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


Mark One

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

                For the six month period ended September 30, 2009

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


                For the transition period from ______ to _______


                        COMMISSION FILE NUMBER: 000-33195


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


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


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


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


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


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


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

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


<PAGE>


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

                                 Yes [X ] No[ ]

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

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

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

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

                                       N/A

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

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares  outstanding   Outstanding as of November 13, 2009
of each of the issuer's classes of common
stock, as of the most practicable date:

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


                                        2
<PAGE>


                                XINHUA CHINA LTD.

                                    FORM 10-Q


         PART I - FINANCIAL INFORMATION                                        5

Item 1.  Financial Statements                                                  5

Item 2   Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            26

Item 3.  Quantitative and Qualitative Discloses About Market Risk             33

Item 4.  Controls and Procedures                                              33

Item 4T. Controls and Procedures                                              35

         PART II - OTHER INFORMATION                                          35

Item 1.  Legal Proceedings                                                    35

Item 1A. Risk Factors                                                         35

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          35

Item 3.  Defaults Upon Senior Securities                                      36

Item 4.  Submission of Matters to a Vote of Security Holders                  36

Item 5.  Other Information                                                    36

Item 6.  Exhibits                                                             37









                                       3
<PAGE>


                           FORWARD LOOKING STATEMENTS


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

AVAILABLE INFORMATION

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









                                       4
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

















                                XINHUA CHINA LTD.

                   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                      SEPTEMBER 30, 2009 AND JUNE 30, 2009

                             (Stated in US Dollars)































                                       5
<PAGE>



                                XINHUA CHINA LTD.


CONTENTS                                                                  Pages

Report of Registered Independent Public Accounting Firm                       7

Consolidated Balance Sheet                                                8 - 9

Consolidated Statement of Income                                             10

Consolidated Statement of Stockholders' Equity                               11

Consolidated Statement of Cash Flows                                         12

Notes to the Financial Statements                                       13 - 25
























                                       6
<PAGE>


Board of Directors and Stockholders
Xinhua China Ltd.


             Report of Registered Independent Public Accounting Firm


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

We conducted our review in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States).  A review of  interim  financial
information  consists  principally of applying analytical  procedures and making
inquiries of persons  responsible  for financial and accounting  matters.  It is
substantially  less in scope  than an audit  conducted  in  accordance  with the
standards of the Public Company  Accounting  Oversight  Board,  the objective of
which is the expression of an opinion  regarding the financial  statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying interim  consolidated  financial statements for them
to be in conformity with U.S. generally accepted accounting principles.







South San Francisco, California                     Samuel H. Wong & Co., LLP
October 29, 2009                                    Certified Public Accountants








                                       7
<PAGE>


<TABLE>
<CAPTION>

                                Xinhua China Ltd.
                           Consolidated Balance Sheets
                   As of September 30, 2009 and June 30, 2009
                             (Stated in US Dollars)

                                                                                  (Audited)
                                               Notes     September 30, 2009     June 30, 2009
                                                         __________________     _____________
<S>                                               <C>       <C>                  <C>

                             ASSETS
Current Assets
  Cash and Cash Equivalents                       3D        $    12,086          $    45,769
  Accounts Receivable, net                        3E             74,176               74,228
  Other Receivables and Prepayments                4            224,630              224,535
                                                            ___________         ____________

     Total Current Assets                                       310,892              344,532

Long-term Assets
  Property, Plant & Equipment, net              3F,5             51,350               55,156
                                                            ___________         ____________

     Total Long-term Assets                                      51,350               55,156

                                                            ___________         ____________

     Total Assets                                           $   362,242          $   399,688
                                                            ===========          ===========

               LIABILITIES & STOCKHOLDERS' EQUITY

Liabilities
  Current Liabilities
  Accounts Payable and Accrued Liabilities         6        $   725,294          $   754,025
  Current portion of Loans Payable                 7          1,479,475            1,490,911
                                                            ___________         ____________

     Total Current Liabilities                                2,204,769            2,244,936

  Long-term Liabilities
  Loans Payable                                    7          1,058,261            1,058,261
  Loans from Shareholders                          8          6,078,455            5,945,061
                                                            ___________         ____________

     Total Long-term Liabilities                              7,136,716            7,003,322
                                                            ___________         ____________

     Total Liabilities                                      $ 9,341,485          $ 9,248,258


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

</TABLE>


                                       8
<PAGE>


<TABLE>
<CAPTION>

                                Xinhua China Ltd.
                           Consolidated Balance Sheets
                   As of September 30, 2009 and June 30, 2009
                             (Stated in US Dollars)

                                                                                  (Audited)
                                               Notes     September 30, 2009     June 30, 2009
                                                         __________________     _____________
<S>                                               <C>       <C>                  <C>

                              Stockholders' Equity

Common Stock $0.00001 Par Value
   500,000,000 Shares Authorized;
   499,911,400 and 490,311,400 shares
   issued and  outstanding at September 30,
   2009 and June 30, 2009, accordingly.           10              4,999                4,903
Additional Paid-In Capital                                   11,503,215           11,399,960
Accumulated Other Comprehensive
   Income                                                        38,656               38,756
Accumulated Deficit                                         (20,526,113)         (20,292,189)
                                                            ___________          ___________
    Total Stockholders' (Deficit)/Equity                     (8,979,243)          (8,848,570)
                                                            ___________          ___________

Total Liabilities & Stockholders' Equity                    $   362,242          $   399,688
                                                            ===========          ===========










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

</TABLE>


                                       9
<PAGE>


<TABLE>
<CAPTION>

                                Xinhua China Ltd.
                        Consolidated Statement of Income
             For the three months ended September 30, 2009 and 2008
                             (Stated in US Dollars)

                                                        Note     September 30, 2009     September 30, 2008
                                                                 __________________     __________________
<S>                                                       <C>       <C>                    <C>

Revenue

   Revenue, net                                           3H        $          -           $          -
   Cost of Sales, net                                     3I                   -                      -
      Gross Profit                                                             -                      -

Operating Expenses

   Selling, General, and Administrative
   Expenses                                                              129,019                226,867
                                                                    ____________           ____________

      Total Operating Expense                                            129,019                226,867

                                                                    ____________           ____________

      Operating Income/(Loss)                                           (129,019)              (226,867)
                                                                    ____________           ____________

Other Income (Expenses)
   Other Income                                                                -                179,621
   Interest Income                                                             8                     26
   Gain on disposal of Beijing BoHeng                                          -                 73,427
   Interest Expense                                                      104,913                150,360
                                                                    ____________           ____________

      Loss before minority interest and income tax                      (233,924)              (161,534)


Loss before Income Tax                                                  (233,924)              (124,153)

Income Tax                                             3M,14                   -                      -

                                                                    ____________           ____________

Net Loss                                                            $   (233,924)          $   (124,153)
                                                                    ============           ============


Basic & Diluted Earnings Per Share                     3N,17        $    (0.0004)          $   ( 0.0028)
                                                                    ____________           ____________

Weighted Average Shares Outstanding                                  496,259,226            111,928,254
                                                                    ____________           ____________


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

</TABLE>


                                       10
<PAGE>


<TABLE>
<CAPTION>

                                Xinhua China Ltd.
                 Consolidated Statements of Stockholders' Equity
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


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

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

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


Balance, July 1, 2009              490,311,400   4,903    11,399,960    (20,253,432)          38,756   (20,292,189)   (8,848,570)
Additional Paid-in Capital                   -       -        11,339              -                -             -        11,399
Imputed interest on interest
free advances from related party             -       -        91,916              -                -             -        91.916
Issuance of shares to Highgate       9,600,000      96             -              -                -             -            96
Foreign Currency translation                 -       -             -           (100)            (100)            -          (100)
Net Loss for quarter                         -       -             -       (233,924)               -      (233,924)     (233,924)
                                   ______________________________________________________________________________________________

Balance, September 30, 2009        499,911,400   4,999    11,503,215    (20,487,456)          38,656   (20,526,113)   (8,979,243)
                                   =============================================================================================



                                                        September 30, 2009     June 30, 2009
                                                        __________________     _____________

            COMPREHENSIVE INCOME(LOSS)

            Net Loss                                       $ (233,924)         $ (2,503,735)

            OTHER COMPREHENSIVE INCOME

            Foreign Currency Translation Adjustment              (100)                  607
                                                           __________          ____________

            Total Comprehensive Income                     $ (234,024)         $ (2,503,128)
                                                           ==========          ============


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

</TABLE>


                                       11
<PAGE>


<TABLE>
<CAPTION>

                                Xinhua China Ltd.
                      Consolidated Statements of Cash Flows
             For the three months ended September 30, 2009 and 2008
                             (Stated in US Dollars)

                                                                         September 30, 2009     September 30, 2008
                                                                         __________________     __________________
<S>                                                                          <C>                    <C>

Cash Flow from Operating Activities:
   Net (Loss)                                                                $ (233,924)            $ (124,153)
   Adjustments to reconcile net earnings(loss) to net cash used in
   operating activities:
      Depreciation                                                                3,856                  5,632
      Imputed interest expense                                                  104,708                111,725
      Amortization of deferred imputed interest from note receivable                  -                 13,768

   Changes in assets and liabilities:
      Decrease/(Increase) Accounts receivable                                         -                337,652
      Decrease/(Increase) Other receivables and prepayments                           -                   (812)
      Decrease/(Increase) Accounts Payable and accrued liabilities              (41,523)              (506,684)
      Decrease/(Increase) in Deferred Revenue                                         -                (18,355)
                                                                             __________             __________

   Cash Sourced/(Used) in Operating Activities                                 (166,883)              (181,227)
                                                                             __________             __________

Cash Flows from Investing Activities:
   Proceeds of note receivable - Boheng                                               -              1,625,000
   Purchase of plant and equipment                                                    -                   (396)
   Investment in subsidiary - Boheng                                                  -             (1,625,000)
                                                                             __________             __________

   Cash Used/(Sourced) in Investing Activities                                        -                   (396)
                                                                             __________             __________

Cash Flows from Financing Activities:
   Stock Issue to Highgate on debt conversion                                        96                    328
   Repayment of Loan to Highgate                                                (11,436)               (44,000)
   Loans from shareholders                                                      133,236                200,848
   Additional Paid-in Capital                                                    11,340                      -
                                                                             __________             __________

   Cash Sourced/(Used) in Financing Activities                                  133,236                157,176
                                                                             __________             __________

Net Increase/(Decrease) in Cash & Cash Equivalents for the Year                 (33,647)               (24,447)

Effect of Currency Translation                                                      (36)                   496

Cash & Cash Equivalents at Beginning of Year                                     45,769                 38,733

                                                                             __________             __________

Cash & Cash Equivalents at End of Year                                       $   12,086             $   14,782
                                                                             ==========             ==========

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


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

</TABLE>


                                       12
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


1.   ORGANIZATION AND BUSINESS BACKGROUND

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

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

     Details  of  the  Company's  subsidiaries  as of  September  30,  2009  are
     described below:

<TABLE>
<CAPTION>


                                            Place of
                                          incorporation                                 Particulars of      Effective
                                           and kind of         Principal activities    issued/registered     interest
                  Name                    legal entity        and place of operation     share capital         held
     ________________________________________________________________________________________________________________
<S>                                 <C>                       <C>                     <C>                      <C>
                                                                    Sales and
     Beijing Joannes Information       PRC, a company with       distribution of       Registered capital
     Technology Co., Ltd.               limited liability           books, PRC            US$1,250,000         100%
     ________________________________________________________________________________________________________________

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

</TABLE>


2.   GOING CONCERN UNCERTAINTIES

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

     As of September  30, 2009,  the Company had no working  capital but current
     liabilities  exceeding  current  assets by  $1,893,877  and an  accumulated
     deficit of $20,526,113  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  September 30, 2009. As a result,  the financial  statements do not
     include any  adjustments  to reflect  the  possible  future  effects on the
     recoverability   and   classification   of  assets  or  the   amounts   and
     classification  of  liabilities  that may  result  from the  outcome of the
     Company's ability to continue as a going concern.



                                       13
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A.) Basis of Presentation

          These  accompanying   consolidated   financial  statements  have  been
          prepared in accordance with generally accepted  accounting  principles
          in the United States of America ("US GAAP").

     (B.) Use of Estimates

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

     (C.) Basis of Consolidation

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

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

     (D.) Cash and Cash Equivalents

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

     (E.) Accounts Receivable, Net

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



                                       14
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


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

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

            Asset Classification              Depreciable Life
            ____________________              ________________

          Land Use right                            50 years

          Buildings                                 50 years

          Motor Vehicles                        8 - 10 years

          Equipment and Machinery                5 - 8 years

          Leasehold Improvement                      2 years

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

     (G.) Impairment of Long-life Assets

          In accordance  with SFAS No. 121,  "Accounting  for the  impairment of
          Long-Lived  Assets and for  Long-Lived  Assets to be  Disposed  of', a
          long-lived assets and certain identifiable  intangible assets held and
          used by the Company are reviewed  for  impairment  whenever  events or
          changes in circumstances indicate that the carrying amount of an asset
          may  not  be   recoverable.   For  the  purposes  of  evaluating   the
          recoverability  of  long-lived  assets,  the  recoverability  test  is
          performed using  undiscounted net cash flows related to the long-lived
          assets.  The Company reviews  long-lived  assets, if any, to determine
          whether the carrying values are not impaired.

     (H.) Revenue Recognition

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



                                       15
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


          Shipping and handling  fees billed to customers are included in sales.
          Costs  related to shipping and handling are part of selling,  general,
          and  administrative   expenses  in  the  consolidated   statements  of
          operations. EITF No. 00-10, "Accounting for Shipping and Handling Fees
          and Costs"  allows  for the  presentation  of  shipping  and  handling
          expenses in line items other than cost of sales.  For the period ended
          September 30, 2009, there were no shipping and handling costs included
          in selling,  general and  administrative  expenses in the accompanying
          consolidated statements of operations.

     (I.) Cost of Sales

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

     (J.) Value-Added Tax

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

     (K.) Advertising Expenses

          The Company expenses  advertising costs as incurred in accordance with
          the  American  Institute  of Certified  Public  Accountants  ("AICPA")
          Statement of Position 93-7, "Reporting for Advertising Costs". For the
          period ended September 30, 2009, advertising expenses amount to zero.

     (L.) Comprehensive Income

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

     (M.) Income Taxes

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



                                       16
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


          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.

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

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

                                                    Country of        Income Tax
                            Subsidiary               Domicile            Rate
                            __________              __________        __________

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

                    Pac-Poly Investment Ltd.        British Virgin
                                                    Islands              0.00%

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

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

                                        TAXABLE INCOME

                    Rate      Over        But Not Over      Of Amount Over
                    ____      ____        ____________      ______________

                    15%             0          50,000                   0
                    25%        50,000          75,000              50,000
                    34%        75,000         100,000              75,000
                    39%       100,000         335,000             100,000
                    34%       335,000      10,000,000             335,000
                    35%    10,000,000      15,000,000          10,000,000
                    38%    15,000,000      18,333,333          15,000,000
                    35%    18,333,333               -                   -

          Based on the  consolidated  net income for the period ended  September
          30, 2009, the Company shall not be subject to income tax.


                                       17
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


     (N.) Loss Per Share

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

     (O.) Foreign Currencies Translation

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

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


                                   September 30,     June 30,     September 30,
          Exchange Rates               2009           2009           2008
          ______________           _____________     ________     _____________

          Period/year end RMB:
             US$ exchange rate        6.8290         6.8319         6.8551

          Average period/year
             RMB: US$ exchange
             rate                     6.8310         6.8355         6.8529

     (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.


                                       18
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


     (Q.) Related Parties

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

     (R.) Convertible Debenture Issued with Stock Purchase Warrants

          The Company  accounts  for the  issuance of and  modifications  to the
          convertible  debt issued with stock  purchase  warrants in  accordance
          with APB No. 14,  Accounting for Convertible Debt and Debt Issued with
          Stock Purchase  Warrants , EITF No. 98-5,  Accounting for  Convertible
          Securities  with  Beneficial   Conversion   Features  or  Contingently
          Adjustable Conversion Ratios, and EITF No. 00-27, Application of Issue
          No.  98-5  to  Certain  Convertible   Instruments  and  SFAS  No.  15,
          Accounting by Debtors and Creditors for Troubled Debt Restructurings.

          Due to the indeterminate number of shares, which might be issued under
          the  embedded  convertible  host  debt  conversion  feature  of  these
          debentures,  the Company is required to record a liability relating to
          both the detachable  warrants and embedded  convertible feature of the
          notes  payable   (included  in  the   liabilities   as  a  "derivative
          liability").

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

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

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

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


                                       19
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


     (S.) Recently Issued Accounting Standard

          In June 2009,  FASB issued FASB  Statement  No.  166,  Accounting  for
          Transfers for Financial  Assets and FASB Statement No. 167, a revision
          to FASB  Interpretation No. 46 (Revised December 2003),  Consolidation
          of Variable Interest Entities.

          Statement 166 is a revision to FASB Statement No. 140,  Accounting for
          Transfers and  Servicing of Financial  Assets and  Extinguishments  of
          Liabilities,  and will require  more  information  about  transfers of
          financial assets,  including  securitization  transactions,  and where
          entities have continuing  exposure to the risks related to transferred
          financial   assets.   It  eliminates  the  concept  of  a  "qualifying
          special-purpose  entity," changes the  requirements for  derecognizing
          financial assets, and requires additional disclosures.

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

          On July 1,  2009,  FASB  issued  FASB  Statement  No.  168,  The "FASB
          Accounting  Standards  Codification"  and the  Hierarchy  of Generally
          Accepted  Accounting  Principles.  The ASC has  become  the  source of
          authoritative  US  GAAP  recognized  by  the  FASB  to be  applied  by
          nongovernmental  entities and provides that all such guidance  carries
          an equal  level of  authority.  The ASC is not  intended  to change or
          alter  existing  GAAP.  The ASC is  effective  for  interim and annual
          periods ending after September 15, 2009.

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

4.   OTHER RECEIVABLES AND PREPAYMENT

                     September 30, 2009     June 30, 2009
                     __________________     _____________

     Prepayments         $ 224,630            $ 224,535
                         =========            =========

     The carrying amounts of prepayments approximate their fair value.

5.   PROPERTY, PLANT, AND EQUIPMENT, NET

     Property, plant, and equipment consist of the following:

                                        September 30, 2009     June 30, 2009
                                        __________________     _____________

     Equipment and machinery                $  53,441            $  53,418
     Motor vehicles                            47,027               47,007
     Leasehold Improvement                     16,313               16,306
                                            _________            _________
                                              116,781              116,731
     Less: Accumulated Depreciation           (65,431)             (61,576)
                                            _________            _________
                                            $  51,350            $  55,156
                                            =========            =========

     Depreciation  expense for  September 30, 2009 and June 30, 2009 were $3,856
     and $26,585, respectively.


                                       20
<PAGE>


                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


6.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

                          September 30, 2009       June 30, 2009
                          __________________       _____________

     Accounts Payable         $ 725,294              $ 754,025
                              =========              =========


7.   LOANS PAYABLE/CONVERTIBLE DEBENTURE

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

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

                                             Conversion of
     Payment Date           Cash Payment       Debenture
     ____________           ____________     _____________

     March 10, 2007         $   250,000         250,000

     September 30, 2007         375,000         375,000

     October 31, 2007           375,000         375,000

     January 31, 2008           250,000         250,000

     July 31, 2008              625,000         625,000
                            ___________       _________

                            $ 1,875,000       1,875,000
                            ===========       =========


                                       21
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


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

     Loans Payable  outstanding as of September 30, 2009 amount to $2,537,736 of
     which  $1,479,475 and  $1,058,261  were  attributed to current  portion and
     long-term,  respectively.

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

8.   LOANS FROM SHAREHOLDERS

     The total  outstanding  amount of $6,078,455  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 September 30, 2009,  there was $91,916
     imputed  interest,  at 6.00% annum,  recorded.  For the year ended June 30,
     2009, there was $342,847 imputed interest, at 6.00% per annum, recorded.

9.   COMMON STOCK AND WARRANTS

     A.   Common Stock

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

     B.   Warrants

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

               (i)  two years from the date of issuance; and

               (ii) fifteen  business  days from date that the Company  provides
                    notice  in  writing  to the  subscriber  that the  Company's
                    common  shares have been  trading or traded at a price of $7
                    or more for a period of ten days.


                                       22
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


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

          (2)  Share purchase warrant issued from convertible debenture

               On December  13,  2005,  the Company  issued to the holder of the
               convertible  debenture  1,035,000  warrants.  One share  purchase
               warrant is  exercisable  for one  common  share at  $0.00001  per
               share, until expiration on November 22, 2010. As of September 30,
               2009,  374,911,400  shares of common stock have been converted by
               the  convertible  debenture  holders  at an  aggregate  amount of
               $533,168.

          (3)  Share warrant issued for service

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

10.  CHINA CONTRIBUTION PLAN

     Full-time  employees of the Company are entitled to staff welfare  benefits
     including  medical  care,  welfare  subsidies,  unemployment  insurance and
     pension benefits through a China government-mandated multi-employer defined
     contribution  plan.  The Company is  required to accrue for these  benefits
     based  on  certain  percentages  of  the  employees'  salaries.  The  total
     contributions made for such employee benefits were $21,887 and $53,457, for
     the period  ended  September  30,  2009 and the year  ended June 30,  2009,
     respectively.

11.  STATUTORY RESERVES

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


                                       23
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


12.  GAIN ON DEBT RESTRUCTURING

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

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

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

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

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

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

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

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

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

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

          o Liabilities on Conversion discharged                 $   2,334,198

          o Liabilities on Warrants discharged                         891,537

          o Loans discharged                                           225,000

          o Unamortized discounts                                   (1,950,603)
                                                                 _____________
                                                                 $   1,500,132


                                       24
<PAGE>



                                Xinhua China Ltd.
                   Notes to Consolidated Financial Statements
                  For the three months ended September 30, 2009
                             (Stated in US Dollars)


13.  CONCENTRATION OF RISK

     (A). Major Customers and Vendors

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

     (B). Credit Risk

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

14.  COMMITMENT AND CONTINGENCIES

     The Company leases an office premise under a non-cancelable operating lease
     for a term of three years from January 1, 2009 to December  31,  2011.  The
     cost incurred under this operating  lease is recorded as rental expense and
     totaled $ 17,567 and $65,944 for the period  ended  September  30, 2009 and
     year ended June 30, 2009, respectively.  Future minimum rental payments due
     according to the  operating  lease until  termination  at December 31, 2011
     are:

                  Within one year                    $   52,713
                  Within year two until termination     105,418
                                                     __________
                                                     $  158,131
                                                     ==========

15.  NET LOSS PER SHARE

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

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

     Basic and diluted net loss per share calculation:

                                       September 30, 2009     September 30, 2008
                                       __________________     __________________
     (a). Numerator:

          Net loss used in computing
          basic net loss per share            233,924                124,153

     (b). Denominator:

          Weighted-average ordinary
          shares outstanding              496,259,226            111,928,254

          Basic and diluted net loss
          per share                           $0.0004                $0.0010


     For the period ended September 30, 2009 and 2008 in which the Company had a
     net loss,  inclusion of warrants  outstanding would have been anti-dilutive
     and therefore not included in the computation of diluted losses per share.


                                       25
<PAGE>



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

BUSINESS DEVELOPMENT

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

CURRENT SUBSIDIARIES

         PAC-POLY INVESTMENTS LIMITED

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

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

         BEIJING JOANNES INFORMATION TECHNOLOGY CO. LT.

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


                                       26
<PAGE>


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

RECENT BUSINESS OPERATIONS

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

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

RESULTS OF OPERATION

The  summarized  consolidated  financial  data set forth in the tables below and
discussed in this section  should be read in conjunction  with our  consolidated
financial  statements  and  related  notes  for the  three  month  period  ended
September 30, 2009 and 2008, which financial  statements are included  elsewhere
in this Quarterly Report.

                                          FOR THREE MONTH      FOR THREE MONTH
                                            PERIOD ENDED         PERIOD ENDED
                                         SEPTEMBER 30, 2009   SEPTEMBER 30, 2008
                                            (UNAUDITED)          (UNAUDITED)
________________________________________________________________________________

REVENUE
   Net revenue                                     -0-                  -0-
   Cost of Sales                                   -0-                  -0-

GROSS PROFIT                                       -0-                  -0-

OPERATING EXPENSES
   Selling, general and administrative
   expenses                                  $ 129,019            $ 226,867

OPERATING INCOME (LOSS)                       (129,019)            (226,867)

OTHER INCOME (EXPENSES)
   Other income                                    -0-              179,621
   Interest income                                   8                   26
   Gain on disposal of Beijing BoHeng              -0-               73,427
   Interest expense                            104,913              150,360

NET LOSS                                      (233,924)            (124,153)


                                       27
<PAGE>


RESULTS OF OPERATION

FOR THREE MONTH PERIOD ENDED  SEPTEMBER  30, 2009 COMPARED TO THREE MONTH PERIOD
ENDED SEPTEMBER 30, 2008.

         REVENUES AND GROSS MARGIN AND COST OF SALES

We had net sales of $-0- for both three month periods  ended  September 30, 2009
and September 30, 2009.

         OPERATING EXPENSES

Our total  operating  expenses  were  $129,019  for the three month period ended
September 30, 2009 as compared to total  operating  expenses of $226,867 for the
three month period ended September 30, 2008. The decrease in operating  expenses
during the three month period ended  September 30, 2009 as compared to the three
month  period  ended  September  30,  2008 was due to a decrease in a variety of
expenditures relating to our restructuring efforts and decreased scope and scale
of business operations.  During the three month period ended September 30, 2009,
our selling,  general and  administrative  expenses  consisted of: (i) legal and
professional  fees of $16,783 (2008:  $19,901);  (ii) office  expenses of $1,664
(2008:  $1,854);  (iii) salaries and benefits of $51,900 (2008:  $24,992);  (iv)
management fees of $30,000 (2008: $150,000);  (v) vehicle expense of $187 (2008:
$2,097); and (vii) other expenses of $28,485 (2008: $28,023).

         INTEREST EXPENSE

We incurred  $104,913 in interest  expense  during the three month  period ended
September 30, 2009 as compared to $150,360  incurred as interest  expense during
the three month period ended  September 30, 2008.  Interest  expense of $104,913
incurred  during the three month period ended  September 30, 2009  consisted of:
(i) $-0- (2008:  $13,768)  in interest  expense  from the  amortization  of note
receivable;  (ii) $104,708 (2008:  $111,725)  imputed  interest charged on loans
from related parties.

         IMPAIRMENT LOSS ON BOHENG INVESTMENT/OTHER INCOME

As a result of the  termination  by the purchaser of the  acquisition of Beijing
Boheng  Investments and Management  Co., Ltd., we repossessed  Boheng as our 95%
interest subsidiary on August 25, 2008 at a value of $1,625,000, which was equal
to the unpaid  purchase price due by the purchaser.  After the  repossession  of
Boheng,  we conducted an evaluation of our carrying value and determined that an
impairment  loss in the amount of $1,625,000 was incurred  although Boheng still
owns a 7.98% equity interest in Xinhua C&D. This impairment loss was accordingly
reflected in the income statement for fiscal year ended December 31, 2008. Thus,
$73,427 was recorded during the three month period ended September 30, 2008.


                                       28
<PAGE>


During the three  month  period  ended  September  30,  2008,  we also  recorded
$179,621 in other income.

Therefore,  our net loss during the three month period ended  September 30, 2009
was ($233,924)  compared to a net loss of ($124,153)  incurred  during the three
month period ended September 30, 2008. The increase in net loss during the three
month period ended September 30, 2009 was due primarily to the recording  during
the three month period ended September 30, 2008 of a gain of $73,427 on disposal
of the Boheng Investment and of $179,621 in other income.

LIQUIDITY AND CAPITAL RESOURCES

THREE MONTH PERIOD ENDED SEPTEMBER 30, 2009

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

As at the three month period ended  September 30, 2009,  our current assets were
$310,892 and our current  liabilities  were  $2,204,769,  resulting in a working
capital deficit of $1,893,877.  As at the three month period ended September 30,
2009,   current  assets  were  comprised  of:  (i)  $12,086  in  cash  and  cash
equivalents;  (ii) $74,176 in net  accounts  receivable;  and (iii)  $224,630 in
other receivables and prepayments.  As at the three month period ended September
30, 2009,  our current  liabilities  were comprised of: (i) $725,294 in accounts
payable and accrued liabilities; and (ii) $1,479,475 in current portion of loans
payable. See " - Material Commitments."

As at the three month period  ended  September  30, 2009,  our total assets were
$362,242  comprised of: (i) $310,892 in current assets;  and (ii) $51,350 in net
property,  plant and  equipment.  The decrease in total assets  during the three
month period ended  September  30, 2009 from fiscal year ended June 30, 2009 was
primarily due to the decrease in cash.

As at the three month period ended  September  30, 2009,  our total  liabilities
were  $9,341,485  comprised  of: (i)  $2,204,769  in current  liabilities;  (ii)
$1,058,261 in loans payable;  and (iii)  $6,078,455 in loans from  shareholders.
The slight  increase in total  liabilities  during the three month  period ended
September 30, 2009 from fiscal year ended June 30, 2009 was primarily due to the
increase in loans from shareholders.

Stockholders'   deficit  increased  from  ($8,848,570)  for  June  30,  2009  to
($8,979,243) for September 30, 2009.

         OPERATING ACTIVITIES

We have not generated  positive cash flows from  operating  activities.  For the
three month period  ended  September  30, 2009,  net cash flow used in operating
activities  was  ($166,883)  compared to net cash used  operating  activities of
($181,227) during the three month period ended September 30, 2008. Net cash flow
from operating activities during the three month period ended September 30, 2009
consisted  primarily  of  a  net  loss  of  ($233,924)  adjusted  by  $3,856  in
depreciation and $104,708 in imputed interest expense. Further changes in assets
and liabilities consisted of a decrease of $41,523.


                                       29
<PAGE>


Net cash flow from  operating  activities  during the three month  period  ended
September 30, 2008 consisted  primarily of a net loss of ($124,153)  adjusted by
$5,632 in  depreciation,  $111,725  in imputed  interest  expense and $13,768 in
amortization of deferred imputed interest from note receivable.  Further changes
in assets and  liabilities  consisted  of a decrease  of  $337,652  in  accounts
receivable  and an  increase  of  $812 in  other  receivables  and  prepayments,
$506,684 in accounts  payable  and accrued  liabilities  and $18,355 in deferred
revenue.

         INVESTING ACTIVITIES

During the three month period ended  September  30, 2009,  net cash flow used in
investing  activities  was $-0- compared to net cash flow sourced from investing
activities of ($396) for the three month period ended  September  30, 2008.  Net
cash flow used in  investing  activities  during the three  month  period  ended
September  30, 2008 was primarily the result of $1,625,000 as proceeds from note
receivable - Boheng  Investment which was offset by $1,625,000 as the impairment
loss of the  Boheng  Investment  and a  further  $396 as  purchase  of plant and
equipment.

         FINANCING ACTIVITIES

During the three month period ended  September 30, 2009,  net cash flow provided
by  financing  activities  was  $133,236  compared to net cash flow  provided by
financing  activities of $137,176 for the three month period ended September 30,
2008.  Net cash flow provided from financing  activities  during the three month
period ended September 30, 2009 pertained primarily to $133,236 received as loan
from  shareholders,  $96 in stock  issued to  Highgate  on debt  conversion  and
$11,340 as additional paid-in capital,  which was offset by $11,436 in repayment
of loan to Highgate.

PLAN OF OPERATION

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

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

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


                                       30
<PAGE>


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

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

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

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

MATERIAL COMMITMENTS

LOANS PAYABLE/CONVERTIBLE DEBENTURE

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


                                       31
<PAGE>


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

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

                                                CONVERSION OF
     PAYMENT DATE            CASH PAYMENT         DEBENTURE

     March 10, 2007           $  250,000           250,000
     June 30, 2007               375,000           375,000
     October 31, 2007            375,000           375,000
     January 31, 2008            250,000           250,000
     July 31, 2008               625,000           625,000
                              __________         _________

                              $1,875,000         1,875,000
                              ==========         =========

As of June 30,  2007,  we paid  $250,000  for the payment due March 10, 2007 and
issued  100,000  shares and 125,000  shares of our common stock on March 1, 2007
and April 18, 2007,  respectively,  pursuant to exercise  rights.  During fiscal
year ended June 30, 2009 and the three month  period ended  September  30, 2009,
Cornell and  Highgate  converted  an aggregate  of  266,655,668  and  15,620,252
shares, respectively, against the outstanding amount at a total conversion price
of $144,532 and $18,699, respectively.

LOANS FROM SHAREHOLDERS

During fiscal year 2009/10,  a material  commitment  for us relates to the loans
from shareholders. The outstanding amount of $6,078,455 represents cash advanced
to  us  from  our   shareholders.   These   shareholder   loans  are  unsecured,
interest-free  and not repayable within the next twelve months.  For fiscal year
ended June 30,  2009,  we  calculated  imputed  interest  expense of $342,847 in
relation to interest-free  shareholders loans at its effective interest rate and
accounted for it in the consolidated  financial statements.  For the three month


                                       32
<PAGE>

period ended  September  30, 2009,  we calculated  imputed  interest  expense of
$91,916  in  relation  to  interest-free  shareholders  loans  at its  effective
interest  rate and accounted for it in the  consolidated  financial  statements.
During fiscal year ended June 30, 2009, the shareholders  converted an aggregate
of 125,000,000 shares against the shareholders' loan at a total conversion price
of $12,500.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

EXCHANGE  RATE

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

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

INTEREST RATE

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

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

ITEM 4.  CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be disclosed in our reports filed under the  SECURITIES
EXCHANGE  ACT OF 1934,  as  amended,  is  recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange


                                       33
<PAGE>

Commission's  rules and forms,  and that such  information  is  accumulated  and
communicated  to our  management,  including our  president  (also our principal
executive  officer) and our  secretary,  treasurer and chief  financial  officer
(also our  principal  financial  and  accounting  officer)  to allow for  timely
decisions regarding required disclosure.

As of September 30, 2009, the end of our first quarter covered by this Quarterly
Report,  we  carried  out an  evaluation,  under  the  supervision  and with the
participation  of our president  (also our principal  executive  officer and our
principal financial and accounting officer),  of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing,
our president (also our principal  executive officer and chief financial officer
also  our  principal  financial  and  accounting  officer)  concluded  that  our
disclosure  controls and  procedures  were  effective  in  providing  reasonable
assurance  in the  reliability  of our  financial  reports  as of the end of the
period covered by this Quarterly Report.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

AUDIT COMMITTEE

Our Board of Directors has not  established an audit  committee.  The respective
role of an audit committee has been conducted by our Board of Directors.  We are
contemplating  establishment of an audit committee during fiscal year 2009. When
established,  the audit  committee's  primary function will be to provide advice
with  respect  our  financial  matters and to assist our Board of  Directors  in
fulfilling its oversight  responsibilities  regarding finance,  accounting,  and
legal compliance. The audit committee's primary duties and responsibilities will
be to: (i) serve as an independent  and objective party to monitor our financial
reporting  process and  internal  control  system;  (ii) review and appraise the


                                       34
<PAGE>

audit  efforts of our  independent  accountants;  (iii)  evaluate our  quarterly
financial performance as well as its compliance with laws and regulations;  (iv)
oversee  management's  establishment  and enforcement of financial  policies and
business  practices;  and (v) provide an open avenue of communication  among the
independent accountants, management and our Board of Directors.

ITEM 4T. CONTROLS AND PROCEDURES

Not applicable.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING

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

ITEM 1A. RISK FACTORS

Not applicable.

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

CORNELL CAPITAL PARTNERS LP/HIGHGATE HOUSE FUNDS LTD.

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

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


                                       35
<PAGE>

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

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

                                                         CONVERSION OF
         PAYMENT DATE              CASH PAYMENT            DEBENTURE

         March 10, 2007             $  250,000               250,000
         June 30, 2007                 375,000               375,000
         October 31, 2007              375,000               375,000
         January 31, 2008              250,000               250,000
         July 31, 2008                 625,000               625,000
                                    __________             _________

                                    $1,875,000             1,875,000
                                    ==========             =========

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

During the three month  period  ended  September  30, 2009 and fiscal year ended
June 30, 2009, an aggregate of 15,620,252 and 266,655,667 shares,  respectively,
of our common stock were issued  pursuant to  conversion  of the debt at a total
conversion price of $18,699 and $144,532.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.


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<PAGE>


ITEM 6. EXHIBITS

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

Exhibit

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


                                   SIGNATURES


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


                               XINHUA CHINA LTD.


Dated: November 13, 2009

                               By: /s/ XIANPING WANG
                                   _________________________________________
                                       Xianping Wang
                                       President/Chief Executive Officer


Dated: November 13, 2009


                               By: /s/ XIANPING WANG
                                   _________________________________________
                                       Xianping Wang
                                       Acting as Interim Chief Financial Officer


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