UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
                                   (Mark One)

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007

                                       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                                   98-0440893
   ---------------------------           ------------------------------------
   State or other jurisdiction           (I.R.S.) Employer Identification No.
        of incorporation

                                1# Dongfeng Road
                   Xi'an Weiyang Tourism Development District
                                  Xi'an, 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 shell company (as defined in
Rule 12b-2 of the Exchange Act):

            Yes                                             No    __X___
                  ------------------                                -

   As of October 31, 2007 the Company had 18,727,327 outstanding shares of
common stock.


<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006






<PAGE>



INDEX TO FINANCIAL STATEMENTS



                                                                          Page

Condensed Consolidated Balance Sheet as of September 30, 2007 (Unaudited)

Condensed Consolidated Statements of Income and Accumulated Other
   Comprehensive Income for the Nine and Three Months Ended
    September 30, 2007 and 2006 (Restated) (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months
    Ended September 30, 2007 and 2006 (Restated) (Unaudited)

Notes to Condensed Consolidated Financial Statements



<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 2007 (UNAUDITED)
                                    (IN US$)

ASSETS

Current Assets:
  Cash and cash equivalents                          $    106,791
  Accounts receivable                                      24,131
  Inventories                                              40,066
  Deferred tax asset                                       65,687
  Prepaid expenses and other current assets                 9,262
  Due from related parties                              1,004,319
                                                    --------------

    Total Current Assets                                1,250,256
                                                    --------------

  Fixed assets, net of depreciation                     9,299,782
                                                    --------------

Other Assets:
  Long-term assets                                      22,455,074
                                                    --------------

    Total Other Assets                                 22,455,074
                                                    --------------

TOTAL ASSETS                                        $  33,005,112
                                                    ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
  Accounts payable and accrued expenses            $      961,080
  Taxes payable                                         4,423,301
                                                    --------------

      Total Current Liabilities                         5,384,381
                                                    --------------

Commitments and contingencies

      Total Liabilities                                 5,384,381
                                                    --------------

STOCKHOLDERS' EQUITY
  Preferred stock, $.001 Par Value; 10,000,000
   shares authorized and 0 shares issued and
   outstanding                                                 -
  Common stock, $.001 Par Value; 50,000,000 shares
   authorized and 18,727,327 shares issued and
   outstanding                                             18,727
  Additional paid-in capital                           15,005,728
  Statutory reserves                                    1,822,088
  Retained earnings                                     8,429,063
  Accumulated other comprehensive income (loss)         2,345,125
                                                    --------------

      Total Stockholders' Equity                       27,620,731
                                                    --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $  33,005,112
                                                    ==============

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



<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
                     ACCUMULATED OTHER COMPREHENSIVE INCOME
   FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

                                    (IN US $)

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

                                                         NINE MONTHS ENDED        THREE MONTHS ENDED
                                                           SEPTEMBER 30,             SEPTEMBER 30,
                                                         2007         2006         2007         2006
                                                     -----------  -----------  -----------  -----------

OPERATING REVENUES
   Catering and hotel related services income       $ 2,880,007  $ 2,732,847  $ 1,055,853  $ 1,012,110
   Management, rental and laundry income              1,349,166    1,234,031      456,192      434,658
                                                     -----------  -----------  -----------  -----------

      TOTAL OPERATING REVENUES                        4,229,173    3,966,878    1,512,045    1,446,768

COST OF REVENUES                                        733,179      679,328      270,749      255,957
                                                     -----------  -----------  -----------  -----------

GROSS PROFIT                                          3,495,994    3,287,550    1,241,296    1,190,811
                                                     -----------  -----------  -----------  -----------
OPERATING EXPENSES
   Salaries and wage related expenses                   319,837      268,948      104,921      121,403
   General and administrative fees                      407,065      710,168      132,087      227,798
   Depreciation, amortization and impairment            405,060      341,018      113,050       86,026
                                                     -----------  -----------  -----------  -----------
       Total Operating Expenses                       1,131,962    1,320,134      350,058      435,227
                                                     -----------  -----------  -----------  -----------
INCOME BEFORE OTHER INCOME (EXPENSE)                  2,364,032    1,967,416      891,238      755,584

OTHER INCOME (EXPENSE)
   Interest income                                          870          759          304          202
   Loss on disposal of assets                                 -       (9,502)           -            -
                                                     -----------  -----------  -----------  -----------
       Total Other Income (Expense)                         870       (8,743)         304          202
                                                     -----------  -----------  -----------  -----------

NET INCOME BEFORE PROVISION FOR INCOME TAXES          2,364,902    1,958,673      891,542      755,786

Provision for Income Taxes                             (781,301)    (332,462)    (299,103)      97,915
                                                     -----------  -----------  -----------  -----------
NET INCOME APPLICABLE TO COMMON SHARES              $ 1,583,601  $ 1,626,211  $   592,439  $   853,701
                                                    ============ ============ ============ ============

NET EARNINGS PER BASIC AND DILUTED SHARES           $      0.08  $      0.10  $      0.03  $      0.05
                                                    ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                               18,633,920    7,027,328   18,727,327   17,027,328
                                                    ============ ============ ============ ============
COMPREHENSIVE INCOME
    Net income                                      $ 1,583,601  $ 1,626,211  $   592,439  $   853,701
    Other comprehensive income
       Currency translation adjustments               1,077,358      549,083      406,475      322,948
                                                    ------------ ------------ ------------ ------------
Comprehensive income                                $ 2,660,959  $ 2,175,294  $   998,914  $ 1,176,649
                                                    ============ ============ ============ ============

</TABLE>


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


<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)
                                    (IN US $)

                                                             2007        2006
                                                         ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                             1,583,601   1,626,211
                                                         ----------- -----------
   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation, amortization and impairment              405,060     341,018
     Loss on disposal of fixed assets                             -       9,502

  Changes in assets and liabilities
     Decrease in accounts receivable                         15,200     (57,618)
     (Increase) decrease in inventory                        (4,944)      4,629
     (Increase) decrease in prepaid expenses and other
      current assets                                            935      (8,217)
     Increase (decrease) in accounts payable and
       and accrued expenses                                 (22,057)     35,082
     Increase in income taxes payable                       983,801     893,937
     (Increase) in deferred taxes                            (6,996)   (417,185)
                                                         ----------- -----------
     Total adjustments                                    1,370,999     801,148
                                                         ----------- -----------
     Net cash provided by operating activities            2,954,600   2,427,359
                                                         ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   (Increase) in advances to related parties                (16,092)   (267,147)
   (Increase) in loans receivable                                 -    (634,535)
   (Increase) in long-term assets                        (2,962,571) (1,389,668)
   (Acquisitions) of fixed assets                            (1,596)   (734,442)
                                                         ----------- -----------
      Net cash (used in) investing activities            (2,980,259) (3,025,792)
                                                         ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITES
    Proceeds from issuance of common stock                   85,000           -
                                                         ----------- -----------
       Net cash provided by financing activities             85,000           -
                                                         ----------- -----------
Effect of foreign currency translation                        1,056     549,083
                                                         ----------- -----------
NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                60,397     (49,350)

CASH AND CASH EQUIVALENTS -
    BEGINNING OF PERIOD                                      46,394      68,403
                                                         ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                $  106,791  $   19,053
                                                         =========== ===========

SUPPLEMENTAL NONCASH FINANCIAL INFORMATION

  Shares of stock issued for liabilities                 $        -  $        -
                                                         =========== ===========


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


<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION

            The unaudited condensed consolidated financial statements included
            herein have been prepared, without audit, pursuant to the rules and
            regulations of the Securities and Exchange Commission ("SEC"). The
            condensed consolidated financial statements and notes are presented
            as permitted on Form 10-QSB and do not contain information included
            in the Company's annual consolidated statements and notes. Certain
            information and footnote disclosures normally included in financial
            statements prepared in accordance with accounting principles
            generally accepted in the United States of America have been
            condensed or omitted pursuant to such rules and regulations,
            although the Company believes that the disclosures are adequate to
            make the information presented not misleading. It is suggested that
            these condensed consolidated financial statements be read in
            conjunction with the December 31, 2006 audited financial statements
            and the accompanying notes thereto. While management believes the
            procedures followed in preparing these condensed consolidated
            financial statements are reasonable, the accuracy of the amounts are
            in some respects dependent upon the facts that will exist, and
            procedures that will be accomplished by the Company later in the
            year.

            These condensed consolidated unaudited financial statements reflect
            all adjustments, including normal recurring adjustments which, in
            the opinion of management, are necessary to present fairly the
            consolidated operations and cash flows for the periods presented.

            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
            THY") was incorporated in the People's Republic of China ("PRC") on
            August 3, 1997 as a limited liability company. Shaanxi THY 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 THY on November 5, 2004, the Company acquired
            Shaanxi THY by issuing 17,027,328 shares of its common stock to the
            original shareholders of Shaanxi THY in exchange for 100% of their
            membership interests (the "Merger"). As a result, the controlling
            member of Shaanxi THY 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 THY 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
            Merger, the Merger was considered to be a capital transaction in
            substance, rather than a business combination and no goodwill was
            recognized. For financial reporting purposes, the Merger was treated
            as a reverse acquisition whereby Shaanxi THY is considered to be the
            accounting survivor and the operating entity while the Company is
            considered to be the legal survivor.


<PAGE>



                       NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

            On that basis, the historical financial information presented is
            that of Shaanxi THY. The historical stockholders' equity accounts of
            the Company have been retroactively restated to reflect the issuance
            of the 17,027,328 shares of common stock since the beginning of the
            periods presented. The difference between the par value of the
            shares issued for the Merger and the par value of the shares of
            Shaanxi THY is recorded as additional paid-in capital.


NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Principles of Consolidation

            The condensed consolidated financial statements include the accounts
            of the Company and its wholly owned subsidiary. All significant
            intercompany accounts and transactions have been eliminated in
            consolidation.

            Use of Estimates

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make 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. On an on-going basis, the Company evaluates
            its estimates, including, but not limited to, those related to bad
            debts, income taxes and contingencies. The Company bases its
            estimates on historical experience and on 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 value of assets and liabilities that are not readily
            apparent from other sources. Actual results could differ from those
            estimates.

            Economic and Political Risks

            The Company's operations are conducted in the PRC. Accordingly, the
            Company's business, financial condition and results of operations
            may be influenced by the political, economic and legal environment
            in the PRC, and by the general state of the PRC economy.

            The Company's operations in the PRC are subject to special
            considerations and significant risks not typically associated with
            companies in North America and Western Europe. These include risks
            associated with, among others, the political, economic and legal
            environment and foreign currency exchange. The Company's results may
            be adversely affected by changes in governmental policies with
            respect to laws and regulations, anti-inflationary measures,
            currency conversion, remittances abroad, and rates and methods of
            taxation, among other things.

<PAGE>

                       NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Cash and Cash Equivalents

            The Company considers all highly liquid debt instruments and other
            short-term investments with an initial maturity of three months or
            less to be cash equivalents. The Company maintained $13,055 as of
            September 30, 2007 in cash on hand. The remainder of the cash was in
            financial institutions.

            Comprehensive Income

            The Company adopted Statement of Financial Accounting  Standards No,
            130, "Reporting  Comprehensive  Income," (SFAS No. 130).  SFAS No.
            130 requires the reporting of comprehensive income in addition to
            net income from operations.

            Comprehensive income is a more inclusive financial reporting
            methodology that includes disclosure of information that
            historically has not been recognized in the calculation of net
            income.

            Inventory

            Inventory is valued at the lower of cost or market. Inventory
            includes raw materials and consumables.

            Potential losses from obsolete and slow-moving inventories are
            provided for when identified. Cost, which comprises all costs of
            purchase and, where applicable, other costs that have been incurred
            in bringing their inventories to their present location and
            condition, is calculated using the first-in, first-out method.

            Fair Value of Financial Instruments

            The carrying amounts reported in the condensed consolidated balance
            sheet for cash and cash equivalents, trade receivables and accounts
            payable approximate fair value because of the immediate or
            short-term maturity of these financial instruments.

            Currency Translation

            The Company's functional currency is that of the PRC which is the
            Chinese Renminbi (RMB). The reporting currency is that of the US
            Dollar. Capital accounts of the consolidated financial statements
            are translated into United States dollars from RMB at their
            historical exchange rates when the capital transactions occurred.
            Assets and liabilities are translated at the exchange rates as of
            the balance sheet date. Income and expenditures are translated at
            the average exchange rate of the year. The period end RMB to US
            dollar as of September 30, 2007 was 7.5061, and the average period
            RMB to the US dollar for the nine months ended September 30, 2007
            and 2006 were 7.5626 and 7.94, respectively. The RMB is not freely
            convertible into foreign currency and all foreign

<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            currency exchange transactions must take place through authorized
            institutions. No representation is made that the RMB amounts could
            have been, or could be, converted into US dollar at the rates used
            in translation. The Company records these translation adjustments as
            accumulated other comprehensive income (loss). Gains and losses from
            foreign currency transactions are included in other income (expense)
            in the results of operations. For the nine months ended September
            30, 2007 and 2006, the Company recorded approximately $1,077,358 and
            $549,083 in transaction gains (losses) as a result of currency
            translation.

            Revenue Recognition

            The Company generates revenue from catering, hotel and related
            services. 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, a related
            party based on terms stated in the agreement. This company is
            controlled by a common director and stockholder of the Company.

            Accounts Receivable

            The Company conducts business and extends credit based on an
            evaluation of the customers' financial condition, generally without
            requiring collateral. Exposure to losses on receivables is expected
            to vary by customer due to the financial condition of each customer.
            The Company monitors exposure to credit losses and maintains
            allowances for anticipated losses considered necessary under the
            circumstances. The Company has established a reserve of $2,598 as of
            September 30, 2007.

            Accounts Receivable (Continued)

            Accounts receivable are generally due within 30 days and collateral
            is not required.

            Advertising Costs

            The Company expenses the costs associated with advertising as
            incurred. Advertising expenses for the nine months ended September
            30, 2007 and 2006 are included in general and administration
            expenses in the condensed consolidated statements of income.



<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Fixed Assets

            Fixed assets are stated at cost. Depreciation is computed using the
            straight-line method over the estimated useful lives of the assets,
            net of the estimated residual values; buildings - 40 years (5%
            estimated residual value), building improvements - 15 years (5%
            residual value), electrical equipment - 12 years (5% residual
            value), furniture and fixtures - 15 years (5% residual value) and
            vehicles and other equipment - 10 years (5% residual value). In
            addition, the Company purchased land use rights that are for a
            period of 40-68 years, the unexpired lease term, with no residual
            value.

            When assets are retired or otherwise disposed of, the costs and
            related accumulated depreciation are removed from the accounts, and
            any resulting gain or loss is recognized in income for the period.
            The cost of maintenance and repairs is charged to income as
            incurred; significant renewals and betterments are capitalized.
            Deduction is made for retirements resulting from renewals or
            betterments.

            Land Use Rights

            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.

            Impairment of Long-Lived Assets

            Long-lived assets, primarily property and equipment and intangible
            assets, are reviewed for impairment whenever events or changes in
            circumstances indicate that the carrying amount of the assets might
            not be recoverable. The Company does perform a periodic assessment
            of assets for impairment in the absence of such information or
            indicators. Conditions that would necessitate an impairment
            assessment include a significant decline in the observable market
            value of an asset, a significant change in the extent or manner in
            which an asset is used, or a significant adverse change that would
            indicate that the carrying amount of an asset or group of assets is
            not recoverable. For long-lived assets to be held and used, the
            Company recognizes an impairment loss only if its carrying amount is
            not recoverable through its undiscounted cash flows and measures the
            impairment loss based on the difference between the carrying amount
            and estimated fair value.


<PAGE>



                       NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Earnings Per Share of Common Stock

            Basic net earnings per common share is computed using the weighted
            average number of common shares outstanding. Diluted earnings per
            share (EPS) includes additional dilution from common stock
            equivalents, such as stock issuable pursuant to the exercise of
            stock options and warrants. Common stock equivalents are not
            included in the computation of diluted earnings per share when the
            Company reports a loss because to do so would be antidilutive for
            the periods presented.

            The following is a reconciliation of the computation for basic and
            diluted EPS:

                                      September 30,  September 30,
                                          2007           2006
                                      -------------  -------------

Net income                             $ 1,583,601    $ 1,626,211
                                      -------------  -------------

Weighted-average common shares
Outstanding (Basic)                     18,633,920     17,027,328

Weighted-average common stock
Equivalents
     Stock options                               -              -
     Warrants                                    -              -
                                      -------------  -------------

Weighted-average common shares
Outstanding (Diluted)                   18,633,920     17,027,328
                                      =============  =============

            Income Taxes

            The Company accounts for income tax using an asset and liability
            approach and allows for recognition of deferred tax benefits in
            future years. Under the asset and liability approach, deferred taxes
            are provided for the net tax effects of temporary differences
            between the carrying amounts of assets and liabilities for financial
            reporting purposes and the amounts used for income tax purposes. A
            valuation allowance is provided for deferred tax assets if it is
            more likely than not these items will either expire before the
            Company is able to realize their benefits, or that future
            realization is uncertain.



<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            In accordance with the relevant tax laws and regulations of PRC, the
            Company has recorded a provision for income taxes based on their
            applicable tax rate.

            Stock-Based Compensation

            The Company follows FASB 123R in accounting for its stock based
            compensation (see Recent Accounting Pronouncements). This measures
            compensation expense for its employee stock-based compensation using
            the intrinsic-value method. Under the intrinsic-value method of
            accounting for stock-based compensation, when the exercise price of
            options granted to employees and common stock issuances are less
            than the estimated fair value of the underlying stock on the date of
            grant, deferred compensation is recognized and is amortized to
            compensation expense over the applicable vesting period. The Company
            for 2007 and 2006 did not grant any options or warrants that would
            need to be valued under such method. The following represents the
            effect on net income attributable to common shareholders per share
            if the fair value method had been applied to all awards.

            On January 1, 2006, the Company adopted the provisions of FAS No.
            123R "Share-Based Payment" ("FAS 123R") which requires recognition
            of stock-based compensation expense for all share-based payments
            based on fair value. Prior to January 1, 2006, the Company measured
            compensation expense for all of its share-based compensation using
            the intrinsic value method prescribed by Accounting Principles Board
            ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees"
            ("APB 25") and related interpretations. The Company has provided pro
            forma disclosure amounts in accordance with FAS No. 148, "Accounting
            for Stock-Based Compensation - Transition and Disclosure - an
            amendment of FASB Statement No. 123" ("FAS 148"), as if the fair
            value method defined by FAS No. 123, "Accounting for Stock Based
            Compensation" ("FAS 123") had been applied to its stock-based
            compensation.

            The Company has elected to use the modified-prospective approach
            method. Under that transition method, the calculated expense in 2006
            is equivalent to compensation expense for all awards granted prior
            to, but not yet vested as of January 1, 2006, based on the
            grant-date fair values estimated in accordance with the original
            provisions of FAS 123. Stock-based compensation expense for all
            awards granted after January 1, 2006 is based on the grant-date fair
            values estimated in accordance with the provisions of FAS 123R. The
            Company recognizes these compensation costs, net of an estimated
            forfeiture rate, on a pro rata basis over the requisite service
            period of each vesting tranche of each award. The Company considers
            voluntary termination behavior as well as trends of actual option
            forfeitures when estimating the forfeiture rate.


<PAGE>



                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Stock-Based Compensation (Continued)

            The Company measures compensation expense for its non-employee
            stock-based compensation under the Financial Accounting Standards
            Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18,
            "Accounting for Equity Instruments that are Issued to Other Than
            Employees for Acquiring, or in Conjunction with Selling, Goods or
            Services". The fair value of the option issued is used to measure
            the transaction, as this is more reliable than the fair value of the
            services received. The fair value is measured at the value of the
            Company's common stock on the date that the commitment for
            performance by the counterparty has been reached or the
            counterparty's performance is complete. The fair value of the equity
            instrument is charged directly to compensation expense and
            additional paid-in capital.

            Segment Information

            The Company follows the provisions of SFAS No. 131, "Disclosures
            about Segments of an Enterprise and Related Information". This
            standard requires that companies disclose operating segments based
            on the manner in which management disaggregates the Company in
            making internal operating decisions. For 2007 and 2006, the Company
            operated in one segment and one geographical location.

            Related Party Transactions

            Parties are considered to be related if one party has the ability,
            directly or indirectly, to control the other party, or exercise
            significant influence over the other party in making financial and
            operating decisions. Parties are also considered to be related if
            they are subject to common control or common significant influence.

            Recent Accounting Pronouncements

            In September 2006, the FASB issued SFAS 157, "Fair Value
            Measurements." This standard defines fair value, establishes a
            framework for measuring fair value in generally accepted accounting
            principles, and expands disclosure about fair value measurements.
            This statement is effective for financial statements issued for
            fiscal years beginning after November 15, 2007. Early adoption is
            encouraged. The adoption of SFAS 157 has not had a material impact
            on the consolidated financial statements.

            In September 2006, the FASB issued SFAS 158, "Employers' Accounting
            for Defined Benefit Pension and Other Postretirement Plans, an
            amendment of FASB Statements 87, 88, 106 and 132(R)" ("SFAS 158").
            SFAS 158 requires 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


<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Recent Accounting Pronouncements (Continued)

            comprehensive income. SFAS 158 also requires the measurement of
            defined benefit plan assets and obligations as of the date of the
            employer's fiscal year-end statement of financial position (with
            limited exceptions). The adoption of SFAS 158 has not had a material
            impact on the Company's consolidated financial statements.

            In February 2007, the FASB issued FAS No. 159, "The Fair Value
            Option for Financial Assets and Financial Liabilities - Including an
            amendment of FASB Statement No. 115", ("FAS 159") which permits
            entities to choose to measure many financial instruments and certain
            other items at fair value at specified election dates. A business
            entity is required to report unrealized gains and losses on items
            for which the fair value option has been elected in earnings at each
            subsequent reporting date. This statement is expected to expand the
            use of fair value measurement. FAS 159 is effective for financial
            statements issued for fiscal years beginning after November 15,
            2007, and interim periods within those fiscal years. The adoption of
            SFAS 158 is not expected to have a material impact on the Company's
            consolidated financial statements

            In July 2006, the FASB issued Interpretation No.  48 (FIN  No.  48),
            "Accounting for Uncertainty in Income Taxes."  This  interpretation
            requires recognition and measurement of uncertain income tax
            positions using a  "more-likely-than-not"  approach.  FIN No. 48 is
            effective for fiscal years beginning after December 15, 2006. The
            adoption of FIN No. 48 has not had a material impact on the
             Company's  consolidated  financial statements.

            In September 2006, the United States Securities and Exchange
            Commission ("SEC") issued SAB 108, "Considering the Effects of Prior
            Year Misstatements when Quantifying Misstatements in Current Year
            Financial Statements."

            This SAB provides guidance on the consideration of the effects of
            prior year misstatements in quantifying current year misstatements
            for the purpose of a materiality assessment. SAB 108 establishes an
            approach that requires quantification of financial statement errors
            based on the effects of each of the company's financial statements
            and the related financial statement disclosures. SAB 108 permits
            existing public companies to record the cumulative effect of
            initially applying this approach in the first year ending after
            November 15, 2006 by recording the necessary correcting adjustments
            to the carrying values of assets and liabilities as of the beginning
            of that year with the offsetting adjustment recorded to the opening
            balance of retained earnings. Additionally, the use of the
            cumulative effect transition method requires detailed disclosure of
            the nature and amount of each individual error being corrected
            through the cumulative adjustment and how and when it arose. The
            adoption of SAB 108 has not had a material impact on the Company's
            consolidated financial statements.



<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 3-     FIXED ASSETS

            Fixed assets as of September 30, 2007 were as follows:

                                    Estimated
                                     Useful
                                      Lives
                                     (Years)

            Land use right                40-68     $3,038,627
            Buildings                       40      6,622,508
            Building improvements           15      1,561,268
            Furniture and fixtures          12       389,825
            Electrical equipment            15      1,408,325
            Vehicles and other              10      1,763,518
                                                    ---------

                                                   14,784,071
            Less: accumulated depreciation          5,484,289
                                                    ---------
            Property and equipment, net            $9,299,782
                                                   ==========

            There was $405,060 and $341,018 charged to operations for
            depreciation expense for the nine months ended September 30, 2007
            and 2006, respectively. There was no impairment for these assets
            during the nine months ended September 30, 2007 and 2006.

NOTE 4-     LONG-TERM ASSETS

            The balance as of September 30, 2007 included payments of
            $22,455,074 made to the local government for the acquisition of a
            piece of land in the PRC. Pursuant to an agreement executed May 26,
            2002, the total estimated consideration for the land is $15,008,280.
            There is no specific due date for payment of the balance of the
            consideration.

            The Company proposes to utilize the land for property development.
            This agreement stipulates that the planning and preparation work
            should be completed by the end of 2002, with construction to
            commence by March 2004. The Company has paid design and planning
            fees of $7,446,794 through September 30, 2007, and although this
            project has been delayed, Management believes that the agreement is
            still effective and there is no penalty for the delay pursuant to
            the agreement.

            Although it is the present intention of Management to develop the
            land, the Company shall have the right to dispose of the land
            through the local government subject to certain conditions. The land
            has a value which has been prepared by an independent valuation
            specialist on a depreciated replacement cost basis that exceeds the
            carrying cost. There is no impairment on this amount as of September
            30, 2007.


<PAGE>



                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 5-     RELATED PARTY 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.

            Yuan Taizu - 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 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 - part of Wenhao Group.

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

            Xianyong Road Industry - company with common shareholders.

            The Company as of September 30, 2007 has advanced $510,918 to
            Shaanxi New Taohuayuan Economy Trade Company, $289,590 to the Wenhao
            Group, $127,135 to Dongjin Taoyuan, $60,128 to Yuan Taizu, and
            $17,203 to Xianyong Road Industry. These advances are unsecured,
            interest-free and have no fixed repayment terms. The Company has
            classified these as current assets.

            Management Fee Agreement

            The Company entered into a management agreement with Shaanxi New
            Taohuayuan Economy Trade Company Limited and Shaanxi Wenhao Group on
            January 15, 2004 for a period of five years. Additionally, in 2006,
            the Company entered into a management agreement with Yuan Taizu for
            a five year period. The annual management fees are fixed at
            approximately $1,774,240. For the nine months ended September 30,
            2007 and 2006, the Company earned $1,349,166 and $1,234,031 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.


<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 6-     STOCKHOLDERS' EQUITY (DEFICIT)

            Preferred Stock

            As of September 30, 2007, the Company has 10,000,000 shares of
            preferred stock authorized with a par value of $.001. There are as
            of September 30, 2007, no shares issued and outstanding.

            Common Stock

            As of September 30, 2007, the Company has 50,000,000 shares of
            common stock authorized with a par value of $.001. As of September
            30, 2007, the Company has 18,727,327 shares issued and outstanding.
            Of the issued and outstanding shares, 17,027,328 of these shares
            were issued in November 2004 upon completion of the merger. In
            January 2007, 1,699,999 were issued at $.05 per share ($85,000) for
            cash.

            Options and Warrants

            The Company has not granted any options or warrants as of September
            30, 2007.

            Statutory Reserves

            Statutory reserves include a statutory surplus reserve and a
            statutory public welfare fund, which are maintained in accordance
            with the legal requirements of the PRC. Pursuant to the Articles of
            Association, the Company has to appropriate 10% of the net income,
            based on the accounts prepared in accordance with accounting
            principles generally accepted in the PRC, to the statutory surplus
            reserve and statutory public welfare fund. The statutory surplus
            reserve can be utilized to offset prior years' losses or for
            capitalization as additional paid-in capital, whereas the statutory
            public welfare fund shall be utilized for collective staff welfare
            benefits such as building of staff quarters or housing. No
            distribution of the statutory reserves shall be made other than on a
            liquidation of the Company.

NOTE 7-     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.



<PAGE>


                       NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)


NOTE 8-     COMMITMENTS AND CONTINGENCIES

            As of September 30, 2007, the Company had capital expenditure
            commitments contracted, but not provided for net of deposits they
            paid for the acquisition of the land as noted in Note 4, amounting
            to $16,490,257.

NOTE 9-     PROVISION FOR INCOME TAXES

            In accordance with the relevant tax laws and regulations of PRC, the
            corporate income tax rate is 33% for the nine months ended September
            30, 2007 and 2006, respectively.

                                    Nine Months Ended
                                      September 30,
                                     2007       2006
                                    ------     ------

Current tax expense                $ 773,428  $ 752,728
                                   ---------- ----------
Deferred tax expense (benefit)         7,873   (420,266)
                                   ---------- ----------
                                   $ 781,301  $ 332,462
                                   ========== ==========

            A reconciliation of the PRC enterprise income tax rate to the
            effective income tax rate is as follows:

                                                    ---------------------------
                                                       2007         2006
                                                    -----------  ------------

            Statutory rate                             33%           33%
            Surcharge on taxes not deductible  for
            PRC enterprise income
               tax purposes                             9            10
            Other non-temporary differences            (9)           (7)
                                                    -----------  ------------
                                                    -----------  ------------
                                                       33%           36%
                                                    ===========  ============

            Deferred Taxes - the Company

            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.



<PAGE>


                       NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                     SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

NOTE 9-     PROVISION FOR INCOME TAXES (CONTINUED)

            At September 30, 2007, deferred tax assets consist of the following:


            Other payables                   $   65,687
                                             ===========


            Value Added Tax

            The Company only recognizes Value Added Tax ("VAT") for their store
            revenue at a rate of 4%. A very small portion of the Company's
            revenue is derived from this source.








<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. 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 October 2007.

      We also manage a chain of three 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 Operation for the nine months ended September 30, 2007 compared to
nine months ended September 30, 2006

      Material changes of certain items in our Statement of Operations for the
nine months ended September 30, 2007, as compared to the nine months ended
September 30, 2006, are discussed below:

                  Increase (I)
Item             or Decrease (D) Reason

Operating Revenue       I        Increase in Operating Revenues was primarily
                                 the result of improved service and new menu.
Provision for Income    I        During the nine months ended September 30, 2006
 Taxes                           our income tax expense was reduced by a
                                 deferred tax benefit. We were not able to use

<PAGE>

                                 a deferred tax benefit to offset income taxes
                                 during the nine months ended
                                 September 30, 2007.

      Gross profit, as a percentage of Operating Revenues, was 83% during the
current period, which was the same as our gross profit percentage in the
comparable nine-month period in 2006.

Liquidity and Capital Resources

      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 2008.

      We expect to complete the New Hainan hotel and resort project in 2008 and
commence operations at the end of 2009. The remaining costs to develop the
project are expected to be approximately $9,000,000.

       Based upon the foregoing, our future capital requirements are:

                                                     Projected
Activity                                             Time Frame   Estimated Cost
--------                                             ----------   --------------
Pay remaining amount for land use rights
  for Lantian project                                      2007   $   800,000
Construction and development costs -
  Lantian project                                     2007-2012   $17,800,000
Construction and development costs -
  New Hainan project                                  2007-2008   $ 9,000,000

      We have financed our operations to date through the sale of our common
stock and cash generated by our operations. As of September 30, 2007
expenditures for the 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 the Lantian and New Hainan projects through cash
from our operations and loans. Loans would be collateralized by the property 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 June 30, 2007 balance sheet.

                                       2

<PAGE>


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.

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
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

                                       3

<PAGE>

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
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.

                                       4

<PAGE>

     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 3. CONTROLS AND PROCEDURES

      Cai Danmei, our Chief Executive and Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures as of a date prior to
the filing date of this report, and in her opinion our disclosure controls and
procedures are effective to ensure that material information relating to us,
including our consolidated subsidiaries, is made known to her by others within
those entities, particularly during the period in which this report is being
prepared, so as to allow timely decisions regarding required disclosure. There
have been no changes in our internal controls or in other factors that could
significantly affect our internal controls. As a result, no corrective actions
with regard to significant deficiencies or material weakness in our internal
controls were required.

                                       5

<PAGE>


                                     PART II

                                OTHER INFORMATION


Item 6. Exhibits

         Number           Exhibit
         ------           -------

           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 on November 18, 2007.

                               NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.



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






<PAGE>