 2006, the Company reduced its equity interest in Xinhua C&D from 56.14% to 7.98%.  Subsequent to the deconsolidation of Xinhua C&D, the Company commenced the internet book distribution business through Beijing Joannes Information Technology Co., Ltd. (“Joannes”). As of September 30, 2010, the Company disposed both subsidiaries at a loss. See note 12 – Loss on Disposal of Subsidiaries. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | GOING CONCERN UNCERTAINTIES These consolidated financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As of December 31, 2010, the Company had no working capital but current liabilities exceeding current assets by $1,646,240 and an accumulated deficit of $25,278,593 because the Company continued to incur losses over the past several years.  Management has taken certain action and continues to implement changes designed to improve the Company’s financial results and operating cash flows.  The actions involve certain cost-saving initiatives and growing strategies, including (a) reductions in headcount and corporate overhead expenses; and (b) development of e-commerce business.  Management believes that these actions will enable the Company to improve future profitability and cash flow in its continuing operations through December 31, 2010.  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. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

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

| (C.)   | Basis of Consolidation After disposal of the two subsidiaries on September 16, 2010, the Company has no subsidiaries; therefore, no consolidation is necessary. |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| (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”. 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 September 30, 2010, there were no shipping and handling costs included in selling, general and administrative expenses in the accompanying consolidated statements of income. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 September 30, 2010, 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 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. 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: - |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 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 |   | - |   | - |

|   | Based on the consolidated net income/(loss) for the period ended December 31, 2010, the Company shall not be subject to income tax. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

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

|   | The Company calculates loss per share in accordance with SFAS No. 128, “Earnings per Share”.  Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding.  Diluted loss per share is computed similar to basic loss per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.  The effect of outstanding stock options, stock purchase warrants and convertible debenture, which could result in the issuance of 499,911,400 and 499,911,400 of common stock at December 31, 2010 and June 30, 2010, 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Exchange Rates                              |   | December 31, 2010 |   |   | June 30, 2010 |   |   | December 31, 2009 |   |
|---------------------------------------------|--------|-------------------|--------|--------|---------------|--------|--------|-------------------|--------|
| Period/year end RMB : US$ exchange rate     |   |              | 6.6627 |   |          |   | 6.8086 |              |   |   | 6.8282 |   |
| Average period/year RMB : US$ exchange rate |   |              | 6.6632 |   |          |   | 6.8347 |              |   |   | 6.8293 |   |

| (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 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: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

| (S.)   | 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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets and FASB Statement No. 167, a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities. Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures.Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.On July 1, 2009, FASB issued FASB Statement No. 168, The “FASB Accounting Standards Codification” and the Hierarchy of Generally Accepted Accounting Principles.  The ASC has become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities and provides that all such guidance carries an equal level of authority. The ASC is not intended to change or alter existing GAAP. The ASC is effective for interim and annual periods ending after September 15, 2009.The Company has adopted the above recent accounting pronouncements without any material impact on the financial statements presented herein.  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|        |   | December 31, 2010 |   |   | June 30, 2010 |   |
|-------------|--------|-------------------|--------|--------|---------------|--------|
|        |   |              |   |   |          |   |
| Prepayments |   | $                 | 11,189 |   |          | $      | 241,353 |   |

|    | The carrying amounts of prepayments approximate their fair value. |
|--------------|-------------------------------------------------------------------|

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

|    | Property, plant, and equipment consist of the following: |
|--------------|----------------------------------------------------------|

|                           |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|-------------------|--------|--------|---------------|--------|
| Equipment and machinery        |   | $                 | -      |   |          | $      | 174,428 |   |
| Motor vehicles                 |   |              | -      |   |          |   | 81,959 |   |
| Leasehold Improvement          |   |              | -      |   |          |   | 37,756 |   |
|                           |   |              | -      |   |          |   | 294,143 |   |
| Less: Accumulated Depreciation |   |              | -      |   |          |   | (90,081 | ) |
|                           |   | $                 | -      |   |          | $      | 204,062 |   |

|    | Depreciation expense for December 31, 2010 and June 30, 2010 were $0 and $28,000 respectively.During the period ended December 31, 2010, the Company disposed all fixed assets which includes property, plant, and equipment due to the disposal of their investment in subsidiaries as noted in Note 12 – Discontinued Operations. |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|    | Accounts payable and accrued liabilities as of December 31, 2010 and June 30, 2010 consists of the following: |
|--------------|---------------------------------------------------------------------------------------------------------------|

|             |   | December 31, 2010 |    |   | June 30, 2010 |   |
|------------------|--------|-------------------|---------|--------|---------------|--------|
| Accounts Payable |   | $                 | 159,354 |   |          | $      | 570,834 |   |

| 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: |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|    | 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, 2010 and year ended June 30, 2009; the debenture holders converted 9,600,000 and 266,655,667 shares against outstanding loan at a total conversion price of $11,436 and $144,532, respectively. Loans Payable outstanding as of December 31, 2010 amount to $2,556,336 of which $1,498,075 and $1,058,261 were attributed to current portion and long-term, respectively. Loans Payable outstanding as of June 30, 2010 amoto $2,530,573 of which $1,472,311 and $1,058,261 were attributed to current portion and long-term, respectively. |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|    | The total outstanding amount of $10,548,854 represents cash advanced from shareholders of the Company.These shareholders’ loans are unsecured and not repayable within the next twelve months.  For the period ended December 31, 2010, there was $109,226 imputed interest, at 6.00% annum, recorded. For the year ended June 30, 2010, there was $419,775 imputed interest, at 6.00% per annum, recorded. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

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

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

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

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

| (2)   | Share purchase warrant issued from convertible debenture |
|-----------------|----------------------------------------------------------|

|    | On December 13, 2005, the Company issued to the holder of the convertible debenture 1,035,000 warrants.  One share purchase warrant is exercisable for one common share at $0.00001 per share, until expiration on November 22, 2010.  As of December 31, 2010, zero shares of common stock were converted by the convertible debenture holders. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Share warrant issued for service |
|-----------------|----------------------------------|

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

----

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

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

| (A).   | Major Customers and Vendors 100% of the Company’s revenues were derived from customers located in the PRC, and there are no customers and vendors who account for 10% or more of revenues and purchases.  The Company’s assets are all located in the PRC. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| 12.   | LOSS ON DISPOSAL OF SUBSIDIARIES The Company disposed its subsidiaries; namely, Beijing Joannes Information Technology Co., Ltd. and Pac-Poly Investment Ltd. during the six-month period and resulted in a loss of $4,118,173, which is reflected in the Income Statement. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.   | NET LOSS PER SHARE Basic net loss per share is computed using the weighted average number of the ordinary shares outstanding during the year.  Diluted net loss per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the year. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                                  |   | For the six-month periods ended |        |
|-------------------------------------------------------|--------|---------------------------------|-------------|
| Basic and diluted net loss per share calculation:     |   | December 31, 2010               |        |   | December 31, 2009 |   |
|                                                  |   |                            |        |   |   |   |
| (a). Numerator:                                  |   |                            |        |   |   |   |
| Net loss used in computing basic net (loss) per share |   |                            | (4,629,238  | ) |   |   | (525,602 | ) |
|                                                  |   |                            |        |   |   |   |   |   |
| (b). Denominator:                                |   |                            |        |   |   |   |   |   |
| Weighted-average ordinary shares outstanding          |   |                            | 499,911,400 |   |   |   | 498,095,183 |   |
|                                                  |   |                            |        |   |   |   |   |   |
| Basic and diluted net loss per share                  |   | $                               | (0.009      | ) |   | $ | (0.001 | ) |

|   | For the period ended December 31, 2010 and 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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.   | DISCONTINUED OPERATION During the quarter ended September 30, 2010, the Company ceased operation of its subsidiaries; namely, Beijing Joannes Information Technology Co., Ltd. and Pac-Poly Investment Ltd, which were eventually disposed of before the quarter ended.  Their operation results, net of tax effect are reported in detail as follow: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

|                                                           |   | For Six Month Period Ended December 31, 2010(unaudited) |       |   | For Six Month Period Ended December 31, 2009(unaudited) |   |
|----------------------------------------------------------------|--------|---------------------------------------------------------|------------|--------|---------------------------------------------------------|--------|
| Revenue                                                        |   |                                                    |       |   |                                                    |   |
|    Net revenue                                  |   |                                                    | -0-        |   |                                                    |   | -0- |   |
|    Cost of Sales                                |   |                                                    | -0-        |   |                                                    |   | -0- |   |
| Gross Profit                                                   |   |                                                    | -0-        |   |                                                    |   | -0- |   |
|                                                           |   |                                                    |       |   |                                                    |   |   |   |
| Operating Expenses                                             |   |                                                    |       |   |                                                    |   |   |   |
|    Selling, general and administrative expenses |   | $                                                       | 194,385    |   |                                                    | $      | 296,393 |   |
| Operating Income (loss)                                        |   |                                                    | (194,385   | )      |                                                    |   | (296,393 | ) |
|                                                           |   |                                                    |       |   |                                                    |   |   |   |
| Other Income (Expenses)                                        |   |                                                    |       |   |                                                    |   |   |   |
|    Other income                                 |   |                                                    | -0-        |   |                                                    |   | -0- |   |
|    Interest income                              |   |                                                    | -0-        |   |                                                    |   | 40 |   |
|    Interest expense                             |   |                                                    | 245,594    |   |                                                    |   | 229,249 |   |
|    Loss on disposal of subsidiaries             |   |                                                    | 4,118,173  |   |                                                    |   | -0- |   |
| Loss Before Income Tax                                         |   |                                                    | (4,363,767 | )      |                                                    |   | (525,602 | ) |
|    Discontinued Operations net of tax           |   |                                                    | (71,086    | )      |                                                    |   | -0- |   |
| Net Loss                                                       |   |                                                    | (4,629,238 | )      |                                                    |   | (525,602 | ) |

----

----

----

----

----

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

----

----

----

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

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

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

----

----

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

----

|                           | XINHUA CHINA LTD |                                      |
|--------------------------------|------------------|-------------------------------------------|
|                           |             |                                      |   |
| Dated: February 21, 2010  | By:              | /s/XIANPING WANG                          |   |
|                           |             | Xianping Wang                             |   |
|                           |             | President/Chief Executive Officer         |   |
|                           |             |                                      |   |
|                           |             |                                      |   |
| Dated: February 21, 2010       | By:              | /s/ XIANPING WANG                         |   |
|                           |             | Xianping Wang                             |   |
|                           |             | Acting as Interim Chief Financial Officer |   |
|                           |             |                                      |   |
|                           |             |                                      |   |

----