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 JUNE 30, 2006

                                             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 August 15, 2006 the Company had 17,027,328 outstanding shares of
common stock.


<PAGE>













                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                 New Taohuayuan Culture Tourism Company Limited

                     Six months ended June 30, 2006 and 2005




<PAGE>



                          INDEX TO FINANCIAL STATEMENTS


                                                                         Page

Condensed Consolidated Balance Sheet as of June 30, 2006 (Unaudited)     F-1

Condensed Consolidated Statements of Income and Accumulated Other
   Comprehensive Income for the Six and Three Months Ended
    June 30, 2006 and 2005 (Unaudited)                                   F-2

Condensed Consolidated Statements of Cash Flows for the Six Months
    Ended June 30, 2006 and 2005 (Unaudited)                             F-3

Notes to Condensed Consolidated Financial Statements                  F-4 - F-16












<PAGE>
                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                      CONDENSED CONSOLIDATED BALANCE SHEET
                            JUNE 30, 2006 (UNAUDITED)
                                    (IN US$)

                                     ASSETS
   Current Assets:
     Cash and cash equivalents                            $       14,309
     Accounts receivable                                           9,455
     Inventories                                                  43,109
     Loan receivable                                             250,138
     Prepaid expenses and other current assets                    80,398
     Due from related parties                                    953,439
                                                          --------------
       Total Current Assets                                    1,360,848
                                                           -------------
     Fixed assets, net of depreciation                         8,755,573
                                                           -------------

   Other Assets:
     Long-term assets                                         16,479,091
                                                            ------------
       Total Other Assets                                     16,479,091
                                                            ------------
   TOTAL ASSETS                                              $26,595,512
                                                             ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Current Liabilities:
  Accounts payable and accrued expenses                    $     837,411
  Deferred tax liability                                           2,993
  Taxes payable                                                2,504,349
                                                            ------------
      Total Current Liabilities                                3,344,753
                                                            ------------
Commitments and contingencies
      Total Liabilities                                        3,344,753
                                                            ------------

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 17,027,328 shares issued and outstanding               17,027
  Additional paid-in capital                                  14,922,428
  Statutory reserves                                           1,585,036
  Retained earnings                                            5,963,251
  Accumulated other comprehensive income (loss)                  763,017
                                                            ------------
      Total Stockholders' Equity                              23,250,759
                                                            ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 26,595,512
                                                            ============





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


                                      F-1
<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                     ACCUMULATED OTHER COMPREHENSIVE INCOME
      FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
                                    (IN US $)

<TABLE>
<S>                                                 <C>           <C>           <C>            <C>
                                                   Six Months Ended             Three Months Ended
                                                        June 30,                      June 30,
                                                   2006          2005           2006          2005
OPERATING REVENUES
   Catering and hotel related services income  $ 1,720,738    $ 1,818,691     $ 978,252     $ 876,704
   Management, rental and laundry income           799,373        725,803       486,617       362,901
                                               -----------    -----------     ---------     ---------

    TOTAL OPERATING REVENUES                     2,520,111      2,544,494     1,464,869     1,239,605

COST OF REVENUES                                   423,371        409,801       223,529       237,735
                                               -----------    -----------    ----------    ----------

GROSS PROFIT                                     2,096,740      2,134,693     1,241,340     1,001,870
                                               -----------    -----------    ----------    ----------

OPERATING EXPENSES
 Salaries and wage related expenses                147,545        160,892        55,612        80,571
 General and administrative fees                   482,374        437,403       286,821        33,516
 Depreciation, amortization and impairment         254,990        247,938       127,834       123,969
                                               -----------    -----------    ----------    ----------
       Total Operating Expenses                    884,909        846,233       470,267       438,056
                                               -----------    -----------    ----------    ----------

INCOME BEFORE OTHER INCOME (EXPENSE)             1,211,831      1,288,460       771,073       563,814

OTHER INCOME (EXPENSE)
   Interest income                                     558            208           262           188
   Loss on disposal of assets                       (9,502)            --        (9,502)           --
                                               -----------    -----------    ----------    ----------
       Total Other Income (Expense)                 (8,944)           208        (9,240)          188

NET INCOME BEFORE PROVISION FOR INCOME TAXES     1,202,887      1,288,668       761,833       564,002
Provision for Income Taxes                        (430,377)      (405,193)     (152,003)     (206,267)
                                               -----------    -----------    ----------    ----------

NET INCOME APPLICABLE TO COMMON SHARES         $   772,510    $   883,475     $ 609,830    $  357,735
                                               ===========    ===========     =========    ==========

NET EARNINGS PER BASIC
     AND DILUTED SHARES                        $      0.05    $      0.05     $    0.04    $     0.02
                                               ===========    ===========     =========    ==========

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

COMPREHENSIVE INCOME
    Net income                                $    772,510    $   883,475   $   609,830   $   357,735
    Other comprehensive income
       Currency translation adjustments            226,135             --       194,986            --
                                              ------------   ------------   -----------   -----------
   Comprehensive income                       $    998,645    $   883,475   $   804,816   $   357,735
                                              ============   ============   ===========   ===========
</TABLE>

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


                                      F-2
<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED)
                                    (IN US $)


                                                            2006        2005

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                         $   772,510    $  883,475
                                                      -----------    ----------

   Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation, amortization and impairment            254,990       247,938
     Loss on disposal of fixed assets                       9,502            --

  Changes in assets and liabilities
     (Increase) decrease in accounts receivable               531        (1,454)
     (Increase) decrease  in inventory                      1,000        (3,404)
     (Increase) in prepaid expenses and other
         current assets                                   (41,021)      (36,529)
     Increase (decrease) in accounts payable
         and accrued expenses                              (5,244)      (11,571)
     Increase in income taxes payable                     598,078       629,237
     (Increase) in deferred taxes                         (40,913)      (73,796)
                                                     ------------    ----------

     Total adjustments                                    776,923       750,421
                                                     ------------    ----------

     Net cash provided by operating activities          1,549,433     1,633,896
                                                      -----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES
   (Increase) decrease in advances to related parties    (244,784)     (194,121)
   (Increase) in loans receivable                        (250,138)           --
   (Increase) in long-term assets                      (1,243,942)   (1,451,607)
   (Acquisitions) disposals of fixed assets               (90,798)       (5,811)
                                                     ------------    ----------

      Net cash (used in) investing activities          (1,829,662)   (1,651,539)
                                                    -------------    ----------

CASH FLOWS FROM FINANCING ACTIVITES
    Dividends paid                                             --       (23,163)
                                                    -------------    ----------

       Net cash (used in) financing activities                 --       (23,163)
                                                    -------------    ----------

Effect of foreign currency translation                    226,135            --
                                                   --------------    ----------
NET (DECREASE) IN
    CASH AND CASH EQUIVALENTS                             (54,094)      (40,806)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD            68,403        93,294
                                                   --------------    ----------

CASH AND CASH EQUIVALENTS - END OF PERIOD          $      14,309     $   52,488
                                                   =============     ==========

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

                                      F-3
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                       JUNE 30, 2006 AND 2005 (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, 2005 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.


                                      F-4
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (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.

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.

                                      F-5
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            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 $6,397 as of
            June 30, 2006 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.


                                      F-6

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            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 June 30, 2006 and 2005 were 7.996 and 8.3,
            respectively, and the average period RMB to the US dollar for 2006
            and 2005 were 8.007 and 8.3, 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 six months ended June 30, 2006 and
            2005, the Company recorded approximately $226,135 and $0 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 not established a reserve for
            uncollectibles as of June 30, 2006.

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

                                      F-7

<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Advertising Costs

            The Company expenses the costs associated with advertising as
            incurred. Advertising expenses for the six months ended June 30,
            2006 and 2005 are included in general and administration expenses in
            the condensed consolidated statements of operations.

            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.

                                      F-8

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (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:

                                                June 30,            June 30,
                                                   2006                2005
                                                --------            -------

            Net income                       $   772,510        $   883,475
                                              ----------        -----------

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

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

            Weighted-average common shares
            Outstanding (Diluted)             17,027,328         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.

            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.

                                      F-9

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            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 2006 and 2005 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.

                                                         Six Months Ended
                                                              June 30,
                                                         -----------------
                                                         2006         2005
            Net income:
              As reported                              $772,510     $883,475

              Add: Stock-based employee
            compensation expense included in
            reported net loss, net of related
            tax effects                                      --           --
              Less: Total stock-based employee
            compensation expense determined under
            fair value based method for all awards,
            net of related tax effects                      (--)         (--)
                                                       --------     --------
                                                       $772,510     $883,475
               Pro forma
            Net earnings per share:
              As reported:
                Basic                                  $   0.05     $   0.05
                Diluted                                $   0.05     $   0.05
              Pro forma:
                Basic                                  $   0.05     $   0.05
                Diluted                                $   0.05     $   0.05

          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.  NEW
          TAOHUAYUAN   CULTURE   TOURISM  COMPANY  LIMITED  NOTES  TO  CONDENSED
          CONSOLIDATED  FINANCIAL STATEMENTS  (CONTINUED) JUNE 30, 2006 AND 2005
          (UNAUDITED)

                                      F-10
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            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 2006 and 2005, 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

            On December 16, 2004, the Financial Accounting Standards Board
            ("FASB") published Statement of Financial Accounting Standards No.
            123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R
            requires that compensation cost related to share-based payment
            transactions be recognized in the financial statements. Share-based
            payment transactions within the scope of SFAS 123R include stock
            options, restricted stock plans, performance-based awards, stock
            appreciation rights, and employee share purchase plans. The
            provisions of SFAS 123R, as amended, are effective for small
            business issuers beginning as of the first interim or annual
            reporting period that begins after December 15, 2005.

NOTE 3-     FIXED ASSETS

            Fixed assets as of June 30, 2006 were as follows:

                                       Estimated Useful
                                          Lives (Years)

             Land use right                   40-68          $2,329,876
             Buildings                           40           6,210,658
             Building improvements               15           1,465,687
             Electrical equipment                12           1,321,216
             Furniture and fixtures              15             386,201
             Vehicles and other equipment        10           1,032,840
                                                             ----------

                                                             12,746,478
             Less: accumulated depreciation                   3,990,905
                                                            -----------
             Property and equipment, net                     $8,755,573
                                                             ==========

                                      F-11
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

            There was $254,990 and $247,938 charged to operations for
            depreciation expense for the six months ended June 30, 2006 and
            2005, respectively. There was no impairment for these assets during
            the six months ended June 30, 2006 and 2005.

NOTE 4-     LONG-TERM ASSETS

            The balance as of June 30, 2006 included payments of $16,479,091
            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 $1,470,811 through June 30, 2006, 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 June 30,
            2006.

NOTE 5-     RELATED PARTY TRANSACTIONS

            The Company has identified the following related parties:

            Chen Jingmin - a director and stockholder of the Company.

            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.

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

            The Company as of June 30, 2006 has been advanced $589,151 from
            Shaanxi New Taohuayuan Economy Trade Company and $267,159 from
            Shaanxi Wenhao Zaliang Shifu Limited. These advances are unsecured,
            interest-free and have no fixed repayment terms. The Company has
            classified these as current assets.

                                      F-12
<PAGE>


                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)

NOTE 5-     RELATED PARTY TRANSACTIONS (continued)

            Management Fee Agreement

            The Company entered into a management agreement with Shaanxi New
            Taohuayuan Economy Trade Company Limited and Shaanxi Wenhao Zaliang
            Shifu Limited on January 15, 2004 for a period of five years. The
            annual management fees are fixed at approximately $1,400,000. The
            Company entered into an additional management agreement in 2006 for
            approximately $200,000 per year. For the six months ended June 30,
            2006 and 2005, the Company earned $799,373 and $725,803 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.

            Laundry Fee Agreement

            The Company entered into a laundry fee agreement with Shaanxi New
            Taohuayuan Economy Trade Company Limited and Shaanxi Wenhao Zaliang
            Shifu Limited on January 1, 2004. The laundry fees earned by the
            Company for the six months ended June 30, 2006 and 2005 were $17,350
            and $25,403, respectively.

            Rental Agreement

            The Company entered into a rental agreement with Shaanxi New
            Taohuayuan Economy Trade Company Limited on January 15, 2004. Rental
            income was charged at a 50% discount of the standard daily rate.
            There was no rental income earned during the six months ended June
            30, 2006.

NOTE 6-     STOCKHOLDERS' EQUITY (DEFICIT)

            Preferred Stock

            As of June 30, 2006, the Company has 10,000,000 shares of preferred
            stock authorized with a par value of $.001. There are as of June 30,
            2006, no shares issued and outstanding.

            Common Stock

            As of June 30, 2006, the Company has 50,000,000 shares of common
            stock authorized with a par value of $.001. As of June 30, 2006, the
            Company has 17,027,328 shares issued and outstanding. These shares
            were issued in November 2004 upon completion of the merger. There
            have been no other shares issued.


                                      F-13

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)


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

            Options and Warrants

            The Company has not granted any options or warrants as of June 30,
            2006.

            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 June 30, 2006, 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 $947,710.

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 six months ended June 30,
            2006 and 2005, respectively.

                                      F-14

<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)


NOTE 9-     PROVISION FOR INCOME TAXES (continued)

                                                     Six months ended
                                                         June 30,
                                                     -----------------
                                                    2006          2005

            Current tax expense                 $ 471,290     $ 478,989

            Deferred tax expense (benefit)        (40,913)      (73,796)
                                                ---------     ---------
                                                $ 430,377     $ 405,193
                                                =========     =========

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

                                                         2006       2005

             Statutory rate                              33%        33%
             Surcharge on taxes not deductible
               for PRC enterprise income tax purposes     10        12
             Other non-temporary differences             (7)       (13)
                                                       -----     ------
                                                         36%        32%

            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 liabilities represent deductible temporary differences arising
            mainly from the welfare payable.


                                      F-15
<PAGE>

                 NEW TAOHUAYUAN CULTURE TOURISM COMPANY LIMITED
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       JUNE 30, 2006 AND 2005 (UNAUDITED)


NOTE 9-     PROVISION FOR INCOME TAXES (continued)

            At June 30, 2006, deferred tax liabilities consist of the following:


            Welfare payable            $ (43,374)
            Other                         40,381
                                       ---------
                                       $  (2,993)
                                       =========

            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.



















                                      F-16

<PAGE>


4

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 hotels and resorts in Shaanxi, province in the PRC.

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

      Our business is not seasonal in nature.

Results of Operation for the six months ended June 30, 2006

      Gross profit for the six months ended June 30, 2006 was 83% of gross
revenues, which was the same as our gross profit percentage during the six
months ended June 30, 2005.

      Net income per share for the six months ended June 30, 2006 and 2005 were
both $0.05.

Liquidity and Capital Resources

      During the six months ended June 30, 2006 our operations generated cash of
$1,549,433.

      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 have financed our operations to date through the sale of our common
stock and cash generated by our operations. As of June 30, 2006 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.

Restrictions on currency exchange

     Substantially all of our revenues and operating expenses are denominated in
Renminbi.  The  Renminbi is  currently  freely  convertible  under the  "current


                                       1
<PAGE>

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
as their application assists management in making their business decisions


                                       2
<PAGE>
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.

     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.


                                       3
<PAGE>

ITEM 3.    CONTROLS AND PROCEDURES


      Cai Danmei, the Company's Chief Executive and Financial Officer, has
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the
end of the period covered by this report, and in her opinion the Company's
disclosure controls and procedures are effective. There were no changes in the
Company's internal controls over financial reporting that occurred during the
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.


















                                       4
<PAGE>



                                     PART II

                                OTHER INFORMATION





Item 6. Exhibits



(a)   Exhibits

            Number        Exhibit

            31            Rule 13a-14(a) Certifications

            32            Section 1350 Certifications














                                       5
<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 August 20, 2006.

                                       NEW TAOHUAYUAN CULTURE TOURISM CO., LTD.



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















                                       6