UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                For the quarterly period ended September 30, 2008

                                       or
            [ ] Transition Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934

                          Commission File Number: None

                    NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.
                    ---------------------------------------

              Nevada                                 Applied For
   State or other jurisdiction           (I.R.S.) Employer Identification No.
        of incorporation
                                1# Dongfeng Road
                   Xi'an Weiyang Tourism Development District
                                   Xian, China
                  --------------------------------------------
                     Address of principal executive offices

                                0086-29-86671555
                        ------------- -----------------
               Registrant's telephone number, including area code

                                       N/A
                      ------------------------------------
                  Former address of principal executive offices

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) had been subject to such filing
requirements for the past 90 days.

            Yes ____X_____                      No __________
                    -

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

      Large accelerated filer [  ]                 Accelerated filer [  ]

      Non-accelerated filer [  ]                   Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

         Class of Stock       No. Shares Outstanding              Date
         --------------       ----------------------              ----

         Common                    18,727,327              November 12, 2008


<PAGE>





         NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMIITED AND SUBSIDIARY


                        CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2008

                                   (UNAUDITED)






<PAGE>

                                TABLE OF CONTENTS






Consolidated Balance Sheets as of September 30, 2008 (unaudited)
and December 31, 2007                                                         1

Unaudited consolidated Statements of Income                                   2
for the three month and nine month periods ended
September 30, 2008 and 2007

Unaudited consolidated Statements of Cash Flows                               3
for the nine month periods ended September 30, 2008
and 2007

Notes to unaudited consolidated financial statements                       4-16




<PAGE>


               NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                         September 30, 2008   December 31, 2007
                                         ------------------   -----------------
                                            (Unaudited)

Current assets
   Cash and cash equivalents             $       69,802       $       45,680
   Accounts receivable, net                      44,372               34,178
   Other receivable, net                          2,020                  385
   Inventories                                   86,708              127,182
   Due from related parties                     560,321              476,552
                                         ---------------      ---------------
      Total Current Assets                      763,223              683,977

Property & equipment, net                     6,691,774            6,713,733

Construction-in- progress                    11,712,985            7,944,945

Land use right, net                           2,595,388            2,463,522

Other assets
   Deposit for construction-in-progress      17,673,309           16,452,000
                                         ---------------      ---------------
Total assets                             $   39,436,680       $   34,258,177
                                         ===============      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
 Accounts payable and accrued expenses   $     477,413        $      495,825
 Deferred revenue                               11,881                52,105
 Taxes payable                               5,182,221             4,070,480
                                         ---------------      ---------------
   Total Current Liabilities                 5,671,515             4,618,410

Stockholders' equity
   Common stock, $.001 par value,
    50,000,000 shares authorized,
    18,727,327 issued and outstanding           18,727                18,727
   Preferred stock, $.001 par value,
    10,000,000 shares authorized, none
    shares issued and outstanding                    -                     -
   Additional paid in capital               15,855,727            15,855,727
   Statutory reserve                         2,206,090             2,018,901
   Other comprehensive income                5,461,095             3,207,587
   Retained earnings                        10,223,525             8,538,825
                                         ---------------      ---------------
   Total stockholders' equity               33,765,164            29,639,767

Total liabilities and stockholders'
 equity                                  $  39,436,680        $   34,258,177


  The accompanying notes are an integral part of these consolidated financial
statements.



                                       1
<PAGE>


          NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
          CONSOLIDATED INCOME STATEMENTS AND OTHER COMPREHENSIVE INCOME
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
                                   (UNAUDITED)

<TABLE>
<S>                                            <C>                    <C>             <C>                    <C>

                                              For the three month periods             For the nine month periods
                                                  ended September 30,                     ended September 30,
                                              2008                   2007             2008                  2007
                                             ------                 ------           ------                ------
Net revenue
 Catering and hotel related
  services income                         $  1,381,739          $  1,055,853     $  3,580,363          $  2,880,007
 Management fee income                         503,494               456,192        1,482,190             1,349,166
                                          -------------         -------------    -------------         -------------
   Total net revenue                         1,885,232             1,512,045        5,062,552             4,229,173

Cost of revenue                                397,949               270,749        1,087,631               733,179
                                          -------------         -------------    -------------         -------------
Gross profit                                 1,487,283             1,241,296        3,974,921             3,495,994

Operating expenses
 General and administrative expenses           299,204               237,008          939,896               726,902
 Depreciation and amortization                 258,075               113,050          555,571               405,060
                                          -------------         -------------    -------------         -------------
 Total operating expenses                      557,279               350,058        1,495,467             1,131,962
                                          -------------         -------------    -------------         -------------
Income from operations                         930,004               891,238        2,479,454             2,364,032
                                          -------------         -------------    -------------         -------------
Other Income
 Interest income                                   283                   304            1,045                   870
 Other income, net                               7,107                   304           15,400                     -
                                          -------------         -------------    -------------         -------------
 Total other income                              7,390                   304           16,445                   870
                                          -------------         -------------    -------------         -------------
Income before income taxes                     937,395               891,542        2,495,900             2,364,902

Provision for income taxes                    (232,545)             (299,103)        (624,011)             (781,301)
                                          -------------         -------------    -------------         -------------
Net income                                   1,169,939               592,439        1,871,889             1,583,601

Other comprehensive item:
 Foreign currency translation gain             317,412               406,475        2,253,508             1,077,358
                                          -------------         -------------    -------------         -------------
Net comprehensive income                     1,487,351                998,914    $  4,125,397          $  2,660,959
                                          =============         ==============   =============         =============

Earning per share:
 Basic & diluted earning per share        $       0.06          $        0.03    $      0.10           $       0.08
                                          =============         ==============   =============         =============
Weighted average number of
shares outstanding:
 Basic & diluted weighted average
 number of shares                           18,727,327             18,727,327      18,727,327            18,727,327
                                          =============         ==============   =============         =============

</TABLE>

The basic and diluted  shares are the same because  there are no diluted  shares
issued

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



                                       2
<PAGE>


               NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2008 AND 2007
                                   (UNAUDITED)

                                                        2008           2007
                                                   -------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                       $   1,871,889  $   1,583,601
                                                   -------------- --------------
 Adjustments to reconcile net income to
 net cash provided by operating
 activities:
  Depreciation and amortization                          555,571        405,060
  (Increase) / decrease in current assets:
    Accounts receivables                                 (23,266)        15,200
    Inventory                                             48,535         (4,944)
    Other receivables                                     (1,562)             -
    Prepaid expenses and other current assets                  -            935
  Increase/(Decrease) in current liabilities:
    Accounts payable and accrued expenses                (53,693)       (22,057)
    Taxes payable                                        787,194        983,801
    Deferred revenue                                     (42,874)             -
    Deferred tax                                               -         (6,996)
                                                   -------------- --------------
     Total Adjustments                                 1,269,904      1,370,999
                                                   -------------- --------------
     Net cash provided by operating activities         3,141,793      2,954,600
                                                   -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
     (Increase) in advances to related parties           (31,234)       (16,092)
     (Increase) in construction in progress           (3,090,401)    (2,962,571)
     (Acquisition) of fixed assets                             -         (1,596)
                                                   -------------- --------------
     Net cash used in investing activities            (3,121,635)    (2,980,259)
                                                   -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock                    -         85,000
                                                   -------------- --------------
     Net cash provided by financing activities                 -         85,000
                                                   -------------- --------------
     Effect of exchange rate changes on cash and
     cash equivalents                                      3,964          1,056
                                                   -------------- --------------
     Net increase in cash and cash equivalents            24,122         60,397

     Cash and cash equivalents, beginning
     balance                                              45,680         46,394
                                                   -------------- --------------
     Cash and cash equivalents, ending balance     $      69,802  $     106,791
                                                   ============== ==============

SUPPLEMENTAL NONCASH FINANCIAL DISCLOSURES:

     Cash paid during the year for:
     Income tax payments                           $           -  $           -
                                                   ============== ==============
     Interest payments                                         -              -
                                                   ============== ==============


  The accompanying notes are an integral part of these consolidated financial
statements.



                                       3
<PAGE>


               NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2008


<TABLE>
<S>                        <C>          <C>         <C>          <C>          <C>            <C>         <C>         <C>

                                                             Additional      Other                                   Total
                             Common Stock       Preferred       Paid      Comprehensive   Statutory    Retained   Stockholders'
                          Shares      Amount      Stock      in Capital      Income        Reserve     Earnings      Equity
                          ------      ------    ---------    -----------  -------------   ---------    --------   -------------

Balance as at December
31, 2006                17,027,328    17,027           -     14,922,428     1,267,767     1,822,088    6,845,462    24,874,772
                        ----------- ---------  ----------   ------------  ------------  ------------ ------------  ------------

Issuance of shares for
services                 1,699,999     1,700           -        933,299             -             -            -       934,999

Change in foreign
currency translation gain        -         -           -              -     1,939,820             -            -     1,939,820

Transfer to statutory
reserve                          -         -           -              -             -       196,813     (196,813)            -

Net income for the year
ended December 31, 2007          -         -           -              -             -             -    1,890,176     1,890,176
                        ----------- ---------  ----------   ------------  ------------  ------------ ------------  ------------
Balance as at December
31, 2007                18,727,327  $ 18,727   $       -    $15,855,727   $ 3,207,587   $ 2,018,901  $ 8,538,825   $29,639,767

Change in foreign
currency translation gain                                                   2,253,508                                2,253,508

Net income for the
period ended September
30, 2008                                                                                               1,871,889     1,871,889
                        ----------- ---------  ----------   ------------  ------------  ------------ ------------  ------------
Balance as at September
30, 2008                18,727,327  $ 18,727   $       -    $15,855,727   $ 5,461,095   $ 2,018,901  $10,410,714   $33,765,164
                        =========== =========  ==========   ============  ============  ============ ============  ============

</TABLE>




                                       4
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - ORGANIZATION

      New Taohuayuan Culture Tourism Company Limited (the "Company") was
      incorporated under the laws of the State of Nevada on November 3, 2004.
      The Company is an investment holding company.

      Shaanxi New Taohuayuan Culture Tourism Company Limited ("Shaanxi NTHY")
      was incorporated in the People's Republic of China ("PRC") on August 3,
      1997 as a limited liability company. Shaanxi NTHY operates a resort in
      Xi'an, in the PRC, providing catering, hotel and related services.

      Pursuant to an agreement and plan of migratory merger between the Company
      and Shaanxi NTHY on November 5, 2004, the Company acquired Shaanxi NTHY by
      issuing 17,027,328 shares of its common stock to the original shareholders
      of Shaanxi NTHY in exchange for 100% of their membership interests (the
      "Merger"). As a result, the controlling member of Shaanxi NTHY has
      effective and actual operating control of the Company. The Merger was
      approved by the Shaanxi Ministry of Commerce on November 24, 2004. Since
      then, Shaanxi NTHY has become a wholly owned subsidiary of the Company and
      its status has changed to a wholly owned foreign owned enterprise.
      Since the Company had no operations or net assets prior to the
      acquisition, the acquisition was considered to be a capital transaction in
      substance, rather than a business combination and no goodwill was
      recognized. For financial reporting purposes, the acquisition was treated
      as a reverse acquisition whereby Shaanxi NTHY is considered to be the
      accounting survivor and the operating entity while the Company is
      considered to be the legal survivor.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Unaudited Interim Financial Information

      The accompanying unaudited consolidated financial statements have been
      prepared by New Taohuayuan Tourism Company Limited pursuant to the rules
      and regulations of the Securities and Exchange Commission (the "SEC") Form
      10-QSB and Item 310 of Regulation S-B, and generally accepted accounting
      principles for interim financial reporting. The information furnished
      herein reflects all adjustments (consisting of normal recurring accruals
      and adjustments) which are, in the opinion of management, necessary to
      fairly present the operating results for the respective periods. Certain
      information and footnote disclosures normally present in annual
      consolidated financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      omitted pursuant to such rules and regulations. These consolidated
      financial statements should be read in conjunction with the audited
      consolidated financial statements and footnotes included in the Company's
      Annual Report on Form 10-KSB. The results of the nine month period ended
      September 30, 2008 are not necessarily indicative of the results to be
      expected for the full year ending December 31, 2008.



                                       5
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      Basis of Presentation

      The accompanying consolidated financial statements have been prepared in
      conformity with accounting principles generally accepted in the United
      States of America. The Company's functional currency is the Chinese
      Renminbi (CNY); however the accompanying consolidated financial statements
      have been translated and presented in United States Dollars (USD).

      Foreign currency transactions and comprehensive income (loss)

      As of September 30, 2008, the accounts of Shaanxi NTHY were maintained,
      and its financial statements were expressed, in Chinese Yuan Renminbi
      (CNY). Such financial statements were translated into U.S. Dollars (USD)
      in accordance with Statement of Financial Accounts Standards ("SFAS") No.
      52, "Foreign Currency Translation," with the CNY as the functional
      currency. According to the Statement, all assets and liabilities were
      translated at the current exchange rate, stockholder's equity are
      translated at the historical rates and income statement items are
      translated at the average exchange rate for the period. The resulting
      translation adjustments are reported under other comprehensive income in
      accordance with SFAS No. 130, "Reporting Comprehensive Income" as a
      component of shareholders' equity.

      During the nine month periods ended September 30, 2008 and 2007 the
      transactions of Shaanxi NTHY were denominated in foreign currency and were
      recorded in Chinese Yuan Renminbi (CNY) at the rates of exchange in effect
      when the transactions occur. Exchange gains and losses are recognized for
      the different foreign exchange rates applied when the foreign currency
      assets and liabilities are settled. Transaction gains and losses that
      arise from exchange rate fluctuations on transactions denominated in a
      currency other than the functional currency are included in the results of
      operations as incurred.

      Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles in the United States ("GAAP") requires
      management to make certain estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the
      reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates, and such differences may
      be material to the financial statements. Certain prior year amounts have
      been reclassified to conform to the current year presentation.

      Principles of Consolidation

      The consolidated financial statements include the accounts of New
      Taohuayuan Culture Tourism Company Limited and its wholly owned subsidiary
      Shaanxi NTHY, collectively referred to within as the Company. All material


                                       6
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      inter-company accounts, transactions and profits have been eliminated in
      consolidation.

      Revenue Recognition

      The Company generates revenue from catering, hotel, and related services.
      The Company's revenue recognition policies are in compliance with Staff
      accounting bulletin (SAB) 104. Revenue is generally recognized: (a) when
      persuasive evidence of an arrangement exists; (b) when services are
      rendered; (c) when the fee is fixed or determinable; and (d) when
      collectibility is reasonably assured. Such service revenues are recognized
      net of discounts.

      The Company also generates management fee income in accordance with
      Shaanxi New Taohuayuan Economy Trade Company Limited and its subsidiaries
      (related parties) based on terms stated in the agreement. These companies
      are controlled by a common director and stockholder of the Company. Cost
      of good sold related to management fee income is immaterial comparing with
      the total expenses incurred for the Company during its fiscal year.

      Income Taxes

      The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which
      requires the recognition of deferred tax assets and liabilities for the
      expected future tax consequences of events that have been included in the
      financial statements or tax returns. Under this method, deferred income
      taxes are recognized for the tax consequences in future years of
      differences between the tax bases of assets and liabilities and their
      financial reporting amounts at each period end based on enacted tax laws
      and statutory tax rates applicable to the periods in which the differences
      are expected to affect taxable income. Valuation allowances are
      established, when necessary, to reduce deferred tax assets to the amount
      expected to be realized.

      In July 2006, the Financial Accounting Standards Board ("FASB") issued
      FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes--an
      Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 seeks to
      reduce the diversity in practice associated with certain aspects of
      measuring and recognition in accounting for income taxes. In addition, FIN
      48 requires expanded disclosure with respect to the uncertainty in income
      taxes and is effective

      Beginning January 1, 2008, the new Enterprise Income Tax ("EIT") law will
      replace the existing laws for Domestic Enterprises ("DES") and Foreign
      Invested Enterprises ("FIEs"). The new standard EIT rate of 25% will
      replace the 33% rate currently applicable to both DES and FIEs. The two
      years tax exemption, three years 50% tax reduction tax holiday for
      production-oriented FIEs will continue until it expires.



                                       7
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      Statement of Cash Flows

      In accordance with SFAS No. 95, "Statement of Cash Flows," cash flows from
      the Company's operations is based upon the local currencies. As a result,
      amounts related to assets and liabilities reported on the statement of
      cash flows will not necessarily agree with changes in the corresponding
      balances on the balance sheet.

      Segment Reporting

      Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
      "Disclosure About Segments of an Enterprise and Related Information"
      requires use of the "management approach" model for segment reporting. The
      management approach model is based on the way a company's management
      organizes segments within the company for making operating decisions and
      assessing performance. Reportable segments are based on products and
      services, geography, legal structure, management structure, or any other
      manner in which management disaggregates a company.

      Risks and Uncertainties

      The Company is subject to substantial risks from, among other things,
      intense competition associated with the industry in general, other risks
      associated with financing, liquidity requirements, rapidly changing
      customer requirements, limited operating history, foreign currency
      exchange rates and the volatility of public markets.

      The Company's operations are carried out in the PRC. Accordingly, the
      Company's business, financial condition and results of operations may be
      influenced by the political, economic and legal environments in the PRC,
      by the general state of the PRC's economy. The Company's business may be
      influenced by changes in governmental policies with respect to laws and
      regulations, anti-inflationary measures, currency conversion and
      remittance abroad, and rates and methods of taxation, among other things.

      Contingencies

      Certain conditions may exist as of the date the financial statements are
      issued, which may result in a loss to the Company but which will only be
      resolved when one or more future events occur or fail to occur. The
      Company's management and legal counsel assess such contingent liabilities,
      and such assessment inherently involves an exercise of judgment. In
      assessing loss contingencies related to legal proceedings that are pending
      against the Company or unasserted claims that may result in such
      proceedings, the Company's legal counsel evaluates the perceived merits of
      any legal proceedings or unasserted claims as well as the perceived merits
      of the amount of relief sought or expected to be sought.

      If the assessment of a contingency indicates that it is probable that a
      material loss has been incurred and the amount of the liability can be
      estimated, then the estimated liability would be accrued in the Company's
      financial statements. If the assessment indicates that a potential
      material loss contingency is not probable but is reasonably possible, or


                                       8
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      is probable but cannot be estimated, then the nature of the contingent
      liability, together with an estimate of the range of possible loss if
      determinable and material would be disclosed.

      Loss contingencies considered to be remote by management are generally not
      disclosed unless they involve guarantees, in which case the guarantee
      would be disclosed.

      Allowance for Doubtful Accounts

      Management reviews the composition of accounts receivable, loans and
      prepaid expense and analyzes historical bad debts, aging analysis, current
      economic trends and changes in payment patterns to evaluate the adequacy
      of these reserves. Reserves are recorded primarily on a specific
      identification basis. Allowance for doubtful accounts amounted to $29,144
      and $27,130 at September 30, 2008 and December 31, 2007 respectively.

      Intangible Assets

      The Company applies criteria specified in SFAS No. 141, "Business
      Combinations" to determine whether an intangible asset should be
      recognized separately from goodwill. Intangible assets acquired through
      business acquisitions are recognized as assets separate from goodwill if
      they satisfy either the "contractual-legal" or "separability" criterion.
      Per SFAS 142, intangible assets with definite lives are amortized over
      their estimated useful life and reviewed for impairment in accordance with
      SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived
      Assets." Intangible assets, such as purchased technology, trademark,
      customer list, user base and non-compete agreements, arising from the
      acquisitions of subsidiaries and variable interest entities are recognized
      and measured at fair value upon acquisition. Intangible assets are
      amortized over their estimated useful lives from one to ten years. The
      Company reviews the amortization methods and estimated useful lives of
      intangible assets at least annually or when events or changes in
      circumstances indicate that assets may be impaired. The recoverability of
      an intangible asset to be held and used is evaluated by comparing the
      carrying amount of the intangible asset to its future net undiscounted
      cash flows. If the intangible asset is considered to be impaired, the
      impairment loss is measured as the amount by which the carrying amount of
      the intangible asset exceeds the fair value of the intangible asset,
      calculated using a discounted future cash flow analysis. The Company uses
      estimates and judgments in its impairment tests, and if different
      estimates or judgments had been utilized, the timing or the amount of the
      impairment charges could be different.

      Effective January 1, 2002, the Company adopted Statement of Financial
      Accounting Standards No. 144, "Accounting for the Impairment or Disposal
      of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting
      and reporting for the impairment or disposal of long-lived assets and
      supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
      Assets and for Long-Lived Assets to be Disposed Of," and the accounting
      and reporting provisions of APB Opinion No. 30, "Reporting the Results of
      Operations for a Disposal of a Segment of a Business." The Company
      periodically evaluates the carrying value of long-lived assets to be held
      and used in accordance with SFAS 144. SFAS 144 requires impairment losses


                                       9
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      to be recorded on long-lived assets used in operations when indicators of
      impairment are present and the undiscounted cash flows estimated to be
      generated by those assets are less than the assets' carrying amounts. In
      that event, a loss is recognized based on the amount by which the carrying
      amount exceeds the fair market value of the long-lived assets. Loss on
      long-lived assets to be disposed of is determined in a similar manner,
      except that fair market values are reduced for the cost of disposal.

      Recent Accounting Pronouncements

      In September 2006, FASB issued SFAS 158 `Employers' Accounting for Defined
      Benefit Pension and Other Postretirement Plans--an amendment of FASB
      Statements No. 87, 88, 106, and 132(R)' This Statement improves financial
      reporting by requiring an employer to recognize the over funded or under
      funded status of a defined benefit postretirement plan (other than a
      multiemployer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in
      which the changes occur through comprehensive income of a business entity
      or changes in unrestricted net assets of a not-for-profit organization.
      This Statement also improves financial reporting by requiring an employer
      to measure the funded status of a plan as of the date of its year-end
      statement of financial position, with limited exceptions. An employer with
      publicly traded equity securities is required to initially recognize the
      funded status of a defined benefit postretirement plan and to provide the
      required disclosures as of the end of the fiscal year ending after
      December 15, 2006. An employer without publicly traded equity securities
      is required to recognize the funded status of a defined benefit
      postretirement plan and to provide the required disclosures as of the end
      of the fiscal year ending after June 15, 2007. However, an employer
      without publicly traded equity securities is required to disclose the
      following information in the notes to financial statements for a fiscal
      year ending after December 15, 2006, but before June 16, 2007, unless it
      has applied the recognition provisions of this Statement in preparing
      those financial statements:

     a.   A brief description of the provisions of this Statement
     b.   The date that adoption is required
     c.   The date the employer  plans to adopt the  recognition  provisions  of
          this Statement, if earlier.

      The requirement to measure plan assets and benefit obligations as of the
      date of the employer's fiscal year-end statement of financial position is
      effective for fiscal years ending after December 15, 2008. The management
      is currently evaluating the effect of this pronouncement on financial
      statements.

      In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
      in Consolidated Financial Statements", which is an amendment of Accounting
      Research Bulletin ("ARB") No. 51. This statement clarifies that a
      noncontrolling interest in a subsidiary is an ownership interest in the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. This statement changes the way the consolidated
      income statement is presented, thus requiring consolidated net income to


                                       10
<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      be reported at amounts that include the amounts attributable to both
      parent and the noncontrolling interest. This statement is effective for
      the fiscal years, and interim periods within those fiscal years, beginning
      on or after December 15, 2008. Based on current conditions, the Company
      does not expect the adoption of SFAS 160 to have a significant impact on
      its results of operations or financial position.

      In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
      Combinations." This statement replaces FASB Statement No. 141, "Business
      Combinations." This statement retains the fundamental requirements in SFAS
      141 that the acquisition method of accounting (which SFAS 141 called the
      purchase method) be used for all business combinations and for an acquirer
      to be identified for each business combination. This statement defines the
      acquirer as the entity that obtains control of one or more businesses in
      the business combination and establishes the acquisition date as the date
      that the acquirer achieves control. This statement requires an acquirer to
      recognize the assets acquired, the liabilities assumed, and any
      noncontrolling interest in the acquiree at the acquisition date, measured
      at their fair values as of that date, with limited exceptions specified in
      the statement. This statement applies prospectively to business
      combinations for which the acquisition date is on or after the beginning
      of the first annual reporting period beginning on or after December 15,
      2008. The Company does not expect the adoption of SFAS 160 to have a
      significant impact on its results of operations or financial position.

      In March, 2008, the FASB issued FASB Statement No. 161, "Disclosures about
      Derivative Instruments and Hedging Activities". The new standard is
      intended to improve financial reporting about derivative instruments and
      hedging activities by requiring enhanced disclosures to enable investors
      to better understand their effects on an entity's financial position,
      financial performance, and cash flows. It is effective for financial
      statements issued for fiscal years and interim periods beginning after
      November 15, 2008, with early application encouraged. The new standard
      also improves transparency about the location and amounts of derivative
      instruments in an entity's financial statements; how derivative
      instruments and related hedged items are accounted for under Statement
      133; and how derivative instruments and related hedged items affect its
      financial position, financial performance, and cash flows.

      FASB Statement No. 161 achieves these improvements by requiring disclosure
      of the fair values of derivative instruments and their gains and losses in
      a tabular format. It also provides more information about an entity's
      liquidity by requiring disclosure of derivative features that are credit
      risk-related. Finally, it requires cross-referencing within footnotes to
      enable financial statement users to locate important. Based on current
      conditions, the Company does not expect the adoption of SFAS 161 to have a
      significant impact on its results of operations or financial position.

      In May 0f 2008, FSAB issued SFASB No.162, The Hierarchy of Generally
      Accepted Accounting Principles. The pronouncement mandates the GAAP
      hierarchy reside in the accounting literature as opposed to the audit
      literature. This has the practical impact of elevating FASB Statements of
      Financial Accounting Concepts in the GAAP hierarchy. This pronouncement


                                       11
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      will become effective 60 days following SEC approval. The company does not
      believe this pronouncement will impact its financial statements.

      In May of 2008, FASB issued SFASB No. 163, Accounting for Financial
      Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.
      The scope of the statement is limited to financial guarantee insurance
      (and reinsurance) contracts. The pronouncement is effective for fiscal
      years beginning after December 31, 2008. The company does not believe this
      pronouncement will impact its financial statements.

Note 3 - DEPOSIT FOR LAND USE RIGHT

      The company has deposited amounts with the local government, for land use
      rights amounting $17,673,309 and $16,452,000 at September 30, 2008 and
      December 31, 2007, respectively, for the acquisition of a piece of land in
      PRC. The Company intends to acquire the land for the development of new
      project. To obtain the land use right from the Government, the Company is
      required to pay the demolish fee associated with the acquisition of the
      land use right amounting $22,091,636. As of September 30, 2008, the
      demolish fee was not deposited with the government, therefore, the
      official title of land use right has not been transferred to the Company.

Note 4 - PROPERTY AND EQUIPMENT

      As of September 30, 2008 and December 31, 2007 the property and equipment
      of the Company consisted of the following:

                                           9/30/2008     12/31/2007
                                         ------------------------------
      Buildings                            7,237,949      7,970,697
      Infrastructure and Leasehold
       Improvement                         1,793,877      1,669,912
      Furniture and fixtures               1,649,019        401,163
      Equipments                           1,989,063      1,768,132
      Automobiles                            315,178        293,399
                                         ------------------------------
                                          12,985,086     12,103,303
      Accumulated Depreciation            (6,293,312)    (5,389,570)
                                         ------------------------------
      Property and Equipment, net        $ 6,691,774    $ 6,713,733
                                         ==============================

      The Company had depreciation expenses of $505,967, and $368,894 for the
      nine month periods ended September 30, 2008 and 2007 respectively.

Note 5 - LAND USE RIGHT

      According to the laws of China, the government owns all the land in China.
      Companies or individuals are authorized to possess and use the land only
      through land use rights granted by the Chinese government. Land use rights
      are being amortized using the straight-line method over the lease term of
      40 to 68 years.

      As of September 30, 2008 the intangible assets of the Company consisted of
      the following:


                                       12
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                                         9-30-2008    12-31-2007
                                                         ---------    ----------
                  Land use rights                      $  3,359,141 $ 3,127,008
                                                       ------------ -----------
                  Accumulated amortization                 (763,753)   (663,486)
                  Land use rights, net                 $  2,595,388 $ 2,463,522
                                                       ------------ ------------

      The Company had amortization expenses of $49,604 and $36,166 as of
      September 30, 2008 and 2007. The amortization expenses for land use right
      for next five years after September 30, 2008 are as follows:

September 30, 2009                          $      66,139
September 30, 2010                                 66,139
September 30, 2011                                 66,139
September 30, 2012                                 66,139
September 30, 2013                                 66,139
After                                           2,264,693
                                             ------------
  Total                                     $   2,595,388
                                            =============

Note 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     The Company's accounts payable and accrued expenses as of September 30,
     2008 are summarized as follows:

            -------------------------------------------------------------
                                                9-30-2008     12-31-07
            -------------------------------------------------------------
            Accounts payables                   $  62,876    $ 130,828
            -------------------------------------------------------------
            Other payables                        310,663      268,302
            -------------------------------------------------------------
            Accrued payroll                        30,928       28,791
            -------------------------------------------------------------
            Accrued expenses                       72,946       67,905
            -------------------------------------------------------------
            Total accounts payables and         $ 477,413    $ 495,825
            accrued expenses
            -------------------------------------------------------------

Note 7 - DEFERRED REVENUE

      The company has recorded deferred revenue of $11,881 and $52,105 as of
      September 30, 2008 and December 31, 2007. Deferred revenue represents
      advances from customers for using the resort facilities within the next
      twelve month period.

Note 8- TAX PAYABLES

     As of September 30, 2008, tax payables are summarized as follows:

                                          9/30/2008     12/31/2007
                                        -------------- --------------
     Income tax payable                 $  4,185,286   $  3,456,655
     Business tax payable                    872,991        497,146
     VAT payable                                  67         12,669
     Other taxes payable                     123,877        104,010
                                        -------------- --------------
     Tax payable                        $  5,182,221   $  4,070,480
                                        ============== ==============


                                       13
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - INCOME TAXES

      The Company is registered in the State of Nevada and has registered
      primarily in two tax jurisdictions - the PRC and the United States. For
      certain operations in US and China, the Company has incurred net
      accumulated operating losses for income tax purposes The Company believes
      that it is more likely than not that these net accumulated operating
      losses will not be utilized in the future. Therefore, the Company has
      provided full valuation allowance for the deferred tax assets arising from
      the losses at these locations as of September 30, 2008. Accordingly, the
      Company has no net deferred tax assets.

      The provision for income taxes from operations on income consists of the
      following for the nine month periods ended September 30, 2008 and 2007:

                                         9-30-2008   9-30-2007
         US Current Income Tax
         Expense (Benefit)
         -----------------------------------------------------
         Federal                         $       -   $       -
         -----------------------------------------------------
         State                                   -           -
         -----------------------------------------------------
                                                 -           -
         -----------------------------------------------------
         PRC Current Income                624,011     781,301
         Expense (Benefit)
         -----------------------------------------------------
         Total Provision for            $  624,011   $ 781,301
         Income Tax
         -----------------------------------------------------

      The following is a reconciliation of the provision for income taxes at the
      U.S. federal income tax rate to the income taxes reflected in the
      Statement of Operations:

            -------------------------------------------------------------
                                                9-30-2008    9-30-2007
            -------------------------------------------------------------
            Tax expense (credit) at                34%          34%
            statutory rate - federal
            -------------------------------------------------------------
            State tax expense net of federal       6%            6%
            tax
            -------------------------------------------------------------
            Valuation allowance                   (40%)        (40%)
            -------------------------------------------------------------
            Foreign income tax - PRC               25%          33%
            -------------------------------------------------------------
            Tax expense (benefit) at actual        25%          33%
            rate
            -------------------------------------------------------------

      United States of America
      ------------------------

      As of September 30, 2008, the Company in the United States had
      approximately $109,588 in net operating loss carry forwards available to
      offset future taxable income. Federal net operating losses can generally
      be carried forward 20 years. The deferred tax assets for the United States
      entities at September 30, 2008 consists mainly of net operating loss carry


                                       14
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


      forwards and were fully reserved as the management believes it is more
      likely than not that these assets will not be realized in the future.

      The following table sets forth the significant components of the net
      deferred tax assets for operation in the US as of September 30, 2008 and
      2007.

               ------------------------------------------------------
                                             9-30-2008    9-30-2007
               ------------------------------------------------------
               Net operation loss carry     $  1,035,588   $       -
               forward
               ------------------------------------------------------
               Total deferred tax assets         414,235           -
               ------------------------------------------------------
               Less: valuation allowance       (414,235)           -
               ------------------------------------------------------
               Net deferred tax assets       $        -    $       -
               ------------------------------------------------------

      People's Republic of China (PRC)

      Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax ("EIT") is
      at a statutory rate of 33%, which is comprises of 30% national income tax
      and 3% local income tax. Beginning January 1, 2008, the new Enterprise
      Income Tax ("EIT") law will replace the existing laws for Domestic
      Enterprises ("DES") and Foreign Invested Enterprises ("FIEs"). The new
      standard EIT rate of 25% replaced the 33% rate currently applicable to
      both DES and FIEs. The two years tax exemption, three years 50% tax
      reduction tax holiday for production-oriented FIEs will continue until the
      tax exemption period expires. The applicable new EIT for the Company is
      25%. The Company paid $0 of income tax payable as of September 30, 2008
      and 2007.

      Deferred income tax assets

      Deferred income taxes are determined using the liability method for the
      temporary differences between the financial reporting basis and income tax
      basis of the Company's assets and liabilities. Deferred income taxes are
      measured based on the tax rates expected to be in effect when the
      temporary differences are included in the Company's tax return. Deferred
      tax assets and liabilities are recognized based on anticipated future tax
      consequences attributable to differences between financial statement
      carrying amounts of assets and liabilities and their respective tax bases.
      The Company's deferred tax assets represent deductible temporary
      differences arising mainly from the other payables.

      The following table sets forth the significant components of the net
      deferred tax assets for operation in the PRC as of September 30, 2008 and
      2007.

               ---------------------------------------------------------
                                             9-30-2008        9-30-2007
               ---------------------------------------------------------
               Net operation income       $  1,871,889  $     1,583,601
               ---------------------------------------------------------
               Total deferred tax assets             -           65,687
               ---------------------------------------------------------


                                       15
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


               Less: valuation allowance             -                -
               ---------------------------------------------------------
               Net deferred tax assets      $        -  $        65,687
               ---------------------------------------------------------

Note 10 - MANAGEMENT FEE AGREEMENTS

      The Company entered into five management agreements with Shaanxi New
      Taohuayuan Economy Trade Company Limited and Shaanxi Wenhao Group and its
      subsidiary on various time for a period of five years. Shaanxi New
      Taohuayuan Economy Trade Company Limited and Shaanxi Wenhao Group and its
      subsidiary are related parties. The annual management fees are fixed at
      approximately $1,400,000. For the nine month periods ended September 30,
      2008 and 2007, the Company earned $1,482,190 and $1,349,166 in management
      fees, respectively. There is a bonus management fee clause contained in
      the agreement calculated at 15% on the excess of the actual revenue over
      targeted revenue, as defined therein. No bonus management fees have been
      earned to date (See Note 12 for details).

Note 11 -RELATED PARTIES TRANSACTIONS

      The Company has identified the following related parties:

      Chen Jingmin - a director and stockholder of the Company.

      Dongjin Taoyuan - a stockholder of the Company in which Chen Jingmin has
      control and a beneficial interest.

      Shaanxi New Taohuayuan Economy Trade Company Limited - the principal
      stockholder of the Company in which Chen Jingmin has control and a
      beneficial interest.

      Shaanxi Wenhao Zaliang Shifu Co., Limited - a stockholder of the Company
      in which Chen Jingmin has control and a financial interest. The Wenhao
      Group has various entities as noted below.

      Shaanxi Wenhao Dongjin Taohuyuan - part of Wenhao Group.
      Shaanxi Wenhao Naner Huan Wenhao - part of Wenhao Group.
      Shaanxi Wenhao Xijiao Wenhao(Taoyuan Nanlu Branch) - part of Wenhao Group.
      Shaanxi Wenhao Yuan Taizu - part of Wenhao Group

      Shaanxi Kangze Economic and Trade Co., Limited - a stockholder of the
      Company in which Chen Jingmin has control and a beneficial interest.

      Shaanxi Xianyong Luye Developing Co., Limited - a stockholder of the
      Company in which Chen Jingmin has control and a beneficial interest.

      The Company as of September 30, 2008 had receivable $129,077 from Shaani
      NTHY - Dongjing Taoyuan Co., $383,838 from the Wenhao Group, $47,405 from


                                       16
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      Shaanxi Xianyong Luye Developing Co., Ltd. These receivables are
      unsecured, interest-free and have no fixed repayment terms. The Company
      has classified these receivables as due from related parties under current
      assets.

      The Company as of December 31, 2007 had receivable from Shaanxi New
      Taohuayuan Economy Trade Company, $356,589 to the Wenhao Group, $119,963
      to Dongjin Taoyuan. These advances are unsecured, interest-free and have
      no fixed repayment terms. The Company has classified these advances as
      receivables from related parties under current assets.

      As of September 30, 2008 and December 31,2007, there were no related
      parties' payables.

      As of September 30,2008, amounting of $3,512,570 and $6,580,362 had been
      paid to Shaanxi Traditional Decoration Co.,Ltd. and Shaanxi Qinghua Green
      Project Co.,Ltd. Respectively, which are both related parties, for Lantian
      Xintianyou Project included in construction in progress.

Note 12 -- COMMITMENTS

      Following are some of the significant commitments as of September 30,
      2008:

     1.   Management  Agreements  with Shaanxi New Taohuayuan  Tourism & Trading
          Co. Ltd. - Dongjin  Taoyuan  Branch and Shaanxi  Wenhao  Taoyuan Nanlu
          Branch

      On January 15, 2004 the Company signed two five-year agreements with
      Shannxi New Taohuayuan Tourism & Trading Co. Ltd - Dongjin Taoyuan Branch
      and Xi'an Taoyuan Nanlu Branch to manage the restaurants. The company will
      perform management and operation function including advertising,
      marketing, human resources and accounting on monthly basis. The Company
      will receive RMB 3,500,000 from each of the restaurant respectively as
      basic annual management fees, paid quarterly. In addition, if the annual
      revenue exceeds the targeted amount, the company will be compensated for
      additional 15% of the revenue as bonus. The agreements will expire on Jan
      14, 2009. For the nine month periods ended September 30, 2008, the
      management fees earned amounting to $375,918 and $375,918 respectively
      based upon the agreements.

     2.   Management  Agreements  with  Shaanxi  Wenhao  Zaliang Co. Ltd - Xi'an
          Nanerhuan Branch, Yuantaizu Branch and Beijing Branch

      On January 10, 2006 the Company signed three five-year agreements with
      Shaanxi Wenhao Zaliang Co. Ltd - Xi'an Nanerhuan Branch, Yuantaizu Branch
      and Beijing Branch respectively to manage the restaurants. The company
      will perform management and operation function including advertising,
      marketing, human resources and accounting on monthly basis. The Company
      will receive RMB 3,600,000, RMB 1,800,000 and RMB 1,400,000 from each of
      these restaurants respectively as basic annual management compensation,
      paid quarterly. In addition, if the annual revenue exceeds the targeted
      amount, the company will be compensated for additional 15% of the revenue


                                       17
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      as bonus. The agreements will expire on Jan 09, 2010. For the nine month
      periods ended September 30, 2008, the management fees earned amounting
      $386,658, $193,329 and $150,367 respectively based upon the agreements.

     3.   Lantian  Xintianyou Garden Decoration  Project agreements with Shaanxi
          Traditional Decoration Co., Ltd.

      On Mar. 15, 2006, the company signed a decoration agreement with Shannxi
      Traditional Decoration Co. Ltd for Shannxi Lantian Xintianyou Garden
      Decoration Project. The company hired the Shannxi Traditional Decoration
      Co. Ltd., to do decoration work on its property with the commitment to pay
      RMB 80,000,000 as total compensation. The company will pay 30% of the
      amount at the beginning of the construction, 30% will be paid on 50%
      completion and 40% after the project is completed. The company is also
      responsible for appointing the third party as supervisor to monitor the
      project and to protect the surrounding environment. The project started on
      April 1st, 2006 and will be finished in 2008. As of September 30, 2008,
      the Company has paid $3,512,570 to the said contractor included in
      construction in progress.

     4.   Lantian Xintianyou Garden Green Project Agreement with Shannxi Qinghua
          Green Project Co.,Ltd.

      On May 15, 2007, the company signed an agreement with Shannxi Qinghua
      Green Co. Ltd for the afforesting project of Lantian Xintianyou Garden
      Green. The company hired Shannxi Oinghua Green Project Co. Ltd., to
      perform afforesting work on the garden with the commitment to pay RMB
      50,000,000 as total compensation. The company will pay 30% of the amount
      at the inception of the construction, 35% will be paid on 50% completion
      and 30% after the project completes. The final 5% will be held as project
      quality insurance deposit. After the project completed, Shannxi Qinghua
      Green Co.,Ltd will be responsible for the maintenance of the garden and
      the company will pay RMB 1,250,000 as annual compensation for services.
      The project started on Oct. 6, 2007 and will be finished at the end of
      2008. As of September 30, 2008, the Company has paid $6,580,362 to the
      said contractor included in construction in progress.

     5.   Lantian Xintianyou Garden Project

      The Company entered an agreement with Lantian County, Xian City, Shaanxi
      Province to offer a new project's development - Lantian Xingtianyou
      Project in 2003. The Company acquired a land (4512 Mu) in Lantian County
      and committed to finish the project in one year. The project has been
      started since 2004. However, the Company paid amount of $17,673,309 as
      land cost in 2006 but the title is not yet transferred to the Company
      without paying the demolish fee associated with the project (See note C
      for details).



                                       18
<PAGE>

Note 13- STATUTORY RESERVE AND STATUTORY COMMON WELFARE FUND

      As stipulated by the Company Law of the People's Republic of China (PRC),
      net income after taxation can only be distributed as dividends after
      appropriation has been made for the following:

     i.   Making up cumulative prior years' losses, if any;

     ii.  Allocations  to the  "Statutory  surplus  reserve"  of at least 10% of
          income  after  tax,  as  determined  under  PRC  accounting  rules and
          regulations, until the fund amounts to 50% of the Company's registered
          capital;

     iii. Allocations  of 5-10% of income  after tax,  as  determined  under PRC
          accounting rules and regulations,  to the Company's  "Statutory common
          welfare  fund",  which is  established  for the  purpose of  providing
          employee  facilities  and other  collective  benefits to the Company's
          employees; and

     iv.  Allocations to the discretionary  surplus reserve,  if approved in the
          stockholders' general meeting.

      In accordance with the Chinese Company Law, the company reserved $187,189
      and $196,813 statutory fund as of September 30, 2008 and December 31,2007
      respectively.

      According to the new Company Law of the People's Republic of China (PRC)
      executed in 2006, the Company is no more required to reserve the
      "Statutory common welfare fund". Accordingly, the Company did not reserve
      the common welfare fund as of September 30, 2008.

Note 14 - RETIREMENT PLAN

      As stipulated by the rules and regulations in the PRC, the Company is
      required to contribute to a state-sponsored social insurance plan for all
      of its employees who are residents in the PRC at rates ranging from 12% to
      17% of the basic salary of its employees. The Company has no further
      obligations for the actual pension payments or post-retirement benefits
      beyond the annual contributions. The state-sponsored retirement plan is
      responsible for the entire pension obligations payable to all employees.

Note 15 - STOCKHOLDERS' EQUITY

      In January 2007, the Company entered into an agreement with outside third
      party to provide consulting services. As part of agreement the Company
      agreed to issue 1,699,999 shares of common stock at discount at $0.05 per
      share or $85,000 for cash. The consulting company will provide consulting
      service to the Company during the six month periods starting January 2007.
      The fair market value of the common stocks of the company was $0.55 on the
      agreement date. Accordingly the Company booked $85,000 as compensation


                                       19
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      expense after accounting for the shares issued at discount price of $0.05
      for the said stock issuance as of December 31, 2007.

      Since the consulting company did not accomplish the services stated in the
      agreement, the board of directors of the Company dated on February 28,
      2008 approved to buy back the common stocks at $0.05 per share
      subsequently. As of September 30, 2008, the consulting company did not
      sell 1,699,999 shares back to the Company.

Note 16 - OTHER COMPREHENSIVE INCOME

      Balances of related after-tax components comprising accumulated other
      comprehensive income (loss), included in stockholders' equity, as of
      September 30, 2008 and 2007 are as follows:

                                                 Foreign Currency
                                             Translation Adjustment
                                           --------------------------
        Balance at December 31, 2007             $    3,207,587
        Change in 2008                                2,253,508
                                              ------------------
        Balance at September 30, 2008            $    5,461,095
                                              ==================

Note 17- SEGMENT REPORTING

      The Company had two principal operating segments which were: resort income
      and management fee income. These operating segments were determined based
      on the nature of the services provided. Operating segments are defined as
      components of an enterprise about which separate financial information is
      available that is evaluated regularly by the chief operating
      decision-maker in deciding how to allocate resources and in assessing
      performance. The Company's chief executive officer and chief financial
      officer have been identified as the chief operating decision makers. The
      Company's chief operating decision makers direct the allocation of
      resources to operating segments based on the profitability, cash flows,
      and other measurement factors of each respective segment.

      The Company evaluates performance based on several factors, of which the
      primary financial measure is business segment income before taxes. The
      segments' accounting policies are the same as those described in the
      summary of significant accounting policies. The following table shows the
      operations of the Company's reportable segments:



                                       20
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                                  The nine month periods ended
                                                          September 30
                                                      2008             2007
                                                      ----             ----
  Revenues:
   Resort income from unaffiliated customers     $  3,580,363     $  2,880,007
   Management fee income from affiliated customers  1,482,190        1,349,166
                                                 -------------    -------------
                 Consolidated                    $  5,062,552     $  4,229,173
                                                 =============    =============
  Operating income (loss)
   Resort income                                 $  1,106,752     $  1,014,866
   Management fee income                            1,482,190        1,349,166
   Corporation (1)                                   (109,588)               -
                                                 -------------    -------------
                 Consolidated                    $  2,479,454     $  2,364,032
                                                 =============    =============
  Net income (loss):
   Resort income                                 $    869,834     $    571,726
   Management fee income                            1,111,643        1,011,875
   Corporation (1)                                   (109,588)               -
                                                 -------------    -------------
                 Consolidated                    $  1,871,889     $  1,583,601
                                                 =============    =============
  Identifiable assets:
   Resort income                                 $ 39,436,680     $ 34,258,177
   Management fee income                                    -                -
   Corporation (1)
                                                 -------------    -------------
                 Consolidated                    $ 39,436,680     $ 34,258,177
                                                 =============    =============
  Depreciation and amortization:
                                                 -------------    -------------
   Resort income                                 $    555,571     $    405,060
                                                 =============    =============
  Capital expenditures:
   Resort income                                 $  3,121,635     $  2,980,259
   Management fee income                                    -                -
   Corporation (1)                                          -                -
                                                 -------------    -------------
                 Consolidated                    $  3,121,635     $  2,980,259
                                                 =============    =============


     (1). Unallocated  loss from  Operating  income (loss) and Net income (loss)
          before taxes are primarily related to general  corporate  expenses and
          capital expenditure for new project.



<PAGE>


ITEM 2. MANAGEMENTS  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND PLAN OF
        OPERATION

      You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our financial statements
and the related notes included elsewhere in this report. Our financial
statements have been prepared in accordance with U.S. GAAP. In addition, our
financial statements and the financial data included in this report reflect our
reorganization and have been prepared as if our current corporate structure had
been in place throughout the relevant periods. The following discussion and
analysis contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.

                                    OVERVIEW

      We own and operate the Taohuayuan Inn hotel and resort located in the city
of Xi'an, province of Shaanxi, in the PRC. The Taohuayuan Inn has 23 courtyards
with 146 rooms and 292 beds.

      We manage the DongJin Taoyuan Villas, a hotel and resort property
approximately 10 miles from downtown Xi'an. DongJin Taoyuan Villas has 84 rooms
and 168 beds. This property closed for major remodeling in 2006 and is expected
to reopen in July 2008.

      We also manage a chain of four traditional Chinese restaurants. Two of the
restaurants are in Xi'an, and one is in Beijing.

      We receive fees for managing the DongJin Taoyuan Villas and the three
restaurants.

      Room rates in the Shaanxi province are established by the Shaanxi Price
Bureau. Room rates are established for each hotel or resort in the Shaanxi
Province and are based upon a number of factors, including the quality of the
property and amenities offered. Room rates may be changed at any time by the
Shaanxi Price Bureau based upon economic conditions in China.

      Our business is not seasonal in nature.

Results of Operations

Three and Nine Months Ended September 30, 2008
----------------------------------------------

      Material changes of certain items in our Statement of Operations for the
three and nine months ended September 30, 2008, as compared to the three and
nine months ended September 30, 2007, are discussed below:


                                       1
<PAGE>

                       Increase (I)
Item                  or Decrease (D)  Reason
----                  ---------------  ------

Operating Revenue           I          More customers due to improvements made
                                       to our facilities and services, as well
                                       as summer Olympic games.

Operating Expenses          I          Increased operating revenue and higher
                                       fuel costs.

Provision for Income Taxes  D          8% decrease in PRC tax rates beginning on
                                       January 1, 2008.

Foreign Currency                       Increased revenue and changes in currency
 Translation Gain           I          exchange rates.

Liquidity and Capital Resources

      Our material sources and (uses) of cash during the nine months ended
September 30, 2008 were:

         Cash provided by operations                            $3,141,793
         Payment for land use rights, building improvements,
             and of equipment                                   (3,090,401)
         Changes in foreign currency exchange rate                   3,964

      Our material sources and (uses) of cash during the nine months ended
September 30, 2007 were:

         Cash provided by operations                            $2,954,600
         Payment for land use rights, building improvements,
           and equipment                                        (2,962,571)
         Loans to related parties                                  (16,092)
         Sale of stock                                              85,000
         Changes in foreign currency exchange rate                   1,056

      We intend to develop an 848 acre commercial and residential development in
Lantian, a city located approximately 23 miles from Xi'an and a 150 room hotel
and resort in Xi'an. We have not started actual construction work on these
projects.

      We anticipate that the remaining costs to develop the Lantian project will
be approximately $17,800,000 over five years. We expect to begin construction on
the property in July 2009.

      We expect to complete the New Hainan hotel and resort in Xi'an in December
2009. The remaining costs to develop the project are expected to be
approximately $20,000,000.

                                       2
<PAGE>

      We have financed our operations to date through the sale of our common
stock and cash generated by our operations. As of September 30, 2008
expenditures for our Lantian and New Hainan projects have been funded with cash
from our operations and proceeds from the sale of our common stock. We expect to
finance the remaining costs for these projects through cash from our operations
and loans. Loans would be collateralized by the properties and issued in
conjunction with the government. However, required financing may not be
available to us, in which case the development of the projects may take
additional time or we may be unable to develop the projects. At present, we do
not have any lines of credit or other bank financing arrangements.

      We do not know of any trends, events or uncertainties that have, or are
reasonably likely to have, a material impact on our short-term or long-term
liquidity other than our need to pay the taxes and surcharges which we have
accrued as liabilities on our September 30, 2008 balance sheet.

Restrictions on Currency Exchange

     Substantially  all of our  projected  revenues and  operating  expenses are
denominated in Renminbi.  The Renminbi is currently freely convertible under the
"current account",  which includes dividends,  trade and service-related foreign
exchange  transactions,  but not under the  "capital  account",  which  includes
foreign direct investment and loans.

     We may  purchase  foreign  exchange  for  settlement  of  "current  account
transactions",  including payment of dividends to our shareholders,  without the
approval of the State  Administration  for Foreign Exchange.  We may also retain
foreign  exchange in our current  account,  subject to a ceiling approved by the
State   Administration  for  Foreign  Exchange,   to  satisfy  foreign  exchange
liabilities or to pay dividends.  However, the Chinese government may change its
laws or  regulations  and limit or eliminate  our ability to purchase and retain
foreign currencies in the future.

     Since a significant  amount of our future  revenues will be  denominated in
Renminbi,  the existing  and any future  restrictions  on currency  exchange may
limit our ability to utilize revenues generated in Renminbi to fund any business
activities outside China or fund expenditures denominated in foreign currencies.

     Exchange rate  fluctuations may adversely affect our financial  performance
because of our foreign  currency  denominated  assets and  liabilities,  and may
reduce the value,  translated or converted,  as applicable into U.S. dollars, of
our net fixed assets, our earnings and our declared dividends.  We do not engage
in any  hedging  activities  in order to minimize  the effect of  exchange  rate
risks.

Reserves

     In  accordance  with  current  Chinese  laws,  regulations  and  accounting
standards, we are required to set aside as a general reserve at least 10% of our
respective  after-tax  profits.  Appropriations  to the reserve  account are not
required after these reserves have reached 50% of our registered capital.  These


                                       3
<PAGE>


reserves  are  created  to  fund   potential   operating   losses  and  are  not
distributable as cash dividends. We are also required to set aside between 5% to
10% of our  after-tax  profits  to the  statutory  public  welfare  reserve.  In
addition and at the discretion of our  directors,  we may set aside a portion of
our after-tax  profits for enterprise  expansion funds,  staff welfare and bonus
funds and a surplus reserve. These statutory reserves and funds can only be used
for specific purposes and may not be used for dividends.

Critical Accounting Policies and Estimates

      We prepare financial statements in conformity with U.S. GAAP, which
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities on
the date of the financial statements, and the reported amounts of revenue and
expenses during the financial reporting period. We continually evaluate these
estimates and assumptions based on the most recently available information, our
own historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Since the use of estimates is an
integral component of the financial reporting process, actual results could
differ from those estimates. Some of our accounting policies require higher
degrees of judgment than others in their application. We consider the policies
discussed below to be critical to an understanding of our financial statements
as their application assists management in making their business decisions

Revenue recognition

      We generally recognize service revenues when persuasive evidence of an
arrangement exists, services are rendered, the fee is fixed or determinable, and
collectibility is probable. Service revenues are recognized net of discounts.

Foreign currency translation

      We consider Renminbi as our functional currency as a substantial portion
of our business activities are based in Renminbi ("RMB"). However, we have
chosen the United States dollar as our reporting currency.

      Transactions in currencies other than the functional currency during the
year are translated into the functional currency at the applicable rates of
exchange prevailing at the time of the transactions. Monetary assets and
liabilities denominated in currencies other than the functional currency are
translated into the functional currency at the applicable rates of exchange in
effect at the balance sheet date. Exchange gains and losses are recorded in the
statements of operations.

      For translation of financial statements into the reporting currency,
assets and liabilities are translated at the exchange rate at the balance sheet
date, equity accounts are translated at historical exchange rates, and revenues,
expenses, gains and losses are translated at the weighted average rates of
exchange prevailing during the period. Translation adjustments resulting from

                                       4
<PAGE>

this process are recorded in accumulated other comprehensive income (loss)
within stockholders' equity.

Property, plant and equipment and depreciation

     Property,   plant  and  equipment  are  stated  at  cost  less  accumulated
depreciation.

     The  cost of an asset  consists  of its  purchase  price  and any  directly
attributable  costs of bringing the asset to its present  working  condition and
location for its intended use.  Expenditures incurred after the assets have been
put into operation, such as repairs and maintenance,  are normally recognized as
an expense in the period in which they are incurred.  In situations where it can
be clearly  demonstrated  that  expenditure  has  resulted in an increase in the
future economic benefits expected to be obtained from the use of the assets, the
expenditure is capitalized.

     When assets are sold or retired,  their costs and accumulated  depreciation
are  eliminated  from the  accounts  and any gain or loss  resulting  from their
disposal is included in the statement of operations.

     Depreciation  is  calculated  to write off the cost of property,  plant and
equipment over their estimated  useful lives as set out below,  from the date on
which  they  become  fully  operational  and after  taking  into  account  their
estimated residual values, using the straight-line method.

ITEM 4.T.  CONTROLS AND PROCEDURES

      Cai Danmei, our Chief Executive Officer and Principal Financial and
Accounting Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934) as of the end of the period covered by this report, and in her opinion our
disclosure controls and procedures are effective.

      There were no changes in our internal controls over financial reporting
that occurred during the fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


                                       5
<PAGE>
                                     PART II
                                OTHER INFORMATION


Item 6. Exhibits

Exhibit
Number      Exhibit Name
-------     ------------

31          Rule 13a-14(a) Certifications

32          Section 1350 Certifications















<PAGE>

                                   SIGNATURES


     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.


November 13, 2008                      By:    /s/ Cai Danmei
                                             -----------------------------
                                             Cai Danmei, Chief Executive Officer
                                             and Principal Financial and
                                             Accounting Officer



<PAGE>