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 MARCH 31, 2007

                                       OR

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

      For the transition period from _______ to ________.

      Commission File Number - 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 May 15, 2007 the Company had 18,727,327 outstanding shares of common
stock.


<PAGE>








                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2007 AND 2006







<PAGE>





                          INDEX TO FINANCIAL STATEMENTS



Condensed Consolidated Balance Sheet as of March 31, 2007 (Unaudited)

Condensed Consolidated Statements of Income and Accumulated Other
   Comprehensive Income for the Three Months Ended
   March 31, 2007 and 2006 (Restated) (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months
   Ended March 31, 2007 and 2006 (Restated) (Unaudited)

Notes to Condensed Consolidated Financial Statements








<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEET
                           MARCH 31, 2007 (UNAUDITED)
                                    (IN US$)

                                     ASSETS
Current Assets:
  Cash and cash equivalents                               $      102,017
  Accounts receivable                                             33,931
  Inventories                                                     42,204
  Deferred tax asset                                              57,371
  Prepaid expenses and other current assets                       22,583
  Due from related parties                                       992,249
                                                          ---------------
      Total Current Assets                                     1,250,355
                                                          ---------------

  Fixed assets, net of depreciation                            9,281,135
                                                          ---------------

Other Assets:
Long-term assets                                              19,749,964
                                                          ---------------
      Total Other Assets                                      19,749,964
                                                          ---------------
TOTAL ASSETS                                                $ 30,281,454
                                                          ===============

                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
  Accounts payable and accrued expenses                    $     954,973
  Taxes payable                                                3,611,702
                                                          ---------------
      Total Current Liabilities                                4,566,675
                                                          ---------------
Commitments and contingencies
      Total Liabilities                                        4,566,675
                                                          ---------------

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                                            7,317,021
  Accumulated other comprehensive income (loss)                1,551,215
                                                          ---------------
      Total Stockholders' Equity                              25,714,779
                                                          ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $   30,281,454
                                                          ===============


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

                                       1

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                     ACCUMULATED OTHER COMPREHENSIVE INCOME
         FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
                                    (IN US $)

                                                       Three Months Ended
                                                            March 31,
                                                       2007          2006
                                                       ----          ----
                                                                  (Restated)
OPERATING REVENUES
   Catering and hotel related services income   $    880,863    $    813,748
   Management, rental and laundry income             443,560         323,580
                                                -------------   -------------
      Total Operating Revenues                     1,324,423       1,137,328

COST OF REVENUES                                     221,017         200,261
                                                -------------   -------------

GROSS PROFIT                                       1,103,406         937,067
                                                -------------   -------------

OPERATING EXPENSES
   Salaries and wage related expenses                113,322          89,959
   General and administrative fees                   149,443         160,229
   Depreciation, amortization and impairment         145,040         128,934
                                                -------------   -------------
      Total Operating Expenses                       407,805         379,122
                                                -------------   -------------

INCOME BEFORE OTHER INCOME (EXPENSE)                 695,601         557,945

OTHER INCOME (EXPENSE)
   Interest income                                       310             297
                                                -------------   -------------
      Total Other Income (Expense)                       310             297
                                                -------------   -------------

NET INCOME BEFORE PROVISION FOR
    INCOME TAXES                                     695,911         558,242
Provision for Income Taxes                          (224,351)       (161,945)
                                                -------------   -------------

NET INCOME APPLICABLE TO COMMON SHARES          $    471,560    $    396,297
                                                =============   =============

NET EARNINGS PER BASIC AND DILUTED SHARES       $       0.03    $       0.02
                                                =============   =============

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                            18,443,994      17,027,328
                                                =============   =============

COMPREHENSIVE INCOME
    Net income                                  $    471,560    $    396,297
    Other comprehensive income
     Currency translation adjustments                283,448         131,381
                                                -------------   -------------
Comprehensive income                            $    755,008    $    527,678
                                                =============   =============

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

                                       2

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
                                    (IN US $)

                                                           2007        2006
                                                                     (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                         $   471,560    $   396,297
                                                    ------------   ------------

 Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation, amortization and impairment            145,040        128,934

Changes in assets and liabilities
     (Increase) decrease in accounts receivable           3,814        (12,475)
     (Increase) in inventory                             (8,499)          (269)
     (Increase) decrease in prepaid expenses and
      other current assets                              (12,797)         9,121
     (Decrease) in accounts payable and
       and accrued expenses                            (158,500)       (52,345)
     Increase in income taxes payable                   310,969        262,861
     (Increase) in deferred taxes                          (998)       (40,913)
                                                    ------------   ------------
            Total adjustments                           279,029        294,914
                                                    ------------   ------------
   Net cash provided by operating activities            750,589        691,211
                                                    ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
     (Increase) in advances to related parties          (44,126)       (82,884)
     (Increase) in long-term assets                  (1,083,864)      (712,574)
     (Acquisitions) of fixed assets                        (776)       (42,453)
                                                    ------------   ------------
        Net cash (used in) investing activities      (1,128,766)      (837,911)
                                                    ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITES
    Proceeds from issuance of common stock               85,000             --
                                                    ------------   ------------
   Net cash (used in) financing activities               85,000         85,000
                                                    ------------   ------------

Effect of foreign currency translation                  348,800        131,381
                                                    ------------   ------------

NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                            55,623        (15,319)

CASH AND CASH EQUIVALENTS -
    BEGINNING OF PERIOD                                  46,394         68,403
                                                    ------------   ------------

CASH AND CASH EQUIVALENTS - END OF PERIOD           $   102,017    $    53,084
                                                    ============   ============

SUPPLEMENTAL NONCASH FINANCIAL INFORMATION
     Shares of stock issued for liabilities         $        --    $        --
                                                    =============  ============


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

                                       3

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 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.



                                       4
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

      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.

      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.

      As noted in Note 10, the Company has restated its condensed consolidated
      financial statements to adjust certain tax accrual and accruals for tax
      surcharges (penalties and interest) previously recorded. The net effect of
      the adjustments was an increase in net income of the Company for the three
      months ended March 31, 2006 of $460,829 from a net loss of ($64,532) to a
      net income of $396,297. The adjustments increased the earnings (loss) per
      share $0.02 from $0.00 to $0.02.

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.


                                       5
<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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.

      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 $16,026 as of March 31, 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.


                                       6
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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 March 31, 2007 was 7.7342, and the average period
      RMB to the US dollar for 2007 and 2006 were 7.7780 and 8.0498,
      respectively. The RMB is not freely convertible into foreign currency and
      all foreign 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 three months ended March 31, 2007 and
      2006, the Company recorded approximately $283,448 and $131,381 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.


                                       7
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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 $10,475 as of March 31, 2007.

      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 three months ended March 31, 2007 and 2006
      are included in general and administration expenses in the condensed
      consolidated statements of income.

      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.


                                       8
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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.

      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:

                                                   March 31,      March 31,
                                                       2007           2006
                                                   ---------      ---------
                                                                  (Restated)

      Net income                                $   471,560    $   396,297

      Weighted-average common shares
      Outstanding (Basic)                        18,443,994     17,027,328

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

      Weighted-average common shares
      Outstanding (Diluted)                      18,443,994     17,027,328
                                              ==============  =============


                                       9
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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.

      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.



                                       10
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      Stock-Based Compensation (Continued)

      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.

      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 20065, 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.

                                       11
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      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 is not
      expected to have 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 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). Management does not expect adoption of SFAS 158 to have 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.

      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. Management is still evaluating what
      effect this will have on the Company's consolidated financial statements.



                                       12
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 2-  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      Recent Accounting Pronouncements (Continued)

      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 Company does not
      anticipate that SAB 108 will have a material impact on its consolidated
      financial statements.

      NOTE 3-     FIXED ASSETS

      Fixed assets as of March 31, 2007 were as follows:

                                         Estimated
                                          Useful
                                          Lives
                                         (Years)
                                         ---------

            Land use right                40-68     $2,949,014
            Buildings                       40       6,427,201
            Building improvements           15       1,515,224
            Furniture and fixtures          12         378,328
            Electrical equipment            15       1,366,792
            Vehicles and other              10       1,710,707
                                                    ----------

                                                    14,347,266
            Less:          accumulated               5,066,131
                                                    ----------
            depreciation
            Property  and   equipment,              $9,281,135
                                                    ==========
            net

      There was $145,040 and $128,934 charged to operations for depreciation
      expense for the three months ended March 31, 2007 and 2006, respectively.
      There was no impairment for these assets during the three months ended
      March 31, 2007 and 2006.


                                       13
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 4-     LONG-TERM ASSETS

      The balance as of March 31, 2007 included payments of $19,749,964 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 $4,741,684 through March
      31, 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 March 31, 2007.

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.


                                       14
<PAGE>
                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 5-     RELATED PARTY TRANSACTIONS (CONTINUED)

      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 March 31, 2007 has advanced $495,850 to Shaanxi New
      Taohuayuan Economy Trade Company, $284,659 to the Wenhao Group, $123,758
      to Dongjin Taoyuan, $58,469 to Yuan Taizu, and $29,513 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 three months ended March 31, 2007 and 2006, the
      Company earned $443,560 and $323,580 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.

NOTE 6-     STOCKHOLDERS' EQUITY (DEFICIT)

      Preferred Stock

      As of March 31, 2007, the Company has 10,000,000 shares of preferred stock
      authorized with a par value of $.001. There are as of March 31, 2007, no
      shares issued and outstanding.

      Common Stock

      As of March 31, 2007, the Company has 50,000,000 shares of common stock
      authorized with a par value of $.001. As of March 31, 2007, the Company
      has 18,727,327 shares issued and outstanding. Of the issued and
      outstanding shares, 17,027,328 of these shares 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.



                                       15
<PAGE>
                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 6-     STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

      Options and Warrants

      The Company has not granted any options or warrants as of March 31, 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.

NOTE 8-     COMMITMENTS AND CONTINGENCIES

      As of March 31, 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 $8,511,232.

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 three months ended March 31, 2007
      and 2006, respectively.



                                       16
<PAGE>
                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 9-     PROVISION FOR INCOME TAXES (CONTINUED)


                                                Three Months Ended
                                                         March 31,
                                                2007          2006
                                                ----          ----

            Current tax expense             $ 223,940     $ 141,359

            Deferred tax expense (benefit)        411        20,586
                                            ----------    ----------

                                           $  224,351    $ 161,945
                                           ==========    =========

      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           9
         Other non-temporary differences            (9)        (13)
                                                 ------       -----
                                                    33%         29%

      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.

      At March 31, 2007, deferred tax assets consist of the following:


            Other payables                   $       57,371
                                             ---------------




                                       17
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 9-     PROVISION FOR INCOME TAXES (CONTINUED)

      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.


NOTE 10-    RESTATED FINANCIAL STATEMENTS

      As noted in Note 1, the Company has restated its condensed consolidated
      financial statements to adjust tax accrual and accruals for tax surcharges
      (penalties and interest) previously recorded. The net effect of the
      adjustments was an increase in net income of the Company for the three
      months ended March 31, 2006 of $460,829 from a net loss of ($64,532) to a
      net income of $396,297. The adjustments increased the earnings (loss) per
      share $0.02 from $0.00 to $0.02.






                                       18
<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 May 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 three months ended March 30, 2007 compared to three
months ended March 31, 2006

      Material changes of certain items in our Statement of Operations for the
three months ended March 31, 2007, as compared to the three months ended March
31, 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.
                                 Our occupancy rate during the three months
                                 ended March 31, 2007 was 79% compared to 75%
                                 for the three months ended March 31, 2006.

<PAGE>


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

Income tax

      Our effective tax rates were 130% and 75% respectively for the three
months ended March 31, 2006 and 2005. The difference between the effective tax
rate and the PRC enterprise income tax rate is mainly due to the surcharge on
taxes which we are accruing and which is not deductible for PRC enterprise
income tax purposes.

Liquidity and Capital Resources

       Our material sources (uses) of cash during the following periods were:

                                         Three months ended  Three months ended
                                            March 31, 2007     March 31, 2006
                                         ------------------  ------------------

      Cash provided by operations           $ 750,589           $691,211
      Advances to related parties             (44,126)           (82,884)
      Payment for land use rights          (1,083,864)          (712,574)
      Purchase of equipment                      (776)           (42,453)
      Cash on hand at beginning of period          --             15,319

      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.

       As of March 31, 2007 project expenditures for the mixed-use development
in Lantian were $15,400,000 for the land use rights and $1,400,000 for
preliminary planning and design. We anticipate that the remaining costs to
develop the project, will be approximately $64,000,000 over five years. We
expect to begin construction on the property in 2007.

      As of March 31, 2007 project expenditures for the hotel and resort in Xian
were $1,258,000 for the land use rights. 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
$10,000,000.

      We had a written arrangement with the local government which provides that
the total taxes payable by us, including the PRC enterprise income tax and
business tax, would be subject to a maximum amount of US$123,864 per year.
However, this arrangement was not in compliance with the national tax laws and
regulations in the PRC which require that taxes are based upon a percentage of
taxable income and are not limited to a specific amount. Accordingly, we have
accrued all taxes which may be due in accordance with relevant national and
local laws and regulations in the PRC, together with a surcharge for interest
that may be levied on the unpaid taxes at a rate of 0.05% per day. By December

                                       2

<PAGE>

31, 2006 we plan to resolve this issue with the national PRC taxing authorities.
If the PRC taxing authority demands payment of all taxes and interest which they
claim are due we believe that we will be able to pay the amounts owed in
installments with cash from our operations. We do not have any legal opinion
concerning the validity of our tax agreement with the local government.

       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    $64,000,000
Construction and development costs -
  New Hainan project                                 2007-2008    $10,000,000

      We have financed our operations to date through the sale of our common
stock and cash generated by our operations. As of March 31, 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 March 31, 2007 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

                                       3

<PAGE>

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
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

                                       4

<PAGE>

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.

     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.

Taxes

      Although we had a written arrangement with the local government which
provides that the total taxes payable by us, including the PRC enterprise income
tax and business tax, would be subject to a maximum amount of US$123,864 per
year, we do not believe that this arrangement is in compliance with the national
tax laws and regulations in the PRC which require that taxes are based upon a
percentage of taxable income and are not limited to a specific amount.
Accordingly, we have accrued all taxes which may be due in accordance with
relevant national and local laws and regulations in the PRC, together with a
surcharge for interest that may be levied on the unpaid taxes at a rate of 0.05%
per day. If the taxes and interest we ultimately are required to pay are less
than the amounts we have accrued, we will reduce our recorded liability for
unpaid taxes.


                                       5

<PAGE>


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.


                                       6


<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 May 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>